GEE posts Rs 12.66 crore operating cash outflow in first half

GEE Limited recorded a Rs 12.66 crore net operating cash outflow in the half year ended September 30, 2026, despite reporting Rs 10.78 crore profit for the period. A Rs 32.08 crore working-capital absorption, led by increases in other assets and trade receivables, reversed an Rs 8.71 crore operating cash inflow a year earlier.

What drove GEE's operating cash outflow?

GEE's operating cash outflow resulted from working-capital movements exceeding cash generated before those changes. Profit before tax was Rs 14.41 crore for the half year ended September 30, 2026, compared with Rs 6.93 crore in the corresponding 2025 period. After adjustments including Rs 2.05 crore of depreciation and amortisation, Rs 3.80 crore of finance cost, and Rs 3.63 crore profit on sale of property, plant and equipment, operating profit before working-capital changes was Rs 16.31 crore.

Working-capital changes absorbed Rs 32.08 crore, compared with Rs 4.22 crore in the prior-year half. Cash generated from operations therefore moved to an outflow of Rs 14.78 crore from an inflow of Rs 9.33 crore. GEE paid Rs 2.12 crore of income tax, net of refunds, resulting in net cash used in operating activities of Rs 12.66 crore, against net operating cash generated of Rs 8.71 crore a year earlier.

How did working capital absorb GEE's cash?

GEE's largest reported working-capital use was the Rs 21.15 crore increase in other assets during the six months ended September 30, 2026, compared with a Rs 4.89 crore increase in the previous first half. Trade receivables increased by Rs 10.60 crore, broadly in line with the Rs 10.50 crore increase in the corresponding 2025 period. Together, those two asset movements accounted for Rs 31.75 crore of cash absorption.

Loans increased by Rs 1.45 crore, adding to the cash use, while trade payables decreased by Rs 3.27 crore after increasing by Rs 2.77 crore in the previous first half. Inventories released Rs 28.62 lakh of cash in the 2026 half year, substantially below the Rs 6.18 crore release reported a year earlier. Increases in other liabilities and provisions contributed Rs 2.91 crore of cash, compared with Rs 2.02 crore in the prior-year period.

The September 30, 2026 balance sheet reflects some of these movements. Trade receivables stood at Rs 65.49 crore, compared with Rs 55.04 crore at March 31, 2026. Other current assets rose to Rs 28.14 crore from Rs 12.39 crore, while inventories fell to Rs 87.24 crore from Rs 89.72 crore over the same period.

How did GEE fund its first-half cash requirements?

GEE funded the operating deficit through positive investing and financing cash flows during the half year ended September 30, 2026. Investing activities generated Rs 8.43 crore, reversing an investing outflow of Rs 33.16 lakh in the corresponding 2025 half year. The main inflow was Rs 15.75 crore from sale of property, plant and equipment, whereas the prior-year cash-flow statement reported no such sale proceeds.

The investing inflow was partly offset by Rs 8.18 crore spent on property, plant and equipment and an advance of Rs 10.02 lakh for investment property. GEE also received Rs 92.55 lakh of interest income in investing cash flows, compared with Rs 9.78 lakh a year earlier. The cash-flow statement separately included Rs 2.05 crore of depreciation and amortisation as a non-cash adjustment in operating activities.

Financing activities generated Rs 10.53 crore, compared with a Rs 7.08 crore financing outflow in the half year ended September 30, 2025. Net proceeds from short-term borrowings were Rs 17.13 crore, compared with net repayments of Rs 2.28 crore in the prior-year half. GEE also reported Rs 2.87 crore of net long-term borrowing repayments and Rs 3.72 crore of interest paid during the 2026 half year.

How did GEE's profit compare with its cash generation?

GEE's reported profit did not translate into positive operating cash flow in the September 2026 half year because working-capital movements exceeded operating profit before those changes. Profit for the period rose to Rs 10.78 crore from Rs 5.16 crore in the corresponding prior-year half. However, the Rs 32.08 crore working-capital outflow was nearly twice the Rs 16.31 crore operating profit before working-capital changes.

The comparison with the prior-year period shows a divergence between earnings and operating cash. Profit before tax increased by Rs 7.48 crore, from Rs 6.93 crore to Rs 14.41 crore. Net operating cash flow changed by Rs 21.37 crore, from an Rs 8.71 crore inflow to an Rs 12.66 crore outflow, with the increase in other-assets cash use and the smaller inventory release contributing to that movement.

GEE ended the half year with cash and cash equivalents of Rs 7.04 crore, up from Rs 73.11 lakh at the beginning of the financial year. The closing balance comprised Rs 8.53 lakh of cash in hand and Rs 6.95 crore of bank balances. The Rs 6.31 crore net increase in cash reflected combined inflows from investing and financing activities that exceeded the operating cash deficit.

What balance-sheet changes accompanied GEE's cash-flow movement?

GEE's short-term borrowings rose to Rs 56.57 crore at September 30, 2026, from Rs 38.95 crore at March 31, 2026, consistent with the Rs 17.13 crore net cash proceeds from short-term borrowings reported in the financing section. Long-term borrowings increased to Rs 24.47 crore from Rs 22.02 crore, although the cash-flow statement recorded Rs 2.87 crore of net long-term borrowing repayments during the half year.

Total equity was Rs 225.02 crore at September 30, 2026, compared with Rs 215.01 crore at March 31, 2026. Other equity increased to Rs 214.62 crore from Rs 204.62 crore, while equity share capital remained Rs 10.40 crore. GEE operates in one reportable segment, manufacturing and selling welding consumables, according to its financial-results notes.

Conclusion

GEE's first-half results show that higher reported earnings did not convert into operating cash in the six months ended September 30, 2026. Profit for the period increased to Rs 10.78 crore, but increases in other assets, receivables and loans, combined with a reduction in trade payables, produced a Rs 32.08 crore working-capital cash outflow and a Rs 12.66 crore operating cash deficit.

The unresolved issue is whether GEE can reduce the working-capital balances that rose during the half year, notably Rs 65.49 crore of trade receivables and Rs 28.14 crore of other current assets at September 30, 2026. The next disclosed financial results can also show whether short-term borrowings, which provided Rs 17.13 crore of cash in the half year, continue to fund cash requirements and whether asset-sale proceeds recur after the Rs 15.75 crore received in the period.