‘Interpretations Do Not Match Operating Realities’: Oswal Pumps Clarifies On Negative Cash Flow Concerns

Oswal Pumps on Thursday said that “some interpretations in a report circulating in the public domain do not fully reflect operating realities”, responding to recent concerns around its cash flow position and receivables.

In an exchange filing, the company sought to address what it described as selective readings of its financials, stressing that these do not capture the underlying nature of its business model and execution framework.

The company provided a detailed, point-by-point explanation to address the issues raised. Oswal Pumps emphasised that the commentary in question does not adequately factor in the operational structure of government-led programmes under which a significant portion of its business is executed.

Addressing concerns around negative operating cash flows and elevated receivables, Oswal Pumps explained that these trends are largely attributable to its participation in government schemes, where there is an inherent timing mismatch between revenue recognition and cash inflows.

The company noted that revenues are recognised upon execution and delivery, while cash collections are linked to subsidy disbursements from government authorities, which typically follow after prescribed verification and approval processes. This timing gap, it said, can temporarily result in negative operating cash flows and higher receivable balances, even though the underlying transactions are backed by government programmes.

On observations related to audit trail limitations, Oswal Pumps clarified that these pertain to its older enterprise resource planning (ERP) system, which had certain constraints in terms of automated audit trails. The company said it is in the process of migrating to a new ERP platform that offers significantly enhanced audit controls, improved traceability and stronger internal reporting mechanisms. According to the company, this transition is part of a broader effort to strengthen governance, compliance and transparency as the scale of operations expands.

Oswal Pumps also addressed concerns regarding the classification of supply chain financing. The company clarified that the financing arrangements in question are standard trade facilitation mechanisms and have been appropriately classified in line with applicable accounting practices. It stated that there has been no misrepresentation of liabilities and that the disclosures accurately reflect the nature of these arrangements.

The company maintained that while headline numbers may appear volatile due to the structure of government-led execution cycles, they do not reflect stress in the core business. Oswal Pumps added that it remains focused on improving systems, strengthening controls and ensuring greater clarity for stakeholders as it continues to scale its operations.