murree brewery pakistan

University of Sargodha

Department of Commerce

A Final Project of Financial Management by:

Nabeel Aslam

00 – S.S

Course Instructor: ___Prof. Zahid Ali Akbar_______

Topic: Murree Brewery

Vth Semester / Self Support

B.Com (HONS)

A Final Project of Murree Brewery

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An Introduction to Murree Brewery

Murree Brewery is the maker of Pakistan's premier beer brand, Murree Beer.

Its products are only legally available in Pakistan owing to a prohibition on the

exportation of alcohol from Pakistan. The brewery has two manufacturing

units located in Rawalpindi and Hattar (North-West Frontier Province).

The Murree Brewery produces a wide variety of Beer's, Liquor's and non

alcoholic products. Our Premium products include Murree's Millennium Beer,

Murree's Classic Beer, Lite Export Pills, Eight and Twelve years old Single

Malt Whiskies, Vintage with a blend of a Scotch Grain Whisky, Silver Top

Gin, Bolskaya Vodka and Doctor's Brandy.

“Murree Brewery, an ISO 14001 Certified Company”

History

Consequent to the British annexation of the Punjab in 1849 from Sikh rule,

and more so after 1857 when the British Crown formally extended its

sovereignty over India, a structured administration commenced in the Punjab.

To meet the beer requirements of British personnel (mainly army), the Murree

Brewery was established in 1860 and incorporated a year later at Ghora

Galli, located in the Pir Punjal range of the Western Himalayas at an

elevation of 6000' above sea level, near the resort town of Murree.

http://en.wikipedia.org/wiki/Pakistan

http://en.wikipedia.org/wiki/Beer

http://en.wikipedia.org/wiki/Rawalpindi

http://en.wikipedia.org/wiki/Hattar

http://en.wikipedia.org/wiki/North-West_Frontier_Province


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Between 1885 & 1890 the Company established Breweries in

Rawalpindi & Quetta & acquired an interest in the Oticumand (South India) &

Norailiya (Ceylon) breweries. A distillery was also established in the above

period in Rawalpindi next to the Brewery.

The Murree Brewery at Ghora Galli was therefore among the first modern

beer breweries established in Asia. Murree Beer proved to be very popular

among the British troopers who were largely barracked in the 'Galis' of these

hills.

The virtues of beer brewed from barley malt & hops as a light alcoholic

beverage were not lost on the local population who rapidly became avid

consumers.

By the turn of the 20 century, the name "Murree" was famous for its beer in

keg and bottle in the bars, beer halls and army messes of British India.

Murree Beer was first awarded a medal for product excellence at the

Philadelphia Exhibition in 1876, followed by numerous awards over the past

140 years.

In 1935, a massive earthquake totally demolished the Quetta brewery as well

as substantial part of Quetta town, killing thousands of persons, including a

number of our employees. At Ghora Galli (Murree), the scarcity of water

became an emerging problem. By the 1920s, brewing was mostly transferred

to the Rawalpindi brewery but malting continued at Ghora Galli till the 1940s,

when this property was sold. This historic brewery built in Gothic style

architecture was burnt during the partition riots of 1947/48.

Park Lodge a handsome residential properly was purchased by the company

from Mrs. H. Whymper in 1888. It was the principal residence and head office

of the company till 1959, when it was taken over by the Government of


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Pakistan to house the office of the President of Pakistan. I t

remains an office of the Head of State of Pakistan from 1960 till the present

day.

Two English families were closely connected with the founding of the original

brewery. Edward Dyer was the first General Manager of the company. He

was also the founder of Dyer Meaken breweries, Simla hills. Edward

Whymper, a member of this family was the first person to climb Matterhorn

Mountain in 1865.

The Rawalpindi brewery is blessed with deep aquifers of good water. A

railway siding was extended to the premises in the 19th century, which is now

derelict.

Under the present prohibition law, only non-Muslims and foreigners are

permitted to consume alcohol. Notwithstanding the consequent reduction in

demand, the Company decided as policy to concentrate on product

excellence. It was decided to modernize the plants.

A Ziemann (German) brew house was installed in 1967, 'Saladin' Box

Maltings in 1971. Also in the late sixties, it was decided to embark on an

ambitious long-term program to mature Malt Whiskies. Over the past four

decades white oak casks and vats have been procured from North America,

Australia and Spain

Our two underground cellars now hold over half a million liters of Malt Whisky

for varying periods of maturation up to 12 years under controlled temperature

conditions.

