Fsa Assignment- Web - Mrf

8/18/2019 Fsa Assignment- Web - Mrf

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Financial Statement Analysis

Assignment

Company : MRF

Tyres

Group 4

Submitted by :

1. Anitha Kumari A V WEB 055

2. Anoop P WEB 05!


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". #$i%ton &o'eph WEB 0(5

4. )hanya P *air WEB 0((

5. &aya+ri'hnan S WEB0!5

1. Executive Summary

Finance for any organization is equivalent to its life blood. Organization success or failure will

depend on how the firm can raise funds efficiently and how raised capital is efficiently employed

and utilized within organization’s production & service sectors.

This financial cash flow analysis report examines the one of the largest tyre manufacturing

company in ndia! "#F $td. %nalysis includes examination of important financial parameters of

the company to review its financial performance and health. The obective of this analysis is to

have a deeper loo' into the how company has managed its operations and have been able to

sustain its financial competitive advantage amongst its competitors in an industry of mixed

fortunes.

This report is an attempt to ta'e a deeper loo' into the publically available financial data about

"#F for the past ( years. %nalysis tools used includes )omparative financial statement analysis!

)ommon*size financial statement analysis! #atio analysis! )ash flow analysis and valuation.

This report also loo's at some of the qualitative factors which support the quantitative analysis in

order to obtain a holistic view. The report is based on the secondary data which is collected fromthe annual reports published about "#F $td. and from different websites.


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2. MRF Limite ! Company "vervie#

"#F $imited originally 'nown as "adras #ubber Factory $imited is a maor player in thendian tyre manufacturing industry. ts operations include manufacturing! distribution and sale of

various 'inds of vehicle tyres.

"#F manufactures tyres! tread rubber! tubes! flaps! conveyer belts and other rubber products.

The tyres manufactured by "#F are used for buses! truc's! passenger cars! formula racing cars!

off road vehicles! military vehicles! two wheelers +bi'es &scooters, and three wheelers. ts

business also includes pre treads! paints! coats and toys. ts paint range includes decorative !

pigmented! glossy and matte finishes for automobiles and for other industrial uses. Toys

manufactured by "#F are sold under F-/0OO$ brand.

"#F also provides services including %ir conditioner recover and recharge unit! wheel balancer

with diagnostics! test lane for vehicle safety tests! robot controlled wheel alignment. "#F $td

has subsidiaries namely "#F )orp $td! "#F nternational and "#F $an'a 1vt. $td.

"#F now sells its products to more than 23 countries including %mericas! 4uropean countries!

"iddle 4ast countries! and other %sian countries. "#F has several manufacturing facilities

located at Tamil adu! 0erala! 5oa! %ndhra 1radesh and 1ondicherry.

ndian tyre industry companies aggregately reported a turnover of about #s.67!333 crores in 8379*

8376 and is growing at a decent rate. :(; of the total business were accounted by top 73 companies.


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$. Types o% Analysis

Cash Flow Analysis

422(1

422(0

4225,

4225-

4225!

4225(

42255

42254

4225"

42252

2000

1500

1000

500

0

500

1000

1500

2000

*et #a'h %rom /peratin

Atiitie' 3' in #r'

*et #a'h 'ed in 6ne'tin

Atiitie' 3' in #r'

*et #a'h 'ed in 7inanin

Atiitie' 3' in #r'

• et cash from Operating %ctivity is showing consistent growth except for a dip in

8377and has grown from #s.in'8 59

Sources o% Cas& 2'1(


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Main Uses of Cash in 2014

)iidend Paid8 19 /n edemption o% )ebenture8 29 ;rade = 0th reeiab$e'8 (9

Purha'e o% 6ne'tment'8 (9

6ntere't Paid8 -9

/ther'8 159)iret ;a


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/ther'8 09)iidend Paid8 19/ther'8 29 /% the @on ;em Borro>in'8 "9 /ther'8 "9 ;rade = 0th reeiab$e'8 (9

6nentorie'8 -9

6ntere't Paid8 109

)iret ;a


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/ther'8 19)iidend Paid8 19 ;rade = 0th reeiab$e'8 59

6nentorie'8 -9

6ntere't Paid8 ,9

)iret ;a


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(. Comparative Analysis

Sales Graph

Sep 14312 Sep 1"312 Sep 12312 Sep 11312 Sep 10312

0

5000

10000

15000

20000

Sa$e' ;urnoer

*et Sa$e'

/ales revenues have improved year on year for the past 6 years. )ompounded /ales 5rowth

