All the shareholders of the MRSS were wondering why the share price was in downward mode even after posting more than expected half-yearly results which were declared in the month of May 2018. The EPS of 4 in FY17 is translated now at 13 in FY18. This speaks volumes about the growth of the company. However, there were rumour in the market that company is not paying taxes in time which was anticipated by someone in valuepicker forum and pointed out that there “Finance cost” contains something more than “interest cost of borrowing” which he has clarified to be the “cost of interest on delayed payment of taxes”. So from that moment, we have decided to dig down into the problem and asked the management some queries to calm down investors nerves. Interestingly, the management replied honestly to all our queries and I would like to clarify that it was indeed not a rumor but a true fact that MRSS has delayed their payment of taxes. However, management has clarified that same will be streamlined this year. Below is the snippet of our queries and replies we received from Mr. Raj Sharmaji, the Promoter of MRSS.
[IZ Team]: It is a rumor in the market that MRSS being a 100% CAGR Company is not paying taxes in time. Please Explain.
[Raj Sharma]: As a growing company, which was cash constrained, MRSS had delayed tax payments but it has plans to bring it in line.
[IZ Team]: Further, please can you provide the breakup of “Finance Cost” for FY 2017-18 for better understanding?
[Raj Sharma]: Breakup of “ Finance Cost” for FY18:
- Int on cc – 19 lakhs
- Int on Exim loan – 2 lakhs
- Int on unsecured loan – 22.89 lakhs
- Int on property loan – 40 lakhs
- Processing fees – 7 lakhs
[IZ Team]: MRSS has taken a long-term loan of around 7.30 Cr in the FY 2017-18 as against nil in the previous year. Please, can you brief us about the purpose of such loan?
[Raj Sharma]: MRSS had taken a term loan of 4Cr for new corporate office purchased in May 2017. Rest is EXIM loan of around 2.5cr & unsecured loan outstanding of 1cr.
[IZ Team]: Company’s Tangible asset has gone up from 62 Lacs in FY17 to around 6.42 Cr in FY18. Can you please provide the details of asset MRSS has purchased in FY18?
[Raj Sharma]: MRSS purchased a new corporate office in Kurla in May 2017 which added to the tune of around 5.7Cr to the Fixed Assets in FY18.
[IZ Team]: Employee Benefit expenses of the Company has gone up from 2.9 Cr in FY17 to 9.42 Cr in FY18. Please explain the reason whether the hike is due to hiring more employees during the year or remuneration of the existing employees has gone up?
[Raj Sharma]: MRSS topline has grown 181% YoY on a consolidated level post-acquisition of Singapore subsidiary. And hence the Employee Benefit expenses of the Company in FY18 has also gone up which on the standalone basis is 3Cr & 6Cr is of Singapore subsidiary which sums up to 9.42Cr on the consolidated level.
If you’re an MRSS shareholder and have any questions which you would like to get answered by the MRSS management then please write them in the comments section of this page and we’ll try to get them answered by one of the most investor-friendly management asap!
We would also like to thank Pantomath team who helped us in connecting with Mr. Raj Sharma to get answers of our questions.