Permanent Magnets Ltd carries a seven-year streak of unqualified audit opinions and cumulative operating cash flow that covers reported profit, but the record is shadowed by three open-ended legal and governance items: a winding-up order stayed since 2015, a decade-old loan interest default, and a proposal to triple borrowing limits to ₹300 Crores while a subsidiary’s $5 million foreign-currency borrowing sits outside standalone debt.
Key findings
- Standalone debt understates group obligations, and the company wants to triple borrowing limits
Major- Standalone borrowings were ₹37.42 Crores in FY26, while consolidated borrowings were ₹66.84 Crores, a gap of ₹29.42 Crores driven by a $5 million External Commercial Borrowing taken by subsidiary Quantum Magnetics. The AGM notice dated 13 Jul 2026 proposes to raise the borrowing limit under Section 180(1)(c) from ₹100 Crores to ₹300 Crores and the asset-charge limit from ₹100 Crores to ₹300 Crores. A default on interest for a Central Excise loan from ICICI Bank has persisted since FY2017-18, with the company providing simple interest at 12% but not paying the interest amount. - A winding-up order stayed since 2015 and an unpaid excise loan interest remain unresolved
Major- The Bombay High Court passed a winding-up order dated 15 April 2015 on a petition by M/s. Savino Del Bene Freight Forwarders for dues of ₹0.13 crore; the company obtained an interim stay and deposited ₹0.19 crore with interest, and the matter remains pending as of the FY2025-26 annual report. The auditor has included an Emphasis of Matter paragraph on the winding-up order and going concern in every annual report from FY2019-20 through FY2025-26. Disputed income tax demands across six assessment years total ₹0.69 crore, all pending before the CIT (Appeals). - Revenue growth is concentrated in a single segment and increasingly tied up in receivables
Minor- The company operates in a single reportable business segment, Engineering and Current Sensing Applications, across all years from FY20 to FY26. Revenue from operations grew to ₹226 crore in FY26, while trade receivables rose to ₹54.68 crore and receivable days increased to 88 days from 70 days in FY25 and 72 days in FY24. Management confirmed there was “no revenue” from rare earth magnets in FY26 due to restrictions from China. - Operating cash flow covers reported profit, but rising capex is absorbing free cash flow
Clean- Cumulative cash flow from operations of ₹78.42 crore exceeded cumulative profit after tax of ₹50.72 crore over FY24-FY26, with annual CFO/PAT ratios of 1.13x, 2.42x, and 1.19x. Free cash flow swung from ₹0.66 crore in FY24 to ₹10.08 crore in FY25. Dividend per share rose each year from ₹1.20 in FY22 to ₹2.20 recommended for FY26.
What to watch
- AGM resolutions on borrowing limits. Outcome of the 65th AGM resolutions to increase borrowing, charge-creation, and Section 186 limits to ₹300 Crores each, as proposed in the notice dated 13 Jul 2026.
- Winding-up petition. Next hearing before the Bombay High Court, no scheduled date provided in the FY2025-26 annual report.
- Excise loan interest dispute. Resolution of the Central Excise loan interest dispute with the Ministry of Finance, no timeline provided in the FY2025-26 annual report.
- Relays project ramp-up. Commercial ramp-up expected from H2 FY27, per management’s Q4 FY26 transcript.
- Quantum Magnetics Phase 2. Capex implementation and first sales in Q3/Q4 FY27, per management’s Q4 FY26 transcript.
Bottom line: This is a disclosed and audited record with real cash conversion and a seven-year run of clean audit opinions. The risk sits in three places that have stayed open for years: a winding-up order stayed since 2015, an interest default that the auditor flags in every CARO report, and a governance structure where a family-controlled board is now asking shareholders for permission to triple borrowing limits while a subsidiary carries dollar debt outside the standalone books. Watch the AGM vote, the next court listing, and whether the Relays and Quantum Magnetics capex timelines hold.