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1Copyright 2013 Mahindra Intertrade Limited. All rights reserved. 1

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2Copyright 2013 Mahindra Intertrade Limited. All rights reserved.

Best Practices cum Steel ConferenceFebruary 8 10, 2013

The critical difference is YOU

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Focus on Critical area

Working capital management

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Rs cr

Consolidated Balance sheet

ITEM Actual

F 2012

SHAREHOLDERS' FUNDS 307.84

TOTAL DEBT 53.74

TOTAL LIABILITIES 393.47

APPLICATIONS OF FUNDS

TOTAL FIXED ASSETS 192.79

INVESTMENTS: Others 25.13

Cash and bank balances 33.38

Inventories 160.37

Account receivables 200.32

Loans and advances 62.87

Total current assets 456.95

Total current liabilities 268.70

NET WORKING CAPITAL 188.25

TOTAL ASSETS 393.47

SOURCES OF FUNDS

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Receivable Payable

Inventory

Importance of working capital management:

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Why working capital management ?

To ensure sufficient cash to pay

- Creditors

- Operating expenses like salary.

- Debt repayment obligation

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What did we do.

Formation of Inventory risk management policy

Cap on inventory level

Buying pattern during steel price volatility

Provisioning norms

Closely monitoring inventory aging.

Circulation of monthly inventory aging report.

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Stock Ageing Report as of 31st Dec, 2012(02.01.2013 Morning) for MSSCL Bhopal

Category GRADE Total 0-30 31-60 61-90 91-120 121-180 181-360 Above-361 > 90 days Remark

Qty Qty Qty Qty Qty Qty Qty Qty Qty

Coil 27D084 169.31 169.31 -

27MOH 10.04 2.01 8.04 -

27ZDKH90 0.28 0.28 0.28

M4 131.78 52.12 79.66 131.78

As compared to Nov 12 report,

stock has been reduced by 126 t.

MOH 47.84 47.71 0.13 47.84

As compared to Nov 12 report,

stock has been reduced by 43 t.

ZDKH85 15.15 11.80 3.35 3.35

ZDKH90 2.83 2.83 -

Total 377.22 185.94 8.04 - 52.12 79.94 51.06 0.13 183.24

WIP 23ZDKH 25.30 24.58 0.73 25.30

27D084 24.85 9.89 14.95 -

27M4 12.24 10.87 0.12 1.14 0.12 1.38

27MOH 12.42 8.68 2.87 0.83 0.05 0.87

27ZDKH 4.15 3.41 0.74 0.74

D084 93.61 93.61 -

M4 198.95 131.05 35.80 12.07 11.35 5.73 2.83 0.13 20.04

MOH 125.54 48.06 31.30 7.06 20.83 11.26 5.93 1.11 39.13

ZDKH85 19.99 2.40 0.28 0.21 1.45 14.41 1.24 17.32

ZDKH90 90.36 9.09 28.22 15.19 23.00 14.87 53.06

Total 607.42 317.06 110.54 21.99 47.58 42.30 64.59 3.37 157.84

As compared to Nov 12 report,

stock has been increased by 40 t.

FG 23MOH 5.85 5.85 -23ZDKH 11.15 11.15 11.15

27M4 0.07 0.07 - 0.07

27MOH 0.35 0.22 0.13 0.13

27ZDKH90 3.92 3.92 -

50H600 1.74 1.74 1.74

D084 4.84 4.84 -

M4 17.89 12.98 0.28 0.16 4.48 4.64

MOH 26.35 22.85 0.08 3.33 0.09 - 3.42

ZDKH85 2.17 2.17 2.17

Total 74.32 50.43 - 0.57 3.33 0.29 6.81 12.88 23.31 At same level

Grand Total 1,423.26 827.36 134.56 88.02 103.52 130.96 122.46 16.38 373.32% to Total 100% 58% 9% 6% 7% 9% 9% 1% 26%

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MIL improved by 9% over March12

MME improved by 48% over March 12

MSSCL worsen by 16% over March12

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Summary of aged inventory

(Qty in tonnes)

Jan-13 Mar-12 Jan-13 Mar-12 Jan-13 Mar-12

MIL 19,599 20,062 2,857 4,640 14.6% 23.1%

MME 744 158 110 99 14.8% 62.6%

MSSCL 2,016 1,985 930 596 46.1% 30.0%

Total stock Stock above 90 days % of stock above 90 days

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Its all about money!!!!!!

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Working Capital cycle of MME

Bank credit forRM purchase Inventory

Realizationfrom sale

180days

90days

60days

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How fast are we converting receivable

into cash?

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.. did our home work

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Particulars

Sep'12 Oct '12 Nov '12 Dec'12 Jan '13 Feb '13 Mar '13

Opening Cash and Bank Balance 186 41 594 151 (38) (284) 571

Receipts

Sale Realization 1369 1230 2810 1824 951 1149 1149

Total Receipts 1369 1230 2810 1824 951 1149 1149

Payments

Import LC Payments 1243 560 3028 1850 1034 132 1451

Other Payments 272 117 190 163 163 163 163

Total Payments 1514 677 3218 2013 1197 295 1614

Closing Cash and Bank Balance 41 594 151 (38) (284) 571 105

Forcast

USD in '000

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We sniffed the problem

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Started alternative thinking.

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Approached ICICI Bank, Dubai

and

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.tied up a facility

for $ 10 mn.at lower cost than existing banks

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In mid Dec12, ABB informed that they will not pay

dues of $ 1.5 mn until Jan13.

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Particulars

Sep'12 Oct '12 Nov '12 Dec'12 Jan '13 Feb '13 Mar '13Opening Cash and Bank Balance 186 41 594 151 (38) (284) 571

Receipts

Sale Realization 1369 1230 2810 1824 951 1149 1149Total Receipts 1369 1230 2810 1824 951 1149 1149

Payments

Import LC Payments 1243 560 3028 1850 1034 132 1451Other Payments 272 117 190 163 163 163 163

Total Payments 1514 677 3218 2013 1197 295 1614

Closing Cash and Bank Balance 41 594 151 (38) (284) 571 105

Forcast

USD in '000

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Since we had foreseen this well in advance..

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We were ready for the challenge

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and averted a default situation

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Nothing comes for free

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Remember Universal Mantra

Sabse Bada Rupaiyaa

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and thats some thing Mr.Narayan Murthy often says

Profit is an opinion, cash is a fact

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Disclaimer

This document is the property of Mahindra Intertrade Limited (MIL) , India, and contains confidential and trade secretinformation. This document is for information only and is not an offering for sale of any securities of MIL. This documentmay not be transferred from the custody or control of MIL except as authorised by MIL and then only by way of loan forlimited purposes. It must be returned to MIL upon request and, in all events, upon completion of the purpose of the loan.Neither this item nor the information it contains may be used or disclosed to persons not having a need for such use ordisclosure consistent with the purpose of the loan, without the prior written consent of MIL. All products or company namesmentioned in this document are used for identification purposes only, and may be trademarks of their respective owners

Copyright 2013 Mahindra Intertrade Limited. All rights reserved.

Thank youVisit us at www.mahindraintertrade.com

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