Midland Microfin Annual Report

Midland Microfin Limited (Midland Microfin) Return Comparision with Primex 40 Index

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Midland Microfin Limited

Midland Microfin Limited Balance Sheet (Rs in Millions)

Particulars	31-03-2024	31-03-2023
ASSETS
Cash and cash equivalents	2,120.80	1,235.82
Bank balances other than cash and cash equivalents	2,370.66	2,026.70
Derivative financial instruments	34.24	41.13
Trade Receivables	36.27	25.79
Other Receivables	17.33	-
Loans	20,274.87	15,285.34
Investments	516.6	800
Other financial assets	529.75	243.24
Current tax assets (net)	-	53.57
Deferred tax assets (net)	77.91	10.98
Property, plant and equipment	150.85	120.91
Intangible assets under development	6.68	-
Intangible assets	13.01	10.66
Other non-financial assets	66.94	48.04
Total assets	26,215.91	19,902.18
LIABILITIES AND EQUITY
LIABILITIES
Total outstanding dues of Micro Enterprises and Small Enterprises	13.66	53.3
Total outstanding dues of Creditors other than Micro Enterprises and Small Enterprises	21.53	19.83
Debt securities	1,874.09	2,635.08
Borrowings	16,582.03	11,754.98
Subordinated liabilities	1,371.53	1,260.56
Other financial liabilities	1,322.94	655.19
Current tax liabilities (net)	75.35	-
Provisions	31.27	23.63
Other non-financial liabilities	44.92	23.92
EQUITY
Equity share capital	476.11	455.7
Instruments entirely equity in nature	434.68	335.16
Other equity	3,967.80	2,684.83
Total liabilities and equity	26,215.91	19,902.18

Midland Microfin Limited Profit & Loss Statement (Rs in Millions)

Particulars	31-03-2024	31-03-2023
Revenue from operations	5308.72	3944.05
Other income	18.87	5.07
Total income	5,327.59	3949.12
Expenses
Finance cost	2,043.75	1,684.55
Net loss on fair value changes	172.2
Impairment on financial instruments	507.54	514.84
Employee benefit expenses	1,059.52	747.19
Depreciation and amortization expense	37.96	30.09
Other expenses	566.52	357.36
Total expenses	4,387.49	3,334.03
Profit before tax	940.1	615.09
Tax expense:
Current tax	287.36	104.81
Deferred tax	-68.81	41.95
Income tax expense	218.55	146.76
Profit for the year	721.55	468.33
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Re-measurement gain/(loss) on defined benefit plans	3.16	3.82
Income tax effect	-0.79	-0.96
Items that will be reclassified subsequently to profit or loss
Fair value income/(loss) on derivative financial instruments	4.3	-5.22
Income tax effect	-1.08	1.31
Other comprehensive (loss)/income	5.59	-1.05
Total comprehensive income for the year	727.14	467.28
Earnings per share (equity share, par value of Rs. 10 each)
Basic	16.45	10.71
Diluted	15.53	10.7
Nominal value	10	10

Midland Microfin Limited Consolidated Cash Flow Statement (Rs in Millions)

Particulars	31-03-2024	31-03-2023
Cash flow from operating activities
Profit before tax	940.1	615.09
Adjustments:
Depreciation and amortization	37.96	30.09
Provision for employee benefits	10.79	6.88
Net loss on fair value changes	172.2	-
Impairment of financial instruments	435.27	-129.45
Net gain on derecognition of financials instruments under amortised	-149.45	-169.13
Profit on sale of mutual fund units	-1.12	-3.25
Other provisions and write offs	2.35	1.45
Interest expense	2.93	3.83
Lease rental reversed upon implementation of Ind AS 116	-10.65	-11.46
Operating profit before working capital changes	1,440.38	344.05
Movements in working capital :
(Decrease) / increase in payables	-37.94	31.43
Increase in other financial liabilities (excluding lease liabilities)	673.77	221.5
Increase in other non financial liabilities	21	6.58
(Increase) / decrease in bank balances other than cash and cash equivalents	-343.96	443.88
(Increase) in receivables	-27.81	-10.85
(Increase) in loan portfolio	-5,421.70	-4,807.74
(Increase) / decrease in other financial assets	-142.51	28.56
(Increase) / decrease in other non financial assets	-18.9	16.01
Cash (used in) operating activities post working capital changes	-3,857.67	-3,726.58
Income taxes paid	-158.44	-155.54
Net cash (used in) operating activities	-4,016.11	-3,882.12
Cash flow from investing activities
Purchase of property, plant and equipment (excluding right of use assets)	-62.93	-51.39
Purchase of intangible assets and intangible assets under development	-12.3	-1.36
Purchase of investments	-2,218.00	-3,295.00
Sale of investments	2,330.32	2,648.25
Net cash from / (used in) investing activities	37.09	-699.5
Cash flow from financing activities
Proceeds from issue of equity shares	20.41	-
Premium on issue of equity shares	306.15	-
Proceeds from issue of compulsorily convertible Preference shares (CCPS)	80.57	335.16
Proceeds from issue of partly paid CCPS	18.95	-
Premium on issue of partly paid CCPS	284.15	-
Share issue expenses	-0.62	-
Proceeds from issue (redemption) of Debt securities (net)	-760.99	1,313.15
Proceeds from issue of Borrowings (other than debt securities) (net)	4,838.25	1,753.25
Proceeds from issue of Subordinated liabilities (net)	110.97	99.71
Dividend on equity shares	-31.9	-31.9
Dividend on compulsorily convertible preference shares	-1.94	-
Net cash from financing activities	4,864.00	3,469.37
Net increase / (decrease) in cash and cash equivalents	884.98	-1,112.25
Cash and cash equivalents at the beginning of the year	1,235.82	2,348.07
Cash and cash equivalents at the end of the year	2,120.80	1,235.82
Components of cash and cash equivalents as at the end of year
Cash in hand	41.45	10.96
Balance with banks - on current account	179.01	116.23
Deposits with original maturity of less than or equal to 3 months	1,844.47	1,108.63
Cheques on hand	55.87	-
Total cash and cash equivalents	2,120.80	1,235.82

