dg cement report

Financial Analysis of DG Khan Cement Company Ltd.

Nishat group of industries

PrefaceAs the world is growing rapidly, the businesses are also moving to become the huge one. And by that result, more and more people want to become a master in these businesses. The main purpose in the finance field is to know how the financial analysis is done. We all know that finance is the blood of any business and without it no business can run. Financial analysis of a company is very difficult and the most important task and by doing this we are able to know the whole financial position and financial structure of the company.Simply by looking at how much cash a company has does not provide enough information. The financial statements need to be analyzed to measure a company’s performance and to compare it with other firm’s in the same industry. The resulting information is intended to be useful to owners, potential investors, creditors, analysts, and others as the analysis evaluates the past performance, future potential and financial position of the firm.This report is an analysis of financial statements of D.G. Khan Cement Company Ltd. This report has been prepared with an objective to develop analytical skills required to interpret the information (explicit as well as implicit) provided by the financial statements and to measure the company’s performance during the past few years. The financial statements are analyzed using traditional evaluation techniques such as horizontal analysis, vertical analysis and trend analysis. Ratios are an important tool in analyzing the financial statements & the company’s profitability, solvency & liquidity. Sincere attempts have been made to make this report error free but if any errors and omissions are found then we apologize for that.

Shabbir Bilal (3839)Sagheer Ahmed (3860)Faizan Ahmed khan (3899)

PrefaceAs the world is growing rapidly, the businesses are also moving to become the huge one. And by that result, more and more people want to become a master in these businesses. The main purpose in the finance field is to know how the financial analysis is done. We all know that finance is the blood of any business and without it no business can run. Financial analysis of a company is very difficult and the most important task and by doing this we are able to know the whole financial position and financial structure of the company.Simply by looking at how much cash a company has does not provide enough information. The financial statements need to be analyzed to measure a company’s performance and to compare it with other firm’s in the same industry. The resulting information is intended to be useful to owners, potential investors, creditors, analysts, and others as the analysis evaluates the past performance, future potential and financial position of the firm.This report is an analysis of financial statements of D.G. Khan Cement Company Ltd. This report has been prepared with an objective to develop analytical skills required to interpret the information (explicit as well as implicit) provided by the financial statements and to measure the company’s performance during the past few years. The financial statements are analyzed using traditional evaluation techniques such as horizontal analysis, vertical analysis and trend analysis. Ratios are an important tool in analyzing the financial statements & the company’s profitability, solvency & liquidity. Sincere attempts have been made to make this report error free but if any errors and omissions are found then we apologize for that.

Shabbir Bilal (3839)Sagheer Ahmed (3860)Faizan Ahmed khan (3899)



Acknowledgement In the name of “Allah”, the most beneficent and merciful who gave us strength and knowledge to complete this report. This report is a part of our course “Financial Statement Analysis”. This has proved to be a great experience. We would like to express our gratitude to our Financial Accounting teacher Ms. Miss Moona Shamim who gave us this opportunity to fulfill this report. We would also like to thank our colleagues who participated in a focus group session.

Acknowledgement In the name of “Allah”, the most beneficent and merciful who gave us strength and knowledge to complete this report. This report is a part of our course “Financial Statement Analysis”. This has proved to be a great experience. We would like to express our gratitude to our Financial Accounting teacher Ms. Miss Moona Shamim who gave us this opportunity to fulfill this report. We would also like to thank our colleagues who participated in a focus group session.


Table of ContentsS.No Particular Page

1 Preface 12 Acknowledgement 23 Table of content 34 Introduction 4-95 Liquidity position 106 Activity ratio 10-117 Debt ratio 128 Profitability ratio 139 Assets Utilization 14

10 Return on investment 1511 Income statement 17-2012 Balance sheet 2113 Summarized Income Statement 2214 Summarized Balance sheet 2215 Horizontal Analysis of Income statement 2316 Vertical analysis of income statement 2417 Calculation of ratios 25-29



Introduction

Mission StatementTo provide quality products to customers and explore new markets to promote/expand sales of the Company through good governance and foster a sound and dynamic team, so as to achieve optimum prices of products of the Company for sustainable and equitable growth and prosperity of the Company.

Vision StatementTo transform the Company into modern and dynamic cement manufacturing company with qualified professionals and fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan.

