Paper Boat maker reports 96% decline in profit
What's the story
Hector Beverages, the maker of beverage brand Paper Boat, has reported a massive decline in profitability for the fiscal year ending March 2026. The company's annual financial statements show a staggering 96% drop in profit after tax to ₹2 crore from ₹46 crore last year. This comes despite a steady increase in revenue during the same period.
Revenue growth
Revenue growth amid declining profitability
Hector Beverages's operating revenue for FY26 stood at ₹760 crore, a year-on-year (YoY) increase of 13.8% from ₹668 crore in FY25.
The company also reported a total income of ₹778 crore in FY26, including other income of ₹18 crore.
This is an increase from the previous fiscal year's total income of ₹682 crore.
Information
Shift in product mix drives top line
The company's top line was driven by a shift in product mix during the fiscal year. Revenue from traded goods rose 30.2% to ₹574 crore, contributing over 75% of the operating revenue. However, revenue from manufactured goods declined 18.6% to ₹184 crore from ₹226 crore last year.
Expense surge
Rising costs impact bottom line
Despite the revenue growth, Hector Beverages's total expenditure for FY26 increased 22% to ₹776 crore from ₹636 crore in FY25.
Consumption of materials remained the largest cost head at ₹485 crore, accounting for 62.5% of total expenditure.
Employee benefit expenses declined marginally to ₹88 crore from ₹90 crore last year.
Operational costs
Increased spending on growth and operations
Hector Beverages also ramped up its spending on growth and operations during the fiscal year.
Advertising and promotional expenses jumped 55.6% to ₹28 crore while selling and distribution expenses increased 15.5% to ₹67 crore.
Job work charges more than doubled to ₹25 crore during the same period, with other operating expenses adding another ₹83 crore in FY26.
Profit drop
Decline in EBITDA and cash reserves
The higher expenditure has taken a toll on Hector Beverages's profitability, with EBITDA declining 39.7% to ₹41.4 crore in FY26 from ₹68.6 crore last year.
This has also led to a narrowing of the EBITDA margin from 10.3% to 5.4%.
The company's total assets stood at ₹522.5 crore at the end of FY26, with cash and bank balance declining by 29% to ₹101 crore while current assets stood at ₹365 crore.