Fi

nanci
alManagement

A
Repor
ton
MM For
gingsLt
d.
&
Rel
iancecommuni
cat
ionLt
d.

By
Rohi
tHasanpal
li
(
Div
-B)
(
Rol
lNo.B-
44)
 MM For
gings
Annualr
epor
t(2018-
19)
Wor
kingCapi
talf
orMM For
gingsLt
d

Cur
rentAsset
s(Asat31stMar
ch2019)

Sr
.No. NameofAsset
s Amount(
₹inmi
ll
ion)

a. I
nvent
ori
es 954.
07

b. Fi
nanci
alAsset
s-

i
. I
nvest
ment
s 0

i
i
. Tr
adeRecei
vabl
es 513.
22

i
i
i. CashandCashequi
val
ent
s 4699.
49

i
v. BankBal
ances(
othert
hani
i
i.abov
e) 43.
86

v
. Loans 4.
51

v
i. Ot
herFi
nanci
alAsset
s

c. Ot
herCur
rentAsset
s 676.
81

Tot
alCur
rentAsset
s 6848.
10
Cur
rentLi
abi
li
ti Asat31stMar
es( ch2019)

Sr
.No. Cur
rentLi
abi
li
ti
es Amount(
₹inmi
ll
ion)

a. Fi
nanci
alLi
abi
l
iti
es-

i
. Bor
rowi
ngs 0

i
i
. Tr
adePay
abl
es- 935.
98

a.Tot
alout
standi
ngduesofsmal
land -
medi
um ent
erpr
ises

b.Tot
alout
standi
ngduesofcr
edi
tor
sot
her
t
hansmal
landmedi
um ent
erpr
ises

i
i
i. Ot
herFi
nanci
alLi
abi
l
iti
es

b. Ot
herCur
rentLi
abi
l
iti
es 3426.
07

c. Pr
ovi
sions 85.
37

d. Cur
rentTaxLi
abi
l
iti
es

Tot
alCur
rentLi
abi
li
ti
es 4,
447.
43

Wor
kingCapi
tal=Cur
rentAsset
s–Cur
rentLi
abi
li
ti
es
=6848.
10–4447.
42
=2400.
68
CashConv
ersi
onCy
cle–
I
.Inv
ent
oryConv
ersi
onPer
iod
=(
Aver
ageI
nvent
ory
/CostofGoodsSol
d)*365Day
s
=(
6541.
875/
93411.
51)*365
=26day
s

Av
erageI
nvent
ory=(
Openi
ngSt
ock+Cl
osi
ngSt
ock)/2
=(
5153.
61+7930.
14)/2
=6541.
875

CostofGoodsSol 51₹
d=93411. /
-

I
I. Recei
vabl
esCol
lect
ionPer
iod
=(
Aver
ageTr
adeRecei
vabl
es/
Credi
tSal
es)*365Day
s
=(
256.
5/3389.
5)*365
=28day
s

Av
erageTr
adeRecei
vabl
es=(Openi
ngTradeRecei
vabl
es+Cl
osi
ngTr
adeRecei
vabl
es)
/2
=(
338+183)/2

5₹
=256. /
-
I
I. Pa
I yabl
eDef
err
alPer
iod
=(
Aver
ageTr
adePay
abl
es/CostofGoodsSol
d)*365
=(
0/93411.
51)*365
=0day
s

Av
erageTr
adePay
abl
es=(
Openi
ngTr
adePay
abl
es+Cl
osi
ngTr
adePay
abl
es)/2
=(
0+0)/2

=0₹/
-
CostofGoodsSol 51₹
d=93411. /
-
CashConv
ersi
onCy
cle
=I
nvent
oryConv
ersi
onPer
iod+Recei
vabl
esCol
l
ect
ionPer
iod-Pay
abl
e
Def
err
alPer
iod
=26+28-
0
=54

