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Financial Statement Analysis
Assignment
Company : MRF
Tyres
Group 4
Submitted by :
1. Anitha Kumari A V WEB 055
2. Anoop P WEB 05!
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". #$i%ton &o'eph WEB 0(5
4. )hanya P *air WEB 0((
5. &aya+ri'hnan S WEB0!5
1. Executive Summary
Finance for any organization is equivalent to its life blood. Organization success or failure will
depend on how the firm can raise funds efficiently and how raised capital is efficiently employed
and utilized within organization’s production & service sectors.
This financial cash flow analysis report examines the one of the largest tyre manufacturing
company in ndia! "#F $td. %nalysis includes examination of important financial parameters of
the company to review its financial performance and health. The obective of this analysis is to
have a deeper loo' into the how company has managed its operations and have been able to
sustain its financial competitive advantage amongst its competitors in an industry of mixed
fortunes.
This report is an attempt to ta'e a deeper loo' into the publically available financial data about
"#F for the past ( years. %nalysis tools used includes )omparative financial statement analysis!
)ommon*size financial statement analysis! #atio analysis! )ash flow analysis and valuation.
This report also loo's at some of the qualitative factors which support the quantitative analysis in
order to obtain a holistic view. The report is based on the secondary data which is collected fromthe annual reports published about "#F $td. and from different websites.
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2. MRF Limite ! Company "vervie#
"#F $imited originally 'nown as "adras #ubber Factory $imited is a maor player in thendian tyre manufacturing industry. ts operations include manufacturing! distribution and sale of
various 'inds of vehicle tyres.
"#F manufactures tyres! tread rubber! tubes! flaps! conveyer belts and other rubber products.
The tyres manufactured by "#F are used for buses! truc's! passenger cars! formula racing cars!
off road vehicles! military vehicles! two wheelers +bi'es &scooters, and three wheelers. ts
business also includes pre treads! paints! coats and toys. ts paint range includes decorative !
pigmented! glossy and matte finishes for automobiles and for other industrial uses. Toys
manufactured by "#F are sold under F-/0OO$ brand.
"#F also provides services including %ir conditioner recover and recharge unit! wheel balancer
with diagnostics! test lane for vehicle safety tests! robot controlled wheel alignment. "#F $td
has subsidiaries namely "#F )orp $td! "#F nternational and "#F $an'a 1vt. $td.
"#F now sells its products to more than 23 countries including %mericas! 4uropean countries!
"iddle 4ast countries! and other %sian countries. "#F has several manufacturing facilities
located at Tamil adu! 0erala! 5oa! %ndhra 1radesh and 1ondicherry.
ndian tyre industry companies aggregately reported a turnover of about #s.67!333 crores in 8379*
8376 and is growing at a decent rate. :(; of the total business were accounted by top 73 companies.
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$. Types o% Analysis
Cash Flow Analysis
422(1
422(0
4225,
4225-
4225!