Another wave of modernization was undertaken in the 1990s. New beer

canning and modern bottle filling facility from Holstein and Kappert


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(Germany) was installed. Two units of alcohol rectification

columns for producing extra neutral grade of potable alcohol from Molasses

were procured from France and Italy, respectively, to give our Vodkas and

Gins a qualitative edge.

Also in this period, the beer fermentation capacities were renewed. It is

pertinent to point out that our basic beer fermentation system installed in the

1930s was then at the cutting edge of this technology. Known at the time as

the Nathan system, it incorporates fermentation and the lagering of beer in a

single double jacketed vessel. A variation of this system is now in extensive

use world wide.

Tops Food and Beverages a division of the Company was established in

1969. It processes fruits and markets fruit juices and allied food products.

Two manufacturing units are located in Rawalpindi and Hattar (NWFP)

respectively. A Tetra Pak packaging facility was added in 2001. The Hattar

plant was installed in 1992.

Vision & Mission Statements

VISION STATEMENT

Our office is in the market

MISSION STATEMENT

We the people of Murree Brewery Co. make personal commitment to first

understand our customers requirement then to meet & exceed their

expectations, by performing the correct tasks on time and every time through:


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Continuous improvement

Alignment of our Mission & goals

Responsibility and respect of our jobs and each other

Educating one another

Corporate Profiles

Company Name: Murree Brewery Company Limited

Ticker: MURE

Exchanges: KAR

2010 Sales: Not Available

Major Industry: Food & Beverages

Sub Industry: Brewers

Country: PAKISTAN

Employees: 261

Murree Brewery Company Limited is a Pakistan-based company. The

Company is principally engaged in the manufacturing of Pakistan made

foreign liquor (PMFL) including alcoholic beer, non-alcoholic beer (NAB), non-

alcoholic products (NAP), which includes juices in tetra packs in Rawalpindi

and food products, juices, glass bottles and jars in Hattar. Murree Brewery

Company Limited operates in three divisions: liquor division, which includes

PMFL, alcoholic beer, NAB, Big Apple, Lemonade, Cindy and Malt -79; tops

division, which includes food products and juices, and glass division, which

includes glass bottles and jars.


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Products & Services

Beers

Liquors


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NON ALCOHOLIC BEERS (NAB)

CARBONATED SOFT DRINKS

FRUITY MALTS

http://www.murreebrewery.com/nab.html

http://www.murreebrewery.com/CSD.html


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FRUIT JUICES

Managnemnt Officails

Mr. M. P. Bhandara (Late))

Chief Executive

Mr. Isphanyar Bhandara

Chief Executive

Phone :+92 051-5567041-7

Fax :+92 051-

5584420,5565461,5563873

Email: [email protected] &

[email protected]


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M. Javed,

General Manager, Murree

Brewery Co. Ltd.

Phone :+92 051-5567041-7

Fax :+92 051-

5584420,5565461,5563873


[email protected]

Major (R) Sabih-ur-Rehman

Special Assistant to Chief

Executive

Phone :+92 051-5567041-7

Fax :+92 051-

5584420,5565461,5563873


[email protected]

Fakher-E-Mahmood

Technical Manager

Phone : 92-(051) 5567041-7

Fax : +92 051-

5584420,5565461,5563873

M. Adbullah Zafar

Marketing Manager

Phone : + (051)5567041-7

Fax :+92 051-

5584420,5565461,5563873


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How to Buy…?

Under the laws of Pakistan Muslims are prohibited from consuming alcoholic

drinks. Non-Muslims and foreigners require consumption permit issued by

Provincial Governments and Islamabad (Capital Territory). However in most

cases a Liquor retailer will assist you in obtaining a permit.


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Murree Brewery Company

Limited - Price Analysis Snapshot

This Report features up to a ten-year record of the equity Price history for

Murree Brewery Company Limited. Tabular results include the High, Low and

Closing price for the quarter. There is also a calculation of percentage

change in price for both Quarterly and Annual periods. Price values are

adjusted for stock splits and dividends.

Murree Brewery Company Limited is a Pakistan-based company. The

Company is principally engaged in the manufacturing of Pakistan made

foreign liquor (PMFL) including alcoholic beer, non-alcoholic beer (NAB), non-

alcoholic products (NAP), which includes juices in tetra packs in Rawalpindi

and food products, juices, glass bottles and jars in Hattar. Murree Brewery

Company Limited operates in three divisions: liquor division, which includes

PMFL, alcoholic beer, NAB, Big Apple, Lemonade, Cindy and Malt -79; tops

division, which includes food products and juices, and glass division, which

includes glass bottles and jars.

