UPL operating cash outflow doubles as inventory build-up

UPL Limited reported Rs 9,587 crore of net cash used in operating activities for the half year ended September 30, 2026, nearly twice the Rs 4,811 crore used a year earlier. A Rs 7,489 crore inventory increase was the largest working-capital cash use, while net proceeds from current borrowings rose to Rs 10,418 crore.

Why did UPL's operating cash outflow nearly double?

UPL's operating cash outflow nearly doubled because inventory growth, lower trade and other payables, and tax payments outweighed Rs 3,565 crore of operating profit before working-capital changes. Net cash used in operating activities was Rs 9,587 crore in the half year ended September 30, 2026, compared with Rs 4,811 crore in the corresponding half year ended September 30, 2025.

The largest movement was a Rs 7,489 crore increase in inventories, compared with a Rs 5,877 crore increase in the prior-year half. UPL also recorded a Rs 4,651 crore decrease in trade and other payables, versus a Rs 962 crore decrease a year earlier. Trade receivables and other assets absorbed a further Rs 323 crore, while net income taxes paid were Rs 689 crore, compared with a Rs 33 crore inflow in the earlier period.

Operating profit before working-capital changes increased by Rs 118 crore year on year, but this did not convert into operating cash generation. Depreciation and amortisation rose to Rs 1,651 crore from Rs 1,502 crore, while finance costs declined to Rs 1,671 crore from Rs 1,791 crore. The cash-flow statement indicates that the larger deficit arose from working-capital movements rather than a reduction in the pre-working-capital measure.

How much did UPL's inventory increase during the first half?

UPL's inventory balance rose by Rs 7,489 crore to Rs 20,165 crore at September 30, 2026, from Rs 12,676 crore at March 31, 2026. The increase was the largest individual working-capital item in the consolidated cash-flow statement for the half year.

Trade receivables increased by Rs 763 crore to Rs 18,637 crore from Rs 17,874 crore over the same period. Other current assets rose by Rs 53 crore to Rs 3,300 crore, while total current assets increased by Rs 5,283 crore to Rs 47,445 crore. The inventory rise was therefore larger than the total increase in current assets, reflecting movements in other current asset categories.

UPL does not identify a product, geography or business segment responsible for the inventory build-up in the supplied financial statements. Its three reported segments are crop protection, seeds and post harvest, and non agro. Crop protection recorded Rs 16,693 crore of first-half segment revenue, compared with Rs 3,608 crore for seeds and post harvest and Rs 1,908 crore for non agro, but the filing does not allocate inventory balances between them.

How did UPL finance its working-capital requirement?

UPL reported Rs 10,418 crore of net proceeds from current borrowings in the half year ended September 30, 2026, compared with Rs 3,902 crore in the previous-year half. This was the largest financing cash inflow and contributed to Rs 8,124 crore of net cash generated from financing activities, after Rs 155 crore of net cash used in financing activities a year earlier.

The higher current-borrowing inflow coincided with Rs 9,587 crore of operating cash use and Rs 1,270 crore of net investing cash use. The filing reports these movements separately and does not assign particular borrowing proceeds to specific inventory purchases. Net proceeds from current borrowings were Rs 6,516 crore higher year on year, while the inventory cash outflow was Rs 1,612 crore higher.

Financing outflows in the 2026 half included Rs 1,370 crore of interest and other financial charges, Rs 507 crore of dividends and Rs 417 crore of lease-liability repayments. In the 2025 half, UPL had repaid Rs 3,409 crore of perpetual bonds and received Rs 1,685 crore from a rights issue, neither of which appears in the 2026 half-year financing cash-flow items.

What changed in UPL's debt and cash position?

UPL's reported borrowings increased by Rs 10,669 crore to Rs 32,715 crore at September 30, 2026, from Rs 22,046 crore at March 31, 2026. Current borrowings rose by Rs 15,278 crore to Rs 21,789 crore, while non-current borrowings fell by Rs 4,609 crore to Rs 10,926 crore, shifting a larger share of borrowings into current liabilities.

UPL disclosed that Rs 9,573 crore of current borrowings at September 30, 2026 consisted of current maturities of long-term debt payable within the next 12 months. The comparable amount was Rs 4,733 crore at March 31, 2026. That Rs 4,840 crore increase explains part of the rise in current borrowings and is separate from the Rs 10,418 crore net current-borrowing proceeds reported in cash flows.

Cash and cash equivalents fell by Rs 2,707 crore during the half year to Rs 3,268 crore from Rs 5,975 crore at the start of the period. Investing activities used Rs 1,270 crore, including Rs 908 crore invested in associates and joint ventures, Rs 618 crore spent on property, plant and equipment including capital work-in-progress and capital advances, and Rs 180 crore on intangible assets including assets under development.

Conclusion

UPL's first-half figures show operating activities consumed Rs 9,587 crore of cash despite Rs 3,565 crore of operating profit before working-capital changes. The Rs 7,489 crore inventory increase and Rs 4,651 crore reduction in trade and other payables were the principal cash uses, while Rs 10,418 crore of net current-borrowing proceeds coincided with a Rs 10,669 crore rise in reported borrowings.

The next disclosed corporate milestone is UPL's proposed composite scheme, approved by its board on February 20, 2026. The Competition Commission of India approved the scheme on June 2, 2026, and BSE Limited and the National Stock Exchange of India Limited issued observation letters on July 29, 2026, but shareholder, regulatory and National Company Law Tribunal approvals remain pending; no accounting effect had been given as of September 30, 2026.