4225(
42255
42254
4225"
42252
2000
1500
1000
500
0
500
1000
1500
2000
*et #a'h %rom /peratin
Atiitie' 3' in #r'
*et #a'h 'ed in 6ne'tin
Atiitie' 3' in #r'
*et #a'h 'ed in 7inanin
Atiitie' 3' in #r'
• et cash from Operating %ctivity is showing consistent growth except for a dip in
8377and has grown from #s.in'8 59
Sources o% Cas& 2'1(
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Main Uses of Cash in 2014
)iidend Paid8 19 /n edemption o% )ebenture8 29 ;rade = 0th reeiab$e'8 (9
Purha'e o% 6ne'tment'8 (9
6ntere't Paid8 -9
/ther'8 159)iret ;a
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Main Uses of Cash in 2013
/ther'8 09)iidend Paid8 19/ther'8 29 /% the @on ;em Borro>in'8 "9 /ther'8 "9 ;rade = 0th reeiab$e'8 (9
6nentorie'8 -9
6ntere't Paid8 109
)iret ;a
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Main Uses of Cash in 2012
/ther'8 19)iidend Paid8 19 ;rade = 0th reeiab$e'8 59
6nentorie'8 -9
6ntere't Paid8 ,9
)iret ;a
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(. Comparative Analysis
Sales Graph
Sep 14312 Sep 1"312 Sep 12312 Sep 11312 Sep 10312
0
5000
10000
15000
20000
Sa$e' ;urnoer
*et Sa$e'
/ales revenues have improved year on year for the past 6 years. )ompounded /ales 5rowth
6 >ears? 7
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"nterest Pay#ents
Sep 14312 Sep 1"312 Sep 12312 Sep 11312 Sep 10312
0
100
200
"00
/nterest
6ntere't
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Profit Mar$in
Sep 14312 Sep 1"312 Sep 12312 Sep 11312 Sep 10312
0.00
1000.00
2000.00
0ross ,ro-t
Gro'' Pro:t
%&uity ' (on %&uity
Sep 14 Sep 1" Sep 12 Sep 11 Sep 10
0.00
500.00
1000.00
1500.00
2000.00
2500.00"000.00
"500.00
4000.00
4500.00
5000.00
ECuity 3;ota$ Shareho$der'
7und'
*on ECuity 3;ota$ )ebt
nteresting to note that "#F’s paid up shareholders capital is only about .7; of the reserve
funds. )ompany is holding huge stoc' pile of funds as reserves and distributes only 8.9; as
dividends. n the below chart! /hare capital is seen along @ %xis since it is only 7A7333 of the
#eserve Totals. #eserves have been growing steadily for the past 6 years.
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Sep 14 Sep 1" Sep 12 Sep 11 Sep 10
0
1000
2000
"000
4000
5000
e'ere' ;ota$
Share #apita$
Year Sep 14 Sep 13 Sep 12 Sep 11 Sep 10
Share Capital (Rs in Crs) 4.24 4.24 4.24 4.24 4.24
Reserves Total (Rs in Crs)
4,513.4
0 3,640.90
2,853.5
6
2,293.5
3 1,686.44
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)or*in$ Capital
Sep 14 Sep 1" Sep 12 Sep 11 Sep 10
0.00
1000.00
2000.00"000.00
4000.00
5000.00
;ota$ #urrent A''et' ;ota$ #urrent @iabi$itie'
*et Wor+in #apita$
Bor'ing capital increase is in line with the increase in sales revenue. )urrent %ssets are almost
twice that of current liabilities except in the year ending in 8378.
Capital )or* in Pro$ress
Sep 14 Sep 1" Sep 12 Sep 11 Sep 10
0
500
1000
1500
Capital or in ,rogress
#apita$ Wor+ in Prore''
)apital wor' in progress shows that "#F is adding more capacity on a regular basis to augment
its capacity and in line with sales revenue increases steadily across past 6 years. This is the maor
use of cash in investing activities.
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)ommon /ize %nalysis +)ash Flow /tatement,
2014 2013 2012 2011 2010
Sales Trnover 100.0! 100.0! 100.0! 100.0! 100.0!
Total Income 90.4! 90.6! 91.3! 98.4! 94.4!
Ra" #aterials 5$.1! 58.9! 64.1! 69.6! 63.9!
Total %&pen'itre $6.8! $$.2! 81.4! 86.8! 83.8! peratin *ro+it 13.6! 13.3! 9.9! 11.6! 10.6!
ross *ro+it 12.0! 11.9! 8.$! 10.$! 9.8!
*ro+it -e+ore Ta& 9.1! 9.1! 6.4! 8.4! 6.6!
'/ste' et*ro+it 6.1! 6.0! 4.4! 3.3! 4.3!