D.G. Khan Cement Company Limited

NISHAT GROUPNishat Group is one of the leading and most diversified business groups in South East Asia. With assets over PRs.300 billion, it ranks amongst the top five business houses of Pakistan. The group has strong presence in three most important business sectors of the region namely Textiles, Cement and Financial Services. In addition, the Group has also interest in Insurance, Power Generation, Paper products and Aviation. It also has the distinction of being one of the largest players in each sector. The Group is considered at par with multinationals operating locally in terms of its quality of products & services and management skills.

Mian Mohammad Mansha, the chairman of Nishat Group continues the spirit of entrepreneurship and has led the Group successfully to make it the premier business group of the region. The group has become a multidimensional corporation and has played an important role in the industrial development of the country. In recognition of his unparallel contribution, the Government of Pakistan has also conferred him with “Sitara-e-Imtiaz”, one of the most prestigious civil awards of the country.



D.G. Khan Cement CompanyD.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is the largest cement-manufacturing unit in Pakistan with a production capacity of 5,500 tons clinker per day. It has a countrywide distribution network and its products are preferred on projects of national repute both locally and internationally due to the unparallel and consistent quality. It is list on all the Stock Exchanges of Pakistan.

DGKCC was established under the management control of State Cement Corporation of Pakistan Limited (SCCP) in 1978. DGKCC started its commercial production in April 1986 with 2000 tons per day (TPD) clinker based on dry process technology. Plant & Machinery was supplied by UBE Industries of Japan.

Acquisition of DGKCC by Nishat GroupNishat Group acquired DGKCC in 1992 under the privatization initiative of the government. Starting from the privatization, the focus of the management has been on increasing capacity as well as utilization level of the plant. The company undertook the optimization by raising the capacity immediately after the privatization by 200tpd to 2200tpd in 1993.

Capacity AdditionTo meet the increasing demand and to capitalize on its geographic location, the management further expanded the capacity by adding another production line with a capacity of 3,300 tons per day in year 1998. Design of the new plant is based on latest dry process technology, energy efficient and environmental protection from particulate pollution according to the international standards. The plant and machinery was supplied by M/s F.L. Smidth of Denmark. As a result, DGKCC emerged as the largest cement production plant in Pakistan with annual production capacity of 1,650,000 M tons of clinker (1,732,000 M.Tons Cement) constituting about 10% share of the total cement production capacity of the country. The optimization plan is still underway to increase the total capacity of the two units to 6700 TPD by mid of 2005 from 5500 TPD at present.

Expansion -Khairpur ProjectFurthermore, the Group is also setting up a new cement production line of 6,700 TPD clinker near Kalar Kahar, Distt. Chakwal, the single largest production line in the country. First of its kind in cement industry of Pakistan, the new plant will have two strings of pre-heater towers, the advantage of twin strings lies in the operational flexibility whereby production may be adjusted according to market conditions. The project will be equipped with two vertical cement grinding mills. The cement grinding mills are first vertical Mills in Pakistan. The new plant would not only increase the capacity but would also provide proximity to the untapped market of Northern Punjab and NWFP besides making it more convenient to export to Afghanistan from northern borders.



Power GenerationFor continuous and smooth operations of the plant uninterrupted power supply is very crucial. The company has its own power generation plant along with WAPDA supply. The installed generation capacity is 23.84 MW.

Environmental ManagementDG Khan Cement Co. Ltd., production processes are environment friendly and comply with the World Bank’s environmental standards. It has been certified for “Environment Management System” ISO 14001 by Quality Assurance Services, Australia. The company was also certified for ISO-9002 (Quality Management System) in 1998. By achieving this landmark, DG Khan Cement became the first and only cement factory in Pakistan certified for both ISO 9002 & ISO 14001...

BOARD OF DIRECTORS Mrs. Naz Mansha Chairperson/Director

Mian Raza Mansha Chief Executive/Director

Saqib Elahi Director

Khalid Qadeer Qureshi Director

Mohammad Azam Director

Zaka ud din Director

Inayat Ullah Niazi Director & Chief Financial Officer

Why cement sector for our projectAt the time of independence in 1947, only one or two units were producing grey cement in the country. During the decade of 1948-58, the number of cement units increased to six. During the Ayub era the economy started to grow and the construction activities underwent a boom. To meet the growing demand of cement new units were set up. During the decade of 1958-68, the number of cement units increased from 6 to 9. During the following period of Zulfiqar Ali Bhutto all the industrial units, including cement industry, were nationalized, therefore, no new unit was set up during 1971-77. During the period of General Zia-ul-Haq, 1977-88, denationalization of industrial units boosted the investments. Housing and construction industries picked up and the demand for cement increased. Thus, the number of cement units increased from 9 to 23 and finally 24.The cement industry in Pakistan has become a long way since independence when country had less than half a million tones per annum production capacity. By now it has exceeded 10 million tones per annum as a result of establishment of new manufacturing facilities and expansion by existing units. Privatization and effective price decontrol in 1991-92 heralded a new era in which the industry has reached a level where surplus production after meeting local demand is expected in 1997.