Obser
vat
ions–
Ty
peofWor
kingCapi
tal
thusobt
ainedi
sposi
ti
vei
nthi
scase.Thi
siscal
l
ed
asNetWor
kingCapi
tal
.Posi
ti
vewor
kingcapi
tal
iswhenacompany
's
cur
rentl
i
abi
l
iti
esl
agsi
tscur
rentasset
s.Thi
smeanst
hatt
hel
i
abi
l
iti
est
hat
needt
obepai
dwi
thi
noney
earl
agst
hecur
rentasset
sthatar
e
monet
izabl
eov
ert
hesameper
iod.
Rel
ianceCommuni
cat
ionLt
d.
Annual
Repor
t(2018-
19)
Wor
kingcapi
talf
orRel
iancecommuni
cat
ionLt
d

Cur
rentAsset
s(AsAt31stMar
ch2019)

Sr
.No. NameofAsset
s Amount(
₹inmi
ll
ion)

a. Fi
nanci
alAsset
s-

i
. I
nvest
ment
s 4218

i
i
. Tr
adeRecei
vabl
es 1527

i
i
i. CashandCashequi
val
ent
s 225

i
v. Loans 6528

v
. Ot
her
s 228.
87

c. Ot
herCur
rentAsset
s 24117

Tot
alCur
rentAsset
s 36676.
00
Cur
rentLi
abi
li
ti Asat31stMar
es( ch2019)

Sr
.No. Cur
rentLi
abi
li
ti
es Amount(
₹inmi
ll
ion)

a. Fi
nanci
alLi
abi
l
iti
es-

i
. Tr
adePay
abl
es- 2730

a.Tot
alout
standi
ngduesofsmal
land 28335
medi
um ent
erpr
ises

b.Tot
alout
standi
ngduesofcr
edi
tor
sot
her 934.
89
t
hansmal
landmedi
um ent
erpr
ises

i
i
. Ot
her
s 782.
04

b. Ot
herCur
rentLi
abi
l
iti
es 17309

c. Pr
ovi
sions 1217

d. I
ncomeTaxLi
abi
l
iti
es(
net
)

Tot
alCur
rentLi
abi
li
ti
es 49591.
00

Wor
kingCapi
tal=Tot
alCur
rentAsset
s–Tot
alCur
rentLi
abi
li
ti
es
=36676.
00–49591.
00
 =-
12915mi
l
li
on
=-
12915₹/
-
Obser
vat
ions–
Ty
peofwor
kingcapi
tal
isnegat
ive,
whi
chi
snegat
ivewor
kingcapi
tal
.Thi
s
i
ndi
cat
est
hatt
hecompanyhasmor
eli
abi
l
iti
est
hanasset
sandt
husi
snot
capabl
eofpay
ingof
fshor
tter
m debt
sandexpensesi
ncaset
her
ear
eany
.

Rat
ioAnal
ysi
s

Sr
. Rat
io For
mul
a Year
s I
nter
pret
ati
on
No.

I
. Li
qui
dit
yMeasur
ement 2017 2018 2019
Rat
ios-

1. Cur
rent Cur
rent 0.
68 0.
64 0.
62 I
nal
lthey
ear
sabov
ether
a
Rat
io Asset
s/Cur
rent i
smor
ethan2,
whi
chi
san
Li
abi
l
iti
es i
deal
sit
uat
ion.Al
so,
the
i
ndust
ry’
srat
ioi
sjustabov
e
f
or2020.
2. Li
qui
d (
Cash+Cash 0.
8194 0.
8861 0.
9443 Thei
deal
val
ueshoul
dbe1
Rat
io Equi
val
ent
s 2017i
twasl
essandadequ
Shor
tTer
m i
n2019.Thi
simpl
i
est
hatt
h
I
nvest
ment
s+ companyhadheav
y
Bi
l
ls dependencyoni
nvent
ory
,a
Recei
vabl
es+ f
act
orwhi
chi
twassuccess
Debt
ors)/ i
ncor
rect
ingt
il
l2019.
Cur
rent
Li
abi
l
iti
es

I
I. Pr
ofi
tabi
li
tyI
ndi
cat
or
Rat
ios-

1. NetPr
ofi
t (
NetPr
ofi
t/
Net 87% 73.
488% 89.
304% Ti
mkendoeswel
lont
hisco
Mar
gin Sal
es)*
100 t
ooast
hisr
ati
ofort
hei
ndu
r
angedf
rom 0.
5%t
o1%.

