project on azgard9

By: Yasir Rehman

CHAPTER: 01

INTRODUCTION AND HISTORY OF THE COMPANY

THIS CHAPTER COVERS

1. Mission Statement Of the Company

2. Vision Statement Of the Company

3. Introduction of the Azgard Nine

4. History of Azgard Nine

5. History in a graph

6. Corporate Affairs

7. Company Information

8. Registered Offices

9. Business Strategy

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By: Yasir Rehman

TEXTILE INDUSTRY OF PAKISTANWhen we think of manufacturing industry in Pakistan, it is the textile industry that

immediately comes to mid that is playing an important position in terms of the

employment generation and value added special contribution towards the exports. The

textile industry which is endowed its strong base of raw material has started its journey

from non existence in 1947 with meager size of 78000 spindles and merely 3000 looms

that is too in the unorganized sector, with only one textile unit and it could supply only

8% of the domestic demand derived from its population of 76 million people.

The industry has gone through a long way and now possesses 443 units, 8.4 million

spindles and 166,000 rotors, 20,000 shuttles less looms, 200,000 power looms, over 600

processing units and over 2500 garments units. The table given on the next page shows

the contributions of textile sector in the economic development of the country.

Economic Environment

The textile industry is one of the most important sectors of Pakistan. It contributes

significantly to the country's GDP, exports as well as employment. It is, in fact, the

backbone of the Pakistani economy.

Established capacity

The textile industry of Pakistan has a total established spinning capacity of 1550 million

kgs of yarn, weaving capacity of 4368 million square metres of fabric and finishing

capacity of 4000 million square metres. The industry has a production capacity of 670

million units of garments, 400 million units of knitwear and 53 million kgs of towels.

The industry has a total of 1221 units engaged in ginning and 442 units engaged in

spinning. There are around 124 large units that undertake weaving and 425 small units.

There are around 20600 power looms in operation in the industry. The industry also

houses around 10 large finishing units and 625 small units.

Pakistan's textile industry has about 50 large and 2500 small garment manufacturing

units. Moreover, it also houses around 600 knitwear-producing units and 400 towel-

producing units.

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By: Yasir Rehman

Contribution to exports

According to recent figures, the Pakistan textile industry contributes more than 60% to

the country's total exports, which amounts to around 5.2 billion US dollars. The industry

contributes around 46% to the total output produced in the country.

In Asia, Pakistan is the 8th largest exporter of textile products.

Contribution to GDP and employment

The contribution of this industry to the total GDP is 8.5%. It provides employment to

38% of the work force in the country, which amounts to a figure of 15 million. However,

the proportion of skilled labor is very less as compared to that of unskilled labor.

TEXTILE INDUSTRY’S ECONOMIC CONTRIBUTION

DESCRIPTION CONTRIBUTION

EXPORTS64% OF TOTAL EXPORTS (US $ 4.9

BILLION)

MANUFACTURING 46% OF TOTAL MANUFACTURING

EMPLOYMENT 38% OF TOTAL EMPLOYMENT

INVESTMENT 31% OF TOTAL INVESTMENT

MARKET CAPITALIZATION 7% OF TOTAL MARKET

CAPITALIZATION

INTEREST Rs. 4 BILLION PER ANNUM

SALARIES AND WAGES Rs. 40 BILLION PER ANNUM

CONTRIBUTION TO RESEARCH

AND DEVELOPMENT

Rs. 116 MILLION PER ANNUM

GROSS DOMESTIC PRODUCT (GDP) 8.5% OF TOTAL GDP

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By: Yasir Rehman

Textile Industry Brief

PARTICULARS DESCRIPTIONS

Sector Textile Industry

Sector Life Cycle Growth stage

Type of Industry Cyclic

Growth rate 27.86%

Historical Performance

Textile industry would be able to maintain its competitive

advantage in this field for the yards to come (Pakistan is the

fourth largest denim producer in the world with an annual

production of 200,000,000 meters). This has now been

achieved and Azgard9 in able to offer these services as a

single source supplier for all denim and specialized yarn

customers. Textile industry is fast growing industry, being

aided by Government of Pakistan, as it is associated with

Yarn.

ThreatsSupplier (Row material), Consumer (Less purchasing power),

Political instability

Risks & mitigationInflation rate, Interest rate, Environmental problems, Political

instability

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By: Yasir Rehman

CORPORATE INFORMATION

BOARD OF DIRECTORS

1. Mr. Mueen Afzal (Chairman)

2. Mr. Ahmed H. Shaikh (Chief Executive)

3. Chief Justice (Retd.) Mian Mahboob Ahmad

4. Mr. Aehsun M.H. Shaikh

5. Mr. Ali Jehangir Siddiqui

6. Mr. Khalid A.H. Al-Sagar

7. Mr. Mohammed Khaishgi

COMPANY SECRETARY

1. Mr. Muhammad Ijaz Haider

CHIEF FINANCIAL OFFICER

2. Mr. Abid Amin

AUDIT COMMITTEE

3. Chief Justice (Retd.) Mian Mahboob Ahmad

4. Mr. Mueen Afzal

MANAGEMENT TEAM

5. Mr. Ahmed H. Shaikh

6. Mr. Tariq Mohammad Khan

7. Mr. Abid Amin

8. Mr. Irfan Nazir

9. Mr. Tahir Munir

10. Mr. Atif Farooqi

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By: Yasir Rehman

11. Mr. Usman Rasheed

FINANCE COMMITTEE


13. Mr. Ali Jehangir Siddiqui


15. HUMAN RESOURSE COMMITTEE



18. Mr. Salim Khan

BANKERS

19. JS Bank Limited

20. MCB Bank Limited

21. Citibank N.A.

22. ABN Amro Bank

23. Faysal Bank Limited

24. Habib Bank Limited

25. Saudi Pak Industrial & Agricultural

26. Investment Company (Private) Limited

27. The Hong Kong and Shanghai

28. Banking Corporation

29. United Bank Limited

30. Standard Chartered Bank Pakistan Limited

31. NIB Bank Limited

32. National Bank of Pakistan

33. Allied Bank Limited

34. My Bank Limited

35. KASB Bank Limited

36. Pak Oman Investment Company

37. Saudi Pak Commercial Bank

LEGAL ADVISORS

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By: Yasir Rehman

38. Hamid Law Associates

AUDITORS

39. Rahman Sarfaraz Rahim Iqbal Rafiq (Chartered Accountants)

40. TAX ADVISORS

Faruq Ali & Co. Chartered Accountants

REGISTERED OFFICE

41. Ismail Aiwan-e-Science Off Shahrah-e-Roomi Lahore, 54600 Ph:

+92 (0)42 111-786-645 Fax: +92 (0)42 5761791

Unit I

42. 2.5 KM off Manga, Raiwind Road, District Kasur. Ph: +92 (0)42

5384081 Fax: +92 (0)42 5384093

Unit II

43. Alipur Road, Muzaffargarh. Ph: +92 (0)661 422503, 422651 Fax:

+92 (0)661 422652

Unit III

44. 20 KM off Ferozepur Road, 6 KM Badian Road on Ruhi Nala

Der Khurd, Lahore. Ph: +92 (0)42 8460333, 8488862

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By: Yasir Rehman

INTRODUCTION Of AZGARD NINE

The Origins and the inception in the ancient legend “AZGARD” was one of none worlds

in Norse Mythology- it was protected by “Heimdall” the son of nine different Mothers

each attributing him with a particular skill and power – and thus He would protect Azgard

from the powers that be.

The significance of nine for our company is not just based on this Mythology but also

connected with the auspicious nature of this number throughout many different elements

in and out of the world today that is an auspicious and important number in Indian,

Chinese, Japanese and Greek cultures for various different reasons.

In Chinese culture the number Nine represents ‘Change’ and ‘Transformation’, as in the

case with Azgard Nine which is changing and Transforming itself into an entity with new

goals, aspirations and targets.

Nine in much of ancient Greek methodology also has represented gestation and

fulfillment of creation as it does for us at Azgard Nine. The ‘fulfillment of creation’ for us

being the forming of this global entity by nine members on the ninth day of February

sowing the seeds for an auspicious and rewarding future.

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By: Yasir Rehman

The Azgard Nine Limited Group was started as a family business over four

generations ago. The Sheikh family, Now in its Forth generation, in one of the

oldest business families in the sub continent with experience in many different

sectors and having a proven track record of successful leadership in four

continents. The gamily began its first operations in 1886 in shamkot, in the Asian

sub continent.

Although, now, A Public company the family still remains behind the

company in everyway, supporting and nurturing its growth into the future and

beyond.

The current specialized yarn operation was set up in 1972 with the open end

spinning and denim weaving operations following in 1995. The final frontier was

the garments operation, which came in to being in 1997.

The concept behind the group’s textile ambitions was to be a fully vertical

apparel solution provider based in a country that would be able to maintain its

competitive advantage in this field for the yards to come (Pakistan is the fourth

largest denim producer in the world with an annual production of 200,000,000

meters). This has now been achieved and Azgard in able to offer these services as

a single source supplier for all denim and specialized yarn customers.

The future is squeezing the brand customers toward a sourcing solution that

stems from as small a global map as will allow. We believe it is feasible, in order

to not be spread too thin’, to consolidate a position in as few regions as possible in

the quest of r practical and economical global sourcing – Azgard Nine limited is

that perfect vehicle which can accommodate and achieve this position, therefore

realizing the vision that was incepted so many years ago by the guardians of the

Azgard group bring the resultant advantages to you the customer.

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By: Yasir Rehman

MISSION

TEXTILE & APPAREL

TO RETAIN A LEADERSHIP

POSITION AS THE LARGEST VALUE ADDED

DENIM PRODUCTS COMPANY IN

PAKISTAN

VISION

TEXTILE & APPAREL

TO BECOME A MAJOR

GLOBAL FASHION APPAREL

COMPANY

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By: Yasir Rehman

Business Strategies

Ginning

In Pakistan Cotton processing industry has catered to low quality products (lint, yarn and

fabric) over the past few decades. Whereas the Azgard9 producing well quality and

standard denim garments in Pakistan and export good quality products. Azgard9 is one

of the largest firms in the textile sector with good market share.

Ginning is the first mechanical process involved in the processing of cotton. During the

process lint (fibre) is separated from seed to cotton. The ginning industry has

mushroomed in the cotton growing area of Pakistan informally, without adequate

regulations. There are 1,221 ginning factories in the country with installed capacity of

more than one billion bales on a single shift basis and a total capacity of around 20

million bales on three shift bases, part of which lies unutilized. Out of 1,221 ginning

units, 75 percent are based in Punjab and 22 percent in Sindh and only 700-800 units are

operational with an average production of about 10 million bales per year.

Changing global demands and textile market profiles are demanding a shift to quality

products. In this, the ginning factory plays a pivotal role for determining quality of

cotton fibre as raw material for downstream industry. Yet this component of local textile

industry is the most neglected and antiquated.

Most Pakistani cotton continues to carry an unacceptable level of contamination. This

phenomenon is clearly reflected in the rising volume of imports from countries who

produce contamination free cotton or longer staple cotton which the saw gins of Pakistan

cannot handle.

By having an efficient raw material, Pakistan has the chance to produce textile products

of better quality and more economically by saving freight costs and avoiding supply

shortages as well as time lags. Unless up-gradation of this industry is undertaken, it

would not be possible to remain competitive in export markets.

Spinning sector

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By: Yasir Rehman

This is the first process that adds value to cotton by converting into a new product i.e.

conversion from ginned cotton into cotton yarn. If spinning industry produces sub-

standard yarn, its effect goes right across the entire value chain.

Pakistan has the third largest spinning capacity in Asia with a spinning capacity of 5% of

the total world and 7.6% of the capacity in Asia and an annual growth rate of 6.2%,

while Azgard9 has the fifth largest spinning capacity in Pakistan. At present, cotton-

spinning sector is comprised of 458 textile units (50 composite units and 408 spinning

units). Almost 70 percent of total production is consumed in local industry and the rest is

being exported.

Major share holders of machinery market in this sector are Switzerland (Rieter),

Germany, Japan and China respectively.

Weaving & Made-up sector

The weaving sector is one of the most important sub-sectors. The exports of woven

fabrics and other related woven made-ups comprise a major portion of textile exports

from Pakistan. The weaving sector can be broadly classified into three main segments:

a. Composite Weaving units

b. Independent Shuttle less weaving units

c. The power Loom sector

Investments have taken place in shuttle less loom, both in integrated and in-dependent

weaving sector. During the period of 1999 – 2009 an investment of approximately USD

0.93 billion and USD 0.61 billion has been made in weaving and made-up sector

respectively. Further investment in this sector will be forthcoming in the medium term.

a. Composite Weaving Units:

The composite weaving units comprise of integrated textile mills having their own

spinning and dyeing facility. A total of fifty such units currently exist with an installed

capacity of about 10,416 Looms. Recent phenomenon of induction of shuttle-less looms,

viz. Projectile and Air jet looms, in this sector is a healthy sign. As a pace of investment

in-crease, the number of modern looms in this sector is on increase. However, the textile

millers still prefer to setup an independent weaving unit rather than integrated ones.

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By: Yasir Rehman

b. Independent Shuttle less looms:

This is a new segment of weaving units, which is in the process of coming up on the

same pattern as independent spinning units. Motivated by market demand and

government incentives as well as shift towards high quality fabrics. The entrepreneurs

are establishing independent weaving units with shuttle-less looms. These looms are both

second hand and new ones and employ the modern technology of rapier, projectile and

air-jet looms.

c. The Power looms sector:

The Power loom sector has modernized and registered a robust growth over the two

decades. The growth in Power loom sector is to a larger extent a result of the government

policies pursued, as well as increased demand for the product. This sector is producing

comparatively low value added grey cloth of mostly inferior quality. The problem of the

Power loom sector revolve around access to credit facilities to modernize their

equipment as well as purchase of yarn especially when prices of yarn increase and the

prices of cloth increase with a time lag.

There is a need for training facilities and guidance to diversify their products, especially

to cater to the needs of the garment industry.

1.6.4 Knitting

The knitting (hosiery) is playing a pivotal role in the value addition of the textile sector.

There are about 18,000 Knitting Machines spread all over the country producing 80

million dozens of knitwear. The capacity utilization is approximately 70%. There is

greater reliance on the development of this industry as there are substantial value

additions in the form of knitwear. The products made in Pakistan includes T-Shirts,

jogging suits, jerseys, pyjamas, sport shirts, children wear, gloves, nightgowns,

tracksuits, sweaters and socks etc.

The knitwear industry is export oriented and highly value added. The bulk of knitwear

garments are mainly exported to developed countries like USA, Ger-many, UK, Canada,

France, etc. About 15% of the total output is consumed domestically.

1.6.5 Readymade Garment sector

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By: Yasir Rehman

The garment industry provides highest value addition in the textile sector. This industry

is distributed in small, medium and large scale units most of them having 50 machines

and below, large units are now coming up in the organized sector of the industry. The

industry enjoys the facility of duty free import of machinery and income tax exemption.

This sector has further export performance for the future.

Pakistan with total exports of around USD 1 billion has a meager share of 1% in the

global market apparel market. The apparel export product mix from Pakistan is heavily

tilted towards men’s wear and knitted garments.

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By: Yasir Rehman

INDUSTRY ANALYSIS

PORTER’S FIVE FORCES

Azgard9 is a Pakistani textile manufacturing and marketing company has a primary

target to textile for an analysis using Michael Porter’s 5-Forces Model (“5-Forces”).

We have applied the 5-Forces analysis into the respective divisions:

3.1.1 Supplier Power

3.1.2 Barriers to Entry

3.1.3 Threat of Substitutes

3.1.4 Buyer Power and Degree of Rivalry

3.1.5 Competitive rivalry

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

By: Yasir Rehman

Suppliers Power

Suppliers in this industry are not concentrated. They act as separate groups competing

for the same project through the bid system that is prevalent in textile Industry. Volume

is of significant concern. The Azgard9 is the large textile industry and is not affected in

terms of supply volume giving suppliers any leverage.

Buyer Power

Azgard9 is a premier brand and nationwide presence ensures sellout production to

Pakistani and international customers, due to flexible demand delivery and low down

payments.

Buyers have power over when they are concentrated, purchase a significant portion of

new production, and pose a credible threat to purchases from competitors.

