Page 15 - Kolte Patil AR 2019-20

Net profit^ (C Crore)
RoCE^ (%)
Net Debt (C Crore)
Gearing^ (x)
Debt cost (%)
FY17 87.2
FY18 121.5
FY19 122.3
FY20 137.5
FY17 14.5
FY18 18.4
FY19 15.6
FY20 12.8
FY17 455
FY18 288
FY19 517
FY20 434
FY17 0.53
FY18 0.29
FY19 0.47
FY20 0.35
FY17 12.1
FY18 10.4
FY19 10.4
FY20 10.5
Definition
Profit earned during the year after deducting all expenses and provisions
Why we measure
It highlights the strength of the business model in enhancing value for shareholders.
Performance
The Company’s net profit grew every single year through the last few years. The Company reported a 12.2% increase in net profit in FY20, reflecting the resilience of
the business model in a challenging downtrend.
Definition
This financial number measures the efficiency with which capital is employed in the business.
Why we measure
ROCE is a useful metric for comparing profitability across companies based on the amount of capital they use - especially in capital-intensive sectors.
Performance
The Company reported 12.8% ROCE in FY 20, prudently investing every rupee in profitable projects to generate attractive returns.
Definition
The quantum of debt after deducting the cash on the Company’s books. Net debt for FY20 does not include C196 Crore towards OCD, CCD, OCRPS and Zero Coupon NCD subscribed by PE investors.
Why we measure
This number provides a true and fair picture of the company’s intrinsic profitability.
Performance
The Company’s net debt declined from C517 Crore in FY 19 to C434 Crore in FY 20, an achievement considering that the year under review was marked by sluggish sectorial offtake and liquidity crunch.
Definition
This ratio measures net debt to net worth (less revaluation reserves).
Why we measure
This is one of the defining measures of
a Company’s financial health, indicating the ability of the Company to remunerate shareholders over debt providers (the lower the gearing the better).
Performance
The Company’s gearing decreased from 0.47 in FY19
to 0.35 in FY 20. We recommend that
this ratio be read in conjunction with net debt/operating profit.
Definition
This is derived through the calculation of the average cost of the consolidated debt on the Company’s books.
Why we measure
This indicates our ability in convincing bankers and other debt providers of
the robustness of
our business model, translating into a progressively lower debt cost (potentially leading to higher margins).
Performance
The Company’s debt cost progressively declined from 12.1% in FY17 to 10.5% in FY20, indicating a superior credit-rating.
Note: ^The Company adopted IND AS 115 (Completion Contract Method – CCM) effective from 1 April, 2018 and opted for the modified retrospective method; To facilitate a like-to-like comparison, the figures shown above are based on the previously applicable Percentage of Completion Method (POCM).
Annual Report 2019-20 | 13