Revenue and Operating Income Growth
Between March 2007 and March 2008, Archies recorded an increase in net sales from ₹104.73 crores to ₹117.90 crores, marking a growth of approximately 12.6%. The total operating income mirrored this trend, rising to ₹117.90 crores in March 2008 from ₹104.73 crores the previous year. This growth was achieved despite a slight reduction in raw material costs, which decreased from ₹14.87 crores to ₹13.36 crores, indicating improved cost efficiency in procurement or production inputs.
However, the purchase of finished goods saw a notable rise from ₹22.49 crores to ₹33.63 crores, suggesting a strategic increase in inventory or outsourcing to meet demand. The company also experienced a significant increase in manufacturing expenses, which rose from ₹41.40 crores to ₹46.79 crores, reflecting higher operational activity or inflationary pressures. Employee costs increased from ₹12.33 crores to ₹15.39 crores, consistent with business expansion or wage adjustments.
Profitability Margins and Earnings
Operating profit before depreciation, interest, and tax (PBDIT) excluding other income improved from ₹13.80 crores in March 2007 to ₹15.20 crores in March 2008. Including other income, operating profit rose to ₹16.69 crores from ₹15.12 crores, indicating a modest increase in ancillary income streams. Interest expenses increased moderately from ₹0.83 crores to ₹1.27 crores, which slightly tempered gross profit before depreciation and tax (PBDT), though it still grew from ₹14.29 crores to ₹15.41 crores.
Depreciation expenses rose marginally, reflecting ongoing capital investments or asset utilisation. Profit before tax increased from ₹11.87 crores to ₹12.68 crores, while profit after tax (PAT) rose from ₹7.82 crores to ₹8.17 crores. This translated into a slight improvement in earnings per share (EPS) from ₹2.40 to ₹2.42, signalling stable shareholder returns. Operating profit margins remained robust, though they experienced a minor dip from 13.18% to 12.89%, and PAT margins decreased from 7.46% to 6.93%, reflecting increased costs and interest burden.
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Balance Sheet and Reserves
Archies' equity capital increased slightly from ₹6.51 crores to ₹6.76 crores, while reserves expanded significantly from ₹61.15 crores to ₹72.93 crores, indicating retained earnings accumulation and strengthening of the company's net worth. The face value of shares remained constant at ₹10.0, maintaining shareholder equity structure.
Cash Flow Analysis
The company’s cash flow position improved markedly over the period. Cash flow from operating activities increased from ₹7.09 crores to ₹7.97 crores, reflecting enhanced operational efficiency and profitability. Despite a continued negative cash flow from investing activities, which stood at ₹-11.85 crores in March 2008 compared to ₹-12.71 crores the previous year, Archies managed to increase cash flow from financing activities substantially from ₹5.62 crores to ₹10.10 crores. This infusion of funds contributed to a net cash inflow of ₹6.22 crores in March 2008, a significant improvement from a neutral cash flow position in March 2007.
Consequently, the closing cash and cash equivalents surged to ₹7.72 crores from ₹1.50 crores, providing the company with greater liquidity and financial flexibility.
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Summary of Historical Performance
Overall, Archies has shown consistent growth in revenue and profitability between fiscal years 2007 and 2008. While operating and net profit margins experienced slight compression due to rising costs and interest expenses, the company maintained positive earnings growth and improved cash flow generation. The increase in reserves and cash balances reflects prudent financial management and a strengthening balance sheet. These factors collectively suggest that Archies has been on a steady growth trajectory, balancing expansion with financial discipline.
Investors analysing Archies’ historical performance should note the company’s ability to grow sales and profits while managing working capital and financing needs effectively. The improved liquidity position and rising reserves provide a solid foundation for future growth opportunities, although margin pressures warrant close monitoring in the context of cost management and competitive dynamics.
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