Borosil operating cash flow turns negative during H1FY27

Borosil Limited reported Rs 2.9 crore of net cash used in operating activities in H1FY27, compared with Rs 50.1 crore generated in H1FY26. Operating profit before working-capital changes increased to Rs 111.4 crore, but a Rs 91.4 crore working-capital outflow and Rs 22.9 crore of net tax payments outweighed it.

Why did Borosil's operating cash flow turn negative in H1FY27?

Borosil's operating cash flow turned negative because the Rs 91.4 crore working-capital outflow and Rs 22.9 crore of net direct taxes paid exceeded the Rs 111.4 crore operating profit before working-capital changes. The company consequently reported Rs 2.9 crore of net cash used in operating activities for H1FY27, versus Rs 50.1 crore of positive operating cash flow in H1FY26.

The deterioration occurred despite higher profit before balance-sheet movements. Profit before tax rose to Rs 60.3 crore in H1FY27 from Rs 53.9 crore in H1FY26, while adjustments for non-cash, investment and financial items increased to Rs 51.1 crore from Rs 39.5 crore. This lifted operating profit before working-capital changes by Rs 18 crore year on year, but the working-capital outflow expanded by Rs 56.5 crore.

Cash generated from operations, before direct taxes, fell to Rs 20 crore from Rs 58.5 crore. Net direct taxes paid were Rs 22.9 crore, compared with Rs 8.4 crore a year earlier, meaning taxes alone were higher than the cash generated from operations in H1FY27. The presentation therefore shows that the negative operating cash flow reflected both working-capital absorption and higher tax payments.

What changed in Borosil's working-capital balances?

Borosil's inventory and trade receivables both increased between FY26 and H1FY27, coinciding with the Rs 91.4 crore working-capital outflow. Inventories rose by Rs 63.3 crore to Rs 429.4 crore, while trade receivables increased by Rs 41 crore to Rs 148 crore. Together, those two current-asset balances increased by Rs 104.3 crore.

Other current assets also rose to Rs 48.1 crore in H1FY27 from Rs 36.8 crore at FY26, an increase of Rs 11.3 crore. Current assets in total increased by Rs 97.7 crore to Rs 683.7 crore. The cash-flow statement does not provide a line-by-line reconciliation of working-capital changes, so it does not allocate the Rs 91.4 crore outflow among inventory, receivables, payables and other current accounts.

There were offsets on the liability side. Trade payables increased by Rs 18.6 crore to Rs 91.7 crore, and other current liabilities rose by Rs 12.2 crore to Rs 21.6 crore. Current borrowings also increased to Rs 61.6 crore from Rs 33.2 crore, though borrowings are reported in financing rather than operating cash flow. The balance-sheet movements show larger inventory and receivables alongside increases in several current liabilities.

How did Borosil's earnings compare with cash generation?

Borosil's reported earnings increased in H1FY27 even as operating cash flow became negative. Revenue from operations rose 8.8% year on year to Rs 627.4 crore, gross profit rose 15.6% to Rs 408.9 crore, and profit after tax increased 11.4% to Rs 44.7 crore. EBITDA, including other income, grew 10.8% to Rs 112.1 crore.

Margins also rose in the first half. Gross profit margin was 65.2%, compared with 61.3% in H1FY26, while EBITDA margin was 17.2%, compared with 15.5%. EBITDA excluding other income increased 20.5% to Rs 107.7 crore, whereas other income declined to Rs 4.4 crore from Rs 11.8 crore. The comparison indicates that the cash-flow change was not accompanied by a decline in reported first-half operating profit.

The presentation cautions that the Diwali festival shift affects the timing of seasonal demand and sales, making Q2FY27 and H1FY27 sales and financial performance not strictly comparable with the corresponding prior-year periods. Category-wise sales rose 7.6% to Rs 603.4 crore in H1FY27, led by non-glassware sales, which increased 10.9% to Rs 240.2 crore. Opalware sales rose 7.8% to Rs 210.7 crore and glassware sales rose 2.7% to Rs 152.6 crore.

How did Borosil fund investment and financing needs?

Borosil recorded Rs 15.2 crore of cash used in investing activities and Rs 17.2 crore generated from financing activities in H1FY27. Combined with the Rs 2.9 crore operating cash outflow, these movements resulted in a Rs 0.9 crore net decrease in cash and cash equivalents during the half year.

Cash and cash equivalents closed H1FY27 at Rs 2 crore, down from the Rs 2.8 crore opening balance. The cash-flow statement shows a Rs 34.9 crore investing outflow and a Rs 15.4 crore financing outflow in H1FY26, when operating cash inflow was Rs 50.1 crore. In H1FY27, financing cash generation partly offset the operating and investing cash outflows.

Balance-sheet financing changed during the period. Non-current borrowings were Rs 101.1 crore at H1FY27 versus Rs 103.2 crore at FY26, while current borrowings rose to Rs 61.6 crore from Rs 33.2 crore. Total equity increased to Rs 932.8 crore from Rs 886.9 crore, and total assets rose to Rs 1,397.8 crore from Rs 1,281.7 crore.

Conclusion

Borosil delivered higher H1FY27 revenue, profit and EBITDA, but did not convert that reported operating improvement into operating cash. A Rs 91.4 crore working-capital outflow reduced Rs 111.4 crore of operating profit before working-capital changes to Rs 20 crore of cash generated from operations, and Rs 22.9 crore in net tax payments took operating cash flow to negative Rs 2.9 crore.

The presentation leaves unresolved how much of the working-capital outflow arose from each balance-sheet category because it does not provide a line-by-line reconciliation. Subsequent disclosures will show whether inventory of Rs 429.4 crore, trade receivables of Rs 148 crore and trade payables of Rs 91.7 crore change as seasonal demand timing, affected by the Diwali shift, develops.