MRF (Madras Rubber Factory) is India’s No.1 tyre manufacturing company.

It was started in the year 1946 by K M Mammen

Mappillai as a small toy balloon unit. Much later in November 1960 it ventured into manufacturing of tyres. The company entered
into a technical collaboration with Tire & Rubber company, USA.
In 1964 MRF established an overseas office at Beirut, Lebanon to tap the export market. This was amongst India’s very first efforts
on tyre exports. In 1989 the company collaborated with US–based Hasbro International, the world’s largest toy maker and launched
Funskool India. In the same year it entered into a pact with Vapocure of Australia to manufacture polyurethane paint formulations
and with Pirelli for Muscleflex conveyor and elevator belting.
Currently MRF exports tyres to over 65 countries including America, Europe, Middle East, Japan, and the Pacific region. It presently
has overseas offices in Dubai, Vietnam and Australia.
Products of the company
 Tyres – It manufactures various tyres for passenger cars, two–wheelers, trucks, buses, tractors, light commercial vehicles and off–
the–road tyres.
 Conveyor Belting – It manufactures its Muscleflex brand of conveyor belting at one of the most advanced state–of–the–art
facilities in India. Incorporating the latest manufacturing techniques in processes beginning with mixing, calendaring and the like
to manufacturing of the finished products, all of which is in–house, Muscleflex –conveyor belting has gained rapid acceptance in
markets worldwide.
 Pretreads – It is the most advanced precured retreading system in India. MRF forayed into retreading as far back as 1970. Today,
MRF has perfected the art of recured retreading with its extensive knowledge in tyres and rubber.
Awards
 It was awarded as Most Trusted Tyre Company in India by TNS 2006 global CSR study.
 The company won the J D Power Asia Pacific award for customer satisfaction seven times.
 MRF was honoured with CAPEXIL award as acknowledgement for its export performance.
 2013 Won the JD power award for the 10th time.

MOTOR SPORTS
Racing
The MRF Formula 2000 cars are used in the most sought after racing series from MRF - The MRF Challenge. Around 20 drivers
from all over the world battle it out in the MRF Challenge series every year
 Rallying
MRF is the largest promoter of rallying in the country. Having met with success in the domestic championships, the company
entered international rallying in 2002 with two cars in the FIA Asia Pacific Rally Championship (APRC).

Motocross
Derived from the words ‘Motorcycle’ and ‘Cross Country’, Motocross is often shortened to MX. It’s a form of motorcycle sport or
all-terrain two wheeler racing held on enclosed off-road circuits. In line with its close association with motorsports, MRF promotes
a national Supercross Championship annually in several cities.

Karting
Karting is considered the stepping-stone for a successful career in formula car racing. It has moved on from becoming a pastime
for racing buffs to a serious sport. And MRF has strengthened its long-standing association with karting in India by becoming the
first Indian tyre company to develop FIA-CIK approved karting tyres in India.

MRF Pace Foundationedit

MRF Pace Foundation is a coaching clinic for training fast bowlers established by MRF with the help of former Australian pace
spearhead Dennis Lillee in Chennai, India. Through this program, young aspiring fast bowlers are trained in a special facility. Fast
bowlers who trained with foundation and went on to represent the Indian Cricket Team include Javagal Srinath, Irfan Pathan, Munaf
Patel, Venkatesh Prasad, R. P. Singh, Zaheer Khan and S Sreesanth. Besides Indian players, foreign players like Chaminda Vaas, Henry
Olonga, Heath Streak and Australian fast bowlers Glenn McGrath, Mitchell Johnson and Brett Lee have also trained at the
foundation. Sachin Tendulkar in his early days trained in the MRF Pace Foundation to become a fast bowler. Glenn McGrath was
appointed director of the Foundation on 2 September 2012, replacing Dennis Lillee, who has held the post since its inception in
1987.[13]

Endorsement[edit]
MRF had been the bat sponsor for many cricketers of the game. Sachin Tendulkar, Brian Lara and Steve Waugh have endorsed MRF
products.[14] MRF has also sponsored Indian batsmen Rohit Sharma,[15] Gautam Gambhir and Sanju Samson. Currently MRF is endorsed
by star batsmen Prithvi Shaw, Shikhar Dhawan, Virat Kohli[16] and AB de Villiers.[17]

Previous endorsements[edit]

 Sachin Tendulkar – Conqueror,Genius,Wizard

 Brian Lara – Wizard, Wizard 400
 Steve Waugh – Conqueror
 Rohit Sharma – Genius
 Gautam Gambhir – Genius
 Sanju Samson – Wizard
Current endorsements[edit]