6 >ears? 7


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"nterest Pay#ents


0

100

200

"00

/nterest

6ntere't


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Profit Mar$in


0.00

1000.00

2000.00

0ross ,ro-t

Gro'' Pro:t

%&uity ' (on %&uity

Sep 14 Sep 1" Sep 12 Sep 11 Sep 10

0.00

500.00

1000.00

1500.00

2000.00

2500.00"000.00

"500.00

4000.00

4500.00

5000.00

ECuity 3;ota$ Shareho$der'

7und'

*on ECuity 3;ota$ )ebt

nteresting to note that "#F’s paid up shareholders capital is only about .7; of the reserve

funds. )ompany is holding huge stoc' pile of funds as reserves and distributes only 8.9; as

dividends. n the below chart! /hare capital is seen along @ %xis since it is only 7A7333 of the

#eserve Totals. #eserves have been growing steadily for the past 6 years.


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0

1000

2000

"000

4000

5000

e'ere' ;ota$

Share #apita$

Year Sep 14 Sep 13 Sep 12 Sep 11 Sep 10

Share Capital (Rs in Crs) 4.24 4.24 4.24 4.24 4.24

Reserves Total (Rs in Crs)

4,513.4

0 3,640.90

2,853.5

6

2,293.5

3 1,686.44


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)or*in$ Capital


0.00

1000.00

2000.00"000.00

4000.00

5000.00

;ota$ #urrent A''et' ;ota$ #urrent @iabi$itie'

*et Wor+in #apita$

Bor'ing capital increase is in line with the increase in sales revenue. )urrent %ssets are almost

twice that of current liabilities except in the year ending in 8378.

Capital )or* in Pro$ress


0

500

1000

1500

Capital or in ,rogress

#apita$ Wor+ in Prore''

)apital wor' in progress shows that "#F is adding more capacity on a regular basis to augment

its capacity and in line with sales revenue increases steadily across past 6 years. This is the maor

use of cash in investing activities.


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)ommon /ize %nalysis +)ash Flow /tatement,

2014 2013 2012 2011 2010

Sales Trnover 100.0! 100.0! 100.0! 100.0! 100.0!

Total Income 90.4! 90.6! 91.3! 98.4! 94.4!

Ra" #aterials 5$.1! 58.9! 64.1! 69.6! 63.9!

Total %&pen'itre $6.8! $$.2! 81.4! 86.8! 83.8! peratin *ro+it 13.6! 13.3! 9.9! 11.6! 10.6!

ross *ro+it 12.0! 11.9! 8.$! 10.$! 9.8!

*ro+it -e+ore Ta& 9.1! 9.1! 6.4! 8.4! 6.6!

'/ste' et*ro+it 6.1! 6.0! 4.4! 3.3! 4.3!

+Only main elements shown ,

2014 201" 2012 2011 2010

0.09

20.09

40.09

(0.09

-0.09

100.09

120.09

Sa$e' ;urnoer

;ota$ 6nome

a> Dateria$'

;ota$ E


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3. Common Si4e %or alance S&eet 5MRF6

Year Sep 14 Sep 13 Sep 12 Sep 11 Sep 1

SOURCES OF FUNDS : 0.00! 0.00! 0.00! 0.00! 0.0

Share Capital 0.06! 0.0$! 0.08! 0.09! 0.1 Reserves Total 58.94! 5$.22! 51.31! 48.56! 55.3

%it Share arrants 0.00! 0.00! 0.00! 0.00! 0.0

%it ppliation #one 0.00! 0.00! 0.00! 0.00! 0.0

Total Shareholders Funds 59.00% 5.!9% 5".#9% $.&5% 55.5!

Sere' oans 19.01! 20.82! 24.35! 24.13! 16.0

nsere' oans 5.84! 4.31! 6.36! 9.$4! 28.4

Total De't !$.5% !5."#% #0."% ##.% $$.$

ther ia7ilities "&."5% ".5% ".90% ".$% 0.00

Total ()a')l)t)es 100.00! 100.00! 100.00! 100.00! 100.0

*++(IC*TION OF FUNDS :

ross -lo !.&$% &.05% 9".0#% "."#% ""0.&0

ess :late' ;epreiation 3$.86! 39.38! 38.64! 39.39! 66.9 ess


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0.009

10.009

20.009

"0.009

40.009

50.009

(0.009

!0.009

Share #apita$

e'ere' ;ota$ ;ota$ Shareho$der' 7und'

;ota$ )ebt

*et B$o+

6nentorie'

#apita$ Wor+ in Prore''

6ne'tment'

*et #urrent A''et'

7. Comparison o% MRF an its inustry peers 5Apollo

Tyres an 89 Tyres6

-RF (TD

2014 2013 2012 2011 2010

Sales Trnover

100.0

! 100.0! 100.0! 100.0! 100.0! Total Income 90.4! 90.6! 91.3! 98.4! 94.4!