Popular Culture References

The brewery was photographed and filmed by Michael Palin on his tours of the

Himalaya and is featured in his DVD and book, Himalaya (book)/Himalaya with

Michael Palin, documentary 2004. Palin stated the products of the Murree

Brewery saved his life while traveling around Pakistan, which, as a Islamic

State forbids the consumption of alcohol.


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Recent Changes in

Murree Brewery

In 1977 the Murree Brewery suffered a significant setback when Zulfiqar Ali

Bhutto imposed a total prohibition in Pakistan, to appease Islamic elements of

the electorate. Subsequently the government of General Zia-ul-Haq amended

this law, requiring anyone wishing to consume alcohol to present credentials

demonstrating that they were non-Muslim. The small Christian, Hindu and

Parsi communities were not large enough to support the enterprise, and

production had to be scaled back.

However, gradual relaxation of the prohibition laws has allowed Murree to

introduce variations of Murree beer, vodka, gin and whisky. Today, all Murree

products are readily available in legal liquor shops that operate openly in

Karachi in places like Zamzama and Defence. It is also available in the

interior of Sindh. Although the consumption of alcohol in public is still

nominally banned, it is becoming increasingly available in clubs and high-

class restaurants.

Murree Beer was initially being produced in Austria for European markets and

was available in various Pakistani and Indian restaurants, an enterprise which

has since ceased since 2004. The current CEO, Isphanyar Bhandara has

announced plans to pursue co-brewing with Fosters, but this is still in

development.


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The Murree Brewery is one of the oldest public companies of the

sub-continent. Its shares were traded on the Calcutta Stock Exchange as

early as 1902, and is now the oldest continuing industrial enterprise of

Pakistan and among the top 25 performing public companies by the Karachi

Sock Exchange.

Murree's biggest competitor is the Quetta Distillery, and its products have to

increasingly vie with smuggled brands from the West and India.

BOARD OF DIRECTORS

Chairman: Mr. Khurram Muzaffar

Chief Executive: Mr. Isphanyar M. Bhandara

Ch. Mueen Afzal

Mr. Aamir H. Sherazi

Mrs. Goshi M. Bhandara

Lt. Gen. ® Zarrar Azim

Mr. Usman Khalid Waheed

PRINCIPAL OFFICERS:

Company Secretary: Mr. M. Zaffar Iqbal

Chief Financial Officer: Mr. Ejaz Muhammad

General Manager: Mr. Mohammad Javed


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Business Manager: Mr. A. W. K. Sherwani

Acting General Manager: Mr. Talat Yaqoob Awan

AUDIT COMMITTEE

Mr. Khurram Muzaffar (Chairman)

Ch. Mueen Afzal (Member)

Mrs. Goshi M. Bhandara (Member)

AUDITORS PRINCIPAL BANKERS

M/s KPMG Taseer Hadi & Co. Bank Alfalah Ltd, Rawalpindi

Chartered Accountants. Standard Chartered Bank

The Bank of Khyber, Hattar.

Allied Bank Ltd, Lahore / Gujranwala

Profitability Analysis

The company's revenue of Rs. 4.422 billion for the period under review was 11% higher

compared to the corresponding period last year. Major reasons attributed to this increase

were robust growth in data segment and commencement of EVDO operations in major

cities. Direct costs increased by 9.7% from Rs. 3.34 billion to 3.67 billion in 1HFY’10. The

increase in direct cost was mainly due to higher depreciation charges, network maintenance

and excessive fuel consumption resulting from power outages across the country.


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Liquidity Analysis

Finance cost more than doubled from Rs. 169.022 million to Rs. 377.353

million. Due to the high direct cost and high finance, cost, there was a loss

after taxation of Rs. 407.151 million for the period under review. This

translated into a Loss per Share of Rs 0 47 as compared to LPS of Rs. 0.26

in 1HFY09.

Winding up of the subsidiary "Worldcall Telecommunications Lanka (Pvt.)

Limited" is in process. The subsidiary has been accounted for as

discontinued operations. Loss for 1 discontinued operation was Rs. 5.869

million.

There was an increase in current assets from Rs. 4.1 FY09 to Rs. 4.847

billion in 1HFY10 mainly due to the] trade debts. Current maturities of non-

current liabilities by 21% while trade and other payables increased by 81%;

increasing the current liabilities by 46% from Rs. 5.309 bill Rs. 7.731 billion

in 1HFY10.

