United Spirits Ltd Management Discussions.

A. Economic Scenario

Global economy: Global prospects remain highly uncertain one year into the pandemic. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic-induced disruptions and the extent of policy support. Although GDP, in general, recovered stronger than expected in the second half of 2020, it remains significantly below pre-pandemic trends in most countries. Output losses have been particularly large for countries that rely on tourism and commodity exports and for those with limited policy space to respond.

The outlook depends not just on the outcome of the battle between the virus and vaccines—it also hinges on how effectively economic policies deployed under high uncertainty can limit lasting damage from this unprecedented crisis. However, emerging market economies and low-income developing countries have been hit harder and are expected to suffer more significant medium-term losses.

Global growth is projected at 6 percent in 2021, moderating to 4.4 percent in 2022. The projections for 2021 and 2022 are stronger than in the October 2020 World Economic Outlook (WEO). The upward revision reflects additional fiscal support in a few large economies, the anticipated vaccine-powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility. High uncertainty surrounds this outlook, related to the path of the pandemic, the effectiveness of policy support to provide a bridge to vaccine-powered normalization, and the evolution of financial conditions.

(Source: IMF Global Economic Outlook, Apr.21) Indian economy:

The year 2020 saw the outbreak of novel COVID-19 virus that posed economic challenge and threatening mobility, safety, and a normal life. The need of containing the spread of pandemic resulted in lockdowns, which led to restrictions of economic activities. This inherent trade-o_ led to the policy dilemma of "lives versus livelihoods". As per National Statistical office, Indias GDP (gross domestic product) contracted 24.4% in Q1, 7.3% in Q2 and recorded GDP growth of 0.4% in the third quarter of FY21._This rise indicates V-shaped recovery progression that started in the second quarter of FY21. Indias real gross domestic product (GDP) at current prices stood at Rs 195.86 lakh crore (US$ 2.71 trillion) in FY21, as per the second advance estimates (SAE) for 2020-21. Indias Consumer Food Price Index (CFPI) – combined inflation was 3.87% and Consumer Price Index (CPI) – combined inflation was 5.03% in February21.

Some of the recent initiatives and developments undertaken by the Government of India are listed below:

• The Government of India announced Rs 2.65 lakh crore (US$ 36 billion) stimulus package to generate job opportunities and provide liquidity support to various sectors such as tourism, aviation, construction and housing.

• Numerous foreign companies are setting up their facilities in India on account of various Government initiatives like Make in India and Digital India.

• The Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.

• In the Union Budget 2021-22, capital expenditure for FY22 is likely to increase by 34.5% at Rs 5.5 lakh crore (US$ 75.81 billion) over FY21 (BE) to boost the economy.

As per Economic Survey 2020-21, Indias real GDP growth for FY22 is projected at 11%. The January 2021 WEO update forecast a 11.5% increase in FY22 and a 6.8% rise in FY23. According to the IMF, in the next two years, India is also expected to emerge as the fastest-growing economy. (Source: https://www.ibef.org/economy/economic-survey-2020-21) India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behaviour and expenditure pattern, according to_a Boston Consulting Group (BCG) report. The second wave of pandemic which has started spreading in Mar 21, has also led to restrictions and lockdown to contain the spread. The same will have impact on the current outlook, however the exact quantum will be ascertained in due course of time.

B. Industry Overview

India is one of the fastest growing liquor markets in the world. Alcoholic beverages are considered a sunrise industry owing to its high-growth potential and increasing social acceptance. The outlook for the Indian alcoholic beverages continues to remain positive due to favorable demographics, expanding middle class, rising disposable income levels, greater preference for premium food and drink experiences and greater acceptance of alcoholic beverages in social circles. Increased consumption of liquor in rural areas will be another major reason for the growth in the market. Although the average per adult intake of alcohol is considerably low in India when compared to other countries such as the United States, drinkers among young Indians are more prevalent. This provides tremendous opportunity to drive growth of Alcobev industry on the back of its rising working-age population. It is expected that per capita consumption will increase with changes in lifestyle and aspiration of the population.

C. Performance Indian Spirits Market Overview

Industry performance: The Indian spirits industry has been growing at more than 12% CAGR for the decade starting 2001 making it one of the fastest growing markets in the World. A slowdown of economy in 2019 followed by COVID-19 virus outbreak in 2020 had an adverse impact on consumption in India.

