GMM Pfaudler repaid Rs 116 crore as H1 cash use exceeded generation
Key highlights
- GMM Pfaudler repaid Rs 116 crore of net debt in H1 FY27, including Rs 100 crore of net long-term borrowings.
- GMM Pfaudler generated Rs 168 crore of business cash and applied Rs 127 crore to working capital in H1 FY27.
- Net funding for inventory increased by Rs 127 crore to Rs 337 crore at September 30, 2026.
- GMM Pfaudler's cash conversion cycle increased to 24 days from 21 days.
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GMM Pfaudler repaid Rs 116 crore of net debt in H1 FY27, but Rs 182 crore of working-capital and capital-expenditure applications exceeded its Rs 168 crore of business cash generation, contributing to a decline in cash-flow-statement cash to Rs 427 crore from Rs 635 crore.
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How did GMM Pfaudler repay net debt in H1 FY27?
GMM Pfaudler reported repayment of Rs 116 crore of net debt in H1 FY27, comprising Rs 100 crore of net long-term borrowings repaid and Rs 16 crore of net short-term borrowings repaid. The company said the long-term repayment included repayment of an approximately EUR 7 million loan.
Consolidated borrowings fell to Rs 732 crore on September 30, 2026, from Rs 835 crore on March 31, 2026, a decline of Rs 103 crore. GMM Pfaudler reported net debt to equity of 0.2 times at September 30, 2026, compared with 0.1 times in FY26, while net debt to EBITDA, or earnings before interest, tax, depreciation and amortisation, was 0.6 times against 0.4 times.
What drove GMM Pfaudler's working-capital outflow?
GMM Pfaudler reported a Rs 127 crore working-capital application in H1 FY27, while its working-capital summary showed net funding required for inventory rose by the same amount to Rs 337 crore at September 30, 2026 from Rs 210 crore at March 31, 2026. Inventory increased by Rs 25 crore to Rs 662 crore and customer advances declined by Rs 102 crore to Rs 325 crore.
Inventory days, net of customer advances, increased to 32 days at September 30, 2026 from 22 days at March 31, 2026. This increase occurred as backlog rose by Rs 252 crore to Rs 2,446 crore, while trade receivables increased by Rs 42 crore to Rs 507 crore and receivable days remained unchanged at 48.
Trade payables increased by Rs 121 crore to Rs 592 crore, and payable days rose to 57 from 49. GMM Pfaudler's cash conversion cycle nevertheless increased to 24 days from 21 days because its definition adds inventory days and receivable days, then deducts payable days.
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Did working capital exceed GMM Pfaudler's business cash generation?
No. GMM Pfaudler generated Rs 168 crore of business cash in H1 FY27 and applied Rs 127 crore to working capital, leaving the working-capital outflow Rs 41 crore below business cash generation. The presentation therefore does not show working capital alone exceeding cash generated by the business.
Business cash generation comprised Rs 90 crore of profit before tax, Rs 124 crore of non-cash and other items, and Rs 46 crore of taxes paid. After the Rs 127 crore working-capital application, GMM Pfaudler also incurred Rs 55 crore of net capital expenditure, taking total cash applications in that section to Rs 182 crore.
The Rs 182 crore application of cash was Rs 14 crore higher than the Rs 168 crore of business cash generation. The cash-flow statement then recorded a further Rs 194 crore of investing and financing outflows, including Rs 40 crore of net interest, Rs 30 crore of leases, Rs 5 crore of dividends, Rs 3 crore of deposits placed and Rs 116 crore of debt repayments.
What changed in GMM Pfaudler's balance sheet during H1 FY27?
GMM Pfaudler's consolidated balance sheet expanded to Rs 4,149 crore at September 30, 2026 from Rs 4,024 crore at March 31, 2026. Fixed assets increased by Rs 170 crore to Rs 835 crore, other current and non-current assets increased by Rs 97 crore to Rs 813 crore, and shareholders' equity rose by Rs 92 crore to Rs 1,296 crore.
Trade payables rose by Rs 121 crore to Rs 592 crore and other current and non-current liabilities increased by Rs 36 crore to Rs 1,192 crore. Unfunded pension liabilities declined by Rs 21 crore to Rs 309 crore, non-controlling interest remained Rs 28 crore, and goodwill and intangibles declined by Rs 3 crore to Rs 850 crore.
Cash and bank balance on the balance sheet declined by Rs 206 crore, from Rs 688 crore to Rs 482 crore. This differs from the cash-flow statement's Rs 208 crore reduction from Rs 635 crore of opening cash to Rs 427 crore of closing cash, and the presentation does not provide a reconciliation between the two cash disclosures.
Conclusion
GMM Pfaudler reduced net debt by Rs 116 crore in H1 FY27 while its cash generation was absorbed by Rs 127 crore of working-capital application, Rs 55 crore of net capital expenditure and Rs 194 crore of financing and investing outflows. Net inventory funding increased to Rs 337 crore and the cash conversion cycle increased by three days to 24 days, even as backlog reached Rs 2,446 crore.
The next disclosure to watch is whether GMM Pfaudler reconciles the difference between its cash-flow-statement cash and balance-sheet cash figures. Investors can also monitor whether inventory days and the 24-day cash conversion cycle change as the company executes the Rs 2,446 crore backlog reported at September 30, 2026.