HOAC Foods cash falls Rs 3.62 crore as borrowings rise

HOAC Foods India Limited reported a Rs 3.62 crore decline in cash and cash equivalents during the half year ended September 30, 2026, ending with Rs 2.91 crore despite Rs 6.00 crore of profit before tax. A Rs 8.22 crore operating outflow and Rs 3.68 crore investing outflow were chiefly funded by borrowing proceeds.

Why did HOAC Foods report negative operating cash flow?

HOAC Foods used Rs 8.22 crore in operating activities in the half year ended September 30, 2026 because working-capital movements exceeded the cash generated from reported profit and adjustments. The cash-flow statement, prepared under the indirect method prescribed by Accounting Standard 3, starts with Rs 6.00 crore of profit before tax and arrives at a Rs 6.63 crore pre-working-capital cash figure after adding Rs 37.39 lakh of finance costs, Rs 24.24 lakh of depreciation and amortisation, and Rs 1.40 lakh of gratuity provision.

The largest operating cash uses were a Rs 7.02 crore increase in inventories, a Rs 5.69 crore increase in trade receivables and a Rs 4.08 crore increase in other non-current assets. Short-term loans and advances consumed another Rs 1.03 crore. These movements were partly offset by a Rs 2.44 crore increase in trade payables and a Rs 58.06 lakh increase in other current liabilities, while income taxes paid were Rs 3.13 lakh.

The reported operating cash outflow for the six months to September 30 exceeded the Rs 4.22 crore outflow recorded for the full year ended March 31, 2026. The periods are not directly comparable because one covers six months and the other a full year, but the filing shows that cash absorption accelerated alongside higher inventory and receivable balances. In the prior full year, inventory consumed Rs 9.73 crore, while trade receivables released Rs 44.14 lakh of cash; in the September half year, both lines consumed cash.

How did HOAC Foods fund its operating and investment outflows?

HOAC Foods reported Rs 8.29 crore of net cash from financing activities in the half year ended September 30, 2026, which partly covered the combined Rs 11.91 crore used in operating and investing activities. The financing inflow comprised Rs 6.73 crore of proceeds from short-term borrowings and Rs 1.94 crore from long-term borrowings. Interest payments of Rs 37.39 lakh reduced the net financing cash inflow.

The balance sheet also shows a substantial change in borrowing balances between March 31 and September 30, 2026. Short-term borrowings rose to Rs 11.09 crore from Rs 4.37 crore, while long-term borrowings increased to Rs 3.67 crore from Rs 1.73 crore. Total current liabilities rose to Rs 19.84 crore from Rs 8.60 crore, including trade payables of Rs 4.34 crore compared with Rs 1.89 crore and short-term provisions of Rs 3.01 crore compared with Rs 1.52 crore.

The composition of financing cash flows differed from the year ended March 31, 2026. That year’s Rs 10.14 crore net financing inflow included Rs 9.50 crore of share-premium proceeds and Rs 49.73 lakh from issuing shares, alongside Rs 1.17 crore of long-term borrowing proceeds and Rs 45.56 lakh of short-term borrowing proceeds. The September 2026 half-year cash-flow statement reports no share-issue or share-premium proceeds, instead showing funding through short- and long-term borrowings.

Where did HOAC Foods invest cash during the half year?

HOAC Foods used Rs 3.68 crore in investing activities during the half year ended September 30, 2026, primarily for Rs 2.94 crore of capital work in progress and Rs 74.39 lakh of purchases of tangible and intangible assets. Capital work in progress refers to expenditure on assets that had not yet been recorded as completed property, plant and equipment at the reporting date.

The investing outflow was higher than the Rs 2.70 crore reported for the full year ended March 31, 2026. Payments for capital work in progress increased from Rs 1.67 crore in that year to Rs 2.94 crore in the six months to September 2026. Purchases of tangible and intangible assets were lower than the prior year’s Rs 1.03 crore, but the larger work-in-progress payment increased total investment cash use.

