How has been the historical performance of Remedium Life?

Revenue and Profitability Overview

For the year ended 31 March 2025, Remedium Life reported total operating income of ₹405.25 crores, entirely derived from net sales, with no other operating income recorded. Despite this revenue base, the company faced substantial expenditure, notably a purchase of finished goods amounting to ₹534.28 crores, which exceeded its sales figure, indicating a high cost structure. The inventory adjustment showed a negative figure of ₹136.15 crores, reflecting an increase in stock levels during the period.

Operating expenses beyond purchases were minimal, with employee costs at ₹0.76 crores and other expenses totalling ₹7.44 crores. The total expenditure excluding depreciation stood at ₹406.34 crores, marginally surpassing operating income, resulting in an operating profit before other income of negative ₹1.09 crores. However, other income of ₹10.80 crores helped lift the operating profit (PBDIT) to ₹9.71 crores.

Interest expenses were significant at ₹5.29 crores, reducing gross profit before depreciation and tax to ₹4.42 crores. After accounting for depreciation of ₹0.04 crores, profit before tax was ₹4.38 crores. Following tax provisions of ₹2.25 crores, the company reported a consolidated net profit of ₹2.13 crores, translating to a modest profit after tax margin of 0.53% and earnings per share of ₹0.04.

Balance Sheet and Capital Structure

Remedium Life's balance sheet as of March 2025 shows total assets and liabilities each amounting to ₹1,720.31 crores. Shareholder's funds, comprising equity capital of ₹40.32 crores and reserves of ₹3.57 crores, totalled ₹43.89 crores. The company reported no long-term borrowings, but current liabilities were substantial at ₹1,676.46 crores, including trade payables of ₹500.96 crores and short-term borrowings of ₹1,141.39 crores. This heavy reliance on short-term debt highlights a leveraged position.

On the asset side, current assets matched current liabilities closely, with inventories valued at ₹269.38 crores and sundry debtors at ₹771.62 crores. Cash and bank balances were minimal at ₹1.43 crores. The net block of fixed assets was negligible at ₹0.01 crores, indicating limited investment in tangible assets. The book value per share stood at approximately ₹0.76, reflecting the modest net worth relative to the equity base.

Cash Flow and Working Capital Dynamics

Cash flow analysis reveals challenges in operational liquidity. The company generated a profit before tax of ₹4.00 crores, with adjustments of ₹5.00 crores. However, changes in working capital resulted in a significant outflow of ₹1,144 crores, leading to a negative cash flow from operating activities of ₹1,134 crores. There were no investing activities recorded during the year.

Financing activities provided a cash inflow of ₹1,136 crores, effectively offsetting the operational cash outflow and resulting in a net cash inflow of ₹1 crore. The closing cash and cash equivalents stood at ₹1 crore, up from zero at the start of the year. This pattern underscores the company's dependence on external financing to sustain operations amid working capital pressures.

Summary and Investor Considerations

In summary, Remedium Life's historical performance for the fiscal year ending March 2025 reflects a company operating with thin profit margins and a high level of short-term debt. The operating profit margin excluding other income was negative, while the gross profit margin was just above 1%. The net profit margin remained below 1%, signalling limited profitability despite reasonable revenue levels.

The balance sheet reveals a leveraged capital structure with current liabilities far exceeding shareholder equity, and a working capital cycle that exerts significant pressure on cash flows. The company’s reliance on financing activities to maintain liquidity highlights potential risks for investors, particularly in terms of solvency and operational sustainability.

Prospective investors should weigh these factors carefully, considering the company's modest earnings per share and low book value per share against its operational and financial challenges. While the company has managed to remain profitable on a consolidated basis, the narrow margins and heavy debt burden suggest cautious scrutiny is warranted before investment decisions.

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