Barriers to entry

Identifying the possibility and probability of new entrants in an industry is critical

because they can intrude on market share and profitability of existing competitors.

Economies of scale, product differentiation, capital requirements, switching costs and

government policy all affect the textile Industry.

The economies of scale realized by azgard9 make it almost impossible for new entrants.

The governmental red tape that must be overcome in this industry is paramount to the

success of a prospective textile Company.

Threats of substitute

The threat of substitutes entails a consideration of such things as switching costs, buyer

inclination to substitute and the price-performance trade-off of substitutes. Most

individuals would like to make an investment with the purchase of a particular product of

an organization.

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By: Yasir Rehman

Degree of competitive rivalry

The growth rate of the textile market is tremendous especially azgard9; however, it is

limited in many respects. The growth for the demand and the production is enormous.

We believe the growth in the actual number of competitors is merely a related effect of

the costly barriers to entry. In recent days, the situation of textile industry is not very

good as shutting down of power looms due to electricity disaster.

The market is both mature and developing at the same time. The maturity of the market

can be illustrated by the Interventions and helps to carry out a cost benefit analysis of a

policy provided that governments know the tradeoff between efficiency and non

efficiency goals.

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By: Yasir Rehman

EXTERNAL ENVIIRONMENT

PEST ANALYSIS

Political Changes

Political factors include government regulations and legal issues and define both formal

and informal rules under which the firms operate. The rule and regulations that the

TEXTILE industry follows are as follows:

Tax Policies

General sales tax is enhanced from 15 % to 16 % including sales tax services

under the Provincial Sales Tax Ordinance, etc.

Due to the increase in the general rates of sales tax, the rate sales tax on the

natural gas has been increased from 24 % to 25 %.

The government has put special excise duty of 2 % as well.

Duty on the services such as goods insurance, fire Insurance, theft Insurance,

marine Insurance, other Insurance, non-fund services provided by banking

companies or non-banking companies has been enhanced from 5 % to 10 %.

The company confident that all pending issues will be ultimately resolved

without any additional liability.

The rate of tax for the collection at the import stage for all imports of goods has been reduced to

2 % from 5 %.

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By: Yasir Rehman

Employment Laws:

The labor policy issued by the Government of Pakistan lays down the parameters for the

growth of trade unionism, the protection of workers' rights, the settlement of industrial

disputes, and the redress of workers' grievances.

The policy also provides for the compliance with international labor standards ratified by

Pakistan. At present, the labor policy as approved in year 2002 is in force.

Environment regulations

At present Pakistan textile industries follow the Pakistan Environmental Protection

Act,1997.

The Pakistan government has now become conscious of the environmental

pollution.

But still there are many factors that are prevailing up till now and are the cause of

the unrest.

More over, the geographical region where Pakistan is located, having the

neighbors such as India and Afghanistan, and the pertaining international

situation regarding the war against terrorism, not only the direct investors have

stepped back even the investors who have made investments in the country are

backing up. These factors affected the textile industries in Pakistan.

Economic Factors:

Pakistan, with a population of about 18 million people has undergone a remarkable

macro economic growth during the last few years but the main and the core problems of

the economy are still unsolved. Inflation is one of the core problems. The inflation in the

year 2008 has recorded to be the highest according to the Federal Bureau of Statistic.

The consumers are mostly pessimistic about the economic conditions of the country as

the economy is going in downward direction these days. Economic factors can not be

excluded for operating any business including textile. Following are the factors affecting

the macro economy:

Economic growth

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By: Yasir Rehman

Inflation rate

Interest rates

Exchange rates

Economic Growth

The textile sector growth continued 7.85% in 2008-09, which is slightly more moderate

than 7.12% for the year 2007. Economic conditions are not very sound. The increasing

inflation, imposition of new taxes, rising fuel charges and changes in government

economic policies has discouraged investment in textile.

If Pakistan keeps on getting better grants and loans waivers or if any other economy

boosting factor such as controlled inflation rate and economic growth take place, it will

benefit the entire industry and also for azgard9 as well.

Inflation Rate

Inflation is one of these core problems. This thing is really hurting the purchasing power

of Pakistani consumers. The inflation in year 2009 has recorded to be the highest

according to the Federal Bureau of Statistics. Consumer Price jumped to 17.86% in

March 2009 according to the statistics given by Federal Bureau of Statistics.

Interest rate

The monetary policy of Pakistan is controlled by the state bank of Pakistan. The state

bank, in order to control the inflation has taken measures and tightened up the monetary

policies. Pakistan has raised its main interest rate to 13.5 % to help fight inflation.

Exchange Rate

The exchange rates of Pakistan with respect to the U.S. dollar, has declined. The

Pakistani rupee has depreciated since the proclamation of emergency rule in November

2007 and especially in current democratic govt. this rate is at very low side. In other

words we can say that the value of the rupee has fallen as the time passed by.

Social Change

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By: Yasir Rehman

Health consciousness among the people of Pakistan has been increasing day by

day.

The citizens of Pakistan are getting aware of their duties in order to maintain the

healthy environment.

Government is taking several steps in order to educate, how important it is for

the people to live in the healthy environment.

The government discourages the operation of the industries with in the city by

charging these factories with environmental charges.

By the passage of time, the people as well along with the government are discouraging

such activities and demand for clean environment

Technology Change

The Pakistani industries not only have to compete among them selves but with

the international market as well.

Pakistan is steadily automating particularly its manufacturing sectors to stir

quality production and ensure skilled management, as it would ensure a good

place for the country in the global competitive market.

Technological factors can lower barriers to entry, reduce minimum efficient

production levels, and influence outsourcing decisions.

In recent years, technology has been seen to be progressing at very fast rate all over the

world. It has helped to raise income and alleviate poverty in the developing countries.

Conclusion (PEST analysis and Azgard9)

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By: Yasir Rehman

As for as textile industry is concerned, there is much competition in political,

economical, social and technological factors especially price competition.

The political stability in Pakistan is at unrest. Due to this, the textile Factories along with

Azgard9 are facing problems regarding the investments they have made. The stock

market has shown sheer down fall since the political unrest. The day after day terrorist

attacks and the suicidal bombing have caused the unrest in the country as well. Along

with creating a sense of non security among the citizens of Pakistan, these activities have

proved to be hazardous to the textile sector as well.

The minimum wages has been increased by the government of Pakistan which is another

increase in the expense on behalf of the textile producers. There aren’t specified

strategies or labor laws that protect the labor wages at the factory. Azgard9 considers

employee satisfaction as a major contributor to their success in the market and therefore

has undertaken extensive planning to ensure the employed labor force is happy with

there salary packages.

The investors in the textile sector are well aware of the importance of technology in the

present day and they quite well realize the returns they can get using advance

technologies.

Internal Environment

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By: Yasir Rehman

SWOT Analysis

The SWOT analysis provides information that is helpful in matching the firm's resources

and capabilities to the competitive environment in which it operates. As such, it is

instrumental in strategy formulation and selection. The following diagram shows how a

SWOT analysis fits into an environmental scan:

Strength:

The production of the textile products (Cotton, Yarn, and Polyester) in Azgard9

is completely automated.

The company has imported the machinery for spinning process. The use of this

advance machinery has helped the company produce good quality garments with

much efficiency.

Azgard9 factory is the only garments factory that produces both ready made

garments and finished products of yarn.

Azgard9, having a good brand image, has the advantage to charge their customers

at a higher price than the other competitors.

The price of Azgard9 garments is high in the international market as compared to

its local competitors who are involved in the exports as well.

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By: Yasir Rehman

The company brand image is very strong in the market, both local and

international.

The Azgard9 factory compensates its employees, better than all the other

industries.

Weakness

The absence of certain strengths may be viewed as a weakness. For example, each of the

following may be considered weaknesses of AZGARD9:

Delay in capacity expansion

Large investment needed for business expansion

Wastage of raw material

Workers leave the organization after working short time

Lack of online market facility to access international buyers

Disputes between Middle level and Lower management

Relative weak position in textile market as compare to the other textile mills

in Pakistan

The cost of freight charges further reduces the retention price of the garments,

hampering the profitability of the company.

Wastes produce by the company may dangerous for human health.

OPPERTUNITIES

Moving into new market segments that offer improved profits

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By: Yasir Rehman

Large workshops for training and development.

A developing market such as the Internet.

A market vacated by an ineffective competitor.

Support of the power looms unions

Better Competitive Position.

This has given Azgard9 a golden opportunity to capture the maximum market

with very less competition.

The demand of garments and yarn outside Pakistan has been increasing rapidly,

providing Azgard9 a good chance to explore these markets.

Azgard9 is also exploring new markets for the potential customers of ready made

garments, which will give Azgard9 a competitive edge against the competitors.

Threats

Price wars with competitors.

A new competitor in the home market.

Fear of Privatization.

Tuff Competition

Globalization is the factor which brings the strong companies in Pakistan

A competitor has a new, innovative product or service.

The export to international market highly depends on diplomatic relations

between the countries.

Competitors have superior access to channels of distribution.

BOSTON COUNSELTING GROUP

BCG MATRIX

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By: Yasir Rehman

The BCG growth-share Matrix is a portfolio planning model developed by Bruce

Henderson of the Boston Consulting Group in the early 1070’s. It is based on the

observation that a company’s business units can be classified into four categories based

on combinations of market growth and market share relative to the larges competitor,

hence the name “growth-share”. Market growth serves as a proxy for industry

attractiveness, and relative market share serves as a proxy for competitive advantage.

The growth-share matrix thus maps the business unit positions with in these two

important determinants of profitability.

For more effective planning and operations, a multi-business or multi-product

organization should be divided according to its major markets or products. Each such

entity is called a strategic business unit (SBU).

Using this matrix, an organization classified each of such SBU according to the factor

such as:

Relative Market Share

Business Growth Rate

The BCG matrix is shown below:

Conclusion

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By: Yasir Rehman

Under the light of BCG matrix, I can examine that Azgard9 is existing in the category of

Question MARK because of low market share 20% and high business growth rate. In

order to be the market leader, Azgard9 has to improve its market position.

Presently Azgard9 has 9% of the market share and is one of the leading brands in

Pakistan with a diverse customer base. Form above given information we can say that

Azgard9 has strong potential for growth but low market share .So product lines of

Azgard9 secured in category “Question marks” having high growth and low market

share.

FINANCIAL ANALYSIS OF THE COMPANY

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By: Yasir Rehman

THIS CHAPTER COVERS: -

1. PURPOSE OF FINANCIAL ANALYSIS2. FINANCIAL REPORTING POLICIES3. RATIO ANALYSIS4. ADVANTAGES OF RATIO ANALYSIS5. LIMITATION OF RATIO ANALYSIS6. TYPES OF RATIO ANALYSIS1. LIQUIDITY RATIO2. TURNOVER RATIO3. PROFITABILITY RATIO4. LEVERAGE RATIO7. HORIZONTAL ANALYSIS OF PROFIT & LOSS ACCOUNT8. HORIZONTAL ANALYSIS OF BALANCE SHEET9. VERTICAL ANALYSIS OF PROFIT & LOSS ACCOUNT10. VERTICAL ANALYSIS OF BALANCE SHEET

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By: Yasir Rehman

PURPOSE OF FINANCIAL ANALYSIS

1) In our course of financial management we are required to make a financial analysis of any manufacturing company. The main purpose of these analyses is that we are the business graduate and it is very necessary for us to apply our knowledge in the practical way. For example if in future we are the manager of any bank and a company wants to obtain a loan from our bank then we make analysis of the company’s financial statement to access the capacity of paying us interest on time as well as the principle which we lend that company through analyzing the different ratio analyses, and to know that what is capital structure of the company.

2) Then through the cash flow statement we are able to know that how much cash is available with the company because profitability does not mean that the company has the equal amount of cash. We also able to know that how much cash is generated by the company from its operating activities, and how much amount of cash is investing in the asset through which we can access the future performance of the company.

3) Being as an investor if we are able to make an analysis of financial statement then we can invest in that venture which is the best in terms of our purpose.

4) Being as an investor before investing in any company we can analyze the performance of the company through the vertical analyses and horizontal analyses with the current and previous year or we can also comparison of the company with the other company of the same age (Competitors) and applying the same accounting techniques.

- 29 -

By: Yasir Rehman

Financial Reporting Policies

Company policies with reference to accounting, finance and corporate

matters are governed by relevant corporate regulations, Companies

Ordinance 1984, and the code of corporate Government

It is company resolved to comply with International Accounting Standards

for the preparation of financial statements with any departure there from

being adequately disclosed.

Company is in the process of establishing and efficient Internal Audit

Department to enhance the scope of internal control and data generated by

the company, it also help in building the confidence of our creditors,

financial institutions and other interested organization

- 30 -

By: Yasir Rehman

AZGARD NINE LIMITED

BALANCE SHEET

AS AT 31 DECEMBER 2008

2009 2008 2007 2006 2005

Rupees

EQUITY AND LIABILITIES

Share capital and reserves

Issued, subscribed and paid-up capital 3,827,118,540

3,788,822,900

3,788,838,900

1,737,308,680

1,737,308,680

Reserves 3,532,469,002

3,530,626,122

3,578,262,182

403,331,469

362,142,241

Unappropriated profit 2,764,494,959

2,400,605,174

1,807,067,052

952,462,490

410,657,982

10,124,082,501

9,720,054,196

9,174,168,134

3,093,102,639

2,510,108,903

Surplus on revaluation of property, plant and equipment

219,356,257

239,073,077

257,360,867

278,943,671

306,564,511

Non-current liabilities

Redeemable capital - Secured

Privately placed TFC,s -

-

-

250,000,000

250,000,000

Term Finance Certificates (TFCs) - I 62,500,000

125,000,000

187,500,000

-

-

Term Finance Certificates (TFCs) - II 1,832,162,407

2,141,955,064

2,142,812,532

2,143,670,000

-

Term Finance Certificates (TFCs) - III 2,499,000,000

2,500,000,000

-

-

-

- 31 -

By: Yasir Rehman

Less: Transaction costs (34,187,500)

(33,187,500)

