Thomas Scott H1 operating cash turns negative despite profit

Thomas Scott (India) Limited reported net cash used in operating activities of Rs 3.91 crore for the half year ended September 30, 2026, despite Rs 15.00 crore of reported profit before tax. A Rs 29.05 crore increase in inventories was the largest disclosed working-capital cash use, outweighing cash released from receivables.

Why was Thomas Scott's H1 operating cash flow negative?

Thomas Scott's operating cash flow was negative because working-capital movements reduced cash by more than the company generated from profit and non-cash adjustments in the six months ended September 30, 2026. The cash-flow statement starts with profit before tax of Rs 14.99 crore and reaches Rs 18.98 crore of profit before working-capital changes after adjustments including Rs 1.68 crore of depreciation and amortisation and Rs 2.32 crore of interest expense.

The largest disclosed movement was a Rs 29.05 crore increase in inventories. A Rs 12.23 crore decrease in trade receivables released cash, but it did not offset the inventory build and other movements in operating assets and liabilities. Cash generated from operations was negative Rs 18.07 lakh, and net cash used in operating activities was Rs 3.91 crore after direct taxes.

Thomas Scott's income statement and cash-flow statement therefore measure different aspects of the half year. The income statement records revenue and expenses under accounting standards, while operating cash flow also captures cash tied up in inventory, receivables, payables and other operating balances during the period ended September 30, 2026.

How did Thomas Scott's H1 profit compare with last year?

Thomas Scott's profit before tax rose to Rs 15.00 crore for the half year ended September 30, 2026, from Rs 12.51 crore in the corresponding half of 2025. Revenue from operations increased to Rs 144.74 crore from Rs 110.82 crore, while profit after tax increased to Rs 11.72 crore from Rs 8.18 crore.

Total expenses increased to Rs 129.73 crore in H1 2026 from Rs 98.32 crore a year earlier, alongside the Rs 33.92 crore increase in revenue. Purchases of stock-in-trade rose to Rs 41.94 crore from Rs 33.49 crore, while the reported change in inventories of finished goods and work-in-progress was negative Rs 28.94 crore, compared with negative Rs 12.77 crore in H1 2025.

Finance costs rose to Rs 2.32 crore in H1 2026 from Rs 90.25 lakh a year earlier, and depreciation and amortisation increased to Rs 1.68 crore from Rs 1.17 crore. These costs are included in the reported profit, whereas the Rs 3.91 crore operating cash outflow additionally reflects the timing of cash movements in working capital.

What do Thomas Scott's working-capital balances show?

Thomas Scott's inventory balance was Rs 114.88 crore at September 30, 2026, compared with Rs 77.08 crore at March 31, 2026. The cash-flow statement separately records a Rs 29.05 crore inventory increase during H1, identifying stock as the largest specifically disclosed use of operating cash.

Trade receivables were Rs 73.99 crore at September 30, 2026, while other current assets were Rs 47.38 crore. The cash-flow statement reports a Rs 12.23 crore decrease in trade receivables during H1, showing that the period-end receivables balance and the cash-flow movement capture different points in the company’s operating cycle.

Thomas Scott also reported a Rs 1.27 crore decrease in trade payables and a Rs 25.40 lakh decrease in current provisions in its H1 cash-flow statement. The filing does not provide management commentary on the composition of the inventory increase, its expected timing of sale, or the expected release of cash from working capital.

How did Thomas Scott's cash position change despite the operating outflow?

Thomas Scott's cash and cash equivalents increased by Rs 1.59 crore during H1 to Rs 1.65 crore at September 30, 2026, from Rs 5.37 lakh at the beginning of the period. The increase followed the Rs 3.91 crore operating outflow because investing and financing cash flows also affected the closing balance.

Net cash used in investing activities was Rs 6.14 crore in H1 2026, while net cash from financing activities was Rs 7.51 crore. Financing cash flows included Rs 4.52 crore of proceeds from issuing share warrants, and the statement records Rs 2.32 crore of interest expense within financing activities.

Paid-up equity share capital was Rs 14.85 crore at September 30, 2026, compared with Rs 14.67 crore at March 31, 2026. Other equity was Rs 138.70 crore at the half-year end versus Rs 122.64 crore at March 31, 2026, while total assets and total equity and liabilities were each Rs 261.69 crore.

What does Thomas Scott disclose about its business and results review?

Thomas Scott states that it is primarily engaged in the manufacturing and trading of textile products and reports a single business segment. Export turnover was nil for the half year ended September 2026, so the company did not provide geographical segment reporting for that period.

The Board approved the unaudited September 2026 half-year results on November 12, 2026, following Audit Committee review. Bharat Gupta & Co., Chartered Accountants, conducted a limited review under Standard on Review Engagement 2410 and reported that nothing had come to its attention indicating the statement lacked required disclosures; the report also states that a review provides less assurance than an audit.

The income statement gives H1 profit before tax as Rs 15.00 crore, while the cash-flow statement begins with Rs 14.99 crore. Thomas Scott provides no reconciliation for the Rs 1.04 lakh difference between those separately presented figures.

Conclusion

Thomas Scott reported higher H1 revenue and profit for the period ended September 30, 2026, but did not generate positive operating cash. Revenue rose to Rs 144.74 crore and profit before tax reached Rs 15.00 crore, while the Rs 29.05 crore inventory increase and other working-capital movements contributed to a Rs 3.91 crore operating cash outflow.

The next results will show whether inventory of Rs 114.88 crore and other current-asset balances decline or require further cash deployment. The filing provides no inventory-release target or working-capital outlook, while subsequent disclosures can also clarify cash flows related to the Rs 4.52 crore share-warrant proceeds and finance costs of Rs 2.32 crore in H1.