Merino Industries Limited Growth

In FY21, the total revenue of the company witnessed a de-growth of 10% from FY20. There has been an overall decrease in the revenue instead of the COVID-19 lockdown and restrictions. Revenue from operations decreased by 12% in FY21 compared to FY20, with revenue from laminates declining by 14%, or Rs.169.73 Cr., compared to a growth of Rs. 4.40 Cr. in FY20, and non-laminate revenues declined by 11% or Rs. 34 Cr., compared to a growth of Rs. 10.68 Cr. in FY20. Other income, on the other hand, grew significantly by 127% in FY21 from FY20, primarily on account of an increase in the fair value gains on the financial assets. 

In FY21, despite a fall in revenue of 10%, or Rs. 153 Cr., the company witnessed a higher net profit of Rs. 132 Cr. in FY21, which represents a marginal growth of 2%. The reason for such higher net profits is the higher scale of operations and cost-efficiency. Overall expenses de-grew by 15% in FY21 from FY20, mostly attributable to lower other expenses in FY21 than in FY20, improving net profits altogether. 

The company has witnessed an EPS growth of 2% in FY21 from FY20. The reason for the increase in the EPS is primarily attributable to an increase in the net profits of the company. Although it must be noted that there was a total increase in the number of shares pursuant to business company, which has increased the overall denominator, yet net profits were sufficient enough to register higher EPS in FY21 from FY20. 

The overall increase in the equity of the company by 15% from FY20 due to the addition of equity shares pursuant to business combination, along with an increase in the retained earnings due to an increase in the net profits of the company, has increased the numerator, but the increase in the shares of the company, which was a result of business combination, led to an overall fall in the book value per share of the company in FY21. 

The EBITDA of the company in FY21 grew by 5% over FY20. The reason for such an increase in the EBITDA is the operational scalability of the company, which is also witnessed by lower COGS, resulting in the higher gross margin in FY21 over FY20. Also, lower employee benefit expenses and other expenses have further improved the overall EBITDA despite the fall in revenue in FY21 in lieu of COVID-19 restrictions. 

The EBIT of the company in FY21 has witnessed a sharp growth of 8% from FY20. Overall growth in EBITDA is the primary reason for the growth in the EBIT of the company. Along with the EBITDA growth, lower depreciation expense gave a further boost to EBIT. Depreciation has been reduced primarily as a result of lower property, plant, and equipment additions in FY21 compared to FY20.

Overall, in FY21, there was a marginal increase in the total assets of the company. Non-current assets constitute about 57% of the total assets in FY21, out of which non-current investments comprise the largest part of the segment. Overall, non-current assets have witnessed a growth of 28%, while current assets have witnessed a de-growth of 19% in FY21 from FY20. The reason for such an increase in the non-current investment worth Rs. 215 Cr. is the attractive investment opportunities in COVID-19 that were presented. 

Cash flow from operations has improved considerably, registering a growth of 95% in FY21 from FY20. The growth in cash flow from operations is primarily attributable to changes in the working capital, mainly from decreases in non-current and current assets and a decrease in the inventory, which was a result of a fall in the production capacity along with a fall in the buying capacity in lieu of COVID-19 restrictions.