Indo SMC reports Rs 9.89 crore operating cash outflow in H1

Indo SMC Limited used Rs 9.89 crore in operating activities in the half year ended September 30, 2026, despite reporting Rs 24.52 crore of profit before tax, as inventory and trade receivables together absorbed Rs 42.60 crore. Cash and cash equivalents fell by Rs 12.02 crore to Rs 41.54 crore.

Why did Indo SMC report an operating cash outflow?

Indo SMC reported an operating cash outflow because working-capital movements exceeded cash generated from profit and non-cash adjustments. Operating profit before working-capital changes was Rs 26.14 crore for the half year ended September 30, 2026, but cash generated from operations was negative Rs 7.07 crore before income-tax payments.

Inventory increased by Rs 25.86 crore and trade receivables increased by Rs 16.75 crore during the six-month period, creating a combined Rs 42.60 crore cash requirement. Short-term loans and advances used a further Rs 0.99 crore, while other non-current assets and other current assets used Rs 2.66 crore and Rs 0.30 crore, respectively.

Trade payables increased by Rs 12.58 crore, partly offsetting the cash absorbed by current assets, and other current liabilities increased by Rs 0.75 crore. After income tax paid of Rs 2.82 crore, Indo SMC recorded net cash used in operating activities of Rs 9.89 crore under the indirect method set out in Accounting Standard 3.

How did Indo SMC's working capital change?

Indo SMC's inventory balance rose to Rs 110.93 crore at September 30, 2026 from Rs 85.08 crore at March 31, 2026, a Rs 25.86 crore increase matching the inventory movement in the cash-flow statement. Trade receivables increased to Rs 52.50 crore from Rs 35.75 crore, a rise of Rs 16.75 crore.

The two balance-sheet increases came as revenue from operations reached Rs 216.10 crore in the half year ended September 30, 2026, compared with Rs 197.20 crore in the half year ended March 31, 2026. Revenue therefore increased by Rs 18.91 crore between those reported half-year periods, while inventory and receivables increased by a combined Rs 42.60 crore.

Current liabilities increased to Rs 79.59 crore at September 30 from Rs 64.98 crore at March 31, a rise of Rs 14.61 crore. Trade payables due to parties other than micro and small enterprises rose to Rs 22.82 crore from Rs 10.90 crore, while short-term borrowings were Rs 42.35 crore, compared with Rs 42.45 crore.

Was Indo SMC profitable despite the cash outflow?

Indo SMC was profitable in the half year ended September 30, 2026, reporting profit before tax of Rs 24.52 crore and profit for the period of Rs 20.18 crore. The negative operating cash flow reflects the timing and scale of reported working-capital changes rather than a pre-tax loss.

Revenue from operations was Rs 216.10 crore, compared with Rs 112.54 crore in the half year ended September 30, 2025 and Rs 197.20 crore in the half year ended March 31, 2026. Total income, including Rs 1.94 crore of other income, was Rs 218.04 crore in the latest half year.

Profit before tax was below Rs 26.50 crore in the half year ended March 31, 2026 even as revenue rose by Rs 18.91 crore. Total expenses increased to Rs 193.53 crore from Rs 171.37 crore, while cost of material consumed rose to Rs 194.21 crore from Rs 165.80 crore.

The segment statement reported Rs 16.27 crore of segment result from CT PT Products in the latest half year, compared with Rs 16.64 crore in the March 2026 half year. SMC Products contributed Rs 8.64 crore versus Rs 10.55 crore, while FRP Products contributed Rs 1.88 crore versus Rs 1.81 crore.

How did the operating outflow affect Indo SMC's cash balance?

Indo SMC's cash and cash equivalents fell to Rs 41.54 crore at September 30, 2026 from an opening balance of Rs 53.55 crore, a net decrease of Rs 12.02 crore. The operating outflow of Rs 9.89 crore was accompanied by Rs 1.74 crore used in investing activities and Rs 0.39 crore used in financing activities.

Investing activities included Rs 3.33 crore spent on property, plant and equipment, partly offset by Rs 1.59 crore of interest income received. Property, plant and equipment on the balance sheet stood at Rs 22.57 crore at September 30, compared with Rs 21.03 crore at March 31, while capital work-in-progress was Rs 9.09 crore against Rs 8.16 crore.

Financing activities included Rs 2.28 crore of interest paid and Rs 1.99 crore of proceeds from long-term borrowings. There were no receipts from issue of share capital in the latest half year, whereas the year ended March 31, 2026 included Rs 84.95 crore of net receipts from issue of share capital.

How does Indo SMC's latest cash flow compare with the prior year?

Indo SMC's Rs 9.89 crore operating outflow for the six months ended September 30, 2026 was below the Rs 34.77 crore operating outflow reported for the year ended March 31, 2026, although the periods cover six and 12 months, respectively. In the full year, inventory absorbed Rs 67.85 crore while trade receivables released Rs 11.39 crore of cash.

The direction of the receivables movement changed in the latest half year, with a Rs 16.75 crore cash use from higher receivables versus a Rs 11.39 crore cash inflow from lower receivables in the year ended March 31, 2026. Inventory remained a cash use in both periods, with the latest Rs 25.86 crore increase below the full-year Rs 67.85 crore increase.

Net cash flow for the year ended March 31, 2026 was an increase of Rs 50.67 crore, compared with a Rs 12.02 crore decrease in the latest half year. The earlier full-year result included Rs 92.12 crore of financing cash inflow, while the half year ended September 30, 2026 recorded a Rs 0.39 crore financing outflow.

Conclusion

Indo SMC combined Rs 24.52 crore of pre-tax profit with a Rs 9.89 crore operating cash outflow in the half year ended September 30, 2026 because larger inventory and trade receivables absorbed Rs 42.60 crore. Higher trade payables offset part of that requirement, but cash and cash equivalents still declined to Rs 41.54 crore.

The next disclosed item to watch is use of initial public offering proceeds. Indo SMC allocated Rs 52.00 crore to working-capital requirements and had used Rs 48.18 crore by September 30, 2026; total unutilised proceeds were Rs 33.82 crore, while the company separately reported Rs 34.44 crore held in fixed deposits.