-

-

-

4,359,474,907

4,733,767,564

2,330,312,532

2,393,670,000

250,000,000

Less: Current maturity shown under current liabilities

397,013,346

242,582,192

63,357,468

248,770,802

150,000,000

3,962,461,561

4,491,185,372

2,266,955,064

2,144,899,198

100,000,000

Long term finances - Secured

Habib Bank Limited ("HBL") -

50,000,000

200,000,000

250,000,000

400,000,000

United Bank Limited ("UBL") 100,000,000

125,000,000

200,000,000

200,000,000

200,000,000

Citi Bank N.A - I -

66,666,668

133,333,334

200,000,000

200,000,000

Citi Bank N.A - II -

-

600,000,000

-

-

Citi Bank Bahrain 542,437,500

577,031,250

-

-

-

National Bank of Pakistan ("NBP") 1,250,000,000

1,500,000,000

1,500,000,000

-

-

Deutsche Investitions - Und MBH 1,499,985,000

1,361,550,000

1,207,350,000

-

-

Faysal Bank Limited ("FBL") -

7,477,167

17,446,722

-

-

Saudi Pak Industrial and Agricultural -

-

-

Company Limited ("SAPIACO") 100,000,000

-

-

-

-

KASB Bank Limited ("KASB") 250,000,000

-

-

-

-

3,742,422,500

3,687,725,085

3,858,130,056

650,000,000

800,000,000

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By: Yasir Rehman

Less: Current maturity shown under 1,055,580,000

714,173,833

338,913,068

116,666,666

150,000,000

current liabilities

2,686,842,500

2,973,551,252

3,519,216,988

533,333,334

650,000,000

Liabilities against assets subject to finance lease

Present value of minimum lease payments 43,539,091

38,650,236

57,399,207

108,517,278

179,585,700

Less: Current portion shown under current liabilities

18,328,147

24,293,231

47,776,589

68,343,306

63,081,881

25,210,944

14,357,005

9,622,618

40,173,972

116,503,819

Long term payables -

-

1,643,889

2,907,643

1,147,729

Current liabilities

Current portion of non-current liabilities

Redeemable capital 397,013,346

242,582,192

63,357,468

248,770,802

150,000,000

Long term finances 1,055,580,000

714,173,833

338,913,068

116,666,666

150,000,000

Liabilities against assets subject to finance lease

18,328,147

24,293,231

47,776,589

68,343,306

63,081,881

1,470,921,493

981,049,256

450,047,125

433,780,774

363,081,881

Short term borrowings 6,574,080,304 3,820,688,516

5,936,699,317

3,142,402,324

1,492,909,892

Derivative financial liabilities 50,536,909

- 33 -

By: Yasir Rehman

34,369,582 32,021,606 - -

Trade and other payables

Trade creditors 525,814,913

584,674,986

418,693,807

104,837,013

195,881,907

Payable to subsidiary company -

-

213,380,444

-

-

Bills payable 537,452,118

201,628,543

195,065,104

394,601,913

360,544,669

Accrued liabilities 202,279,471

165,533,306

113,135,650

76,380,977

54,792,260

Advances from customers 51,207,512

25,124,744

30,905,697

15,045,683

59,877,980

Workers' profit participation fund 18,967,710

26,295,607

7,768,786

24,509,700

20,803,281

Workers' Welfare Fund 20,000

20,000

20,000

20,000

20,000

Customers duty surcharge -

-

-

-

800,301

Tax deducted at source 4,381,582

12,365,729

22,143,171

15,470,450

9,064,521

Other payables 10,376,809

15,232,854

14,651,186

4,571,055

5,858,822

1,350,500,115

1,030,875,769

1,015,763,845

635,436,791

707,643,741

Due to related parties - Unsecured 426,768,193 -

-

-

-

Markup accrued on borrowings

Redeemable capital 120,008,159

105,596,533

86,463,805

28,656,424

-

Long term finances 187,296,164

150,021,510

136,056,498

67,415,308

-

Short term borrowings 146,813,269

61,593,740

73,858,235

58,717,720

26,687,284

- 34 -

By: Yasir Rehman

Due to related parties 10,979,472

-

Liabilities against assets subject to finances lease

1,129,379

479,146

863,999

1,414,929

1,393,512

466,226,443

317,690,929

297,242,537

156,204,381

28,080,796

Unclaimed dividend 14,686,046 9,694,014

22,312,061

362,062

95,414

Contingencies and commitments - -

27,371,673,266 23,632,588,968 22,983,054,051 10,461,546,789

6,276,136,686

ASSETS

Non-current assets

Property, plant and equipment 7,734,950,547 7,643,6

49,558 7,601,895,866

3,113,043,032

2,847,936,402

Capital work in progress

Building 82,291,559

126,743,808

40,657,400

484,363,296

22,060,697

Plant and machinery 836,379,334

41,244,046

14,965,044

1,975,292,610

62,231,641

918,670,893 167,987,85

4 55,622,444 2,459,655,906 84,292,33

8

Intangible assets

- 35 -

By: Yasir Rehman

Development costs 20,512,135

38,118,588

47,948,625

64,221,974

81,187,908

Software 13,024,081

13,024,081

12,596,184

9,715,302

7,187,681

33,536,216

51,142,669

60,544,809

73,937,276

88,375,589

Long term investments 7,521,644,05

1 6,391,

905,201 6,303,488,906

93,517,562

2,666,296

Long term deposits 19,777,502 20,2

39,502 19,906,757

29,745,135

18,517,830

Current assets

Stores, spares and loose tools

Stores 147,745,923

88,462,119

65,423,805

60,280,813

50,503,425

Spares 53,783,115

36,842,528

34,857,431

27,069,375

21,443,068

Loose tools 164,232

164,230

1,481,251

440,167

662,200

201,693,270

125,468,877

101,762,487

87,790,355

72,608,693

Stock in trade

Raw material 1,884,682,430

910,632,770

1,302,466,823

1,507,912,595

636,338,989

Work in process 1,037,817,334

799,992,413

342,640,598

237,742,221

220,379,606

Finished goods 1,111,603,355

535,506,990

377,403,503

288,525,734

538,010,735

4,034,103,119

2,246,132,173

2,022,510,924

2,034,180,550

1,394,729,330

- 36 -

By: Yasir Rehman

Trade receivables

Considered good

Local

- secured 50,675,076

59,131,978

51,213,639

35,678,611

67,845,621

- unsecured 405,796,100

573,722,054

471,151,490

514,990,993

313,607,956

456,471,176

632,854,032

522,365,129

550,669,604

381,453,577

Foreign

- secured 1,244,183,273

1,024,342,703

612,532,020

463,213,980

563,658,279

- unsecured 76,578,163

-

-

-

-

1,320,761,436

1,024,342,703

612,532,020

463,213,980

563,658,279

1,777,232,612

1,657,196,735

1,134,897,149

1,013,883,584

945,111,856

Considered doubtful 4,697,881

11,098,746

4,249,348

4,249,348

4,249,348

1,781,930,493

1,668,295,481

1,139,146,497

1,018,132,932

949,361,204

Provision for doubtful debts (4,697,881)

(11,098,746)

(4,249,348)

(4,249,348)

(4,249,348)

1,777,232,612

1,657,196,735

1,134,897,149

1,013,883,584

945,111,856

Derivative financial assets 175,673,993 388,9

- 37 -

By: Yasir Rehman

93,278 555,680,244 - -

Advances, deposits, prepayments and other receivables

Advances to suppliers - Unsecured, considered good

218,873,888

558,337,926

338,715,170

407,631,218

158,543,173

Advances to employees - Unsecured, considered good

35,531,785

31,967,447

33,022,422

31,059,330

19,357,526

Security deposit 3,746,090

7,771,140

7,523,215

3,115,165

9,314,906

Margin deposits 61,218,959

4,500,762

8,053,085

25,393,993

201,562,598

Prepayments 8,939,720

4,223,701

7,720,379

9,144,119

8,873,451

Rebate receivable 95,843,350

74,992,940

43,340,387

56,947,188

26,624,906

Accrued gain on swap contract -

4,195,229

-

-

-

Return on investments in TFCs receivable 87,219,798

58,869,781

104,725,479

-

-

Textile quota -

-

-

-

24,917,583

Octrai refundable -

-

-

-

2,778,771

Sales tax recoverable 125,962,603

67,391,636

106,264,996

81,783,885

141,957,831

Letters of credit 114,453,218

152,585,907

97,824,575

175,710,254

26,571,132

Insurance claim 28,493,266

29,009,077

4,107,165

14,462,187

2,462,187

Others receivables- Unsecured, considered good

9,232,385

11,098,746

2,884,379

5,979,992

4,052,709

789,515,062

1,004,944,292

754,181,252

811,227,331

627,016,773

Current taxation

As at beginning of the year 51,050,683

3,342,068

27,996,650

64,824,871

44,824,871

Paid during the year 115,116,774

119,715,688

90,914,500

106,836,571

84,824,871

- 38 -

By: Yasir Rehman

Provision for the year (102,218,852)

(72,007,073)

(115,569,082)

(143,664,792)

(64,824,871)

As at end of the year 63,948,605

51,050,683

3,342,068

27,996,650

64,824,871

Short term investments 4,018,853,586 3,838,4

44,830 3,788,315,521

670,927,050

109,148,931

Cash and bank balances

Cash in hand 4,605,358

1,725,909

4,902,546

1,497,894

2,556,878

Cash at banks

in current accounts

local currency 76,458,037

35,655,637

564,247,327

34,116,304

9,563,317

foreign currency 8,996,680

-

-

in saving accounts

local currency 917,667

7,966,360

1,141,431

10,028,160

8,787,582

foreign currency - US $1,177 (2007: US $ 1,392)

92,748

85,410

1,617,640

-

-

82,073,810

45,433,316

580,905,624

45,642,358

20,907,777

27,371,673,266 23,632,588,968 22,983,054,051 10,461,546,78

9 6,276,136,68

6

AZGARD NINE LIMITED

- 39 -

By: Yasir Rehman

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31 DECEMBER 2008

2009 2008 2007 2006 2005

Rupees

Sales - Net

Local 1,966,476,028 1,262,415,231

817,705,903

791,644,932

1,646,343,974

Export 8,222,024,239 5,430,603,244

4,121,729,636

3,832,200,523

1,652,820,064

10,188,500,267 6,693,018,475

4,939,435,539

4,623,845,455

3,299,164,038

Add: Export rebate 33,384,958 12,031,454

6,949,191

- -

Less: Commission and brokerage 108,385,874 76,154,250

55,711,068

64,642,025

48,655,110

Sales tax - 553,753

991,696

136,731,073

94,596,501

10,113,499,351 6,628,341,926

4,889,681,966

4,422,472,357

3,155,912,427

Cost of sales

Raw material consumed 4,849,764,538 3,225,277,373

2,525,051,205

1,820,580,742

1,748,032,339

Salaries, wages and benefits 971,980,356 729,678,278

510,904,024

354,746,907

283,661,014

Fuel and power 522,666,246 347,011,458

323,569,253

333,090,255

189,237,711

Stores, spares and loose tools consumed 279,174,956 165,164,813

111,348,583

152,724,507

48,628,540

Traveling, conveyance and entertainment 75,739,696 85,805,784

46,802,918

9,220,631

16,704,076

- 40 -

By: Yasir Rehman

Rent, rates and taxes 21,041,783 3,954,337

10,172,160

5,141,456

2,070,589

Insurance 33,239,482 16,125,222

18,768,415

8,064,020

6,792,699

Repair and maintenance 50,141,690 43,581,324

36,763,527

22,665,131

10,793,306

Processing charges 58,626,887 28,735,160

29,898,239

22,330,528

17,529,443

Depreciation 524,442,914 527,625,994

238,492,943

253,998,842

164,167,467

Amortization 17,606,453 16,495,533

16,273,349

16,965,934

-

Printing and stationery 13,835,059 8,676,593

3,732,388

3,797,218

710,526

Communication 17,981,410 9,736,459

2,813,485

1,872,407

2,530,894

Others 37,903,583 28,575,924

22,547,063

17,745,768

6,921,232

7,474,145,053 5,236,444,252

3,897,137,552

3,022,944,346

2,497,779,836

Work in process

As at beginning of the year 799,992,413 342,640,598

227,469,465

220,379,606

172,868,794

Transfer from trial run production - - 10,272,756

- -

As at end of the year (1,037,817,334)

(799,992,413)

(342,640,598)

(227,469,465)

(220,379,606)

(237,824,921)

(457,351,815)

(104,898,377)

(7,089,859)

(47,510,812)

Cost of goods manufactured 7,236,320,132 4,779,092,437

3,792,239,175

3,015,854,487

2,450,269,024

Finished goods

As at beginning of the year 535,506,990 377,403,503

265,079,159

538,010,735

472,496,892

Transfer from trial run production/purchases

- - 23,446,575

- 56,024,092

As at end of the year (1,111,603,355)

(535,506,990)

(377,403,503)

(265,079,159)

(538,010,735)

- 41 -

By: Yasir Rehman

(576,096,365)

(158,103,487)

(88,877,769)

272,931,576

(9,489,751)

6,660,223,767 4,620,988,950

3,703,361,406

3,288,786,063

2,440,779,273

Gross Profit 3,453,275,584 2,007,352,976

1,186,320,560

1,133,686,294

715,133,154

Administrative and selling expenses

Salaries, wages and benefits 187,807,137 142,881,025

125,951,704

97,413,171

52,250,069

Traveling, conveyance and entertainment 51,902,512 52,011,992

65,821,574

54,340,963

16,005,579

Fuel and power 13,479,289 5,179,605

5,135,713

3,303,763

1,580,446

Repair and maintenance 10,035,005 10,140,344

5,835,059

3,581,988

2,514,315

Rent, rates and taxes 7,614,134 7,425,727

3,429,834

760,014

1,247,250

Insurance 3,115,432 4,617,600

2,374,346

1,764,074

450,145

Freight and clearing 240,972,890 123,071,363

113,662,864

80,684,019

48,598,511

Printing and stationery 4,793,296 4,188,033

3,648,302

3,449,924

2,114,502

Communication 33,805,936 25,045,991

22,178,413

19,112,928

11,295,398

Advertisement and sales promotion 585,118 6,260,885

7,543,790

4,501,610

6,829,196

Legal and professional charges 18,912,524 31,288,597

8,685,373

6,452,585

2,127,432

Depreciation 14,063,223 8,661,790

7,169,796

10,031,523

6,338,324

Fee and subscription 11,911,399 5,915,422

8,032,648

3,441,908

2,636,288

Amortisation of textile quota - - - 23,564,403

22,964,732

Donations 50,000 2,100,000

100,000

4,694,172

110,944

- 42 -

By: Yasir Rehman

Provision for doubtful debts - 448,533

- - -

Others 4,481,848 5,948,166

11,820,922

8,220,010

8,160,361

603,529,743 435,185,073

391,390,338

325,317,055

185,223,492

Operating profit 2,849,745,841 1,572,167,903

794,930,222

808,369,239

529,909,662

Other income - Net

Financial instruments

Gain on sale of investments 18,718,646 78,528,537

58,478,149

199,442,372

1,192,320

Unrealized loss on investments at fair value through profit or loss

- (6,684,745)

- 35,039,438

6,951,688

Impairment loss on investments available for sale

- (1,650,720)

(996,768)

- -

Markup on balances with related parties - 12,668,157

4,206,768

- -

Dividend income 589,730,500 588,645,000

1,058,711,503

38,934,462

-

Unrealized loss on derivative financial instruments

(11,321,450)

(16,177,407)

- 29,038,697

-

Foreign exchange gain 37,181,192 9,182,370

- - -

Loss on winding up of subsidiary (400,384)

- - - -

Return on bank deposits 1,399,408 1,740,198

7,414,660

17,966,099

710,367

Non-financial instruments

Gain / (loss) on disposal of property plant and equipment

964,001 198,325

(48,215)

(6,661,778)

266,005

Provision for Workers' Profit Participation Fund

(18,967,710)

(26,295,607)

(7,753,166)

(24,509,700)

(20,803,281)

- 43 -

By: Yasir Rehman

Miscellaneous 2,844,386 1,070,775

1,205,236

2,992,762

743,955

620,148,589 641,224,883

1,121,218,167

292,242,352

(10,938,946)

Finance cost

Mark-up / interest on:

- redeemable capital 506,755,533 35,703,432

21,950,385

- -

- long term finances 1,096,850,098 257,460,359

285,288,527

93,647,624

23,198,011

- short term borrowings 770,336,216 712,480,002

302,086,679

176,264,632

74,804,694

- balances with related parties 10,979,472 -

- - -

- liabilities against assets subject to finance lease

8,224,128 3,684,904

7,795,623

9,724,293

16,644,210

- workers' profit participation fund 4,601,731 318,839

1,014,852

326,582

818,980

2,397,747,178 1,009,647,536

618,136,066

279,963,131

115,465,895

Bank charges and commission 72,644,477 52,285,676

37,928,519

28,511,524

8,242,486

2,470,391,655 1,061,933,212

656,064,585

308,474,655

123,708,381

Profit before taxation 999,502,775 1,151,459,574

1,260,083,804

792,136,936

395,262,335

Taxation (102,218,852)

(72,007,073)

(115,569,082)

(50,843,271)

(20,000,000)

Profit after taxation 897,283,923 1,079,452,501

1,144,514,722

741,293,665

375,262,335

TREND PERCENTAGE ANALYSIS

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By: Yasir Rehman

8.1 BRIEF

Comparing analytical data for a current period with similar computation for prior years

afford some basis for judging whether the condition of the business is improving or

worsening. This comparison of data over time is sometimes called horizontal or trend

analysis, to express the idea for reviewing data for a number of consecutive periods.

The changes in financial statement items from a base year to following years are

expressed as trend percentages to show the extent and direction of change. Two steps

are necessary to compute trend percentages.

First, a base year is selected and each item in financial statement for the base

year is given a weight of 100%.

Second step is the express each item in the financial statement for following

years as a percentage of its base year amount.

