Hindusthan Engineering Annual Reports, Balance Sheet and Financials

Hindusthan Engineering & Industries Limited Balance Sheet (Rs in Lakhs)

Hindusthan Engineering & Industries Limited Profit & Loss Statement (Rs in Lakhs)

Hindusthan Engineering & Industries Limited Consolidated Cash Flow Statement (Rs in Lakhs)

Here is a summary of the Cash Flow Statement for the years 2024 and 2023:

Cash Flow from Operating Activities

For the financial year ending 31st March 2024, the company recorded a net profit before tax of ₹27,597 lakhs, a significant increase from ₹9,434 lakhs in the previous year (31st March 2023). Adjustments to this figure include depreciation and amortization expenses of ₹3,585 lakhs, which remained relatively stable compared to ₹3,457 lakhs in 2023, reflecting the ongoing depreciation of existing assets. Other notable adjustments include a remeasurement of the defined benefit plan of ₹311 lakhs and a net interest received of ₹1,182 lakhs, both of which helped improve the company’s cash position.

After these adjustments, the operating profit before working capital changes stood at ₹30,308 lakhs, more than double the previous year’s ₹12,267 lakhs, reflecting stronger core operational performance. However, changes in working capital had a significant negative impact. Trade and other receivables decreased by ₹5,881 lakhs in 2024, which was less than the decrease of ₹8,244 lakhs in 2023. On the inventory side, there was a sharp increase of ₹32,697 lakhs in 2024, compared to ₹12,341 lakhs in 2023, indicating that the company tied up a significant portion of its resources in inventory. Meanwhile, trade and other payables increased by ₹10,185 lakhs, providing some relief to cash flow.

As a result, the cash generated from operations was ₹1,915 lakhs in 2024, compared to ₹814 lakhs in 2023. However, after paying direct taxes of ₹6,546 lakhs (up from ₹2,354 lakhs in 2023), the net cash flow from operating activities turned negative at ₹4,631 lakhs in 2024, a deeper outflow compared to the negative ₹1,540 lakhs in 2023.

Cash Flow from Investing Activities

The company’s cash flow from investing activities remained negative in both years, reflecting continuous investment in assets. In 2024, the company spent ₹4,024 lakhs on the purchase of fixed assets, which is slightly less than ₹4,458 lakhs in 2023. The company also made significant outflows of ₹9,595 lakhs on loans and financial assets, compared to ₹5,754 lakhs in 2023, suggesting an increase in investments or loans to external parties.

However, there were some inflows, including interest received of ₹4,125 lakhs in 2024 (up from ₹2,541 lakhs in 2023), and modest proceeds from the sale of fixed assets amounting to ₹74 lakhs. After factoring in all these components, the net cash flow from investing activities was negative ₹9,456 lakhs in 2024, worse than the negative ₹7,624 lakhs in 2023. This indicates that the company continues to invest heavily in assets and loans, reducing its available cash.

Cash Flow from Financing Activities

The company’s financing activities provided a positive boost to cash flow in 2024, although the net inflow was slightly lower than in 2023. The company raised ₹12,651 lakhs from borrowings in 2024, slightly less than the ₹13,708 lakhs raised in 2023. On the outflow side, the finance cost (interest paid) increased significantly to ₹2,943 lakhs from ₹1,775 lakhs in 2023, reflecting higher borrowing costs.

Overall, the net cash flow from financing activities was positive ₹9,708 lakhs in 2024, though lower than the ₹11,933 lakhs seen in 2023. These inflows from financing activities helped counterbalance the cash outflows from operations and investing activities, but not enough to avoid an overall decline in cash reserves.

Net Increase/Decrease in Cash and Cash Equivalents

The company experienced a net decrease in cash and cash equivalents of ₹4,379 lakhs in 2024, compared to a net increase of ₹2,769 lakhs in 2023. This decrease was primarily driven by heavy investments in assets and financial loans, along with negative cash flow from operating activities. The company began the year with cash and cash equivalents of ₹6,310 lakhs and ended with ₹1,931 lakhs by 31st March 2024, significantly reducing its liquidity.

