Chapter 1

Introduction

1.1 Introduction to Project:

This project is about doing comparative analysis of four companies selected from food industry

of Pakistan. For comparative analysis we have chosen the companies which are NATIONAL

FOOD LIMITED, NESTLÉ PAKISTAN, ENGRO FOODS LIMITED and SHEZAN

INTERNATIONAL LIMITED. These companies for many years are dealing in food products.

These companies have ample range of food products and their products are highly appreciated in

the market.

1.2 Source of Data:

Main data source is published annual reports of National Foods Ltd, Nestle Pakistan, Engro

Foods Ltd, and Shezan International Limited for the year ended at 2009, 2010, 2011, 2012, 2013

and 2014.

1.3 Methodology of Project

Methodology of project is based on Balance Sheet Analysis, Income Statement Analysis and

Ratio Analysis, for examining financial statements of any business it is best tool. We study the

relation among various sections of annual reports through ratio analysis. Ratios are often

considered a useful tool to find out that how company is doing in market and what their

economic position is. The purpose of ratio analysis is to find out at which position company is

performing week and how to improve it. Financial statements and their notes are the best source

for calculating ratios. In income statement and balance sheet analysis we study and compare the

performance of one company with other company.

Balance Sheet

Income Statement

Cash Flow Statement

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1.4Performance Parameter:-

1.4.1Liquidity Ratios: Liquidity ratio explains that how much company is liquidated and

have ability to pay their obligations from the cash they have.

Quick ratio:

Quick ratio is use to find out the liquidity of a company. These are the assets which can be

quickly converted into cash within the 90 days.

Quick ratio = (Current asset - inventory)/ Current Liabilities.

Net Working Capital:-

Net working capital measures how much cash company has to pay its debt. A positive net

working capital shows that company have extra money that when they pay their debt.

Networking Capital = Current assets - Current liabilities

Current ratio:-

Current ratio measures that how much Current Assets Company has to pay their short term

obligations. A company having high current ratio shows that company is performing well while

lower current ratio indicated that company not performing well and also have high portion of

short term obligation which is not good for company.

Formula: Current Assets/ Current Liabilities

1.4.2 Profitability ratio:

Profitability ratio is a financial ratio which measures the company profitability regarding the

expenses and cost that company has incurred. For most of the profitability ratio, higher the ratio

from competitor means that company is performing well from rival firms.

Return on assets:-

This ratio tells us about the profitability of a company on their assets. When this ratio is higher

its good for company because they are earning more the investment they have made for the

purchasing of assets.

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Return on Asset = Net income / Total assets

Return on equity:-

This ratio measures efficiency of a firm’s that unit of shareholders' equity is generating profit for

a firm. This ratio tells about how the firm will use their recourses to generate profit. The return

on equity is helpful tool for comparative study of firm competing in same industry.

Return on Equity = Net income/ Shareholder’s equity

Net profit margin:-

This is the ratio which tells us about how much of the net income is earned by company on their

sales.

NPM= Net income/ Net sales

Gross profit margin:-

GPM is a ratio which measure the financial health of a firm by dividing cost of goods sold from

total sales, which show that how much money lift after paying of cost. Gross profit margin is

used by investors to compare similar firms of an industry or yearly comparison in a company.

Gross Profit Margin = Gross Profit / Sales

1.4.3 Activity Analysis Ratio: - Activity ratio some time refer as management ratios,

it is used that to what extent a firm is using its total assets for example inventories and fixed

assets. Inventory and assets turnover are the ratios which are more frequently used.

Assets turnover ratio:-

This ratio can be calculated by dividing total sale by net assets. When this ratio is higher it’s

good for company because higher the ratio means that company is utilizing their assets

efficiently. Assets turnover ratio= Net sales/ Total assets

Inventory Turnover Ratio:-

Inventory turnover ratio show that how much inventory is converted into sales and then replace

during a fiscal year.

Inventory Turnover Ratio = Set sales / Inventory

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1.4.4 Capital Structure Analysis:-

These are the ratio used for find out the solvency and liquidity of the company.

Debt equity ratio:-

This is an important ratio used by analyst and investors to measure the true risk in a company.

This ratio tells the investors that how much debt is employed in the capital of company. Higher

the ratio is a indication that company is aggressive in debt financing and low ratio indicate that

company has low liabilities which is a good point for attracting investors.

Debt to equity ratio = Net debt / Total shareholder’s equity

Debt to Asset Ratio:-

This ratio shows that how much debt is utilized in assets of the company rather than financed by

shareholder’s equity. The ratio is used to find out the financial risk of a business.

Debt to Asset ratio= Net debt/ Net assets

1.4.5 Capital Market Analysis Ratio:-

Some ratios are not calculated from balance sheet or income statement, but they are calculated

from market performance of the stock of company. These ratio measures the profit generation of

the company not just concern with the price of the stocks.

Earnings per share:-

In this ratio net profit is divided by outstanding share of the company.

Earnings per share = Net income / Number of outstanding shares

Payout ratio:-

It is a ratio of dividend being compensated to the shareholder’s. This ratio is used to find out that

what company is doing with their net income. The money that company not paid to their

shareholder’s as dividend is added to retained earnings of company.

Payout ratio= Dividends /Earning per share

PE Ratio:-

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This ratio shows the linkage among price of the stock and earnings per share. This ratio is trendy

for stock analysis.

P/E = Stock price / Earnings per share

1.5 LIMITATION OF PERFORMANCE PARAMETERS:

In these performance parameters we use to analyze past performance of company on the basis of

which we cannot predict future trend and performance of company that it will achieve.

These parameters only focus on quantitative aspect and do not take account of qualitative aspect

of the company.

The main source of these parameters is financial statement and corporation website which

incorporate biasness of corporation so using these as foundation will deform project reliability

Business used major alteration and calculates approximately in account preparation but these

approximation and adjustments may be wide of the mark which will also affect project

credibility.

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Chapter 2

History of Companies

2.1 NESTLÉ (Great Food, Good Life)

Nestle was build up in 1905. It was built in collaborations with Anglo Swiss milk company,

which was build up in 1866. Company was founded by George page, Charles Page and Farine

Lactee, who were siblings. The company was offering milk and baby food items at the start.

Nestle then take over many organizations which include Crosse and Blackwell, Rowntree

Mackintosh, Libby’s, Findus and Gerber.

