| Established industrial centre in western central Madhya Pradesh
Dewas, a leading industrial centre situated on the Malwa plateau in the West-central part of Madhya Pradesh, about 160 km south west from state capital, Bhopal, is known as the Soya capital of India and is a major part of the soya bean processing industry in the country. Dewas is the hub of various industries like textile, pharmaceutical, automobile and agri-based industries, among others. Some of the major companies in the automobile industry include TATA, Gabriel India Limited, Gajra Gears, to name a few. Apart from this there are other major sectors like textile (Arvind Mills, S Kumar), Pharma (Ranbaxy Labs), metal (Steel Tubes of India Limited), chemical (Navin Fluorine International Limited) and agri-based (Ruchi Soya Limited). Further, Dewas also holds India's Bank Note Press, an industrial unit of the Government of India, the Ministry of Finance and the Department of Economic Affairs. Except for DMC's coverage of water supply which stood at 95 percent of the benchmark all its service coverage ratios stood as per the benchmarks. Sewarage and piped water supply coverage remained at 100percent, while there is scope for improvement in terms of basic amenities coverage. Dewas has been identified one of the cities under Atal Mission for Rejuvenation and Urban Transformation (AMRUT) mission. The purpose of AMRUT is to ensure every household to have access to tap water and sewerage connection, increase the amenity value of cities, and reduce pollution in the city.
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Delays in debt servicing of term loan
There are continuous delays in servicing of a term loan as evident in the term loan account statements for past one year. The delays in the term loan interest and principal servicing are due to elongation in the tax collections by DMC.
DMC is maintaining DSRA equivalent to one month instalment in other term loan, the DSRA was liquidated in the month of Feb/March 2024 on account of delays in receivables, however the same was replenished within the due date. Acuite believes that, without adequate structure in DSRA and ongoing elongation in tax receivables, likely to put pressure on the liquidity profile of the DMC.
Higher buildup in receivables
DMC has higher buildup in receivables as reflected by high debtor days of 318 days for FY24 against 321 days for FY23. Earlier, DMC used to track its tax collection on a manual basis and since FY22, DMC started using GPS technology which has led to surge in the taxable lands and increase property tax collections. DMC has accounted for the legacy pending receivables for the new identified taxable lands. However, collections of this receivables remained moderate with the demand raised which led to elevation in receivables.
Stabilization in revenues; however, profitability declined
The total operating income of DMC in FY24 stood rangebound at Rs. 148.92 crore as against Rs. 146.87 crore in FY23. The revenues majorly include tax revenues, rental income from municipal properties assigned revenues & compensation and also revenue grants, contributions & subsidies from government of Madhya Pradesh. Despite marginal improvement in the revenue, the EBITDA margin of DMC significantly increased to 25.26 percent in FY24 compared to 19.34 percent in FY23 majorly on account of decrease in the operational expenses. However, the corporation reported Profit after Tax (PAT) of Rs. 0.36 crore in FY24 against Rs. 3.08 crore in FY23. The decline in PAT is led by increase in depreciation expenses. The net cash accruals of DMC increased to Rs. 35.86 crore in FY24 as against Rs. 26.49 crore in FY23.
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