The company has a high proportion of Trade receivables + Inventory when compared with Quarterly sales.
For instance, Trade receivables – 67 crores
Inventory -80 Crores
Q3 Sales - 108 crores.
So I just wanted to know more about the receivables. Surprisingly the company has a lot of data about Receivables. As per AR’20 and ’19 the following are the age of receivables.
The company’s allowance for doubtful debt at 20 % for receivable above 2 years looks pretty low. However, if you look more carefully, the receivable above 2 years have come down drastically from 202.97 lacs in 2018 to just 25.18 lacs in 2020. A similar kind of improvement can be seen in receivables above 1 year which was at 381.94 lacs in ’19 came down to 147.15 lacs in ’20. That in a way shows the company’s ability in recovering receivables. Once you see the improvement in receivables in the higher age bracket, it will be interesting whether the company has taken any impairment on receivables.
As per AR’20 the company has taken an impairment of 39.29 lacs in FY 20 and 85.00 lacs in FY19. Eventhough the impairment is above the company’s allowance for doubtful debts for receivables, its very close to it.
From what I understand the company has been able to significantly bring down receivables that are more than 1 year old with very small impairment. Also 92% of the receivables are less than 6 months.
I would have loved it if they would have given a less than 3 month period receivables as well. That would have made the analysis better.
As per AR’20 there are 2 customers accounting for more than 10 % of receivables. An idea about who these customers are, may help us in better understanding pix’s markets
Discl: Have a tracking investment