Here is a summary of the Cash Flow Statement for the years 2024 and 2023:

Cash Flow from Operating Activities

Profit before tax: The company’s profit before accounting for taxes increased from ₹615.09 million in 2023 to ₹940.1 million in 2024, indicating improved profitability.

Depreciation and amortization: The non-cash expense for depreciation and amortization rose slightly from ₹30.09 million in 2023 to ₹37.96 million in 2024, reflecting higher asset amortization.

Provision for employee benefits: The provision set aside for employee benefits increased from ₹6.88 million to ₹10.79 million, suggesting higher employee-related liabilities.

Net loss on fair value changes: A significant loss of ₹172.2 million in 2024, compared to no such loss in 2023, indicates adverse market conditions impacting the fair value of certain financial instruments.

Impairment of financial instruments: There was a large impairment charge of ₹435.27 million in 2024, whereas in 2023, there was a reversal or gain of ₹129.45 million, suggesting a worsening in the credit quality of the financial instruments held.

Net gain on derecognition of financial instruments under amortized cost: The company earned gains of ₹149.45 million in 2024, slightly lower than ₹169.13 million in 2023, from derecognizing financial instruments.

Profit on sale of mutual fund units: There was a small profit from the sale of mutual funds, with a decrease from ₹3.25 million in 2023 to ₹1.12 million in 2024.

Other provisions and write-offs: Provisions and write-offs slightly increased from ₹1.45 million in 2023 to ₹2.35 million in 2024.

Interest expense: Interest expenses decreased from ₹3.83 million to ₹2.93 million, reflecting a lower cost of borrowing or reduced debt.

Lease rental reversed upon implementation of Ind AS 116: A reversal of ₹10.65 million in 2024, compared to ₹11.46 million in 2023, indicates adjustments related to lease accounting standards.

Operating profit before working capital changes: Operating profit, before considering changes in working capital, rose substantially from ₹344.05 million in 2023 to ₹1,440.38 million in 2024, indicating improved operational efficiency.

Movements in Working Capital

(Decrease)/increase in payables: There was a decrease in payables by ₹37.94 million in 2024, compared to an increase of ₹31.43 million in 2023, suggesting timely payments to suppliers or reduced purchases.

Increase in other financial liabilities: Other financial liabilities increased significantly by ₹673.77 million in 2024, up from ₹221.5 million in 2023, indicating increased obligations.

Increase in other non-financial liabilities: Non-financial liabilities increased by ₹21 million in 2024, compared to ₹6.58 million in 2023.

(Increase)/decrease in bank balances other than cash and cash equivalents: There was a significant increase in bank balances by ₹343.96 million in 2024, compared to a decrease of ₹443.88 million in 2023.

(Increase) in receivables: Receivables increased by ₹27.81 million in 2024, compared to ₹10.85 million in 2023, indicating higher credit sales or slower collections.

(Increase) in loan portfolio: The loan portfolio increased by ₹5,421.70 million in 2024, compared to an increase of ₹4,807.74 million in 2023, reflecting aggressive lending or expansion.

(Increase)/decrease in other financial assets: Other financial assets increased by ₹142.51 million in 2024, compared to a decrease of ₹28.56 million in 2023.

