How has been the historical performance of Sambandam Spg.?

Revenue and Operating Performance Trends

Examining the consolidated annual results from March 2019 through March 2025, Sambandam Spg.'s net sales exhibited notable volatility. The company achieved peak sales of nearly ₹355 crores in March 2022, a substantial increase from ₹231 crores in March 2021. However, sales declined to ₹268 crores by March 2025, indicating a contraction from the previous peak. Operating profit margins, excluding other income, mirrored this pattern, reaching a high of 14.2% in March 2021 and 13.1% in March 2022, before sharply falling to around 3.5% in March 2025. This decline suggests increasing pressure on operational efficiency and cost control.

Raw material costs, a significant component of total expenditure, rose in line with sales but also showed variability, peaking at ₹239 crores in March 2022 before easing to ₹182 crores in March 2025. Employee and power costs similarly fluctuated, with power costs notably spiking to ₹27 crores in March 2022 before settling at ₹18 crores in the latest fiscal year. Other expenses followed a similar trend, reflecting the company's operational cost challenges.

Profitability and Margins

Despite strong sales in earlier years, Sambandam Spg. has struggled with profitability in recent times. Operating profit (PBDIT) excluding other income peaked at ₹46.45 crores in March 2022 but dropped sharply to ₹9.27 crores by March 2025. The inclusion of other income did little to offset this decline. Interest expenses have steadily increased, reaching ₹11.46 crores in March 2025, which, combined with depreciation charges, has pushed the company into negative gross profit territory in the latest fiscal year.

Consequently, the company reported a loss before tax of over ₹10 crores in March 2025, continuing a trend of losses since March 2023. The net profit margin turned negative, with a loss after tax of ₹7.44 crores in March 2025, compared to a profit of ₹14.52 crores in March 2022. Earnings per share have followed suit, declining from a positive ₹35.4 in March 2022 to a negative ₹17.17 in March 2025, underscoring the financial strain on shareholders.

Balance Sheet and Debt Position

Sambandam Spg.'s balance sheet reveals a high leverage position. Total debt stood at ₹119 crores in March 2025, slightly down from ₹130 crores in March 2023 but still elevated compared to ₹74 crores in March 2020. Long-term borrowings have decreased from a peak of ₹65 crores in March 2022 to ₹46 crores in March 2025, while short-term borrowings remain substantial at ₹73 crores. Shareholders' funds have declined from ₹116 crores in March 2022 to ₹86 crores in March 2025, reflecting accumulated losses and reserve erosion.

On the asset side, net block values have decreased from ₹138 crores in March 2022 to ₹120 crores in March 2025, indicating some asset depreciation or disposals. Current assets have also contracted from ₹166 crores in March 2022 to ₹124 crores in March 2025, with inventories and sundry debtors showing a downward trend. The company's net current assets have shrunk significantly, signalling tighter liquidity conditions.

Cash Flow Analysis

Cash flow from operating activities has remained positive but modest, with ₹16 crores generated in March 2025 compared to ₹28 crores in March 2023. Investing activities have been relatively subdued recently, with no significant outflows in the latest fiscal year after heavy investments in prior years. Financing activities have seen consistent outflows, reflecting debt repayments or reduced borrowings. Overall, the net cash inflow/outflow has been neutral in recent years, indicating a cautious cash management approach amid profitability challenges.

Summary and Outlook

In summary, Sambandam Spg. has demonstrated a mixed historical performance with strong revenue growth until 2022, followed by a decline in sales and profitability. The company faces challenges from rising costs, elevated interest expenses, and shrinking margins, which have led to consecutive losses in recent years. Its balance sheet shows high leverage and reduced net worth, while cash flows remain positive but constrained.

Investors should weigh these factors carefully, considering the company's operational volatility and financial pressures. While the recent years have been difficult, the company’s ability to stabilise costs and manage debt will be critical for any future turnaround and sustainable growth.

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