Property, plant and equipment stood at Rs 9.51 crore at September 30, 2026, up from Rs 6.07 crore at March 31, 2026. Within that total, capital work in progress rose to Rs 4.61 crore from Rs 1.67 crore, while tangible assets increased to Rs 4.84 crore from Rs 4.34 crore. The filing does not state when the Rs 4.61 crore of work in progress will be completed or put into use.

How did profit, working capital and cash balances change?

HOAC Foods ended September 30, 2026 with Rs 2.91 crore of cash and cash equivalents, compared with Rs 6.53 crore at March 31, 2026. The Rs 3.62 crore decline follows the cash-flow statement’s Rs 8.22 crore operating outflow, Rs 3.68 crore investment outflow and Rs 8.29 crore financing inflow. In contrast, cash increased by Rs 3.22 crore in the year ended March 31, 2026.

Inventory increased to Rs 20.63 crore at September 30 from Rs 13.60 crore at March 31, while trade receivables rose to Rs 13.70 crore from Rs 8.01 crore. Together, the balances increased by Rs 12.72 crore. This balance-sheet movement aligns with the cash-flow statement, which records Rs 7.02 crore used by inventory growth and Rs 5.69 crore used by the increase in trade receivables during the half year.

Reported earnings improved despite the operating cash outflow. Revenue from operations was Rs 43.19 crore for the half year ended September 30, 2026, compared with Rs 21.73 crore in the corresponding half year of 2025. Profit before tax increased to Rs 6.00 crore from Rs 2.65 crore, and profit attributable to equity shareholders increased to Rs 4.32 crore from Rs 1.95 crore. Finance costs, however, were Rs 37.39 lakh in the September 2026 half year, against Rs 45.15 lakh in the corresponding prior-year half year.

What happened to HOAC Foods’ QIP proceeds?

HOAC Foods’ auditor certificate states that Rs 9.23 crore of net proceeds from its Qualified Institutions Placement, or QIP, had been fully utilised by September 30, 2026. The certificate identifies Rs 7.85 crore for working-capital requirements and Rs 1.38 crore for general corporate purposes, with no unutilised balance. It says the difference between funds raised and actual funds received reflected Rs 76.70 lakh of issue-related expenses.

The financial-results notes say HOAC Foods allotted 4,97,250 equity shares on July 3, 2025 to qualified institutional buyers at Rs 201 per share, including a Rs 191 premium per share. That note puts the total amount raised through the QIP at Rs 9.99 crore. A separate utilisation table in the results lists Rs 5.54 crore of issue objects, all utilised, while the auditor certificate presents Rs 9.23 crore of net proceeds and its stated uses.

The cash-flow statement for the year ended March 31, 2026 records Rs 9.50 crore of proceeds from share premium, Rs 49.73 lakh from issuing shares and Rs 66.94 lakh of QIP expenses. No QIP proceeds or QIP expenses appear in the financing section for the half year ended September 30, 2026. The disclosed certificate confirms that the QIP’s net proceeds had no remaining balance at the September reporting date.

Conclusion

HOAC Foods combined higher revenue and profit with significant cash absorption during the half year ended September 30, 2026. Revenue nearly doubled to Rs 43.19 crore and profit before tax rose to Rs 6.00 crore, but higher inventory, receivables, other non-current assets and capital expenditure resulted in a Rs 3.62 crore cash decline. Borrowing proceeds of Rs 8.67 crore before interest payments supplied much of the funding for those outflows.

The next disclosures should show whether the Rs 20.63 crore inventory and Rs 13.70 crore receivables balances convert into operating cash, and whether Rs 4.61 crore of capital work in progress moves into completed assets. The filing gives no completion schedule for that work in progress, while the QIP auditor certificate says all Rs 9.23 crore of net QIP proceeds had been utilised by September 30, 2026.