Nestlé start with pasteurization milk and letter it was so developed that now days it is the leading

firm in providing food item, with having so many sub brands.. As of now Nestlé is dealing

filtered water, breakfast oats, Coffee, candy parlor, dairy items, dessert, pet sustenance’s,

different drinks, rack stable, chilled Ice cream, Infant nourishment, execution nourishment,

human services nourishment, refrigerated items and snacks. Twenty nine of Nestlé's brands that

offers about one billion Swiss franc yearly (about $ 1.12 billion). Nestlé has approximately 442

plants, which work in 85diffrent nations, and having approximately 328,000 employees working.

Nestle is one of the principle shareholders of L'Oréal, the world's biggest beauty care products

organization.

2.1.1 NESTLÉ in Pakistan

Nestle Pakistan Limited (NPL), formerly famous as Nestle Milkpak Company Limited, is a

subsidiary company of Nestle SA. It is listed on the KSE and LSE. For nine years in a string, the

corporation has won a place between the top twenty five companies of the KSE.

Nestle Pakistan serving their customers in Pakistan since 1988, the parent company Nestle

(Swiss-Base) obtain shares in Milk Pack Limited. Now days Nestle has completely set their self

according t needs of Pakistani people. Nestle Pakistan products are apparently considered as safe

products, delicious foods and full of nutrition, as a leading organization in sector which they

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operate. Nestle Pakistan distribution system is so good that their products are reached to

everywhere in the country. Connivance is at the heart of the Nestlé way of thinking, and there

summit is to convey products to individuals'

2.2 Products:

Ambient Dairy: Ambient Dairy include following products.

NESTLÉ BUNYAD: NESTLÉ BUNYAD is prepared with Vitamin C and Iron, so that two

glasses daily help fulfill 60% of a child’s Guideline Daily Amounts.

NESTLÉ MILO: it is available in pack of 200ml ready to drink. It is in chocolate flavor that

gives you energy.

NESTLÉ MILKPAK: it nourishes people of Pakistan from since three decades.

NESTLÉ MILKPAK Cream: this product of nestle is available in rich, soft and lovely flavor that

quench your thirst.

NESTLÉ NIDO: It provides complete nourishment for children because Nestle believes mother

lover their children’s without any condition and always search to find quality product for their

child’s.

NESTLÉ NESVITA Calcium Plus: This product specially targeting women’s that work in

offices or home and tired from all day work to restore their energy and charge their lives.

NESTLÉ EVERYDAY: This cream is available for making coffee and tea. It having a great taste

and make perfect cup.

2.2.1 Juices

NESTLÉ FRUITA VITALS

This product of Nestle Pakistan is available in Apple, Red Grape Nectar, Pineapple, Guava,

Peach, & Orange variants.

NESFRUTA: Nesfruta comes in 200ml and also 1000ml.

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2.2.2 Bottled Water

NESTLÉ PURE LIFE: Nestle serves broad variety of distilled bottle water to their customers.

Nestle guarantee their customer that they provide well quality product that are produced under

strict hygienic process

Range of Products:

Nestlé Pure Life is available in the different packaging formats:

18 Liter 

5 Liter 

1.5 Liter 

0.5 liter

2.2.3 Culinary & Food:

NESTLÉ MAGGI NOODLES: This is easy to make and trusted product around the word

offered by Nestle, MAGGI is offered in Pakistan since last twenty years, generations from two

decades having grown up with the favorite MAGGI quickly served. MAGGI gives power to

mothers to show their love toward their children in cooking instantly cooking MAGGI for them.

Baby Food:

NESTLÉ CERELAC: From birth to 3 years of grow old, baby goes through a period of speedy

development and growth. Choosing the best nourishment for your baby can be tricky and

confusing and you always wonder if it’s just right. Nestle cerelac provide complete nourishment

for the baby.

Breakfast Cereals

NESTLÉ KOKO KRUNCH: KOKO KRUNCH is a delicious chocolate tasted rich cereals

loved by kids. Made with the goodness of whole grain

NESTLÉ CORN FLAKES: It not only serves a tasty morning meals but it contains ten

essential minerals and including calcium, vitamins & iron for a nutritious start to the day.

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2.2.4 Coffee

NESCAFÉ: Four thousand cups of NESCAFÉ coffee are drunk around the world every second

by people, and every cup is enjoyed. NESCAFÉ is a brand that is loved by customers. People

emotions are connected to it and it bring people join.

NESCAFÉ GOLD: This is product loved by younger to keep their self energetic and fresh.

Coffee beans have rich taste and lovely smell.

NESCAFÉ 3 in 1: It is mixture of milk a little bit sugar and milk for making quick cup of

coffee.

2.2.5 Confectionery:

Kit Kat: Kit Kat is our no.1 global brand in confectionery and a valuable asset in our group. It

has a perfect balance of 69% milk

The given below is basic facts as regards Nestlé Pakistan:

Ticker: NESTLÉ

Country of operation: PAKISTAN

Stock exchange: KSE

Industry incorporated: Food & Beverages

Sub Industry: Different food products

2014 Sales: 96,457,743,000 (Dec 2014)

total employees: 2,422(2014)

Market Capital: 408,146,256,000

Year: ends in December

Total Outstanding Shares: 45,349,551

Type of Share: Ordinary share

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2.3 ENGRO FOODS LIMITED (The Local Flavor with a global Vision)

Engro Foods Limited was built-in 2005 as a diversified industry of the Engro Group. EFL plant

is established at Sukkhur on twenty three acre land, its capacity of receipting milk 8,000,000

ltrs/day and ultra high temperature milk capacity of 800,000 ltrs /day. Engro Foods Limited plant

was build at expenditure of Rupees one billion, Engro Food has employees of about 1749 people

at the end of 2014.

Engro Foods started the food business by milk processing and then selling it to final customers.

Engro Food ltd vision was to grab the growth opportunities that persist in market of this sector.

Company is curious about their social responsibilities and making products environmental

friendly. Thus they want to improve live of people living at remote areas and take over the

scarcity.

Core Values:

1. To be leader of the market.

2. To bring in pioneering products.

3. To be globally focused and detain diversified market.

4. To keep up quality and work for unremitting improvement.

5. External & society Involvement.

6. The focal point should be personal growth and improvement.

7. Passionate search of revenue.

8. To keep pleased morals and integrity.

9. Environmental clean, nutrient and safe products should be made.

10. To promote partnership and teamwork.

2.3.1 Products:

OLPERS: Engro Foods launched their first product by the name of OLPERS. When Engro

Foods offer Olpers there were strong rival firms existed in the market. Opler capture market

share after few years as it was launched; it was because of its quality and features in the product.

