As per the recent Crisil ratings for various facilities by MOL – Ratings reaffirmed/Stable outlook. The comments on the Debt and inventory is as follows (Looks like based on inputs given by MOL)
Crisil Notes:-
” Large working capital requirements
MOL’s operations are working capital intensive with gross current assets (GCAs) of 250 days as on March 31, 2022, with receivables and inventory of 33 days and 223 days, respectively. Inventory levels are generally high during the financial year end as the company builds inventory for the peak season of July to December. Currently the working capital requirements have increased further leading to higher dependence on debt, hence, working capital management will be a key rating sensitivity factor.”
So going forward, an investor should expect an elevated (may come down, however above historical averages) working capital requirement with recent capacity expansion and FY end higher inventory to supply for festival season starting July. If sales pick up to justify the cost, company will be in comfortable position.
Disc: invested.
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