2. Oper
ati
ng (
Oper
ati
ng 15.
78% 15.
82% 15.
95% Fort
hisi
ndust
ryt
hisr
ati
o
Pr
ofi
t Pr
ofi
t/
Net r
angedf
rom 8%t
o10%i
nth
Sal
es)*
100 pr
evi
ous5y
ear
s,sowecan
saf
elysayt
hatTi
mkendoes
except
ional
l
ywel
li
nthi
s
depar
tment
.

3. Ret
urnon NetI
ncome/ 247.
98% 257.
22% 11.
60% Hi
ghv
aluemeansbet
terus
Asset
s Tot
alAsset
s companyasset
s.Fort
he
i
ndust
ryt
hev
aluewasabou
6%.So,
int
hiscase,
thev
alu
gr
eatf
ort
hecompany
.
4. Ret
urnon NetI
ncome/ 4.
69 4.
78 7.
44 I
deal
val
uef
ort
hei
ndust
ryi
Capi
tal Capi
tal t
her
ange15-
20%.Ther
efor
Empl
oyed Empl
oyed t
hecompanyt
her
efor
eisdo
wel
lont
hiscount
.

5. Ret
urnon (
Prof
itAf
ter 14.
731 12.
097 11.
786 Hi
ghert
hef
igur
e,hi
gheri
st
Networ
th Tax/ pr
ofi
tforshar
ehol
der
s.
Shar
ehol
der
s Gener
all
y,ami
nimum
Funds)*100 15% 
Ret
urnonnet
wor
th 
i
ndi
cat
es 
bet
ter
 val
ua
andpr
ofi
tabl
est
ockandbe
10%Ret
urnonNetWor
thi
s
consi
der
edaspoorr
atef
or
company
.

I
II
. Longt
erm Fi
nanci
al
Posi
ti
onorSol
vency
Rat
ios-

1. Equi
ty (
Shar
ehol
der
s’ 73.
434 74.
748 76.
503 Wecanobser
vet
hatEqui
ty
Rat
ioor f
unds/Tot
al Rat
iov
aluehasgr
ownhi
ghe
Pr
opr
iet
ary asset
s)*
100 wi
thy
ear
s,whi
chi
sagood
Rat
io si
tuat
ionf
ort
hecompanyt
o
i
n,asi
tref
lect
sthest
rong
f
inanci
alst
ruct
ureoft
he
company
.
2. Debt– Longt
erm 0.
519 0.
493 0.
434 Themanuf
act
uri
ngi
ndust
ry
Equi
ty debt/Tot
al hadf
igur
esi
nther
angeof0
Rat
io Equi
ty t
o0.
6.Thecompanyt
husc
besai
dtobecl
oseenough
bedoi
ngwel
l
.

3. Debtt
o LongTer
m 28.
.565% 26.
248% 24.
496% Thecompanyshowsuni
for
t
otal Debt/(
Long i
nthi
scase,
whi
chal
toget
h
Capi
tal Ter
m Debt+ aposi
ti
vesi
gnf
ori
t.
empl
oyed Shar
ehol
der
’s
Rat
io Funds)

4. Fi
xed Fi
xedAsset
s 0.
722 0.
7891 0.
653 Thenumber
shav
edecl
i
ned
Asset
sto (
Aft
er t
hiscountf
ort
hecompany
.
Pr
opr
iet
or’
s depr
eci
ati
on)/ I
deal
l
yar
ati
oval
ueabov
e1
f
undsRat
io Shar
ehol
der
s desi
red.
f
unds

5. I
nter
est EBI
T/I
nter
est 176.
09% 118.
92% 138.
4% Fort
hei
ndust
ryt
hev
alues
Cov
erage onLongTer
m r
angedf
rom 0.
7to1.
2int
h
(
IC)Rat
io Debt l
ast5y
ear
s.Ther
efor
e,Ti
m
mai
ntai
nsaheal
thyI
Crat
io