Olper’s milk is Engroo food limited standard and homogenize pure UHT milk with 3% fat and 9

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% non-fats. Olper’s is a premier brand, and targeting the customers who are quality conscious. It

is accessible in easy to open, six layered Tetra Pak Brick Aseptic red packaging and comes with

a 3 months shelf life. Olper’s is offered in four packs of 200 ml, 500ml, 1000 ml and 1500 ml

packs,.

OLPER’s LITE: This is hi calcium and low fat milk for younger’s who are health conscious

and want active life, it having nutrients that boost energy, without gaining extra weight. This

product is formed with special care to offer a quality product to customers of Pakistan who are

health conscious. Olper’s is available in liquid form in market, it is low fat milk that having basic

nutrition’s so that adults could get their basic health requirements.

OLPER Badam Zafran Milk: EFL launched flavored milk encouraged by the customary

flavors of badam, zafran and rose, especially for those children’s who don’t like smell of milk.

Olper's flavored milk is rich in nutrition, creamy and healthy and same ingredients like natural

milk. This product was launched for the first time in 2011in 250 ml packs. Enormously well-

liked within a rising sector of the industry, It is the paramount choices for everybody who desire

a taste of zafran, badam and rose in every packs of milk.

OLPER’s cream: This product has make a new trend on the table of meal and in kitchens, it is

widely used as food item changing taste of people. It was launched for the first time in 2006 and

after that I has capture market by its unique taste, Olper's Cream is used in day to day meals is

the country UTH cream that are loved by its customers and they are gradually increasing.

Olper's Lassi: Lassi is a revitalizing liquid from prepared from milk and yoghurt. This drink is

used in summers, and prepared in tetra pack, is offered in various flavors.

Dairy Omung: Dairy Omung is a dairy brand that provides premium milk to customers that are

price conscious. Dairy Omung targeting house wives who are responsible for health of their

family and kitchen.

Omung Dubala: Omung Dubala was offer in 2010; it is a low price high quality product, which

is alternative to dairy base cream. Omung Dobala help customer by maintaining balance of

requirement between living and eating habits

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Tarang: Tarang is Pakistan number one tea making brand, it is specialized tea milk which make

a cup of tea with perfect taste. Tarang gives quality more than the money you pay for, Tarang is

available in liquid as well as in powder formats so to extent choice for customers. Tarang has

manifestly fresh odor, strong taste and focus on eye capturing making tea for every customers,

Tarang is the profitable brand since 2007, after catching hearts of millions of peoples form

Pakistan.

TARKA: Tarrka is Engro Food Limited best desi ghee distinctive for its pure taste and rich

smell, Tarka was launched in 2005. Tarka taste in your cooking add more taste to you food and

increase your desire for to have more.

ICE CREAM: Omoré's has wide and delicious range of flavor that glorious to treat everyone,

Omore’s was launched in 2009. Omoré is a delicious ice-cream and frozen variety that seeks to

cater to a broad variety of customer. Offered in more than 40 Stock keeping units including

cones, ice-lolly, cups, sticks of different sizes, this brand has develop into a family name

crossway of Pakistan.

The below is the basic details about Engro Foods Limited:

Ticker: EFood

Country: PAKISTAN

Industry incorporated: Food & Beverages

Sub Industry: Different food products

2014 Sales: 96,457,743,000 (Dec 2014)

Total employees: 1750(2014)

Market Capital: 106,409,946,650.00

Year Ends: year ends in December

Total Outstanding shares: 763,890,500

Type of Share: Ordinary

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2.4 SHEZAN International LimitedShezan Company was implicit as a private limited organization on May 13, 1964, the firm was

developed with the aim of to be a leading business of the market in preparing product of juices,

sharbats, pickles, James and squashes. Pakistan has a very great atmosphere for developing vast

verity of products. Throughout the hundreds of years Pakistani specialists have obtained and

created one of a kind strain of extraordinary organic product assortments, supreme for their well-

off savor and flavor. Shezan International Limited was joint venture of the Shah Nawaz Group of

Pakistan. The agribusiness foundation of the Pakistani supports affected them to build up this

agriculture based firm.

To prepare natural product in Pakistan which could be easily available to the final customer’s

innovative ideas was given by the American corporations, Shezan got to be leading the way in

preparation of juices from the pulps of fruits. Shezan is currently the biggest firm in preparing

the food products and meeting the requirements of Pakistan and export necessities. With the

authorization of Pakistan government in 1971 the Shah Nawaz Group gets hold of every one of

the shares of Alliance Industrial Development Corporation with the authorization of the Pakistan

Government. Shezan Int had since demonstrated supported development in mutually the

residential and sends out practical life. Shezan International has been consistently growing its

product production limit all over the time. In1980 and 1981 they introduce a new plant in

Karachi with aim to provide food for Karachi, Sindh and sends out interest. In 1983 they plant a

new plant for filling bottles in Lahore. In 1987 they build a tetra brick plant for making the

packed juices in the beverage industry of Pakistan.

2.4.1 ProductsShezan International presents wide range of food items. Shezan international has wide portfolio

of products and is vast in their field. They have different products like juices, jams and ketchups.

The organization is integrated in the preparing, producing, trade and offering of these things.

AllPure:

Shezan international offer another juices series by the name of AllPure; these juices are prepared

from natural fruits. Shezan International provides wide range of juices to enhance the taste of

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customers by pure juice. For the better taste of customers they make juices in the pure natural

form so that customers could enjoy it.

Different flavors are available in this series like

PINEAPPLE, APPLE, MANGO, ORANGE, TROPICAL and GRAPES.

Bottled Juice:

The Bottle juice offered by Shezan International has a very exceptional prevalent and loved by

youngsters. It freshen the mind of customers by its present taste. people of Pakistan has shown

their love and affections for this product.

Standard Juices:

Company gives their supreme parity to good taste. Regular juices are accessible in different

flavors and they are considered as a great selection by the customers. It is accessible in following

flavors.

LEMON BARLEY, PUNCH, APPLE, LYCHEE and ORANGE

Twist:

This is a different brand offered in good-looking, slender and simple packaging, these juices are

well thought-out that they are dwelling. Twist juice are offered in following flavors.

APPLE, RASPBERRY, PINEAPPLE, FRUIT PUNCH, MANGO-STRAWBERRY and

MANGO

Syrups:

Syrups are offer by Shezan International in wide range. It can be mixed with chilled water for

quenching thirst. Syrups are offered in different flavors.

LIME CORDIAL, POMEGRANATE, SANDAL, ROSE and SAMARKAND

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Vinegar:

Artificial and high standard vinegar are prepared by Shezan International which are available in

various packages in market.

Sauces:

In business of ketchup Shezan International has their own standard. In dinner peoples prefer

Ketchup offered by Shezan International. In market they are offered if different sizes eg 10kg

drum. Additionally Shezan International is offering onion and chilly sauces too.

