How has been the historical performance of Balkrishna Paper?

Revenue and Operating Performance

Between March 2015 and March 2016, Balkrishna Paper's net sales surged dramatically from ₹28.16 crores to ₹198.30 crores, reflecting a robust expansion in its core business activities. This growth was complemented by a rise in other operating income, which increased from ₹0.14 crores to ₹1.57 crores, culminating in total operating income of ₹199.88 crores in March 2016 compared to ₹28.30 crores the previous year.

Despite this substantial revenue growth, the company faced challenges in controlling costs. Raw material expenses escalated from ₹14.03 crores to ₹106.66 crores, while power costs and manufacturing expenses also rose sharply, indicating increased operational scale but also higher input costs. Employee costs grew from ₹2.32 crores to ₹17.51 crores, consistent with the company's expansion.

These cost pressures contributed to an operating profit before depreciation and interest (PBDIT) excluding other income remaining negative, though the loss narrowed slightly from ₹0.61 crores in March 2015 to ₹3.86 crores in March 2016. Including other income, the operating loss was reduced to ₹3.27 crores in March 2016 from ₹0.50 crores the prior year.

Profitability and Margins

Notably, the company reported exceptional items amounting to ₹43.70 crores in March 2016, which significantly influenced its profitability metrics. After accounting for interest expenses that rose to ₹5.83 crores from ₹0.82 crores, and depreciation increasing to ₹6.92 crores, Balkrishna Paper posted a gross profit before depreciation and tax (PBDT) of ₹34.60 crores in March 2016, a marked improvement from a loss of ₹1.33 crores in the previous year.

This translated into a profit before tax of ₹27.67 crores in March 2016, reversing the prior year's loss of ₹2.42 crores. After tax provisions of ₹10.86 crores, the company achieved a profit after tax of ₹16.82 crores, compared to a loss of ₹2.14 crores in March 2015. Earnings per share (EPS) reflected this turnaround, rising to ₹15.66 from a negative ₹2.00.

Margins improved significantly, with the gross profit margin turning positive at 17.31% in March 2016 from a negative 4.7% the year before. The profit after tax margin also shifted from a negative 7.58% to a positive 8.41%, signalling enhanced operational efficiency and profitability.

Balance Sheet and Financial Position

Balkrishna Paper's balance sheet showed a strengthening in shareholder funds, which increased to ₹75.11 crores in March 2016 from ₹67.77 crores the previous year. Total reserves rose to ₹64.37 crores, supporting the equity base of ₹10.74 crores. The company managed to reduce its total debt from ₹86.24 crores to ₹65.37 crores, reflecting a more conservative leverage position.

Long-term borrowings remained relatively stable at around ₹46.59 crores, while short-term borrowings were halved from ₹38.70 crores to ₹18.78 crores, indicating improved liquidity management. Total liabilities decreased from ₹226.33 crores to ₹206.81 crores, consistent with the reduction in debt levels.

On the asset side, net block values declined from ₹104.69 crores to ₹77.24 crores, while capital work in progress increased to ₹80.17 crores, suggesting ongoing investments in capacity or infrastructure. Current assets rose modestly to ₹47.12 crores, supported by an increase in current investments to ₹12.10 crores and cash and bank balances improving to ₹3.59 crores.

Cash Flow and Liquidity

Cash flow from operating activities showed some volatility, decreasing from ₹5.00 crores in March 2015 to ₹2.00 crores in March 2016. However, cash flow from investing activities turned positive at ₹11.00 crores, compared to an outflow of ₹1.00 crore the previous year, reflecting asset acquisitions or disposals. Financing activities saw a higher outflow of ₹10.00 crores, up from ₹3.00 crores, likely due to debt repayments or other financing adjustments.

Overall, the company recorded a net cash inflow of ₹3.00 crores in March 2016, improving from a neutral cash position the year before. Closing cash and cash equivalents stood at ₹3.00 crores, indicating a modest but positive liquidity position.

Summary of Historical Performance

In summary, Balkrishna Paper's historical performance over the two fiscal years ending March 2015 and March 2016 reflects a significant transformation. The company moved from a loss-making position with limited revenue to a profitable entity with nearly sevenfold revenue growth. This was accompanied by improved margins, a stronger balance sheet, and better cash flow management.

While the operating profit remained negative excluding exceptional items, the overall profitability was bolstered by one-off gains. The reduction in debt and enhancement in shareholder funds indicate a healthier financial structure. However, the company still faces challenges in controlling operating costs and sustaining operating profitability without reliance on exceptional items.

Investors analysing Balkrishna Paper should consider both the impressive top-line growth and the underlying cost dynamics, alongside the company's ongoing investments and liquidity position, to assess its future prospects in the competitive paper manufacturing sector.

Limited Time Only! Subscribe for Rs. 12,999 and get 1 Year of MojoOne + an Additional Year Completely FREE. Don't miss out on this exclusive offer. Claim Your Free Year →