Cash flow from operations recover

Sep 01 2014, 02:02 IST
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For a sample of 251 companies, these rose by a third last year helped by efficient operations and a drop in working capital. For a sample of 251 companies, these rose by a third last year helped by efficient operations and a drop in working capital.
SummaryProfits may not be rising at a particularly fast clip but operating cash flows for a...

Profits may not be rising at a particularly fast clip but operating cash flows for a clutch of India’s top companies have seen a robust pick-up over the last couple of years, reports Nitin Shrivastava in Mumbai. For a sample of 251 companies, these rose by a third last year helped by efficient operations and a drop in working capital. Heavyweights Reliance Industries, Tata Motors, Bharti Airtel, TCS, Coal India and Tata Steel contributed nearly 60% to the jump.

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Consequently, aggregate free cash flows too increased by 81% y-o-y to probably a six-year high despite spends on capex at a strong R2.88 lakh crore. The rise in net cash flows from operations — which indicates a company’s ability to generate sufficient funds to grow the business and rely less on borrowings — was supported by a sharp reduction in working capital for some of the oil and gas firms and auto makers apart from a good performance by telcos and export-oriented firms.

A sterling show by overseas subsidiary JLR helped Tata Motors improve cash flows by nearly R14,000 crore to R36,151 crore while Tata Steel too reported a nearly 200bps improvement in operating margins helping it to report R13,145 crore of net operating cash flows. Bharti Airtel and Idea Cellular too turned in better numbers reporting net cash flows of R26,025 crore and R8,219 crore, respectively.

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