Deccan Chronicle's results for the 18-month period ended 30-Sept-2012 are out.
The company has changed its financial year from 31-March to 30-September. The annual report is still not out. So we have many missing links as of now.
The company has suffered loss for the period. Sales are down. Costs are high. We don't have information regarding other expenses of Rs.345 crores. Operating losses are about Rs.389 crores. Finance costs are Rs.734 crores.
The whole company is available today at about Rs.100 crores. Of course, if you buyout, you will also get to pay (a financial liability) about Rs.3,903 crores. That's how it is: obligation.
In search of cash
Depreciation for the period is Rs.81 crores. Capex for the period is Rs.3,025 crores (most of which is spent for brand building as per the information provided). We don't know yet to whom these amounts are paid and what brand is being built for the business.
There has been significant savings of about Rs.420 crores from working capital and some long-term assets/liabilities. To put in another way, basically, the operations are down.
Joining these dots we get about Rs.109 crores of cash from operations. See, the cash is out there.
Restructuring of operations and recasting of financial statements
Apparently, there has been restructuring of operations (we don't know what this means yet; as of now as we understand, the operations are down) and recasting of financial statements (we don't know what this means either; recast lets one have new or some different arrangement; recast of financial statements is an interesting idea, though).
Net loans received after all this is about Rs.3,189 crores. This cash is in. But, needs to be repaid with interest sometime in the future. However, it is known currently that this future is not knowable.
There has been buyback of own equity during May-August-2011 amounting to about Rs.228 crores.
If we join the dots again, we get net financing (loans net of interest and buyback) cash inflow of about Rs.2,228 crores.
The reconciliation of cash
So we have operating cash of Rs.109 crores; financing cash of Rs.2,228 crores; and capex of Rs.3,025 crores. That brings net cash loss for the period to about Rs.688 crores. This deficit is financed by, aha! opening cash of Rs.704 crores. What remains as of Sept-2012 is a cash of Rs.16 crores for the company to continue its operations. What a challenge!
More losses to come
The cash loss of Rs.688 crores does not include accrued interest on loans. This means that interest charges have not been fully provided by the company for the period.
Non-performing asset
In the mean time, some (why not all is a question) of the lenders have classified the financing provided to the company as non-performing asset.
Due to the invoking of pledged shares, the promoter shareholding has gone down from 73.83% to 38.4% as of Sept-2012.
IPL franchise granted by BCCI has been revoked. The company claims that it is a contingent asset.
The dive
The performance of the stock has been miserable:
In the past 5 years, the stock is down by about 97%, while Sensex gained about 15%.
This brings down the promoters, the minority shareholders and the lenders. Now we need to find someone to blame: the choices are a) promoters; b) lenders; c) rating agencies; d) analysts; e) all shareholders; f) all of them. Take your pick.
Cash as of now
We need to know what happened to that Rs.16 crores cash that was there as of Sept-2012. If the company has continued to operate, surely, that cash has gone. Ouch!
The company has changed its financial year from 31-March to 30-September. The annual report is still not out. So we have many missing links as of now.
The company has suffered loss for the period. Sales are down. Costs are high. We don't have information regarding other expenses of Rs.345 crores. Operating losses are about Rs.389 crores. Finance costs are Rs.734 crores.
The whole company is available today at about Rs.100 crores. Of course, if you buyout, you will also get to pay (a financial liability) about Rs.3,903 crores. That's how it is: obligation.
In search of cash
Depreciation for the period is Rs.81 crores. Capex for the period is Rs.3,025 crores (most of which is spent for brand building as per the information provided). We don't know yet to whom these amounts are paid and what brand is being built for the business.
There has been significant savings of about Rs.420 crores from working capital and some long-term assets/liabilities. To put in another way, basically, the operations are down.
Joining these dots we get about Rs.109 crores of cash from operations. See, the cash is out there.
Restructuring of operations and recasting of financial statements
Apparently, there has been restructuring of operations (we don't know what this means yet; as of now as we understand, the operations are down) and recasting of financial statements (we don't know what this means either; recast lets one have new or some different arrangement; recast of financial statements is an interesting idea, though).
Net loans received after all this is about Rs.3,189 crores. This cash is in. But, needs to be repaid with interest sometime in the future. However, it is known currently that this future is not knowable.
There has been buyback of own equity during May-August-2011 amounting to about Rs.228 crores.
If we join the dots again, we get net financing (loans net of interest and buyback) cash inflow of about Rs.2,228 crores.
The reconciliation of cash
So we have operating cash of Rs.109 crores; financing cash of Rs.2,228 crores; and capex of Rs.3,025 crores. That brings net cash loss for the period to about Rs.688 crores. This deficit is financed by, aha! opening cash of Rs.704 crores. What remains as of Sept-2012 is a cash of Rs.16 crores for the company to continue its operations. What a challenge!
More losses to come
The cash loss of Rs.688 crores does not include accrued interest on loans. This means that interest charges have not been fully provided by the company for the period.
Non-performing asset
In the mean time, some (why not all is a question) of the lenders have classified the financing provided to the company as non-performing asset.
Due to the invoking of pledged shares, the promoter shareholding has gone down from 73.83% to 38.4% as of Sept-2012.
IPL franchise granted by BCCI has been revoked. The company claims that it is a contingent asset.
The dive
The performance of the stock has been miserable:
In the past 5 years, the stock is down by about 97%, while Sensex gained about 15%.
This brings down the promoters, the minority shareholders and the lenders. Now we need to find someone to blame: the choices are a) promoters; b) lenders; c) rating agencies; d) analysts; e) all shareholders; f) all of them. Take your pick.
Cash as of now
We need to know what happened to that Rs.16 crores cash that was there as of Sept-2012. If the company has continued to operate, surely, that cash has gone. Ouch!
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