Financial Report on Lafarge Cement Pakistan
-
Upload
saadii-khan -
Category
Documents
-
view
216 -
download
0
Transcript of Financial Report on Lafarge Cement Pakistan
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
1/36
REPORT ON LAFARGE CEMENT
PAKISTAN
INTRODUCTION TO BUSINESS FINANCE
PROJECT REPORTLAFARGE CEMENT PAKISTAN
SUBMITTED BYSAAD KHAN KAKAERZAI
IDSP09-BB-0083
SUBMITTED TOMR. UMAIR BAIG
MOHAMMAD ALI JINNAH UNIVERSITY
KARACHI.
1
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
2/36
Table of Content
S.No Description PageNo.
0102
03
04
05
06
07
08
09
10
11
12
13
14
2
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
3/36
DEDICATION:
Our beloved teachers & parents, whose blessings and concentration Brings
us to this stage and who trample their inclination and longing for Up holdingour studies.
LETTER OF ACKNOWLEDE
3
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
4/36
APRIL 24th, 2010
This report is a financial ratio analysis of Lafarge cement
pakistanwhich has been prepared as a part of the course
requirement for Introduction to Business Finance. The
material compiled and presented in this report is a result of
hard work.
This report has proved to be a great experience. For this, I
would like to thank our Almighty ALLAH who made
everything easier to me and then Our Instructor Mr. Umair
Baig who provided us the path of knowledge and guidance.
Sincerely,
Saad Khan Kakerzai
Introduction
Yunus Brothers Group one of the largest export houses of Pakistan,Lucky Cement Limited currently has the capacity of producing 25,000tons per day of dry process Cement.
Lucky Cement came into existence in 1996 with a daily productioncapacity of 4,200 tons per day, currently is an omnipotent cementplant of Pakistan, and rated amongst the few best plants in Asia.
4
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
5/36
With production facilities in Pezu (Production capacity: 13,000 Tons perday) as well as in Karachi (Production capacity: 12,000 tons per day), ithas the tendency to become the hub of cement production in Asia.
The Vision
To be the market leader in domestic and exports from the Country bysupplying high quality cement at the most competitive rates withcustomers satisfaction and discharge our social responsibilities for thebenefit of under privileged.
The Mission
To be the largest and fastest growing cement producer using state of
the art technology at the most competitive cost by utilizing ourexperience for maximizing profits for our shareholders.
The Strategy
To be the leading exporter of cement from Pakistan for the regionalcountries as well as to explore the other potential export markets.As a part of future strategy, to explore investment possibilities outsidePakistan in the cement industry to become global producer.
Company Information
BOARD OF DIRECTORS
Mr. Muhammad Yunus Tabba (Chairman/Director)Mr. Muhammad Ali Tabba (Chief Executive)Mr. Muhammad Sohail TabbaMr. Imran Yunus TabbaMr. Javed Yunus Tabba
Mrs. Rahila AleemMiss Mariam RazzakMr. Manzoor Ahmed (NIT)
EXECUTIVE DIRECTOR
Mr. Abdur Razzaq Thaplawala
5
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
6/36
DIRECTOR FINANCE &
COMPANY SECRETARY
Mr. Muhammad Abid GanatraFCA, FCMA, FCIS
STATUTORY AUDITORS
M/s. Ford Rhodes Sidat Hyder & Co.,Chartered AccountantsA member firm of Ernst & Young Global Limited
INTERNAL AUDITORS
M/s. A.F. Ferguson & Co.,Chartered Accountants
A member firm of PricewaterhouseCoopers
COST AUDITORS
M/s. KPMG Taseer Hadi & Co.,Chartered Accountants
AUDIT COMMITTEE
Mr. Muhammad Yunus TabbaMr. Muhammad Ali TabbaMr. Imran Yunus TabbaMr. Javed Yunus TabbaMiss Mariam Razzak
BANKERS
Allied Bank LimitedThe Royal Bank of Scotland LimitedBank AL-Habib LimitedCitibank N.A.,Faysal Bank LimitedHabib Bank Limited
6
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
7/36
Habib Metropolitan Bank Ltd.KASB Bank LimitedMCB Bank LimitedNational Bank of PakistanSoneri Bank LimitedStandard Chartered Bank (Pakistan) LimitedUnited Bank Limited
REGISTERED OFFICE
Pezu, District Lakki Marwat, N.W.F.P.