(Increase)/decrease in other non-financial assets: Other non-financial assets increased by ₹18.9 million in 2024, compared to a decrease of ₹16.01 million in 2023.

Cash (used in) operating activities post working capital changes: The company had a net cash outflow of ₹3,857.67 million in 2024, slightly higher than the outflow of ₹3,726.58 million in 2023, indicating that despite higher profits, working capital changes led to significant cash outflows.

Income taxes paid: Income taxes paid remained relatively stable, with a slight increase from ₹155.54 million in 2023 to ₹158.44 million in 2024.

Net cash (used in) operating activities: The net cash used in operating activities was ₹4,016.11 million in 2024, higher than ₹3,882.12 million in 2023, indicating a significant outflow of cash from operating activities.

Cash Flow from Investing Activities

Purchase of property, plant, and equipment: Capital expenditure on property, plant, and equipment increased from ₹51.39 million in 2023 to ₹62.93 million in 2024.

Purchase of intangible assets: Expenditure on intangible assets increased from ₹1.36 million in 2023 to ₹12.3 million in 2024.

Purchase of investments: The company’s investments decreased, with purchases totaling ₹2,218 million in 2024, down from ₹3,295 million in 2023.

Sale of investments: Proceeds from the sale of investments increased to ₹2,330.32 million in 2024, up from ₹2,648.25 million in 2023.

Net cash from/(used in) investing activities: The company generated net cash of ₹37.09 million from investing activities in 2024, compared to a net cash outflow of ₹699.5 million in 2023, showing a positive turn in investment cash flow.

Cash Flow from Financing Activities

Proceeds from the issue of equity shares: The company raised ₹20.41 million from issuing equity shares in 2024.

Premium on issue of equity shares: The premium raised on equity shares was ₹306.15 million in 2024.

Proceeds from the issue of compulsorily convertible preference shares (CCPS): The company raised ₹80.57 million from CCPS in 2024, down from ₹335.16 million in 2023.

Proceeds from the issue of partly paid CCPS: Additional funds of ₹18.95 million were raised through partly paid CCPS in 2024.

Premium on issue of partly paid CCPS: The premium on partly paid CCPS was ₹284.15 million in 2024.

Share issue expenses: The company incurred expenses of ₹0.62 million for issuing shares in 2024.

Proceeds from the issue (redemption) of debt securities: The company had a net outflow of ₹760.99 million from debt securities in 2024, compared to a net inflow of ₹1,313.15 million in 2023.

Proceeds from the issue of borrowings (other than debt securities): The company raised ₹4,838.25 million in 2024, significantly more than the ₹1,753.25 million raised in 2023, indicating increased borrowing activity.

Proceeds from the issue of subordinated liabilities: The company raised ₹110.97 million in 2024, slightly higher than ₹99.71 million in 2023.

Dividend on equity shares: The company paid dividends of ₹31.9 million in both 2024 and 2023.

Dividend on compulsorily convertible preference shares: A dividend of ₹1.94 million was paid on CCPS in 2024.

Net cash from financing activities: The company generated net cash of ₹4,864 million from financing activities in 2024, up from ₹3,469.37 million in 2023, indicating a strong inflow from financing.

Net Increase/(Decrease) in Cash and Cash Equivalents

The company saw a net increase of ₹884.98 million in cash and cash equivalents in 2024, compared to a decrease of ₹1,112.25 million in 2023, showing an improved cash position.

Cash and Cash Equivalents at the Beginning and End of the Year

The cash and cash equivalents increased from ₹1,235.82 million at the beginning of 2024 to ₹2,120.80 million at the end of 2024.

Components of Cash and Cash Equivalents

Cash in hand: Cash in hand increased from ₹10.96 million in 2023 to ₹41.45 million in 2024.

Balance with banks - on current account: The bank balance on the current account increased from ₹116.23 million in 2023 to ₹179.01 million in 2024.

Dividend History

Particulars	2024	2023
Dividend Per Share (in Rs.)	-	-
Retained Earnings (Rs. In Millions)	1,284.69	741.29

Midland Microfin Limited Recent Financial Performance

Dividend per Share: The specific dividend per share figure for 2024 and 2023 is not provided. Dividend per share represents the portion of a company 's earnings that is distributed to shareholders in the form of dividends. A higher dividend per share may indicate that the company is sharing more of its profits with shareholders.

Retained Earnings: Retained earnings for 2024 amounted to Rs 1284.69 Lakhs, while in 2023, they were Rs. 741.29 Lakhs Retained earnings represent the portion of a company 's profits that is reinvested in the business rather than distributed as dividends. An increase in retained earnings suggests that the company has retained more of its profits for reinvestment or future growth.