Amidst all the great things happening in the business, this old question of unconventional OCF calculation has been bugging me and a few others like @komal.
Management was asked on the concall yesterday about their existing practice of starting with PAT and adding taxes to arrive at OCF. Apparently many people have been reaching out to them with this query and they said on the call that they will relook at this practice and change over to the conventional method that starts with PBT and subtracts taxes.
I do think the OCF since 2019 was being overstated by the amount of taxes paid (Stated OCFs were about 20% higher than they should have been). This change in treatment roughly coincides with the appointment of Gianender & Associates as their statutory auditors, so the change in methodology could have been the auditor’s suggestion. The auditor’s term gets over in FY23.
Anybody with more detailed knowledge of IND-AS 7 who thinks RACL’s current practice may be acceptable? My cursory reading of IND-AS 7 did not suggest so, plus I have never seen another company calculate OCFs like this.
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