How has been the historical performance of Orissa Bengal?

Revenue and Profitability Trends

In the fiscal year ending March 2025, Orissa Bengal reported net sales of ₹338.85 crores, marking a slight increase from ₹332.80 crores in the previous year. Despite this revenue growth of approximately 1.8%, the company's profitability showed a more nuanced picture. Operating profit before depreciation, interest, and tax (PBDIT) excluding other income rose significantly to ₹12.11 crores from ₹6.92 crores, reflecting improved operational efficiency and cost management. Including other income, operating profit increased to ₹12.76 crores compared to ₹9.30 crores the year before.

However, the company faced higher interest expenses, which nearly tripled to ₹3.89 crores from ₹1.30 crores, and depreciation costs doubled to ₹5.26 crores. These factors contributed to a decline in profit before tax to ₹3.61 crores from ₹5.45 crores. Consequently, net profit after tax fell to ₹2.31 crores, down from ₹3.69 crores, resulting in a reduced profit after tax margin of 0.68% compared to 1.11% previously. Earnings per share also declined from ₹1.75 to ₹1.10, signalling pressure on shareholder returns despite stable revenue.

Cost Structure and Margins

The company's total expenditure excluding depreciation remained largely stable at ₹326.74 crores, marginally higher than ₹325.88 crores in the prior year. Manufacturing expenses constituted the bulk of costs, increasing slightly to ₹317.19 crores. Employee costs decreased modestly to ₹4.46 crores, while other expenses also saw a slight reduction. Operating profit margin excluding other income improved to 3.57% from 2.08%, indicating better control over operating costs relative to revenue. Gross profit margin also edged up to 2.62% from 2.40%, though the overall net margin contracted due to higher financial charges and depreciation.

Balance Sheet and Financial Position

Orissa Bengal's balance sheet reflects a notable increase in total assets to ₹162.76 crores from ₹113.63 crores, driven by growth in both non-current and current assets. Non-current assets rose to ₹57.91 crores from ₹34.87 crores, supported by higher gross block and investments. Current assets increased to ₹104.85 crores from ₹78.75 crores, with significant growth in sundry debtors and short-term loans and advances.

Shareholders' funds strengthened to ₹91.78 crores from ₹89.44 crores, supported by reserves rising to ₹70.70 crores. However, total liabilities surged to ₹162.76 crores from ₹113.63 crores, largely due to a sharp increase in total debt from ₹13.65 crores to ₹59.02 crores. Long-term borrowings more than doubled, and short-term borrowings increased substantially, reflecting a higher leverage position. Contingent liabilities also expanded markedly, which may warrant close monitoring by investors.

Cash Flow and Liquidity

The company's cash flow position showed some strain in the latest fiscal year. Cash flow from operating activities turned negative at ₹-15 crores compared to a positive ₹6 crores previously, impacted by a significant ₹26 crore increase in working capital requirements. Investing activities continued to absorb cash, with outflows rising to ₹25 crores. Financing activities provided a substantial inflow of ₹41 crores, primarily through increased borrowings, which helped maintain a marginal net cash inflow of ₹1 crore. Closing cash and cash equivalents improved slightly to ₹1 crore from near zero, but the negative operating cash flow highlights potential liquidity challenges.

Summary and Outlook

Overall, Orissa Bengal's historical performance over the past year shows modest revenue growth and improved operating profitability, but these gains were offset by rising interest expenses and depreciation, leading to a decline in net profit and earnings per share. The company's balance sheet has expanded significantly, with increased asset base and higher leverage, which may raise concerns about financial risk. Negative operating cash flow and increased working capital requirements further underline the need for careful liquidity management.

Investors should weigh these factors alongside sector dynamics and broader market conditions when assessing Orissa Bengal's prospects. While operational improvements are evident, the financial costs and leverage trends suggest a cautious approach may be prudent.

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