Roopa Screen Limited’s Working-Capital Build-Up Cut Cash Flow

Roopa Screen reported higher FY26 profit, but operating cash flow fell to Rs 2.85 crore from Rs 3.81 crore in FY25. Trade receivables and inventory absorbed a combined Rs 5.60 crore of cash in FY26, outweighing the increase in operating profit before working-capital changes to Rs 10.86 crore.

Why did Roopa Screen’s working-capital build-up reduce operating cash flow?

Roopa Screen’s operating cash flow fell because cash tied up in receivables, inventory and short-term advances increased more than operating profit before working-capital changes. Cash generated from operations declined to Rs 4.96 crore in FY26 from Rs 5.50 crore in FY25, while income tax paid increased to Rs 2.11 crore from Rs 1.69 crore. Net cash from operating activities consequently fell by Rs 96.67 lakh to Rs 2.85 crore.

Working capital is the funding committed to short-term operating assets and liabilities, including inventory, trade receivables and trade payables. Roopa Screen uses the indirect method for its cash-flow statement, starting with profit before tax and adjusting for non-cash items and changes in working-capital balances. In FY26, the Rs 2.71 crore increase in receivables, Rs 2.89 crore increase in inventory and Rs 66.71 lakh increase in short-term loans and advances were only partly offset by a Rs 41.15 lakh increase in trade payables.

The FY26 cash movement differed from FY25 because FY25 included a Rs 39.17 lakh release from inventory, whereas FY26 recorded a Rs 2.89 crore inventory outflow. Receivables consumed Rs 3.25 crore of cash in FY25 and Rs 2.71 crore in FY26. Collections from delivered sales therefore remained a determinant of cash conversion in both periods.

How large were Roopa Screen’s receivables and inventory balances?

Roopa Screen’s trade receivables increased to Rs 12.78 crore at March 31, 2026 from Rs 10.26 crore at March 31, 2025, while inventory rose to Rs 6.98 crore from Rs 4.09 crore. The two balances together were Rs 19.76 crore at March 31, 2026, compared with Rs 14.36 crore a year earlier. Short-term loans and advances also rose to Rs 95.50 lakh from Rs 28.79 lakh.

The inventory increase was concentrated in raw materials and finished goods. Raw materials rose to Rs 3.06 crore at March 31, 2026 from Rs 1.65 crore a year earlier, while finished Rotary Nickel Screen goods rose to Rs 3.71 crore from Rs 2.24 crore. Roopa Screen values raw materials, work in progress and finished goods at cost or net realisable value, whichever is lower, and determines cost using the first-in, first-out method.

Receivables were unsecured and considered good, with no unbilled trade receivables reported at March 31, 2026. Receivables outstanding for less than six months were Rs 11.55 crore, up from Rs 9.47 crore at March 31, 2025. Amounts outstanding for more than six months were Rs 1.23 crore, compared with Rs 78.82 lakh, although the balance outstanding for more than three years declined to Rs 26.87 lakh from Rs 43.85 lakh.

Did Roopa Screen’s higher profit convert into operating cash?

Roopa Screen’s profit and revenue increased in FY26, but the growth did not fully convert into operating cash because sales are recognised when goods are delivered and collections can occur later. Revenue from operations rose to Rs 50.73 crore in FY26 from Rs 45.34 crore in FY25, while profit after tax increased to Rs 6.48 crore from Rs 4.69 crore. Profit before tax rose to Rs 8.69 crore from Rs 6.27 crore.

The revenue composition also changed during FY26. Manufactured Rotary Nickel Screen sales were Rs 41.92 crore, compared with Rs 39.90 crore in FY25, while traded nickel metal sales increased to Rs 8.57 crore from Rs 5.36 crore. Transport and freight revenue was Rs 88.88 lakh in FY26 against Rs 8 lakh in FY25, and export sales of Rs 15.63 lakh were reported after no export sales in FY25.

The cash-flow statement shows how accounting profit differed from cash generation. Depreciation of Rs 1.24 crore and finance costs of Rs 73.06 lakh were added back to profit before tax in calculating FY26 operating profit before working-capital changes. The subsequent Rs 5.60 crore cash use from receivables and inventory reduced the operating cash available from reported earnings.

For operating cash flow to rise without a comparable increase in funding needs, receivables recorded from delivered goods would need to be collected and inventory would need to be sold or reduced. Roopa Screen classifies its normal operating cycle as 12 months, based on the period between acquisition of goods or inventory and their realisation into cash and cash equivalents.

How did Roopa Screen finance its working-capital requirement?

Roopa Screen’s short-term borrowings increased to Rs 6.67 crore at March 31, 2026 from Rs 1.41 crore at March 31, 2025, alongside the rise in working-capital assets. The FY26 closing balance included Rs 2.65 crore of bank overdraft or cash credit, Rs 3.40 crore of loans from directors and Rs 62.52 lakh of current maturities of long-term borrowings. The cash-flow statement records Rs 2.01 crore of proceeds from short-term borrowings during FY26.

Cash credit is a bank working-capital facility that allows borrowing up to a sanctioned limit. Bank of Baroda’s cash-credit facility had a sanctioned amount of Rs 5.25 crore and a balance of Rs 2.65 crore at March 31, 2026, compared with Rs 64.11 lakh a year earlier. The facility has a 12-month term subject to annual review and is secured by hypothecation of stock and book debts.

Long-term borrowings declined to Rs 74.40 lakh at March 31, 2026 from Rs 5.61 crore at March 31, 2025. Roopa Screen reported no continuing default in repayment of loans or interest and said it had not been declared a willful defaulter by a bank or financial institution. Its bank facilities are supported by mortgages, charges over specified movable assets and personal guarantees from named promoters.

Conclusion

Roopa Screen’s FY26 accounts show that higher profit did not result in a matching increase in operating cash flow. Revenue increased by Rs 5.39 crore and profit after tax rose by Rs 1.80 crore, but receivables and inventory absorbed Rs 5.60 crore in the operating cash-flow reconciliation, reducing net operating cash to Rs 2.85 crore.

The disclosed matters to monitor are trade receivables of Rs 12.78 crore, inventory of Rs 6.98 crore and cash-credit utilisation of Rs 2.65 crore at March 31, 2026. The Bank of Baroda cash-credit facility is subject to annual review, while Roopa Screen’s 12-month operating-cycle classification makes future operating cash flow dependent on collections and inventory conversion.