The cement industry is needed a highly important segment of industrial sector that plays a pivotal role in the socio-economic development. Through the cement industry in Pakistan has witnessed its lows and high in recent past, it has recovered during the last couple of years and is buoyant once again.

There are total number of units are 23, from which 4 units are in the public sector while the remaining 19 units are owned by the private sector. Two of the four units in the public sector had to close down their operations due to stiff competition and heavy cost of production. The cement plants are located in every province of Pakistan.

The province-wise distribution of cement plant is as under.

Providence Units Capacity (Million Tons)Punjab 8 7.488Sindh 8 3.851NWFP 6 4.945Baluchistan 1 0.758Total 23 17.040

Three additional cement plants with installed capacity of over 2.1 million tons are in the final stage of completion despite the available excess capacity in this sector. The following table shows installation of new cement factories and expansion of the existing facilities during the current decade.



The industry is divided into two broad regions, the northern region and the southern region. The northern region has over 87 percent share in total cement dispatches while the units based in the southern region contributes 13 percent to the annual cement sales.

Name of company New/ Expansion Year of Commission New Capacity Created(Tons)

Northern RegionAskari Cement Expansion 1964 945,000Askari cement New 1996 630,000Bestway cement New 1988 1,039,500D.G Khan cement Expansion 1988 1,039,500Fauji cement New 1997 945,000Lucky cement New 1996 1,260,000Maple Leaf cement Expansion 1998 1,039,500Pioneer cement New 1994 630,000Sub-Total 7,528,500Southern RegionEssa cement Expansion 1988 315,000

Total 7,843,500



INDUSTRY REVIEWThe cement industry of Pakistan again set a new record and sold 30.112M tons during FY 2008 against 24.222M tons last year, with a growth of over 24%. During the period under report the capacity utilization of the industry was 81% against 79% last year. The slight increase in capacity utilization is due to the fact that during the year industry added another 6.5M tons of new capacity.Pakistani Cement industry fully tapped the export prospects of cement and managed to export hefty 6.610M tons against 2.797M tons last year. The cement manufacturers fully poised to explore new export markets. Contrary to past, now the cement is being exported not only to regional neighboring countries, rather Pakistani cement is finding its place in South East Asian countries, Russia and in African countries as well.Clouds of recession are hovering over the economy of Pakistan and having achieved consecutive growth of over 6% in real GDP during last four years, economic growth slowed down to 5.8% in FY 2008 against 6.8% recorded last year. Demand of cement is directly related with prevailing economic conditions. During FY 2008 cement sales in the country remained bleak due to uncertainty in political and economic front coupled with fading law and order situation. Total sales in the country were 22.395M tons against 21.034M tons last year, witnessing an increase of only over 6%. Dilemma of price war among the cement manufacturers to find out the market share has badly affected the financial health of the

cement sector. In addition, all time high oil and coal prices coupled with expanding inflationary trend in the country hit badly the cost of production. Going forward, monetary tightening stance of the State Bank of Pakistan to curb inflation in the country posed additional burden in the form of increased lending rates.



Liquidity Position with Graphical Presentation

Liquidity Position

Liquidity Position 2008 2007 2006 2005 2004

Current Ratio 1.54 2.60 1.65 1.37 1.21Acid Test Ratio 1.22 2.33 1.44 0.96 0.64Cash Ratio 1.18 2.31 1.43 0.94 0.62

The following graph show the increase and decrease in the variable. As it is shown in the graph that in 2004 there is the gradual increase in the ratio, and it goes to the boom and it suddenly decreases in 2008.

Activity Ratios

Activity Ratios 2008 2007 2006 2005 2004

Account Receivables Turnover

41.02 times58.78 times

105.79 times 81.94 times73.78 times

Account Receivables Turnover in Days

8.89 days 6.20 days 3.45 days 4.45 days 4.94 days



As the graph depict that the receivables turnover was at normal pace in 2004 to 2005 but it reached to boom in 2006 and started decreasing in 2007. Days in receivable and a/r turn over in day are at very good pace.