Asset Management Analysis

The company recorded a 62% increase in its revenue from Rs. 5196 million

to Rs. 8408 million in FY-09. This increase was mainly contributed by the

LDI Long Distance and International segment where the company was

successfully able to strengthen its operations and attract healthy volumes of

traffic. Direct Costs increased from Rs. 3807 million to 7037 million due to

the higher ATC rates that prevailed during the year as compared to the

previous year as well as higher depreciation charges of Rs. 1110 million

which increased due to significant enhancement in infrastructure and

equipment. Even though the company managed to make an operating profit

of Rs. 15.36 million as compared to an operating loss of Rs. 302.55 million,


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the profit was eroded by the high depreciation costs and high

finance costs leading to a net loss of Rs. 490.82 million for FY09. The gross

margin decreased from 19.23% to 16.31% while net profit margin improved

from -6.93% « to 5.84% in FY09. Return on Asset and return on equity also

deteriorated from their previous levels to -2.24% and - 4.25%. If the

financial costs are controlled, the profitability of the company can be

improved.

The liquidity position of the company has been deteriorating over the years.

The current ratio dropped from 1.15 to 0.80 in FY-09. Current assets

increased from Rs. 3427.9 million to Rs. 4262.1 million in FY09, an increase

of 24%. Major increase was t seen in trade debts from Rs. 975.89 million to

2116.74 million. Current liabilities showed an increase of 78% from Rs.

2980.2 million to 5309.98 million in FY09. Large portion non-current

liabilities matured this year amounting to Running finance also increased to

Rs. 1046 million payables increased to Rs. 2239 million. The company

should take measures to improve its liquidity as it has already entered

danger zone.

The asset management of MURREE BREWERY has improved over the

Days Sales Outstanding and Days Inventory outstanding hail showed a

decline to 8 days and 67 days respectively, reducing the operating cycle.

Total asset turnover increased from 21% in FY-08 to 37% in FY09. This can

be attributed to the sharp rise in revenue. Sales to equity increased from

0.34 to 0.74. The increased turnover ratios show that the company is

efficiently using its assets and equity to generate the revenue.

The debt management ratios indicate that the company is mostly financed

through equity financing. Debt to asset ratio has slightly increased to 0.28 in

FY09. Debt to equity has increased over the year to 0.55 where as long


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term debt to equity has declined to 0.30 implying that long-term

debt has decreased as compared to last year. TIE ratio has improved to

0.03 from -1.85 in FY08. It shows that the company is still not in a position

to cover its high finance costs. Measures should be taken to control these

costs.

Debt Management Analysis

The decline in profitability of the company in FY09 took its toll on Earnings

per Share, resulting in a 63% drop in EPS, bringing it down to Rs. -0.51 for

the year.

The company's stock performance has not been very impressive for the

year, as depicted in the graph. The stock remained below the KSE 100

Index for the larger part of the year.

Future Outlook Analysis

Telecom has become a highly competitive sector and the strategy of the

company plays a very important role in the success of that company.

MURREE BREWERY is focusing on increasing the share of data services in

its product portfolio. With the growing popularity of cable and advertisement

business segment; it also has plans to add nearly 30% new house passes

to its network in the coming year.

Furthermore, the intense competition in the voice market along with profits

attrition due to price wars has negatively affected the sets segment. Mobile

substitution factor has put downward pressures on revenues and margins.

Steps need to be taken to win customers justly loyalty and ensure steady

streams of revenue from existing customers. Implementation of various USF

projects will also be r the accomplished by the year-end.


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Tabular Analysis

2006 2007 2008 2009

Liquidity

Current Ratio 1.94 1.23 2.15 0.80

Asset Management

Inventory

Turnover 3 4 11 8

Days Sales

Outstanding 59 68 79 67

Total Asset

Turnover 0.28 0.25 0.21 0.37

Sales /

Equity 0.39 0.36 0.37 0.74

Profitability

Gross Profit

Margin 0.37 0.39 0.19 0.16

Net Profit

Margin 0.22 0.14 (0.07) (0.06)

Return on 0.06 0.04 (0.02) (0.02)


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Analysis of Financial Statements by Ratio Technique

Ratios Analysis

The ratios analysis is one of the most powerful tools of financial

management. Though ratios are simple to calculate and easy to understand,

they suffer from serious limitations.

Asset

Return on

Equity 0.08 0.05 (0.03) (0.04)

Debt Management

Debt / Asset 0.14 0.14 0.24 0.28

Debt / Equity 0.20 0.20 0.43 0.55

Long – Term

Debt / Equity 0.11 0.09 0.35 0.30

Times

Interest

Earned

3.32 2.00 (1.85) (0.03)

Market Value

Earnings per

Share 1.28 0.83 (0.35) (0.57)


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1) Limitations of financial statements: Ratios are based only

on the information which has been recorded in the financial

statements. Financial statements themselves are subject to several

limitations. Thus ratios derived, there from, are also subject to those

limitations. For example, non-financial changes though important for

the business are not relevant by the financial statements. Financial

statements are affected to a very great extent by accounting

conventions and concepts. Personal judgment plays a great part in

determining the figures for financial statements. Comparative study

required: Ratios are useful in judging the efficiency of the business

only when they are compared with past results of the business.