PRODUCTION FACILITIES
1. Pezu, District Lakki Marwat, N.W.F.P.2. 58 Kilometers on Main Super Highway, GadapTown, Karachi.
HEAD OFFICE
6-A, Muhammad Ali
Housing Society,A. Aziz Hashim Tabba Street,Karachi-75350UAN # (021) 111-786-555
SHARES DEPARTMENT
6-A, Muhammad AliHousing Society,A. Aziz Hashim Tabba Street, Karachi.UAN # (021) 111-786-555
WEB SITE ADDRESS
www.lucky-cement.com
7
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
8/36
E-MAIL ADDRESS
A BRIEF PROFILE OF MR. ABDUL RAZZAK TABBA
LATE CHAIRMAN OF YUNUS BROTHERS GROUP
Mr. Abdul Razzak Tabba was the Chairman of YB Group. Mr. Tabba wasawarded SITARA-I-IMTIAZ on 23rd March, 2005 for Public Service andthe highest exports. Under the leadership of Mr. Abdul Razzak Tabba,the Group has received more than 20 Exports Trophies from the
Government of Pakistan for the highest overall exports from theCountry as well as the highest exports in Textile Sector. It may bepertinent to point out that during the financial year 2004-2005, thetextile mills owned by the Group i.e. Yunus Textile Mills, Lucky TextileMills, Gadoon Textile Mills and Fazal Textile Mills have in total exportedtextile goods worth more than Rs. 18 Billion.
Unfortunately, the group lost its dynamic and great leader on 19thMay, 2005. Mr. A. Razzak Tabba suffered a heart stroke on 19th May,2005 and died the same day.
Mr. A. Razzak Tabba was a Director of National Bank of Pakistan and
had been involved in policy making of the bank. In addition to this, hewas an active member of the board of governors of the Institute ofBusiness Management (IBM). He was also a member of academicsyndicate of Dow Medical University, as well as a member of advisorycommittee of Citizen Police Liaison Committee, a trustee of SaarkHealth Foundation, ice chairman Kidney Foundation and trustee ofWorld Memon Foundation Community Centre where technicaleducation is being given to more than 2300 girls every year.
8
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
9/36
History
9
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
10/36
BRANDS AVAILABLE AT LUCKY CEMENT
Lucky CEMENT (REGULAR) Lucky STAR
Lucky GOLD Lucky SULPHATE RESISTANT CEMENT (SRC)
10
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
11/36
Ratio Analysis
S.NO Ratio Formula 2007 2008
1- Current Ratio Current Assets 2852907874 3856415682
Current Liabilities 3122289185 5268864833
0.88 0.73
2- Quick Ratio Quick Assets 983703841 238042993
Current Liabilities 3122289185 5268864833
0.31 0.045
3-A/P payment
periodNet CreditPurchases 364514357 383562061
Avg A/P 1537746095 1342179485
0.23 0.285
Avg Payment
Period 365 365 365
times 0.23 0.285
1587 1281
4- Working CapitalCurrent Assets-
Current Liabilities 2852907874 - 3856415682 -
3122289185 5268864833
(269381311) (1412449151)
5- Debt Ratio Total Liabilities 10998872710 10949799450
Total Assets 21499828234 21984203052
51% 50%
6-Avg Days of
Operating Cycle A/R turnover day + 6 + 135 3+122
Invt turnover days
141 days 125 days
11
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
12/36
S.NO Ratio Formula 2007 2008
7- A/R turnover Net Credit Sale 4191594084 7439375345
Avg. A/R 74358911 54142748
56.5 138
8-
Avg. collection
period 365 365 365
A/R Turnover 56.5 138
6 days 3 days
9- Inventory turnover Cost of Good Sold 4684077998 6864524968
Avg. Inventory 1748102922 2349983010
2.7 3
10-
Total assets
turnover Net Sales 4191594084 7439375345
Total Assets 21499828234 21984203052
19.5% 34%
11- Price Earning Ratio Market Price 3 3.42
Earning Per share (0.59) (1.01)(5.08) (3.385)
12- Gross profit margin Gross Profit (492483914) 574850377
Net Sales 4191594084 7439375345
(11.74%) 7.727%
13- Dividend Yield Dividen per share 0 0
Market Price 3 3.42
0 0
S.NO Ratio Formula 2007 2008
14- Net profit margin Net Profit (1242403558) (521096900)
Net Sales
7439375345 4191594084
(16.70%) (12.43%)
15- Return on assets Net Profit (521096900) (1242503558)
Total Assets 21499828234 25723761
(2.42%) (5.65%)
16- Equity Ratio Share Holder
Equity
10500955528 11034403602
Total assets 21499828234 21984203052
49% 50%
17- Earning per share Net Profit after Tax (521096900) (1242503558)
No. of Sharesissued
877480582 1224799777
(0.59) (1.01)
18- Dividend per share Dividend Paid 0 0
No. of Shares
issued 877480582
1224799777
0 0
12
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
13/36
19- Book value per shareShare Holder