Jams:

Company prepares products from the items that they grown from their ground which is the

reason behind why Shezan is famous for quality in business sector. Its jams can be used in meal

whatever the time is. It is accessible in the accompanying tastes.

PLUM, ORANGE, MANGO, MIXED FRUITS and APPLE

Quench:

This product offered by Shezan International is to take rid from warmth just by mixing with cold

water and take it. It dose restoration to body in moments. It has just two taste lime and lemon.

Mango Nectar:

Pakistan is famous for its mangos; Shezan international uses quality mangos for extracting

nectars from mangos. It is 100% immaculate and is finest distinct option for soft drinks and soda

pops.

Pickles:

It offers a quality and standard pickles that are liked by families because of its exceptional taste.

Different sizes are available in it.

Ispaghol: It also offers to deliver quality Husk in light of the fact that it is useful for the health

of customers. Customers used it for two reasons first that it is slow in digestion and second it lifts

the feelings of hunger. Extra calories are lost and make you skinny looking slim.

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The subsequent are the basic details regarding Shezan Limited:

Ticker: SHEZ

Country: PAKISTAN

Industry: Beverages

Sub Industry: Different foods product

2014 Sales: 676,052,700.00 (June 2014)

Currency: Pakistan Rupees

Market Capital: 3,764,580,000.00

Fiscal Year Ends: June

Shares Outstanding: 6,000,000.00

Share Type: Ordinary

2.5 National FoodsDiscovering the Symphony of Flavors

National Foods started its business in 1970 and began as a Spice organization. Three decades of

a short period later it has expanded into a vast verity food company with more than 120 items

and 170 or more SKU for the domestic business sector and more than 100 separated items for the

international markets.

Skilled HR from inside of the organizations has fuelled awesome growth by excelling well-

designed management. Indeed, after thirty years the organization's primary priority still depends

on consumer needs for developing product with the altering according to drift in business sector.

In this creative era of regularly evolving standard of living, fuelled by the widespread step up of

technology; customers have been constrained to change their food habits. National Foods

respond to this assessment of creating inventive food items in light of ease and fast readiness in

accordance to modern way of and retain traditional qualities through its great amass of food

items.

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The brand fulfills its vital promise by dependably conveying value to its buyers. National Foods

make its relationship strong with families by bringing people all together on traditional events

like seasonal holidays, festivals, feasts and in daily life.

2.5.1 Products:

National Foods Masala Products:

National Food ingredients are carefully chosen and mixed to ensure the right mix up and ideal

taste. National Foods utilizes modern innovative procedures to acquire exhaustive blending of

spices, and henceforth the specific flavor that is our specialty. Our spices depend on the most

well known and traditional ethnic dishes the subcontinent brings to the table. We give our

customers recepies that are simple and easy to utilize. National recipes include a wide verity of

more than 48 delectable dishes, for example curries, biryanis, kababs and some more.

National Food Snacks Products:

National Foods snacks have wide range trying that will feel your taste buds snappy. At whatever

point, wherever, snacks simply add flavor to your taste experience. National Food Snacks are

pure lure and fun to the food side.

National Food Spices and Ingredients Products:

National Foods has a scope of basic dishes which give comfort to the cooking environment.

Flavors and fixings are the primarily essentials for any Pakistani dish. To see how to utilize

them, when to utilize them and in what amounts, is viewed as a art that must be comprehended

with experience. The color, the smell and the taste, everything that is so essential for a dish to

turn out immaculate is controlled by the right and auspicious utilization of flavor and spices.

National Foods Spices and Ingredients are similar to little spell that meet up to work magic.

National Food Salt Products:

National Food utilizes the most advanced refining methods, which include cleaning, washing and

centrifuging. Deliberately picked crude material, at the starting stage and guarantees most

extreme purity of the salt. Special handling empowers the free stream of National Foods salt.

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National Foods is the spearheading maker of iodized salt in Pakistan. Because of their aggressive

situating, iodized salt is currently synonymous with National Foods in Pakistan.

Fruitily and James:

National Foods Fruitily moment drink blend is far beyond reviving refreshment. Every serving

of Fruitily is overflowing with crucial nutrients that not just give the energy that your body and

mind require additionally abandon you refreshed, supported and livened up.

National Jams make life more productive by bringing you mouthwatering natural product

spreads and satisfaction. National Jams are presently an affix on the table at morning and are

available in an assortment of tastes.

Ketchup, Pickle and Chutney:

Ketchup is prepared from 100% fresh tomatoes. It's a perfect equalization of bitter and sweet,

which change the most straightforward of nourishment into sound and scrumptious dinners

The taste, smell and kind of National's pickles catch the genuine substance of Pakistani tradition.

The lusciously spicy and tart extent of pickles is all set from the best ingredients including

flavorsome oils, newly picked vegetables and food products, and the spice mix.

National Foods has an energizing scope of tangy and wonderful chutneys. The scope of chutneys

incorporates energizing and delectable flavors. Whether utilized as a dinner supplement or as a

dipping sauce, these chutneys include the component of Pakistani taste through their interesting

traditional.

Rice and Dessert: Beautifully separate, pearl white grains of National Rice dependably flicker

and burst with flavor. Basmati rice is accessible in different pressing.

National Foods offers a delightful and pleasant scope of divine desserts. The extent has an

variety of items and is not just constrained to traditional desserts, for example, kheers and

faloodas additionally incorporates contemporary treats, for example, jams and custards.

The accompanying are the important insights about National Food Limited

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Ticker: NATF

Country: PAKISTAN

Industry: Food & Beverages

Sub Industry: different food products

2014 Sales: 972,525,000.00 (June 2014)

Currency: Pakistan Rupees

Market Capital: 12,797,706,480.00

Fiscal Year Ends: June

Shares Outstanding: 41,443,350.00

Share Type: Ordinary

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Chapter 3

Horizontal and Vertical Analysis

3.1 Vertical Analysis of Summarized Balance Sheet and profit & loss Statements of year

2014 of National Foods, Engro Foods,

Shezan Limited, Nestle limited.

Table 3.1: Vertical analysis of balance sheet

National

Foods

Engro Foods Nestle Shezan Limited

Assets

NON-CURRENT ASSETS 26.69 63.09 64.42 31.77

CURRENT ASSETS 73.31 36.91 35.58 68.23

Total Assets 100% 100% 100% 100%

Liability and Shareholders’

equity

SHARE CAPITAL AND

RESERVES

44.32 45.04 24.42 56.00

NON-CURRENT

LIABILITIES

2.90 25.93 21.89 2.55

CURRENT LIABILITIES 52.78 29.03 53.69 41.55

Total liabilities and Share

holder equity

100% 100% 100% 100%

Following are the comparative vertical analysis of National foods Ltd, Engro Foods, Shezan

Limited, Nestle Limited. It is summarized balance sheet in which we are comparing these four

companies on vertical basis.

