Fauji Cement Company Limited

INTERNATIONAL ISLAMIC UNIVERSITY ISLAMABAD

Group Members:

Muhammad Farooq (0333-8636340)Muhammad Khalil Hussain (0333-9835303)Muhammad AhsanMBA 19 (B)

GRADUATE SCHOOL OF BUSINESSINTERNATIONAL ISLAMIC UNIVERSITY

ISLAMABAD

Fouji Cement Company Ltd.The company was constructed on 23-11-1992 It is established by Fauji Foundation Its ordinary shares are 951,300,813 Its preference shares are 48,699,187Competitors: Lucky Cement, DGK, Maple Leaf,Attock Cement &

Askari Cement

Major Share Holders

Fauji Foundation 31.66%

Fauji Fertilizers 12.64%

UBL 15.72%

General Public 13.45%

Other JS companies 12.26%

INDUSTRY (2008)Domestic dispatches=22,395,522TonsExports(Tons) = 7,716,620 TonsTotal Dispatches= 30,112,142TonsCapacity Utilization= 81.04%

GROWTHDomestic despaches=6.47%Exports(Tons) = 142.02%Total Dispatches= 24.31%Capacity Utilization= 1.21%

FAUJI CEMENT(2008)Domestic dispatches=899,405TonsExports(Tons) = 278,095 TonsTotal Dispatches= 1,177,500TonsCapacity Utilization= 101.03%

GROWTHDomestic dispatches=6.39%Exports(Tons) = 82.63%Total Dispatches= 3.01%%Capacity Utilization= 3.01%

Qualitative Analysis

FCCL has earned profit after tax of Rs.414 million in 2008 but it has contributed towards national exchequer for Rs. 1,268 million in the form of taxes, & duties.

FCCL has earned USD 13.804 million through export%age share in export is 4%%age market share of FCCL is 6%Production level is 100.83% (Capacity= 1,165,500

M.Tones, Actual 1,174,722 M.Tons)FCCL is ISO 9001-2000 and 14001-2004 certifiedFuture outlook: New Plant of 7,200 tpd clinker in

parallel to the existing plantRefuse Derived Fuel Plant (RDF): cost 300 million,

capacity 12 tons per hourEarning Per Share is Rs. 0.85 per share and market

price per share is Rs. 16.06

Cost of Sales of Cement Industry

COST HEAD %AGE OF COST OF SALES

Cost of Raw material 10%

Cost of fuel 41%

Cost of power 18%

Cost of packing 9%

Other costs 22%

Raw Material: Lime Stone (Calcium Carbonate)75 to 80%, Clay15-20%, Iron ore, & Gypsum

Raw Material

Crusher stacker & Reclaimer

Roller Press

Grinding Mill

Lime Stone 80%, Clay 20%, Iron Ore

Rotary Kiln (1200-1450C)

Clinker Cooling

Clinker (120C)

Clinker Storage

Roller Process

Add Gypsum

Cement Mill

Storage Silo

Packing Unit

Bulk/Paper/ Hope Bags

Dispatch To Consumer

Manufacturing Process:

Analysis of Financial Statements

LIQUIDITY RATIOS:PROFITABILITY RATIO:ACTIVITY RATIO:LEVERAGE RATIOS:

LIQUIDITY RATIOS:CURRENT RATIO: Current Assets/Current Liabilities

Year 2008 2007 2006 2005 2004

Ratio 2.16 1.35 1.25 0.97 1.54

Quick Ratio:Year 2008 2007 2006 2005 2004

Ratio 2.06 1.23 1.13 0.93 1.38

CASH RATIO:

Year 2008 2007 2006 2005 2004

Ratio 1.54 0.29 0.67 0.50 0.53

PROFITABILITY RATIO:

Year 2008 2007 2006 2005 2004

Ratio 18.56% 31.52% 51.12% 38.01% 32.26%

GROSS PROFIT MARGIN

OPERATING PROFIT MARGIN Year 2008 2007 2006 2005 2004

Ratio 16.96% 28.74% 47.64% 34.75% 31.49%

NET PROFIT MARGIN Year 2008 2007 2006 2005 2004

Ratio 11.66% 18.66% 28.08% 17.94% 13.68%

RETURN ON ASSETS:

Year 2008 2007 2006 2005 2004

Ratio 4.83% 15.55% 32.95% 15.89% 12.23%

Year 2008 2007 2006 2005 2004

Ratio 6.30% 11.22% 11.71% 5.73% 1.92%

FINANCIAL CHARGE:

RETURN ON EQUITY:

Year 2008 2007 2006 2005 2004

Ratio 4.45% 17.30% 36.67% 20.84% 16.20%

THREE STEP DUPONT:

ROE=(NET PROFIT MARGIN) X (ASSET TURNOVER) X (EQUITY MULTIPLIER)ROE=(NET INCOME/SALES) X (SALES/ASSETS) X (ASSETS/ SHAREHOLDERS EQUITY)

ROE= 0.04 0.17 0.37 0.21 0.16

ACTIVITY RATIOS:

Year 2008 2007 2006 2005 2004

Ratio 0.28 0.54 0.69 0.46 0.039

ASSET TURNOVER RATIO:

AVERAGE SALES PER DAY= NET SALES / 365 DAYS

9,714.80 9,488.45 11,742.84 7,794.91 6,291.04

ACCOUNT RECIEVABLE TURNOVER:

Year 2008 2007 2006 2005 2004

  35.57 90.51 5.99 5.91 11.7

A/R Turnover

35.57

90.51

5.99 5.91 11.7020406080100

2008 2007 2006 2005 2004

INVENTORY TURNOVER:Year 2008 2007 2006 2005 2004

Ratio 12.55 12.94 14.44 31.53 25.25

FIXED ASSET TURNOVER:Year 2008 2007 2006 2005 2004

Ratio 0.5 0.79 0.94 0.61 0.49

LEVERAGE RATIOS:

Year 2008 2007 2006 2005 2004

Ratio 0.25 0.42 0.47 0.61 0.67

DEBT RATIO:

DEBT/ EQUITY RATIO:

Debt/Equity Ratio

0.340.71 0.89

1.542.05

00.51

1.52

2.5

2008 2007 2006 2005 2004

Year 2008 2007 2006 2005 2004

Ratio 0.34 0.71 0.89 1.54 2.05

TIE RATIO:Year 2008 2007 2006 2005 2004

Ratio 4.23 4.93 7.88 5.1 10.36

Z- Score Model of Fauji Cement Company Limited

Z = 0.012x1 + 0.014x2 + 0.033x3 + 0.006x4 + 0.999x5

2,008 2,007 2,006 2,005 2,004

0.320 0.574 0.722 0.467 0.397

X1 = working capital/total assets

X2 = retained earnings/total assets

X3 = EBIT/total assets

X5 = sales/total assets

X4 = Market value of equity/book value of total debt