Company Records Rs. 2.46 Billion Revenue as Profit Declines Year-on-Year

The National Silk and Rayon Mills Limited has reported a profit after taxation of Rs. 70.04 million for the financial year ended June 30, 2026, compared with Rs. 83.40 million in the previous financial year. The company’s latest financial statements show relatively stable revenue, improved gross profit margins, and a significant decline in cash generated from operating activities.

According to the company’s financial statements, revenue from contracts with customers increased slightly to Rs. 2.461 billion in FY2026 from Rs. 2.451 billion in FY2025, reflecting modest growth in overall sales.

Gross Profit Improves Despite Higher Operating Costs

The company recorded a gross profit of Rs. 186.01 million during FY2026, compared with Rs. 190.50 million in the previous year. Although revenue increased slightly, the cost of sales also rose to Rs. 2.275 billion from Rs. 2.261 billion, putting pressure on gross profitability.

Distribution costs declined to Rs. 2.96 million from Rs. 3.68 million, while administrative expenses increased to Rs. 59.62 million from Rs. 50.42 million. Other expenses fell substantially to Rs. 11.84 million from Rs. 30.30 million, helping support the company’s operating performance.

Profit from operations reached Rs. 120.47 million, up from Rs. 114.50 million in FY2025. However, higher finance costs of Rs. 11.32 million, compared with Rs. 3.09 million a year earlier, affected the company’s final earnings.

Net Profit and Earnings Per Share Decline

Profit before taxation stood at Rs. 109.14 million, compared with Rs. 111.05 million in the previous year. Following taxation of Rs. 39.10 million, the company reported a net profit of Rs. 70.04 million.

Earnings per share declined to Rs. 4.50 from Rs. 5.36 in FY2025. This decrease highlights the pressure on shareholder earnings despite the company’s relatively stable revenue and improved operating profit.

Asset Revaluation Strengthens Equity

The company’s statement of comprehensive income includes a surplus of Rs. 80.25 million arising from the revaluation of freehold land during FY2026. As a result, total comprehensive income increased to Rs. 150.29 million, compared with Rs. 83.40 million in the previous year.

The statement of financial position shows total equity and liabilities of approximately Rs. 2.383 billion at June 30, 2026, compared with Rs. 2.708 billion in FY2025. Total equity increased to approximately Rs. 1.705 billion from Rs. 1.554 billion, supported by the land revaluation and retained earnings.

The company’s total assets stood at approximately Rs. 2.383 billion at the end of FY2026, according to the financial statements.

Operating Cash Flow Turns Negative

One of the key developments in the company’s financial results was the change in operating cash flow. Net cash used in operating activities amounted to Rs. 23.64 million in FY2026, compared with net cash generated of Rs. 125.99 million in FY2025.

The company also reported net cash used in investing activities of Rs. 91.90 million, primarily reflecting capital expenditure on property, plant and equipment of Rs. 99.34 million.

Financing activities generated net cash of Rs. 74.05 million during the year, supported by long-term financing and net short-term borrowings. Despite this support, cash and cash equivalents declined to Rs. 48.12 million at June 30, 2026, from Rs. 89.62 million a year earlier.

The change in cash flow highlights the importance of monitoring working capital, operating cash generation, and financing requirements in the coming financial year.

Outlook for FY2027

The National Silk and Rayon Mills Limited enters FY2027 with stable revenue, a higher operating profit, and a stronger reported equity position following the revaluation of its freehold land. However, lower net profit, increased finance costs, and negative operating cash flow remain important areas to watch.

The company’s future performance will depend on its ability to improve cost efficiency, manage financing expenses, strengthen cash generation, and maintain revenue growth. Investors will likely monitor these factors closely when assessing the company’s financial position and earnings potential.