Market segmentation: The Indian alcobev industry is segmented into IMFL (Indian Made Foreign Liquor), IMIL (Indian Made Indian Liquor), Wine, Beer and imported alcohol. Whiskey dominates the Indian spirits industry by a very wide margin. The IMFL category accounts for almost 72% of the market.

Consumption pattern: The states of Karnataka, Maharashtra, West Bengal, Odisha, Telangana, Delhi, Haryana, Punjab etc. are amongst the largest consuming states for alcobev in India. The most popular channel of alcobev sale in India is liquor stores as its consumption is primarily an outdoor activity and supermarkets and malls are present only in the tier I and tier II cities of India.

Constantly changing regulatory environment: In 2020, Government in the State of Andhra Pradesh has changed the route to market by setting up state managed retail outlets and discontinuing private retailers. In contrast, State of Chhattisgarh has rolled back from government controlled to private parties which is expected to flourish the industry. During the year, there has been proposal for change in route to market in Delhi.

Growth drivers: Indian Alcobev industry holds great potential for spirits companies given the current low per capita consumption, favorable demographics and aspirations of growing younger population. Rapid urbanization is expected to enhance disposable income, which is favourable for the growth of the industry. The revival in GDP will give a further _llip to Alcobev sales as IMFL volumes are seen to grow ahead of GDP when GDP growth picks up. Favourable demographics with a median age of 27.9 years and growing social acceptability of Alcobev consumption are likely to bode well for the industry. The organized players stand to benefit from steady growth in the conversion from country liquor to IMFL given increasing health concerns associated with consumption of country liquor. States like Tamil Nadu and Karnataka have banned the sale of country liquor primarily on account of rising death toll due to consumption of country liquor.

Growing prevalence of premium Alcobev: Rapid urbanization is expected to enhance disposable income, which is favorable for the growth of the industry. With more Indians traveling abroad, rising aspirations, favorable environment for imported liquor and higher disposable income, consumers are upgrading towards premium segments in the country. The rise in premiumization is evident in the increased focus of the big players on semi-premium and premium categories with an increase in launches and_ increased marketing_ of these categories. Another trend which is gaining traction in the Alcobev space is the growing popularity of grain-based liquor as against traditionally popular molasses-based liquor.

D. Regulatory Scenario in Indian Market

Regulatory oversight of both central and state governments encompass a slew of restrictions on production, movement and sale of alcobev products. Alcobev also falls under the purview of Food Safety and Standards Authority of India (FSSAI). In addition, direct advertising of alcobev products is not permitted in India. Prohibitively high inter-state duties compel national alcobev players to set-up owned or contract manufacturing setups in every state. Licenses are required to produce, bottle, store, distribute or retail all alcobev products. Distribution is also highly controlled, both at the wholesale and retail levels. In states with government control on pricing, price increase is based on government notifications. In states where retailing is controlled by the state government, there is a specified quota that each player can sell, capping potential to increase market share for our products. These regulations make operations restrictive for the industry players.

During the year, post the COVID outbreak, most of the states experienced lockdown which created stress in the economy. As an outcome of the same, there were additional taxes/levies in some of the States leading to consumer price increase. Pricing continues to remain a challenge for the category since with continuous increase in excise duties, end consumer prices continue to experience upsurge with no benefit to your Company. During the year, Company secured pricing in multiple states across India.

E. Business analysis Company overview

United Spirits Limited (USL/your Company) is the largest alco beverage Company in India and is also among the largest consumer goods companies. Your Company is involved in the manufacture, sale and distribution of beverage alcohol. It has a comprehensive brand portfolio with over about 80 brands of Scotch whisky, IMFL whisky, brandy, rum, vodka and gin. 9 of these brands sell more than a million cases annually. Your Company has brands spanning across price points operating in all segments of Popular, Prestige, Premium and Luxury.

Your Company produces and sells around 80 million cases. McDowells No.1, Royal Challenge, Signature, Antiquity, Black Dog, Directors Special Black, McDowells Rum, McDowells Brandy, Bagpiper, Old Tavern, Haywards are some of the marquee brands owned by your Company. In addition, your Company also imports, manufactures, distributes and sells various iconic Diageo brands such as Haig Gold Label, Captain Morgan, Johnnie Walker, J&B, Baileys, Lagavulin, Talisker, VAT 69, Black & White, Smirno_ and Ciroc in India under different licensing agreements.

Your Company has a strong distribution network, and its route to consumer is superior in the industry with almost 1 in every 2 branded spirits bottles being sold in India in the Companys P&A portfolio.

