Cash flow from operations

The cash the trading business actually produced, after paying suppliers, staff and usually tax, but before spending on new plant and before anything to do with lenders or shareholders. It is the first section of the cash flow statement and the one an analyst reads first.

Most companies present it by the indirect method, which starts at profit before tax and works backwards. Non-cash charges such as depreciation are added back because they reduced profit without moving money. Changes in working capital are then adjusted. Inventory that grew consumed cash, and payables that grew released it. Interest and tax are handled separately, and Indian and American rules send interest to different sections, which matters the moment a comparison crosses markets. What survives all of that's the money the operations left in the bank.

Take a manufacturer earning ₹615 crore of net profit. Add back ₹380 crore of depreciation, take off a ₹210 crore increase in working capital, and you're left with ₹785 crore of operating cash flow.

Profit is an opinion. This is closer to a fact.

One presentational difference between markets catches people out, and it's not the one most readers expect. Under the international standard, interest classification is left to the company until IFRS 18 removes that choice for most companies from 2027. Ind AS 7 already takes it away: an entity outside financial services must report interest paid and dividends paid in financing, and interest and dividends received in investing. So two Indian filers cannot differ here, and there's nothing to normalise between them. Across markets there's a gap. American filings keep interest paid and interest received inside operating, so the same borrower shows a higher operating cash flow on its Indian statements than the identical business would show on American ones, by its interest paid less the interest and dividends it received. That's the adjustment worth making, and it runs one way: Indian operating cash flow is flattered relative to the American measure, by more the more the company borrows.

Read it first, every time.