Equity 10500955528 11034403602
Number of shares 877480582 1224799777
12 9
20-
Return on SHE Net income (521096900) (1242503558)
Share holder
equity
10500955528 11034403602
(4.96%) (11.26%)
21-
Rate of cost of goodsold COGS 4684077998 6864524968
Net sales 4191594084 7439375345
111.7% 92.27%
22-
Rate of operatingexpense Operating expense 324501826 507941850
Net sales 4191594084 7439375345
7.74% 6.82%
23-
Cash Flow Margin Cash fromoperation 690048153 2277828392
Net sales 4191594084 7439375345
16.46% 30.61%
S.NO Ratio Formula 2007 2008
13
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
14/36
TIME SERIES ANALYSIS
1-CURRENT RATIO:
0
0.2
0.4
0.6
0.8
1
2007 2008
INTERPRETATION:Current ratio measure the firms ability to meet its short term obligations or
commitments. It shows the relationship between current assets and current liabilities. In
the year 2007 current ratio was 0.88 it means current assets were 0.88 times less than that
of its current liabilities.In the year 2008 it decreased to 0.73 if we evaluate the performance over the period of
time companies result are showing bad position in 2008.
2007 2008
0.88 0.73
14
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
15/36
2-QUICK RATIO:
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
2007 2008
INTERPRETATION:Quick ratio measure the firms ability to meet its short term obligations or commitments.
It shows the relationship between quick assets and current liabilities. In the year 2007quick ratio was 0.31 it means quick assets were 0.31 times less than that of its current
liabilities.
In the year 2008 it decreased to 0.045 if we evaluate the performance over the periodof time companies result are showing worst position in 2008.
4-WORKING CAPITAL:
2007 2008
(269381311) (1412449151)
2007 2008
0.31 0.045
15
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
16/36
-1.5E+09
-1E+09
-5E+08
0
2007 2008
INTERPRETATION:Working capital measure the firms ability to meet its short term obligations or
commitments. It shows the relationship between current assets less current liabilities. In
the year 2007 working capital (269381311) it means company has problem with its cash.
In the year 2008 it decreased to (1412449151) and in 2008. if we evaluate theperformance over the period of time companies result are showing worse position though
in 2007 it was decreasing than increased in 2008.
4.NVENTORY TURNOVER:(TIMES)
2.55
2.6
2.65
2.7
2.75
2.8
2.85
2.9
2.95
3
2007 2008
INTERPRETATION:
Inventory turnover shows how efficiently management utilizes its assets in generating
revenue by relating or comparing sales to assets. It shows the relationship between costs
2007 2008
2.7 3
16
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
17/36
of goods sold with average inventory. In the year 2007 inventory was 1748102922 it
means firm use 2.7 times to convert its inventory into cash in 3 times. In the year 2008 it
increases in 2008.
5.INVENTORY TURNOV:(DAYS)
114
116
118
120
122
124
126
128
130
132
134
136
2007 2008
6.ACCOUNTS RECEIVABLE TURNOVER:
2007 2008
135 122
2007 2008
56 138
17
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
18/36
0
20
40
60
80
100
120
140
2007 2008
INTERPRETATION:
Accounts receivable turnover shows how efficiently management utilizes its assets in
generating revenue by relating or comparing sales to assets. It shows the relationship
between credit sales and accounts receivables. In the year 2007 debt to equity ratio were56 it means firm use to collects its cash 56 times in a year.
In the year 2008 it increased to 138.
7.ACCOUNTS RECEIVABLE TURNOVER IN DAYS:
0
1
2
3
4
5
6
2007 2008
8.ACCOUNTS PAYABLE PAYMENT PERIOD TIME:
2007 2008
6 3
2007 2008
0.23 0.285 18
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
19/36
0
0.05
0.1
0.15
0.2
0.25
0.3
2007 2008
9. IN DAYS:
0
200
400
600
800
1000
1200
1400
1600
2007 2008
10. TOTAL DAYS OF OPERATING CYCLE:
2007 2008
1587 1281
2007 2008
141 125
19
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
20/36
115
120
125
130
135
140
145
2007 2008
11. DEBT RATIO:
49.4
49.6
49.8
50
50.2
50.4
50.6
50.8
51
2007 2008
INTERPRETATION:
Debt ratio measure the firm ability to meet its long term obligations or commitments. It
shows the relationship between total debts and total assets. In the year 2007 debt ratio
was 51% it means total liability were 51% less than that of its total assets.