AZGARD NINE LIMITED

PROFIT AND LOSS ACCOUNT (Trend Analysis)FOR THE YEAR ENDED 31 DECEMBER 2008

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By: Yasir Rehman

2009 2008 2007 2006 2005

Rupees

Sales - NetLocal 119.45% 76.68% 49.67% 48.09% 100.00%

Export 497.45% 328.57% 249.38% 231.86% 100.00%

308.82% 202.87% 149.72% 140.15% 100.00%

Add: Export rebate 480.42% 173.13% 100.00% 0.00% 0.00%

Less: Commission and brokerage 222.76% 156.52% 114.50% 132.86% 100.00%

Sales tax 0.00% 0.59% 1.05% 144.54% 100.00%

320.46% 210.03% 154.94% 140.13% 100.00%

Cost of salesRaw material consumed 277.44% 184.51% 144.45% 104.15% 100.00%

Salaries, wages and benefits 342.66% 257.24% 180.11% 125.06% 100.00%

Fuel and power 276.20% 183.37% 170.99% 176.02% 100.00%

Stores, spares and loose tools consumed 574.10% 339.65% 228.98% 314.06% 100.00%

Traveling, conveyance and entertainment 453.42% 513.68% 280.19% 55.20% 100.00%

Rent, rates and taxes 1016.22% 190.98% 491.27% 248.31% 100.00%

Insurance 489.34% 237.39% 276.30% 118.72% 100.00%

Repair and maintenance 464.56% 403.78% 340.61% 209.99% 100.00%

Processing charges 334.45% 163.93% 170.56% 127.39% 100.00%

Depreciation 319.46% 321.39% 145.27% 154.72% 100.00%

Amortization 103.78% 97.23% 95.92% 100.00% 0.00%

Printing and stationery 1947.16% 1221.15% 525.30% 534.42% 100.00%

Communication 710.48% 384.70% 111.17% 73.98% 100.00%

Others 547.64% 412.87% 325.77% 256.40% 100.00%

299.23% 209.64% 156.02% 121.03% 100.00%

Work in process

As at beginning of the year 462.77% 198.21% 131.59% 127.48% 100.00%

Transfer from trial run production 0.00% 0.00% 100.00% 0.00% 0.00%

As at end of the year 470.92% 363.01% 155.48% 103.22% 100.00%

500.57% 962.63% 220.79% 14.92% 100.00%

Cost of goods manufactured 295.33% 195.04% 154.77% 123.08% 100.00%

Finished goods


Transfer from trial run production/purchases 0.00% 0.00% 41.85% 0.00% 100.00%


6070.72% 1666.04% 936.57% -2876.07% 100.00%

272.87% 189.32% 151.73% 134.74% 100.00%

Gross Profit 482.89% 280.70% 165.89% 158.53% 100.00%

Administrative and selling expensesSalaries, wages and benefits 359.44% 273.46% 241.06% 186.44% 100.00%


Fuel and power 852.88% 327.73% 324.95% 209.04% 100.00%



Insurance 692.10% 1025.80% 527.46% 391.89% 100.00%

Freight and clearing 495.84% 253.24% 233.88% 166.02% 100.00%


Communication 299.29% 221.74% 196.35% 169.21% 100.00%

Advertisement and sales promotion 8.57% 91.68% 110.46% 65.92% 100.00%

Legal and professional charges 888.98% 1470.72% 408.26% 303.30% 100.00%

- 46 -

By: Yasir Rehman

Depreciation 221.88% 136.66% 113.12% 158.27% 100.00%

Fee and subscription 451.82% 224.38% 304.70% 130.56% 100.00%

Amortisation of textile quota 0.00% 0.00% 0.00% 102.61% 100.00%

Donations 45.07% 1892.85% 90.14% 4231.12% 100.00%

Provision for doubtful debts 0.00% 100.00% 0.00% 0.00% 0.00%

Others 54.92% 72.89% 144.86% 100.73% 100.00%

325.84% 234.95% 211.31% 175.63% 100.00%

Operating profit 537.78% 296.69% 150.01% 152.55% 100.00%

Other income - NetFinancial instruments

Gain on sale of investments 1569.93% 6586.20% 4904.57% 16727.25%

100.00%


0.00% -96.16% 0.00% 504.04% 100.00%

Impairment loss on investments available for sale 0.00% 165.61% 100.00% 0.00% 0.00%

Markup on balances with related parties 0.00% 301.14% 100.00% 0.00% 0.00%

Dividend income 1514.67% 1511.89% 2719.21% 100.00% 0.00%

Unrealized loss on derivative financial instruments -38.99% -55.71% 0.00% 100.00% 0.00%

Foreign exchange gain 404.92% 100.00% 0.00% 0.00% 0.00%

Loss on winding up of subsidiary 100.00% 0.00% 0.00% 0.00% 0.00%

Return on bank deposits 197.00% 244.97% 1043.78% 2529.13% 100.00%



362.40% 74.56% -18.13% -2504.38% 100.00%

Provision for Workers' Profit Participation Fund 91.18% 126.40% 37.27% 117.82% 100.00%

Miscellaneous 382.33% 143.93% 162.00% 402.28% 100.00%-5669.18% -5861.85% -10249.78% -2671.58% 100.00%

Finance costMark-up / interest on:

- redeemable capital 2308.64% 162.66% 100.00% 0.00% 0.00%

- long term finances 4728.21% 1109.84% 1229.80% 403.69% 100.00%

- short term borrowings 1029.80% 952.45% 403.83% 235.63% 100.00%

- balances with related parties 100.00% 0.00% 0.00% 0.00% 0.00%

- liabilities against assets subject to finance lease 49.41% 22.14% 46.84% 58.42% 100.00%

- workers' profit participation fund 561.89% 38.93% 123.92% 39.88% 100.00%

2076.58% 874.41% 535.34% 242.46% 100.00%

Bank charges and commission 881.34% 634.34% 460.16% 345.91% 100.00%

1996.95% 858.42% 530.33% 249.36% 100.00%

Profit before taxation 252.87% 291.32% 318.80% 200.41% 100.00%

Taxation 511.09% 360.04% 577.85% 254.22% 100.00%

Profit after taxation 239.11% 287.65% 304.99% 197.54% 100.00%

Net Sale

This is the amount of net revenues earned from sales of goods during the

particular period. It is determined by deducting sales tax from own

manufactured and purchased products or services rendered of that period.

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By: Yasir Rehman

Fiscal year 2005 is considered as base for analyzing the net sales which are

consider as base for the analysis.

Amounts 2009 2008 2007 2006 2005Net Sale 320.46% 210.03% 154.94% 140.13% 100.00%

320.46%

210.03%

154.94% 140.13%

100.00%

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

350.00%

2009 2008 2007 2006 2005

Net Sale

Explanation:

SALES are showing continuous upward trend. There is a huge increase in

sales in 2009(320.46%) and then about 210.03% in the year 2008 due to increase in

exports and starting of many business expansion projects indicating the firm's efficiency

to cover losses producing from retention of garments in FY 2009. This shows a good

picture for investors and lenders to take interest in azgard9.

COST OF GOODS SOLD

This is the amount of purchase price and direct expenses of the merchandise sold during the

particular period. It is determined by adding beginning inventory of material and net purchases

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By: Yasir Rehman

with the deduction of ending inventory from both. Fiscal year 2005 is considered as base for

analyzing the cost of good sold which are consider as base for the analysis.

Amounts 2009 2008 2007 2006 2005CGS 272.87% 189.32% 151.73% 134.74% 100.00%

272.87%

189.32%151.73% 134.74%

100.00%

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

2009 2008 2007 2006 2005

CGS

Interpretation

Cost of good Sold are showing healthy trend. It’s increasing year by year and reaches to

the 272.87% in FY09 as compared to the FY05 and further explanations are given as

under.

FY2006: Cost of good sold of the FY06 grew by 134.74%mainly due to high purchase

prices of row material consumed in process,

FY2007: Cost of good sold for the year was grown by 151%supported by higher unit

price of wool, yarn.

FY2008: Cost of good sold for the year 08 higher by 189%as compared to the base

year 2005,due to mainly to higher production of polycoton and popline This is mainly

due to the market plan that focused on consumption of yarn at grass root level.

FY2009: Cost of good sold of the year 2009, 272% compared with 189% in 2008, Cost

of good sold grow much because of increase in raw material consumed in business

process and in manufacturing cost.

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By: Yasir Rehman

Gross Profit

Amounts 2009 2008 2007 2006 2005

Gross Profit482.89

%280.70% 165.89% 158.53% 100.00%

Gross Profit

482.89%

280.70%

165.89% 158.53%

100.00%

0.00%

100.00%

200.00%

300.00%

400.00%

500.00%

600.00%

2009 2008 2007 2006 2005

Interpretation

Gross profits are showing positive trend. It’s increasing year by year and reaches to the

482.89% in FY09 as compared to the FY05 and further explanations are given as under.

Gross profit of the FY06 grew by 158%mainly due to high double weft volume and

supported by higher unit selling prices of all products. The FY08 proved to be good one

forAzgard9 due to mainly to higher turnover of wool and cotton. This is mainly due to the

market plan that focused on consumption of cotton fabric at grass root level.

Azgard9 gives strongest results to date in 2009. Gross profit of the year 2009, 482.89%

compared with 2008,

Net Profit

Amounts 2009 2008 2007 2006 2005

Profit after taxation239.11

%287.65% 304.99% 197.54% 100.00%

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By: Yasir Rehman

239.11%

287.65% 304.99%

197.54%

100.00%

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

350.00%

2009 2008 2007 2006 2005

Net Profit

Explanation:

Net profit after taxes is showing fluctuating outcomes in FY 2006, 197.54%, and in

FY2007 it is 304.99% and 287.65% in year 2008. This small decrease in net profit of

Azgard9 is due to heavy taxes levied by the government and then this trend is showing

negative response in FY 2009 which is 239.11%. Overall it shows a good picture for

investors and lenders to make investment in Azgard9. I expect that Azgard9 gave

realistic results in future.

AZGARD NINE LIMITEDBALANCE SHEET (Trend Analysis)AS AT 31 DECEMBER 2009

2009 2008 2007 2006 2005

Rupees

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By: Yasir Rehman



Issued, subscribed and paid-up capital 220.29% 218.09% 218.09% 100.00% 100.00%

Reserves 975.44% 974.93% 988.08% 111.37% 100.00%

Unappropriated profit 673.19% 584.58% 440.04% 231.94% 100.00%

403.33% 387.24% 365.49% 123.23% 100.00%

Surplus on revaluation of property, plant and equipment 71.55% 77.98% 83.95% 90.99% 100.00%


Redeemable capital - SecuredPrivately placed TFC,s 0.00% 0.00% 0.00% 100.00% 100.00%Term Finance Certificates (TFCs) - I 33.33% 66.67% 100.00% 0.00% 0.00%

Term Finance Certificates (TFCs) - II 100.00% 99.92% 99.96% 100.00% 0.00%

Term Finance Certificates (TFCs) - III 99.96% 100.00% 0.00% 0.00% 0.00%

Less: Transaction costs 103.01% 100.00% 0.00% 0.00% 0.00%

1743.79% 1893.51% 932.13% 957.47% 100.00%

Less: Current maturity shown under current liabilities 264.68% 161.72% 42.24% 165.85% 100.00%

3962.46% 4491.19% 2266.96% 2144.90% 100.00%

Long term finances - SecuredHabib Bank Limited ("HBL") 0.00% 12.50% 50.00% 62.50% 100.00%United Bank Limited ("UBL") 50.00% 62.50% 100.00% 100.00% 100.00%Citi Bank N.A - I 0.00% 33.33% 66.67% 100.00% 100.00%Citi Bank N.A - II 0.00% 0.00% 100.00% 0.00% 0.00%

Citi Bank Bahrain 94.00% 100.00% 0.00% 0.00% 0.00%

National Bank of Pakistan ("NBP") 83.33% 100.00% 100.00% 0.00% 0.00%

Deutsche Investitions - Und MBH 124.24% 112.77% 100.00% 0.00% 0.00%

Faysal Bank Limited ("FBL") 0.00% 42.86% 100.00% 0.00% 0.00%Saudi Pak Industrial and Agricultural 0.00% 0.00% 0.00% 0.00% 0.00%

Company Limited ("SAPIACO") 100.00% 0.00% 0.00% 0.00% 0.00%

KASB Bank Limited ("KASB") 100.00% 0.00% 0.00% 0.00% 0.00%

467.80% 460.97% 482.27% 81.25% 100.00%

Less: Current maturity shown under 703.72% 476.12% 225.94% 77.78% 100.00%current liabilities

413.36% 457.47% 541.42% 82.05% 100.00%

Liabilities against assets subject to finance leasePresent value of minimum lease payments 24.24% 21.52% 31.96% 60.43% 100.00%Less: Current portion shown under current liabilities 29.05% 38.51% 75.74% 108.34% 100.00%

21.64% 12.32% 8.26% 34.48% 100.00%

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By: Yasir Rehman

Long term payables 0.00% 0.00% 143.23% 253.34% 100.00%

Current liabilities

Current portion of non-current liabilitiesRedeemable capital 264.68% 161.72% 42.24% 165.85% 100.00%Long term finances 703.72% 476.12% 225.94% 77.78% 100.00%Liabilities against assets subject to finance lease 29.05% 38.51% 75.74% 108.34% 100.00%

405.12% 270.20% 123.95% 119.47% 100.00%

Short term borrowings 440.35% 255.92% 397.66% 210.49% 100.00%

Derivative financial liabilities 157.82% 107.33% 100.00% 0.00% 0.00%

Trade and other payablesTrade creditors 268.43% 298.48% 213.75% 53.52% 100.00%Payable to subsidiary company 0.00% 0.00% 100.00% 0.00% 0.00%Bills payable 149.07% 55.92% 54.10% 109.45% 100.00%Accrued liabilities 369.18% 302.11% 206.48% 139.40% 100.00%Advances from customers 85.52% 41.96% 51.61% 25.13% 100.00%Workers' profit participation fund 91.18% 126.40% 37.34% 117.82% 100.00%Workers' Welfare Fund 100.00% 100.00% 100.00% 100.00% 100.00%Customers duty surcharge 0.00% 0.00% 0.00% 0.00% 100.00%Tax deducted at source 48.34% 136.42% 244.28% 170.67% 100.00%Other payables 177.11% 260.00% 250.07% 78.02% 100.00%

190.84% 145.68% 143.54% 89.80% 100.00%

Due to related parties - Unsecured 100.00% 0.00% 0.00% 0.00% 0.00%

Markup accrued on borrowingsRedeemable capital 138.80% 122.13% 100.00% 0.00% 0.00%Long term finances 277.82% 222.53% 201.82% 100.00% 0.00%

Short term borrowings 550.12% 230.80% 276.75% 220.02% 100.00%Due to related parties 100.00% 0.00% 0.00% 0.00% 0.00%

Liabilities against assets subject to finances lease 81.05% 34.38% 62.00% 101.54% 100.00%

1660.30% 1131.35% 556.27% 100.00%

Unclaimed dividend 15391.92% 10159.95% 23384.47% 379.46% 100.00%

Contingencies and commitments 0.00% 0.00% 0.00% 0.00% 0.00%

436.12% 376.55% 366.20% 166.69% 100.00%

2009 2008 2007 2006 2005

ASSETS

Non-current assets

Property, plant and equipment 271.60% 268.39% 266.93% 109.31% 100.00%

Capital work in progressBuilding 373.02% 574.52% 184.30% 2195.59% 100.00%Plant and machinery 1343.98% 66.28% 24.05% 3174.10% 100.00%

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By: Yasir Rehman

1089.86% 199.29% 65.99% 2918.01% 100.00%

Intangible assetsDevelopment costs 25.27% 46.95% 59.06% 79.10% 100.00%Software 181.20% 181.20% 175.25% 135.17% 100.00%

37.95% 57.87% 68.51% 83.66% 100.00%

Long term investments282100.86

%239729.77

%236413.70

% 3507.40% 100.00%

Long term deposits 106.80% 109.30% 107.50% 160.63% 100.00%

Current assets

Stores, spares and loose toolsStores 292.55% 175.16% 129.54% 119.36% 100.00%Spares 250.82% 171.82% 162.56% 126.24% 100.00%Loose tools 24.80% 24.80% 223.69% 66.47% 100.00%

277.78% 172.80% 140.15% 120.91% 100.00%

Stock in tradeRaw material 296.18% 143.10% 204.68% 236.97% 100.00%Work in process 470.92% 363.01% 155.48% 107.88% 100.00%Finished goods 206.61% 99.53% 70.15% 53.63% 100.00%

