MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2021-22

278 COMPANY OVERVIEW BOARD’S REPORT MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE BUSINESS RESPONSIBILITY REPORT STANDALONE ACCOUNTS CONSOLIDATED ACCOUNTS 45. Additional Regulatory Information: a. Ratios: Rupees crores Particulars 2022 2021 Debt-Equity Ratio (times) (Long term Borrowings + Short term Borrowings (including current maturities of long term borrowings)/(Total Equity).................................................................................................................. 0.17 0.22 Debt Service Coverage Ratio (times) (Profit before interest, tax, depreciation, amortisation, impairments and exceptional items)/ (Gross interest for the period + Principal repayments within a year)............................................ 10.95 6.96 Return on Equity (Net Profit for the period/Average Total Equity for the period).................................................... 13.35% 2.85% Inventory Turnover (times) (Cost of materials consumed/Average Inventories for the period)................................................. 7.94 6.84 Trade Receivables Turnover (times) (Revenue from sale of goods and services)/(Average Trade Receivable for the period).............. 21.51 17.13 Trade Payables Turnover (times) (Purchase of goods and services + Other Expenses)/(Average Trade Payable for the period)..... 4.11 3.95 Net Capital Turnover (times) (Revenue from operations)/[Average working capital (Current assets less Current liabilities) for the period]..................................................................................................................................... 9.80 10.46 Net Profit margin (%) (Net Profit for the period/Revenue from operations)...................................................................... 8.59% 2.21% Return on Capital Employed (%) (Profit before interest and tax/(Average Total Equity + Average Total Debt for the period)..... 14.67% 6.73% Return on Investment (%) (Income earned on investments/Average Investment for the period). .......................................... 4.69% 4.47% Explanatory notes: (i) Cost of materials consumed for the purpose of Inventory turnover ratio includes Purchases of stock-in-trade and Changes in inventories of finished goods, stock-in-trade and work-in-progress. (ii) Investments includes current and non-current investments including Fixed deposits, Mutual funds, Corporate deposits, Inter corporate deposits excluding investments in Equity instruments. Explanation for change in the ratios by more than 25%: (i) Debt Service Coverage Ratio (times): The debt service coverage ratio is healthier at 10.95 in current year as against 6.96 in previous year primarily due to decrease in finance cost resulting from repayment of borrowings during the year. (ii) Return on Equity (%): Return on Equity in the current year has improved from 2.85% in previous year to 13.35% in current year on the base of higher profit for the year. (iii) Trade Receivables Turnover (times): The debtor’s turnover ratio improved to 21.51 in current year as against 17.13 in the previous year primarily due to better collection efforts and significant improvements in credit management process across divisions. (iv) Net Profit margin (%): The net profit margin (after exceptional items) improved to 8.59% in current year as against 2.21% in the previous year primarily on account of increase in operation performance, lower impairment losses on investments, higher gain on sale of long-term investment and lower tax expenses for the year. (v) Return on Capital Employed (%): Return on capital employed has improved from 6.73% in the previous year to 14.67% in the current year on the base of higher profit for the year.