Name- Kishan kumar

Roll no. –RQ2145B42

Section –Q2145
Subject Code- Q2145
Company – MRF Ltd.

Q1) balance sheet of company of the fiscal year 2018,2019,2020.

 The data for balance sheet has been collected from the annual report of the company.

Balance sheet of MRF

31-01-2021 31-03-2019 31-03-2018

Particular In Cr. In Cr. In Cr.
Assets
Non-current Assets
Property, plant and equipment 8820.72 6751.32 6057.84
Capital work-in-progress 1734.56 1403.19 1078.84
Other intangible assets 28.46 16.2 17.47
Financial assets:
Investments 26.53 1078 1092.42
Loans 12.22 0.31 1.57
Other financial assets 18.22 16.03 14.76
Other non-current assets 555.59 642.13 342.31
Current Assets
Inventories 2852.69 2950.93 2172.07
Financial assets:
Investments 1513.65 2770.39 3054.02
Trade Receivables 2257.03 2361.62 2135.92
Cash and cash equivalent 1104.23 57.52 98.79
Bank balance 2.62 2.55 39.84
Loans 2.89 0.61 1.9
Other financial assets 50.75 33.91 8.64
Other current assets 173.95 142.77 185.41
Assets classified as held for
sale 0.2
Total assets 19154.11 18227.68 16301.8
EQUITY AND LIABILITIES
EQUITY
Equity share capital 4.24 4.24 4.24
Other equity 12000.11 10649.06 9599.96
Total equity 12004.35 10653.3 9604.2
LIABLITIES
Non-current liabilities
Financial Liabilities:
Borrowings 779.03 1054.73 1319.33
Provisions 189.16 167.8 152.74
Deferred Tax liabilities 427.83 839.2 619.01
Other non-current liabilities 250.64 76.29 58.08
CURRENT LIABILITIES
Financial Liabilities:
Borrowings 241.99 408.86 229.08
Trade payables
(A) total outstanding due of
micro enterprises and small
enterprises 17.02 21.25 17.33
(B) total outstanding due of
creditors other than micro
enterprises and small
enterprises 2323.12 2306.39 1981.63
Other financial liabilities 730.63 761.65 530.41
Other current liabilities 1709.78 1781.13 1638.9
Provisions 153.08 149.23 142.83
Current Tax liabilities 7.85 8.26
Total Liabilities 6822.28 7574.38 6697.6
TOTAL EQUITY AND
LIABILITIES 18826.63 18227.68 16301.8

Current Assets & Non – current Assets

 In current assets company has inventories which include Raw materials, Finished Goods,
stock in trade, stores and spares.
 If we look into the balance sheet of the financial year 2018 and 2019 the inventories has
increased but in the financial year 2020 due to the pandemic the inventories has decreased
because of the pandemic.
 Whereas in current financial assets investments, trade receivable has decreased which
shows the direct impact of pandemic on the company.
 The company has given more loans in the time period of 2020 to its employees.
 If we look into the non-current assets of the company. Property, plant and equipment,
capital work-in-progress has increased in the past 3 financial years.
 In other intangible assets company has computer software which has been amortised. And it
has been noticed that company is investing its fund in latest technology and software.
Non-current liabilities & Current liabilities
 In liabilities company has borrowings, provision (Provision for employee benefits), deferred
tax which has decreased in past 3 fiscal years.
 Company also has dealer’s security deposits, retention money, deferred money as a liability.
In the past 3 years these liabilities have increased and we can say this has happened because
of the pandemic.
 When we look at the overall liability of a company it has been decreased in the fiscal year
2020.

Q2) A. How company has performed compared to the last two years?
Comment and analyse the liquidity, efficiency and solvency position of the
company through ratio analysis?

Ans. If we look into the cash and investments of the company, it is around 2644.48 Cr. With land in
their hand. Which shows that company has the capability to expand its business more. MRF has the
70% hold of tyre business for passenger vehicles in India.

 If we talk about the liquidity ratio:

 The current ratio is the ratio between the current assets and current liabilities of a company.
The current ratio is used to indicate the liquidity of an organization in being able to meet its
debt obligations in the upcoming twelve months. A higher current ratio will indicate that the
organization is highly capable of repaying its short-term debt obligations.

Current ratio = current assets/ current liabilities

Current ratio = 1.53

The liquidity ratio of MRF is positive. This type of ratio helps in measuring the ability of a company to
take care of its short-term debt obligations. A higher liquidity ratio represents that the company is
highly rich in cash.

 if we talk about the solvency ratio:

 Solvency ratios can be defined as a type of ratio that is used to evaluate whether a company
is solvent and well capable of paying off its debt obligations or not.

Debt Equity Ratio: The debt-equity ratio can be defined as a ratio between total debt and
shareholder’s fund. The debt-equity ratio is used to calculate the leverage of an organization. An
ideal debt-equity ratio for an organization is 2:1.

The formula for debt-equity ratio is

Debt Equity Ratio = Total debts/shareholder’s fund

Debt equity ratio = 0.15

  The Efficiency ratios measures a company’s ability to use its assets to generate income.

Fixed capital/sales = 0.67

Receivable days = 52.62
Inventory days = 66.29
Payable days = 36.12

Tyre maker MRF is seeing some bright spots amid a bleak growth outlook for the automotive and
tyre industry due to the disruptions caused by the pandemic.However, the ₹16,322-crore MRF sees
some bright spots to drive demand in the near term. “Fortunately, the demand for tyres, particularly
from the farm and commercial sector, has not been affected much and we are able to cater to these
market segments. Also, the forecast of a normal monsoon and its timely onset have boosted the
expectations of a bumper crop output and this augurs well for the rural economy. This can
strengthen rural income and demand, which will see a spurt in demand for two-wheelers and
tractors.

B) How the company has performed compared to its competitors?

Ans. MRF ltd. has lots of competitor in India. Like Balkrishna Industries, JK tyres, Apollo tyres, CEAT,
Birla Tyres, Bridgestone, Goodyear, Toyo tire and many more.

 The current sales turnover of MRF is 15,921.35 cr. Highest among all the competitors.
 The net profit of the company is also highest among its competitors which is 1,249.06 cr.
 Assets of the company is also highest among its competitors 14,031.44 cr.
 Return on assets (ROA): The ROA of the company improved and stood at 8.8% during FY20,
from 7,6% during FY19.

The effects of better efficiency of the company can also be visible from the trends of Return on
Assets and Net Profit Margin. The Return on Equity (ROE) seems to be fluctuating around 20%
but is expected to improve further in the upcoming years. The Fixed Assets Turnover Ratio plays
a major impact on the valuation of equity. It can be seen that the fixed asset turnover ratio is
declining over the past few years due to high expenditure on fixed assets mainly for the purpose
of R&D. The ratio is expected to improve further and will help for the better valuation of the
company.

C) On the basis of information collected and analysis made above, decide with
suitable reason whether you would like to invest in the shares of the company
and why/why not?

Ans. No i don’t like to invest in mrf shares because

MRF Ltd is in the Tyres sector, having a market capitalization of Rs. 29,343.30 crores. It has
reported a sales of Rs. 3,591.11 crores and a net profit of Rs. 299.92 crores for the quarter
ended September 2017.
Maruti is bigger than 10 times in market capital.

Maruti gave 54 times return where as MRF gave 27.8 times return. So what is the reason MRF
stock is trading at 68,164.50 and Maruti is at 9042.25.

Maruti Share face value is 5 and MRF share face value is 10, it indicates Maruti share split one
time and Maruti also gave bonus that is why the Maruti share price still at 9042.25 today.