Diageo PLC holds 55.94% shareholding in your Company. Post takeover by Diageo, your Company set out the vision to become the Best Performing, Most Trusted and Respected Consumer Goods Company in India. For this, it has been working on a five-point agenda viz.,

1. Strengthen & Accelerate core brands

2. Evolve route to consumer

3. Drive out cost to invest in growth and expand margins

4. Lead USL and industry towards the highest ideals of corporate citizenship

5. Creating a future-ready organisation

Your Company has been striving hard with a strong focus on premiumisation and at the same time also trying to maximise value from brands in the popular segment.


Your Company has 9 brands in its portfolio which sell more than a million cases every year, of which 1 brand sell more than 25 million cases each annually. The Companys exports business is also growing.

Your Company boasts of pan-India manufacturing presence with +47 facilities and robust distribution network of more than 70,000 outlets, which provide access to vendors, suppliers and distributors.

With high brand equity and significant market share, your Company is able to have a significant influence on industry issues through representations made on behalf of the industry.

Your Company has a wide range of portfolio spanning across categories of Scotch whisky, IMFL whisky, brandy, rum, vodka and gin; and in various price points from Luxury, Premium, Prestige to Popular.

Your Companys rich heritage ensures long-lasting relationships with most of the raw material suppliers, which enables it to ensure uninterrupted procurement at competitive rates. This, in turn, helps the Company to ensure continuous production and supply of its products through the length and breadth of the country.

The in-house Technical Centre and its tie-up with the global giant Diageo, enables your Company to undertake research on new products, analytics and sensory sciences, process R&D, special spirits and flavour management. Your Companys professional team of expert scientists work constantly with perseverance to renovate the portfolio. The strong marketing team creates impactful communication to convey the renewed brand salience.

Your Companys workforce of over about 3,200 regular employees are the key strength in achieving the goals laid down by the Company. Our team has enabled us to emerge as the leading player in the industry, despite facing various industry tailwinds. Gender diversity of about 15% has been achieved and the industrial relations during the year were cordial. There have been no material developments in Human Resource during the year.

F. Business performance

Your Companys transformational journey to improve operations under the new leadership of Diageo post 2014, encompasses a strategic road map covering five strategic pillars to steer its future growth trajectory. These are:

1. Strengthen and accelerate core brands

Your Company has embarked on a long-term plan to not just grow revenues year-on-year by increasing market share but to also grow the categories that we play in significantly through expanding areas of consumption as well as providing new flavors/accessible spirits. This includes a heightened drive at key accounts or premium on-premise venues as well as the channel of wedding & banquets. McDowells No. 1 and Scotch were the key brands around which communication was focused to increase brand image and recall. Your Company continued to invest in its power brands and continue to improvise no effectiveness of A&P spends to win across each of the 3 Indias - Affluent, Middle and aspiring population. Power brands like McDowells No. 1 Whiskey and Royal Challenge witnessed renovations and we solidified the momentum of renovation with unprecedented scale of media with IPL broadcast sponsorship. Modern retail was charged with iconic visibility of Johnnie Walker. This has strengthened the portfolio with a strong step-up proposition.

We stood together with on trade and supported them across key markets with ‘Raising the Bar programme. This is reflected in an increase in contribution of the Prestige and above segment from 53% of net sales in the financial year ended March 31, 2016 to 69.8% of net sales in the financial year ended March 31, 2021.

2. Evolve route to consumer

Given the prohibition on liquor advertising, your Company is focusing on leveraging retail outlets to strengthen its brand equity in the Luxury, Premium and Prestige categories. Your Company endeavours to capture consumer attention using preferential placements in outlets and better visual appeal and customer recall. Your Company collaborated with start-ups, invested in party and night-life content ecosystem and increased spends on digital media to increase its consumer reach. As on-trade gradually opened across the country, we supported bars by inspiring consumers to walk forward towards their favorite bars responsibly with a 360-campaign called #WalkInWithJohnnie. The campaign not only engaged with consumersation-trade channels, but also reached out to consumers through digital campaigns to build awareness about socializing responsibly. Through the year we have focused on winning consumers in the in-home occasions with our ‘Home Bar offers at Off Trade and (Do It Yourself) DIY drinks campaigns.