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3.1.1 Current Assets: Current assets are that which has high liquidity are known as current

assets. Current assets include cash and bank balance, stock in trade, store, spares and trade debts.

In our report National foods have 73.31% current assets, Engro Foods has 36.91%, Nestle

Limited has 35.58% and Shezan Limited has 62.23% of current assets. This data shows that

liquidity of National Food limited has 73.31%, while on the other hand data also suggest that

National Food Limited unable to convert their assets into long term investment to generate more

profit.

3.1.2 Long-term Assets: Assets that company held for more than one year. Long-term assets

company use for increasing its process. In this report National Foods have 26.69%, Engro Foods

has 63.09%, Nestle Limited has 64.42% and Shezan Limited has 31.77% long-term assets.

Nestle and Engro foods have almost same percentage of long term assets meaning that both

companies have transformed their current assets into long term assets. It shows that company

using their assets efficiently.

3.1.3 Share holder’s Equity: Shareholder’s equity signify the money by which a firm is

funded through common and preferred shares. If equity of a company is high it means that

company has paid or having less liability. While on the other hand negative equity suggest that

company has more liability then share holder’s equity. Nestle Limited has 24.42% of

shareholder’s equity of the total liabilities and shareholder’s equity, so this means that an asset

funded by shareholders is only 24.42% while rest is funded through long and short term liability.

The remaining company’s healthy equity is almost half of the assets. Shareholders are liable for

the losses and profit of company.

3.1.4 Current Liabilities: The obligations or due payment that company should have to pay

within one year are current liabilities. If firm has low current assets then current liabilities then

they will be taking more debt to pay their obligations.

In our report National Foods (73.31%:52.78%), Engro Foods (36.91%:29.03), Nestle Limited

(35.58%:53.69%), and Shezan Limited (68.23%:47.55%) of current assets to current liabilities.

All companies can be considered healthy except Nestle Limited current assets to current

liabilities. Shezan limited have highest ratio after paying their short-term liabilities it have

21

remaining 26.68% of current assets left. It means that Shezan limited have excess of current

assets. They should have to invest those extra assets in other department in order to generate

more profit.

3.1.5 Long Term Liabilities: These liabilities are those debts which are unpaid for more than

single year. It should be paid from the assets and future yield of the company. Engro foods have

25.93% which is higher than others while Nestle limited have 21.89%, National Foods have

2.90% and Shezan limited have lower then all 2.55%. It shows that Shezan limited and National

Foods have low debt and obligations then comparison to Nestle Limited and Engro Foods. Engro

Foods and Nestle limited have a lot of debts to be paid, having a lot of debts leading to

bankruptcy.

3.2 Vertical Analysis of Profit and Loss statement:

Following are the comparative vertical analysis of National foods Ltd, Engro Foods, Shezan

Limited, Nestle Limited. It is summarized Profit and loss statement in which we are comparing

these four companies on vertical basis. All values are in percentage and in summarized form.

All details are given below table.

Values in %age

National

Foods

Engro Foods Nestle Shezan Limited

Sales 100.00 100.00 100.00 100.00

CGS (64.95) (81.18) (71.67) (70.05)

Gross Profit 35.05 18.82 28.33 29.95

Distribution Expenses (19.76) (10.90) (11.49) (18.83)

Administration Expenses (3.66) (2.98) (2.20) (3.20)

Other operation Expenses (0.80) (0.24) (1.52) (2.40)

Other Income 0.73 0.70 0.54 0.79

Operating Profit 11.51 5.41 13.65 6.34

Other Expenses - (1.38) - -

22

Finance Cost (0.90) (2.87) (2.23) (0.42)

Profit Before Tax 10.61 1.14 11.42 5.92

Taxation (3.33) 0.92 (3.19) (2.086)

Net Income 7.29 2.06 8.23 3.84

Table 3.2: Vertical analysis of Income statement

3.2.1 Summary of profit and Income statement: In this report after analyzing the income

statement of these four companies Nestle Limited have more net income the rest of companies.

Nestle Limited has 8.23% net income of their total sales. National Foods is few points back then

Nestle Limited, which means that both companies have well invested their assets and generate

more profit from it. While Engro foods have low percentage of net income which at some point

means that they are not using their assets efficiently.

Horizontal Analysis for balance sheet and income statement for year 2014 for

National Foods, Engro Foods Ltd, Nestle Limited and Shezan Limited

3.3 Horizontal Analysis: This analysis is the contrast of two year financial information of

the firm over the two years. When doing horizontal analysis it should be done for same period to

show effect of financial statement of the company over that period.

Value in %age

National Foods Engro Foods Nestle Shezan Limited

2014 2013 2014 2013 2014 2014 2014 2013

Assets

Non-Current Assets 19.23 12.61 1.13 31.5 32.67 20.00 11.01 71.53

Current Assets 16.36 42.55 18.38 22.61 6.38 21.57 (13.65)

23

Total Assets –

Current Liabilities

28.06 19.88 6.78 8.3 (1.06) 2.75 18.01 3.74

Liability And

Shareholders’

Equity

Issued Share Capital

And Reserves

25.01 0.00 10.00 6.81 6.48 2.58 14.81 13.53

Share Capital

Reserve

32.31 29.92 8.05 1.79 6.73 2.70

Non-Current

Liabilities

3.11 18.30 13.16 12.8 (21.46) 16.06 35.98 (11.10)

Unappropriated

Profit

34.73 28.34 24.43 13.10 7.19 (18.59) 21.58 (10.74)

Total liabilities and

Share holder equity

28.06 19.88 6.78 8.3 (1.06) 2.75 18.01 3.74

3.3.1 Horizontal Analysis for Balance sheet: this analysis of the balance sheet is done for two

period formats, which is given under as indicating changes in two years perspective.

Table 3.3: Horizontal analysis of Balance sheet

Summary of Horizontal Balance sheet: After studying the horizontal summarized balance

sheet of these four companies National Foods is performing well. After subtracting the current

liabilities from total assets, net assets of National foods for both years almost double of these rest

of companies. This means that national foods have well managed their assets and generate profit

in well mannered. Nestle Limited have low percentage of 2.75% in previous year and in current

year they have negative percentage which means that Nestle have paid their debts because of

which their value came negative. Shezan limited in previous have 3.74% of their net assets while

in current year they increase it to 18.01% which mean that they not only pay off their liabilities

but they also well managed their assets and generate profit because of which their assets

increased. Engro food in current year has decrease in their net assets which because of paying

liabilities and also using portion of unappropriated income in different investments.

