A Project report

On
COMPANY - MRF Ltd

SUBMITTED TO SUBMITTED BY
PROF. SANJAY SHANBHAG YUVRAJ BHOLA
2017232130
SEC G
ABOUT THE COMPANY
MRF Ltd., incorporated in 1960 to take over the business of
the Madrass Rubber Factory, MRF later went public in 1961.
The company has its production plants at Tiruvottiyour,
Arakkonam, medak, kottayam and Goa. The Company
manufactures tyres and tubes in collaboration with Mansfield
tyre sand Rubber, US. Its products include Nylon grip.
Zigma, Tyredrome, etc. Its subsidiary companies are Funskool (India), MRF Corp and MRF
International .MRF diversified into conveyor belts in collaboration with Pierelli, Italy, in
1991-62, tied up with Vapocure, Australia, to manufacture polyurethane paint formulations
and later into tyre machines in collaboration with Abex, US. It also diversified into speciality
surface coatings, conveyor  belts and leather. MRF is planning to take over Dunlop, which is
a BIFR company. It has undertaken a study to examine Dunlop’s operations before firming
up its stand on the issue,. MRF is to extend support to the manufacturers, including investing
in like moulds and to finalize a proposal for development of area tyres for different aircraft
with the IAF in consultation with DGAQA ( Directorate General of Air Quality Assurance.)
It has launched a steel-belted premium radial ty8re variant called MRF ZVTS’. While this
tyres augments the company’s overall range of radials, it also marks a step forward in terms
of technology, performance and superior ride quality, ZVTS in available in more than 11
sizes to fit all Maruti vehicle sand Fiat, GM, For, Honda, Hyundai, Mitsubishi and Daewoo
cars, ZVTS9 has been develope4d especially for Indian road conditions. It has become an
original equipment supplier of radial tyres to Tata Indica . MRF has been selected as one of
India’s Top 10 companies for the sixth consecutive year  by the Far Eastern Economic
Review’s annual “ Review 200”.
DIVIDEND POLICY
Announcement Dividend Dividend/shar Total EPS
type e Dividen
d
05-05-17 FINAL 54.00 60 3421.44
03-02-17 INTERIM 3.00
27-10-16 INTERIM 3.00
100 5488.44
03-05-16 FINAL 94.00
29-10-15 INTERIM 3.00
27-07-15 INTERIM 3.00
50 2117.09
26-11-14 FINAL 44.00
30-10-14 INTERIM 3.00
23-07-14 INTERIM 3.00
30 1891.49
26-11-13 FINAL 24.00
24-10-14 INTERIM 3.00
25-07-13 INTERIM 3.00
25 1349.52
29-11-12 FINAL 19.00
25-10-12 INTERIM 3.00
25-07-12 INTERIM 3.00
 DIVIDEND POLICY
6,000.00

5,000.00

4,000.00

3,000.00

2,000.00

1,000.00

0.00
Mar'17 Mar'16 Sep’14 Sep’13 Sep’12

Basic EPS (Rs.) Dividend per share

INTERPRETATION
Two interim dividends of Rs.3 each per share (30% each) for the financial year ended 31st
March, 2017 were declared by the Board of Directors on 27th October, 2016 and on 03rd
February, 2017. The Board of Directors is now pleased to recommend a final dividend of
Rs.54/- per share (540%) on the paid up equity share capital of the Company, for
consideration and approval of the shareholders at the Annual General Meeting of the
Company. With this, the total dividend for the financial year ended 31st March, 201 7 works
out to Rs. 60/- per share (600%). The total amount of dividends aggregates to Rs. 25.45 crore.
As we can see in the table, there is a consistency of dividend payments which means that
company have a sound financial system and is able to meet the demands of shareholders,
which in turn keeps the share price of MRF Ltd high compared to other companies in the
same Industry.
WORKING CAPITAL MANAGEMENT
CURRENT ASSETS ( in Cr)