3. Drive out costs to invest in growth

During the financial year ended March 31, 2021, your Company was able to drive productivity across all line items in the Profit and loss account. There are initiatives to create more efficient trade spends under NRM program (Net Revenue Management), marketing efficiency and effectiveness for above-the-line spends as well as better overhead management in terms of creating a fit-for-purpose organization across each function as well as by reducing operating overheads. On the cost front, a strong pipeline has been created on each line item in materials, manufacturing and logistics to counter inflation with benefits accruing not also in the coming years. Similarly, loan repayment and reduction in cost of debt led to interest cost savings. Your Company successfully invested these savings in future growth.

4. Corporate citizenship

Your Company continued to be the leader in shaping the regulatory landscape and conform to the highest compliance and governance standards. We are a responsible marketeer of alcobev products. Your Company implemented a host of innovative initiatives to influence public policy._ We continued to promote the cause of road safety, responsible consumption, water conservation, skills development, and women empowerment. We have extended support to Government Hospital and institution with medical equipments such as oxygen cylinders, test kits, PPE kits, High flow nasal Cannula, etc. Also provided drinking water facility in Maharashtra and Jharkhand for frontline health care workers.

5. Creating a winning organisation

Your Company continues to automate and simplify all systems and processes to create a winning organization. Your Company has enhanced its capabilities in digital, corporate relations, legal and compliance. Smooth integration with Diageo, its investment in shared service centre and intent to attract best-in-class talent pool are right steps in developing a future-ready organisation.

G. Business Review – Revenue and Revenue Mix

Your Company continued its journey of premiumization by improving the mix of P&A salience to ~70% in F21. F21 remained a challenging year for the industry on multiple fronts with COVID led initial lockdown and sliding consumer confidence index impacting the category growth in general. Our portfolio is uniquely positioned to access the high growth opportunities that the Indian market provides. Your Company has been relentlessly striving to achieve double- digit top-line growth and improve organic operating margin to mid-high teens. To achieve this, your Company is taking all possible efforts to strengthen and accelerate its core brands, upgrade its route to consumer strategy and leverage economies of scale. At the same time, your Company has remained committed to the highest ideals of corporate citizenship. Its integration with Diageo brand portfolio has enabled your Company to establish leadership in terms of both volume and value.

Your Company has strengthened its entire portfolio through a mix of rationalisation and renovation. Prestige and above brands which represent about 70% of net sales are the core focus of your Company, wherein it has laid emphasis on renovation to keep pace with evolving consumer tastes. Your Companys robust performance in the Prestige and Above segment is reflective of its commitment and success of the premiumisation strategy. At the same time, your Company has ensured that it has maximised value gains in the Popular segment as well.

During the year under review, your Company achieved a sales volume of 70.71 million cases as against 79.75 million cases in the previous year resulting in softness in volume by ~11%. Your Companys net sales revenue stood at about Rs 78,892 million in the financial year ended March 31, 2021, as against about Rs 90,909 million in the previous year. This translate to decline of 13.2% over previous year.

With continuous focus on premiumization, overall Prestige & Above segment represented 53% of total volumes (Vs 51% previous year) and ~ 70% of total net sales (Vs 65% previous year) during the financial year ended March 31, 2021. The Prestige and Above segments net sales were down 7.2% under stressed COVID environment. The Popular segment represented 47% (Vs 49% previous year) of total volumes and ~ 29% (Vs 30% previous year) of total net sales during the financial year ended March 31, 2021. The Popular segments net sales shrunk by 17.5% during the financial year ended March 2021 Vs 4.2% decline during last year.

H. Net Debts

Your Companys net debt stood at Rs 5,556 million as on March 31, 2021. Your Company used Profit from operations, intercompany loan repayments and reduction in working capital to repay its loans amounting to Rs 15,175 million. This reduction in debt (including repayment of NCD of Rs 7500 million) together with renegotiation of borrowing rates and a favorable mix of debt reduced external borrowing cost by 610 million during the financial year.

Significant improvement in your Companys overall financial flexibility, corporate governance and compliance framework has led to further improvement in our credit rating. During the year, ICRA Limited & CRISIL held the Long Term Rating of "AA+" with positive outlook. While the Short Term Rating was reafirmed at "A1+" which is the highest possible rating in that category. These ratings will enable the Company to access more economical sources of debt leading to lower interest cost and increased shareholder value.

