How has been the historical performance of Cranes Software?

Revenue and Operating Performance Trends

Over the past seven years, Cranes Software’s net sales have shown significant volatility. The company recorded a peak in revenue in the fiscal year ending March 2021, with net sales reaching ₹58.60 crores. However, this was followed by a sharp decline in subsequent years, with sales dropping to ₹8.21 crores by March 2025. The downward trend in sales since 2021 indicates challenges in sustaining business growth or market demand.

Operating income mirrored this pattern, with total operating income peaking in 2021 before contracting sharply. Raw material costs and employee expenses have generally decreased in line with sales, but other expenses have remained substantial, contributing to overall high expenditure levels. For instance, other expenses were ₹69.04 crores in 2021 but reduced to ₹5.12 crores by 2025, reflecting cost-cutting efforts.

Despite these efforts, the company has consistently reported negative operating profits excluding other income, with losses widening notably in the years following 2021. Operating profit margins have been deeply negative, reaching nearly -108% in 2024 and -38.6% in 2025, underscoring ongoing operational challenges.

Profitability and Margins

The company’s profitability has been under severe pressure, with consolidated net losses reported every year from 2019 through 2025. The fiscal year 2023 stands out with an exceptionally large net loss of ₹97.54 crores, a stark contrast to the modest losses in other years. Earnings per share have remained negative throughout, with the worst EPS recorded in 2023 at -₹8.28 per share, improving slightly to -₹0.95 by 2025.

Profit before tax has fluctuated widely, with a notable profit in 2023 of ₹130.69 crores, largely influenced by extraordinary other income items. However, this was offset by exceptional items and high interest costs in other years, contributing to negative gross and net profit margins. The PAT margin has consistently been negative, reaching as low as -255.6% in 2024, reflecting the company’s struggle to generate sustainable profits.

Balance Sheet and Financial Position

Cranes Software’s balance sheet reveals a challenging financial position. Shareholders’ funds have been negative since at least 2019, with the deficit widening to nearly -₹874 crores by 2025. This negative net worth is a significant concern, indicating accumulated losses and erosion of equity capital. The company carries no long-term borrowings but has substantial short-term borrowings, which increased from negligible levels in 2021 to ₹457.87 crores in 2025, signalling reliance on short-term debt financing.

On the asset side, total assets have shrunk considerably from ₹142.15 crores in 2020 to just ₹14.31 crores in 2025. Non-current assets have been largely written down, with net block values falling sharply over the years. Current assets have also declined, with net current assets remaining deeply negative, reflecting liquidity pressures. Contingent liabilities have remained relatively stable around ₹40 crores, adding to the company’s financial risks.

Cash Flow and Liquidity

Cash flow from operating activities has been negative in most years, with the company reporting outflows of ₹4 crores in 2025 and ₹15 crores in 2024. This trend highlights ongoing difficulties in generating cash from core operations. Investing activities have been largely neutral in recent years, while financing activities have provided some relief, with inflows of ₹5 crores in 2025 and ₹15 crores in 2024, likely reflecting debt or equity injections.

Closing cash and cash equivalents have diminished over time, standing at negligible levels in recent years, which may constrain the company’s ability to meet short-term obligations. The persistent negative cash flow and shrinking liquidity position underscore the financial stress faced by Cranes Software.

Outlook and Considerations for Investors

Overall, Cranes Software’s historical performance reveals a company grappling with declining revenues, sustained losses, and a weakened balance sheet. The negative equity position and reliance on short-term borrowings raise concerns about financial stability. While there have been occasional spikes in other income and profits before tax, these have not translated into consistent profitability or positive cash flows.

Investors should carefully weigh these factors against the company’s prospects and industry dynamics before considering exposure. The financial data suggests a need for strategic turnaround measures to restore growth and profitability.

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