I G Petrochemicals' record is a study in contrasts: a clean regulatory history and a decade of unqualified audit opinions sit alongside a return on capital that has collapsed to 3.0% while free cash flow stayed negative in four of the last five years. The company continues to pay dividends and capitalise borrowing costs into a growing pool of unfinished projects, even as the core business generates less cash than it consumes.
Key findings
- Operating cash falls short of capex, yet dividends continue and borrowing costs are parked in unfinished projects
Major- Free cash flow was negative in FY26 (₹-60 crore), FY24 (₹-136 crore), and FY23 (₹-7 crore), with only FY25 turning positive at ₹125 crore. The company paid dividends of ₹31 crore in FY26 despite that negative free cash flow, while borrowing costs capitalised into capital work-in-progress rose from nil in FY25 to ₹3.64 crore in FY26 at a rate of 9.45%. ROCE fell from 19.6% in FY23 to 3.0% in FY26, and cumulative operating cash flow of ₹1,442 crore covered only 66% of cumulative EBITDA of ₹2,175 crore over the ten-year window through FY26. - Contingent liabilities of \~₹99 crore are dominated by long-running tax and duty disputes, none provided for
Minor- Consolidated contingent liabilities not provided for as at 31 March 2026 total 99.08 crore, comprising disputed excise and service tax of 17.12 crore, income tax matters of 39.79 crore, and electricity duty disputed of 39.98 crore. The electricity duty dispute rose from 16.06 crore at 31 March 2020 to 39.98 crore at 31 March 2026, with a writ petition pending before the Mumbai High Court and a stay granted. Management states it is confident all matters will be decided in the Group's favour based on legal opinions.
What to watch
- Plasticizer, CBG, and pyrolysis oil plant commercial operations. Commencement of commercial operations at all three plants is expected during FY2026-27, along with capitalisation of the associated CWIP.
- Electricity duty writ petition. The writ petition before the Mumbai High Court has 39.98 crore at stake as of FY2025-26.
Bottom line: This is a disclosed and audited record with a genuinely clean regulatory history and no promoter share pledges. The risk sits in the widening gap between reported profit and cash generation: a 3.0% ROCE, negative free cash flow in four of five years, and borrowing costs capitalised into growing CWIP together suggest the earnings statement carries more weight than the cash book. Watch whether the three plants entering commercial operations in FY2026-27 convert that CWIP into revenue, and whether the ₹39.98 crore electricity duty dispute before the Mumbai High Court moves toward resolution.