Activity Ratio

2008 2007 2006 2005 2004

Inventory Turnover in days

27.66 days 21.69 days 14.96 days 21.89 days 43.63 days

Inventory Turnover

13.19 times 16.83 times 24.40 times 16.67 times 8.36 times

Ending F.G Inventory

33.27days 8.003 days 8.06 days 12.5 days 18.85 days

Debt RatiosDebt Ratios 2008 2007 2006 2005 2004

Debt To Equity Ratio 76 53 78 93 85

Debt Ratio 43 34 44 48 46



The debt management ratios of DGKC showed a positive trend during 2007. The debt to asset and equity ratios as well as the long-term debt ratio all receded during the period and this reflected a reduction in dependence on debt financing. the company's However, during 2008 the debt ratios of the company rose because the total debt increased in 2008

Profitability RatiosProfitability Ratios 2008 2007 2006 2005 2004Gross Profit Margin 15 32 49 37 36Operating Profit Margin 12 34 49 46 35Net Profit Margin 7.84 25 31 31 20



Profitability - Financial Year 2002 to Financial Year 2008

The profitability ratios of the company have shown a declining trend since after 2005. The gross profit margin increased in 2006 only to fall in 2007 and 2008. The profit margin of the company has decreased continuously along with return on assets (ROA) and return on equity (ROE).

The problem of rising input costs had begun in 2007. This rise in cost of production and raw material have continued into 2008 and further aggravated, causing the declining trend of the profitability of DGKC.

Despite a strong growth in cement dispatches, the cement sector experienced declining profitability during 2008. The net sales revenue did not increase to an equal extent due to decrease in net retention prices in the sector.

.

Assets Utilization

Asset Utilization 2008 2007 2006 2005 2004Return on Total Assets 24 33 10 13 11Return on Assets 18.5 3.8 23 11 6.60total asset turnover 24 15 74 35 33



The performance of DGKC in terms of asset management was weak during 2007. During the year, the inventory turnover (days) of the company more than doubled compared to 2006 when the management of inventory seemed most efficient (evident from the lowest inventory turnover in days). This could be traced back to lower sales revenue for the period, coupled with a higher stock of inventory.

However, in 2008 the asset management of DGKC improved as the inventory turnover rate increased because the company earned sales revenue more in proportion to the increase in inventory. Thus the days to convert inventory into sales became less (from approx. 100 days in 2007 to 79 days in 2008)..

Return on Investment

Return on total equity

Return Ratios

2008 2007 2006 2005 2004

Return on Total Equity

0.30 0.37 17 22 13



One of the most important profitability metrics is return on equity [or ROE for short]. Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet.

Investment Ratios

Price earning ratio

Investment ratios 2008 2007 2006 2005 2004

Price earning ratio 2.58 4.81 3.38 3.96 8.19



Earnings per share are generally considered to be the single most important variable in determining a share's price. It is also a major component used to calculate the price-to-earnings valuation ratio. The EPS of company is fluctuating but in current year it has decreased drastically which is not a good sign for share holders. An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation.

Annexure

Summarized Income Statement

Summarized Income Statement 2008

Rs. In’000

2007Rs.In’000

2006Rs. in’000

2005Rs.In’000

2004Rs.In 000

Sales NetLocal SalesExport SalesLess.Excise DutySpecial Excised DutySales taxCommission to stockiestSales Net-.Cost of SalesRaw and Packing material usedSalaries and WagesElectricity and Gas

14732445 2741111

2729046 99556 1929858250749 12464347

1368488 48035216447594597486

8887306 511826

1679829

1159214 1404646419625

580717 293929 6053351902567

10348119 607817

1509449

1349755 1410677955665

4640802308544706252114667

6730756 641351

1141756

877924 728675279560

3742871859143229791493514

5392393 305191

990124

766497 582073882756

3305351619192179111123716



Furnace oilStores and Spares usedRepair and maintenanceInsuranceDeprecation on property plant and EquipmentDeprecation on assets subjects to finance leaseRoyalty Excise DutyVehicle RunningPostage Telephone ,TelegramPrinting and StationeryLegal and Professional ChargesEstate DevelopmentRent, Rates and taxesFreight ChargesOther Expenses

Opening W.I.PTransfer from Trail runClosing W.I.PCost of Goods ManufacturedOpening stock of finished goodsTransfer from Trail runClosing Stock of finished goodsCost of good sold