 Virat Kohli – Conqueror,Genius VK 18

 AB de Villiers – Genius ABD 25
 Shikhar Dhawan – Genius SD 25 / Unique SD
 Prithvi Shaw – Emerging Star
Sponsorship[edit]
At IPL 2010, MRF sponsored moored balloons floating above the cricket grounds with a high-definition camera recording live actions
of the cricket match. MRF joined as a global partner of International Cricket Council for 2015 Cricket World Cup.[18] In 2017, MRF
became the sleeve sponser for the Premier League clubs Newcastle United,[19] West Ham United F.C.[20] and official tyre partner for
West Bromwich Albion.
Manufacturing facilities
The company has manufacturing facilities for tyres at Kottayam in Kerala, Puduchery, Arakonam, Goa and trichy two plants in
Perambalur in Tamil Nadu, Medak and ankenpally in Telangana has two facilities one recently opened.[6] The company manufactures
toys at its facility in Goa. The paints and coats are manufactured at two facilities in Chennai, Tamil Nadu

THE MRF DESIGN PROCESS

The Design process at MRF starts from the customer - inputs from individual customers are compiled by marketing and given to
Corporate Technical MRF's R&D and Product Development Division or vehicle specific requirements are received from the OE
customer.
MRF's team of 300 engineers and scientists gives MRF its enormous strength in product design. Requirements received, a team now
works on converting the customer input into a Design Concept.
MRF uses cutting - edge technologies in predictive testing and design validation before it leaves the drawing board. These advances
have significantly brought down the time to market for new designs.
Advanced raw materials are tested and approved in our NABL accredited laboratories. MRF works closely with global suppliers in
using the latest developments in materials across the globe. Our laboratories which have the very latest in testing equipment closely
monitor the quality of the material going into our tyres at the time of approval and regularly after that.
The prototypes for verification and validation testing are manufactured in one of MRF's 9 factories all of which are TS 16949/ISO
9001 certified. The tyres then go through testing for confirming the architecture and a series of indoor testing to ensure that they
meet MRF's tight standards and also those required by the OEM or by any of the national standards like BIS/JIS/ETRTO/T&RA.
Tyres are now handed over to the Vehicle Dynamics Group, who now validates the design on the vehicle. These tests are done at the
test track in a series of manoeuvres at various speeds, pushing the tyres to the limits of its capabilities.
MRF also tests tyres on fleets across the country to ensure that the tyres have endured successfully all the types of roads on which
our customers travel daily. Race Tracks and Indian Roads are our laboratories.
Only after this do we give any tyres to the customer - all global players manufacturing a global class of vehicles. MRF has been
designing tyres this class of vehicles for more than a decade now. MRF tyres have met the demanding requirements of these
vehicles, backed by an R&D team which is completely in-house and self reliant.

MRF LTD. (MRF) - FINANCIAL RATIOS

RATIOS 2018 2017 2016

DEBT-EQUITY RATIO 0.21 0.26 0.34

CURRENT RATIO 0.94 0.96 1.18

ASSET TURNOVER RATIO 2.08 2.47 2.55

INVENTORY TURNOVER RATIO 6.67 6.90 8.03

DEBTORS TURNOVER RATIO 7.44 7.78 8.35

INTEREST COVERAGE RATIO 7.42 9.27 11.25

OPERATING MARGIN (%) 16.79 19.83 21.17

NET PROFIT MARGIN (%) 7.17 9.84 11.16

RETURN ON CAPITAL EMPLOYED (%) 16.61 22.97 30.96

RETURN ON NET WORTH (%) 12.04 18.48 28.24

RATIOS 2014 2013 2012

DEBT-EQUITY RATIO 0.43 0.51 0.64

CURRENT RATIO 1.52 1.50 1.43

ASSET TURNOVER RATIO 2.48 2.55 2.94

INVENTORY TURNOVER RATIO 8.15 7.82 8.24

DEBTORS TURNOVER RATIO 8.97 8.94 9.45

INTEREST COVERAGE RATIO 6.78 7.26 6.25

OPERATING MARGIN (%) 13.61 13.35 9.90

NET PROFIT MARGIN (%) 6.13 5.96 4.38

RETURN ON CAPITAL EMPLOYED (%) 22.40 23.86 19.29

RETURN ON NET WORTH (%) 22.00 24.67 22.20

Analysis of MRF's financial statements for the

period from 2012 to 2017
This report analyzes the balance sheets and income statements of MRF. Trends for the major balance sheet and income statement items and ratio
analysis are used to understand the financial position and financial effectiveness of the company. The report studied the 2012 - 2017 period.

