All amount in Rs.

crore
Income Statement
Sales
% growth
Expenses
Operating Profit
% growth
OPM
Other Income
Interest
% of debt
Depreciation
% of Fixed Assets
Profit before tax
Tax
Net Profit
EPS (unadj)
Balance Sheet

Share Capital
Reserves
Borrowings
Other Liabilities
Total Liabilities
Fixed Assets
CWIP
Investments
Other Assets
Total Assets
Cost of capital employed (COCE)
Cost of equity
Rm
Rf
Beta
Ke
Cost of debt
Kd (marginal)
tax
Post-tax Kd

Mar-05

Mar-06

Mar-07

470.38

672.79

1,240.85

43%

84%

385.52
84.86

572.47
100.32

1,116.06
124.79

18.04%

18%
14.91%

24%
10.06%

32.71
28.9

49.74
38.54

79.57
57.22

5%

5%

4%

26.92

49.15

73.21

5%

6%

6%

61.75
22.28
39.47
6.99

62.37
21.83
40.54
5.55

73.93
28.34
46.46
6.36

Mar-05

Mar-06

Mar-07

95.89
272.13
595.33
269.68
1,193.62
573.06
258.21
9.51
352.84
1,193.62

99.37
446.94
840.86
233.16
1,594.05
882.52
147.12
100.96
463.45
1,594.05

81.09
459.27
1,466.08
315.63
2,314.07
1,221.69
140.04
122.56
829.78
2,314.07

Mar-06
62.37
100.91

Mar-07
73.93
131.15

15%
7.10%
1.12
16%

9%
28%
7%

Calculation of EVA
Profit before tax
EBIT

Mar-05
61.75
90.65

NOPAT [EBIT*(1-t)]

65.50

100.91

131.15

Debt (borrowings)
Cost of debt
Equity (book value)
Cost of equity
Cost of capital employed (COCE)

595.33
39.44
368.02
58.69
98.14

840.86
55.71
546.31
87.13
142.84

1,466.08
97.14
540.36
86.18
183.31

EVA

-32.64

-41.93

-52.16

Calculation of Altman Z score

as of March 31, 2016
Working Capital
Retained Earnings
EBIT
Equity (market value)
Sales
Total Assets
Total Liabilities
Parameters
Working Capital / Total Assets
Retained Earnings / Total Assets
EBIT / Total Assets
Market Value of Equity / Total Liabilities
Sales / Total Assets
Altman Z score

1,591.53
1,331.39
1,036.19
100.03
5,302.51
5,776.98
4,345.13
Ratios
0.2755
0.2305
0.1794
0.0230
0.9179

Weightage
1.2
1.4
3.3
0.6
1

Z Score
0.3306
0.3227
0.5919
0.0138
0.9179
2.1768

Analysis:
Z-score of Welspun India falls between 1.8-2.7 indicating that it is less likely to file for bankruptcy
Problem with Z score in case of textile companies is that these days companies outsource their operations and h
Due to this the turnover ratios like Sales turnover are high. Also across the Z score formula, all ratios are on Tota

Corporte Frauds
August, 2016:Welspun India sued by consumers in USA for selling fradulently labelling its bedsheets and towe
Target corp cut ties with welspun India for supplying fraudulently labelled products
This led to fall ins share price from about 104 to 46in the span of 5 days
Checking Quality of Revenue
[Quality of revenue = (Cash collected / Sales x 100)]
Change in receivables year on year
Sales
Score
Ideal score
Analysis:

165
5,302.51
3%
1%

Company has got a poor value of earnings and has increased its receivables by about 50%
Checking quality of earnings
Mar-05

Mar-06

Mar-07

83.16

41.59

81.72

Cash from Operating Activity

Net Income
Score (OCF/NI)
Ideal score
*N/M = not meaningful

39.47
N/M
100%

40.54
10259%

46.46
N/M

Analysis:
Quality of earnings (proxy for cash conversion ratio) score is highly volatile which indicates high risk as to wheth
Volatility of earnings
EBIT (rebased)
Revenue (rebased)

Jan-05

Jan-06

Jan-07

Mar-05
100%
100%

Jan-08

Jan-09

Jan-10

Jan-11

Mar-06
111%
143%

Jan-12

Jan-13

Mar-07
145%
264%

Jan-14

Jan-15

Share Price performance

Analysis / highlights:

Dropped from Rs. 104 on 19th August, 2016 to Rs. 46 on August 29 th, 2016
Stock is trading at a P/E multiple of 7
Promoters have been charged of fraudulent practices about the product offerings thereby loosi

