Atul Ltd

Cash flow
(Rs crore)
Mar ' 16

Mar ' 15

Mar ' 14

Mar ' 13

Mar ' 12

Profit before tax

393.03

312.11

297.09

192.42

122.48

Net cashflow-operating activity

374.28

316.96

141

168.14

120.5

Net cash used in investing

activity

-340.32

-194.59

-79.85

-88.51

-119.24

Netcash used in fin. activity

-35.26

-124.91

-60.39

-82.34

0.58

-1.3

-2.54

0.76

-2.71

1.84

Cash and equivalnt begin of

year

4.7

7.24

6.48

9.19

13.41

Cash and equivalnt end of

year

3.4

4.7

7.24

6.48

15.25

Net inc/dec in cash and

equivlnt

Annual results in
brief
(Rs crore)
Mar ' 16
Sales
Operating profit
Interest
Gross profit
EPS (Rs)

Mar ' 15

Mar ' 14

Mar ' 13

Mar ' 12

2,458.90

2,555.65

2,365.45

2,001.48

1,795.57

432.15

375.72

343.13

247.26

203.15

25.84

23.64

31.43

33.13

43.1

452.05

367.39

351.32

232.64

171.69

90.38

73.3

71.74

45.69

29.71

1.Almost entire PBT has gone into cash flow fm operating activity 2. CF fm
Operating activity is positive

Is +ve cash flow from add

borrowing?

s +ve cash flow from additional bank

orrowing?

levels of debt. The statement of cash flows will highlight how successful a comp
cash and reduce debt. A good company will seek to generate p
Free cash flow is the cash that a company has available for distribution to sh
financing obligations. Despite borrowing $80.8 million and returning nearly $20
Lauren still generated $278.2 million in cash. Another way to look at it is that
Polo Ralph Lauren's operations was returned to shareholders. If you were to look
you would also notice that while its debt levels have risen, so has the compan
How Does Cash Flow Relate to Liquidity?

The goal of a company -- besides creating free cash flow -- is to ensure that
financial obligations and grow its business. Thus, from time to time, a compan
capital markets in order to increase its liquidity beyond the sources of it
There are three basic ways in which a company can create liquidity beyond its
assets, issuance of equity and issuance of debt. Let's look at
Monetization of assets can be achieved through disposal of a business, sale of
sale of assets such as property, a plant or equipment. A recent example of such
Boston Markets unit to a private-equity firm
The sale of common stock through a secondary offering or issuance of preferre
straight preferred or convertible into common stock. Recently, Bank of Amer
preferred private placement issued by Countrywide Financial to help the mortga
crisis.
Companies can issue debt. Debt comes in two main forms: secured and unsecur
value of an asset such as real estate, receivables or marketable securities. Th
asset-backed security or "repo" transaction
For example, CarMax recently closed on a $500 million asset-backed loan tha
inventory. An unsecured liability is created when a company borrows money a
company without pledging any collateral to the
As an example of this, IHOP recently announced its intention to acquire Appleb
will be raised from credit facilities that IHOP has recently estab
As with preferred stock, unsecured debt can be straight or convertible into sto
lender a security interest in the assets borrowed against, the rates of interest te
debt. Convertible debt will have lower coupon rates than straight debt, becaus
embedded option implicit in the conversion fea
Your Homework:
Review statements of cash flows for several companies that you're interested in
the companies that are in the process of generating cash and returning value t
are borrowing money to maintain or expand ope
At the time of publication, Rothbort was long BAC and MCD, although po

t how successful a company has been in its efforts to generate

y will seek to generate positive free cash flow.
able for distribution to shareholders after payment of all its
and returning nearly $200 million to shareholders, Polo Ralph
way to look at it is that nearly half of the cash provided from
olders. If you were to look at Polo Ralph Lauren's balance sheet,
risen, so has the company's amount of cash and equivalents.
Flow Relate to Liquidity?

flow -- is to ensure that it has sufficient liquidity to meet its

m time to time, a company will have to access the banking or
beyond the sources of its current operations or assets.
eate liquidity beyond its operations or assets: Monetization of
nce of debt. Let's look at all three methods.
sal of a business, sale of a joint venture, IPO of a subsidiary or
recent example of such a transaction is the sale of McDonald's
nit to a private-equity firm.
g or issuance of preferred stock. Preferred stock can be either
. Recently, Bank of America purchased a sizable convertible
ancial to help the mortgage company during the recent liquidity
crisis.
ms: secured and unsecured. Secured debt is issued against the
marketable securities. This may take the form of a mortgage,
urity or "repo" transaction.
on asset-backed loan that was collateralized with automobile
mpany borrows money against the full faith and credit of that
ing any collateral to the lender.
tention to acquire Applebee's for $2.1 billion in cash. The cash
IHOP has recently established or has in place.
ht or convertible into stock. Because secured debt grants the
st, the rates of interest tend to be lower than that of unsecured
an straight debt, because the holder will also benefit from the
licit in the conversion feature.
Homework:
that you're interested in. In the process, compare and contrast
sh and returning value to shareholders vs. the companies that
maintain or expand operations.
C and MCD, although positions can change at any time.