1. The Common-Size Analysis of the Assets, Liabilities and

Shareholders' Equity
Table 1. Assets Trend Analysis, in Cr INR

Indicators 2012 2013 2014 2016 2017 Absolute Percentage

 change change
(2017 / (2017 /
2012) 2012)

Property, plant and equipment 71.54 84.68 151.76 1044.64 1080.57 1009.03 1410.44

Intangible assets, net

5.99 5.39 7.04 9.06 13.23 7.24 120.87
(excluding goodwill)

Noncurrent inventories 57.23 138.12 3421.65 458.74 5474.35 5417.12 9465.53

Deferred tax assets, net,

0 0 224.27 10.05 3.68 3.68 division by 0
noncurrent

Current tax assets,

2907.81 2964.15 0 0 0 -2907.81 -100
noncurrent

Other noncurrent assets 30.46 34.89 42.11 238.22 318.85 288.39 946.78

NONCURRENT ASSETS
3073.03 3227.23 3846.83 1760.71 6890.68 3817.65 124.23
(TOTAL)

Current inventories 1645.59 1795.29 1799.70 1879.74 2392.92 747.33 45.41

Trade and other current

1454.09 1556.14 1708.47 1831.72 1959.95 505.86 34.79
receivables

Current biological assets 353.17 821.48 936.15 2102.75 2313.78 1960.61 555.15

Other current financial assets 203.42 145.14 136.75 0 3.98 -199.44 -98.04

Cash and cash equivalents 61.10 330.81 707.67 80.45 274.42 213.32 349.13

Other assets, current 7.22 22.13 34.72 329.98 242.43 235.21 3257.76

CURRENT ASSETS (TOTAL) 3724.59 4670.99 5323.46 6224.64 7187.48 3462.89 92.97

ASSETS (TOTAL) 6797.62 7898.22 9170.29 7985.35 14078.16 7280.54 107.1

It can be noticed from Table 1 that there was a tendency to increase in the total value of the assets. The percentage change was equal 107.1% in
2017 comparing to 2012. The value of the assets totalled INR 140,781,600 thousand at the end of 2017.
The overall increase of the assets reflects both a growth in the noncurrent assets by 124.23% and a growth in the current assets by 92.97%.

Assets comparison for 5 years

16000

14000

12000

10000

8000

6000

4000

2000

0
2012 2013 2014 2016 2017
 Non Current and Current Assets for 5 Years
8000

7000

6000

5000

4000 Non Current Assets

Current Assets
3000

2000

1000

0
2012 2013 2014 2016 2017

The change of the noncurrent assets value in 2012-2017 was connected with the growth of the following assets:

- Property, plant and equipment (1410.44%)

- Intangible assets other than goodwill (120.87%)

- Noncurrent inventories (9465.53%)

- Deferred tax assets (0%)

- Other noncurrent assets (946.78%)

The change of the current assets value in 2012-2017 was connected with the growth of the following assets:

- Current inventories (45.41%)

- Trade and other current receivables (34.79%)

- Current biological assets (555.15%)

- Cash and cash equivalents (349.13%)

- Other current assets (3257.76%)

Table 2. Sources of Finance (Equity and Liabilities) Trend Analysis, in Cr INR

Absolute Percentage
change change
Indicators 2012 2013 2014 2016 2017
(2017 / (2017 /
2012) 2012)

Issued (share) capital 4.24 4.24 4.24 4.24 4.24 0 0

Other reserves 2853.56 3640.90 4513.40 7156.97 8540.18 5686.62 199.28

EQUITY (TOTAL) 2857.80 3645.14 4517.64 7161.2 8544.42 5686.62 198.99

Noncurrent borrowings 1102.71 952.46 1198.75 1486.45 1238.32 135.61 12.3

Other noncurrent provisions 87.29 75.24 91.85 125.13 137.26 49.97 57.25

Deferred tax liabilities 186.72 222.31 235.31 351.79 501.17 314.45 168.41

Other long-term financial

908.03 1043.23 1144.84 36.24 27.74 -880.29 -96.95
liabilities

NONCURRENT LIABILITIES 2284.75 2293.24 2670.75 1999.61 1904.49 -380.26 -16.64

Current borrowings 528.72 476.23 616.25 488.43 573.34 44.62 8.44

Other current provisions 147.24 269.07 313.31 89.65 120.88 -26.36 -17.9
Trade and other current
939.43 1021.43 1139.72 1528.82 1677.08 737.65 78.52
payables