289.24% 161.04% 145.01% 145.85% 100.00%

Trade receivablesConsidered good

Local

- secured 74.69% 87.16% 75.49% 52.59% 100.00%- unsecured 129.40% 182.94% 150.24% 164.21% 100.00%

119.67% 165.91% 136.94% 216.80% 100.00%Foreign


234.32% 181.73% 108.67% 82.18% 100.00%

188.04% 175.34% 120.08% 107.28% 100.00%Considered doubtful 110.56% 261.19% 100.00% 100.00% 100.00%

187.70% 175.73% 119.99% 107.24% 100.00%Provision for doubtful debts 110.56% 261.19% 100.00% 100.00% 100.00%

188.04% 175.34% 120.08% 107.28% 100.00%

Derivative financial assets 31.61% 70.00% 100.00% 0.00% 0.00%

Advances, deposits, prepayments and other receivablesAdvances to suppliers - Unsecured, considered good 138.05% 352.17% 213.64% 257.11% 100.00%Advances to employees - Unsecured, considered good 183.56% 165.14% 170.59% 160.45% 100.00%

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By: Yasir Rehman

Security deposit 40.22% 83.43% 80.77% 33.44% 100.00%Margin deposits 30.37% 2.23% 4.00% 12.60% 100.00%Prepayments 100.75% 47.60% 87.01% 103.05% 100.00%Rebate receivable 359.98% 281.66% 162.78% 213.89% 100.00%Accrued gain on swap contract 0.00% 100.00% 0.00% 0.00% 0.00%

Return on investments in TFCs receivable 83.28% 56.21% 100.00% 0.00% 0.00%

Textile quota 0.00% 0.00% 0.00% 0.00% 100.00%Octrai refundable 0.00% 0.00% 0.00% 0.00% 100.00%Sales tax recoverable 88.73% 47.47% 74.86% 57.61% 100.00%Letters of credit 430.74% 574.25% 368.16% 661.28% 100.00%Insurance claim 1157.23% 1178.18% 166.81% 587.37% 100.00%Others receivables- Unsecured, considered good 227.81% 273.86% 71.17% 147.56% 100.00%

125.92% 160.27% 120.28% 129.38% 100.00%

Current taxationAs at beginning of the year 113.89% 7.46% 62.46% 144.62% 100.00%Paid during the year 135.71% 141.13% 107.18% 125.95% 100.00%Provision for the year 157.68% 111.08% 178.28% 221.62% 100.00%


Short term investments 3681.99% 3516.70% 3470.78% 614.69% 100.00%

Cash and bank balancesCash in hand 180.12% 67.50% 191.74% 58.58% 100.00%Cash at banks

in current accounts

local currency 799.49% 372.84% 5900.12% 356.74% 100.00%foreign currency 0.00% 0.00% 100.00% 0.00% 0.00%

in saving accounts

local currency 10.44% 90.65% 12.99% 114.12% 100.00%foreign currency - US $1,177 (2007: US

$ 1,392)5.73% 5.28%

100.00%0.00% 0.00%

392.55% 217.30% 2778.42% 218.30% 100.00%

436.12% 376.55% 366.20% 166.69% 100.00%

Total Assets

Amounts 2009 2008 2007 2006 2005Total Assets 436.12% 376.55% 366.20% 166.69% 100.00%

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By: Yasir Rehman

436.12%

376.55% 366.20%

166.69%

100.00%

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

350.00%

400.00%

450.00%

2009 2008 2007 2006 2005

Total Assets

Interpretation

Total assets are showing positive horizontal trend. It’s increasing year by year and

reaches to the 436.2% in FY09 as compared to the FY05 and further explanations are

given as under.

Total assets of the FY06 grew by 166%.this increase mainly due to decrease in non

current assets in 2006 reason behind that is decrease in long term investments by the

Azgard9.

The FY07 and FY08 proved to be good one for firm, growth is almost equal to

400%.This increase occur mainly due to increase in fixed assets. Specially increase in

biological assets at 100%.

Azgard9 delivered strongest results to date in 2009. Total assets reaches at

436.12%increasing rate as compared to the FY2005. This increase occurs mainly due

to the purchase of new technology in the form of fixed assets. Biological assets are

also increased in 2009.

VERTICAL ANALYSIS

“An analysis of percentage financial statements where all balance sheet items are divided by total assets and all income statement items are divided by net sales or revenue”

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By: Yasir Rehman

The expression of individual financial statement item as percentages of total helps the analyst spot trends with respect to the relative importance of these items over time.

Balance Sheet

Vertical analysis is also called common size analysis. The common size balance sheet is also called 100% balance sheet. The total of assets is the base figures representing 100%. Every item of the balance sheet is related vertically to reflect the vertical mix against the total. The analysis represents internal composition of assets and liabilities. The common size balance sheet analysis reveals the sources of capital and all other sources and the application of sources to assets of the company.

Profit And Loss Account

Similar method as applied for balance sheet is also applicable to profit and loss account. The various items of profit and loss account are related as percentage to sales. For example, items like, cost of goods sold. Operating expenses, gross profit, taxation etc. are reduced to percentages by treating the sales as 100 %. These ratios are also called vertical ratios and mix percentages.

AZGARD NINE LIMITED

BALANCE SHEET (Vertical Analysis)AS AT 31 DECEMBER 2009

2009 2008 2007 2006 2005

Rupees

- 57 -

By: Yasir Rehman



Issued, subscribed and paid-up capital 13.98% 16.03% 16.49% 16.61% 27.68%

Reserves 12.91% 14.94% 15.57% 3.86% 5.77%

Unappropriated profit 10.10% 10.16% 7.86% 9.10% 6.54%

36.99% 41.13% 39.92% 29.57% 39.99%

Surplus on revaluation of property, plant and equipment 0.80% 1.01% 1.12% 2.67% 4.88%


Redeemable capital - SecuredPrivately placed TFC,s 0.00% 0.00% 0.00% 2.39% 3.98%Term Finance Certificates (TFCs) - I 0.23% 0.53% 0.82% 0.00% 0.00%Term Finance Certificates (TFCs) - II 6.69% 9.06% 9.32% 20.49% 0.00%Term Finance Certificates (TFCs) - III 9.13% 10.58% 0.00% 0.00% 0.00%Less: Transaction costs -0.12% -0.14% 0.00% 0.00% 0.00%

15.93% 20.03% 10.14% 20.49% 0.00%

Less: Current maturity shown under current liabilities 1.45% 1.03% 0.28% 2.38% 2.39%

14.48% 19.00% 9.86% 20.50% 1.59%

Long term finances - SecuredHabib Bank Limited ("HBL") 0.00% 0.21% 0.87% 2.39% 6.37%United Bank Limited ("UBL") 0.37% 0.53% 0.87% 1.91% 3.19%Citi Bank N.A - I 0.00% 0.28% 0.58% 1.91% 3.19%Citi Bank N.A - II 0.00% 0.00% 2.61% 0.00% 0.00%Citi Bank Bahrain 1.98% 2.44% 0.00% 0.00% 0.00%National Bank of Pakistan ("NBP") 4.57% 6.35% 6.53% 0.00% 0.00%Deutsche Investitions - Und MBH 5.48% 5.76% 5.25% 0.00% 0.00%Faysal Bank Limited ("FBL") 0.00% 0.03% 0.08% 0.00% 0.00%Saudi Pak Industrial and Agricultural 0.00% 0.00% 0.00%

Company Limited ("SAPIACO") 0.37% 0.00% 0.00% 0.00% 0.00%

KASB Bank Limited ("KASB") 0.91% 0.00% 0.00% 0.00% 0.00%

13.67% 15.60% 16.79% 6.21% 12.75%

Less: Current maturity shown under 3.86% 3.02% 1.47% 1.12% 2.39%current liabilities

9.82% 12.58% 15.31% 5.10% 10.36%

Liabilities against assets subject to finance leasePresent value of minimum lease payments 0.16% 0.16% 0.25% 1.04% 2.86%Less: Current portion shown under current liabilities 0.07% 0.10% 0.21% 0.65% 1.01%

0.09% 0.06% 0.04% 0.38% 1.86%

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By: Yasir Rehman

Long term payables 0.00% 0.00% 0.01% 0.03% 0.02%

Current liabilities

Current portion of non-current liabilitiesRedeemable capital 1.45% 1.03% 0.28% 2.38% 2.39%Long term finances 3.86% 3.02% 1.47% 1.12% 2.39%Liabilities against assets subject to finance lease 0.07% 0.10% 0.21% 0.65% 1.01%

5.37% 4.15% 1.96% 4.15% 5.79%

Short term borrowings 24.02% 16.17% 25.83% 30.04% 23.79%

Derivative financial liabilities 0.18% 0.15% 0.14% 0.00% 0.00%

Trade and other payablesTrade creditors 1.92% 2.47% 1.82% 1.00% 3.12%Payable to subsidiary company 0.00% 0.00% 0.93% 0.00% 0.00%Bills payable 1.96% 0.85% 0.85% 3.77% 5.74%Accrued liabilities 0.74% 0.70% 0.49% 0.73% 0.87%Advances from customers 0.19% 0.11% 0.13% 0.14% 0.95%Workers' profit participation fund 0.07% 0.11% 0.03% 0.23% 0.33%Workers' Welfare Fund 0.00% 0.00% 0.00% 0.00% 0.00%Customers duty surcharge 0.00% 0.00% 0.00% 0.00% 0.01%Tax deducted at source 0.02% 0.05% 0.10% 0.15% 0.14%Other payables 0.04% 0.06% 0.06% 0.04% 0.09%

4.93% 4.36% 4.42% 6.07% 11.28%

Due to related parties - Unsecured 1.56% 0.00% 0.00% 0.00% 0.00%

Markup accrued on borrowingsRedeemable capital 0.44% 0.45% 0.38% 0.27% 0.00%Long term finances 0.68% 0.63% 0.59% 0.64% 0.00%Short term borrowings 0.54% 0.26% 0.32% 0.56% 0.43%Due to related parties 0.04% 0.00% 0.00% 0.00% 0.00%Liabilities against assets subject to finances lease 0.00% 0.00% 0.00% 0.01% 0.02%

1.70% 1.34% 1.29% 1.49% 0.45%

Unclaimed dividend 0.05% 0.04% 0.10% 0.00% 0.00%

Contingencies and commitments 0.00% 0.00% 0.00% 0.00% 0.00%

100.00% 100.00% 100.00% 100.00% 100.00%

ASSETS

Non-current assets

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Property, plant and equipment 28.26% 32.34% 33.08% 29.76% 45.38%

Capital work in progressBuilding 0.30% 0.54% 0.18% 4.63% 0.35%Plant and machinery 3.06% 0.17% 0.07% 18.88% 0.99%

3.36% 0.71% 0.24% 23.51% 1.34%

Intangible assetsDevelopment costs 0.07% 0.16% 0.21% 0.61% 1.29%Software 0.05% 0.06% 0.05% 0.09% 0.11%

0.12% 0.22% 0.26% 0.71% 1.41%

Long term investments 27.48% 27.05% 27.43% 0.89% 0.04%

Long term deposits 0.07% 0.09% 0.09% 0.28% 0.30%

Current assets

Stores, spares and loose toolsStores 0.54% 0.37% 0.28% 0.58% 0.80%Spares 0.20% 0.16% 0.15% 0.26% 0.34%Loose tools 0.00% 0.00% 0.01% 0.00% 0.01%

0.74% 0.53% 0.44% 0.84% 1.16%

Stock in tradeRaw material 6.89% 3.85% 5.67% 14.41% 10.14%Work in process 3.79% 3.39% 1.49% 2.27% 3.51%Finished goods 4.06% 2.27% 1.64% 2.76% 8.57%

14.74% 9.50% 8.80% 19.44% 22.22%

Trade receivablesConsidered good

Local


1.67% 2.68% 2.27% 5.26% 6.08%Foreign


4.83% 4.33% 2.67% 4.43% 8.98%

6.49% 7.01% 4.94% 9.69% 15.06%Considered doubtful 0.02% 0.05% 0.02% 0.04% 0.07%

6.51% 7.06% 4.96% 9.73% 15.13%Provision for doubtful debts -0.02% -0.05% -0.02% -0.04% -0.07%

6.49% 7.01% 4.94% 9.69% 15.06%

Derivative financial assets 0.64% 1.65% 2.42% 0.00% 0.00%

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Advances, deposits, prepayments and other receivablesAdvances to suppliers - Unsecured, considered good 0.80% 2.36% 1.47% 3.90% 2.53%Advances to employees - Unsecured, considered good 0.13% 0.14% 0.14% 0.30% 0.31%Security deposit 0.01% 0.03% 0.03% 0.03% 0.15%Margin deposits 0.22% 0.02% 0.04% 0.24% 3.21%Prepayments 0.03% 0.02% 0.03% 0.09% 0.14%Rebate receivable 0.35% 0.32% 0.19% 0.54% 0.42%Accrued gain on swap contract 0.00% 0.02% 0.00% 0.00% 0.00%Return on investments in TFCs receivable 0.32% 0.25% 0.46% 0.00% 0.00%Textile quota 0.00% 0.00% 0.00% 0.00% 0.40%Octrai refundable 0.00% 0.00% 0.00% 0.00% 0.04%Sales tax recoverable 0.46% 0.29% 0.46% 0.78% 2.26%Letters of credit 0.42% 0.65% 0.43% 1.68% 0.42%Insurance claim 0.10% 0.12% 0.02% 0.14% 0.04%Others receivables- Unsecured, considered good 0.03% 0.05% 0.01% 0.06% 0.06%

2.88% 4.25% 3.28% 7.75% 9.99%

Current taxationAs at beginning of the year 0.19% 0.01% 0.12% 0.62% 0.71%Paid during the year 0.42% 0.51% 0.40% 1.02% 1.35%Provision for the year -0.37% -0.30% -0.50% -1.37% -1.03%As at end of the year 0.23% 0.22% 0.01% 0.27% 1.03%

Short term investments 14.68% 16.24% 16.48% 6.41% 1.74%

Cash and bank balancesCash in hand 0.02% 0.01% 0.02% 0.01% 0.04%Cash at banks

in current accounts

local currency 0.28% 0.15% 2.46% 0.33% 0.15%foreign currency 0.00% 0.00% 0.04% 0.00% 0.00%

in saving accounts

local currency 0.00% 0.03% 0.00% 0.10% 0.14%foreign currency - US $1,177 (2007:

US $ 1,392) 0.00% 0.00% 0.01% 0.00% 0.00%

0.30% 0.19% 2.53% 0.44% 0.33%

100.00% 100.00% 100.00% 100.00% 100.00%

AZGARD NINE LIMITED

PROFIT AND LOSS ACCOUNT (Vertical Analysis)FOR THE YEAR ENDED 31 DECEMBER 2009

2009 2008 2007 2006 2005

Rupees

Sales - Net

Local

Export

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Add: Export rebate

Less: Commission and brokerage

Sales tax

100.00% 100.00% 100.00% 100.00% 100.00%

Cost of salesRaw material consumed 47.95% 48.66% 51.64% 41.17% 55.39%

Salaries, wages and benefits 9.61% 11.01% 10.45% 8.02% 8.99%

Fuel and power 5.17% 5.24% 6.62% 7.53% 6.00%

Stores, spares and loose tools consumed 2.76% 2.49% 2.28% 3.45% 1.54%



Insurance 0.33% 0.24% 0.38% 0.18% 0.22%


Processing charges 0.58% 0.43% 0.61% 0.50% 0.56%

Depreciation 5.19% 7.96% 4.88% 5.74% 5.20%

Amortization 0.17% 0.25% 0.33% 0.38% 0.00%


Communication 0.18% 0.15% 0.06% 0.04% 0.08%

Others 0.37% 0.43% 0.46% 0.40% 0.22%

73.90% 79.00% 79.70% 68.35% 79.15%Work in process


Transfer from trial run production 0.00% 0.00% 0.21% 0.00% 0.00%

As at end of the year -10.26% -12.07% -7.01% -5.14% -6.98%

-2.35% -6.90% -2.15% -0.16% -1.51%

Cost of goods manufactured 71.55% 72.10% 77.56% 68.19% 77.64%

Finished goods


Transfer from trial run production/purchases 0.00% 0.00% 0.48% 0.00% 1.78%

As at end of the year -10.99% -8.08% -7.72% -5.99% -17.05%

-5.70% -2.39% -1.82% 6.17% -0.30%

65.85% 69.72% 75.74% 74.37% 77.34%

Gross Profit 34.15% 30.28% 24.26% 25.63% 22.66%

Administrative and selling expensesSalaries, wages and benefits 1.86% 2.16% 2.58% 2.20% 1.66%