In the year 2008 it decreased to 50%.
12. EQUITY RATIO:
2007 2008
51% 50%
20
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
21/36
48.4
48.6
48.8
49
49.2
49.4
49.6
49.8
50
2007 2008
13. ASSETS TURNOVER:
0
5
10
15
20
25
30
35
2007 2008
INTERPRETATION:
Total assets turnover shows how efficiently management utilizes its assets in generating
revenue by relating or comparing sales to assets. It shows the relationship between tototal assets to net sales. In the year 2007 total assets turnover was 110.54 it means thatfirm has generated 110.54 times sales from its total assets.
In the year 2008 it increased to 126.123 if we evaluate the performance over the period of
time companies result are showing a good position in 2008.
14. EARNING PER SHARE:
2007 2008
49% 50%
2007 2008
19.5% 34%
2007 2008
(0.59) (1.01) 21
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
22/36
-1.2
-1
-0.8
-0.6
-0.4
-0.2
0
2007 2008
15. PRICE EARNING RATIO:
-6
-5
-4
-3
-2
-1
0
2007 2008
16. DIVIDEND PER SHARE:
2007 2008
(5.08) (3.386)
2007 2008
0 0
22
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
23/36
0
0.10.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2007 2008
17. DIVIDEND YEILD:
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
2007 2008
18. BOOK VALUE PER SHARE:
2007 2008
0 0
2007 2008
12 9
23
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
24/36
0
2
4
6
8
10
12
2007 2008
19. RATE OF RETURN ON TOTAL ASSETS:
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
2007 2008
INTERPRETATION:
Return on assets measures the overall record of the management in producing profits. It
shows the relationship between assets and net loss. In the year 2007 return on assets was(2.42%) it means that firm has generated 2.42% of net loss from its total assets.
In the year 2008 it increased to (5.42) if we evaluate the performance over the period of
time companies result are showing a Worst position in 2008.
2007 2008
(2.42%) (5.65%)
24
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
25/36
20. RATE OF RETURN IN STOCKHOLDER EQUITY:
-12.00%
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2007 2008
21. RATE OF COST OF GOOD SOLD:
0%
20%
40%
60%
80%
100%
120%
2007 2008
22. RATE OF GROSS PROFIT:
2007 2008
(4.96%) (11.26%)
2007 2008
112% 92.5%
2007 2008
(12%) 8%
25
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
26/36
-15
-10
-5
0
5
10
2007 2008
INTERPRETATION
Gross profit margin measures the overall record of the management in producing profits.
It shows the relationship between gross profit and sales. In the year 2007 gross lossmargin was 12 it means that firm has generated 12% of gross loss from its sales.
In the year 2008 it increased to 8% in gross profit if we evaluate the performance overthe period of time companies result are showing a better position as in 2008.
23. RATE OF OPERATING EXPENSE:
6.4
6.6
6.8
7
7.2
7.4
7.6
7.8
8
2007 2008
24. RATE OF NET PROFIT:
2007 2008
8 7
2007 2008
(12.5%) (17%)
26
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
27/36
-18.00%
-16.00%
-14.00%
-12.00%
-10.00%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2007 2008
INTERPRETATION:
Net profit margin measures the overall record of the management in producing profits. It
shows the relationship between net profit and sales. In the year 2007 net loss margin was
12.5% it means that firm has generated 12.5% of net loss from its sales.In the year 2008 it increased to 17% if we evaluate the performance over the period oftime companies result are showing a worst position in 2008.