Other current liabilities 454.33 552.23 539.29 1902.03 2104.91 1650.58 363.3

CURRENT LIABILITIES 2069.72 2318.96 2608.57 4008.93 4476.21 2406.49 116.27

LIABILITIES (TOTAL) 4354.47 4612.20 5279.32 6008.54 6380.70 2026.23 46.53

LIABILITIES AND EQUITY

7212.27 8257.34 9796.96 13169.75 14925.12 7712.85 106.94
(TOTAL)

Similar to the value of total assets, the liabilities and equity value amounted to INR 140,78.1,6 Cr in 2017, 107.1% more than
in 2012.

There was a stable growth of the stockholders' equity value in 2012-2017, which indicates that the company's assets would
worth more after all claims upon those assets were paid. This means that MRF was expanding.

The change of the stockholders' equity value in 2012-2017 was related to growth of the following sources:

- Other reserves (199.28%)

 9000

8000

7000

6000

5000 Equity
Non Current Liability
4000
Current Liability
3000

2000

1000

0
2012 2013 2014 2016 2017

The change of the liabilities value in 2012-2017 was related to the growth of the following sources:

- Current borrowings (8.44%)

- Trade and other current payables (78.52%)

- Other current liabilities (363.3%)

- Noncurrent borrowings (12.3%)

- Other noncurrent provisions (57.25%)

- Deferred tax liabilities (168.41%)

Table 3. Assets Structure Analysis, %

 Absolute
change
Indicators 2012 2013 2014 2016 2017
(2017 /
2012)

Property, plant and equipment 1.05 1.07 1.65 13.08 7.68 6.62

Intangible assets other than goodwill 0.09 0.07 0.08 0.11 0.09 0.01

Noncurrent inventories 0.84 1.75 37.31 5.74 38.89 38.04

Deferred tax assets, net, noncurrent 0 0 2.45 0.13 0.03 0.03

Current tax assets, noncurrent 42.78 37.53 0 0 0 -42.78

Other noncurrent assets 0.45 0.44 0.46 2.98 2.26 1.82

NONCURRENT ASSETS (TOTAL) 45.21 40.86 41.95 22.05 48.95 3.74

Current inventories 24.21 22.73 19.63 23.54 17 -7.21

Trade and other current receivables 21.39 19.7 18.63 22.94 13.92 -7.47

Current biological assets 5.2 10.4 10.21 26.33 16.44 11.24

Other current financial assets 2.99 1.84 1.49 0 0.03 -2.96

Cash and cash equivalents 0.9 4.19 7.72 1.01 1.95 1.05

Other current assets 0.11 0.28 0.38 4.13 1.72 1.62

CURRENT ASSETS (TOTAL) 54.79 59.14 58.05 77.95 51.05 -3.74

ASSETS (TOTAL) 100 100 100 100 100 0

At the end of 2012 the assets consisted of: 45.21% noncurrent assets and 54.79% current assets. The most significant items of the current assets
were: current inventories (24.21% of total assets), trade and other current receivables (21.39% of total assets), current biological assets (5.2% of
total assets), etc. The following noncurrent assets had the highest values: current tax assets, noncurrent (42.78% of total assets), while the other
items did not play a significant role.
Over the period under review the assets structure changed. At the end of 2017 the assets consisted of: 48.95% noncurrent assets and 51.05%
current assets. Total current assets composed mostly of: current inventories (17% of total assets), trade and other current receivables (13.92% of
total assets), current biological assets (16.44% of total assets), etc. The most significant items of the noncurrent assets were: property, plant and
equipment (7.68% of total assets), noncurrent inventories (38.89% of total assets), etc.

Table 4. Equity and Liabilities Structure Analysis, %

Indicators 2012 2013 2014 2016 2017 Absolute change (2017 / 2012)
Issued (share) capital 0.06 0.05 0.05 0.05 0.03 -0.03

