Asahi India Glass Analysis

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Asahi India Glass

->What is the firm?

Joint Venture between Maruti, AGC and Labroo

->Established in 1984-> Auto ancillaries

->What is their business history?

1991- Liberalization

More auto majors set up India Operations

More customers for AIG

Pole position

->Why do they have so much debt? Where did they used the debt?

Debt starts from 2004

Expansion into float glass (merger)

Other CAPEX (to look at loan, look at the balance sheet exhibit 2)

WC management fuelled with borrowings

->Without the benefit of hindsight, what is your view on their expansion decisions till around
2007/08?

->What spoiled their plans -> GFC (great financial crisis) 2008

Stagnation in auto and construction

Increase in input costs

Steep fall in rupee-> Loan cost increased-> AGC Japan Loan

->Oil cost increases

->Any evidence on WC management?

Why was this poor? Which Items?

Capital Structure policy

->D/E ratio->04 05 06…………………………………….13

1.9 2.5 3.4 4.3 4.7 8.0 7.2 7.0 8.5 13.3

How many reasons for the increase?

No infusion of equity capital after IPO.

Borrowing funds for capex 2 wc

Poor wc management (inr, A/R)


Losses are reducing the equity component

 Benchmark wrt industry->(2.4/14)

->What is the Cap structure policy followed by this firm?

Internal Funding

Debt

Equity

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