Q4FY19 numbers were quite interesting - CAPEX seems to be coming onstream now.
Of course the cash flow for FY19 is unsatisfactory. Approx Net Cash Generated from Operations is -33 Cr (loss)+ 23 Cr (Depn) + 54 Cr (Interest expense) - 1 Cr (Increase in Inventory) + 30 Cr (Increase in Payables) + 13 Cr (Decrease in Debtors) = Rs. 86 Cr.
The reason I say this is unsatisfactory is because 54 Cr is interest expense, which is an actual expense, so (CFO-Interest) is Rs. 32 Cr (most of which, has been generated from increase in trade payables, still not great).
The question for us here is if we can see a Fixed Asset Turn of 1x (at least, which they’ve achieved historically), Morarjee can achieve sales of Rs. 500 Cr+.
GP for this quarter also declined significantly to 45.6% from 55.3%. This could be due to cotton price volatility, or equally likely, them cutting prices to fill up the capacity which has been created.