Ra" #aterials 5$.1! 58.9! 64.1! 69.6! 63.9!

Total %&pen'itre $6.8! $$.2! 81.4! 86.8! 83.8!

peratin *ro+it 13.6! 13.3! 9.9! 11.6! 10.6!

ross *ro+it 12.0! 11.9! 8.$! 10.$! 9.8!

*ro+it -e+ore Ta& 9.1! 9.1! 6.4! 8.4! 6.6!

'/ste' et

*ro+it 6.1! 6.0! 4.4! 3.3! 4.3!

/ Tre 1

Industr)es (td

2014 2013 2012 2011 2010

Sales Trnover 100.0! 100.0! 100.0! 100.0! 100.0!

Total Income 90.59! 91.61! 91.48! 94.94! 91.54!

Ra" #aterials 61.16! 65.26! 69.6$! $0.00! 58.01!


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Total %&pen'itre81.51! 83.$9! 86.$2! 89.60! 80.82!

peratin *ro+it 9.08! $.82! 4.$6! 5.33! 10.$2!

ross *ro+it 5.30! 4.38! 1.91! 3.4$! 8.38!

*ro+it -e+ore Ta& 2.9$! 2.50! 0.21! 1.$4! 6.21!

'/ste' et

*ro+it 2.61! 2.02! 0.1$! 1.34! 4.13!

*2ollo Tres (td

2014 2013 2012 2011 2010

Sales Trnover 100.0! 100.0! 100.0! 100.0! 100.0!

Total Income 91.91! 90.64! 91.54! 98.55! 93.59!

Ra" #aterials 61.65! 64.$3! 69.$4! $0.$6! 58.92!

Total %&pen'itre 80.42! 80.48! 83.$8! 88.98! $8.6$!

peratin *ro+it 11.48! 10.1$! $.$5! 9.56! 14.92!

ross *ro+it 8.90! $.34! 4.98! 6.85! 13.29!

*ro+it -e+ore Ta& 6.34! 5.02! 2.89! 4.39! 11.03! '/ste' et

*ro+it 5.11! 3.31! 2.04! 3.15! $.$0!

"#F has adopted and consistently implemented twin prong policy of both increasing its revenue

and comparatively reduce raw material costs and other expenditures and they have beensuccessful in doing that in the past years and that reflects on their superior operating profit and

profit after tax as shown in the following tables.

Ra3 -ater)als 4% o sales6

Year Sep2014 Sep>13 Sep>12 Sep>11 Sep>10

#R? T; 5$.1! 58.9! 64.1! 69.6! 63.9!

/ Tre 1

Industr)es (td61.16! 65.26! 69.6$! $0.00! 58.01!

*2ollo Tres (td 61.65! 64.$3! 69.$4! $0.$6! 58.92!

Total E72end)ture 4% o sales6

Year 2014 2013 2012 2011 2010

#R? T; $6.8! $$.2! 81.4! 86.8! 83.8!

/ Tre 1

Industr)es (td81.51! 83.$9! 86.$2! 89.60! 80.82!

*2ollo Tres (td 80.42! 80.48! 83.$8! 88.98! $8.6$!

O2erat)n8 +ro)t 4% o sales6

2014 2013 2012 2011 2010

#R? T; p *ro+it 13.6! 13.3! 9.9! 11.6! 10.6!

/ Tre O2

+ro)t9.08! $.82! 4.$6! 5.33! 10.$2!


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*2ollo Tres O2

+ro)t11.48! 10.1$! $.$5! 9.56! 14.92!

+*T 4% o sales6

#R? T; *T 6.1! 6.0! 4.4! 3.3! 4.3!

/ Tre +*T 2.61! 2.02! 0.1$! 1.34! 4.13!

*2ollo Tres +*T 5.11! 3.31! 2.04! 3.15! $.$0!

2014 201" 2012 2011 2010

0.09

5.09

10.09

15.09

20.09

D7 @;) /p Prot

&K ;yre /p Prot

Apo$$o ;yre' /p Prot

D7 @;) PA;

&K ;yre PA;

Apo$$o ;yre' PA;

. ,er%ormance o% MRF Lt.; Apollo Tyres an 89 Tyres

past 3 years

+/ource ? www.moneycontrol.com,

"#F stoc's have faired far better when compared in comparison with its competitors and sensex

as a whole.


