Riba Textiles Limited reports negative cash flow on inventory

Riba Textiles Limited reported a Rs 67.81 lakh net operating cash outflow for the half year ended September 30, 2026, despite Rs 3.46 crore of net profit, because inventories rose by Rs 20.26 crore. The inventory use of cash outweighed a Rs 5.26 crore reduction in trade receivables and other working-capital inflows.

Why did Riba Textiles report negative operating cash flow?

Riba Textiles reported negative cash flow from operating activities of Rs 67.81 lakh for the half year ended September 30, 2026, against a positive Rs 15.42 crore in the corresponding half of 2025. Operating profit before working-capital changes increased to Rs 10.72 crore from Rs 10.22 crore, but movements in inventory, receivables, advances and liabilities changed the cash outcome.

The largest working-capital outflow was the Rs 20.26 crore increase in inventories, compared with a Rs 13.90 crore increase in the previous-year half. The inventory cash requirement therefore increased by Rs 6.36 crore year on year. Loans and advances also used Rs 1.96 crore, while increases in current liabilities and provisions supplied Rs 6.45 crore.

A Rs 5.26 crore reduction in trade receivables provided cash in the September 2026 half, but this was lower than the Rs 12.74 crore cash release reported in the comparable 2025 period. Cash generated from operations consequently fell to Rs 22.24 lakh from Rs 16.36 crore. Net income tax paid of Rs 90.05 lakh turned that pre-tax operating cash surplus into the reported outflow.

The cash-flow statement uses the indirect method under Indian Accounting Standard 7, which starts with profit before tax and adjusts it for non-cash charges and working-capital movements. In this case, profit before tax was Rs 4.36 crore and depreciation and amortisation were Rs 3.56 crore, but the cash conversion was determined principally by the inventory increase.

How did Riba Textiles' working capital change?

Riba Textiles' inventory balance rose to Rs 60.10 crore at September 30, 2026 from Rs 39.85 crore at March 31, 2026, consistent with the Rs 20.26 crore cash outflow in its cash-flow statement. Trade receivables fell to Rs 35.00 crore from Rs 40.27 crore, making receivables the main offset to the inventory build.

Other current assets rose to Rs 10.97 crore from Rs 9.01 crore, while trade payables increased to Rs 13.02 crore from Rs 10.68 crore. Other current liabilities declined to Rs 9.22 crore from Rs 20.35 crore. The cash-flow statement combines movements in current liabilities and provisions, whereas the balance sheet lists individual liability categories.

Total current assets increased to Rs 116.10 crore at September 30 from Rs 93.27 crore at the March 2026 year-end. Total current liabilities rose to Rs 84.58 crore from Rs 78.13 crore. Riba Textiles disclosed one operating segment, the manufacture of terry towels, and did not provide a segment-specific explanation for the inventory increase.

What did Riba Textiles invest and how was it funded?

Riba Textiles used Rs 13.73 crore in investing activities in the half year ended September 30, 2026, compared with Rs 15.88 crore in the prior-year half. The outflow included Rs 7.42 crore of capital work in progress, Rs 7.20 crore for fixed deposits made during the period, and Rs 70.37 lakh for property, plant and equipment including capital work in progress.

Capital work in progress was nil at March 31, 2026 and stood at Rs 7.42 crore at September 30. Property, plant and equipment declined to Rs 118.73 crore from Rs 121.58 crore, while total non-current assets rose to Rs 128.03 crore from Rs 124.76 crore because capital work in progress was added. The filing does not identify the purpose, completion schedule or expected commercial effect of this work.

The investing outflow was partly offset by a Rs 1.29 crore decrease in capital advances and Rs 30.87 lakh of dividend, interest and other income received. Riba Textiles reported no proceeds from sale of property, plant and equipment during the September 2026 half, compared with Rs 21.02 lakh in the corresponding 2025 period.

Riba Textiles generated Rs 13.08 crore from financing activities, against Rs 2.50 crore a year earlier. Net proceeds from short-term borrowings were Rs 16.19 crore and interest paid was Rs 3.11 crore. The financing inflow broadly covered the combined Rs 14.40 crore operating and investing cash outflow, although cash and cash equivalents still declined.

How did Riba Textiles' profit, cash and borrowings compare?

Riba Textiles earned Rs 3.46 crore in net profit for the half year ended September 30, 2026, compared with Rs 3.63 crore a year earlier. Revenue from operations increased to Rs 125.37 crore from Rs 119.29 crore. The lower profit alongside higher revenue and negative operating cash flow shows that reported earnings, sales and cash movement followed different paths during the period.

For the September 2026 quarter, net profit was Rs 3.03 crore, compared with Rs 43.38 lakh in the June 2026 quarter and Rs 2.91 crore in the September 2025 quarter. Quarterly revenue from operations was Rs 86.12 crore, compared with Rs 39.25 crore in the preceding quarter. The results statement recorded no exceptional items in any of those three quarterly periods.

Cash and cash equivalents decreased to Rs 2.82 crore at September 30, 2026 from Rs 4.15 crore at the beginning of the financial year, a fall of Rs 1.32 crore. The closing total comprised Rs 2.56 crore in bank current accounts and Rs 26.65 lakh in cash on hand. The comparable cash and cash-equivalent balance at September 30, 2025 was Rs 4.59 crore.

Current borrowings rose to Rs 59.99 crore from Rs 45.54 crore between March 31 and September 30, while non-current borrowings increased to Rs 46.53 crore from Rs 30.34 crore. Finance costs in the half-year income statement were Rs 3.56 crore, compared with Rs 3.17 crore a year earlier. Total equity increased to Rs 109.48 crore from Rs 106.02 crore.

Conclusion

Riba Textiles remained profitable and increased half-year revenue by Rs 6.08 crore, but its operating cash flow moved from a Rs 15.42 crore inflow a year earlier to a Rs 67.81 lakh outflow. The Rs 20.26 crore inventory build exceeded the cash released from lower receivables, while investment activity added a Rs 13.73 crore cash requirement.

The next disclosed development is the finance leadership change: Rajnish Mittal resigned as chief financial officer effective November 10, 2026, and Balkishan Bagla's appointment took effect on November 11, 2026. Future results will show whether inventory levels, Rs 7.42 crore of capital work in progress, and borrowings totalling Rs 106.52 crore across current and non-current categories change after September 30.