Parag Milk Foods borrowings rise Rs 174.45 crore by September

Parag Milk Foods Limited reported Rs 659.83 crore of standalone borrowings at 30 September 2026, up Rs 174.45 crore from 31 March, as its half-year operating cash flow turned to an outflow of Rs 67.85 crore amid higher inventory and receivables.

What drove Parag Milk Foods' operating cash outflow?

Working-capital movements drove Parag Milk Foods' operating cash outflow in the half year ended 30 September 2026. Operating profit before working-capital changes rose to Rs 168.30 crore from Rs 132.73 crore a year earlier, but inventory absorbed Rs 159.72 crore of cash and trade receivables and other receivables absorbed another Rs 59.91 crore. Trade payables and other payables also decreased by Rs 18.27 crore, compared with an increase of Rs 136.79 crore in the prior-year half.

These movements changed cash generated from operations to an outflow of Rs 66.43 crore, from an inflow of Rs 106.91 crore in the half year ended 30 September 2025. After direct taxes paid of Rs 1.42 crore, net cash used in operating activities was Rs 67.85 crore, compared with cash generated of Rs 95.52 crore a year earlier. The year-on-year shift was Rs 163.37 crore, despite profit before tax increasing to Rs 93.39 crore from Rs 91.12 crore.

How much did Parag Milk Foods' debt increase?

Parag Milk Foods' total standalone borrowings increased to Rs 659.83 crore at 30 September 2026 from Rs 485.38 crore at 31 March 2026. Long-term borrowings rose to Rs 219.34 crore from Rs 111.09 crore, accounting for Rs 108.25 crore of the increase. Current borrowings increased by Rs 66.20 crore to Rs 440.49 crore over the same six-month period.

The cash-flow statement records Rs 149.35 crore of proceeds from long-term borrowings during the half year, against repayments of Rs 20.53 crore. It also records net proceeds of Rs 45.62 crore from short-term borrowings, whereas the prior-year half showed net short-term borrowing outflows of Rs 35.22 crore. These financing inflows occurred while operating activities used Rs 67.85 crore and investing activities used Rs 52.50 crore.

Finance costs rose to Rs 44.03 crore in the half year ended 30 September 2026 from Rs 35.33 crore a year earlier. The balance-sheet increase in borrowings and the higher finance-cost line are reported for the same period, although the filing does not separately assign the cost increase between borrowings, leases or other factors.

Where did Parag Milk Foods deploy balance-sheet resources?

Parag Milk Foods increased inventory, fixed assets and right-of-use assets during the first half. Inventories reached Rs 872.81 crore at 30 September 2026, up Rs 159.72 crore from 31 March. Property, plant and equipment increased by Rs 21.20 crore to Rs 349.36 crore, while right-of-use assets increased by Rs 9.20 crore to Rs 65.48 crore.

Cash used for purchases of property, plant and equipment was Rs 48.94 crore in the half year, lower than Rs 57.82 crore in the comparable 2025 period. Parag Milk Foods also spent Rs 1.25 crore on right-of-use assets, Rs 0.82 crore on intangible assets and Rs 3.01 crore on fixed deposits. After Rs 1.75 crore of interest received and Rs 0.03 crore from asset sales, net cash used in investing activities was Rs 52.50 crore.

Trade receivables were Rs 274.85 crore at 30 September, up Rs 44.07 crore from Rs 230.78 crore at the March year-end. Cash and cash equivalents increased to Rs 5.80 crore from Rs 2.40 crore, while bank balances other than cash equivalents declined to Rs 11.07 crore from Rs 14.99 crore. The filing therefore shows more funds tied up in inventory and receivables even as period-end cash increased by Rs 3.40 crore.

How did Parag Milk Foods' earnings compare with cash flow?

Parag Milk Foods' revenue and operating profit increased in the half year, but profit after tax declined. Revenue from operations rose to Rs 2,135.89 crore for the half year ended 30 September 2026 from Rs 1,811.67 crore a year earlier. Profit before tax increased by Rs 2.27 crore to Rs 93.39 crore, while profit after tax fell to Rs 74.69 crore from Rs 88.05 crore.

The difference between profit and operating cash flow reflected the working-capital outflows rather than a decline in profit before tax. Depreciation and amortisation was Rs 32.69 crore, up from Rs 29.94 crore, and finance costs were Rs 44.03 crore, up from Rs 35.33 crore. Current tax was Rs 23.50 crore in the 2026 half versus Rs 0.45 crore in the previous-year half, while deferred tax was a credit of Rs 4.80 crore rather than a charge of Rs 2.62 crore.

On a quarterly basis, the September 2026 quarter generated revenue of Rs 1,215.42 crore and profit before tax of Rs 60.99 crore. That compared with Rs 920.47 crore of revenue and Rs 32.40 crore of profit before tax in the June 2026 quarter. The standalone results cover one operating segment, Milk and Milk Related Products, so the filing does not provide separate product or geographic cash-flow segments.

What should investors watch in Parag Milk Foods' next results?

The immediate measure is whether inventory and receivable growth moderates after the Rs 219.63 crore combined cash absorption recorded in the half-year cash-flow statement. Inventory rose by Rs 159.72 crore and trade receivables and other receivables rose by Rs 59.91 crore, while total borrowings increased by Rs 174.45 crore over the six months to 30 September 2026.

Parag Milk Foods' board approved a scheme on 3 November 2026 to amalgamate subsidiary Bhagyalaxmi Dairy Farms Private Limited with Parag Milk Foods, subject to required approvals. The scheme has not been given effect in the standalone results. The filing also states that the standalone results for the quarter and half year ended 30 September 2026 were reviewed by the audit committee and approved by the board on 3 November 2026.

Conclusion

Parag Milk Foods' first-half figures show higher revenue and pre-tax profit alongside a Rs 67.85 crore operating cash outflow. The outflow coincided with a Rs 159.72 crore inventory build-up, higher receivables and a Rs 174.45 crore increase in total borrowings, while investing activities used a further Rs 52.50 crore.

Next, investors can watch for a release or further build-up of working capital, changes in long-term and short-term borrowings, and finance costs after they reached Rs 44.03 crore in the half year. Progress of the proposed Bhagyalaxmi Dairy Farms Private Limited amalgamation also remains relevant because it is subject to requisite approvals and is not reflected in these standalone results.