Panchmahal Steel Limited operating cash flow falls to Rs 1.72 lakh

Panchmahal Steel Limited reported net cash from operating activities of Rs 1.72 lakh for the six months ended 30 September 2026, against Rs 10.26 crore a year earlier. Panchmahal Steel recorded profit before tax of Rs 12.44 crore, but a Rs 11.38 crore inventory increase and other working-capital outflows reduced cash generation.

Why did Panchmahal Steel’s operating cash flow fall?

Panchmahal Steel’s operating cash flow fell because working-capital movements used Rs 16.05 crore in the six months ended 30 September 2026. Operating profit before working-capital changes was Rs 18.38 crore, while cash generated from operations was Rs 2.33 crore after changes in operating assets and liabilities. Direct-tax payments of Rs 2.31 crore then reduced net operating cash to Rs 1.72 lakh.

The six months ended 30 September 2025 produced Rs 10.26 crore of net operating cash, although operating profit before working-capital changes was only Rs 4.63 crore. In that prior period, trade receivables released Rs 3.51 crore and other current assets released Rs 3.81 crore, compared with cash uses of Rs 2.40 crore and Rs 1.70 crore respectively in the latest half-year.

Profit before tax improved to Rs 12.44 crore from a loss before tax of Rs 1.83 crore, while revenue from operations rose to Rs 200.72 crore from Rs 180.17 crore. Total expenses increased to Rs 189.81 crore from Rs 183.79 crore. The gap between earnings and operating cash therefore arose from balance-sheet movements rather than a decline in reported profit.

How much cash did inventory and receivables absorb?

Inventory absorbed Rs 11.38 crore of cash, making it Panchmahal Steel’s largest reported working-capital movement for the half-year ended 30 September 2026. Inventories rose to Rs 131.80 crore at 30 September 2026 from Rs 120.43 crore at 31 March 2026. In the corresponding 2025 half-year, inventory used only Rs 1.30 lakh of cash.

Trade receivables absorbed Rs 2.40 crore, and other current assets absorbed Rs 1.70 crore during the latest six months. Trade receivables increased to Rs 50.10 crore at 30 September 2026 from Rs 47.53 crore at 31 March 2026, while other current assets increased to Rs 3.81 crore from Rs 2.10 crore. Other non-current assets also used Rs 10.77 lakh of cash and stood at Rs 71.01 lakh at the reporting date.

The combined cash use from inventories, receivables, other current assets and other non-current assets was Rs 15.59 crore. This exceeded the Rs 12.44 crore profit before tax reported for the six-month period, although the operating cash-flow reconciliation also added back Rs 4.01 crore of depreciation and amortisation and Rs 2.12 crore of finance cost.

Did liability movements or borrowings offset the asset build-up?

No, operating liability movements provided only a limited offset to Panchmahal Steel’s asset build-up. Provisions added Rs 76.78 lakh to operating cash, but trade payables used Rs 15.96 lakh, other financial liabilities used Rs 22.76 lakh and other liabilities used Rs 84.02 lakh. Those movements left cash generated from operations at Rs 2.33 crore before direct taxes.

Trade payables stood at Rs 22.20 crore at 30 September 2026, compared with Rs 22.36 crore at 31 March 2026. Dues to micro and small enterprises declined to Rs 85.71 lakh from Rs 2.29 crore, while dues to other enterprises increased to Rs 21.34 crore from Rs 20.07 crore. Current provisions rose to Rs 3.07 crore from Rs 1.93 crore over the same dates.

Panchmahal Steel reported a Rs 4.54 crore net increase in short-term borrowings during the six months ended 30 September 2026, compared with a Rs 1.75 crore net decrease a year earlier. Net cash from financing activities was Rs 2.42 crore after Rs 2.12 crore of finance costs. Current borrowings on the balance sheet were Rs 39.77 crore at 30 September 2026, up from Rs 35.22 crore at 31 March 2026.

How did cash, investment and earnings change in the half year?

Panchmahal Steel’s cash and cash equivalents increased by Rs 1.43 crore during the six months ended 30 September 2026, closing at Rs 1.72 crore from Rs 29.23 lakh at the start of the financial year. Investing activities used Rs 1.01 crore, compared with Rs 47.36 lakh in the corresponding prior-year period. The latest investing outflow included Rs 67.10 lakh spent on property, plant and equipment and Rs 40.22 lakh on bank deposits, partly offset by Rs 6.48 lakh of interest received.

Net profit was Rs 9.38 crore for the six months ended 30 September 2026, compared with a net loss of Rs 1.37 crore in the prior-year period. Other comprehensive loss was Rs 80.79 lakh, resulting in total comprehensive income of Rs 8.57 crore, against a total comprehensive loss of Rs 1.33 crore a year earlier. Basic and diluted earnings per share were Rs 4.92, compared with a loss per share of Rs 0.72.

Power and fuel expense increased to Rs 26.72 crore from Rs 21.69 crore, while employee benefits expense rose to Rs 12.54 crore from Rs 11.36 crore. Finance costs in the statement of profit and loss fell to Rs 2.12 crore from Rs 2.61 crore. Panchmahal Steel identifies stainless steel long products as its single reportable segment under Indian Accounting Standard 108.

When were Panchmahal Steel’s half-year results approved?

Panchmahal Steel’s board approved the unaudited results and cash-flow statement on 31 October 2026, after recommendation by its audit committee. The filing covers the period from 1 April 2026 to 30 September 2026 and reports total assets of Rs 238.62 crore at 30 September 2026, compared with Rs 224.41 crore at 31 March 2026.

The statutory auditors reviewed the interim results under the Standard on Review Engagements 2410. Their report dated 31 October 2026 stated that nothing had come to their attention suggesting the results did not disclose the information required by the listing regulations. The report is a review and does not express an audit opinion.

Conclusion

Panchmahal Steel’s half-year filing shows that improved reported profitability did not translate into equivalent operating cash. Revenue rose to Rs 200.72 crore and profit before tax reached Rs 12.44 crore, but inventories, receivables and other assets used Rs 15.59 crore of cash, leaving net operating cash at Rs 1.72 lakh after Rs 2.31 crore of tax payments.

The unresolved issue is whether the working-capital balances reported at 30 September 2026 convert into cash in subsequent periods. Inventory was Rs 131.80 crore, trade receivables were Rs 50.10 crore and current borrowings were Rs 39.77 crore, following a Rs 4.54 crore half-year increase in short-term borrowings.