Organic Coatings reports Rs 2.85 crore operating cash outflow

Organic Coatings Limited recorded a Rs 2.85 crore cash outflow from operating activities in the half year ended 30 September 2026, compared with Rs 1.24 crore generated a year earlier, after trade receivables absorbed Rs 6.41 crore and inventories absorbed Rs 2.01 crore. Cash and cash equivalents closed at Rs 6.49 lakh.

Why did Organic Coatings report negative operating cash flow?

Organic Coatings reported negative operating cash flow because working-capital movements more than offset a Rs 36.45 lakh operating loss before working-capital changes for the half year ended 30 September 2026. Cash generation from operations was negative Rs 2.85 crore, compared with positive Rs 1.24 crore in the corresponding half year ended 30 September 2025.

The loss before exceptional items and tax narrowed to Rs 1.26 crore from Rs 1.45 crore a year earlier. Adjustments included Rs 45.30 lakh of depreciation and amortisation, Rs 36.49 lakh of finance costs and a Rs 10 lakh bad-debt provision, offset partly by Rs 0.93 lakh of interest income and a Rs 1.49 lakh net gain on disposal of property, plant and equipment.

The cash-flow statement does not show a separate income-tax cash-flow line. It records cash generation from operations and net cash used in operating activities at the same Rs 2.85 crore for the six months to September 2026.

How did receivables and inventory use Organic Coatings cash?

Trade receivables were Organic Coatings' largest identified operating cash use, absorbing Rs 6.41 crore in the half year ended 30 September 2026, compared with Rs 1.61 crore in the prior-year half. Inventory absorbed another Rs 2.01 crore, against Rs 50.86 lakh in the comparable period.

The balance sheet shows the expansion in working-capital balances. Trade receivables stood at Rs 14.36 crore on 30 September 2026, up from Rs 8.05 crore on 31 March 2026, while inventories increased to Rs 7.36 crore from Rs 5.35 crore. Revenue from operations was Rs 23.25 crore for the 2026 half year, compared with Rs 12.61 crore a year earlier.

Other current assets used Rs 20.17 lakh of cash, compared with Rs 11.10 lakh in the previous corresponding period. Other non-current financial assets provided Rs 0.24 lakh in 2026, whereas they used Rs 0.32 lakh a year before.

Did supplier credit offset Organic Coatings' working-capital demand?

Supplier credit partly offset Organic Coatings' working-capital demand, but not enough to prevent the Rs 2.85 crore operating cash outflow. Trade payables generated Rs 5.46 crore of cash in the 2026 half year, up from Rs 2.98 crore in the 2025 half year.

Trade payables on the balance sheet rose to Rs 17.43 crore at 30 September 2026 from Rs 11.97 crore at 31 March 2026. Other current liabilities contributed Rs 56.48 lakh of cash, compared with Rs 24.01 lakh a year earlier, while other non-current financial liabilities contributed Rs 16 lakh, compared with Rs 75 lakh in the prior-year period.

Current borrowings increased to Rs 9.44 crore at 30 September 2026 from Rs 6.89 crore at 31 March 2026. Non-current borrowings declined to Rs 3.14 crore from Rs 3.27 crore, while total current liabilities rose to Rs 28.36 crore from Rs 19.79 crore.

The cash-flow statement classifies the Rs 2.55 crore increase in current borrowings as a financing inflow rather than operating activity. It therefore did not change the reported operating cash outflow, although it contributed to closing cash.

What happened to Organic Coatings' cash after investing and financing flows?

Organic Coatings' cash and cash equivalents fell by Rs 90.81 lakh during the half year to Rs 6.49 lakh at 30 September 2026, from Rs 97.30 lakh at the beginning of the financial year. The Rs 2.85 crore operating outflow and Rs 11.45 lakh investing outflow were only partly offset by Rs 2.05 crore from financing activities.

Investing activities used less cash than in the prior-year period. Purchases of property, plant and equipment and intangible assets were Rs 17.22 lakh in the 2026 half year, down from Rs 87.11 lakh a year earlier; Rs 4.85 lakh of disposal proceeds and Rs 0.93 lakh of interest income reduced the net investing outflow.

Financing cash flow comprised a Rs 2.55 crore increase in current borrowings, a Rs 12.96 lakh decrease in non-current borrowings and Rs 36.49 lakh of finance costs. In the half year ended 30 September 2025, financing activities provided Rs 21.03 lakh, including a Rs 1.13 crore increase in current borrowings and a Rs 53.53 lakh reduction in non-current borrowings.

Cash at 30 September 2026 consisted of Rs 6.05 lakh in current accounts and Rs 0.44 lakh in bank deposit accounts. At 30 September 2025, cash and cash equivalents were Rs 65.01 lakh, including Rs 60.41 lakh in bank deposit accounts.

How do Organic Coatings' cash flows compare with its reported loss?

Organic Coatings' operating cash outflow exceeded its Rs 1.26 crore pre-tax loss because working-capital uses outweighed non-cash and liability adjustments. The company reported a net loss of Rs 1.26 crore for the half year ended 30 September 2026, compared with a Rs 1.45 crore loss in the prior-year half.

For the September 2026 quarter alone, revenue from operations was Rs 12.03 crore, compared with Rs 5.53 crore in the September 2025 quarter, while the net loss was Rs 89.74 lakh versus Rs 59.75 lakh. Total expenses rose to Rs 12.95 crore from Rs 6.16 crore, with cost of materials consumed at Rs 10.37 crore against Rs 3.57 crore.

Organic Coatings states that it does not have different segments, so no segment-wise cash-flow or profit comparison is provided. The half-year results were reviewed by Soman Uday & Co., which said nothing had come to its attention indicating a material misstatement in the unaudited results.

Conclusion

The figures show that Organic Coatings increased half-year revenue to Rs 23.25 crore but recorded a Rs 2.85 crore operating cash outflow as receivables and inventory increased. Higher trade payables and current borrowings provided cash, but cash and cash equivalents still declined by Rs 90.81 lakh to Rs 6.49 lakh.

The next disclosed event is the appointment of Tejas Rajeshbhai Basrani as chief financial officer and key managerial personnel, effective 12 November 2026. Subsequent financial disclosures will show whether trade receivables of Rs 14.36 crore, inventories of Rs 7.36 crore and the Rs 6.49 lakh cash balance change after the September 2026 half year.