Sundrop Brands posts Rs 48.63 crore first-half cash outflow

For the half-year ended September 30, 2026, Sundrop Brands Limited (formerly known as Agro Tech Foods Limited) reported a consolidated operating cash outflow of Rs 48.63 crore, despite Rs 32.38 crore of profit before tax, as trade receivables, inventories and other assets absorbed Rs 189.84 crore. The outflow widened from Rs 10.24 crore a year earlier.

Why did Sundrop Brands report an operating cash outflow?

Sundrop Brands reported an operating cash outflow because working-capital movements more than offset Rs 60.33 crore of operating profit before working-capital changes in the half-year ended September 30, 2026. Cash generated from operations was negative Rs 46.05 crore, and net income taxes paid of Rs 2.58 crore took net operating cash flow to negative Rs 48.63 crore.

Trade receivables absorbed Rs 55.79 crore of cash, inventories absorbed Rs 59.19 crore and other assets absorbed Rs 74.86 crore. These three asset categories used Rs 189.84 crore, while trade payables and other financial liabilities supplied Rs 82.35 crore, partly offsetting the increase in operating assets.

The consolidated profit before tax was Rs 32.38 crore for the six months, compared with Rs 1.77 crore in the half-year ended September 30, 2025. Depreciation and amortisation of Rs 17.17 crore, share-based payment expense of Rs 10.26 crore and finance costs of Rs 1.20 crore were among the adjustments that lifted operating profit before working-capital changes from Rs 26.21 crore a year earlier.

How did working-capital cash use compare with last year?

Sundrop Brands' operating cash outflow widened by Rs 38.39 crore from negative Rs 10.24 crore in the half-year ended September 30, 2025 to negative Rs 48.63 crore in the latest period. The change reflected larger cash absorption in receivables, inventories and other assets, despite a higher contribution from payables and other financial liabilities.

Receivables used Rs 48.39 crore more cash than in the prior-year period, inventory use rose by Rs 47.16 crore and other-assets use increased by Rs 43.74 crore. The Rs 65.76 crore increase in cash provided by trade payables and other financial liabilities did not fully counter these three outflows.

The September 30 balance sheet showed the same direction in current assets. Consolidated trade receivables increased to Rs 161.52 crore from Rs 106.28 crore at March 31, 2026, inventories rose to Rs 249.99 crore from Rs 190.77 crore, and total current assets reached Rs 591.57 crore from Rs 445.30 crore.

What happened to Sundrop Brands' cash and borrowings?

Sundrop Brands ended September 30, 2026 with consolidated cash and cash equivalents of Rs 14.26 crore, down Rs 17.10 crore from Rs 31.36 crore at March 31, 2026. The cash-flow statement records a Rs 17.40 crore net decrease before a Rs 0.30 crore favourable exchange difference on foreign-currency translation.

Operating activities used Rs 48.63 crore and investing activities used Rs 8.99 crore, while financing activities generated Rs 40.22 crore in the half-year. The financing section reports Rs 44 crore under the line item described as repayment of working-capital demand loans, net, followed by Rs 0.62 crore of finance costs paid and Rs 3.16 crore of lease-liability principal payments.

Consolidated current borrowings stood at Rs 44 crore on September 30, 2026, compared with nil on March 31, 2026. Total current liabilities increased to Rs 368.54 crore from Rs 240.93 crore, while trade payables due to creditors other than micro and small enterprises rose to Rs 203.62 crore from Rs 136.65 crore.

How did investing activities affect first-half cash?

Sundrop Brands used Rs 8.99 crore in investing activities in the half-year ended September 30, 2026, compared with Rs 19.60 crore used in the corresponding 2025 period. Purchases of property, plant and equipment, intangible assets and capital work-in-progress were Rs 13.99 crore, up from Rs 6.40 crore a year earlier.

Mutual-fund purchases totalled Rs 118.50 crore and sale proceeds were Rs 122.42 crore, resulting in a Rs 3.92 crore net cash inflow from those transactions. In the prior-year half, purchases of Rs 129.64 crore exceeded sale proceeds of Rs 116.47 crore, creating a Rs 13.17 crore net outflow.

Consolidated property, plant and equipment declined to Rs 363.24 crore on September 30, 2026 from Rs 369.12 crore at March 31, 2026. Capital work-in-progress rose to Rs 2.34 crore from Rs 2.10 crore, while right-of-use assets increased to Rs 26.04 crore from Rs 22.63 crore.

What do the results show about profit and cash conversion?

Sundrop Brands reported higher first-half revenue and profit before tax, but the cash-flow statement shows that earnings did not translate into positive operating cash because working capital absorbed funds. Consolidated revenue from operations rose to Rs 891.17 crore from Rs 755.42 crore, while profit before tax increased to Rs 32.38 crore from Rs 1.77 crore.

The Group identifies Foods as its single operating segment under Indian Accounting Standard 108, or Ind AS 108, because the chief operating decision maker reviews performance at the overall Group level. The filing therefore provides no separate cash-flow, receivables or inventory figures for individual businesses, including its subsidiaries.

Share-based payment expense was Rs 10.26 crore in the half-year ended September 30, 2026, compared with Rs 7.89 crore a year earlier. During the period, the parent granted 154,367 employee stock options at exercise prices of Rs 515 and Rs 636 per option, in addition to 1,480,411 options granted in the year ended March 31, 2026.

Conclusion

Sundrop Brands' filing shows a divergence between accounting profit and operating cash generation in the half-year ended September 30, 2026. Profit before tax increased by Rs 30.61 crore year on year, but growth in receivables, inventories and other assets resulted in a Rs 48.63 crore operating cash outflow versus Rs 10.24 crore in the comparable period.

The unresolved item for subsequent disclosures is whether the September 30 balances of Rs 161.52 crore in receivables, Rs 249.99 crore in inventories and Rs 44 crore in current borrowings change as working-capital movements develop. The filing also records Rs 13.99 crore of investing purchases and Rs 10.26 crore of share-based payment expense, both relevant to later comparisons.