-)Own consumption CapitalizedCost of Goods SoldGross Profit-) Administrative ExpensesSalaries Wages ElectricityRepair and MaintainanceInsuranceDeprecation on property plant and EquipmentDeprecation on assets subjects to finance leaseVehicle RunningPostage Telephone ,TelegramPrinting and StationeryLegal and Professional ChargesTraveling and conveyanceRent, Rates and taxesEntertainmentSchool expensesFees and subscriptionOther ExpensesAuditors Remuneration

764204 98530 439041354192

3331

837312596215541538934801499963969825753207910534013142686 -(118292)10558407107804

(118863)(11059)19302105280461936301

5715029851620168511956

126

354534412210352267831761136900419823424 -110745

35431

383159 2291321840469367

13108

4534915373715917849454996227411333969449438722916198950462(142686)44569945058

39300(69728)(25370)4398443876402031985

489582678132412779027

1571

5353273818973369610426992780849129662937 -104169

29727

3881131823320542341940

13203

43678168846980177414928844678387956807651415583750205 -(161989)404405319468

-(5058)144106564139928223962843

409502684121031477261

1213

406660934983639410377256132776975345817304 -121953

23997

357762999723642330100

11311

316521045057241831158154839303091413948963177348210983 -(50205)333812638616

-(19468)191482650533307691948791

310562566124330999742

4945

2678310319131365241087279561771855192673576480

17474

338970963742235317155

6923

3028459095881137412765073179615045736742261411388603 -(210983)249173344145

-(38616)5529 -24972621385494

2734231251461199212425

1382

17523841125624712448439766594493736070468645

14616



Total Administrative ExpensesSelling and Distribution ExpenseSalaries Wages ElectricityRepair and MaintenanceInsuranceDeprecation on property plant and EquipmentDeprecation on leased propertyVehicle RunningPostage Telephone ,TelegramPrinting and StationeryRent, Rates and taxesTraveling and conveyanceEntertainmentAdvertisement and Sales PromotionFreight Charges-localFreight and Handling Charges-ExportOther ExpensesTotal Selling and Distribution ExpensesOther Operating ExpensesWorkers’ profit participation fundBook Value of Asset written off

DonationWorker welfare fundExchange lossLoss on Disposal of Property Plant and EquipmentLoss on Sale and Lease back transactionsTotal Other Operating ExpensesOther Operating IncomeIncome from Financial AssetsIncome on Bank DepositsInterest on Loan to Employees

Gain on derecognizing of investmentDividend Income From -Related Parties -OthersTotal Income from financial AssetsIncome from non financial assetsRental Income

8752994971342

-194012351553343837202963395

14135492219

2595562970

-

97345000 -580953 -

-

595687

727128 -

820303143821301

15924488

1039469731858

- -

6708842351132

-160313611094231214061892643

5019637

217965122

93145

-1105035112414 -

-

139721

1659182 -

465656118467615

16344490

41701208303 - -

443225172324 -1225855891127215612941569

23 -

150134352

182006

-9844 - - -

-

191850

363181 -

265763120266427

28473567

760945622116

6986 -

3451211397895

-81485591398110453981919

31239 -

241960905

83058 -4530 - - -

6198

93786

582276543173

15228426696341

20023207

29112002729

-500

38340306900

8876594464349514323582213

13572 -

180538560

60829

- - - - 206 -

61735

535290 -

3446085730121015

1980 -

38271351289

- -



Profit on sales of property plant and assetsScrap SalesMark up on loansProvisions and unclaimed balances returned backExchange gainOthersTotal other operating incomeProfit from operationsFinance CostLong term finances- Long term loans- Preferred dividend- Non participatory

redeemable capital - Finance under markup- Provident fund

-Short term borrowings-Finance leaseworkers profit participation fundLoss on derivative financial instrumentsLoss on Foreign currency forwardGuarantee commissionBank chargesTotal finance CostExcess of Acquire Interest in the net assets of acquireShare of loss of Associated companyProfit before Taxation-)TaxationFor the year- current- Deferred

Prior Year-Current -DeferredTotal taxation

846606

1040737 - -

- - 499413584522-205308

-

416515569(1766298)86194

(8674)

(175273)

108214(309167)

(5) -1513505197,700

479420

32318328281 -

- - 103324656498 103324 -

-

18134496468173 -

(14163)