Other reserves 41.98 46.1 49.22 89.63 60.66 18.68

EQUITY (TOTAL) 42.04 46.15 49.26 89.68 60.69 18.65

Noncurrent borrowings 16.22 12.06 13.07 18.61 8.8 -7.43

Other noncurrent provisions 1.28 0.95 1 1.57 0.97 -0.31

Deferred tax liabilities 2.75 2.81 2.57 4.41 3.56 0.81

Other long-term financial liabilities 13.36 13.21 12.48 0.45 0.2 -13.16

NONCURRENT LIABILITIES 33.61 29.03 29.12 25.04 13.53 -20.08

Current borrowings 7.78 6.03 6.72 6.12 4.07 -3.71

Other current provisions 2.17 3.41 3.42 1.12 0.86 -1.31

Trade and other current payables 13.82 12.93 12.43 19.15 11.91 -1.91

Other current liabilities 6.68 6.99 5.88 23.82 14.95 8.27

CURRENT LIABILITIES 30.45 29.36 28.45 50.2 31.8 1.35

Liabilities 64.06 58.4 57.57 75.24 45.32 -18.74

LIABILITIES AND EQUITY (TOTAL) 106.1 104.55 106.83 164.92 106.02 -0.08

By looking at the Table 4 it can be noticed that the sources of finance consisted of 42.04% shareholders' equity, 33.61% noncurrent liabilities and
30.45% current liabilities. Average share of the equity in 2012 means the financial risk level was acceptable. The total equity consisted mostly of:
other reserves (INR 28,535,600 thousand), etc. The company's liabilities included noncurrent borrowings (16.22% of the total sources of finance),
other long-term financial liabilities (13.36% of the total sources of finance), current borrowings (7.78% of the total sources of finance), trade and
other current payables (13.82% of the total sources of finance), other current liabilities (6.68% of the total sources of finance), etc.
CEAT TYRES FINANCIAL STATEMENT

Indicators 2012 2013 2014 2016 2017

Issued (share) capital 34.24 34.24 35.96 40.45 40.45

Other reserves 618.46 708.77 931.14 1950.81 2265.70

EQUITY (TOTAL) 652.7 743.01 967.1 1991.26 1991.26

Noncurrent borrowings 568.00 421.67 422.49 589.96 703.51

Other noncurrent provisions 8.04 12.01 20.21 29.29 34.18

Deferred tax liabilities 22.44 74.52 109.10 147.37 134.59

Other long-term financial liabilities 1.42 1.42 1.42 5.38 27.16

NONCURRENT LIABILITIES 599.9 509.62 553.22 772 899.44

Current borrowings 502.82 382.16 574.78 21.91 57.99

Other current provisions 15.40 65.54 66.40 78.58 54.60

Trade and other current payables 656.94 776.06 669.26 630.04 749.58

Other current liabilities 557.15 576.23 546.91 463.95 475.44

CURRENT LIABILITIES 1732.31 1799.99 1857.35 1194.48 1337.61

LIABILITIES (TOTAL) 2332.21 2309.61 2410.57 1966.48 2237.05

LIABILITIES AND EQUITY (TOTAL) 2984.91 3052.62 1520.32 2763.26 2890.7

 Sources of Finance for ceat tyres

2500

2000

1500
Equity
Non Current Liabilities
1000 Current Liabilities

500

0
2012 2013 2013 2016 2017
At the end of 2017 the sources of finance comprised 60.69% shareholders' equity, 13.53% noncurrent liabilities and 31.8% current liabilities. This
shows that the share of the equity was in the area of critical values, meaning that the financial risk level was average. The total equity consisted
mostly of: other reserves (INR 85,401,800 thousand), etc. The following liabilities had the highest values: noncurrent borrowings (8.8% of the total
sources of finance), deferred tax liabilities (3.56% of the total sources of finance), current borrowings (4.07% of the total sources of finance), trade
and other current payables (11.91% of the total sources of finance), other current liabilities (14.95% of the total sources of finance), etc.
Comparison between cost of capital of MRF Tyres And Ceat
Tyres
5000

4500

4000

3500

3000
EQUITY
2500
NON CURRENT LIABILITIES

2000 CURRENT LIABILITIES

1500

1000

500

0
2012 MRF 2012 CEAT 2013 MRF 2013 CEAT 2014 MRF 2014 CEAT
 9000

8000

7000

6000

5000 EQUITY
NON CURRENT LIABILITIES
4000
CURRENT LIABILITIES
3000

2000

1000

0
2016 MRF 2016 CEAT 2017 MRF 2018 CEAT

An equity share, commonly referred to as ordinary share also represents the form of fractional or part
ownership in which a shareholder, as a fractional owner, undertakes the maximum entrepreneurial risk
associated with a business venture. The holders of such shares are members of the company and have
voting rights.As we can see the comparison graph the equity of MRF tyres is more than that of Ceat Tyres

