Rough and Tough Tyres Limited

Company profile:-

Rough and Tough tyres Limited (RTTL) is in the business of rubber tyres production. The company faced financial crisis on account of continued losses resulting into its inability to pay its loans. As the situation did not improve, the then promoters of the company approached MRF Limited for bailout & induction of capital in the Company trough interest free unsecured advance. RTTL started incurring cash losses since beginning and ultimately in the financial year ended on 31.03.2013, the Net worth of RTTL was fully eroded. Accumulated losses of RTTL stood at Rs. 1939.88 lacs as per the audited statement of accounts for the year ended 31.03.2013, as against its net worth of Rs. 1742.18 lacs.

The company has also suffered a lot due to labour unrest and absenteeism. The technology used by RTTL is also obsolete and there is a sudden increase in demand of motorcycle tyres. The above factors have led to a market share erosion of RTTL. It was also noted that the company lacks in operational efficiency front.

Suggest a corporate restructuring scheme for the company.

The financials of the company are as follows:

Balance sheetAll are in Lakhs

SOURCES OF FUNDS 31.3.10 31.3.11 31.3.12 31.3.13 31.3.14 31.03.15

Share Capital 1715.82 1715.82 1715.82 1715.82 1715.82 1715.82Reserve & Surplus 26.36 26.36 26.36 26.36 26.36 26.36Profit & Loss A/c -1360.96 -1658.32 -1651.24 -1939.88 -1900.94 -1810.78Secured Loans 199.62 99.62 NIL NIL NIL NILUnsecured Loans 1294.72 1219.2 1275.52 1331.84 1219.18 1218.40Total 1875.56 1402.66 1366.46 1134.14 1060.42 1149.8Applications of funds Fixed Assets 1777.76 1627.88 1485.9 1345.74 1327.94 1380Investments 0.5 0.5 0.5 0.5 0.5 0.5Inventories 19.82 18.84 17.66 16.58 39.28 51.82Sundry Debtors 83.78 NIL NIL NIL 8.92 25.28Cash & Bank Balances 23.58 30.8 29.82 36.56 136.38 158.82Loans & Advances 46.24 56.34 51.7 57.26 254.86 147.68Less : Current liabilities 76.12 331.7 219.12 322.5 707.48 614.3Total 1875.56 1402.66 1366.46 1134.14 1060.42 1149.8

Income Statement:

FINSTRUCT 2015

Year ending 31.3.10 31.3.11 31.3.12 31.3.13 31.3.14 31.03.15Net Sales 885.16 285.98 1079.2 522.64 1367.9 1765.88% growth nil -1.36 5.54 -1.04 3.24 0.58Other Income 10.38 0.88 1 0.96 148.3 21.92Total 895.54 286.86 1080.2 523.6 1516.2 1787.8Expenditure Purchases/Raw Material consumed 8.08 10.12 27.94 84.46 34.26 18.58Stores, & Packing Materials 48.1 14.36 50.62 19.98 60.84 62.62Power & Fuel 250.66 106.98 304.5 200.78 416.5 559.86Employees 348.88 174.12 361.84 225.7 418.34 536.24Other Expenses 55.9 37.54 106.34 66.98 333.7 380.38EBIDTA 183.92 -56.26 228.96 -74.3 252.56 230.12Less : Interest 98.9 88.98 78.96 72.82 nil nilLess : Depreciation 151.72 151.46 142.1 141.14 213.62 139.96Add: Extra Ordinary items nil nil nil nil nil nilLess Provision/Payment of tax 0.84 0.66 0.82 0.38 nil nilProfit/(Loss) After taxation -67.56 -297.36 7.08 -288.64 38.94 90.16Add: Brought forward from previous year -1293.4 -1360.96 -1658.32 -1651.24 -1939.88 -1900.94Balance carried to Balance Sheet -1360.96 -1658.32 -1651.24 -1939.88 -1900.94 -1810.78

FINSTRUCT 2015