Kitex Garments reports Rs 107.96 crore cash outflow from operations

Kitex Garments Limited reported a Rs 107.96 crore standalone cash outflow from operating activities for the half year ended September 30, 2026, despite profit before tax of Rs 48.40 crore. Trade and other receivables absorbed Rs 104.41 crore and inventories absorbed Rs 73.97 crore, exceeding the Rs 19.63 crore cash contribution from payables and provisions.

Why did Kitex Garments report a cash outflow from operations?

Kitex Garments reported the operating cash outflow because working-capital increases exceeded operating profit and the cash released through payables. Standalone operating profit before working-capital changes was Rs 51.30 crore for the half year ended September 30, 2026, compared with Rs 32.99 crore in the corresponding half year ended September 30, 2025. Cash used in operations before taxes was Rs 107.45 crore, and net direct taxes paid of Rs 0.50 crore took the outflow to Rs 107.96 crore.

The latest result reversed an operating cash inflow of Rs 21.55 crore in the half year ended September 30, 2025. Standalone profit before tax declined slightly to Rs 48.40 crore from Rs 49.74 crore, while operating cash flow changed by Rs 129.51 crore. The cash-flow statement shows that the main difference between the two periods was the movement in receivables, inventories, and payables and provisions.

How did receivables and inventories affect Kitex Garments cash flow?

Receivables and inventories together used Rs 178.38 crore of standalone cash during the half year ended September 30, 2026. The cash-flow statement records a Rs 104.41 crore increase in trade and other receivables, against a Rs 16.85 crore decrease in the corresponding 2025 period. It also records a Rs 73.97 crore increase in inventories, compared with a Rs 7.07 crore decrease a year earlier.

The standalone balance sheet records the build-up from March 31, 2026 to September 30, 2026. Trade receivables rose to Rs 167.41 crore from Rs 122.37 crore, while inventories increased to Rs 204.44 crore from Rs 130.47 crore. Other financial assets rose to Rs 169.49 crore from Rs 107.88 crore, a movement included within the broader trade-and-other-receivables cash-flow category.

Trade, other payables and provisions supplied Rs 19.63 crore of cash in the latest half year, partly offsetting the cash absorbed by current assets. The same category used Rs 20.14 crore in the prior-year half year. The Rs 178.38 crore combined cash requirement from receivables and inventories was more than three times the Rs 51.30 crore operating profit before working-capital changes in the latest period.

How did Kitex Garments fund its working-capital requirement?

Kitex Garments partly funded the requirement through a Rs 92.61 crore net increase in working-capital loans during the half year ended September 30, 2026. This exceeded the Rs 43.32 crore net movement reported in the half year ended September 30, 2025. After Rs 7.07 crore of interest paid and Rs 0.23 lakh of dividend or dividend-distribution-tax payments, financing activities generated Rs 85.54 crore of cash.

Standalone current borrowings stood at Rs 270.28 crore at September 30, 2026, up from Rs 164.04 crore at March 31, 2026. The Rs 106.24 crore increase in current borrowings occurred as non-current borrowings declined to Rs 31.06 crore from Rs 44.69 crore. The cash-flow statement separately identifies the financing inflow as a net movement in working-capital loans.

Investing activities also used Rs 17.27 crore during the latest half year. Payments for property, plant and equipment, intangible assets, capital work-in-progress and capital advances were Rs 4.27 crore, while bank balances not considered cash equivalents used Rs 11.02 crore. Standalone cash and cash equivalents fell to Rs 59.19 crore at September 30, 2026 from Rs 98.10 crore at the start of the period.

How do Kitex Garments standalone and consolidated cash flows compare?

Kitex Garments recorded a smaller consolidated operating cash outflow of Rs 28.76 crore than its Rs 107.96 crore standalone outflow for the half year ended September 30, 2026. Consolidated operating profit before working-capital changes was Rs 58.54 crore. A Rs 48.39 crore increase in receivables and an Rs 84.89 crore inventory increase were partly offset by a Rs 46.49 crore rise in payables and provisions.

The comparable consolidated period generated an operating cash inflow of Rs 215.33 crore for the half year ended September 30, 2025. In that period, trade and other payables and provisions generated Rs 216.05 crore, compared with Rs 46.49 crore in the latest half year. Consolidated operating profit before working-capital changes rose to Rs 58.54 crore from Rs 18.16 crore, but the cash-flow result moved in the opposite direction as working-capital movements changed.

Consolidated investing cash use declined to Rs 71.71 crore from Rs 260.73 crore. Payments for property, plant and equipment, intangible assets, capital work-in-progress and capital advances declined to Rs 59.90 crore from Rs 248.31 crore. Consolidated financing activities generated Rs 56.53 crore, including Rs 133.71 crore from net working-capital loan movement, and consolidated cash and cash equivalents ended at Rs 71.22 crore.

What disclosed corporate matter could affect Kitex Garments next?

Kitex Garments has a proposed demerger involving the textile business of Kitex Childrenswear Limited. The board approved the scheme in February 2025 under Sections 230 to 232 of the Companies Act, 2013. The filing states that the demerger will take effect after the necessary regulatory approvals are obtained.

The September 30, 2026 filing identifies infant and kids apparel manufacturing as the Group's only reportable segment. It also says the Group was already compliant with the basic-wage criteria under the New Labour Codes and did not expect a material impact, while it would monitor finalisation of state rules. No timetable or financial effect for the proposed demerger is disclosed in the filing.

Conclusion

The half-year figures show that higher working-capital balances had a materially different cash effect from reported standalone profit. Receivables and inventories consumed Rs 178.38 crore, while financing cash included a Rs 92.61 crore net increase in working-capital loans and period-end standalone cash and cash equivalents were Rs 59.19 crore.

The next disclosed item to watch is the proposed demerger of the textile business of Kitex Childrenswear Limited into Kitex Garments. The scheme, approved by the board in February 2025, remains subject to the necessary regulatory approvals before it can take effect.