Sai Silks first-half profit falls 19% as cash flow turns negative

Sai Silks (Kalamandir) Limited reported unaudited profit after tax of Rs 56.73 crore for the half year ended September 30, 2026, down 19% from Rs 70.14 crore a year earlier, while operating activities used Rs 29.74 crore of cash after inventories absorbed Rs 143.67 crore.

What were Sai Silks' first-half financial results?

Sai Silks recorded total income of Rs 819.64 crore for the half year ended September 30, 2026, compared with Rs 833.56 crore in the corresponding 2025 period. Revenue from operations declined by Rs 14.22 crore to Rs 809.13 crore, while other income increased to Rs 10.51 crore from Rs 10.20 crore.

Profit before tax fell by Rs 18.79 crore to Rs 75.86 crore from Rs 94.65 crore. Tax expense declined to Rs 19.13 crore from Rs 24.51 crore, but the lower tax charge did not offset the decline in pre-tax profit, leaving profit after tax Rs 13.41 crore lower at Rs 56.73 crore.

The September 2026 quarter contributed Rs 434.05 crore of first-half revenue, ahead of Rs 375.08 crore in the June 2026 quarter. Quarterly profit after tax was Rs 31.08 crore, higher than Rs 25.64 crore in the preceding quarter but below Rs 40.08 crore in the quarter ended September 30, 2025.

Why did Sai Silks' first-half profit decline?

Sai Silks' profit declined because total expenses increased to Rs 743.78 crore from Rs 738.91 crore even as total income fell to Rs 819.64 crore from Rs 833.56 crore. The combination reduced profit before tax to Rs 75.86 crore, compared with Rs 94.65 crore in the prior-year half.

Purchases of stock-in-trade rose to Rs 613.32 crore from Rs 616.78 crore, while employee benefit expense increased to Rs 115.42 crore from Rs 106.81 crore. Other expenses rose to Rs 111.14 crore from Rs 109.68 crore, and depreciation and amortisation increased to Rs 17.18 crore from Rs 15.36 crore.

The reported change in inventories was negative Rs 144.20 crore, compared with negative Rs 139.06 crore in the 2025 half year. Finance costs increased to Rs 30.91 crore from Rs 29.33 crore, while total comprehensive income declined to Rs 55.24 crore from Rs 70.53 crore after other comprehensive income items.

What caused Sai Silks' operating cash outflow?

Sai Silks reported a Rs 29.74 crore net cash outflow from operating activities in the half year ended September 30, 2026, compared with an inflow of Rs 180.37 crore a year earlier. Cash generated from operations was negative Rs 9.42 crore, versus positive Rs 218.13 crore, before Rs 20.33 crore of income tax paid.

Inventory was the largest working-capital cash use, absorbing Rs 143.67 crore in the 2026 half year compared with Rs 141.98 crore in the prior-year period. Operating profit before working-capital changes was Rs 111.43 crore, down from Rs 141.70 crore, and was insufficient to cover the inventory movement.

Trade payables supplied Rs 35.47 crore of cash in the 2026 half year, substantially below the Rs 210.69 crore contribution in the corresponding 2025 period. Other current financial and non-financial assets used Rs 12.24 crore, compared with Rs 3.87 crore previously, while trade receivables used Rs 1.73 crore.

How did Sai Silks' balance sheet change?

Sai Silks' inventories stood at Rs 959.59 crore at September 30, 2026, up Rs 143.66 crore from Rs 815.93 crore at March 31, 2026. The balance-sheet movement closely matched the Rs 143.67 crore inventory cash outflow in the interim cash-flow statement.

Total assets rose to Rs 1,956.33 crore from Rs 1,848.91 crore over the six months to September 30, 2026. Current assets increased to Rs 1,271.52 crore from Rs 1,213.72 crore, while bank balances other than cash and cash equivalents fell to Rs 236.32 crore from Rs 329.04 crore.

Cash and cash equivalents declined to Rs 12.26 crore from Rs 19.38 crore at March 31, 2026. Investing activities generated Rs 75.11 crore, including a Rs 92.72 crore decrease in deposits, while financing activities used Rs 52.49 crore, including Rs 22.05 crore of dividends and Rs 24.92 crore of lease-liability principal payments.

Equity increased to Rs 1,293.60 crore from Rs 1,260.47 crore, with other equity rising to Rs 1,264.13 crore from Rs 1,231.00 crore. Non-current lease liabilities increased to Rs 360.48 crore from Rs 323.60 crore, while trade payables to parties other than micro and small enterprises rose to Rs 199.20 crore from Rs 163.73 crore.

What is Sai Silks' plan for unutilised IPO proceeds?

Sai Silks had Rs 20.27 crore of unutilised initial public offering proceeds earmarked for warehouses as at September 30, 2026. Of the Rs 25.40 crore allocated in the prospectus for capital expenditure on two warehouses, the company had utilised Rs 5.13 crore.

The board reconsidered its September 29, 2026 resolution and extended the deadline for using the Rs 20.27 crore balance until September 30, 2027. The filing says the unutilised proceeds will continue to be used for setting up warehouses, which was the original stated purpose.

Sai Silks also disclosed that it had no subsidiaries, associates or joint ventures at September 30, 2026. Its statutory auditors issued a limited review report dated November 3, 2026, stating that nothing had come to their attention suggesting the unaudited standalone statement contained a material misstatement.

Conclusion

Sai Silks' half-year results combined lower revenue and higher total expenses with a working-capital cash drain. Profit after tax declined to Rs 56.73 crore from Rs 70.14 crore, while the increase in inventory to Rs 959.59 crore and the lower cash contribution from trade payables moved operating cash flow to an outflow.

The disclosed event to watch is the September 30, 2027 deadline for deployment of Rs 20.27 crore of warehouse-related initial public offering proceeds. Subsequent filings will also show whether inventory levels, which rose by Rs 143.66 crore in the first six months, and operating cash generation change as the warehouse plan progresses.