Noncurrent liabilities, also called long-term liabilities, are long-term financial obligations
listed on a company’s balance sheet that are not due for settlement within one year – as
opposed to current liabilities which are short-term debts. In the graph the non current
liabilities of MRF tyres are also more than that of Ceat tyres which means MRF Tyres have
more long term sources of finance like quity financing, preference financing, debt financing,
venture capital, internal financing etc

Current liabilities are a company's debts or obligations that are due within one year or within
a normal operating cycle. Furthermore, current liabilities are settled by the use of a current
asset, such as cash, or by creating a new current liability. Current liabilities appear on a
company's balance sheet and include short-term debt, accounts payable, accrued liabilities,
and other similar debts. The current liabilities of MRF tyres are more than that of Ceat tyres
but there is not much difference between two

We can see from the data that the financial structure of MRF tyres is stronger than that of
Ceat tyres.
2. Financial Sustainability and Long-Term Debt-Paying Ability
Table 5. Key ratios of the company's financial sustainability

Indicators 2012 2013 2014 2016 2017 Absolute change (2017 / 2012)

Times Interest Earned division by 0 division by 0 division by 0 division by 0 division by 0 0

Debt Ratio 0.6 0.56 0.54 0.46 0.43 -0.18

Long-Term Debt Ratio 0.32 0.28 0.27 0.15 0.13 -0.19

The Long-Term Debt to Total Capitalization

1 1 1 1 1 -0
Ratio

Debt/Equity Ratio 1.52 1.27 1.17 0.84 0.75 -0.78

Debt to Tangible Net Worth Ratio 1.53 1.27 1.17 0.84 0.75 -0.78

Long-Term Debt to Equity 538.86 540.86 629.89 471.61 449.17 -89.68

The debt ratio tells us that in 2012 each INR 1.00 of the assets was financed by INR 0.6 of debt (and INR 0.4 of equity). In 2013 55.86% of the
sources of finance were liabilities. For every INR 1.00 of the assets there were INR 0.54 of liabilities in 2016. The debt ratio lies in the area of critical
values (from 0.4 to 0.6) at the end of the period, meaning that there was an acceptable financial and credit risk. A decrease in the long-term debt
ratio suggests that the company was progressively becoming less dependent on debt to grow a business. 13% of the sources of finance were a long-
term debt at the end of 2017.

The value of the long-term debt to total capitalization ratio was 1 at the end of 2012, and 1 in 2017. Total capitalization consists of the long-term
debt, preferred stock, and common stockholders' equity. Lower ratio shows lower risk.
The debt/equity ratio is another computation that determines the entity's long-term debt-paying ability. At the end of 2017 this ratio was 75%,
meaning that creditors were protected in case of insolvency.

The debt to tangible net worth ratio is a more conservative ratio than the debt/equity ratio. It eliminates intangible assets because they do not
provide resources to pay creditors. The table 5 shows that the ratio changed from 1.53 in 2012 to 0.75 in 2017. This shows that the creditors'
protection was getting better.

The value of the long-term debt to equity ratio was 538.86 at the end of 2012, and 449.17 in 2017.

3. Liquidity of Short-Term Assets

Table 6. Liquidity Ratios

Indicators 2012 2013 2014 2016 2017 Absolute change (2017 / 2012)

1.8 2.01 2.04 1.55 1.61 -0.19

Current Ratio
0.73 0.81 0.93 0.48 0.5 -0.23
Quick Ratio (Acid Test Ratio)
0.03 0.14 0.27 0.02 0.06 0.03
Cash Ratio
16548700 23520300 27148900 22157100 27112700 10564000
Net Working Capital
- 0 0 0 0 0
Sales to Net Working Capital

The current ratio was 1.8 in 2012, meaning that MRF had 1.8 times as many current assets as current liabilities. The value of the ratio lies in the area
of critical values (from 1.5 to 2). The current ratio was 2.01 at the end of 2013, 2.04 in 2014 and 1.55 at the end of 2016. The value of the ratio was
acceptable at the end of the period under review (27112700 in 2017). This means that MRF was able to pay off debt in due time.

The quick ratio for 2012 was 0.73, showing there were INR 0.73 of the quick assets for every INR 1.00 of the current liabilities. The ratio for 2017
from Table 6 shows INR 0.48 of the quick assets were available for every INR 1.00 of the current liabilities. The decrease in the quick ratio from 2012
to 2017 indicates that the company has been losing its ability to pay its short-term debt.

The company's quick liquidity was unsatisfactory at the end of the period.

