How has been the historical performance of Modi Rubber?

Dec 02 2025 10:59 PM IST

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Modi Rubber has shown significant sales growth, increasing from 5.32 crore in March 2023 to 29.20 crore in March 2025, and a rise in consolidated net profit to 20.46 crore. However, the company continues to struggle with negative operating profits and cash flow issues.

Revenue and Operating Performance Trends

Over the past six years, Modi Rubber’s net sales have shown a substantial upward trajectory, rising from ₹5.24 crores in March 2019 to ₹29.20 crores by March 2025. This growth is particularly notable from fiscal 2023 onwards, where sales surged from ₹5.32 crores to over ₹29 crores within two years, signalling a strong expansion phase. Despite this, the company has consistently reported operating losses excluding other income, with operating profit margins deeply negative, reflecting high expenditure relative to sales. For instance, operating profit margins excluding other income were below -500% in the latest fiscal year, underscoring ongoing operational challenges.

Employee costs and other expenses have increased in line with sales growth, with employee costs rising from around ₹4.64 crores in 2019 to ₹14.45 crores in 2025, and other expenses climbing to ₹31.45 crores in the latest year. Raw material costs, which were negligible in earlier years, have also become a factor, reaching ₹3.84 crores in 2025. These cost pressures have contributed to operating losses, although other income has partially offset these, resulting in a narrower operating loss in recent years.

Profitability and Earnings Analysis

Despite operating losses, Modi Rubber’s consolidated net profit has shown a strong positive trend since 2020, turning from a loss of ₹2.33 crores to a profit of ₹20.46 crores in 2025. This turnaround is largely driven by the company’s share in profit of associates, which has grown significantly from ₹8.12 crores in 2020 to over ₹31 crores in 2025. This income stream has been crucial in offsetting operational deficits and driving consolidated profitability.

Earnings per share (EPS) have mirrored this improvement, rising from a negative ₹0.93 in 2020 to ₹8.18 in 2025, reflecting enhanced shareholder returns. However, the company’s profit before tax has remained negative on an operational basis, indicating that core business profitability still requires improvement. Tax expenses have fluctuated, with some years showing tax credits, further complicating the profit picture.

Balance Sheet and Financial Position

Modi Rubber’s balance sheet has strengthened steadily, with shareholder’s funds increasing from ₹406.70 crores in 2020 to ₹687.50 crores in 2025. Total reserves have also grown substantially, supporting the company’s net worth. The company’s total liabilities have increased moderately, with total debt rising from ₹2.49 crores in 2020 to ₹17.24 crores in 2025, reflecting some leverage but at manageable levels relative to equity.

Asset quality appears stable, with net block assets increasing significantly, indicating ongoing capital investment. Current assets have also grown, supported by rising current investments and cash balances, which reached ₹11.33 crores in 2025. The company’s net current assets remain positive, suggesting adequate liquidity to meet short-term obligations.

Cash Flow and Operational Efficiency

Cash flow from operating activities has been negative in recent years, with ₹28 crores outflow in 2025, reflecting the operational losses and working capital demands. However, cash flow from investing activities has been positive, indicating asset sales or investment income, which helped the company maintain a positive net cash inflow of ₹1 crore in 2025. Financing activities have seen modest outflows, suggesting some debt repayments or dividend payments.

Overall, Modi Rubber’s historical performance reveals a company in transition. While operational profitability remains a challenge, the significant contribution from associates and improved consolidated net profits highlight a successful turnaround phase. The company’s growing reserves, stable asset base, and manageable debt levels provide a solid foundation for future growth and operational improvements.

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