Sutlej Textiles operating cash flow turns negative in H1

Sutlej Textiles and Industries Limited recorded a Rs 26.92 crore net operating cash outflow in the half year ended 30 September 2026, despite consolidated profit of Rs 8.63 crore. Sutlej Textiles’ inventory increase of Rs 102.24 crore and trade-receivables increase of Rs 83.47 crore absorbed cash, while financing activities generated Rs 55.82 crore.

Why did Sutlej Textiles report negative operating cash flow?

Sutlej Textiles reported negative operating cash flow because working-capital movements outweighed its Rs 81.67 crore operating profit before working-capital adjustments in the half year ended 30 September 2026. Cash generated from operations was negative Rs 28.75 crore, and a Rs 1.83 crore net income-tax payment took net cash used in operating activities to Rs 26.92 crore.

The cash-flow statement began with profit before tax of Rs 13.74 crore and adjusted for items including Rs 48.35 crore of depreciation and amortisation, Rs 38.30 crore of finance costs and a Rs 9.80 crore fair-value gain on derivatives. Sutlej Textiles prepared the statement using the indirect method under Indian Accounting Standard 7, or Ind AS 7, Statement of Cash Flows.

The reported half-year outflow contrasts with a Rs 72.29 crore operating cash inflow in the year ended 31 March 2026. The periods differ in length, but cash generated from operations changed from Rs 75.05 crore in the full prior year to negative Rs 28.75 crore in the six months to September 2026.

Which working-capital items used Sutlej Textiles’ cash?

Inventory and trade receivables were the largest uses of Sutlej Textiles’ operating cash, rising by Rs 102.24 crore and Rs 83.47 crore, respectively, in the cash-flow statement for the half year ended 30 September 2026. Together, those two movements used Rs 185.71 crore, more than twice the Rs 81.67 crore operating profit before working-capital adjustments.

Other financial assets used Rs 12.35 crore and other assets used Rs 22.16 crore. The four asset-side movements therefore absorbed Rs 220.22 crore in total. This was partly offset by an Rs 86.30 crore increase in trade payables, Rs 8.56 crore increase in other financial liabilities, Rs 5.99 crore increase in provisions and Rs 8.95 crore increase in other liabilities.

The consolidated balance sheet shows inventories at Rs 607.83 crore on 30 September 2026, compared with Rs 505.59 crore on 31 March 2026. Trade receivables stood at Rs 451.51 crore, up from Rs 373.41 crore at the March year-end. The balance-sheet receivables change differs from the Rs 83.47 crore movement shown in the cash-flow statement.

Did Sutlej Textiles’ profit and revenue improve in the half year?

Sutlej Textiles returned to consolidated profit of Rs 8.63 crore in the half year ended 30 September 2026, compared with a Rs 51.96 crore loss in the corresponding prior-year half. Revenue from operations increased to Rs 1,523.79 crore from Rs 1,246.51 crore, while profit before tax improved to Rs 13.74 crore from a Rs 73.38 crore loss.

Both operating segments reported improved results before finance costs and tax. Yarn recorded segment profit of Rs 52.43 crore, reversing a Rs 22.03 crore loss in the corresponding half of 2025. Home textile posted Rs 1.32 crore of segment profit, compared with a Rs 14.64 crore loss a year earlier.

Finance costs increased to Rs 38.30 crore from Rs 33.16 crore in the corresponding half, while depreciation and amortisation declined to Rs 48.35 crore from Rs 54.68 crore. The group’s half-year total comprehensive income was Rs 11.63 crore, compared with a Rs 49.83 crore comprehensive loss in the prior-year period.

How did Sutlej Textiles fund its cash requirements?

Sutlej Textiles funded part of its operating and investment cash needs through Rs 55.82 crore of net financing inflows in the half year ended 30 September 2026. It received Rs 98.61 crore from long-term borrowings and reported Rs 56.13 crore of net short-term borrowings, against Rs 59.73 crore of long-term principal repayments.

Finance costs paid were Rs 38.12 crore and lease-liability repayments were Rs 1.07 crore. Investing activities used a further Rs 31.85 crore, led by Rs 31.71 crore spent on property, plant and equipment, including capital work-in-progress and intangible assets. Proceeds from property, plant and equipment sales were Rs 10 crore.

Non-current borrowings rose to Rs 362.60 crore at 30 September 2026 from Rs 333.40 crore at 31 March 2026, while current borrowings increased to Rs 656.52 crore from Rs 595.71 crore. Combined borrowings were therefore Rs 1,019.12 crore, up Rs 90.01 crore, and cash and cash equivalents fell to Rs 3.96 crore from Rs 6.91 crore at the start of the half year.

The unaudited consolidated results were reviewed by the Audit Committee and approved by the Board on 13 November 2026. Sutlej Textiles’ statutory auditors issued a limited review report, and the consolidation includes Sutlej Holdings Inc. and its step-down subsidiary American Silk Mills, LLC.

Conclusion

Sutlej Textiles’ first-half figures show that improved revenue and a return to consolidated profitability did not convert into operating cash during the period. The Rs 26.92 crore operating outflow resulted as growth in inventory, receivables and other operating assets exceeded the cash contribution from increased payables and other liabilities.

The filing identifies the finalisation of Central and State rules and government clarifications on the New Labour Codes as an unresolved matter. Sutlej Textiles says it will provide any appropriate accounting effect in the relevant period as developments require; its next disclosures can also show whether the Rs 607.83 crore inventory and Rs 451.51 crore receivables balances change.