I
V. Oper
ati
ngPer
for
mance
Rat
ios-
1. I
nvent
ory NetSal
esOR 4.
975 3.
775 4.
917 Hi
ghr
ati
oindi
cat
est
hatt
he
Tur
nov
er CostofGoods i
sal
i
ttl
echanceoft
hef
ir
m
Rat
io Sol
d/Av
erage hol
dingdamagedorobsol
e
I
nvent
ory st
ock.Thenumber
sfort
his
companyar
eatpari
n
compar
isonwi
tht
he
manuf
act
uri
ngsect
or,
the
r
angef
orwhi
chi
sbet
ween
To7.
0.

2. Debt
ors NetCr
edi
t 5.
.675 5.
252 5.
137 Hi
ghert
hev
alueofdebt
ors
Tur
nov
er Sal
es/ t
urnov
ert
hemor
eef
fi
cient
Rat
io (
Aver
age t
hemanagementofdebt
ors
Debt
ors+ sal
es.
Av
erageBi
l
ls
Recei
vabl
es)

3. Cr
edi
tor
s NetCr
edi
t 6.
363 5.
055 5.
184 Ahi
gher
 r
ati
o i
sgener
all
ym
Pay
abl
e Pur
chases/ f
avor
abl
eas 
pay
abl
es 
are
Rat
io Av
erageTr
ade bei
ngpai
dmor
equi
ckl
y.St
a
Cr
edi
tor
s+ showuni
for
m pat
ter
nint
his
Av
erageBi
l
ls case.
pay
abl
e

4. Fi
xed NetSal
es/ 2.
433 2.
231 1.
899 Hi
ghert
her
ati
o,bet
teri
tis
Asset
s Fi
xedAsset
s f
rom companypoi
ntofv
iew
Tur
nov
er Formanuf
act
uri
ngi
ndust
ry
r
ati
owascl
oset
o3.So,
Ti
mkenI
ndi
aisl
acki
ngont
 aspect
.

5. Wor
king NetSal
es/ 3.
671 3.
562 3.
522 Hi
ghert
hev
alue,
thebet
ter
Capi
tal Av
g.Wor
king asi
tei
theri
ndi
cat
eshi
gher
Tur
nov
er Capi
tal sal
esormor
eassetandl
ow
Rat
io l
i
abi
l
iti
es.

V. I
nvest
mentVal
uat
ion
Rat
ios-

1. Mar
ket Mar
ketPr
ice 6.
09 5.
79 4.
31 Gener
all
y,desi
redv
aluei
sle
Val
uet
o pershar
e/ t
han1.Aswesee,
thev
alue
BookVal
ue BookVal
ueper hasdecr
easedwi
thy
ear
s,t
Rat
io shar
e companyi
sinchi
ngt
owar
ds
mor
esui
tabl
efi
gur
e.

2. Pr
ice Mar
ketPr
ice 50 50 33.
333 Hi
ghv
aluei
ndi
cat
est
hat
Ear
ning perShar
e/ i
nvest
orsar
ewi
l
li
ngt
oinv
e
(
P/E)Rat
io Ear
ningsPer mor
eincompany
,expect
ing
Shar
e hi
gherr
etur
ns.Fort
hey
ear
2019i
thasr
educed,
whi
ch
meansgr
owt
hhas
subst
ant
ial
l
ysl
oweddown
t
hisy
ear
.

3. Ear
nings 1/PERat
io 0.
02or 0.
02or 0.
03or I
deal
l
y,hi
ghert
her
ati
o,bet
t
Yi
eldRat
io 2% 2% 3% t
her
eput
ati
onoft
hecompa
4. Di
vi
dend (
Annual 6.
78 7.
39 5.
25 Companyof
fer
edl
esser
Pay
out Di
vi
dendper r
etur
nsi
nthey
ear2019t
ha
Rat
io Shar
e/Mar
ket 2018andmor
eret
urnsi
n20
Pr
iceper t
hani
n2017.
Shar
e)*
100