+Only main elements shown ,
2014 201" 2012 2011 2010
0.09
20.09
40.09
(0.09
-0.09
100.09
120.09
Sa$e' ;urnoer
;ota$ 6nome
a> Dateria$'
;ota$ E
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3. Common Si4e %or alance S&eet 5MRF6
Year Sep 14 Sep 13 Sep 12 Sep 11 Sep 1
SOURCES OF FUNDS : 0.00! 0.00! 0.00! 0.00! 0.0
Share Capital 0.06! 0.0$! 0.08! 0.09! 0.1 Reserves Total 58.94! 5$.22! 51.31! 48.56! 55.3
%it Share arrants 0.00! 0.00! 0.00! 0.00! 0.0
%it ppliation #one 0.00! 0.00! 0.00! 0.00! 0.0
Total Shareholders Funds 59.00% 5.!9% 5".#9% $.&5% 55.5!
Sere' oans 19.01! 20.82! 24.35! 24.13! 16.0
nsere' oans 5.84! 4.31! 6.36! 9.$4! 28.4
Total De't !$.5% !5."#% #0."% ##.% $$.$
ther ia7ilities "&."5% ".5% ".90% ".$% 0.00
Total ()a')l)t)es 100.00! 100.00! 100.00! 100.00! 100.0
*++(IC*TION OF FUNDS :
ross -lo !.&$% &.05% 9".0#% "."#% ""0.&0
ess :late' ;epreiation 3$.86! 39.38! 38.64! 39.39! 66.9 ess
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Sep 14 Sep 1" Sep 12 Sep 11 Sep 10
0.009
10.009
20.009
"0.009
40.009
50.009
(0.009
!0.009
Share #apita$
e'ere' ;ota$ ;ota$ Shareho$der' 7und'
;ota$ )ebt
*et B$o+
6nentorie'
#apita$ Wor+ in Prore''
6ne'tment'
*et #urrent A''et'
7. Comparison o% MRF an its inustry peers 5Apollo
Tyres an 89 Tyres6
-RF (TD
2014 2013 2012 2011 2010
Sales Trnover
100.0
! 100.0! 100.0! 100.0! 100.0! Total Income 90.4! 90.6! 91.3! 98.4! 94.4!
Ra" #aterials 5$.1! 58.9! 64.1! 69.6! 63.9!
Total %&pen'itre $6.8! $$.2! 81.4! 86.8! 83.8!
peratin *ro+it 13.6! 13.3! 9.9! 11.6! 10.6!
ross *ro+it 12.0! 11.9! 8.$! 10.$! 9.8!
*ro+it -e+ore Ta& 9.1! 9.1! 6.4! 8.4! 6.6!
'/ste' et
*ro+it 6.1! 6.0! 4.4! 3.3! 4.3!
/ Tre 1
Industr)es (td
2014 2013 2012 2011 2010
Sales Trnover 100.0! 100.0! 100.0! 100.0! 100.0!
Total Income 90.59! 91.61! 91.48! 94.94! 91.54!
Ra" #aterials 61.16! 65.26! 69.6$! $0.00! 58.01!
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Total %&pen'itre81.51! 83.$9! 86.$2! 89.60! 80.82!
peratin *ro+it 9.08! $.82! 4.$6! 5.33! 10.$2!
ross *ro+it 5.30! 4.38! 1.91! 3.4$! 8.38!
*ro+it -e+ore Ta& 2.9$! 2.50! 0.21! 1.$4! 6.21!
'/ste' et
*ro+it 2.61! 2.02! 0.1$! 1.34! 4.13!
*2ollo Tres (td
2014 2013 2012 2011 2010
Sales Trnover 100.0! 100.0! 100.0! 100.0! 100.0!
Total Income 91.91! 90.64! 91.54! 98.55! 93.59!
Ra" #aterials 61.65! 64.$3! 69.$4! $0.$6! 58.92!
Total %&pen'itre 80.42! 80.48! 83.$8! 88.98! $8.6$!
peratin *ro+it 11.48! 10.1$! $.$5! 9.56! 14.92!
ross *ro+it 8.90! $.34! 4.98! 6.85! 13.29!
