Orient Cables profits lag operating cash as working capital rises

Orient Cables reported profit after tax in FY2024, FY2025, FY2026 and the three months ended June 30, 2026, but operating cash was negative in the latter three periods. In FY2026, Rs 53.561 crore of profit after tax accompanied Rs 26.644 crore of cash used in operating activities, after inventory and receivables absorbed Rs 90.195 crore.

Why do Orient Cables profits lag operating cash?

Orient Cables’ profits lag operating cash because movements in working capital have exceeded cash generated before those movements and tax payments. Working capital is the cash tied up in short-term operating assets and liabilities, including inventory, receivables and payables. The company’s operating profit before working-capital changes rose from Rs 62.273 crore in FY2024 to Rs 105.169 crore in FY2026, while operating cash changed from an inflow to an outflow.

The deterioration occurred despite higher reported profit and revenue. Revenue from operations increased from Rs 65.7767 crore in FY2024 to Rs 82.4958 crore in FY2025 and Rs 117.1654 crore in FY2026, while operating cash moved from an inflow of Rs 42.181 crore in FY2024 to outflows of Rs 9.785 crore and Rs 26.644 crore. For the three months ended June 30, 2026, Orient Cables reported Rs 32.783 crore of profit after tax but used Rs 11.764 crore in operating activities.

How did inventory and receivables absorb Orient Cables’ funds?

Inventory and trade and other receivables absorbed Rs 157.704 crore in the three months ended June 30, 2026. The cash-flow statement records an inventory outflow of Rs 56.726 crore and a trade and other receivables outflow of Rs 100.978 crore. An inflow of Rs 92.850 crore from trade payables and other current liabilities partly offset those movements.

That quarter’s operating profit before working-capital changes was Rs 56.762 crore. After inventory, receivables, payables and a Rs 0.131 crore provision movement, cash used in operations was Rs 7.962 crore; net income tax paid of Rs 3.802 crore produced operating cash use of Rs 11.764 crore. The cash-flow statement therefore identifies working-capital movements, rather than an accounting loss, as the immediate driver of the outflow.

FY2026 followed the same pattern at an annual scale. Inventory absorbed Rs 39.828 crore and trade and other receivables absorbed Rs 50.367 crore, while trade payables and other current liabilities used another Rs 23.535 crore. These movements, partly offset by a Rs 0.559 crore provisions inflow, turned Rs 105.169 crore of operating profit before working-capital changes into Rs 8.002 crore of cash used in operations before tax.

FY2025 differed in the direction of the payables movement but still produced negative operating cash. Inventory used Rs 32.400 crore and trade and other receivables used Rs 48.327 crore, partly offset by Rs 5.167 crore generated from trade payables and other current liabilities. After Rs 20.995 crore of net income tax paid, operating cash use was Rs 9.785 crore, compared with an operating cash inflow of Rs 42.181 crore in FY2024.

How large are Orient Cables’ working-capital balances?

Orient Cables held Rs 463.212 crore in inventory and trade receivables at June 30, 2026, equal to about 89% of Rs 519.055 crore of total current assets. Inventory was Rs 169.308 crore and trade receivables were Rs 293.904 crore. The concentration means changes in the collection or conversion of these two balances have a direct bearing on operating cash flow.

The combined inventory and trade-receivables balance increased by Rs 95.778 crore in the three months from March 31, 2026, when it was Rs 367.434 crore. At March 31, 2026, inventory was Rs 112.582 crore and trade receivables were Rs 254.852 crore. The balance was Rs 234.922 crore at March 31, 2025, comprising Rs 72.754 crore of inventory and Rs 162.168 crore of trade receivables.

The longer balance-sheet comparison also shows expansion from March 31, 2024. Inventory rose from Rs 40.353 crore at that date to Rs 112.582 crore at March 31, 2026, while trade receivables increased from Rs 136.409 crore to Rs 254.852 crore. For operating cash to improve while sales continue, growth in these balances would need to be contained relative to cash collected from customers and cash released from stock.

How was the cash requirement reflected in financing flows?

Orient Cables’ financing cash flows included material short-term borrowing proceeds during periods when operating and investing cash flows were negative. In FY2026, proceeds from short-term borrowings were Rs 57.490 crore and proceeds from supplier finance arrangements were Rs 54.973 crore. Supplier finance arrangements are arrangements under which a supplier-related obligation is financed through a third party.

Net cash generated from financing activities was Rs 101.661 crore in FY2026, while operating activities used Rs 26.644 crore and investing activities used Rs 63.575 crore. Financing cash flow also included Rs 8.279 crore of long-term borrowing proceeds and Rs 18.205 crore of interest paid. This does not establish the use of each borrowing rupee, but the cash-flow statement shows financing inflows alongside cash use in operations and investment.

The June 2026 quarter included Rs 64.454 crore of short-term borrowing proceeds and a Rs 38.252 crore repayment of supplier finance arrangements. After lease payments, a Rs 1.937 crore long-term borrowing repayment and Rs 7.783 crore of interest paid, net financing cash generated was Rs 15.966 crore. Current borrowings stood at Rs 224.666 crore at June 30, 2026, compared with Rs 198.464 crore at March 31, 2026 and Rs 86.001 crore at March 31, 2025.

What would need to happen for operating cash to recover?

Orient Cables would need cash generated before working-capital movements to exceed the cash absorbed by inventory, receivables, other operating balances and income tax. In FY2026, Rs 105.169 crore of operating profit before working-capital changes was reduced by Rs 113.730 crore of net working-capital outflows after including payables and provisions. Net income tax paid of Rs 18.642 crore then resulted in Rs 26.644 crore of operating cash use.

The June 2026 quarter provides a more immediate measure of this condition. The Rs 157.704 crore combined cash outflow for inventory and receivables exceeded the Rs 92.850 crore inflow from payables and other current liabilities, despite Rs 56.762 crore of operating profit before working-capital changes. The supplied financial information does not disclose a working-capital reduction plan, leaving future inventory levels, receivable collections and current borrowings as unresolved measures in subsequent statements.

Conclusion

Orient Cables’ annual profit after tax increased from Rs 40.069 crore in FY2024 to Rs 53.561 crore in FY2026, but annual operating cash changed from a Rs 42.181 crore inflow to a Rs 26.644 crore outflow. The financial statements attribute the gap principally to cash absorbed by inventory and receivables, with financing flows including short-term borrowing proceeds and supplier-finance movements.

The next financial updates should show whether the June 30, 2026 inventory balance of Rs 169.308 crore and trade-receivables balance of Rs 293.904 crore stabilise or reverse, and whether current borrowings change from Rs 224.666 crore. No working-capital plan is disclosed in the supplied extract, so later cash-flow statements will provide the direct evidence on whether reported profit converts into operating cash.