Fuel and power 0.13% 0.08% 0.11% 0.07% 0.05%



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Insurance 0.03% 0.07% 0.05% 0.04% 0.01%

Freight and clearing 2.38% 1.86% 2.32% 1.82% 1.54%


Communication 0.33% 0.38% 0.45% 0.43% 0.36%

Advertisement and sales promotion 0.01% 0.09% 0.15% 0.10% 0.22%

Legal and professional charges 0.19% 0.47% 0.18% 0.15% 0.07%

Depreciation 0.14% 0.13% 0.15% 0.23% 0.20%

Fee and subscription 0.12% 0.09% 0.16% 0.08% 0.08%

Amortisation of textile quota 0.00% 0.00% 0.00% 0.53% 0.73%

Donations 0.00% 0.03% 0.00% 0.11% 0.00%

Provision for doubtful debts 0.00% 0.01% 0.00% 0.00% 0.00%

Others 0.04% 0.09% 0.24% 0.19% 0.26%

5.97% 6.57% 8.00% 7.36% 5.87%

Operating profit 28.18% 23.72% 16.26% 18.28% 16.79%

Other income - NetFinancial instruments

Gain on sale of investments 0.19% 1.18% 1.20% 4.51% 0.04%


0.00% -0.10% 0.00% 0.79% 0.22%

Impairment loss on investments available for sale

0.00% -0.02% -0.02% 0.00% 0.00%

Markup on balances with related parties 0.00% 0.19% 0.09% 0.00% 0.00%

Dividend income 5.83% 8.88% 21.65% 0.88% 0.00%

Unrealized loss on derivative financial instruments

-0.11% -0.24% 0.00% 0.66% 0.00%

Foreign exchange gain 0.37% 0.14% 0.00% 0.00% 0.00%

Loss on winding up of subsidiary 0.00% 0.00% 0.00% 0.00% 0.00%

Return on bank deposits 0.01% 0.03% 0.15% 0.41% 0.02%



0.01% 0.00% 0.00% -0.15% 0.01%

Provision for Workers' Profit Participation Fund -0.19% -0.40% -0.16% -0.55% -0.66%

Miscellaneous 0.03% 0.02% 0.02% 0.07% 0.02%

6.13% 9.67% 22.93% 6.61% -0.35%

Finance costMark-up / interest on:

- redeemable capital 5.01% 0.54% 0.45% 0.00% 0.00%

- long term finances 10.85% 3.88% 5.83% 2.12% 0.74%

- short term borrowings 7.62% 10.75% 6.18% 3.99% 2.37%

- balances with related parties 0.11% 0.00% 0.00% 0.00% 0.00%

- liabilities against assets subject to finance lease

0.08% 0.06% 0.16% 0.22% 0.53%

- workers' profit participation fund 0.05% 0.00% 0.02% 0.01% 0.03%

23.71% 15.23% 12.64% 6.33% 3.66%

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By: Yasir Rehman

Bank charges and commission 0.72% 0.79% 0.78% 0.64% 0.26%

24.43% 16.02% 13.42% 6.98% 3.92%

Profit before taxation 9.88% 17.37% 25.77% 17.91% 12.52%

Taxation -1.01% -1.09% -2.36% -1.15% -0.63%

Profit after taxation 8.87% 16.29% 23.41% 16.76% 11.89%

ANALYTICAL REVIEW OF VERTICLE PROFIT & LOSS ACCOUNT

Amounts 2009 2008 2007 2006 2005CGS 65.85% 69.72% 75.74% 74.37% 77.34%

As we can see from the vertical profit and loss account the Cost of sales decreased in 2008 by 69% and it decreased by 65% in 2009.

Gross profit increased in 2008 by 30% as compared to 2007 and in 2007 it had decreased by 24% as compared to 25% in 2006.

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Gross Profit 34.15% 30.28% 24.26% 25.63% 22.66%

Net Profit 8.87% 16.29% 23.41% 16.76% 11.69%

By: Yasir Rehman

In year 2008 the profit/loss after taxation was fluctuated and showing a mixed trend in last five years. As in it starts with 11.69% in 2005 and showing an increasing trend up to 2007, but in 2008 it decreased again and lowest in 2009 which is 8.87%.

Net Profit is highest in 2007 which is 23.41%. Whether there is a decreased in net profit of Azgard9 in last two years but I expect that there is a rising boom in profits of the company in future.

Finally the company is improving with the passage of time. Although the profits are not

very adequate but the management is very confident that they are working hard and the

company will prosper in coming years as most of the capital work has been completed.

RATIO ANALYSIS

The term "accounting ratios" is used to describe significant relationship between

figures shown on a balance sheet, in a profit and loss account, in a budgetary control

system or in any other part of accounting organization. Accounting ratios thus shows the

relationship between accounting data.

Ratio analysis is very important while measuring the performance of the business.

These ratios are carried out from the Income statement and balance sheet. Many parties

including management, investors and Government are interested in these ratios. The

purpose of analysis is to measure the performance of the company and financial health of

the organization.

Advantages of Ratios Analysis

Ratio analysis is an important and age-old technique of financial analysis. The following

are some of the advantages of ratio analysis:

Simplifies financial statements:

It simplifies the comprehension of financial statements. Ratios tell the whole story of

changes in the financial condition of the business

Facilitates inter-firm comparison:

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It provides data for inter-firm comparison. Ratios highlight the factors associated with

successful and unsuccessful firm. They also reveal strong firms and weak firms,

overvalued and undervalued firms.

Helps in planning:

It helps in planning and forecasting. Ratios can assist management, in its basic functions

of forecasting for Planning, co-ordination, control and communications.

Makes inter-firm comparison possible:

Ratios analysis also makes possible comparison of the performance of different

divisions of the firm. The ratios are helpful in deciding about their efficiency or

otherwise in the past and likely performance in the future.

Help in investment decisions:

It helps in investment decisions in the case of investors and lending decisions in the

case of bankers etc.

Limitations of 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.

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

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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.

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.

Problems of price level changes: A change in price level can affect the validity of ratios

are 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.

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.

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.

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.

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.

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Ratio Analysis

Ratio analysis involves the methods of calculating and interpreting financial ratios to

access the firm’s performance and status. The basic inputs to ratio analysis and firm’s

income statement and balance sheet for the periods to be examined.

TYPES OF RATIO ANALYSIS

Two types of Ratio Analysis are generally carried out,

1. Cross Sectional Approach, in this approach, the effectiveness of business is

compared with the competitors business of the same period.

2. Most companies use the Time Series Analysis in which the performance of

company over a period is measured.

Ratio Analysis categories:

A) Liquidity

B) Turnover

C) Profitability

D) Leverage

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By: Yasir Rehman

LIQUIDITY RATIOS:

Liquidity ratios are the ratios for testing short term solvency or financial position of a business. These are designed to test the ability of the business to meet its short term obligation promptly. A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts.

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.

Components:

The two basic components of this ratio are current assets and current liabilities. Current assets include cash and those assets which can be easily converted into cash within a short period of time, generally, one year, such as marketable securities or readily realizable investments, bills receivables, sundry debtors, (excluding bad debts or provisions), inventories, work in progress, etc. Prepaid paid expenses should also be included in current assets because they represent payments made in advance which will not have to be paid in near future. Current liabilities are those obligations which are payable within a short period of tie generally one year and include outstanding expenses, bills payable, sundry creditors, bank overdraft, accrued expenses, short term advances, income tax payable, dividend payable, etc. However, some times a controversy arises that whether overdraft should be regarded as current liability or not. Often an arrangement with a bank may be regarded as permanent and therefore, it may be treated as long term liability. At the same time the fact remains that the overdraft facility may be cancelled at any time. Accordingly, because of this reason and the need for conversion in interpreting a situation, it seems advisable to include overdrafts in 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 convertible into cash, and, therefore firm may have less cash to pay off current liabilities.

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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.

Significance

This ratio is a general and quick measure of liquidity of a firm. It represents the margin of safety or cushion available to the creditors. It is an index of the firm’s financial stability. It is also an index of technical solvency and an index of the strength of working capital.

A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. An increase in the current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio represents that there has been deterioration in the liquidity position of the firm. A ratio equal to or near 2: 1 is considered as a standard or normal or satisfactory. The idea of having doubled the current assets as compared to current liabilities is to provide for the delays and losses in the realization of current assets. However, the rule of 2:1 should not be blindly used while making interpretation of the ratio. Firms having less than 2 : 1 ratio may be having a better liquidity than even firms having more than 2 : 1 ratio. This is because of the reason that current ratio measures the quantity of the current assets and not the quality of the current assets. If a firm's current assets include debtors which are not recoverable or stocks which are slow-moving or obsolete, the current ratio may be high but it does not represent a good liquidity position.

current ratio current assets/current liabilitiesyear 2009 2008 2007 2006 2005

Azgard 9 1.08 1.51 1.14 1.09 1.25

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1.08

1.51

1.14 1.091.25

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

2009 2008 2007 2006 2005

Comments:

Current Ratio clears the extent to which the claim of short term creditors can be met by assets that are to become cash within a year. The best standard ratio is 2:1 so, the Azgard Nine has current ratio below standard. There is a mixed trend from 2005 to 2009.

Current ratio shows that how many times current assets are available to meet its current liabilities. Azgard Nine current ratio shows mixed trend and it has grater than 1:1 but only in 2007 it is higher than other years.

Liquidity or Acid Test or Quick Ratio:

Liquid ratio is also termed as "Liquidity Ratio”,” Acid Test Ratio" or "Quick Ratio". It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm to pay its short term obligations as and when they become due

Components:

The two components of liquid ratio (acid test ratio or quick ratio) are liquid assets and liquid liabilities. Liquid assets normally include cash, bank, sundry debtors, bills receivable and marketable securities or temporary investments. In other words they are current assets minus inventories (stock) and prepaid expenses. Inventories cannot be termed as liquid assets because it cannot be converted into cash immediately without a loss of value. In the same manner, prepaid expenses are also excluded from the list of liquid assets because they are not expected to be converted into cash. Similarly, Liquid liabilities means current liabilities i.e., sundry creditors, bills payable, outstanding expenses, short term advances, income tax payable, dividends payable, and bank overdraft (only if payable on demand). Some time bank overdraft is not included in current liabilities, on the argument that bank overdraft is generally permanent way of

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By: Yasir Rehman

financing and is not subject to be called on demand. In such cases overdraft will be excluded from current liabilities.

Significance:

The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It measures the firm's capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio. It is used as a complementary ratio to the current ratio. Liquid ratio is more rigorous test of liquidity than the current ratio because it eliminates inventories and prepaid expenses as a part of current assets. Usually high liquid ratios and indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm's liquidity position is not good. As a convention, generally, a quick ratio of "one to one" (1:1) is considered to be satisfactory.

quick ratio (current assets-stock)/current liabilitiesyear 2009 2008 2007 2006 2005

Azgard 9 0.69

1.15 0.88 0.64 0.71

0.69

1.15

0.880.64 0.71

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2009 2008 2007 2006 2005

Comments:

The acid test ratio is also below standard due to heavy short term borrowings. Azgard Nine acid test ratio decreased in year 2006 and in 2008. The rise in current liabilities is due to the expansion of project and short and long term financing. Azgard Nine liquidity is less than standard except in year 2008. Azgard Nine position is not at considerable point. It shows decreasing trend in 2006 and in 2009 and less than 1:1. But it has increasing position in 2008.

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Turnover/ Activity ratios:

Activity ratios are measures of how well assets are used. Activity ratios -- which are, for the most part, turnover ratios -- can be used to evaluate the benefits produced by specific assets, such as inventory or accounts receivable. Or they can be use to evaluate the benefits produced by all a company's assets collectively.

These measures help us gauge how effectively the company is at putting its investment to work. A company will invest in assets – e.g., inventory or plant and equipment – and then use these assets to generate revenues. The greater the turnover, the more effectively the company is at producing a benefit from its investment in assets

Inventory days.

The number of day’s inventory is also known as average inventory period and inventory holding period. A high number of days inventory indicates that there is a lack of demand for the product being sold. A low days inventory ratio (inventory holding period) may indicate that the company is not keeping enough stock on hand to meet demands. The number of day’s inventory and inventory turnover ratios are included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Inventory Days Inventory Days = Inventory / Cost of Sales*365year 2008 2007 2006 2005 2004

Azgard 9 221.08 177.42 199.34 225.76 208.57

221.08

177.42

199.34

225.76208.57

0

50

100

150

200

250

2009 2008 2007 2006 2005

Comments:

Azgard Nine inventory days increased in 2006 as compare to 2005 and decreased in 2007 and in 2008 and show increasing in 2009 which shows that management is not efficient for managing inventory period.

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Debtors Turnover Ratio or Receivables Turnover Ratio :

Debtor’s turnover ratio indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year.

Significance of the Ratio:

This ratio indicates the number of times the debtors are turned over a year. The higher the value of debtor’s turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It is the reliable measure of the time of cash flow from credit sales. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm.

Debtor's day Trade debtors/Credit sales*365year 2009 2008 2007 2006 2005

Azgard 9 64 91 85 84 109

64

91

85

84

109

193

2009

2008

2007

2006

2005

Comments:

Graph shows that Azgard Nine has a good debtor management to receive the debt or collect the receivables and shows positive trend. It starts in 2005 with 109 but decreases gradually in years 2006 and 2007, then again increases in 2008 by 91. but in 2009 it covers good results as it is decreased by 64.

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Creditors / Accounts Payable Turnover Ratio:

This ratio is similar to the debtor’s turnover ratio. It compares creditors with the total credit purchases. It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include both sundry creditors and bills payable. Same as debtor’s turnover ratio, creditor’s turnover ratio can be calculated in two forms, creditors’ turnover ratio and average payment period.

Significance of the Ratio:

The average payment period ratio represents the number of days by the firm to pay its creditors. A high creditor’s turnover ratio or a lower credit period ratio signifies that the creditors are being paid promptly. This situation enhances the credit worthiness of the company. However a very favorable ratio to this effect also shows that the business is not taking the full advantage of credit facilities allowed by the creditors.

Creditors days Trade Creditors/Credit Sales*365year 2009 2008 2007 2006 2005

Azgard 9 49 57 93 65 80

49 57 93 65 80

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2008 2007 2006 2005

Comments:

Azgard Nine creditor’s days increase in 2005 to 2007 and decrease in 2006 to 2008 and in 2009. Azgard Nine credit management is better in 2007; it has 93 days for payment which shows it efficiency in 2007. If we compare creditor’s days to debtors day than we can see that Azgard Nine is going better to manage its resources

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By: Yasir Rehman

Total Assets Turnover Ratio.

The total assets turnover ratio measures the use of all assets in terms of sales, by comparing sales with net total assets. This interactive tutorial walks you through the calculations as well as where on the financial statements to find the numbers.

Formula Sales/ Total Assetsyear 2009 2008 2007 2006 2005

Azgard 9 0.37

0.28

0.21

0.42

0.50

0.37

0.28

0.21

0.42

0.5

0

0.1

0.2

0.3

0.4

0.5

0.6

2009 2008 2007 2006 2005

Comments:

In the above graph we can see that total asset turnover ratio of Azgard Nine Company showing mix trend in the year 2005 to year 2009. Total asset turnover ratio is at highest level in year 2005 and as it compare with 2007 in which it is lower as 0.21.

But Azgard Nine overall situation regarding to total asset turnover ratio is bad than other competitor.

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By: Yasir Rehman

Fixed Assets Turnover Ratio:

Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets

Formula Cost of sales / Fixed Assetsyear 2009 2008 2007 2006 2005

Azgard 9 0.8

6 0.60

0.49

1.06

0.86

0.86

0.6

0.49

1.06

0.86

0

0.2

0.4

0.6

0.8

1

1.2

2009 2008 2007 2006 2005

Comments:

It shows the utilization of fixed assets, Azgard Nine decreasing the utilization of its fixed assets and it has lower times in 2007 which is 0.49.somore utilization of fixed assets and at highest level in 2006 as it is 1.06.A decreasing trend in year 2007 and after it increasing trend still 2009. It shows an equal trend in 2005 and 2009 that is of 0.86.

