Lloyds Engineering Works Limited cash outflow follows profit rise

Lloyds Engineering Works reported Rs 44.54 crore of net cash used in operating activities for the half year ended September 30, 2026, despite reporting Rs 126.88 crore of consolidated profit before tax. Working-capital movements reduced pre-tax operating cash generation, while direct taxes paid of Rs 38.29 crore increased the outflow.

Why did Lloyds Engineering Works report negative operating cash flow?

Lloyds Engineering Works reported negative operating cash flow because Rs 146.69 crore of operating profit before working-capital changes became Rs 6.25 crore of cash used in operations, before direct taxes paid of Rs 38.29 crore. The resulting net cash used in operating activities was Rs 44.54 crore for the half year ended September 30, 2026.

The cash-flow statement records movements in working capital, including trade receivables, inventories, current and non-current financial assets, bank balances, borrowings and liabilities. These movements created the difference between operating cash flow and the Rs 126.88 crore of profit before tax, which was Rs 49.99 crore above Rs 76.89 crore in the half year ended September 30, 2025.

The operating cash outflow narrowed by Rs 332.98 crore from the prior-year half year, although direct tax payments rose by Rs 27.04 crore. In the half year ended September 30, 2025, cash used in operations before tax was Rs 366.27 crore, compared with Rs 6.25 crore in the latest period.

How did Lloyds Engineering Works' profit compare with revenue and segments?

Lloyds Engineering Works increased revenue from operations to Rs 1,120.70 crore in the half year ended September 30, 2026 from Rs 533.67 crore a year earlier, while profit before tax increased to Rs 126.88 crore from Rs 76.89 crore. Total income, which includes other income, reached Rs 1,147.80 crore, compared with Rs 550.66 crore in the comparable period.

The engineering segment generated Rs 1,120.62 crore of gross revenue and Rs 144.50 crore of segment result during the latest half year. Electrical segment revenue was Rs 89.87 crore, but the segment recorded a Rs 11.14 crore loss, widening from a Rs 3.87 crore loss in the half year ended September 30, 2025.

Net profit after tax before the share of associates was Rs 98.48 crore, compared with Rs 60.38 crore a year earlier. Lloyds Engineering Works recognised Rs 27.52 crore as its share in profit after tax from associates, taking consolidated profit after tax including associates to Rs 126.00 crore, against Rs 84.38 crore in the previous-year period.

Finance cost rose to Rs 12.92 crore from Rs 6.30 crore, while depreciation and amortisation increased to Rs 18.96 crore from Rs 8.94 crore. These items formed part of the reconciliation from profit before tax to Rs 146.69 crore of operating profit before working-capital changes, but did not prevent an operating cash outflow.

Where did Lloyds Engineering Works invest and obtain cash?

Lloyds Engineering Works used Rs 71.79 crore in investing activities and generated Rs 165.94 crore from financing activities during the half year ended September 30, 2026. Capital expenditure absorbed Rs 99.77 crore, inter-corporate deposits used Rs 46.90 crore and investments in shares used Rs 136.73 crore.

Receipts from fixed deposits of Rs 191.53 crore and interest received of Rs 20.08 crore partly offset the investing uses. The net investing outflow was Rs 71.79 crore, lower than Rs 136.70 crore in the half year ended September 30, 2025, when capital expenditure was Rs 55.85 crore and investment in shares was Rs 53.41 crore.

Financing inflows included Rs 135.81 crore from long-term borrowings and Rs 134.16 crore from the issue of equity shares. Repayment of borrowings used Rs 59.79 crore, dividends paid used Rs 36.93 crore and interest paid used Rs 6.88 crore, leaving Rs 165.94 crore of net financing cash generated.

The combined cash flows produced a Rs 49.61 crore increase in cash and cash equivalents, reversing a Rs 4.40 crore decrease a year earlier. Cash and cash equivalents in the cash-flow statement stood at Rs 135.03 crore at September 30, 2026, compared with Rs 1.98 crore at September 30, 2025.

What balance-sheet changes accompanied the cash movements?

Lloyds Engineering Works reported total assets of Rs 4,445.73 crore at September 30, 2026, compared with Rs 2,369.08 crore at March 31, 2026. Non-current assets increased to Rs 2,055.42 crore from Rs 700.32 crore, while current assets rose to Rs 2,390.31 crore from Rs 1,668.76 crore.

Several current-asset balances were higher at the half-year date: trade receivables were Rs 424.42 crore against Rs 239.91 crore, loans were Rs 282.63 crore against Rs 131.02 crore, and other current financial assets were Rs 369.58 crore against Rs 77.25 crore. Inventories increased to Rs 466.74 crore from Rs 432.75 crore.

Total equity increased to Rs 3,005.18 crore from Rs 1,683.31 crore, including non-controlling interest of Rs 612.18 crore compared with Rs 12.46 crore at March 31, 2026. Total liabilities were Rs 1,440.55 crore, against Rs 685.77 crore, as current borrowings rose to Rs 221.40 crore from Rs 24.63 crore and non-current borrowings rose to Rs 114.95 crore from Rs 9.20 crore.

Lloyds Engineering Works acquired a 51.70% shareholding in Steel Infra Solutions Company Limited by September 30, 2026, making it a subsidiary. The transaction included the allotment of 7,00,42,458 Lloyds Engineering Works shares at Rs 71.25 each for non-cash consideration, alongside cash purchases of 42,44,784 Steel Infra Solutions Company Limited shares.

Conclusion

Lloyds Engineering Works reported substantially higher first-half revenue and profit, with profit before tax reaching Rs 126.88 crore and consolidated profit after tax including associates reaching Rs 126.00 crore. However, profit did not translate into operating cash during the period, as working-capital movements and Rs 38.29 crore of direct tax payments resulted in Rs 44.54 crore of cash used in operating activities.

The next issues to watch are conversion of the Rs 4,591.67 crore consolidated order book into revenue and cash, and progress on the proposed Scheme of Merger by Absorption after court-convened shareholder and unsecured-creditor meetings on October 16, 2026. Lloyds Engineering Works also disclosed shareholder approval on September 25, 2026 to increase its employee stock-option pool from 4.40 crore options to 7.35 crore options.