Veegaland Developers Limited used Rs 74.26 crore in FY26 operations

Veegaland Developers Limited remained profitable in FY26 but used Rs 74.26 crore in operating activities, compared with an outflow of Rs 44.00 crore in FY25. Profit after tax rose to Rs 26.61 crore from Rs 20.43 crore, while cash was absorbed by inventory, trade receivables, other financial assets and restricted bank balances.

Why did Veegaland Developers use Rs 74.26 crore in FY26 operations despite profit?

Veegaland Developers used Rs 74.26 crore of operating cash because working-capital investment and income-tax payments outweighed the cash generated before those movements. Profit before tax increased to Rs 36.20 crore in FY26 from Rs 28.27 crore in FY25, while operating profit before working-capital changes rose to Rs 43.17 crore from Rs 32.46 crore.

The company prepares its cash-flow statement under the indirect method in Indian Accounting Standard 7, or Ind AS 7. This method starts with profit before tax and adjusts for non-cash items, finance costs and changes in operating assets and liabilities. Veegaland Developers recorded Rs 58.90 crore of cash used in operations before tax in FY26 and paid Rs 15.36 crore in income tax, producing the Rs 74.26 crore net operating outflow.

The divergence occurred alongside higher reported activity. Revenue from operations increased to Rs 250.98 crore in FY26 from Rs 192.38 crore in FY25, with Rs 257.58 crore of revenue attributed to ongoing projects and Rs 3.39 crore from completed projects. The company recognises revenue on ongoing real-estate projects over time using a cost-based input method, which measures progress against estimated total project cost and does not itself establish that customer cash has been collected.

Which assets absorbed Veegaland Developers' FY26 operating cash?

Inventory was the largest disclosed use of operating cash, absorbing Rs 68.83 crore in FY26, compared with Rs 67.58 crore in FY25. Closing inventory rose to Rs 287.97 crore at March 31, 2026 from Rs 219.14 crore a year earlier. Land held for project construction increased by Rs 35.61 crore to Rs 129.30 crore, while project work-in-progress increased by Rs 35.41 crore to Rs 158.67 crore.

Project work-in-progress includes land, construction cost, allocated interest and allocated expenses incurred on real-estate developments. The company measures land, work-in-progress and completed-unit stock at the lower of cost and net realisable value. Its stated real-estate project operating cycle can run for up to four years, depending on project size, development complexity and approvals, so this inventory requires conversion through construction, sales milestones and collections to become cash.

Trade receivables consumed Rs 34.53 crore of cash-flow capacity during FY26 and closed at Rs 45.15 crore, up from Rs 27.40 crore at March 31, 2025. Of FY26 receivables, Rs 40.05 crore was outstanding for six months to one year and Rs 5.10 crore for one to two years. The FY26 ageing schedule showed no receivables classified as not due or outstanding for more than two years.

Parentheses indicate cash outflows. The Rs 51.30 crore increase in other liabilities partly funded the asset build-up, but it did not offset the combined cash requirements of inventory, receivables, other financial assets, other assets and bank balances.

Did customer advances offset Veegaland Developers' cash requirements?

Customer advances partly offset, but did not eliminate, Veegaland Developers' FY26 cash requirement. Contract liabilities, which are customer payments received before the related performance obligation is satisfied, increased to Rs 101.34 crore at March 31, 2026 from Rs 46.10 crore at March 31, 2025. This increase was the main component of the Rs 51.30 crore rise in other liabilities reported in the cash-flow statement.

Customer-related assets rose at the same time. Contract assets, described as unbilled revenue, rose to Rs 29.08 crore from Rs 14.20 crore, and trade receivables rose by Rs 17.75 crore on the balance sheet. A contract asset is consideration earned that remains conditional on an event other than the passage of time, whereas a receivable is an unconditional right to consideration for which only time is required before payment is due.

The combined balance of trade receivables, contract assets and contract liabilities increased to Rs 175.56 crore at March 31, 2026 from Rs 87.70 crore a year earlier. Contract liabilities exceeded the Rs 74.22 crore combined balance of trade receivables and contract assets at FY26 end. However, the balance-sheet comparison does not negate the operating cash outflow because Rs 68.83 crore of inventory growth and Rs 33.20 crore of other-financial-asset growth also required funding.

What restrictions and financing flows affected Veegaland Developers' cash?

Other financial assets increased to Rs 75.64 crore at March 31, 2026 from Rs 25.44 crore at March 31, 2025. The FY26 balance included Rs 44.63 crore of non-current financial assets, primarily fixed deposits, and Rs 29.08 crore of contract assets. Of the fixed deposits, Rs 44.28 crore with original maturities above 12 months was created from escrow-account balances under a Kerala Real Estate Regulatory Authority circular dated August 28, 2025.

Veegaland Developers reported Rs 20.53 crore of cash and cash equivalents at March 31, 2026, compared with Rs 36.68 crore a year earlier. The company disclosed that Rs 17.53 crore of closing cash and cash equivalents was held in escrow accounts under the Real Estate (Regulation and Development) Act, 2016. These balances must be used for land and construction of the relevant project and can be drawn based on independent certification of actual project-cost progress.

Investing activities used Rs 19.80 crore in FY26, including Rs 21.03 crore spent on property, plant, equipment and intangible assets. Financing activities generated Rs 77.90 crore, comprising Rs 175.00 crore recorded as an increase in borrowings and Rs 5.45 crore of finance costs paid. The reported financing inflow partly covered operating and investing outflows, yet cash and cash equivalents fell by Rs 16.16 crore during FY26.

What must change for Veegaland Developers' operating cash conversion to improve?

Veegaland Developers' operating cash conversion requires land and work-in-progress to translate into project progress, customer billings and collections, while contract assets and receivables must convert to cash. At March 31, 2026, the company had Rs 399.60 crore of transaction price allocated to unsatisfied or partly satisfied performance obligations. It expects to recognise Rs 158.88 crore within zero to one year and Rs 373.10 crore within zero to three years, based on project completion dates under the Real Estate (Regulation and Development) Act, 2016.

The timing of that conversion depends on construction progress, customer milestone payments, project approvals and revisions to estimated costs. Veegaland Developers measures over-time revenue using actual project cost, including land and finance cost, against total estimated project cost. The company reviews progress estimates periodically and accounts for revisions prospectively, making future revenue recognition and working-capital movements dependent on execution of those projects.

Conclusion

Veegaland Developers' FY26 financial information shows that higher profit did not translate into operating cash generation. Profit after tax increased by Rs 6.19 crore, but the operating cash outflow widened by Rs 30.26 crore as the company invested in land and project work-in-progress and carried higher receivables, contract assets, fixed deposits and other financial assets.

The next financial update should show whether the disclosed Rs 399.60 crore of remaining performance obligations converts into revenue and collections within the stated completion bands. It should also show whether inventory, receivables and escrow-linked deposits decline relative to customer contract liabilities, and whether operating cash use reduces as projects progress.