1720471

33000312435

-(247435)2202393-98,000

294114

30502735351 -

- - 737721254310173772 -

17229

16794994450696

(9573)

3448533

405001027000

(32422)(5000)3908802-

707692

1862673294265535351

42655 - -1243983329 -

7804

14056860304041

-

2121271

40000464000

193(65000)2425312-439193

128462

141701200493535112341

37 -98609020049 -

- -8714235224601 -

-

1120415

28700297000

10222(10000)1345016-325922

Net Income 25685 1622471 2418455 1682078 794493



Summarized Balance SheetSummarized Balance Sheet 2008 2007 2006 2005 2004Equity and LiabilitiesCapital and ReservesAuthorized Capital-950000000@ ordinary share10-50000000@ preference share10

Issued subscribed and paid up capitalShare deposit moneyReservesUn-appropriated profitTotal capital and ReserveNon Current LiabilitiesLong term financeLiabilities against subject to finance leaseLong term depositsRetirement and other benefitsDeferred TaxationTotal Non-Current liabilitiesCurrent LiabilitiesTrade and other payablesAccrued markupShort term borrowingCurrent portion of non-current liabilitiesDerivative foreign currency forward optionsProvision for taxationTotal Current liabilitiesTotal LiabilitiesAssetsNon-Current AssetsProperty plant and equipmentAssets subject to finance leaseCapital work in progressInvestmentsLong term loans, advances and depositsTotal Non-Current AssetsCurrent AssetsStores spares and loose toolsStock in tradeGross ReceivablesInvestmentsAdvances, deposits, prepayments and other ReceivablesCash and bank balanceTotal Current AssetsTotal

9500000500000100000002535412

-276347223239930528440

8871051393

7389054018125100010250352

145007439161081943302828202

-

350901289930653678098

24224273683924883076592332524176

33835927

2323883130032546344615082605427832

2440801984217153678098

9500000500000100000002535412

-29630084175768933923185

86864471141

7946739862162400010430917

102727434261239429722042281

-

35090739022951744331

2211755113337619070638174474196913

32529377

149629129514014424516933790229315

1161731921495451744331

250000050000030000001843937

835115085354233055819268200

737246828886

338142657215590009020740

140686934075726136951619025

-

35090601543634304376

7521723295058117596774482213335810

24394481

836049226286741658543763152465

77167990989534304376

250000050000030000001843937

-71965682774939317998

4899225131985

28674457655370005642649

1154426960620 -599674

306048

35090305585818016505

663723731726239831752610634271428

13819736

1035081100994762382769134121486

93836419676918016505

2500000500003000001676306

-

43890882516616317055

273057383487

30365381501380003020575

4939681360677 -487254

-

35090237698911714619

61280831665831126108138768125021

8833476

938847298538526221386816120329

83991288114311714619



Overview of income statement

Overview of Income statement 2008 2007 2006 2005 2004Sales 12,445,996 6,419,625 7,955,665 5,279,560 3,882,756

Cost of sales -10,530,723 4,387,640 3,992,822 3,330,769 2,497,262Gross profit 1,915,273 2,031,985 3,962,843 1,948,791 1,385,494

Administrative expenses -111,658 -104,169 -121,953 -76,480 -68,645Selling and distribution expenses -561,465 -65,122 -34,352 -60,905 -38,560

Other operating expenses -581,913 (139,721 -191,850 -93,786 -61,735Other operating income 847,344 479,420 294,114 707,692 128,462Profit from operations 1,507,581 2,202,393 3,908,802 2,425,312 1,345,016

Finance cost -1,749,837 -467,759 -450,696 -304,041 -224,601Share of loss of associated companies -8,674 -14,163 -9,573

Profit\ Loss before tax -250,930 1,720,471 3,448,533 2,121,271 1,120,415Taxation 197,700 -98,000 -

1,030,078-439,193 -325,922

Profit\ Loss for the year -53,230 1,622,471 2,418,455 1,682,078 794,493Basic earnings per share Rupees -0.21 6.43 10.37 9.12 4.31

