Nityas Gems uses short-term debt as cash flow stays negative

Nityas Gems and Jewellery Limited used Rs 3.647 crore in standalone operating cash during the half year ended September 30, 2026, despite net profit of Rs 10.463 crore, as receivables rose by Rs 12.470 crore and inventories increased by Rs 3.440 crore. Net short-term borrowings added Rs 4.655 crore of financing cash.

Why was Nityas Gems’ operating cash flow negative?

Nityas Gems reported negative operating cash flow because its working-capital movements exceeded cash generated before those changes in the half year ended September 30, 2026. Profit before tax was Rs 12.837 crore, and operating profit before working-capital changes was Rs 13.895 crore after adjustments including Rs 53.8 lakh of finance costs and Rs 45.7 lakh of depreciation and amortisation.

The largest cash use was a Rs 12.470 crore increase in trade receivables. Inventory absorbed another Rs 3.440 crore, other assets used Rs 1.209 crore and other financial assets used Rs 58 lakh. These movements outweighed a Rs 3.693 crore increase in trade payables and a Rs 14 lakh increase in other financial liabilities, leaving cash generated from operations negative at Rs 2.151 crore.

Net taxes paid, including tax deducted at source receivable, were Rs 1.496 crore, taking net cash used in operating activities to Rs 3.647 crore. This was lower than the Rs 11.241 crore operating outflow in the corresponding half year ended September 30, 2025, when receivables used Rs 17.689 crore and inventories used Rs 7.153 crore. The comparison shows that the operating cash deficit narrowed, although it remained negative.

How did Nityas Gems’ receivables and inventory change?

Nityas Gems’ trade receivables increased to Rs 28.611 crore at September 30, 2026, from Rs 16.064 crore at March 31, 2026. That Rs 12.547 crore balance-sheet increase broadly corresponds with the Rs 12.470 crore receivables outflow reported in the cash-flow statement, with the difference reflecting statement presentation and period movements.

Inventories rose to Rs 44.493 crore from Rs 41.054 crore over the same six-month period, a Rs 3.439 crore increase. Other current assets increased to Rs 2.207 crore from Rs 99.8 lakh, while total current assets rose to Rs 75.383 crore from Rs 58.241 crore. The asset changes show that a larger share of funds was committed to current operating assets at September 30.

Nityas Gems describes its business as manufacturing gold, silver and diamond jewellery, including laboratory-grown diamonds. It reports one operating segment because management evaluates the business as a whole for allocating resources and assessing performance. The filing therefore does not identify individual jewellery categories responsible for the increase in receivables or inventory.

How did Nityas Gems finance its working-capital build-up?

Nityas Gems received Rs 4.655 crore in net proceeds from short-term borrowings in the half year ended September 30, 2026. That inflow was greater than the Rs 3.647 crore used in operating activities, although the company also used Rs 32.7 lakh to buy property, plant and equipment and paid Rs 52.6 lakh of finance costs, including interest on lease liabilities.

Current borrowings rose to Rs 13.642 crore at September 30 from Rs 8.987 crore at March 31, matching the Rs 4.655 crore net short-term borrowing inflow. Non-current borrowings fell to Rs 1 lakh from Rs 9.2 lakh, while the cash-flow statement recorded Rs 9 lakh of repayment of long-term borrowings during the half year.

Net financing cash flow was an inflow of Rs 3.921 crore, compared with an inflow of Rs 18.300 crore in the prior-year half year. The earlier period included Rs 18.735 crore of proceeds from share capital and share premium, whereas the latest period reported no such proceeds. The disclosed source of financing therefore shifted from equity issuance in the prior year to short-term borrowing in the latest half year.

What changed in Nityas Gems’ liabilities and cash balance?

Nityas Gems’ total liabilities increased to Rs 31.119 crore at September 30, 2026, from Rs 23.976 crore at March 31. Current liabilities rose by Rs 7.299 crore to Rs 29.456 crore, while non-current liabilities declined to Rs 1.663 crore from Rs 1.819 crore. The rise in current borrowings accounted for most of the increase in current liabilities.

Trade payables rose to Rs 11.858 crore from Rs 8.165 crore. Dues to micro and small enterprises increased to Rs 2.167 crore from Rs 17.6 lakh, while amounts owed to other creditors rose to Rs 9.691 crore from Rs 7.989 crore. The total Rs 3.693 crore increase in trade payables provided an offset within operating cash flow.

Cash and cash equivalents fell to Rs 72 lakh at September 30 from Rs 1.25 crore at the start of the half year, a decline of Rs 53 lakh. The filing classified the closing balance entirely as cash on hand and showed no current-account balance. Investing activities used Rs 32.7 lakh, compared with Rs 7.083 crore a year earlier, when the company reported Rs 6.028 crore of investment in subsidiaries.

Did Nityas Gems remain profitable as borrowing increased?

Nityas Gems remained profitable on a standalone basis, reporting net profit of Rs 10.463 crore for the half year ended September 30, 2026, compared with Rs 9.579 crore in the corresponding 2025 half year. Revenue from operations increased to Rs 117.129 crore from Rs 88.179 crore, while total expenses increased to Rs 104.420 crore from Rs 76.668 crore.

Finance cost increased to Rs 53.8 lakh from Rs 21.5 lakh in the prior-year half year. The debt-equity ratio was 0.20 at September 30, compared with 0.17 at March 31 and 0.16 a year earlier. The company defines total debt for this ratio as current and non-current borrowings plus current and non-current lease liabilities.

Debt-service coverage was 18.86 in the latest half year, down from 34.21 a year earlier, while interest-service coverage was 25.42, down from 56.57. Net worth increased to Rs 74.531 crore from Rs 64.047 crore at March 31, as other equity rose to Rs 52.962 crore from Rs 42.478 crore. The financial results were approved by the board on November 6, 2026 and received an unmodified limited-review conclusion.

Conclusion

Nityas Gems’ half-year figures show that accounting profit and operating cash generation moved in different directions. Revenue rose by Rs 28.950 crore year on year and net profit increased by Rs 88.4 lakh, but receivables and inventory absorbed enough cash to produce a Rs 3.647 crore operating outflow. Short-term borrowing supplied Rs 4.655 crore while cash on hand declined by Rs 53 lakh.

The next reported results will show whether trade receivables of Rs 28.611 crore and inventories of Rs 44.493 crore convert into cash and whether current borrowings of Rs 13.642 crore change further. The filing does not disclose a collection target, inventory target, borrowing target or capital-expenditure plan, leaving operating cash flow, finance cost and working-capital balances as the disclosed measures to watch.