I expect that by showing an increasing trend in last two years Azgard9 manage its fixed assets more efficiently in future.

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By: Yasir Rehman

Profitability Ratios:

Profitability ratios (also referred to as profit margin ratios) compare components of income with sales. They give us an idea of what makes up a company's income and are usually expressed as a portion of each dollar of sales. The profit margin ratios we discuss here differ only by the numerator. It's in the numerator that we reflect and thus evaluate performance for different aspects of the business: The gross profit margin is the ratio of gross income or profit to sales. This ratio indicates how much of every dollar of sales is left after costs of goods sold.

Gross Profit (GP) Ratio:

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.

Components:

The basic components of the calculation of gross profit ratio are gross profit and net sales. Net sales mean those sales minus sales returns. Gross profit would be the difference between net sales and cost of goods sold. Cost of goods sold in the case of a trading concern would be equal to opening stock plus purchases, minus closing stock plus all direct expenses relating to purchases. In the case of manufacturing concern, it would be equal to the sum of the cost of raw materials, wages, direct expenses and all manufacturing expenses. In other words, generally the expenses charged to profit and loss account or operating expenses are excluded from the calculation of cost of goods sold.

Significance:

Gross profit ratio may be indicated to what extent the selling prices of goods per unit may be reduced without incurring losses on operations. It reflects efficiency with which a firm produces its products. As the gross profit is found by deducting cost of goods sold from net sales, higher the gross profit better it is. There is no standard GP ratio for evaluation. It may vary from business to business. However, the gross profit earned should be sufficient to recover all operating expenses and to build up reserves after paying all fixed interest charges and dividends.

Formula Gross profit/Sales*100year 2009 2008 2007 2006 2005

Azgard 9 34.15

30.28

24.26

25.63

22.66

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By: Yasir Rehman

34%30.28%

24.26% 25.63%22.66%

0%

5%

10%

15%

20%

25%

30%

35%

40%

2009 2008 2007 2006 2005

Comments:

Gross profit of Azgard Nine Company increasing in 2006 and also in year 2008 and 2009 but decrease in 2007, Due to inflation and economic instability in Pakistan and irregular power supply of WAPDA. Gross Profit ratio show increasing trend in 2008 to 2009 due to good economic and financial situation of world and good market situation in Pakistan.

Operating Profit Ratio:

Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is generally expressed in percentage. It measures the cost of operations per dollar of sales. This is closely related to the ratio of operating profit to net sales.

Components:

The two basic components for the calculation of operating ratio are operating cost (cost of goods sold plus operating expenses) and net sales. Operating expenses normally include (a) administrative and office expenses and (b) selling and distribution expenses. Financial charges such as interest, provision for taxation etc. are generally excluded from operating expenses.

Significance:

Operating ratio shows the operational efficiency of the business. Lower operating ratio shows higher operating profit and vice versa. An operating ratio ranging between 75% and 80% is generally considered as standard for manufacturing concerns. This ratio is considered to be a yardstick of operating efficiency but it should be used cautiously because it may be affected by a number of uncontrollable factors beyond the control of the firm. Moreover, in some firms, non-operating expenses from a substantial part of the total expenses and in such cases operating ratio may give misleading results

Formula Operating Profit Margin = Operating profit /Sale*100

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By: Yasir Rehman

year 2009 2008 2007 2006 2005Azgard 9 28.18 23.72 16.26 18.38 16.79

28%

23.72%

16.26%18.38%

16.79%

0%

5%

10%

15%

20%

25%

30%

2009 2008 2007 2006 2005

Comments:

Azgard Nine company operating profit increasing in 2006, 2008 and 2009 and decreasing in 2007. Operating profit of organization show increasing trend in 2005, 2006 and 2008 to 2009 but decreases in 2007 due to increase in operating expenses.

I expect that Azgard9 must control its operating expense to maintain a good position and hold a reliable market share in the industry.

Net Profit/ (Loss) after Tax:

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

Significance:

NP ratio is used to measure the overall profitability and hence it is very useful to proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall not be able to achieve a satisfactory return on its investment. This ratio also indicates the firm's capacity to face adverse economic conditions such as price competition, low demand, etc. Obviously, higher the ratio the better is the profitability. But while interpreting the ratio it should be kept in mind that the performance of profits also be seen in relation to investments or capital of the firm and not only in relation to sales.

Components of net profit ratio:

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By: Yasir Rehman

The two basic components of the net profit ratio are the net profit and sales. The net profits are obtained after deducting income-tax and, generally, non-operating expenses and incomes are excluded from the net profits for calculating this ratio. Thus, incomes such as interest on investments outside the business, profit on sales of fixed assets and losses on sales of fixed assets, etc are excluded.

Formula Net profit after tax/Sales*365year 2009 2008 2007 2006 2005

Azgard 9 8.87 16.29 23.41 16.76 11.89

11.89%

16.76%

23.41%

16.29%

9%

0%

5%

10%

15%

20%

25%

2009 2008 2007 2006 2005

Comments:

The Net Profit margin tells us the ability of a company to generate the earning after meeting all costs of business. There is an increase in net profit in 2006 and in 2007 as compare to 2005. In year 2009 company earned a minimum net profit in last five years. The ratio has decreased as compare to previous year due to increase in sale and expansion of project and finance cost. The other organization has mix trend.

Return on Assets:

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By: Yasir Rehman

Where asset turnover tells an investor the total sales for each $1 of assets, return on assets [or ROA for short] tells an investor how much profit a company generated for each $1 in assets. The return on assets figure is also a sure-fire way to gauge the asset intensity of a business. Companies such as telecommunication providers, car manufacturers, and railroads are very asset-intensive, meaning they require big, expensive machinery or equipment to generate a profit. Advertising agencies and software companies, on the other hand, are generally very asset-light (in the case of a software companies, once a program has been developed, employees simply copy it to a five-cent disk, throw an instruction manual in the box, and mail it out to stores).

Formula Net Income / Total Assets*100year 2009 2008 2007 2006 2005

Azgard 9 3.28 4.57 4.94 7.03 5.96

3.28

4.57 4.94

7.03

5.96

0

1

2

3

4

5

6

7

8

2009 2008 2007 2006 2005

Comments:

This ratio measures the return of total investment of the business. Azgard Nine company show mix trend and in 2006 it is at maximum point than others. Decreasing trend from year 2007 to year 2009. It decreases in 2007 to 2009 and increase in 2006, it is at highest point in 2006, which is 7.03, and at lowest in 2009 at 3.28.

Return on Capital Employed (ROCE) Ratio:

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By: Yasir Rehman

Capital employed and operating profits are the main items. Capital employed may be defined in a number of ways. However, two widely accepted definitions are "gross capital employed" and "net capital employed". Gross capital employed usually means the total assets, fixed as well as current, used in business, while net capital employed refers to total assets minus liabilities. On the other hand, it refers to total of capital, capital reserves, revenue reserves (including profit and loss account balance), debentures and long term loans.

Formula Profit before interest and taxation / Capital Employed *100year 2009 2008 2007 2006 2005

Azgard 9 5.87 6.60 8.27 13.00 10.73

5.87% 6.60%

8.27%

13%

10.73%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

2009 2008 2007 2006 2005

Comments:

Azgard Nine return on capital employed is high 2005 and it increase in 2006 but it has decreased in 2007 to 2009. This return on capital employed increase in 2005 to 2006 and decreases in 2007 and in 2009. Azgard Nine return on equity becomes higher then its competitors.

RETURN ON EQUITY CAPITAL (ROE) RATIO:

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By: Yasir Rehman

In real sense, ordinarily 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 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.

Equity share capital should be the total called-up value of equity shares. As the profit used for the calculations are the final profits available to equity shareholders as dividend, therefore the preference dividend and taxes are deducted in order to arrive at such profits.

Formula[(Net profit after tax − Preference dividend) / Equity share capital] × 100

YEARS 2009 2008 2007 2006 2005Azgard 9 8.86 11.11 12.48 23.97 14.95

8.86 11.1112.48

23.97

14.95

0

5

10

15

20

25

30

2009 2008 2007 2006 2005

Comments:

In 2006 Azgard Nine Company return on equity ratio is at highest point and better, in 2007 to 2009 it decreases. Company shows mixed trend. It is going higher in 2005 and than decrease in 2007 to 2009 and it becomes higher in 2006. It is the highest point then competitors.

LEVERAGES RATIOS:

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By: Yasir Rehman

A company can finance its assets either with equity or debt. Financing through debt involves risk because debt legally obligates the company to pay interest and to repay the principal as promised. Equity financing does not obligate the company to pay anything -- dividends are paid at the discretion of the board of directors. There is always some risk, which we refer to as business risk, inherent in any operating segment of a business. But how a company chooses to finance its operations -- the particular mix of debt and equity -- may add financial risk on top of business risk financial risk is the extent that debt financing is used relative to equity. Financial leverage ratios are used to assess how much financial risk the company has taken on. There are two types of financial leverage ratios: component percentages and coverage ratios. Component percentages compare a company's debt with either its total capital (debt plus equity) or its equity capital. Coverage ratios reflect a company's ability to satisfy fixed obligations, such as interest, principal repayment, or lease payments.

DEBT TO EQUITY RATIO:

Debt-to-Equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. It is also known as external internal equity ratio. It is determined to ascertain soundness of the long term financial policies of the company.

Debt to Equity Ratio Short Term Debt + Long Term Debt Total Shareholders Equity

YEAR 2009 2008 2007 2006 2005Azgard 9 2.42 1.79 2.51 2.01 1.29

0

0.5

1

1.5

2

2.5

3

2009 2008 2007 2006 2005

Comments:

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By: Yasir Rehman

Azgard Nine debt to equity ratio is lowest point in 2005 and after that it has decrease its situation in next coming years and increases the ratio, except in year 2008 when debt to equity ratio of Azgard9 is lower to 1.79 and then increases in 2009 by 2.42for expansion of project and their short and long term debts increased.

It shows that Azgard nine position in debt to equity is better then its competitors.

DEBT SERVICE RATIO OR INTEREST COVERAGE 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.

Significance of debt service ratio:

The interest coverage ratio is very important from the lender's point of view. It indicates the number of times interest is covered by the profits available to pay interest charges.

Interest Coverage Ratio

FormulaNet Profit Before Interest and Tax / Fixed Interest Charges

YEAR 2009 2008 2007 2006 2005Azgard 9 0.40 1.08 1.92 2.43 2.73

0.41.08

1.92

2.43

2.73 2009

2008

2007

2006

2005

Comments:

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By: Yasir Rehman

Interest Cover Ratio shows that how many times interest is earned by the company. Azgard Nine Company shows decreasing trend from 2005 to 2009 which indicates negative sign for the company and it has unavailability the funds to pay interest expense. Azgard Nine, in 2008 and 2009 Interest cover ration of the company is not very healthy and it shows that the financial costs are very high and earnings are very low. Management must look into the matter and should improve this ratio. In year 2009 Company earned 0.40 interests which are lower among all year not easy to pay the interest expense.

INVESTMENTS / SHARE HOLDER RATIOS:

Relationship of gains from investments (including realized capital gains) resulting from insurance operations to earned premiums.

EARNINGS PER SHARE (EPS) RATIO:

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 less preference dividend by the total number of equity shares.

Significance:

The earnings per share are a good measure of profitability and when compared with EPS of similar companies, it gives a view of the comparative earnings or earnings power of the firm. EPS ratio calculated for a number of years indicates whether or not the earning power of the company has increased.

Formula Profit after tax/No. of sharesYEAR 2009 2008 2007 2006 2005

Azgard 9 2.65 3.26 4.97 7.42 4.31

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By: Yasir Rehman

P ric e E arning R atio2.65

3.26

4.977.42

4.31

2009

2008

2007

2006

2005

Comments:

The earning per share of company shown mixed trend in above diagram, earning per share of Azgard Nine company increase in 2006 as compare it to 2005 and it is at highest point in this year and than it decrease in 2007, and it goes more down in 2008 and 2009 which mean there is no earning and it going down. The company should better mange its financial position and improve its performance to get out this fall in earning per share.

EARNINGS YIELD

The earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each dollar invested in the stock that was earned by the company.

Formula Earning Per Share / Market Price Per Share * 100YEARS 2009 2008 2007 2006 2005

Azgard 9 4.30 6.26 22.54 23.19 19.16

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By: Yasir Rehman

4.36.26

22.54

23.19

19.16

2009

2008

2007

2006

2005

Comments:

Earning Yield of Azgard Nine was at lowest point in 2009 due to economic crises. But it has very good condition in 2005 to 2007.Azgard Nine is at lowest point in 2009 due to economic and financial crises and purchase a project of fertilizers.

Market Value of Share

MARKET VALUE OF SHARE

YEARS 2009 2008 2007 2006 2005Azgard 9 61.56 52.10 22.05 32.00 22.50

61.56

52.1

22.05

32

22.5

2009

2008

2007

2006

2005

Comments:

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By: Yasir Rehman

Graph shows that market value of share of Azgard Company is high in 2008 to 2009 as compare to 2006 and 2008. In 2009 it is at highest point, market value of Azgard Nine show mixed trend and Azgard Nine market value of share at high point in 2009 and at lower point in 2007 at 22.05.

PRICE EARNING RATIO (P/E RATIO):

Price earning ratio (P/E ratio) is the ratio between market price per equity share and earning per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company

Significance of Price Earning Ratio:

Price earnings ratio helps the investor in deciding whether to buy or not to buy the shares of a particular company at a particular market price

Generally, higher the price earning ratio the better it is. If the P/E ratio falls, the management should look into the causes that have resulted into the fall of this ratio.

Formula Market price per equity share / Earnings per shareYEARS 2009 2008 2007 2006 2005Azgard 9 23.23 15.98 4.44 4.31 5.22

5.224.314.44

15.98

23.23

0

5

10

15

20

25

2009 2008 2007 2006 2005

Comments:

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By: Yasir Rehman

Price earning ratio of Azgard Nine decreasing from 2005 to 2007 which is not beneficial for the company also unfavorable for the investor and encourage the investors to invest but increase in 2008 and 2009 and at very good position in 2008 and then become better in 2009, it shows that there is increase in market value of share and decrease in value of earning per share.

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By: Yasir Rehman

HORIZONTAL AND VERTICAL ANALYSIS

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Common

Size

Analysis

Vertical

Analysis

Common

Base Year

Analysis

Horizontal

Analysis

Common

Statements

Analysis

By: Yasir Rehman

HORIZONTAL ANALYSIS

"In the base statement of previous year every item is given 100% and is subsequent

years these are changed to the related percentages as per base years.”

Importance

Comparative statement can be prepared for several years in a columnar form. The

changes from period to period can be reflected by establishing a base year and making it

100%. Thereafter all such changes are reflected in percentages. This analysis is

invaluable to management and other analysts because the absolute large data are

condensed into percentages. The purpose of horizontal analysis is to highlight the

changes.

Balance Sheet

The purpose o balance sheet is to reflect financial position of an entity on a particular

date. The balance sheet consists of assets, which are the property of the entity, the

liabilities, which are the debts payable to outside investors or suppliers of goods and

services, and the shareholder’s equity, which represents owners’ interest in the entity. At

any given date, assets must be equal to the contributions of the creditors and owners.

Profit And Loss Account

Profit and loss account is also named income statement or income statement or

income and expenditure account or statement of operations and encompasses all sources

of revenue, gain and losses and expenses for a particular period, grouped into various

headings as per charts of accounts of a company. In other words, it summarizes the

results of operations for an accounting period. The net income is closed by transfer to

balance sheet after paying the dividends and appropriations. Sometimes an appropriation

is made to general reserve and still some portion is left as retained earning. The

procedure of horizontal analysis of profit and loss account is same as of balance sheet.

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By: Yasir Rehman

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By: Yasir Rehman

Non-Current Assets

As we can see from the horizontal balance sheet analysis of two years, the total non-

current assets have shown increasing trend. In 2007 it increases 1% from 2006 and it

increases in 2008 by 14% as compare to 2007. This shows heavy investment in fixed

assets by the management.