However, such a comparison only provide glimpse of the past

performance and forecasts for future may not prove correct since

several other factors like market conditions, management policies, etc.

may affect the future operations.

2) Ratios alone are not adequate: Ratios are only indicators; they cannot

be taken as final regarding good or bad financial position of the

business. Other things have also to be seen.

3) Problems of price level changes: A change in price level can affect the

validity of ratios calculated for different time periods. In such a case

the ratio analysis may not clearly indicate the trend in solvency and

profitability of the company. The financial statements, therefore, be

adjusted keeping in view the price level changes if a meaningful

comparison is to be made through accounting ratios.

4) Lack of adequate standard: No fixed standard can be laid down for

ideal ratios. There are no well accepted standards or rule of thumb for

all ratios which can be accepted as norm. It renders interpretation of

the ratios difficult.


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5) Limited use of single ratios: A single ratio, usually, does

not convey much of a sense. To make a better interpretation, a

number of ratios have to be calculated which is likely to confuse the

analyst than help him in making any good decision.

6) Personal bias: Ratios are only means of financial analysis and not an

end in itself. Ratios have to interpret and different people may

interpret the same ratio in different way.

7) Incomparable: Not only industries differ in their nature, but also the

firms of the similar business widely differ in their size and accounting

procedures etc. It makes comparison of ratios difficult and misleading.

CURRENT RATIO:

Current ratio may be defined as the relationship between current assets and

current liabilities. This ratio is also known as "working capital ratio". It is a

measure of general liquidity and is most widely used to make the analysis

for short term financial position or liquidity of a firm. It is calculated by

dividing the total of the current assets by total of the current liabilities.

[Current Ratio = Current Assets / Current Liabilities]

Limitations of Current Ratio

This ratio is measure of liquidity and should be used very carefully because

it suffers from many limitations. It is, therefore, suggested that it should not

be used as the sole index of short term solvency.

1) It is crude ratio because it measures only the quantity and not the

quality of the current assets.

2) Even if the ratio is favorable, the firm may be in financial trouble,

because of more stock and work in process which is not easily


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convertible into cash, and, therefore firm may have less

cash to pay off current liabilities.

3) Valuation of current assets and window dressing is another problem.

This ratio can be very easily manipulated by overvaluing the current

assets. An equal increase in both current assets and current liabilities

would decrease the ratio and similarly equal decrease in current

assets and current liabilities would increase current ratio.

The MURREE BREWERY current ratio is continuously decreasing from

2006 to 2009 and it is near to become insolvent the favorable current ratio is

2:1. And now in current position company is not able to fulfill its current

liabilities. Company’s trade debts are also continuously increasing from

2006 to 2009. It means company is investing more on trade debtors and

company current liabilities dramatically increases in 2009 which is also a

cause of unfavorable current ratio.

STOCK / INVENTORY TURNOVER RATIO

Stock turn over ratio and inventory turn over ratio are the same. This ratio is

a relationship between the cost of goods sold during a particular period of

time and the cost of average inventory during a particular period. It is

expressed in number of times. Stock turn over ratio / Inventory turn over

ratio indicates the number of time the stock has been turned over during the

period and evaluates the efficiency with which a firm is able to manage its

inventory. This ratio indicates whether investment in stock is within proper

limit or not.

[Inventory Turnover Ratio = Cost of goods sold / Average inventory at cost]


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The MURREE BREWERY inventory turnover ratio continual

increases till 2008 and in 2009 is little decreases, its means company is

managing its inventory. Its inventory is in a better way or it is effic iently

utilizing its inventory. It also means that company has a better control on

their direct cost.

DAYS SALE OUT STANDING

Formula will be as:

Days Sale Out Standing = Days in a Year / Receivable Turnover

Its means the period in which receivables convert into cash and this period

is also continuously increasing till 2006 to 2008 and little decreases in 2009.

It means the company credit policy is linear and company is more investing

into the bounding and company is not efficient converting receivables into

cash due to more receivables, the company current ratio is little stable

which is not a good sign for the MURREE BREWERY.