24

3.3.2 Horizontal analysis for Income statement: we are doing the horizontal analysis of these

four company, we will be comparing their performance in the income statement on percentage

base that which company is good on net income level.

Table 3.4: Horizontal analysis of income statement

Conclusion: In this report we had done comparative horizontal analysis of these four companies,

Engro Foods having highest percentage of Net income from the previous year. Engro foods have

also decreased their distribution expenses and other expenses which show good impact on their

net income. Nestle limited having good percentage of increase in their net income. They have

high increase in their other income which has ultimately good impact on their net income which

goes increase. National food having also a little bit good but the last one is Shezan limited which

just increase 4.1% of their net income from previous year. The good point for Shezan Limited is

that they reduce their finance cost which will help them in the coming years.

25

Chapter 4

Comparative Analysis

4.1 Liquidity Ratio

These ratios are used to find out that whether the firm would be able to pay their short term debts

in near future or not. Does they have enough resources that they would pay off their debts or

not? There are various ratios given below.

4.1.2 Current ratio 

This ratio is used to find out that whether a firm would be able to pay off their short term debts

or not. This ratio is higher than one is good for company. Lower then one shows that firm have

liquidity problems.

Table 4.1: Current ratio

Current ratio

Company/Years 2009 2010 2011 2012 2013 2014

NATIONAL

FOODS 1.13 1.01 1.23 1.33 1.30 1.41

ENGRO FOODS

LTD1.35 1.79 2.00 1.8 1.44 1.3

NESTLE

PAKISTAN0.85 0.85 0.81 0.84 0.99 0.70

SHEZAN INT 1.96 1.75 1.64 1.70 1.65 1.64

Among these four companies SHEZAN INT online Ltd. is more liquid then ENGRO FOODS LTD,

NATIONAL FOODS and NESTLE PAKISTAN.

26

4.1.2 Quick Ratio

This ratio is more liquid then current ratio. In this ratio we remove some portion form current

assets which are hard to convert into cash. When this ratio is higher it means that company is

more liquidate and is in better position.

Quick Ratio = (Cash + Accounts Receivable + Short-Term Securities) / Current Liabilities

Table 4.2: Quick ratio

Quick ratio

Company/Years200

9

201

0

201

1

201

2

201

32014

NATIONAL

FOODS 0.33 0.20 0.21 0.40 0.51 0.55

ENGRO FOODS

LTD0.6 0.91 1.18 0.9 0.75 0.62

NESTLE

PAKISTAN0.37 0.38 0.38 0.44 0.49 0.36

SHEZAN INT 0.62 0.56 0.54 0.38 0.51 0.54

This ratio is also like current ratio which also shows the liquidity of the company. Among the

three companies ENGRO LIMITED is extra liquid then SHEZAN INT, NESTLE PAKISTAN

and then NATIONAL FOODs LTD.

Ranking in terms of Liquidity

Table 4.3: Rank on Base of Liquidity of firm

Rankin

gCurrent ratio Quick ratio

1 SHEZAN INTENGRO FOODS

LTD

2ENGRO

FOODS LTDSHEZAN INT

3NATIONAL

FOODS

NESTLE

PAKISTAN

4 NESTLE NATIONAL

27

PAKISTAN FOODS

4.2 Debt Ratio

4.2.1 Debt to Equity Ratio:

This ratio is used to find out that how much debt is taken by firm. When the percentage of this

ratio is low it means that firm has taken less debt and vice versa. Less debt means that company

having more part of equity. High ratio is risky and low is good.

Table 4.4: Debt to equity

Total debt to equity ratio

Company/Years 2009 2010 2011 2012 2013 2014

NATIONAL

FOODS

39.00

%

39.00

%

20.00

% 12.5%

24.00

%

29.00

%

ENGRO FOODS

LTD 121% 47.5% 43.7% 120% 124% 121%

NESTLE

PAKISTAN 180% 220% 311% 340% 340% 309%

SHEZAN INT

74.12

%

90.09

% 94% 96% 73.73 78%

NESTLE PAKISTAN has relatively high debt part rather than equity among these four companies. This

ratio is high its shows that firm may be in risk in near future and they must have to pay their debts. Low

rant in this ratio is good.

4.2.2 Debt to Asset Ratio:-

This ratio is an indicator of that to which extent firm assets are financed by company rather than

financed by shareholder’s equity. The ratio is used to find out the financial risk of a business.

Formula:

Total Debt to total Asset ratio= Total debt/ Total assets

28

Table 4.5: Debt to Asset

Total debt to Total Asset

Company/Years 2009 2010 2011 2012 2013 2014

NATIONAL

FOODS 64% 72% 93% 79% 60%55%

ENGRO FOODS

LTD

62.10

%

70.17

%

16.38

%

54.84

%

55.94

%

54.29

%

NESTLE

PAKISTAN 67% 75% 78% 77% 78%75%

SHEZAN INT43% 48% 51%

42.44

% 44%

44.49

%

NESTLE PAKISTAN has a comparatively privileged debt part in their assets rather than other

four companies. This shows that Nestle Pakistan is using more debt then other firms and which

dangerous for the firm in near future. Low rank in this ratio is good.

Rank on base of Debt ratios.

Table 4.6: Rank on base of debt ratios

Rankin

g

Debt to equity

ratio

Debt to Asset

ratio

1NESTLE

PAKISTAN

NESTLE

PAKISTAN

2NATIONAL

FOODS

NATIONAL

FOODS

3ENGRO

FOODS LTD

ENGRO FOODS

LTD

4 SHEZAN INT SHEZAN INT

29

4.3 Activity Ratio

These ratios are used to find out the firm sales on per assets and inventories. Assets include

current and fixed assets. This ratio finds out the firm efficiency in in well usage of their

resources. So it is used to find out whether the firm are changing their assets and inventory in to

sale or not.

4.3.1 Inventory Turnover

This is an important ratio which tells about that how well the firm is using their inventory. It is to

find out that does the invested money by the firm is generating profit or not? This is the best ratio

to find out the usage of inventory in efficient way.