Operating fixed assets showed decreasing trend in 2007 by 6.53% and it decreases

8.02% in 2008. Capital work in process increased by 430.94% in year 2007, increased by

18.06% in year 2008 respectively. Lon-term loans and advances has shown an increasing

trend in 2007 by 1682.45%in 2007 and decreased by 16.60%. Its long term deposits

decreased in 2007 by 76.08% and increases in 2008 by 14.18%.

Current Assets

Store, spare and tools has shown Increased in 2007 as compare to 2006 by 23% and

increased in 2008 by 61%, which shows that company is in good position as liquidity

point of view. Stock in trade shows increasing trend and increased in 2007 by 11% and

in 2008 increased by 80%. This average stock of inventory is indication of good

inventory management. Trade debts has shown increasing trend in 2007 as compare to

2006 by 46% and it increased by 7% in 2008.Receivable management is efficient in 2008

by showing decreasing trend. Loans and advances showed an increasing trend it

increased in 2007 by 17% and in 2008 it decreases 21%. Cash and cash in bank have also

shown decreasing trend in 2007 and increasing trend in 2008.

Equity and Liabilities

Share capital show a changing trend in 2007 by 0% and 1% increasing trend in 2008.

Reserves have decreased in year 2007 by 1% and no change in 2008, which shows that

company, has utilized all its reserves for expansion of project. Accumulated profit

increased in 2007 by 33% and increased in 2008 by 15%.

Non-Current Liabilities

Non-current liabilities have also shown an increasing trend in 2007 and decrease

trend in 2008. There is a sharp increase year 2007 and a decrease in year 2008. Long

term security deposits and retention money also decreases in 2007 by 16% and decreased

in 2008 by 10% as compare to 2006 and 2007 respectively. Liabilities against assets

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By: Yasir Rehman

increases in2007 by 49% and decreased in 2008 by 76% as compare to 2006 and 2008

respectively.

Current Liabilities

Total current liabilities have also shown a decreasing trend in 2007 and an increasing

trend in 2008. This is also inline with decrease and increase in current assets of the

company. Short term financing is taken to meet the working capital requirements.

Company is not meeting its obligation on regular basis which is evident from an increase

in the current portion of long term debts under current liabilities head of the balance

sheet.

Trade payables decreased in 2007 but increased in 2008 by 31%. Markup on secured

loans also increased in 2007 by 63% in 2007and 47% in 2008 respectively. Short term

borrowing also decreased by 36% in 2007 and an increased by 72% in 2008 as compare

to 2006 and 2007 respectively.

Finally, size of the company has increased during the last five years. More

investment is made in capital assets. Company is in expansion phase since the base year.

Investment in new expansion project and technology is being made in order to keep pace

with changing business environment.

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By: Yasir Rehman

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By: Yasir Rehman

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By: Yasir Rehman

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By: Yasir Rehman

ANALYTICAL REVIEW OF VERTICLE ANALYSIS OF BALANCE SHEET

ASSETS

Non-Current Assets

As we can see from the vertical balance sheet of the company total fixed assets are constant in relation to total assets with little variations. The management is more focusing on working capital management than on fixed asset in last three years as shown by the vertical balance sheet.

Property, plant and equipment have shown a mix trend with improvement in year 2006 which was 33% and then a increase in 2007 which was 32% and after that improvement in last year 2008 that was 28% Capital work in progress was increased in 2006 as compare to 2007, Store spare held for capital expenditures increase in 2007 and 2008. Long-term deposits increased by 0.09% in 2006 and 0.06% and 0.03% increased in 2007 and 2008.

Current Assets

Total current assets have shown an increasing trend over the last three year period. Stores and spares declined in year 2007 after that it has shown an increasing trend. In 2006 it increased by 7.97%, n 20073.02% and in 2008 it was 5.40%.

Stock in trade has shown an increasing trend while in the last year it shows a little decline. Stock in trade is about 2.93% of the total current assets in 2006 and it was 2.03% of total assets in 2007 and 1.34% in 32008. Stores and spares have the largest portion among all current assets. Receivable had 3.09% o total assets in 2006 and they were 1.90% in 2007 and 3.13% in 2008. Trade debtors were 0.70% in 2006, 0.35% in 2007 and 0.12% in 2008. Cash and cash equivalent were 21.34% in 2006, 2.15% in 2007 and 0.29% n 2008. This trend shows that more funds are tied in receivable, inventories and in stores & spares.


Share capital and reserves have shown decreasing trend. Un-appropriated profit has shown decreasing trend and company had beard loss in 2008. The company is now focused on its expansion of projects to increase its capacity of production and improving since year 2005. Currently company is not paying dividends to shareholders. Issued, subscribed and paid up capital was 30.05% of total liabilities in 2006 but reduced up to 16.54% in 207 and it was 15.35% in 2008. Reserves were also decreased due to bonus issue they were 12.65%, 6.44% and 3.09% in 2006, 2007 and 2008 respectively.

Non-Current Liabilities

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By: Yasir Rehman

Total long-term liabilities of the company have shown increasing trend in relation to total liabilities except marginally increase in year 2008. The company is focusing on equity financing than debts due to the higher financing costs. Liabilities against assets have shown a mix trend over the last three year period.

Long term financing was 7.71% in 2006, 43.93% in 2007 and 39.11% in 2008 to all of its liabilities.

Current Liabilities

Short term liabilities have shown an increasing trend during the last three years as shown in the vertical balance sheet of the company. Trade and other payables have shown an increasing trend with a marginal increase in last year. Trade payables deceased in 2007 and 2008; in 2006 they were 7.38%, 2.91%in 2007 and 3.21% in 2008. Sort term financing increased, it was 1.86% in 2006, 2.38% in 2007 and 14.387% in 2008.

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By: Yasir Rehman

CHAPTER # 03

1. Company Analysis

2. Company Life Cycle

3. Company award of the year 2008

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By: Yasir Rehman

COMPANY ANALYSIS:

Azgard nine limited fulfills all its targets of supplies in the market and also expands

its production with the needs of market. In these days company is in its growth stage.

Now the company has three production units including two units for textile produce and

one for Fertilizers. The growth in demand of garments in Asia, India and Middle East,

particularly supply deficit in Europe and USA has geared up export opportunities for

garment Industry of Pakistan. Supply deficit in Europe has resulted in significant demand

for Pakistani garment due to Europe’s geography. European’s import authority standards

have approved Azgard nine for import to Europe. This demand will also be supported by

closing down of some garment units in Europe due to their strict laws governing

pollution control and other environment hazards. Being one of the big garment units of

Pakistan and due to its high quality Azgard Nine is the prime of choice of the

International buyers all over the world. Azgard Nine is committed to provide high

quality garment to its international customers and is being exported to Germany, India,

Middle East, Europe and Africa. Azgard Nine conveniently meets all the International

standards including American, British, Indian and European standards. Azgard Nine is

an ISO 9001-2000 and ISO 14001-2004 certified company and follows all rules and

regulations of the government. Company’s social performance is also good. It has good

cooperation with community and the environment. It is only one company of Pakistan

that has install water filtration plant in its production units in MANGA MANDI.

Company has a good relation with their workers and also trying for their welfare.

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By: Yasir Rehman

Company Life Cycle

Last Five Years Sales of the Company

Comments:

In the above graph you can see in the year 2008 sale of the company at highest point and it is showing increasing trend from 2004 so company sale is at increasing side in the year of 2004 to 2008 there is no much difference between the sale this increasing trend due to expansion of plant and due to the consumption and the demand in the market so we can say that Azgard nine’s product’s demand is increasing in the local market and international market.

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By: Yasir Rehman

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By: Yasir Rehman

CHAPTER # 04

1. Five Years Review

2. Recommendation

3. Conclusion

4. Bibliography

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By: Yasir Rehman

FIVE YEARS REVIEW

Explanation:

In the above chat we can see the profit position of the company during the year 2004 to 2008 in these five years company profitability position is better in 2006 as compare it with other years, so we can say that company was in much better position in 2006.

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By: Yasir Rehman

Review

For last five year review,

In 2004, the profitability of the Company has increased considerably in year 2004 due to stability in the prices of Products and increase in capacity utilization. Company has earned after tax profit of Rs. 375.262 million after accounting for all charges.

To meet the increasing demand for the product of Azgard Nine and maintain its shares in the market, company has planned to purchase a new Garment plant within the premises of Kasur. Company has started work on this new plant and its give help to meeting the demand to local and international markets.

In 2005, sale revenue was Rs. 4422.472 million reflecting a growth of 40% over last year. The cost of sales has increased by 35% during the year, which is mainly due to persistent Prices hike in coal and furnace oil. The company has earned after tax profit of Rs 741.293 million. The profitability of the company has increased considerably in the current year due to stability in the prices of products and increase in capacity utilization.

In 2006, sales revenue is Rs. 4889.68 million reflecting a growth of 11% over last year. The company has earned after tax profit of Rs. 1144.51 million. The profitability of the company has increased considerably in the current year due to better retention prices and new plant capacity utilization.

In 2007, sales revenue for 2007 was Rs.6628.34 million reflecting increase of 36% from last year. The company has earned after tax profit of Rs. 1079.45 million. The profitability of the company has increased considerably in the current year due to better demand.

In 2008, sales revenue was 10113.49 million reflecting an increase of 53% from previous year. The company has earned after tax profit of Rs. 897.28 million. Down fall in the profitability of the company is mainly attributable to increase in cost of input prices of coal and diesel etc.

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By: Yasir Rehman

RECOMMENDATIONS

1. The most important thing for improvement is that Company should Re-arrange

the responsibilities and authorities of all the major departments. Along with this

there should be a proper check and balance system in order avoid from any sort

of departmental overlapping.

2. The location of Head office is very critical for Company. It should near to

Factory in order to handle all the operations in better way.

3. Company should remove unionized employees which are providing problems to

management. For this purpose they should use Golden Hand Shake or other

options.

4. The selection criteria should also be improved. The company should select the

educated and experienced employees and along with there should be a proper

training system for them.

5. The Company should be maintain and established the internal audit and

accounting system according to the standard and requirement of the company

ordinance 1984.

The implementations of all these points can lead the company towards more productive way and after this its market growth and market share will enhance.

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By: Yasir Rehman

CONCLUSION

The textile & apparel sector is amongst the largest and most significant in Pakistan’s economy, accounting for over 60% of total merchandise exports and providing employment to 38% of large scale manufacturing sector workforce.

There is an abundant supply of local raw material as Pakistan is the 4 th largest producer in the world. There is also an abundance of local labor available at a competitive cost when benchmarked against regional competitors.

Against this backdrop the industry remains largely fragmented with few large scale integrated players. Worldwide denim production capacity is over 6 billion linear meters. Denim is the world’s largest cotton textile product with estimated per annum global sales of 4 billion units.

Azgard Nine is Pakistan’s largest denim products business by sales with a fully vertically integrated Manufacturing chain. From cotton to retail ready apparel products. In house capability for spinning. Weaving, Design, finishing and stitching enables control over the entire value chain and provides a significant competitive advantage in facilitating faster speed to market and control over product quality.

With Longstanding relationship with global retailers and brands, and an ability to rapidly build up manufacturing capacity, Azgard nine is well poised to cater to an expected increase in global demand for denim products.

The year 2008 proved very challenging due to a globally recessionary climate affecting all facets of the business. While the business remained under pressure, Azgard Nine was able to protect its value added services to its products portfolio. The key focus remained on meeting and indeed finding ways to exceed customer expectations.

In addition to Azgard Nine’s vertical manufacturing capabilities which were already providing customers solution concepts was added. The company now offers the client a choice of full product development, product design and a complete logistics solution. Traditionally the customer has been sourcing supply of the product only. Now the client has the option to source a full supply chain solution directly from the Company. This value enhancement helped Azgard Nine to grow with its existing customers and add new customers as well during a difficult period.

Urea industry in 2008 remained structurally short despite a 5% increase in production over 2007 (reaching 4.98 Million Tomes). Late arrival of imports further compounded the shortage across all the provinces. Total imports by the Trading Corporation of Pakistan (TCP) during 2008 aggregated 450000 tons. The shortage was managed by

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By: Yasir Rehman

collaboration between the federal & provincial Governments and Fertilizer industry by systematically rationing the available stocks. The government of Pakistan, in an effort to counter shortages utilized the network of national fertilizer marketing limited (NFML) & Utility Stores Corporation of Pakistan for selling 50% of local production during Nov-Dec 2008. Pak American fertilizers ltd. played an active role in coordination with the relevant Government departments to ensure availability of fertilizer in various districts of Punjab and NWFP.

Industry Urea sales in 2008 saw an increase of 11% over 2007 and reached 5.5 million tons. This increase is attributed to demand switch by farmers from phosphates to urea due to the unprecedented price increase of phosphate in the international market.

The fertilizer industry supported the farmers in passing on various subsidies received. The fertilizer industry also contributed an additional subsidy of Rs. 20.7 billion given by the Government of Pakistan (GOP) in shape of lower gas prices to the fertilizer industry in 2008. The GOP also provided additional subsidy of Rs. 14.5 Billion on account of subsidy on import urea. Thus local Urea prices during 2008 averaged US$ 165.7 per tom, significantly lower than the average international urea price of US$ 550 per ton in 2008

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By: Yasir Rehman

BIBLIOGRAPHY

REFERENCE & SOURCES USED

1. http://www.nishatmillsltd.com/nishat/invest.html

2. http://www.nonprofitsassistancefund.org/files/MNAF/ToolsTemplates/ NonprofitFinancialRatios.pdf

3. http://www.azgard9.com/html/financial-info/2008/Security%20Analys_g%20- %20Q1.pdf

4. http://www.azgard9.com/html/financial-info/2008/Consolidated%20ANL.pdf

5. http://www.azgard9.com/html/financial-info/2008/Azgard %209%20AR07%20Consolidati%20(2).pdf

6. http://www.azgard9.com/html/financial-info/2007/ANNUAL%20REPORT- 2006%20PAGE%2021%20TO%20110.pdf

7. http://www.azgard9.com/html/financial-information.htm

8. http://www.sapphire.com.pk/cstmaccounts.htm

9. http://www.sapphire.com.pk/home.htm

10. http://www.kse.com.pk/market-data/history_by_date1.php?id=1&sid=1.20

11. Financial Management by (BPB)

12. Financial Reporting by (BPB)

13. www.investopedia.com

14. www.accountingformanagment.com

References

Special Thanks to

Mr. Muhammad Irfan

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http://www.accountingformanagment.com/

http://www.investopedia.com/

http://www.sapphire.com.pk/home.htm

http://www.sapphire.com.pk/cstmaccounts.htm

http://www.azgard9.com/html/financial-information.htm

http://www.azgard9.com/html/financial-info/2007/ANNUAL%20REPORT-2006%20PAGE%2021%20TO%20110.pdf

http://www.azgard9.com/html/financial-info/2007/ANNUAL%20REPORT-2006%20PAGE%2021%20TO%20110.pdf

http://www.azgard9.com/html/financial-info/2008/Azgard%209%20AR07%20Consolidati%20(2).pdf

http://www.azgard9.com/html/financial-info/2008/Azgard%209%20AR07%20Consolidati%20(2).pdf

http://www.azgard9.com/html/financial-info/2008/Consolidated%20ANL.pdf

http://www.azgard9.com/html/financial-info/2008/Security%20Analys_g%20-%20Q1.pdf

http://www.azgard9.com/html/financial-info/2008/Security%20Analys_g%20-%20Q1.pdf

http://www.nonprofitsassistancefund.org/files/MNAF/ToolsTemplates/NonprofitFinancialRatios.pdf

http://www.nonprofitsassistancefund.org/files/MNAF/ToolsTemplates/NonprofitFinancialRatios.pdf

http://www.nishatmillsltd.com/nishat/invest.html

By: Yasir Rehman

CHAPTER # 05

Annexure:

1. Five Years Balance Sheet of Azgard Nine Pvt limited Company

2. Five Years Profit and Loss account of Azgard Nine Pvt limited Company

3. Five Years Balance Sheet of Sapphire Mills limited Company

4. Five Years Profit and Loss account of Sapphire Mills limited Company

5. Five Years Balance Sheet of Nishat Mills limited Company

6. Five Years Profit and Loss account of Nishat Mills limited Company

7. Ratio Working of Azgard Nine, Sapphire and Nishat Company

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By: Yasir Rehman

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By: Yasir Rehman

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project on azgard9

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