One negative, a noteworthy one, I see in Harita Seating is that, its Debtor days are high; now crossing 100. and increasing every year. Combining this fact with OPM % as low as 7, paints a dull picture.
A good business with some kind of moat, must at least have the power to get their customers to pay-up, preferably advance. Why should the customer have the supplier bear its working capital requirement! and more importantly why should the supplier agree? To keep the sales graph pointing northward? Does it not have a market otherwise?
Somewhat better would be, if the supplier must give handsome credit, then at least it should be in a position to extract a hefty margin. If the supplier cannot do both, then where is the moat.
Harita is one such candidate, with high debtor days and low OPM.
The debtor days are increasing with each passing year. Jumped to 104 in 2018, where it was 66 in 2016. Bad times are likely to continue for next couple of more years.
pls shed some light. tia.
A question. From the company’s AR, how do I find out if the management has faced non-payment of receivables. Bad-debts.