MS AR 2018 (1)

ADDITIONAL
MANAGEMNET REVIEWS (CONTD.)
Strategies To Overcome Liquidity Problems
The management of the Company has years of
experience in liquidity management and liquidity
management system and tend to maintain a strong
liquidity position to ensure availability of sufficient
working capital besides identification and mitigation of
cash flow risks. The key working capital requirements
of the Company are managed through internal liquidity
generation sources comprising of sales revenues
and external means of financing. Revenue receipts
from sales are managed through optimized control
of customer credit, in addition to securing advance
customer orders and cash sales. Regular forecasting
of cash flows and aging analysis are also carried out to
maintain an optimum working capital cycle. Operating
cash flows are mainly used for repayment of debt firstly.
Plans To Manage Repayment Of Debt And
Recovery Of Losses
Cash flow projections indicate availability of sufficient
funds for timely repayment of long-term and short-term
debt liabilities.
Human Capital
Human Capital is considered to be the Company’s most
valuable resource, with significant contributions over
the years towards its growth. The Company ensures
provision of the best employee development programs,
health care, safety and market commensurate
compensation packages.
DESCRIPTION OF ENTITY’S CAPITAL
STRUCTURE
Capital structure represents ordinary share capital and longterm
/ short-term debts.
As at June 30, 2018 capital structure comprised of Rs.
2,515.996 million of share capital representing 251.599
million ordinary shares of Rs. 10/- each. Major shareholding
is owned by the sponsor shareholders with approximately
75% equity holding.
Total long-term financing stood at Rs. 829.0000 million at
close of the year, while, total short-term debt of the Company
stood at Rs. 7,840.376 million at close of the year, with a
debt / equity ratio of 3.45:1 as compared to 3.20:1 in 2017.
The above indicators provide adequate evidence as to the
adequacy of the capital structure for the foreseeable future.
SIGNIFICANT CHANGES IN
FINANCIAL POSITION, LIQUIDITY &
PERFORMANCE COMPARED WITH
THOSE OF PREVIOUS PERIOD
This has been provided in detail in Directors’ report section
under financial review section.
• Succession Planning
The Company has formulated a firm succession
plan which includes performance evaluation and
appropriate training requirements for development
of potential future leaders. Detail of Succession
Planning is available in the Human Resources portion
of the ‘Corporate Governance’ Section.
• Retirement Benefit Plans
The Company is operating an unfunded gratuity plan
for its employees ensuring financial security upon
retirement. Detail of retirement benefit funds have
been disclosed in note 23 of the financial statements.
54 MUGHAL IRON & STEEL INDUSTRIES LIMITED