Earnings per share 0.12 6.43 9.14 7.82 3.78

Overview of Balance sheet

Overview of Balance sheet 2008 2007 2006 2005 2004

Capital and Reserve 30528440 33923185 19268200 9317998 6317055

Non-current Liabilities 10250352 10430917 9020740 5642649 3020575

Current Liabilities 12899306 7390229 6015436 3055858 2376989

Assets

Non-current Assets 33835927 32529377 24394481 13819736 8833476

Current Assets 19842171 19214954 9909895 4196769 2881143



Horizontal Analysis of Income Statements

2008 2007 2006 2005 2004Net sales 321.01 % 165.34 % 204.89 % 135.97 100 %Cost of sale (421.58) (175.7) (159.89) (133.38) 100Gross profit 139.75 146.66 286.02 140.66 100administrative expense (61.33) (151.75) (177.66) (111.41) 100selling &dist. expenses (145.98) (168.88) (89.09) (157.95) 100other operating expense

(964.90) (226.32) (310.76) (151.29) -100

other Operating income

659.03 373.20 228.95 550.89 100

profit from operation 112.53 163.74 290.61 180.32 100finance cost (786.41) (208.26) (200.66) (1345.25) 100share of loss of associated company

- - - - 100

income before taxes 15.64 153.56 307.79 189.33 100Provision for taxation (61.66) (30.06) (316.05) (134.75) 100Net profit 3.23 204.21 304.40 211.72 100

Horizontal analysis of income statement shows that net sales of the Co has increasing trend. But on the other hand Cost of goods sold jump quickly. This is not a good trend. Cost of goods sold of the Co increases due to expensive raw materials. Gross profit of the co decreases from last years due to high cost of goods sold. Administrative and selling expense of the Co has decreasing trend. Other operating expenses of the Company are increasing quickly. Company is also increasing trend in other operating income. Profit from operations also decreases. Co also has high finance cost from last years. Income before taxes has decreasing trend due to high cost of goods sold and finance cost. Net profit of the Company is Very small as compare to last years.



Vertical Analysis of Income Statements

2008 2007 2006 2005 2004Net sales 100% 100% 100% 100% 100 %

Cost of sale (84.46%) (68.35%) (50.18%) (63.09%) (64.32%)Gross profit 15.35 31.64 49.81 36.91 35.68

administrative expense (0.88) (1.62) (1.53) (1.45) (1.77)selling &dist. expenses (4.52) (1.01) (0.43) (1.15) (0.99)

other operating expense (4.78) (2.17) (2.41) (1.78) (1.59)other Operating income 6.79 7.47 3.70 13.40 3.37

profit from operation 12.14 34.31 49.13 45.94 34.64finance cost (14.17) (7.28) (5.66) (5.76) (5.78)

Excess of acquires interest in the net assets

of acquire

0.69- - - -

share of loss of associated company

(0.66) (0.22) (0.12)

income before taxes 1.41 26.80 43.34 40.18 28.86Provision for taxation (1.61) (1.53) (12.95) (8.32) (8.39)

Net profit 20.20 25.27 30.40 31.86 20.46

In vertical analysis of income statement shows that has high cost of goods sold from last years. Gross Profit of the Co has decreasing trend. This is decrease due to high cost of goods sold. Operative expense of the co has minimum portion in the income statement. Profit from operations also has decreasing trend. Share of loss of associated co also increases Income before taxes also decreases from last years. Provision for income taxes also has decreasing trend.



Calculations

Liquidity Ratios

1. Account Receivables Turnover =Net Sales /Average Receivables

Year Calculation Account Receivables

Turnover2008 12464347/30384550 41.02times2007 6419625/109205 58.782006 7955665/75201.50 105.792005 5279560/64430 81.442004 3882756/52622 73.78

2. Account Receivables turnover in days =Average Receivables/Net Sales/365

Year Calculation Account Receivables

turnover in days2008 303845500/12464347/365 8.89days2007 109205/6419625/365 6.202006 75201.50/7955665/365 3.452005 64430/5279560/365 4.452004 52622/3882756/365 4.95

3. Ending Finished Good Inventory Turnover=Cost of Goods sold / Average Ending Finish Good Inventory

Year Calculation Ending F.G Inventory2008 10528046/31643 33.27 days2007 4387640/54812 8.003 days2006 3992822/46073 8.66 days2005 3330769/26505 12.5 days2004 2497262/13252 18.84 days

4.Inventory turnover = Cost of Goods sold/Average Inventory

Year Calculation Inventory turnover2008 10528046/797732.5 13.19times2007 4387640/260713 16.832006 3992822/163640 24.402005 3330769/199766 16.672004 2497262/298538 8.36



