Thankyou for the pointers. I went through the details. I could not find why the promoters did not subscribe fully to the rights issue, but the pointers were really helpful to understand the business better. May be not a good business, but to develop and understanding, below are my assessments.
- Their cash is mostly tied up in inventory and loans & advances so it is not a real cash item thus the actual cash profit is affected.
- Cash flow from operations is -ve for FY23-24 which is not a good sign. I understand that atleast the cash flow form operations should be +ve indicating that at least some of their notional profit is getting converted to cash. In this case, they will need to borrow money for day to day operations also.
- Their fixed asset growth is less so they are not expanding physically. Means they are not seeing growth in their engineering products business. So one question here is why is their inventory increasing? Could it be due to their trading activity?
- They have more capital employed in the engineering products, but they had a -ve profit margin there in FY24. If their assets are not growing much, then where does the capital employed go? Also they are having more sales in trading business so why is the capital employed in engineering business more?
I no more hold this company but I am curious about understanding a business, their balance sheet, cash flow etc and this is now just one company that I am trying to understand as a part of my learning.
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