TOTAL ASSET TURNOVER RATIO

The Total Asset Turnover Ratio describes the efficient use of assets in the

specific time period. The formula for this ratio is:

Total Asset Turnover = Cost of Goods Sold / Total Assets

The MURREE BREWERY total assets turnover is continuously decreasing

from 2006 to 2008 and a significant improvement happen in 2009, the

improvement in this ratio is happen due to the company’s revenues or sales

increasing very fastly in 2009 on important factors in this ratio is also this

that company fix assets are also significantly increasing year to year.


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SALES TO EQUITY RATIO

The Sales to Equity-Ratio explains the sales turnover with respect to the

Shareholder’s Equity. Formula will be as:

Sales to Equity Turnover = Net Credit Sales / Shareholder’s Equity

The MURREE BREWERY sales to equity ratio have a little fluctuation from

2006 to 2008 but it’s rapidly increases in 2009. The main factor in this ratio

is that the company sales have little fluctuations in 2006 to 2008 but sales in

increasing very fastly in 2009. So, this ratio also improves in 2009.

GROSS PROFIT MARGIN

Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed

as a percentage. It expresses the relationship between gross profit and

sales. Following formula is used to calculate gross profit ratios:

[Gross Profit Ratio = (Gross profit / Net sales) × 100]

The MURREE BREWERY Gross Profit Margin significantly decreases in

2008 & 2009. It main reason is that company direct cost increases greatly in

2009. The sales also an increase in 2009but the %age increases in direct

cost was very high then %age increase in sale. So, as a result gross profit

margin became unfavorable in 2008 and 2009.

NET PROFIT MARGIN

Net profit ratio is the ratio of net profit (after taxes) to net sales. It is

expressed as percentage.

[Net Profit Ratio = (Net profit / Net sales) × 100]


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The MURREE BREWERY net profit margin shows a very bad

picture company’s net profits decreases in 2006 and 2009. It shows also in

2008 & 2009 due to following reasons:

1) Company have no control on their finance cost

2) Company have no control on their operating cost

3) Increases in other expenses are also contributing in unfavorable net

profit margin

RETURN ON ASSETS (ROA)

The Return on Assets describes the return that we get on our assets.

Formula for this ratio is as:

ROA = Total Assets / Shareholder’s Equity

The MURREE BREWERY return on asset ratio is also having a bad picture

and which is sharing loss in 2008 and 2009. Its means MURREE

BREWERY management is not effective in generating profit with available

assets. The main reason behind unfavorable return on asset is this that

although the company total assets increases year by year but due to heavy

loss in 2008 and 2009. The company this position is unfavorable by nature.

RETURN ON EQUITY (ROE)

In real sense, ordinary shareholders are the real owners of the company.

They assume the highest risk in the company. (Preference share holders

have a preference over ordinary shareholders in the payment of dividend as

well as capital. Preference share holders get a fixed rate of dividend

irrespective of the quantum of profits of the company). The rate of dividends

varies with the availability of profits in case of ordinary shares only. Thus

ordinary shareholders are more interested in the profitability of a company


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and the performance of a company should be judged on the

basis of return on equity capital of the company. Return on equity capital

which is the relationship between profits of a company and its equity can be

calculated as follows:

Return on Equity Capital = [(Net profit after tax − Preference dividend) /

Equity share capital] × 100

In ROE (return on equity) ratio company response towards its shareholder’s

wealth is also bad company is unable to give dividend to their shareholders

in 2008 & 2009. And, loss is showing in 2008 & 2009 is also in current

position company’s shareholders are facing loss on their investment.

DEBT TO TOTAL ASSET RATIO

This ratio describes the debt burden on the firm’s assets. Formula will be as:

Debt to Total Asset Ratio = Total Debt / Total Assets

The MURREE BREWERY debt to total asset ratio indicates that the

company’s less portion is financed from total debt and it is mostly financed

through shareholder’s equity and this ratio is constant in 2006 and 2007 and

then this ratio increases little fastly in 2008 & 2009.

DEBT TO EQUITY RATIO

This ratio explains the total debt burden on the shareholder’s equity.

Formula will be as:

Debt to Equity Ratio = Long – Term Debt / Shareholder’s Equity

The MURREE BREWERY debt to equity ratio remains constant in 2006 and

2007 then it’s fastly increases in 2008 and 2009. This happen because

company long-term debts decreases in 2009 which mean management of


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MURREE BREWERY handle their long-term finance very well

in 2009. This ratio also indicates that the now company is more depending

on their shareholder’s equity rather than long-term debt.

TIME INTEREST EARNED RATIO

Interest coverage ratio is also known as debt service ratio or debt service

coverage ratio. This ratio relates the fixed interest charges to the income

earned by the business. It indicates whether the business has earned

sufficient profits to pay periodically the interest charges. It is calculated by

using the following formula.