The cash ratio shows that the company was able to pay off 6.13% of its debt immediately as for the end of 2017. It indicates an immediate problem
with paying bills.
Table 6 presents the working capital for MRF at the end of 2012-2017. MRF had INR 16,548,700 thousand in the working capital in 2012, and INR
27,112,700 thousand in the working capital in 2017. Overall, the value of the working capital had grown up over 2012-2017.

The working capital value was positive at the end of the period under review, meaning greater flexibility, since current assets may be modified easily
as the sales volume changes.

The sales to working capital ratio was stable during 2012-2017.

4. Overview of the Financial Results

Table 7. Financial Results Trend Analysis, in thousand INR

Percentage
Absolute
change
Indicators 2012 2013 2014 2016 2017 change (2017
(2017 /
/ 2012)
2012)

Revenue 0 0 0 0 0 0 division by 0

Cost of sales 0 0 0 0 0 0 division by 0

Gross profit 0 0 0 0 0 0 division by 0

Other income and expenses from

continuing operations, except finance 0 0 0 0 0 0 division by 0
costs and income tax expense

EBIT 0 0 0 0 0 0 division by 0

Finance costs 0 0 0 0 0 0 division by 0

Income tax expense (benefit) 0 0 0 0 0 0 division by 0

Income (loss) from continuing operations 0 0 0 0 0 0 division by 0

Comprehensive income (loss) 0 0 0 0 0 0 division by 0

The cost of goods and services totalled INR 0 thousand in 2013. At the end of 2017 the cost of goods and services totalled INR 0 thousand. As a
result, the gross profit was equal INR 0 thousand at the end of the period. Zero EBIT indicates poor performance in 2017. On the whole, 2017 was a
bad period as the company recorded INR 0 thousand comprehensive loss.

The chart above shows that there was no change in the gross profit to net sales ratio in 2012 comparing to 2017. 2017 also witnessed the company's
stable EBIT to sales ratio comparing to 2012. Share of the comprehensive income in the company's net sales in was the same, as in 2012.

5. Profitability Ratios
Table 8. Profitability Ratios, %

Absolute
change
Indicators 2012 2013 2014 2016 2017
(2017 /
2012)

Net Profit Margin division by 0 division by 0 division by 0 division by 0 division by 0 0

Operating Income Margin division by 0 division by 0 division by 0 division by 0 division by 0 0

Gross Profit Margin division by 0 division by 0 division by 0 division by 0 division by 0 0

Return on Assets - 0 0 0 0 0

Return on Operating Assets - 0 0 0 0 0

Return on Investment - 0 0 0 0 0

Return on Equity after Tax - 0 0 0 0 0

At the end of 2017 the net profit margin was 0%, showing INR 0 of the net profit per INR 1.00 of sales.

The MRF's operating performance was weak in 2017. For every rupee of the net sales the company had INR 0 in the operating loss.

For MRF the ROA shows that the company's profitability was 0%. After taking into account inflation, this ratio indicates actual decrease in company
value in 2017.

The operating assets were yielding a 0% return in 2017.

Higher ROIs suggest better performance. This ratio was stable in 2013-2017.

Table 9. Dupont Analysis

Absolute
change
Indicators 2013 2014 2016 2017
(2017 /
2013)
 0 0 0 0 0
Return on Assets
division by 0 division by 0 division by 0 division by 0 0
Net Profit Margin
0 0 0 0 0
Total Asset Turnover

6. Activity Ratios (Turnover Ratios)

Table 10. Activity Ratios (Turnover Ratios)

Absolute
change
Indicators 2013 2014 2016 2017
(2017 /
2013)

Asset Turnover 0 0 0 0 0

Sales to Fixed Assets 0 0 0 0 0

Current Asset Turnover 0 0 0 0 0

Working Capital Turnover 0 0 0 0 0

Accounts Receivable Turnover (Times) 0 0 0 0 0

Average Collection Period (Accounts Receivable Turnover in Days) division by 0 division by 0 division by 0 division by 0 0

Accounts Payable Turnover (Times) 0 0 0 0 0

Days Payable Outstanding division by 0 division by 0 division by 0 division by 0 0

Inventory Turnover (Times) 0 0 0 0 0

Inventory Turnover in Days division by 0 division by 0 division by 0 division by 0 0

Cash Turnover 0 0 0 0 0

Operating Cycle 0 0 0 0 0

Cash Conversion Cycle 0 0 0 0 0

By looking at the Table 10 it can be seen that the company produced INR 0 of products and services for every rupee of the assets used at the end of
the period.

it can be seen that the working capital turnover was 0 in 2013, 0 in 2014, 0 in 2016 and 0 in 2017.