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T7 D Bor'ing )apital A Total %ssets. T8 D #etained 4arnings A Total %ssets. T( D 4arnings

efore nterest and Taxes A Total %ssets. T9 D "ar'et Galue of 4quity A oo' Galue of

Total $iabilities. T6 D /alesA Total %ssets. /tandard measure for total asset turnover

*ltman Score

#R? t' 4.56

pollo Tres 3.93

@A Tres 2.2$

"#F $td has much less ban'ruptcy ris' than its peers. H0 Tyres has a high ban'ruptcy ris'.

>. Ratio Analysis

Profita+ility ,atios

Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10

0

5

10

15

20

"perating margin 5?6

/peratin marin 39


0

5

10

15

0ross pro-t margin 5?6

Gro'' pro:t marin 39


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0

2

4

(

-

@et pro-t margin 5?6

*et pro:t marin 39


0

5

10

15

Auste cas& margin 5?6

Adu'ted a'h marin 39


0

10

20

"0Auste return on net #ort& 5?6

Adu'ted return on net >orth

39


20/31


0

10

20

"0

R"CE 5?6

/#E 39


0

10

20

"0

Reporte return on net #ort& 5?6

eported return on net >orth

39


0

10

20

"0

40

Return on long term %uns 5?6

eturn on $on term %und' 39


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-e.era$e ,atios


0

0.2

0.4

0.(

Long term eBt EDuity

@on term debt ? ECuity


0

0.2

0.4

0.(

0.-

Total eBteDuity

;ota$ debt?eCuity


55

(0

(5

!0

!5

"#ners %un as ? o% total source

/>ner' %und a' 9 o% tota$

'oure


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Mana$e#ent %fficiency ,atios

Sep F14 Sep F1" Sep F12 Sep F11 Sep F10

(

(.5

!

!.5

-

-.5

/nventory Turnover Ratio

6nentory ;urnoer atio


0

1

2

"

4

Fixe assets turnover ratio

7i


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0

1

2

"

4

Asset Turnover Ratio

A''et ;urnoer atio


0

5

10

15

eBtors Turnover Ratio

)ebtor' ;urnoer atio


(

(.5

!

!.5

-

/nvestments Turnover Ratio

6ne'tment' ;urnoer atio


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0

10

20"0

40

50

Average Ra# Material *oling

Aerae a> Dateria$ o$din


0

10

20

"0

Average Finis&e 0oos *el

Aerae 7ini'hed Good' e$d

Per Share ,atios


0.00

1000.00

2000.00

"000.00

Auste E,S 5Rs6

Adu'ted EPS 3'


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0.00

1000.00

2000.00

"000.00

Reporte E,S 5Rs6

eported EPS 3'


0

20

40

(0

ivien per s&are 5Rs6

)iidend per 'hare 3'


0.00

1000.00

2000.00

"000.004000.00

5000.00

"perating pro-t per s&are 5Rs6

/peratin prot per 'hare3'


0.00

5000.00

10000.00

15000.00

oo value 5incl rev res6 per s&are E,S 5Rs6

Boo+ a$ue 3in$ re re' per

'hare EPS 3'


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0.00

10000.00

20000.00

"0000.00

40000.00

@et operating income per s&are E,S 5Rs6

*et operatin inome per

'hare EPS 3'

-i&ui/ity Analysis


0

0.5

1

1.5

2

Current ratio

#urrent ratio


0.-

0.,

1

1.1

Current ratio 5inc. st loans6

#urrent ratio 3in. 't $oan'


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0

0.5

1

uic ratio

Hui+ ratio


(

(.5

!

!.5

-

/nventory turnover ratio

6nentory turnoer ratio

aluation ,atios


0

2

4

(

-

ivien payout ratio 5net pro-t6

)iidend payout ratio 3net

pro:t


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0

1

2"

4

5

ivien payout ratio 5cas& pro-t6

)iidend payout ratio 3a'h

pro:t


-5

,0

,5

100

Earning retention ratio

Earnin retention ratio


,4

,(

,-

100

Cas& earnings retention ratio

#a'h earnin' retention ratio


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Co.era$e ,atios


0

1

2

"

4

Auste cas& Go# time total eBt

Adu'ted a'h Io> time tota$

debt


0

5

10

15

Financial c&arges coverage ratio

7inania$ hare' oerae

ratio


0

2

4

(

-

10

12

Fin. c&arges cov.ratio 5post tax6

7in. hare' o.ratio 3po't

ta


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8. o /enior "anagement team member has left the organization

(. umber of equity shares have remained same over past few years

9. /toc' prices have not fluctuated in a wide range.6. Financial reports does not indicate opaque or complex financial practices or strategies.

=. The source of income for "#F is from its operations which is evident from the reports

published.2. ncome from operating activities is the main source of revenue.


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Documents

Fsa Assignment- Web - Mrf