Smruthi Organics cash falls to Rs 5.61 lakh by September

Smruthi Organics Limited ended the half year to September 30, 2026 with cash and cash equivalents of Rs 5.61 lakh, after a Rs 1.65 crore decline during the period. Smruthi Organics generated Rs 6.19 crore from operations, but higher trade receivables and inventories together absorbed Rs 11.48 crore of cash.

Why did Smruthi Organics’ cash balance decline?

Smruthi Organics’ cash balance declined because its Rs 6.19 crore operating cash inflow did not cover Rs 5.14 crore of investing outflow and Rs 2.70 crore of financing outflow in the half year ended September 30, 2026. Cash and cash equivalents fell from Rs 1.71 crore at March 31, 2026 to Rs 5.61 lakh at the period end.

The cash-flow statement reports a net decrease of Rs 1.65 crore for the September 2026 half year, compared with a net increase of Rs 68.55 lakh in the half year ended September 30, 2025. Operating cash flow declined to Rs 6.19 crore from Rs 17.03 crore, while investing outflow was Rs 5.14 crore against Rs 5.53 crore a year earlier.

Financing outflow narrowed by Rs 8.12 crore from the prior-year half, but this was outweighed by the Rs 10.85 crore reduction in operating cash generation. The opening cash-equivalent balance was Rs 43.57 lakh in the September 2025 half year, compared with Rs 1.71 crore at the beginning of the September 2026 half year.

How did working capital affect Smruthi Organics’ operating cash flow?

Working-capital movements reduced Smruthi Organics’ operating profit before working-capital changes of Rs 10.23 crore to cash generated from operations of Rs 7.10 crore in the half year ended September 30, 2026. After direct tax payments of Rs 90.74 lakh, net cash from operating activities was Rs 6.19 crore.

Trade receivables used Rs 7.85 crore of cash and inventories used Rs 3.64 crore, for a combined Rs 11.48 crore outflow. These uses were partly offset by a Rs 5.55 crore increase in trade payables, a Rs 1.74 crore increase in other current liabilities, and a Rs 54.59 lakh increase in other current financial liabilities.

The comparison with the September 2025 half year was marked. Trade receivables generated Rs 12.85 crore of cash in the prior-year half, while inventories generated Rs 3.37 crore, whereas both lines consumed cash in the current half. Cash generated from operations consequently declined to Rs 7.10 crore from Rs 17.55 crore before taxes.

The September 30, 2026 balance sheet broadly reflects the movement reported in the cash-flow statement. Trade receivables rose to Rs 27.14 crore from Rs 19.30 crore at March 31, 2026, while inventories increased to Rs 31.98 crore from Rs 28.35 crore. The two period-end balances increased by Rs 11.47 crore in aggregate over six months.

What operating profit did Smruthi Organics generate before working-capital changes?

Smruthi Organics generated Rs 10.23 crore of operating profit before working-capital changes in the half year ended September 30, 2026, up from Rs 5.75 crore in the corresponding 2025 half year. Profit before income tax was Rs 6.13 crore, comprising Rs 6.24 crore from continuing operations and a Rs 10.21 lakh loss from discontinued operations.

Depreciation and amortisation of Rs 3.38 crore was the largest adjustment in reconciling profit before tax to operating profit before working-capital changes. Interest expenditure was Rs 55.01 lakh, compared with Rs 1.12 crore in the prior-year half, while unrealised foreign-exchange loss was Rs 3.25 lakh against Rs 34.67 lakh a year earlier.

Revenue from operations rose to Rs 60.01 crore in the half year ended September 30, 2026 from Rs 50.37 crore in the prior-year half. Profit after tax from continuing operations increased to Rs 4.67 crore from Rs 1.09 crore, but the cash-flow statement shows that the rise in reported earnings was accompanied by greater cash absorption in receivables and inventory.

The Formulations Marketing Division is classified as a discontinued operation, while the Bulk Drugs and Intermediates division is the only operating segment at September 30, 2026. The discontinued division recorded a Rs 7.64 lakh loss after tax in the September 2026 half year, compared with a Rs 12.51 lakh loss in the corresponding prior-year period.

Where did Smruthi Organics use cash outside operations?

Smruthi Organics used Rs 5.14 crore in investing activities in the half year ended September 30, 2026, principally through Rs 5.14 crore of purchases of fixed assets, including intangible assets, capital work-in-progress and capital advances. The equivalent fixed-asset outflow was Rs 5.51 crore in the half year ended September 30, 2025.

Property, plant and equipment stood at Rs 46.81 crore at September 30, 2026, compared with Rs 46.52 crore at March 31, 2026. Capital work-in-progress rose to Rs 4.53 crore from Rs 2.97 crore over the same period, while net investment in bank deposits with original maturity exceeding three months was Rs 2.56 lakh.

Financing activities used Rs 2.70 crore, including Rs 2.73 crore of long-term borrowing repayments, Rs 1.72 crore of dividend payments, Rs 54.36 lakh of interest paid and Rs 9.02 lakh of lease-liability payments. Smruthi Organics received Rs 2.46 crore from short-term borrowings during the half year.

Non-current borrowings were nil at September 30, 2026, down from Rs 2.67 crore at March 31, 2026, while current borrowings increased to Rs 8.15 crore from Rs 5.69 crore. Other bank balances were Rs 58.71 lakh at September 30, separate from the Rs 5.61 lakh cash-and-cash-equivalents balance reconciled in the cash-flow statement.

Conclusion

Smruthi Organics reported higher half-year revenue of Rs 60.01 crore and operating profit before working-capital changes of Rs 10.23 crore for the period ended September 30, 2026. However, Rs 11.48 crore absorbed by receivables and inventories, together with Rs 5.14 crore of investing outflow and Rs 2.70 crore of financing outflow, reduced cash equivalents to Rs 5.61 lakh.

The next results will indicate whether the Rs 27.14 crore receivables balance and Rs 31.98 crore inventory balance convert into operating cash. The company also disclosed that residual receivables of the discontinued Formulations Marketing Division remain under recovery, making progress on that recovery an unresolved matter to watch.