[Interest Coverage Ratio = Net Profit before Interest and Tax (EBIT) / Fixed

Interest Charges]

The MURREE BREWERY’s time to interest earned ratio decreases in 2007

then its shows loss in 2008 and its shows very little improvement in 2009 as

compare to the 2008 loss. This ratio is overall indicates that company at this

time is not in a position to cover its interest expenses.

EARNING PER SHARE (EPS)

Earnings per share ratio (EPS Ratio) are a small variation of return on

equity capital ratio and are calculated by dividing the net profit after taxes

and preference dividend by the total number of equity shares. The formula

of earnings per share is:

[Earnings per share (EPS) Ratio = (Net profit after tax – Preference

dividend) / No. of equity shares (common shares)]


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Index Analysis

2006 2007 2008 2009

Non – Current Assets

Tangible Fixed Assets

Property Plans Equity 100 127.95 149.04 202.73

Capital Work-in-Progress 100 200.76 222.82 172.6

100 137.36 158.58 198.83

Intangible Assets 100 97.46 103.76 98.7675

Investment Deposits 100 127.39 134.48 134.48

Long-Term Investment (at cost) 100 58.71 51.42 -

Long-Term Deposits 100 111.85 55.03 34.45

Deferred Costs 100 46.97 - -

100 120.18 133.78 153.92

Current Assets

Store & Spares 100 194.73 165.54 916.97

Stock in Trade 100 160.44 414.33 830.35

Trade Debts 100 128.117 128.41 301.77

Loans & Advances (considered good) 100 85.9 161.14 439.8

Short-Term Deposits & Pre-Payments 100 93.34 122.49 95.23

Other Receivables 100 74.65 42.54 2.89

Short-Term Investment 100 72.77 73.26 48.23

Income Tax Recovered (net) 100 - - -

Cash & Bank Balances 100 38.58 58.44 23.11


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74.81 84.21 110.13

Current Liabilities

Current Maturities of Non-Current Liabilities 100 94.15 40.74 234.14

Running Finance under Markup Offering 100 192.32 24.48 382.73

Trade & Other Payables 100 122.88 120.69 264.8

Interest & Markup Accrued 100 93.7 219.27 486.13

Provision for Tax 100 - - -

Net Current Assets 100 114.64 72.52 259.29

100 30.03 97.34 -57.5

Non-Current Liabilities

Term Finance Certificates (secured) 100 686.96 6486.74 6741.99

Long Term Finance 100 62.43 26.33 -

Deferred Taxation 100 139.59 148.8 83.36

Retirement Benefits 100 141.58 190.76 251.98

Liabilities 30against Assets subject to Financial

Lease 100 110.47 63.15 10.55

Long Term Payable 100 2142.26 1914.64 33943.8

Long Term Deposits 100 78.38 5069.59 95.41

License Fee Payable 100 114.33 129.45 -

Contingencies & Commitments 100 112.63 209.26 231.54

100 107.34 110.08 101.32

Shared Capital & Reserves

Authorized Capital {775,000,000

(2005:350,000,000) ordinary share price Rs. 10

each

100


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In MURREE BREWERY’s Index Analysis we see that a tangible fixed asset

increases significantly from base year. This happen due to heavy increases

in the value of plant & equipment and capital work in progress shows a little

decrease in 2009. MURREE BREWERY non-current assets do not show a

positive improvement regarding to the base year. In this there was no any

differed cost in 2008 & 2009, long-term deposits increases in 2008 but then

they continuously decreases in 2008 & 2009. MURREE BREWERY long-

term investment decreases and then it will be finished in 2009. Intangible

assets and investment property also shows a fluctuating position. MURREE

BREWERY current assets Index analysis also show many ups & downs

regarding to base year company cash and bank balance small show a

decreasing position regarding to base year. Short-term Investment & other

receivables well company trade debt also increases continuously regarding

to base year which may be due to linent credit policy of MURREE

BREWERY. MURREE BREWERY stock in trade and stores spare shows a

healthy position regarding the base year. In current liability we are not that a

large increase in interest and markup happen there is no any provision for

tax of company regarding to base year. Company trade and other payable

also increased in a huge ratio regarding to base year. In MURREE

BREWERY non-current liabilities term financed certificates increases

dramatically however long – term finance reduced and finished in 2009

company liabilities against assets also decreased which having a look at

Issued Subscribes & Paid-up Capital 100 115 131.59 131.59

Share Premium 100 29.52 60.16 60.16

Convertible Loan Reserve 100 100.22 - -

Accumulated P & Loss 100 132.85 136.81 88.24


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MURREE BREWERY revenue regarding to base year. We see

that company revenue continuously increases till 2009 and company direct

cost increases in high ratio in 2009 due to which gross profit of 2009

managed by management of MURREE BREWERY in 2009. MURREE

BREWERY operating profit is also continuously decreasing till 2009.