I. Outlook

Your Company remains the leader in Indias alcobev industry by virtue of strong portfolio and benefits from the guidance of Diageo PLC, the Companys ultimate holding Company. Diageo continues to strengthen the Company with changes at management & distribution levels, revamp of brand promotions strategy, enhanced supply chain efficiency, focusing on lean portfolio, engaging with the government and improving work culture and driving gender diversity. Your Company looks on track to deliver on its medium-term goal of delivering double-digit topline growth and achieve mid-high teens EBITDA margins led by better pricing and cost optimization. Your Companys move on focus towards the franchisee model in the Popular segment with successful implementation in 13 states had been well received and a further strategic review has been initiated. Regulatory overhangs will continue to pose challenges for the alcobev industry. As seen in the past, your Company is well equipped to overcome such challenges.

J. Risks & Concerns, Opportunities & Threats

Risks & Concerns

• The industry is exposed to multiple regulatory risks emanating from state taxes, adverse ruling from courts and changes in regulations with respect to pricing, licensing, working of operating facilities, manufacturing processes, marketing, advertising and distribution.

• With or without lockdowns, some economists see the COVID-19 pandemic weighing on the confidence of consumers - the backbone of the economy. Localized containment measures will act as a drag on growth.

• Increased tendency towards prohibition in an election year.

• Another concern emerges from the dependence on state governments to get price increases. Margins may get severely impacted in case of inflation in raw material costs or any increase in cost due to change in regulations.

• Significant changes in route to market strategies by various state governments pose a concern on establishing distribution network with new intermediaries. This also poses credit risk in case the existing distributors default due to the closure of their respective businesses.

• Prohibition in certain states poses a threat to legitimate sales and gives rise to inter-state smuggling impacting industry growth. This may also lead to a proliferation of country liquor sales in absence of / curtailed availability of branded products.

• The Company continues to work to promote responsible drinking and to mitigate risks due to drinking and driving through its ‘Responsible Drinking initiatives as highlighted in the CSR Report appearing in Annexure 6 of the Directors Report, showcasing the corporate social responsibility initiatives of the Company.

K. Opportunities

• Your Companys strong focus on premiumisation coupled with rising disposable income and evolving consumer lifestyles presents significant opportunity to grow sales and expand margins.

• Your Company has initiated a strategic review of selected Popular brands, continuing the strategy towards long-term Profitable growth through premiumising the Companys portfolio.

• Renovation and revamping of key brands to upgrade them in the Prestige and Above segment presents opportunities to expand margins.

• Strong focus on accomplishment of medium-term vision and adherence to Diageo policies is likely to aid your Companys sales and margins.

• Low per capita consumption, rapid urbanisation, favourable macroeconomic indicators, higher disposable incomes and evolving lifestyles bode well for the industry as a whole.

• Increasing conversion from country liquor to branded IMFL given health issues associated with country liquor consumption present growth opportunity especially for your Companys Popular segment brands.

L. Threats

• Strict imposition of distribution strategies by states growth prospects of the industry.

• High competitive intensity in the segment due to lucrative growth prospects of the industry.

• High pricing control by states pose a threat to margin.

• Proliferation of spurious liquor consumption poses a threat to growth of the Popular segment brands.

M. Internal Control Systems

The Company maintains an adequate system of internal controls commensurate with the nature, size and complexity of the business operations. The Company has ensured that stringent and comprehensive controls are put in place to ensure

• effective and productive use of resources;

• Safeguarding of Companys assets and interests;

• Transactions are approved, registered and properly reported and

• Checks and balances guarantee reliability and consistency of accounting data.

Regulatory compliance is ensured by adhering to various laws, regulations and prevailing statutes. An extensive program of internal, external audits along with periodic reviews by the management is carried out to ensure adherence to the best practices and oversight monitoring by the Board establishes a strong control environment. The management has evaluated that the internal controls over financial reporting are operating effectively by adopting the required procedures. COVID-19 has set forth challenges in the operation and performance of certain controls which required physical presence of employees for control operation. The management has successfully overcome these challenges by adopting to alternate and supplementary procedures warranting the effective and efficient functioning of the controls. The control framework prevailing in the Company was regularly reviewed and controls were monitored to ensure that corrective measures were taken on time for minimum failures.