Key Executives For Mandhana Industries Limited

Name
Title

Balkrishan Goenka

Chairman

Dipali Goenka
Rajesh Mandawewala
Mr. Altaf Jiwani
Mr. A K Joshi

Joint Managing
Director
Managing Director
CFO
Director Operations

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

1,646.39

1,699.12

1,937.16

1,856.49

3,220.55

3,647.31

4,373.03

5,302.51

33%

3%

14%

-4%

73%

13%

20%

21%

1,547.36
99.03

1,684.75
14.37

1,792.61
144.55

1,625.33
231.16

2,933.91
286.64

3,055.83
591.48

3,451.92
921.11

4,028.31
1,274.20

-21%
6.01%

-85%
0.85%

906%
7.46%

60%
12.45%

24%
8.90%

106%
16.22%

56%
21.06%

38%
24.03%

114.1
83.86

153.52
124.29

296.11
109.4

40.54
107.84

46.05
191.85

49.22
197.69

104.15
235.21

94.94
282.9

5%

7%

7%

6%

10%

10%

8%

9%

95.17

108.66

112.63

120.33

137.81

144.86

686.33

332.93

6%

7%

7%

8%

8%

8%

34%

13%

34.1
19.2
-0.16
1.98

-65.06
-7.44
-76.56
0

218.63
57.14
160.83
21.56

43.53
40.31
1.4
0.13

3.03
19.3
-13.37
0

298.15
73.33
224.82
21.85

103.72
19.89
92.07
8.62

753.29
209.01
539.79
51.61

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

78.09
450.02
1,735.19
406.08
2,664.38
1,522.87
166.52
27.39
947.6
2,664.38

78.09
365.94
1,871.63
521.3
2,831.96
1,666.70
105.25
31.42
1,028.59
2,831.96

78.09
443.32
1,680.89
421.66
2,618.96
1,544.28
27.13
14.94
1,032.61
2,618.96

93.98
574.97
1,738.39
511.98
2,914.32
1,560.04
55.02
100.68
1,198.58
2,914.32

89.01
643.32
1,962.14
907.18
3,601.65
1,676.15
123.31
120.51
1,681.68
3,601.65

100.03
890.15
2,027.89
885.16
3,903.23
1,807.31
54.2
93.11
1,948.61
3,903.23

100.35
1,009.29
3,029.32
1,098.82
5,237.78
2,028.49
532.41
111.46
2,565.42
5,237.78

100.46
1,331.39
3,085.09
1,260.04
5,776.98
2,627.00
156.42
141.99
2,851.57
5,776.98

Mar-08
34.10
117.96

Mar-09
-65.06
59.23

Mar-10
218.63
328.03

Mar-11
43.53
151.37

Mar-12
3.03
194.88

Mar-13
298.15
495.84

Mar-14
103.72
338.93

Mar-15
753.29
1,036.19

117.96

59.23

328.03

151.37

194.88

495.84

338.93

1,036.19

1,735.19
114.97
528.11
84.22
199.19

1,871.63
124.01
444.03
70.81
194.82

1,680.89
111.37
521.41
83.15
194.52

1,738.39
115.18
668.95
106.68
221.86

1,962.14
130.00
732.33
116.79
246.80

2,027.89
134.36
990.18
157.91
292.27

3,029.32
200.71
1,109.64
176.97
377.68

3,085.09
204.41
1,431.85
228.35
432.76

-81.23

-135.59

133.51

-70.49

-51.92

203.57

-38.75

603.43

file for bankruptcy

outsource their operations and hence have low asset base (or asset light models)
ore formula, all ratios are on Total assets base which makes it quite redundant in case company has outsourced operations

labelling its bedsheets and towels as Egyptian cotton towel

about 50%

Mar-08

Mar-09

Mar-10

Mar-11

Mar-12

Mar-13

Mar-14

Mar-15

124.08

146.87

84.91

228.05

417.31

370.86

550.97

939.08

-0.16
-7755000%

-76.56
N/M

160.83
5279%

1.40
-13.37
1628929% -312124%

224.82
16496%

92.07
59843%

539.79
N/M

ch indicates high risk as to whether income for next year would be converted to cash or be trapped with debtors
Mar-08
130%
350%

Jan-14

Mar-09
65%
361%

Mar-10
362%
412%

Mar-11
167%
395%

Jan-15

29 th, 2016

roduct offerings thereby loosing a major business share

Mar-12
215%
685%

Mar-13
547%
775%

Mar-14
374%
930%

Mar-15
1143%
1127%

TTM

5,979.47
13%

4,421.97
1,557.50
22%
26.05%

91.51
236.24
375.02
1,037.77
322.44
702.87

outsourced operations

with debtors