Got a Brand or Product that sells ? – Your Balance Sheet will speak.
One does not often get the opportunity to come across Balance Sheet like DFM Foods Ltd, that too from a small cap sector. It is truly amazing for this Rs 120 crores company selling CRAX and NATHKATH brands packaged snack foods.
Consider some of these truly admirable figures in the Balance Sheet:
- FY11 sales at 120 Cr but debtors just Rs 29000. Not even one day sale. That means products are in great demand or DFM knows how to sell. Customers and dealers are not required to be given any credit. If DFM can sell its entire products on cash basis, there is no denying that they have got a product or a brand or both.
- Not only this, DFM inventory of Finished Stocks is just Rs 81 lacs. It is just 3 days sales. DFM dispatches every thing the moment it is produced. No need to stock. Meaning customers have lined up with cash to take the material
- So, no debtors, no finished stock then what next. What is even greater indicator? It is advances from customers. Yes sir, that is also there. DFM has advances from customers to the tune of Rs 5.20 crores. That is around your 15 days sales.
- If you have these three extra ordinary indicators of your Brand, Products and sales ability, why sales during last 3 quarters are stagnating. Sir, plant running at 100% capacity.
- Then what do you do? Expand. Doing Sir. New Plant is under construction at a cost of Rs 70 crores and will be ready by 3rd Qtr of this year.
- How DFM using cash flow. Already bought land for new plant for Rs 9 crores. Given advance for capital goods of more than 4 crores. No additional loan till date. But will take when construction picks up.
- Some concerns as well. Dispute is there with excise department regarding classification of the products.
Market is also quick to recognize these facts. Stock is quoting near to its all time high even during this uncertain time. Market cap is just at 1.5 times its sales.