25. CASH FLOW MARGIN:
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
2007 2008
2007 2008
16.5% 31%
27
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
28/36
Internal Growth Rate
IGR = Return on Assets * Retention Ratio *100
1- (Return on Assets * Retention Ratio)
FOR RETURN ON ASSETS:
ROA = Net profit
Total Assets
ROA = (1242503558)
21984203052
ROA = (0.056)
FOR RETENTION RATIO:
Retention Ratio = 1 dividend payout rate
FOR DIVIDEND PAYOUT RATE:
Dividend payout rate = Dividend paid
28
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
29/36
NPAT
= 0
(1242503558
Dividend payout rate = 0
NOW,
Retention ratio = 1 0
= 1
THEREFORE
IGR = Return on Assets * Retention Ratio
1-(return on Assets * Retention Ratio)
= (0.056*1
1 (-0.056)
IGR= 5.5%
Sustainable Growth Rate
SGR = Return on equity * Retention Ratio
1-(Return on equity * Retention Ration)
FOR RETURN ON EQUITY:
ROE = Net profit
Total Share holder equity
ROE = (1242503558
11034403602
ROE = (0.112)
Now,
= Return on equity*Retention Ratio
1- (Return on equity*Retention Ration)
= (0.112) * 1
29
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
30/36
1- (-0.112)
SGR = 10%
LAFARGE CEMENT PAKISTAN
COMMON SIZE INCOME STATEMENT
Net sales 100%
Cost of good sold (92.27%)
Gross Profit 7.72
Selling general administration expense (6.99%)
Other operating expense (0.47%)
Other operating income 0.63%
Total operating expense (6.82%)
Operating loss 0.89%
Finance cost (19.91%)
30
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
31/36
Loss before tax (19.01%)
Tax 2.31%
Net loss for the year (16.70%)
LAFARGE CEMENT PAKISTAN
COMMON SIZE BALANCE SHEET
ASSETS:
NON CURRENT ASSETS:
Property plant and equipment 78.46%
Intengibles 0.01%
Long term advances 0.38%
Long term deposits 0.2%
Deferred taxation 3.4%
Total 82.45%
CURRENT ASSETS:Stores and spares 11.16%
Stock in trade 4.30%
Trade debts 0.15%
Advances 0.68%
Prepayments 0.30%
31
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
32/36
Interest accrued 0.02%
Other receivables 0.68%
Cash and bank balances 0.25%
Total 17.54%
Total Assets 100%
EQUITIES AND LIABILITIES
SHARE CAIPITAL AND RESERVEShare capital Authorized 225,000,000 ordinary
share
Issued subscribe and paid up 59.70%
Reserves:
Capital reserves 0.87%
Accumulated loss (10.38%)
(9.52%)
Total equities 50.19%
NON-CURRENT LIABILITIESLong term financing 19.96%
Obligation under finance leases 0.09%
Other long term liabilities 5.7%
Current liabilities
32
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
33/36
Trade and other payables 5.21%
Accrued markup 1.72%
Short term running finance 11%
Current maturities:
Long term financing 5.97%
Obligation under finance leases 0.05%
Total 23.96%
Total liabilities and equities 100%
(Items of Income statement and Balance sheet are increased by Sustainable growth
rate which is -10%)
LAFARGE CEMENT PAKISTAN
PROFORMA INCOME STATEMENT
Net sales (6695437811)
Cost of good sold (6178072471)
Gross Profit (517365339)
Selling general administration expense (468283200)
Other operating expense (31532054)
Other operating income 42667589
Total operating expense (45714665)
Operating loss 60217675
Finance cost 1333506389
33
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
34/36
Loss before tax (1273288714)
Tax 155035513
Net loss for the year (1118253202)
LAFARGE CEMENT PAKISTANPROFORMA BALANCE SHEET
ASSETS:
NON CURRENT ASSETS:
Property plant and equipment
15523122980
Intengibles3692434
Long term advances
74372400
Long term deposits
394083100
Deferred taxation
674412506
CURRENT ASSETS:
Stores and spares
2208451699
Stock in trade
852240938
Trade debts
30533926
34
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
35/36
Advances
134305099
Prepayments
59985496
Interest accrued
1552186
Other receivables133779450
Cash and bank balances
49925316
Total
3470774114
Total Asset 19785782750
EQUITIES AND LIABILITIES
SHARE CAIPITAL AND RESERVEShare capital Authorized 225,000,000 ordinary
share 225000000000
Issued subscribe and paid up
11813800390
Reserves:
Capital reserves
171429030
Accumulated loss (2054266180)
(1882837150)
Total equities
9930963242
NON-CURRENT LIABILITIES
Long term financing3949920347
Obligation under finance leases 19182706
Other long term liabilities
1143738102
CURENT LIABILITIES
35
-
8/9/2019 Financial Report on Lafarge Cement Pakistan
36/36
Trade and other payables
1031951587
Accrued markup
340772504
Short term running finance
2176266020
Long term financing1182211499
Obligation under finance leases
10776739
Total 4741978350
Total liabilities and equities
19785782750