Z-Tech reports Rs 58.24 crore operating cash outflow for half year

Z-Tech (India) Limited reported a Rs 58.24 crore net cash outflow from operating activities for the half year ended 30 September 2026, despite profit after tax of Rs 11.94 crore. Trade receivables increased by Rs 29.18 crore and loans, advances and other assets increased by Rs 31.91 crore during the period.

Why did Z-Tech report negative operating cash flow?

Z-Tech used Rs 58.24 crore in operating activities in the half year ended 30 September 2026, compared with an outflow of Rs 9 lakh in the corresponding half year ended 30 September 2025. Cash generated from or used in operations changed to an outflow of Rs 55 crore from an inflow of Rs 3.02 crore, while net income taxes paid were Rs 3.24 crore against Rs 3.12 crore a year earlier.

The cash-flow statement uses the indirect method under Accounting Standard 3, starting with profit before tax and adjusting for non-cash items, finance costs, interest income and working-capital movements. Z-Tech's profit before tax rose to Rs 17.53 crore from Rs 12.65 crore, while operating profit before working-capital changes increased to Rs 19.56 crore from Rs 12.46 crore. The movement from that pre-working-capital profit to cash used in operations reflects the reported balance-sheet movements.

Which working-capital movements consumed Z-Tech's cash?

Z-Tech's trade receivables increased by Rs 29.18 crore in the half year ended 30 September 2026, after a Rs 31.45 crore increase in the corresponding 2025 period. Loans, advances and other assets increased by Rs 31.91 crore, reversing a Rs 29 crore decrease a year earlier. Together, these two movements used Rs 61.09 crore of cash in the 2026 half year.

Inventories increased by Rs 1.27 crore, compared with a Rs 1.13 crore reduction in the prior-year half. Trade payables decreased by Rs 12.44 crore, against a Rs 5.51 crore decrease in the corresponding period, adding to cash use. Other liabilities and provisions increased by Rs 24 lakh, whereas they had decreased by Rs 2.60 crore in the earlier half year.

The 30 September 2026 balance sheet gives context for the movements. Trade receivables stood at Rs 123.16 crore, up from Rs 93.97 crore at 31 March 2026, while short-term loans and advances were Rs 65.72 crore versus Rs 29.34 crore. Other current assets fell to Rs 80.21 crore from Rs 107.66 crore. The cash-flow classification combines loans, advances and other assets, so it cannot be reconciled to one balance-sheet line from the disclosed figures alone.

How did Z-Tech's profit and revenue change while cash was used?

Z-Tech reported profit after tax of Rs 11.94 crore for the half year ended 30 September 2026, up from Rs 9.10 crore in the corresponding prior-year half, while revenue from operations rose to Rs 72.35 crore from Rs 54.98 crore. Profit before tax increased by Rs 4.88 crore to Rs 17.53 crore. Reported profit therefore increased even as operating cash flow moved from a Rs 9 lakh outflow to a Rs 58.24 crore outflow.

Creative Park development & Operations recorded half-year revenue of Rs 60.17 crore, compared with Rs 46.72 crore a year earlier, and segment profit before tax, depreciation and non-controlling interest of Rs 22.84 crore versus Rs 13.52 crore. Engineered Infra revenue increased to Rs 12.19 crore from Rs 8.26 crore, while its segment profit on the same stated basis rose to Rs 84 lakh from Rs 65 lakh. Z-Tech said assets and liabilities are used interchangeably between segments, making meaningful segment-level asset and liability disclosure impracticable.

Employee benefits expense rose to Rs 8.07 crore from Rs 5.40 crore, finance costs increased to Rs 2.92 crore from Rs 28 lakh, and depreciation and amortisation increased to Rs 2.37 crore from Rs 52 lakh. Interest income was Rs 3.33 crore, compared with Rs 66 lakh, and was deducted in calculating operating profit before working-capital changes because it is shown separately as an investing cash inflow. These adjustments explain why the indirect cash-flow calculation differs from the income-statement profit figure.

How was Z-Tech's cash position funded and deployed?

Z-Tech generated Rs 13.36 crore from investing activities in the half year ended 30 September 2026, compared with using Rs 4.37 crore in the corresponding 2025 half. Net bank deposits and other bank balances provided Rs 24.96 crore, interest received was Rs 3.33 crore, and purchases of property, plant and equipment, intangibles and capital work-in-progress used Rs 14.92 crore. That investment outlay exceeded the Rs 5.36 crore used in the prior-year period.

Financing activities provided Rs 48.91 crore, compared with Rs 2.30 crore in the prior-year half. The largest item was Rs 64.20 crore of net proceeds from shares issued on warrant conversion. Net borrowings decreased by Rs 12.38 crore and finance costs paid were Rs 2.92 crore. Z-Tech allotted 17.12 lakh equity shares during the half year after receiving the remaining 75% of the Rs 375 issue price per warrant.

Cash and cash equivalents increased to Rs 16.62 crore at 30 September 2026 from Rs 12.59 crore at the start of the period. The closing amount comprised Rs 7.18 crore in bank current accounts and Rs 9.44 crore in cheques or drafts on hand. Separately, paid-up share capital rose to Rs 16.17 crore from Rs 14.46 crore at 31 March 2026, while money received against share warrants declined to Rs 12.30 crore from Rs 34 crore.

What did the auditor review cover?

Z-Tech's unaudited standalone results for the half year ended 30 September 2026 were reviewed by NAV & Co LLP, which reported on 13 November 2026 that nothing had come to its attention suggesting the statement failed to make required disclosures or contained a material misstatement. The Audit Committee reviewed the results and the Board approved them at meetings held on 13 November 2026.

The auditor said a review under Standard on Review Engagements 2410 is substantially narrower than an audit and does not provide assurance that all significant matters identified in an audit would be found. NAV & Co LLP therefore did not express an audit opinion. Z-Tech separately declared that its statutory auditors had provided an unmodified opinion on the unaudited results.

Conclusion

Z-Tech's half-year accounts show higher revenue, profit before tax and profit after tax alongside a substantially larger operating cash outflow. The Rs 58.24 crore operating cash use was principally associated with Rs 61.09 crore absorbed by receivables and loans, advances and other assets, while lower trade payables and higher inventories added to the working-capital requirement. Equity proceeds of Rs 64.20 crore and an investing inflow of Rs 13.36 crore enabled cash and cash equivalents to increase by Rs 4.03 crore.

The next disclosed unresolved matter is Z-Tech's appeal before the Commissioner of Income Tax (Appeals) against income-tax demand notices totalling Rs 16.87 crore. Z-Tech has made no provision, stating that it expects the demand, and any consequential interest or penalty if applicable, not to sustain on disposal of the appeal. Subsequent cash conversion will also depend on movement in the Rs 123.16 crore receivables balance and Rs 65.72 crore of short-term loans and advances reported at 30 September 2026.