Inventory Turnover =

Net sales

Inventory

Table 4.7: Inventory Turnover

Inventory Turnover

Company/Years 2009 2010 2011 2012 2013 2014

NATIONAL

FOODS 3.29 2.69 2.44 2.94 3.22 3.05

ENGRO

FOODS LTD9.9 10.2 9.8 9.7 9.0 10.3

NESTLE

PAKISTAN9.2 8.1 9.18 9.85 10.88 9.87

SHEZAN INT 3.61 4.19 3.64 4.58 5.68 5.89

When this ratio is high it indicates that maximum utilization of inventory in efficient way.

30

4.3.2 Assets turnover ratio:-

This is the ratio of net sales divided by the net assets of the given year of the firm. When this

ratio is higher it means that firm using their assets in efficient way to make profit and vice versa.

Assets turnover ratio= Net sales/ Total assets

Table 4.8: Assets Turnover

Asset Turnover

Company/

Years2009 2010 2011 2012 2013 2014

NATIONAL

FOODS 204% 167% 190% 226% 201% 195%

ENGRO

FOODS LTD160% 170% 180% 181% 160% 170%

NESTLE

PAKISTAN184%

224.82

%

185.23

%

155.46

%

166.57

%184%

SHEZAN INT 201% 218% 217% 230% 249% 251%

On the basis of asset turnover ratio Shezan Int is performing better then rest of companies, they

are utilizing their assets to word good performance. Shezan Int is followed by National foods that

are performing good to utilize their assets more and generate more profit.

Ranking in terms of activity ratios

Table 4.9: Ranks on the base of activity ratios

RankInventory Turnover

Asset Turnover

1ENGRO FOODS

LTDSHEZAN INT

2NESTLE

PAKISTAN

NESTLE

PAKISTAN

31

3 SHEZAN INTNATIONAL

FOODS

4NATIONAL

FOODS

ENGRO FOODS

LTD

4.4 Profitability/Performance

Every firms are mostly anxious about their profitability. These ratios are often used to determine

the company's profitability and their performance. This is important for the management and

owners of the business. This is used to show the investors that how profitable firm is.

4.4.1 Gross Profit Margin:

This ratio is about that how firm taking control over the cost of their inventories, manufacturing

cost and shifting that cost to their customers. If this ratio is high so it will be good for that

company.

Gross Profit/Net Sales = __%.

Table 4.10: Gross Profit Margin

Gross Profit Margin

Company/Years 2009 2010 2011 2012 2013 2014

NATIONAL

FOODS

29.97

%

29.55

%

28.51

%

32.52

%

64.71

%

35.05

%

ENGRO FOODS

LTD 18.5% 21.0% 22.2% 25.7% 21.6%18.8%

NESTLE

PAKISTAN 29% 27% 22%

26.25

%

27.99

%

28.32

%

SHEZAN INT29% 27% 26%

28.46

%

30.15

%

29.95

%

When gross profit margin of the firm is high its shows that firm is profitable. National Food

having high GPM percentage is high which mean that NF is converting their inventories at low

cost to final product.

32

4.4.2 Net Profit Margin:

This ratio is very simple; it is frequently used for finding about the profitability of a firm. This

ratio tells us about that how much of sales are illustrated in the net income.

Formula = Net Income/Net Sales =

Both values are taken as of income statement

Table 4.11: Net Profit Margin

NPM

Company/Years 2009 2010 2011 2012 2013 2014

NATIONAL

FOODS 3.71% 1.93% 4.18% 8.14% 7.88%7.29%

ENGRO FOODS

LTD -3.2% 0.8% 3.0% 6.5% 0.6%2.1%

NESTLE

PAKISTAN 10%

11.10

% 7.20% 7.42% 6.8%8.2%

SHEZAN INT 3.76% 3.03% 3.33% 4.33% 4.39% 3.84%

When net profit margin of a firm is high its mean that company is performing well. Nestle

Pakistan is generating more profit from their sale because their NPM percentage is higher than

rest of companies, followed by National Foods.

4.4.3 Return on Asset (ROA):

In profitability perspective this ratio is important to find out that spending on assets would be

profitable or not. It find out the on the amount invested on the assets. It is about well

management of the assets.

Net Income/Total Assets =

Table 4.12: Return on Asset

Return on Asset

Company/Years 2009 2010 2011 2012 2013 2014

NATIONAL 7.60% 3.24% 8.08% 18.46 15.84 14.22%

33

FOODS % %

ENGRO FOODS

LTD9.33% 9.50% 5.81% 4.97% 2.62% 6.45%

NESTLE

PAKISTAN

16.18

%

17.94

%

13.27

%

11.53

%11.2% 15%

SHEZAN INT 7.57% 6.59% 7.23% 9.4%10.95

%9.66%

When this ratio is higher its good for company because it shows that firm are using their assets in

a good way to generate more sales.

4.4.4 Return on Equity (ROE):

In the investor perspective this ratio is important to find out return on the money they are

investing. By this ratio investors will make a decision that weather they should invest or not in a

specific firm.

ROE = Net Income/Stockholder's Equity

Table 4.13: Return on Equity

Return on Equity

Company/Years 2009 2010 2011 2012 2013 2014

NATIONAL

FOODS 23.81%

12.39

%27.70%

50.28

%43.96% 36.55%

ENGRO FOODS

LTD(12.9%) 3.4% 12.3% 25.9% 2.0% 7.7%

NESTLE

PAKISTAN48.10%

49.71

%61.33%

50.73

%49.5% 62.79%

SHEZAN INT 13.17%12.59

%14.75%

18.59

%19.02% 17.24%

34

In broad-spectrum, the greater the proportion, the earning capacity would be higher on common

equity, with a few special cases, it tell us that the business is utilizing money of shareholders in a

good way. Nestle Pakistan is performing better they generating more on equity portion of their

share holders. They utilizing equity portion in positive way and generating more profit from rest

of companies.

Rank on the base of effectiveness & operations

Table 4.8: Ranking in terms of effectiveness & operations

Rank GPM NPM ROA ROE

1NATIONAL

FOODS

NESTLE

PAKISTAN

NESTLE

PAKISTAN

NESTLE

PAKISTAN

2NESTLE

PAKISTAN

NATIONAL

FOODS

NATIONAL

FOODS

NATIONAL

FOODS

3 SHEZAN INT SHEZAN INT SHEZAN INT SHEZAN INT

4 ENGRO FOODS ENGRO FOODS ENGRO FOODS ENGRO FOODS

.4.5 Market Performance

4.5.1 Earnings per Share (EPS):

This ratio is about that how much part of net income is paid to the outstanding share of the firms.

This ratio shows the profitability of the firm.