N. COVID-19 Assessment

In view of the nationwide lockdown due to the outbreak of COVID-19 pandemic, your Companys operations at all of its manufacturing, warehousing and office locations were temporarily stopped from March 25, 2020. Operations resumed in a staggered manner beginning May 2020 with adequate precautions being taken in accordance with Government guidelines, and since second quarter of current year the Groups manufacturing locations have been fully operational. Your Company has a prudent liquidity risk management policy for maintenance of required cash and/or has access to funds through adequate unutilized sanctioned borrowing limits from banks and is confident of servicing its debt obligations as they fall due. The Company has assessed its existing controls and internal financial reporting processes and made appropriate changes, as required, in view of the situation arising due to COVID-19 pandemic. Amid surging COVID-19 cases in the country, your Company will apply learnings from the last year when nationwide and several localized lockdowns impacted manufacturing and supply chain, to mitigate impact of any future disruption. Based on the earlier experience, the Company is well prepared to manage any sudden local lockdown and resultant uncertainties, if any. The second COVID-19 wave may also have long-term negative effects not to mention high mortality and unprecedented pressure on health care. Company had reviewed its contracts/arrangements and does not expect any material impact on account of non-fulfilment of the obligations by any party.

O. Key financial and Other ratios

Key financial ratios arising from the financials as given below for the financial year ended March 31, 2021 and March 31, 2020 (Fig. in Rs Million)

Key Financial Numbers (Standalone financial statements)

Particulars 31-Mar-21 31-Mar-20
(i) Share Capital 1,453 1,453
Reserves & Surplus 39,815 36,644
Total Equity (Net worth) 41,268 38,097
Gross Debt (excludes accrued interest and lease liability) 5,556 20,730
PAT 3,103 7,047
Share Price (INR Rupees) 556 485
Other Income 478 455
Total Revenue 271,764 285,892
Total Expenses 266,038 275,013
Less: Depreciation -2,493 -2,275
Less: Finance Cost -1,658 -1,907
Expenses 261,887 270,831
EBIDTA 9,877 15,061
EBIT 7,862 13,241
(ii) Inventory 19,810 18,361
Receivables 21,601 22,835
Payables (13,813) (11,712)
Net Working Capital 27,598 29,484
Revenue from Operations 271,764 285,892
Less: Excise Duty 192,872 194,983
Net Sales Value 78,892 90,909
Debtors Turnover Ratio
Average Receivables 22,218 24,008
NSV 78,892 90,909
Receivable Turnover 3.6 3.8
(iii) Receivable Turnover
(in days) 103 97
Payable Turnover Ratio
Average Payables 12,763 12,536
Purchases (Cogs) 44,682 50,220
Payable Turnover 3.5 4.0
(iv) Payable Turnover (in days) 104 91
Inventory Turnover Ratio
Average Inventory 19,086 18,564
Purchases (Cogs) 44,682 50,220
Inventory Turnover 2.3 2.7
(v) Inventory Turnover
(in days) 156 135
Particulars 31-Mar-21 31-Mar-20
(vi) Interest Coverage Ratio #
Bank Int 1,658 1,907
EBIDTA 9,877 15,061
Interest Cover 6.0 7.9
Interest 1,658 1,907
EBIT 7,862 13,241
Interest Cover 4.7 6.9
(vii) Return of Capital Employed
EBIT 7,862 13,241
Capital Employed 46,824 58,827
Return on Capital Employed 17% 23%
(viii) Net Profit Margin Ratio
PAT 3,103 7,047
NSV 78,892 90,909
Net Profit Margin
(PAT/NSV) 4% 8%
(ix) Operating Margin Ratio
EBIT 7,862 13,241
NSV 78,892 90,909
Operating Margin
(EBIT/NSV) 10% 15%

Summary of Key Ratios Leverage Ratios

Particulars F21 F20
Debt-Equity Ratio 0.16 0.5
Interest Cover 6 8
Valuation Ratios
EPS 4.27 9.70
P/E Ratio 130x 50x
Profitability Ratios
Return on Equity 8% 19%
Return on Capital Employed 17% 23%
Net Profit Margin Ratio 4% 8%
Operating Margin Ratio 10% 15%
Liquidity Ratios
Inventory Turnover Ratio 156 135
Receivable Turnover Ratio 103 97
Payable Turnover Ratio 104 91
Current Ratio 1.23 1.04

# - Debt Equity and Interest coverage ratio has shown improvement during the financial year 2020-21 due to repayment of loans, reduction in borrowing rates at a favourable mix.

- Turnover ratios viz., Receivable Turnover Ratio, Payable Turnover Ratio and Inventory Turnover Ratio have increased during the year owing to lower scale of operations induced by lockdowns. Year-end balances are in usual course of business as compared to P&L.

- Valuation and Profitability ratios are again skewed because of lower scale of operations coupled with one time Raising the Bar support.