I have gone through Annual Report – 2023 today, while there are many positives, I would like to focus/emphasize more on the negatives here as the concerns are high as per my understanding.
- Almost 38% of its purchase is imported (roughly). In FY23, it has imported 50.5Cr. worth of goods/machines. So, the question to find is whether the company is an Assembler (with only a few parts of in-house manufacturing). If that is the case, it is an ordinary company with all sorts of similar competing companies.
- The above fact is even more evidenced by the fact that Calcom’s Manufacturing Cost is reducing Year by Year and instead the Cost of Goods is increasing. Here is a rough common size:
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The debtor days are increasing. It was 30 days (Low Point) in 2019 but increased to 41 in FY20/56 FY21/61 in FY22 and 65 in FY23. While debtors outstanding >6 months are not significant, rising debtor days all say either about competition or something else.
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Ratios are at sub-par levels. ROE/ROCE/ROIC are very low to even beat the cost of equity. But as a growing organization, this is less of a concern and hence will require continuous tracking with an increase in revenue and operating leverage.
Note: These are only my negative pointers and there are many positives for the company as well. The first is Good Management and then Improving Product Expansion and Innovation. I would like if someone could point out the issues and highlight the counter for better insights.
Invested, but not a substantial amount.
Regards,
Mukul Jain
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