Table 4.95:EPS

EPS

35

Company/Years 2009 2010 2011 2012 2013 2014

NATIONAL

FOODS 2.69 1.67 4.45 11.26 13.01 13.68

ENGRO FOODS

LTD1.08 1.22 1.18 1.05 0.55 1.02

NESTLE

PAKISTAN66

90.6

9

102.9

4

129.3

2

129.3

7105.85

SHEZAN INT17.0

8

17.7

923.43 34.56 34.34 32.77

Earnings per share of Nestle Pakistan in more than rest of companies, followed by Shezan Int.

this is a good gesture for company. High earning per share attract investors to invest in company

stock.

4.5.2 Payout Ratio:

This is the ratio of the amount of income which is rewarded in form of dividends to stockholders.

This ratio is used by the investors to find out that how income is used by the firms.

It can be calculated as:

Table 4.16: Payout Ratio

Payout Ratio

Firm/Years 2009 2010 2011 2012 2013 Average

NATIONAL

FOODS 41.84 57.45 44.93 42.63 46.17 58.50

ENGRO FOODS

LTD0.00 34.32 39.42 0.00 0.00 40.29

NESTLE

PAKISTAN61.52 82.70 63.12 54.13 96.62 97.23

SHEZAN INT 33.72 58.20 33.72 29.12 30.77 27.07

36

Mostly this ratio depends on the company dividend policy. Nestle Pakistan is performing well

according to this ratio. They are paying more dividends to their shareholders which give them

opportunity to catch more investor from market.

4.5.3 PE Ratio

This ratio is used for to determine the link among the share price and the firm earnings. This

ratio is mostly admired for share analysis.

P/E = Stock Price / Earning per share

Table 4.17: PE Ratio

P/E Ratio

Firm’s/Years 2009 2010 2011 2012 2013 2014

NATIONAL

FOODS 65.13 30.50 30.65 32.22 48.89 73.20

ENGRO FOODS

LTD12.28 14.75 15.52 57.62 11.33 15.36

NESTLE

PAKISTAN25 27.45 53.57 42.53 71.89 73.21

SHEZAN INT 3.9 10.2 14.4 20.96 29.27 37.90

When price to earnings ratio is low that is good for the company because that means that

investors have to pay less for one getting more earning. For example, if the price to earnings

ratio is 20 so it means that investor are willing to pay twenty rupees to receive earning of one

rupee. Price to earnings ratio shows that weather the company is performing very well or

company is performing poorly. Shezan Int is performing well on base of this ratio, their investor

will get more profit on paying less.

37

Ranking on base of Market share performance

Table 18: Ranking in terms of Market performance

Ranking Earning per ratio Payout P/E

1 NESTLE PAKISTAN NESTLE PAKISTAN SHEZAN INT

2 NATIONAL FOODS NATIONAL FOODS ENGRO FOODS LTD

3 SHEZAN INT SHEZAN INT NESTLE PAKISTAN

4 ENGRO FOODS LTD ENGRO FOODS LTD NATIONAL FOODS

Chapter 5

Conclusion and recommendations

5.1 Conclusion:

The conclusion of our project is that on base of ratio Nestle Pakistan is performing well in the

market. Nestle Pakistan is one of the biggest multi-national company working in Pakistan.

Customer of Nestle Pakistan shows positive response toward their products, which increase their

sales revenue by 15.85% in 2014, and 9.26% increased in 2013. In these previous years company

has offered more diversified product and was accepted in the market. Company net profit grows

by 35.15% in 2014, 12% in 2013, 25.62% in 2012, 28% in 2011 and 10% in 2010. This is

excellent for the company which came for increase in sales. Nestle Pakistan is also having more

number of employee then other companies that we include in our project. Nestle Pakistan has

total employees of about four thousand and two hundred.

Current and acid test ratio of the company is excellent in all six years and almost stood above

one which is good. However company has also borrowed high investments which increase risk

of the company. They have to pay that debt in near future but they have plenty of assets to cover

38

their finance cost. Company Earnings per share and Payout ratio is high they are paying more

dividends to their share holders and there earning per share is more, followed by National Foods.

Engro Foods are the company whose ratios are appalling in contrast of other companies like

Shezan International and National Foods limited. Engro Foods net profit margin and gross profit

margin is lower than other companies. Their sales were also decreased from last year which

affects their sales and net profit ratio. Engro Foods revenue in previous was very low and even in

some years its growth were negative, but in 2014 they increase their revenue by 25 percent

which is a good point for the company that they are improving. In 2014 Engro Foods ice-cream

product sale show increase which is because of they make products related to customers and

excellence in their distribution channel. Their distribution channel management wasn’t good also

which mostly affect their sales and now they are recovering back from these problems. The

companies that we included in our project Engro Foods is the second one that providing more

employment in Pakistan following Nestle Pakistan.

5.2 Recommendations:

Nestle Pakistan have good current ratio then National foods, Shezan international and Engro

Foods limited, but this high ratio have also a bad aspect means that company have extra cash.

Company need to invest that cash in different project and generate more profit. Cash on hand

lose its value so investing it in project is a good option.

Nestle debt ratio is higher than Shezan International, Engro Foods limited and National Foods.

Company has done aggressive debt financing which is not for company. They have increased

their risk and also have to pay more finance cost in future while pay the debt.

Engro Foods net profit margin, gross profit margin, ROA and ROE is low respective of these

other three companies. Their sales were low which affect its profitability ratio. Their sales are

affected by their bad management and lack of proffer distribution channels. They should have to

work on their distribution channels and management, so that they manage their operation that

goes smoothly. They should also have to find new markets for their products and do time

delivery or open store units in different areas which will quick their distribution process.

39

National Foods is unable to quickly convert their inventories into assets, which will increase

their warehouse cost for the inventory. National Food have to quicken the process and should

maintain their standards.

ReferencesComparing and Analyzing Financial Statements to Make an Investment Decision: Case Study of

Automotive Industry. (2012).

Engrofoods.com,. (2016). Engro Food - Financial Reports., from

http://www.engrofoods.com/downloads.html

Nestlé© Pakistan Financial Reports. Retrieved from

http://www.nestle.pk/investors/financialreports

Financial Reports | National Foods.

from http://nfoods.com/investor-relations/financial-report/

Financial. Shezan.biz.

from http://www.shezan.biz/financial

Shezan International Limited, 2009-2014, Published Annual Reports for Stakeholders, Karachi Stock Exchange.

40

 Nestle Ltd., 2009-2014, Published Annual Reports for Stakeholders, Karachi Stock Exchange

Engro Foods Limited, 2009-2014, Published Annual Reports for Stakeholders, Karachi Stock Exchange. National Foods Ltd., 2009-2014, Published Annual Reports for Stakeholders, Karachi Stock Exchange

41