Financial Ratios of Hindusthan Engineering & Industries Limited

 Here is a summary of the financial and operational metrics for Hindusthan Engineering & Industries Limited for the year 2024 and 2023:

Current Ratio

The current ratio measures the company 's ability to meet its short-term obligations with its short-term assets. In 2024, the current ratio was 2.17, slightly lower than 2.41 in 2023. A ratio above 1 indicates that the company has more current assets than current liabilities, suggesting good liquidity. However, the slight decline indicates a reduced margin of safety in covering short-term debts, which could be due to either an increase in liabilities or a decrease in current assets.

Debt-Equity Ratio

The debt-equity ratio reflects the proportion of debt used to finance the company relative to shareholders’ equity. It increased from 0.24 in 2023 to 0.29 in 2024, indicating a modest rise in the company’s leverage. This suggests that the company has taken on slightly more debt relative to equity. A low debt-equity ratio, like this, indicates financial stability and lower risk, as the company is not overly reliant on borrowing.

Debt Service Coverage Ratio (DSCR)

The debt service coverage ratio (DSCR) measures the company’s ability to repay its debt obligations from its operating income. In 2024, the DSCR improved to 8.86 from 6.58 in 2023. This significant improvement indicates that the company generates much more than enough income to cover its debt payments, showcasing strong financial health and reduced risk of default.

Return on Equity (ROE) Ratio

The return on equity (ROE) ratio reflects the company’s ability to generate profits from shareholders ' equity. The ROE rose sharply from 0.06 in 2023 to 0.16 in 2024, showing improved profitability. This means the company generated higher returns for its shareholders in 2024, which is a positive signal of growth and efficient utilization of equity capital.

Inventory Turnover Ratio

The inventory turnover ratio measures how efficiently the company manages its inventory. In 2024, the ratio dropped to 5.13 from 5.66 in 2023, indicating that the company turned over its inventory less frequently. A lower ratio could imply that inventory is moving more slowly, which might lead to higher storage costs or potential obsolescence. This might also suggest challenges in managing stock levels or demand fluctuations.

Trade Receivables Turnover Ratio

The trade receivables turnover ratio increased from 8.8 in 2023 to 11.6 in 2024. This indicates that the company is collecting payments from its customers more efficiently and quickly in 2024. A higher turnover ratio is generally positive, reflecting improved credit management and cash flow from receivables, reducing the risk of bad debts.

Trade Payables Turnover Ratio

The trade payables turnover ratio decreased slightly from 10.32 in 2023 to 9.97 in 2024. This ratio indicates how quickly the company is paying off its suppliers. A slight decrease suggests that the company is taking slightly longer to pay its suppliers in 2024, which could be a strategy to better manage its working capital or a reflection of extended payment terms.

Net Capital Turnover Ratio

The net capital turnover ratio increased significantly from 2.36 in 2023 to 3.1 in 2024. This shows that the company has become more efficient in using its working capital to generate revenue. A higher ratio indicates better management of current assets and liabilities, as the company is generating more sales from the capital employed in its day-to-day operations.

Net Profit Ratio

The net profit ratio improved from 4.06% in 2023 to 7.52% in 2024, showing that the company was able to convert a greater proportion of its revenue into net profit. This improvement in profitability indicates better cost control, pricing strategies, or increased operational efficiency. A higher net profit margin reflects stronger financial health and a more profitable core business.

Return on Capital Employed (ROCE)

The return on capital employed (ROCE), which measures the company’s efficiency in generating profits from its total capital, rose significantly from 7.57% in 2023 to 16.76% in 2024. This sharp increase indicates that the company has become much more effective at using its capital to generate profits, suggesting a higher level of operational efficiency and stronger profitability. This is a highly positive indicator of overall business performance.

Dividend history

 In both 2024 and 2023, the company did not declare or distribute any dividend per share, meaning shareholders did not receive direct payouts from the company 's profits during these years. Instead, the company chose to retain its earnings, which is reflected in the growth of retained earnings.

Retained earnings represent the portion of net income that is not distributed as dividends but is reinvested in the company for growth, expansion, or to improve liquidity. The company’s retained earnings increased significantly from ₹56,001 lakhs in 2023 to ₹75,685 lakhs in 2024, indicating a strong growth in profitability and the decision to retain profits for internal purposes rather than distributing them to shareholders.