Phantom Digital Effects Limited

Inventories:

This is the actual amount of VFX work done by PhantomFX against client’s order. Since Invoices for this work is not yet raised, the same is shown as Inventory / Work In Progress line item.

Billing in VFX industry is usually done on reaching a milestone like some 40%, 70%, 100% of work completion or on completion of a particular phase and the corresponding documents / exe file pertaining to that phase are delivered.

All projects which starts and ended in a particular quarter will be billed in the same quarter.

Any projects where considerable work pertaining to that milestone/ phase has been done, but is not yet 100% complete will be treated as WIP item and shown under Inventory

Usually this happens when the work has recently started in the last month of that quarter and the milestone is not yet reached or in case of some big projects where completion of each milestone itself could take more than a quarter time…like for Ayalaan movie which has 4500+ VFX shots

We can’t expect every project starts and ends within a quarter and every quarter they would be starting with a fresh set of projects…this is a common scenario for every VFX company, but for some reason other VFX companies don’t show it … probably it’s not big enough for them to show or for some other reason

For PhantomFX, this number is usually in the range of 1-3 Crs in previous quarters. But this quarter this has raised to around 11.3 Crs indicating that they could be working on some big projects.

Since this work is only on client’s order, we can safely assume that major portion of it would be billed in next quarter for sure… meaning we would see a big jump in Revenue in next Qtr

ST loans:

Please check my previous post on ST borrowings.

Note that as the company is growing, adding new clients and working on bigger projects, their WC needs also would be going up with increase in TRs and Inventories…I feel OD is good enough as this is a short term need and also keeping in mind that this amount keeps fluctuating either way on a QoQ basis or rather on a Weekly basis.