Mar’17(12 Mar’16-14(18 Sep’14 (12

months) months) months)
Current 2313.78 2102.75 1086.00
Investment
Inventories 2392.92 1879.74 1799.70
Cash and Bank 274.42 80.45 707.67
Other financial 10.08 10.39 24.37
assests
Other current 236.33 319.59 151.22
assests
Total current 5227.53 4392.92 3768.96
assests

CURRENT LIABILITIES ( in Cr)

Mar’17(12 Mar’16-14(18 sep’14 (12

months) months) months)
Borrowings 573.34 488.43 616.25
Trade payable 1677.08 1528.82 1130.34
Provisions 120.88 89.65 103.55
Other financial 550.85 442.26 310.60
liabilities
Other current 1491.62 1455.86 1423.76
liabilities
Current tax 62.44 3.91 127.26
liability
Total current 4475.21 4008.93 3711.76
Liabilities

There are various ways of managing and analysing Working Capital Management out of
which these ratios are the most used and analysed ratios of all:
Net Working Capital- The aggregate amount of difference between the total current assets
and total current liabilities is called Net Working Capital. It is used to analyse the capacity of
a company to pay off its current liabilities with its current assets.
Net Working Capital = Current Assets – Current Liabilities
Mar’17 Mar’16 Sep’14
TOTAL CURRENT ASSEST 5227.53 4392.92 3768.96
TOTAL CURRENT LIABILITY 4475.21 4008.93 3711.76
NET WORKING CAPITAL 752.32 383.99 57.2
INTERPRETATION
Company have a positive net working capital which means they have sufficient current asset
to meet their current liabilities or obligations. It also signifies that company can finance their
short term borrowings or liabilities meaning no financial distress.

Net working capital

5227.53
4475.21 4392.92
4008.93 3768.96
3711.76

752.32
383.99
57.2
Mar’17 Mar’16 Sep’14

TOTAL CURRENT ASSEST TOTAL CURRENT LIABILITY NET WORKING CAPITAL

Capital structure
years Mar’17 Mar’16(18mn Sep’14 Sep’13 Sep’12
)
Shareholders
Fund
Equity Share 4.24 4.24 4.24 4.24 4.24
Capital
Total Share 4.24 4.24 4.24 4.24 4.24
Capital
Reserve and 8540.18 6790.09 4513.40 3640.90 2853.56
surplus
Total Reserve 8540.18 6790.09 4513.40 3640.90 2853.56
and Surplus
Total 8544.42 6794.33 4517.64 3645.14 2857.80
Shareholder’s
Fund

Debt 1811.99 1973.51 1815.00 1428.69 1631.43

Debt/Equity 0.212 0.290 0.401 0.391 0.570

Ratio
 12000
10000
8000
6000
4000
2000
0
Mar’17 Mar’16(18mn) Sep’14 Sep’13 Sep’12

Debt TOTAL CAPITAL EMPLOYED

INTERPRETATION

 MRF Ltd had debt in its capital structure from the financial year Sep’12 till the end of
financial year Mar’17 means the company is levered company.
 The main focus of the company was to reduce the debt from their capital structure to
give confidence to their shareholders. The price per share of MRF is the highest
among all the Indian companies so to retain the price it is important to have the
confidence of shareholders.

DEBT/EQUITY RATIO
years Mar’17 Mar’16(18mn Sep’14 Sep’13 Sep’12
)
Debt/Equity 0.212 0.290 0.401 0.391 0.570
Ratio

Debt/Equity Ratio
0.57

0.4 0.39

0.29
0.21

Mar’17 Mar’16(18mn) Sep’14 Sep’13 Sep’12

INTERPRETATION
 From Sep’12 to Mar’17 the debt to equity ratio is reduced from 0.57 to 0.212 means
company is gradually removing the debt from their capital structure.
 Till Sep’14 the ratio was 0.401, but after that the increase in reserve and surplus
helped the company to reduce its debt to 0.29 in Mar’16.