How has been the historical performance of Azad India?

Revenue and Operating Performance

Azad India reported net sales of ₹9.03 crores in the fiscal year ending March 2025, marking its first recorded revenue after a nil base in the previous year. Despite this positive development, the company’s total operating income stood at ₹9.03 crores, with no other operating income recorded in either year. The cost structure, however, presents a complex picture. Raw material costs exceeded sales at ₹14.17 crores, while purchases of finished goods added another ₹2.79 crores to expenses. Manufacturing expenses were notably negative at ₹-8.62 crores, suggesting adjustments or credits in this category, while employee costs rose modestly to ₹0.47 crores from ₹0.09 crores the prior year.

Total expenditure excluding depreciation increased significantly to ₹10.09 crores from ₹1.30 crores, reflecting the company’s scaling operations. This resulted in an operating profit before depreciation, interest, and tax (PBDIT) excluding other income of a loss of ₹1.06 crores, an improvement from a larger loss of ₹1.30 crores the previous year. The inclusion of other income of ₹1.03 crores nearly offset this loss, bringing the operating profit close to breakeven at ₹-0.03 crores.

Profitability and Margins

Interest expenses remained minimal at ₹0.03 crores, with no exceptional items reported in the latest year. Gross profit before depreciation and tax (PBDT) was a marginal loss of ₹0.06 crores, improving from a loss of ₹1.22 crores the previous year. Depreciation charges of ₹0.11 crores were introduced in the current year, contributing to a profit before tax (PBT) loss of ₹0.18 crores, a significant reduction from the ₹1.21 crores loss in the prior year. The absence of tax expenses and provisions indicates no tax liabilities or contingencies impacting the bottom line.

Consequently, the consolidated net loss after tax narrowed to ₹0.18 crores from ₹1.21 crores, with earnings per share (EPS) improving from a negative ₹0.5 to a marginal negative ₹0.05. The operating profit margin excluding other income was negative at 11.74%, while the net profit margin stood at a modest negative 1.99%, reflecting ongoing challenges in achieving sustainable profitability.

Balance Sheet and Capital Structure

Azad India’s balance sheet expanded notably, with total assets increasing to ₹66.60 crores from ₹42.93 crores. Shareholder funds rose to ₹59.17 crores, supported by an increase in equity capital to ₹36.08 crores and reserves growing to ₹18.41 crores. The company introduced long-term borrowings of ₹2.64 crores, all unsecured, marking a new element in its capital structure. Current liabilities increased to ₹4.11 crores, reflecting higher trade payables and other current obligations.

On the asset side, the company reported capital work in progress of ₹6.09 crores and inventories valued at ₹17.97 crores, indicating ongoing investments and stock accumulation. Current assets rose to ₹56.61 crores, though cash and bank balances declined sharply to ₹1.47 crores from ₹42.93 crores the previous year. This reduction in liquidity is further underscored by cash flow statements showing a net cash outflow of ₹39 crores in the latest year, driven primarily by a substantial negative change in working capital of ₹50 crores and operating cash outflows of ₹51 crores.

Cash Flow and Liquidity

The cash flow analysis reveals a challenging liquidity position. Operating activities consumed ₹51 crores, a stark contrast to the previous year’s ₹1 crore outflow. Financing activities provided ₹10 crores, down from ₹44 crores, insufficient to offset the operating cash drain. Investing activities remained neutral. The company’s opening cash balance of ₹40 crores was largely depleted, leaving a closing cash balance of just ₹1 crore. This significant cash reduction highlights the need for careful working capital management and potential capital infusion to support ongoing operations.

Outlook

Azad India’s historical performance reflects a nascent stage of commercial activity with initial revenue generation but persistent losses and cash flow pressures. The company’s expanding asset base and capital investments suggest a focus on growth, yet profitability remains elusive. Investors should monitor operational efficiencies, cost management, and liquidity improvements as key indicators of future performance.

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