Company finance cost is also showing continuously increases. In Index

Analysis, we see that company is facing a loss before tax in 2009 and this

loss more increases after taxation regarding to base year.

COMMON – SIZE ANAYLSIS

The Balance Sheet

2006 2007 2008 2009

Non - Current Assets

Tangible Fixed Assets

Property Plans Equity 37.5 43.97 45.93 53.08

Capital Work-in-Progress 5.5 10.24 10.19 6.7

43.08 54.21 56.12 59.78

Intangible Assets 30.31 27.06 25.83 20.89

Investment Deposits 0.35 0.41 0.39 0.33

Long-Term Investment (at cost) 0.62 0.33 0.26 -

Long-Term Deposits 0.01 1.28 0.56 0.3

Deferred Costs 0.06 0.02 - -

75.69 88.34 83.34 81.31

Current Assets


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Store & Spares 0.21 -0.38 0.29 1.39

Stock in Trade 0.13 0.2 0.46 0.79

Trade Debts 4.4 5.17 4.64 9.27

Loans & Advances (considered good) 0.84 0.66 1.11 2.58

Short-Term Deposits & Pre-Payments 1.19 1.02 1.2 0.79

Other Receivables 3.4 2.36 1.2 0.06

Short-Term Investment 4.92 3.28 2.96 1.65

Income Tax Recovered (net) 0.33 0.52 0.62

Cash & Bank Balances 9.12 3.22 4.37 1.47

24.3 16.65 16.81 18.68

Current Liabilities

Current Maturities of Non-Current Liabilities 4.98 -4.3 1.66 8.14

Running Finance under Markup Offering 1.71 3 0.34 4.58

Trade & Other Payables 5.3 5.97 5.26 9.81

Interest & Markup Accrued 0.21 0.18 0.38 0.73

Provision for Tax 0.63 - - -

Net Current Assets 12.86 13.5 7.66 23.27

11.44 3.14 9.15 -4.59

Non-Current Liabilities

Term Finance Certificates (secured) 0.3134 -1.97 16.7 14.74

Long Term Finance 6.81 3.89 1.33 -

Deferred Taxation 2.99 3.83 3.66 1.74

Retirement Benefits 0.43 0.56 0.68 0.77


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In MURREE BREWERY common size analysis we see an overall increases

in non-current assets from 2006 to 2009 due to better asset position

property, plan & equipment were little few in 2009. An intangible asset

shows a significant improvements in 2006 company deferred cost remains

low in 2009. Coming towards current assets we see that stock & spare were

better in 2009company trade debt level was high in 2007 and 2009, loan

and advances also show an increase in 2008 band 2009, short – term

deposits and prepayments remain constant in 2007 and 2008. The overall

current assets of MURREE BREWERY are high in 2006 are constant in

2007 and 2008 and are little low in 2009. The total current liabilities under

Liabilities against Assets subject to

Financial Lease 1.1 1.1161 0.57 0.08

Long Term Payable 0.03 0.77 0.61 9.31

Long Term Deposits 0.47 0.34 0.27 0.19

License Fee Payable 4.43 4.64 4.71 -

Contingencies & Commitments 16.61 17.14 28.56 26.85

70.52 69.34 63.77 49.87

Shared Capital & Reserves

Authorized Capital {775,000,000

(2005:350,000,000) ordinary share price

Rs. 10 each

Issued Subscribes & Paid-up Capital

Share Premium

Convertible Loan Reserve

Accumulated P & Loss


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common size analysis are high in 2009. It non-current liabilities

long-term finance was high in 2006 but they were very low in 2009. The

overall non-current assets of MURREE BREWERY were high in 2006 and

were low in 2009. Now, if we make a look at income statement under Index

Analysis, we see an increase in direct cost in 2008 and 2009. The operating

cost was high in 2006 but was controlled by management of MURREE

BREWERY in 2009 operating profit was little improves in 2007 under Index

Analysis but reached approximately to zero in 2009. The finance cost was

high in 2006 but was also controlled in 2009. MURREE BREWERY receive

profit before taxation. In 2006, 2007, 2008 & 2009 MURREE BREWERY

receive the loss in 2009 but after taxation MURREE BREWERY bears a

heavy loss in 2009.

murree brewery pakistan

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