*ro+it -e+ore Ta& 6.34! 5.02! 2.89! 4.39! 11.03! '/ste' et
*ro+it 5.11! 3.31! 2.04! 3.15! $.$0!
"#F has adopted and consistently implemented twin prong policy of both increasing its revenue
and comparatively reduce raw material costs and other expenditures and they have beensuccessful in doing that in the past years and that reflects on their superior operating profit and
profit after tax as shown in the following tables.
Ra3 -ater)als 4% o sales6
Year Sep2014 Sep>13 Sep>12 Sep>11 Sep>10
#R? T; 5$.1! 58.9! 64.1! 69.6! 63.9!
/ Tre 1
Industr)es (td61.16! 65.26! 69.6$! $0.00! 58.01!
*2ollo Tres (td 61.65! 64.$3! 69.$4! $0.$6! 58.92!
Total E72end)ture 4% o sales6
Year 2014 2013 2012 2011 2010
#R? T; $6.8! $$.2! 81.4! 86.8! 83.8!
/ Tre 1
Industr)es (td81.51! 83.$9! 86.$2! 89.60! 80.82!
*2ollo Tres (td 80.42! 80.48! 83.$8! 88.98! $8.6$!
O2erat)n8 +ro)t 4% o sales6
2014 2013 2012 2011 2010
#R? T; p *ro+it 13.6! 13.3! 9.9! 11.6! 10.6!
/ Tre O2
+ro)t9.08! $.82! 4.$6! 5.33! 10.$2!
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*2ollo Tres O2
+ro)t11.48! 10.1$! $.$5! 9.56! 14.92!
+*T 4% o sales6
#R? T; *T 6.1! 6.0! 4.4! 3.3! 4.3!
/ Tre +*T 2.61! 2.02! 0.1$! 1.34! 4.13!
*2ollo Tres +*T 5.11! 3.31! 2.04! 3.15! $.$0!
2014 201" 2012 2011 2010
0.09
5.09
10.09
15.09
20.09
D7 @;) /p Prot
&K ;yre /p Prot
Apo$$o ;yre' /p Prot
D7 @;) PA;
&K ;yre PA;
Apo$$o ;yre' PA;
. ,er%ormance o% MRF Lt.; Apollo Tyres an 89 Tyres
past 3 years
+/ource ? www.moneycontrol.com,
"#F stoc's have faired far better when compared in comparison with its competitors and sensex
as a whole.
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T7 D Bor'ing )apital A Total %ssets. T8 D #etained 4arnings A Total %ssets. T( D 4arnings
efore nterest and Taxes A Total %ssets. T9 D "ar'et Galue of 4quity A oo' Galue of
Total $iabilities. T6 D /alesA Total %ssets. /tandard measure for total asset turnover
*ltman Score
#R? t' 4.56
pollo Tres 3.93
@A Tres 2.2$
"#F $td has much less ban'ruptcy ris' than its peers. H0 Tyres has a high ban'ruptcy ris'.
>. Ratio Analysis
Profita+ility ,atios
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
5
10
15
20
"perating margin 5?6
/peratin marin 39
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
5
10
15
0ross pro-t margin 5?6
Gro'' pro:t marin 39
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Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
2
4
(
-
@et pro-t margin 5?6
*et pro:t marin 39
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
5
10
15
Auste cas& margin 5?6
Adu'ted a'h marin 39
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
10
20
"0Auste return on net #ort& 5?6
Adu'ted return on net >orth
39
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Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
10
20
"0
R"CE 5?6
/#E 39
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
10
20
"0
Reporte return on net #ort& 5?6
eported return on net >orth
39
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
10
20
"0
40
Return on long term %uns 5?6
eturn on $on term %und' 39
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-e.era$e ,atios
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
0.2
0.4
0.(
Long term eBt EDuity
@on term debt ? ECuity
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
0.2
0.4
0.(
0.-
Total eBteDuity
;ota$ debt?eCuity
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 1050
55
(0
(5
!0
!5
"#ners %un as ? o% total source
/>ner' %und a' 9 o% tota$
'oure
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Mana$e#ent %fficiency ,atios
Sep F14 Sep F1" Sep F12 Sep F11 Sep F10
(
(.5
!
