Metal Coatings reports Rs 2.68 crore operating cash outflow

Metal Coatings (India) Limited reported a Rs 2.68 crore net cash outflow from operating activities for the half year ended September 30, 2026, compared with a Rs 5.78 crore inflow a year earlier. A Rs 3.66 crore outflow from working-capital and related movements outweighed Rs 1.41 crore of operating profit before those changes.

What caused Metal Coatings' operating cash outflow?

Metal Coatings' operating cash outflow resulted principally from working-capital and related movements that used Rs 3.66 crore in the half year ended September 30, 2026. This contrasted with a Rs 4.77 crore cash contribution from those movements in the half year ended September 30, 2025, while operating profit before working-capital changes was almost unchanged at Rs 1.41 crore against Rs 1.42 crore.

The half-year profit before tax was Rs 1.61 crore, down from Rs 1.69 crore a year earlier. The company added back Rs 0.27 crore of depreciation and Rs 0.01 crore of finance cost, while deducting Rs 0.34 crore of capital gain on mutual-fund sales, Rs 0.13 crore of rental income and Rs 0.0031 crore of interest income to arrive at operating profit before working-capital changes.

An increase in sundry debtors used Rs 1.36 crore of cash, while an increase in inventories used Rs 0.69 crore. Other current assets consumed Rs 0.67 crore, current liabilities fell by Rs 0.88 crore and short- and long-term provisions fell by Rs 0.15 crore. Other comprehensive income contributed Rs 0.09 crore, but did not offset the listed cash uses.

Cash generated from operations consequently turned negative at Rs 2.24 crore, against positive Rs 6.19 crore in the prior-year half. Tax paid was Rs 0.44 crore, compared with Rs 0.41 crore a year earlier, resulting in the reported Rs 2.68 crore net operating cash outflow despite profit before tax remaining positive.

How did Metal Coatings' cash flows compare with last year?

Metal Coatings' net operating cash flow changed by Rs 8.46 crore year on year, moving from a Rs 5.78 crore inflow in the half year ended September 30, 2025 to a Rs 2.68 crore outflow in the latest half. In the earlier period, debtors released Rs 7.57 crore, inventories released Rs 2.98 crore and other current assets released Rs 6.09 crore of cash.

Investing activities generated Rs 4.12 crore in the latest half, compared with an outflow of Rs 3.33 crore a year earlier. The current-period investing inflow included Rs 3.65 crore of net proceeds from sales of investments, Rs 0.34 crore of capital gain on mutual-fund sales, Rs 0.13 crore of rental income and Rs 0.0031 crore of interest income.

Financing activities used Rs 1.47 crore during the six months to September 30, 2026, lower than the Rs 2.35 crore used in the corresponding prior-year period. The reported outflows were Rs 0.73 crore for dividend paid, Rs 0.73 crore for repayment of borrowings and Rs 0.01 crore for interest paid. Metal Coatings said the final dividend for financial year 2025-26 was Rs 1 per share and was paid during the September 2026 quarter.

The three cash-flow categories produced a Rs 0.03 crore net cash outflow in the latest half, versus a Rs 0.10 crore net cash inflow a year earlier. Cash and cash equivalents were Rs 7.44 lakh at September 30, 2026, compared with Rs 10.85 lakh at March 31, 2026, according to the cash-flow statement.

Did Metal Coatings remain profitable despite negative operating cash flow?

Metal Coatings remained profitable in the half year ended September 30, 2026, with profit before tax of Rs 1.61 crore and net profit of Rs 1.16 crore. These were below Rs 1.69 crore and Rs 1.31 crore, respectively, in the half year ended September 30, 2025, even as revenue from operations increased to Rs 78.28 crore from Rs 74.01 crore.

Total income rose to Rs 78.78 crore from Rs 74.64 crore, while total expenses increased to Rs 77.17 crore from Rs 72.96 crore. Cost of materials consumed increased to Rs 63.32 crore from Rs 61.23 crore, employee-benefit expense rose to Rs 4.03 crore from Rs 3.72 crore, and other expenses increased to Rs 9.77 crore from Rs 7.93 crore.

The quarter ended September 30, 2026 contributed Rs 0.55 crore of profit before tax and Rs 0.39 crore of net profit, compared with Rs 1.05 crore and Rs 0.77 crore in the quarter ended June 30, 2026. Basic and diluted earnings per share for the half year were Rs 1.59, below Rs 1.78 in the comparable half of 2025.

Metal Coatings reported a single operating segment under Indian Accounting Standard 108, or Ind AS 108, and therefore did not provide segment-level profit or cash-flow disclosures. Its total comprehensive income was Rs 1.23 crore for the half year ended September 30, 2026, compared with Rs 1.26 crore a year earlier.

What changed in Metal Coatings' balance sheet and funding?

Metal Coatings' total equity increased to Rs 44.47 crore at September 30, 2026 from Rs 43.97 crore at March 31, 2026. Paid-up equity share capital remained Rs 7.33 crore, while other equity increased to Rs 37.14 crore from Rs 36.64 crore over the six-month period.

Total assets declined to Rs 55.11 crore at September 30, 2026 from Rs 56.37 crore at March 31, 2026. Inventories increased to Rs 11.19 crore from Rs 10.50 crore, consistent with the Rs 0.69 crore inventory cash outflow disclosed in the half-year cash-flow statement.

Current borrowings declined to Rs 2.80 crore at September 30, 2026 from Rs 3.52 crore at March 31, 2026. Total current liabilities decreased to Rs 9.42 crore from Rs 11.14 crore, while total liabilities fell to Rs 10.64 crore from Rs 12.40 crore. The cash-flow statement recorded Rs 0.73 crore of borrowing repayment during the half year.

The balance sheet does not identify commercial reasons for the changes in debtors, inventories or other current assets. It does show that proceeds from investment sales of Rs 3.65 crore provided an investing inflow that partly offset the Rs 2.68 crore operating outflow and Rs 1.47 crore financing outflow in the six months to September 30, 2026.

Conclusion

Metal Coatings' first-half cash flow differed from its profit outcome: it reported Rs 1.16 crore of net profit but a Rs 2.68 crore operating cash outflow. The disclosed driver was a reversal in working-capital and related movements, from a Rs 4.77 crore inflow a year earlier to a Rs 3.66 crore outflow, while revenue increased to Rs 78.28 crore.

The next financial results will show whether the cash absorbed by debtors, inventories and other current assets reverses or persists after September 30, 2026. Investors can also monitor the effect of the Rs 3.65 crore investment-sale proceeds, the Rs 0.73 crore dividend payment and the Rs 0.73 crore borrowing repayment on subsequent cash balances and funding.