5. Inventory Turnover in Days =Average inventory /cost of goods sold /365

Year Calculation Inventory turnover in days2008 797732.5/10528046/365 27.66 days2007 260713/4387640/365 21.692006 163640/3992822/365 14.962005 199766/3330769/365 21.892004 298538/2497262/365 43.63

6. Working Capital = Current Assets – Current Liabilities (Amount in Rupees’000) Year Calculation Working Capital 2008 19842171-12899306 =6942865 2007 19214954-7390229 =11824725 2006 9909895-6015436 =3894459 2005 4196769-3055858 =1140911 2004 2881143-2376989 =504154

7. Current Ratio= Current Assets/Current LiabilitiesYear Calculation Current Ratio2008 19842171/12899306 1.54:12007 19214954/7390229 2.60:12006 9909895/6015436 1.65:12005 4196769/3055858 1.37:12004 2881143/2376989 1.21:1

8. Quick Ratio= (Cash Equivalent + Marketable Securities+ Net Receivables)/Current Liabilities

Year Calculation Quick Ratio2008 (244080+15082605+463446)/12899306 1.22:12007 (116173+16933790+144245)/7390229 2.33:12006 (7235749+502387+969891)/8429327 1.44:12005 (6931615+67244)/6344831 0.96:12004 (5078613+5503)/4524698 0.64:1

9. Cash Ratio or Super quick ratio =Cash Equivalent +Marketable Securities /Current liabilities

Year Calculation Cash Ratio2008 (244080+185082605)/12899306 1.182007 (116173+16933790)/7390229 2.312006 (77167+8543763)/6015436 1.432005 5279560/822532.50 6.422004 3882756/504154 7.70



10. Working Capital Turn Over= Cogs/Average Working Capital

Year Calculation Working Capital Turn

Over2008 10528046/9383795 1.12times2007 4387640/7859592 0.552006 3992822/2517685 1.582005 3330769/8225320 0.402004 2497262/504154 4.9

Long Term Debt Paying Ability1. Debt Ratio =Total Liabilities/Total Assets

Year Calculation Fixed Charge coverage2008 23149658/53678098 43%2007 17821146/51744331 34%2006 15036176/34304376 44%2005 8698507/9317998 93%2004 5397564/6317055 85%

2. Debt Equity Ratio=Total Liabilities/Shareholder’s EquityYear Calculation Debt Equity Ratio2008 23149658/30528440 76%2007 17821146/33923185 532006 15036176/19268200 782005 8698507/9317998 932004 5397564/6317055 85

Profitability Ratios1. Net Profit Margin= Earning after tax (EAT)/Net Sales

Year Calculation Net Profit Margin2008 97753/12464347 7.84%2007 1636634/6419625 252006 2428028/7955665 312005 1682078/5279560 312004 794493/3882756 20

2. Total Asset Turnover = Cogs/Average total AssetsYear Calculation Total Assets Turnover2008 10528046/52711214.50 19.9 Times2007 4387640/43024353.50 10.192006 3992822/10723490.50 37.232005 3330769/14865562 32.42004 2497262/11714619 21.3



3. Return on Assets = Earning after tax + interest/Average total Assets

Year Calculation Return on Assets2008 97753/52711214.50 18.5%2007 1636634/43024353.50 3.82006 2428028/10723490.50 232005 1682078/14865562 112004 794493/11714619 6.8

4. Operating profit Margin = Earning before income and tax (EBIT)/Net Sales

Year Calculation Operating Income

Margin2008 1513505/12464347 12%2007 2202393/6419625 342006 3908802/7955665 492005 2425312/5279560 462004 1345016/3882756 35

Assets Utilization

1. Sales to Fixed Assets =Net Sales /Average Net fixed Assets

YearCalculation Sales to Fixed Assets

2008 12464347/(24231112+22250927)/2 54%2007 6419625/(7816781++22250927)/2 432006 7955665/(7816781+6954499)/2 1082005 5279560/(6954499+6294666)/2 802004 3882756/6294666 62

2. Gross profit margin=Gross profit/Net sales

Year Calculation Gross profit margin2008 1936301/12464347 15.53%2007 2031985/6419625 31.652006 3962843/7955665 49.812005 1948791/5279560 36.912004 1385494/3882756 35.68



Investment Ratios

1. Price/Earning ratio=Market price per share/ Earning per shareYear Calculation Price/Earning ratio2008 30.97/0.12 258.082007 30.97/6.43 4.812006 30.97/9.14 3.382005 30.97/7.82 3.962004 30.97/3.78 8.19


dg cement report

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