!.5
-
-.5
/nventory Turnover Ratio
6nentory ;urnoer atio
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
1
2
"
4
Fixe assets turnover ratio
7i
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Sep F14 Sep F1" Sep F12 Sep F11 Sep F10
0
1
2
"
4
Asset Turnover Ratio
A''et ;urnoer atio
Sep F14 Sep F1" Sep F12 Sep F11 Sep F10
0
5
10
15
eBtors Turnover Ratio
)ebtor' ;urnoer atio
Sep F14 Sep F1" Sep F12 Sep F11 Sep F10
(
(.5
!
!.5
-
/nvestments Turnover Ratio
6ne'tment' ;urnoer atio
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Sep F14 Sep F1" Sep F12 Sep F11 Sep F10
0
10
20"0
40
50
Average Ra# Material *oling
Aerae a> Dateria$ o$din
Sep F14 Sep F1" Sep F12 Sep F11 Sep F10
0
10
20
"0
Average Finis&e 0oos *el
Aerae 7ini'hed Good' e$d
Per Share ,atios
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0.00
1000.00
2000.00
"000.00
Auste E,S 5Rs6
Adu'ted EPS 3'
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Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0.00
1000.00
2000.00
"000.00
Reporte E,S 5Rs6
eported EPS 3'
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
20
40
(0
ivien per s&are 5Rs6
)iidend per 'hare 3'
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0.00
1000.00
2000.00
"000.004000.00
5000.00
"perating pro-t per s&are 5Rs6
/peratin prot per 'hare3'
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0.00
5000.00
10000.00
15000.00
oo value 5incl rev res6 per s&are E,S 5Rs6
Boo+ a$ue 3in$ re re' per
'hare EPS 3'
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Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0.00
10000.00
20000.00
"0000.00
40000.00
@et operating income per s&are E,S 5Rs6
*et operatin inome per
'hare EPS 3'
-i&ui/ity Analysis
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
0.5
1
1.5
2
Current ratio
#urrent ratio
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0.-
0.,
1
1.1
Current ratio 5inc. st loans6
#urrent ratio 3in. 't $oan'
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Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
0.5
1
uic ratio
Hui+ ratio
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
(
(.5
!
!.5
-
/nventory turnover ratio
6nentory turnoer ratio
aluation ,atios
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
2
4
(
-
ivien payout ratio 5net pro-t6
)iidend payout ratio 3net
pro:t
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Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
1
2"
4
5
ivien payout ratio 5cas& pro-t6
)iidend payout ratio 3a'h
pro:t
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
-5
,0
,5
100
Earning retention ratio
Earnin retention ratio
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
,4
,(
,-
100
Cas& earnings retention ratio
#a'h earnin' retention ratio
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Co.era$e ,atios
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
1
2
"
4
Auste cas& Go# time total eBt
Adu'ted a'h Io> time tota$
debt
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
5
10
15
Financial c&arges coverage ratio
7inania$ hare' oerae
ratio
Sep F 14 Sep F 1" Sep F 12 Sep F 11 Sep F 10
0
2
4
(
-
10
12
Fin. c&arges cov.ratio 5post tax6
7in. hare' o.ratio 3po't
ta
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8. o /enior "anagement team member has left the organization
(. umber of equity shares have remained same over past few years
9. /toc' prices have not fluctuated in a wide range.6. Financial reports does not indicate opaque or complex financial practices or strategies.
=. The source of income for "#F is from its operations which is evident from the reports
published.2. ncome from operating activities is the main source of revenue.
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