OTHER INDICATORS

7. Investor Analysis
Table 11. Investor Analysis

Absolute
change
Indicators 2012 2013 2014 2016 2017
(2017 /
2012)

28578000 36451400 45176400 71612100 85444200 56866200

Net assets (Net worth), in thousand INR
division division division division division
0
by 0 by 0 by 0 by 0 by 0
Degree of Financial Leverage

The net value of the enterprise's assets was INR 85,444,200 thousand at the end of 2017, about INR 13,832,100 thousand more than declared at the
end of 2016. Overall, the net worth improved from INR 28,578,000 thousand to INR 85,444,200 thousand. This means that MRF is expanding.
8. Forecasting Financial Failure (Bankruptcy Test) (Financial
Distress Prediction)
Table 12. The Z-Score Model for Private Firms

2012 2013 2014 2016 2017

Indicators
0.23 0.28 0.28 0.17 0.18
X1 (Working Capital/Total Assets)
0 0 0 0 0
X2 (Retained Earnings /Total Assets)
0 0 0 0 0
X3 (Earnings Before Interest and Taxes/Total Assets)
0.66 0.79 0.86 1.19 1.34
X4 (Market Value of Equity/Book Value of Total Debt)
0 0 0 0 0
X5 (Sales/Total Assets)
0.44 0.54 0.56 0.62 0.69
Z=

MRF's Z-score was under 1.2 indicating a high bankruptcy risk in 2012. At the end of 2017 the Altman Z-score was 0.69 that indicates the bankruptcy
may follow. The increase of the company's Z-Score value over the period of 2012-2017 showed that MRF has been improving its financial condition
and declining the risk of bankruptcy. It also witnessed that the company did not perform well enough to have its Z-Score value moving out of the
distress area.

9. Financial Rating

A rating helps to sum up the current financial position and future expectations with one word.

Table 13. Financial Rating

Indicators Weighting Score Score (Period Average score Weighted average score
 factor (Period 3) 4)

1 2 3 4 5=0,35*3+0,65*4 6=5*2

Net Profit Margin 0,15 -1 -1 -1 -0.15

Return on Assets 0,15 -0.5 -0.5 -0.5 -0.075

Debt/Equity Ratio 0,15 -1 -1 -1 -0.15

Current Ratio 0,1 1 1 1 0.1

Net Sales Change 0,1 -1 -1 -1 -0.1

Operating Income 0,1 -0.5 -0.5 -0.5 -0.05

Margin

Equity Change 0,1 1 1 1 0.1

Quick Ratio 0,05 -1 -1 -1 -0.05

Debt Ratio 0,05 1 1 1 0.05

Times Interest 0,05 1 1 1 0.05

Earned

Total Score 1 - - - -0.275

Table 14. Financial condition scale

Sign Current financial condition

Score from (inclusive) to

1 0,8 AAA Excellent

0,8 0,6 AA Very good

0,6 0,4 A Good

0,4 0,2 BBB Positive

0,2 0 BB Normal
 0 -0,2 B Satisfactory

-0,2 -0,4 CCC Unsatisfactory

-0,4 -0,6 CC Adverse

-0,6 -0,8 C Bad

-0,8 -1 D Critical

As a result we can confirm an unsatisfactory (CCC) financial situation.

Conclusion
By assessing the financial position of MRF the following can be concluded:

- MRF's financial sustainability ratios indicate good financial health at the end of 2017. This company was able to generate enough cash flow to pay
interest on its debt while the debt ratio laid in the area of critical values (from 0.4 to 0.6).

- MRF's liquidity ratios demonstrate a short-term issues in 2017. Overall, company was able to pay its short-term debt, but quick liquidity was
unsatisfactory. Due to low amount of marketable securities and cash in bank, absolute liquid position was unsatisfactory.

- The main concern for MRF was zero return at the end of 2017. After taking into account inflation, the ROA ratio indicates actual decrease in company
value in 2017.

Comparing the turnover data of the accounts receivable and accounts payable during 2017 it can be seen that the accounts receivable were turned as
fast as the accounts payable.The net value of the enterprise's assets was INR 85,444,200 thousand at the end of 2017, about INR 13,832,100
thousand more than declared at the end of 2016. Overall, the net worth improved from INR 28,578,000 thousand to INR 85,444,200 thousand. This
means that MRF was expanding.

- At the end of 2017 the Altman Z-score was 0.69 indicating that the bankruptcy may follow.

- The overall financial position of the company was unsatisfactory (CCC).