Mafatlal H1 operating cash outflow reached ₹188.6 crore

Mafatlal Industries Limited reported negative operating cash flow of ₹188.6 crore in H1FY27 as a ₹239.4 crore working-capital outflow outweighed ₹25.0 crore of operating profit before working-capital changes, reducing cash and cash equivalents to ₹8.2 crore at Sep-26.

What caused Mafatlal’s negative H1FY27 operating cash flow?

Mafatlal’s negative H1FY27 operating cash flow followed a ₹239.4 crore adverse change in working capital. The cash-flow statement records operating profit before working-capital changes of ₹25.0 crore at Sep-26, after which cash generated from operations was negative ₹214.4 crore. It then reports direct taxes, refund or paid net, of ₹25.8 crore and net cash from operating activities of negative ₹188.6 crore.

The cash result differed from Mafatlal’s reported H1FY27 profit measures. It recorded profit before tax of ₹34.4 crore and profit after tax of ₹25.6 crore on revenue from operations of ₹1,736.5 crore. Adjustments for non-cash items and other investment or financial items were negative ₹9.4 crore, reducing the operating-profit measure used in the cash-flow statement to ₹25.0 crore.

The Sep-26 working-capital movement contrasts with positive ₹51.0 crore in the Mar-26 cash-flow statement and negative ₹168.1 crore at Mar-25. Net operating cash flow similarly changed from an inflow of ₹140.9 crore in FY26 to an outflow of ₹188.6 crore for the Sep-26 period, while FY25 had recorded an ₹83.6 crore outflow.

How did Mafatlal’s inventory and receivable balances change?

Mafatlal’s inventory and current trade-receivable balances both rose between Mar-26 and Sep-26. Inventories increased by ₹122.8 crore to ₹228.4 crore from ₹105.6 crore, while current trade receivables increased by ₹404.7 crore to ₹1,115.1 crore from ₹710.4 crore. Together, the two current-asset lines increased by ₹527.5 crore during the period.

Current assets increased by ₹296.4 crore to ₹1,454.7 crore at Sep-26 despite declines in cash balances. Cash and bank balance fell by ₹115.5 crore to ₹8.2 crore, matching the decrease in cash and cash equivalents in the cash-flow statement. Separately reported bank balance declined by ₹107.3 crore to ₹27.2 crore, while other current assets increased by ₹17.3 crore to ₹67.2 crore.

The Sep-26 balance followed an earlier increase in receivables during FY26. Current trade receivables rose by ₹231.0 crore from ₹479.4 crore at Mar-25 to ₹710.4 crore at Mar-26, before reaching ₹1,115.1 crore at Sep-26. Inventory increased by ₹8.3 crore during FY26, from ₹97.3 crore to ₹105.6 crore, followed by the ₹122.8 crore increase in the Sep-26 period.

How did Mafatlal’s cash position change during H1FY27?

Mafatlal’s cash and cash equivalents fell to ₹8.2 crore at Sep-26 from ₹123.7 crore at the beginning of the period, a decrease of ₹115.5 crore. Negative operating cash flow of ₹188.6 crore was partly offset by ₹65.1 crore of net cash from investing activities and ₹8.0 crore of net cash from financing activities.

The investing cash inflow at Sep-26 contrasts with a ₹35.5 crore net investing outflow in FY26. Financing activity also changed direction, with an ₹8.0 crore inflow at Sep-26 compared with outflows of ₹32.9 crore in FY26, ₹30.6 crore in FY25 and ₹23.1 crore in FY24. The presentation does not provide line-item explanations for either the investing or financing cash-flow totals.

Cash and cash equivalents at Sep-26 were also below ₹51.2 crore at Mar-25 and ₹182.2 crore at Mar-24. The cash-flow statement shows a ₹72.6 crore increase in cash and cash equivalents in FY26, following a ₹131.1 crore decrease in FY25. The H1FY27 decline of ₹115.5 crore therefore followed both an annual increase and an annual decrease in the preceding reported periods.

Did Mafatlal’s liabilities and borrowings rise with the asset build?

Mafatlal’s current liabilities increased by ₹301.6 crore to ₹1,229.0 crore at Sep-26 from ₹927.4 crore at Mar-26, alongside the reported ₹239.4 crore working-capital outflow. Trade payables increased by ₹354.3 crore to ₹1,068.5 crore, while other financial liabilities declined by ₹87.1 crore to ₹67.3 crore over the same period.

Current borrowings increased by ₹23.4 crore to ₹51.0 crore at Sep-26 from ₹27.6 crore at Mar-26. Non-current borrowings declined by ₹0.9 crore to ₹32.2 crore, making the total of the two reported borrowing lines ₹83.2 crore at Sep-26, compared with ₹60.7 crore at Mar-26. Finance cost was ₹4.4 crore in H1FY27, compared with ₹8.7 crore for FY26.

Total assets increased by ₹370.8 crore to ₹2,120.8 crore at Sep-26, while total equity increased by ₹53.2 crore to ₹826.2 crore. Non-current assets increased by ₹74.4 crore to ₹666.1 crore, including a ₹43.8 crore increase in other investments to ₹433.3 crore and a ₹47.8 crore increase in other financial assets to ₹60.2 crore.

Conclusion

Mafatlal’s Sep-26 cash flow shows that H1FY27 reported profit did not translate into operating cash generation. The ₹239.4 crore working-capital outflow exceeded the ₹25.0 crore operating-profit measure before working-capital changes, producing negative operating cash flow of ₹188.6 crore. Inventory and current trade receivables increased by a combined ₹527.5 crore, while trade payables increased by ₹354.3 crore.

What to watch next is whether the elevated Sep-26 inventory of ₹228.4 crore and current trade receivables of ₹1,115.1 crore change in the following reported balance sheet, and whether cash and cash equivalents move from ₹8.2 crore. The presentation does not disclose a working-capital target, collection plan or cash-flow milestone that would quantify the expected timing of any movement.