Revenue and Operating Income Trends
Over the seven-year period ending March 2020, SKP Securities' net sales demonstrated variability, peaking notably in the fiscal year 2018 at ₹16.71 crores before declining to ₹11.10 crores by March 2020. Total operating income mirrored this pattern, with a high of ₹16.71 crores in 2018 and a subsequent decrease to ₹11.10 crores in 2020. The company’s other operating income, which contributed marginally in earlier years, ceased to appear from 2018 onwards, indicating a shift in income composition.
Cost Structure and Profitability
SKP Securities maintained a consistent employee cost base, rising moderately from ₹2.96 crores in 2014 to ₹3.85 crores in 2020. Manufacturing expenses fluctuated, with a peak of ₹7.05 crores in 2018, before falling to ₹3.06 crores in 2020. Other expenses emerged in 2019 and 2020, adding ₹5.43 crores and ₹3.54 crores respectively, impacting overall expenditure. Total expenditure excluding depreciation rose from ₹8.97 crores in 2014 to ₹10.45 crores in 2020, reflecting operational cost pressures.
Operating profit before depreciation and interest (PBDIT) excluding other income showed a significant decline from ₹6.40 crores in 2018 to ₹0.65 crores in 2020. Including other income, operating profit dropped from ₹7.25 crores in 2018 to ₹0.74 crores in 2020. Interest expenses remained relatively low but increased slightly to ₹0.16 crores in 2020. Depreciation costs rose to ₹0.60 crores in 2020, further compressing profitability.
Consequently, profit before tax fell sharply from ₹6.75 crores in 2018 to a marginal loss of ₹0.02 crores in 2020. After accounting for taxes, the company reported a net loss of ₹0.33 crores in 2020, a reversal from profits in previous years, including ₹5.10 crores in 2018 and ₹1.84 crores in 2019.
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Balance Sheet and Asset Management
SKP Securities' shareholder funds declined from ₹29.08 crores in 2019 to ₹21.55 crores in 2020, reflecting the impact of recent losses. The company's equity capital saw a notable change in 2020, recorded at ₹3.40 crores compared to ₹4.40 crores in prior years, possibly due to corporate actions or restructuring. Total reserves decreased from ₹24.68 crores in 2019 to ₹18.15 crores in 2020.
On the asset side, net block values remained relatively stable, with a slight decrease to ₹3.89 crores in 2020 from ₹4.09 crores in 2019. Non-current investments dropped significantly to ₹4.94 crores in 2020 from ₹17.31 crores the previous year, indicating divestments or revaluation. Current assets also declined to ₹24.02 crores in 2020 from ₹28.62 crores in 2019, with cash and bank balances rising to ₹11.72 crores, suggesting improved liquidity management.
Liabilities and Debt Position
The company maintained a low debt profile, with total debt at ₹0.22 crores in 2020, down from ₹0.41 crores in 2019. Current liabilities increased to ₹8.05 crores in 2020 from ₹4.41 crores in 2019, driven by higher trade payables and other current liabilities. Non-current liabilities remained minimal at ₹0.30 crores in 2020.
Cash Flow Analysis
Cash flow from operating activities turned negative in 2020, registering an outflow of ₹4.00 crores compared to a neutral position in 2019. Investing activities generated a positive cash inflow of ₹11.00 crores in 2020, a reversal from outflows in previous years, likely due to asset sales or reduced capital expenditure. Financing activities saw a cash outflow of ₹7.00 crores in 2020, reflecting repayments or dividend payments. Overall, net cash inflow was neutral in 2020, contrasting with negative cash flows in earlier years.
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Profitability Margins and Shareholder Returns
Operating profit margins excluding other income have contracted sharply from a high of 38.32% in 2018 to 5.86% in 2020. Gross profit margins followed a similar trend, declining from 41.79% in 2018 to 5.23% in 2020. The profit after tax margin turned negative at -2.97% in 2020, a significant drop from 30.54% in 2018 and 16.36% in 2019.
Earnings per share (EPS) reflected this downturn, falling from ₹11.60 in 2018 to a loss of ₹0.08 in 2020. Diluted EPS also declined from ₹10.27 in 2018 to a negative ₹0.82 in 2020. Book value per share remained relatively stable, with a slight decrease to ₹31.66 in 2020 from ₹33.06 in 2019, indicating moderate erosion of net asset value.
Summary of Historical Performance
SKP Securities has experienced a challenging period marked by declining revenues and profitability since its peak in 2018. The company’s operating and net profit margins have contracted significantly, culminating in a net loss in the latest fiscal year. Despite this, the balance sheet remains relatively robust with low debt levels and reasonable liquidity, supported by stable shareholder funds and cash reserves. Cash flow dynamics reveal a shift towards positive investing inflows, offset by negative operating cash flows in the most recent year.
Investors should note the volatility in earnings and margins, alongside the recent contraction in reserves and shareholder funds. The company’s ability to stabilise revenues and control costs will be critical for restoring profitability and enhancing shareholder value going forward.
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