Lucky cement final project FR

A PROJECT OF FINANCIAL ANALYSIS ON

LUCKY CEMENT

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PRESENTED TO:

PROF, AYESHA ANWAR

PRESENTED BY:

Muhammad Tayyab 111405

Muhammad Irfan 103125

M. Qamar Abbas 103141

Farhan Ahmad 091334

The Institute of Management Sciences (Pak-AIMS)

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ACKNOWLEDGEMENT

We would like to pay our praises and humblest thanks to AL-MIGHTY

ALLAH, the most Merciful and Beneficiate of all, who bestowed us with the

ability to complete this project. It gives us immense pleasure and honor to extend

our thanks to our kind & cooperative . Prof Ayesha Anwar from Faculty of

Institute of Management Sciences, Lahore for his valuable advices and suggestions

throughout our semester, in order to perform well & up to mark..

Finally, we pay regards of gratitude to our parents, as they and their prayers for our

success are always been a pillar of strength for us in our life.


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Table of ContentsINTRODUCTION...........................................................................................................................................6

Founder History...........................................................................................................................................7

COMPANY INFORMATION...........................................................................................................................9

Board of Directors...................................................................................................................................9

BUSINESS STRATEGY..................................................................................................................................12

1. Holding and growing local dominance..............................................................................................12

2. Increasing our share in International market......................................................................................12

3. Efficiency..........................................................................................................................................12

4. Sustainable Development..................................................................................................................12

5. HR Excellence...................................................................................................................................12

Corporate Philosophy............................................................................................................................13

Vision Statement...................................................................................................................................13

Mission Statement.................................................................................................................................13

Logo Philosophy........................................................................................................................................13

AWARDS....................................................................................................................................................14

Leadership As Solid As Concrete............................................................................................................15

COMMUNITY DEVELOPMENT:...............................................................................................................15

Development of the Company...................................................................................................................18

INVESTOR RELATIONS................................................................................................................................19

EXPORTS....................................................................................................................................................19

CEMENT MANUFACTURING PROCESS.......................................................................................................21

QUALITY ASSURANCE................................................................................................................................23

CERTIFICATE..............................................................................................................................................24

PRODUCTS OF THE COMPANY...................................................................................................................24

OPC (Ordinary Portland Cement):.........................................................................................................24

SRC (Sulphate Resistant Cement):........................................................................................................25

Clinker:..................................................................................................................................................25

Block Cement:.......................................................................................................................................26

SUSTAINABILITY.........................................................................................................................................26

Building network:......................................................................................................................................31


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Pakistan Business Council (PBC)............................................................................................................31

CSR Association of Pakistan...................................................................................................................31

Marketing Association of Pakistan (MAP)..............................................................................................31

US Atlantic Council................................................................................................................................31

Building Network...................................................................................................................................32

Pakistan Institute of Corporate Governance (PICG)...............................................................................32

SAFETY AND SECURITY...............................................................................................................................32

Fire Fighting...........................................................................................................................................33

Basic Life Support – Cardiopulmonary Resuscitation (CPR)...................................................................33

Vertical Analysis of Financial Performance................................................................................................37

Horizontal Analysis of SOFP.......................................................................................................................38

Vertical Analysis of Statement of Financial Position..................................................................................40

Horizontal Analysis of Statement of Financial Position..............................................................................41

Ratio Analysis of Lucky Cement Lemited...................................................................................................42

Current Ratio:........................................................................................................................................43

Inventory Turnover:...............................................................................................................................43

Gross Profit Ratio:.................................................................................................................................43

Operating Profit Margin:.......................................................................................................................43

Net Profit Ratio:....................................................................................................................................44

Return on Capital Employed.................................................................................................................44

Return on Assets:...................................................................................................................................44

Assets Turnover Ratio:..........................................................................................................................44

Quick Ratio:..........................................................................................................................................45

Debt ratio:..............................................................................................................................................45

Interest cover:........................................................................................................................................46

Earning per share:..................................................................................................................................46

Standards, amendments and interpretations adopted during the year.........................................................46

Recommendations and Financial Strategy:................................................................................................47

Conclusion:................................................................................................................................................47


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INTRODUCTION

Lucky cement Sponsored by well known “Yunus

Brothers Group” – one of the largest export houses of Pakistan, Lucky Cement Limited currently

has the capacity of producing 25,000 tons per day of dry process Cement.

Lucky Cement Limited (LCL) is Pakistan’s largest producer and leading exporter of quality

cement with the production capacity of 7.75 million tons per annum. The company is listed on

Karachi, Lahore, Islamabad and London Stock Exchanges.

Over the years, the Company has grown substantially and is expanding its business operations

with production facilities at strategic locations in Karachi to cater to the Southern regions, Pezu

and Khyber Pakhtunkhwa to furnish the Northern areas of the country. Lucky Cement is

Pakistan’s first company to export sizeable quantities of loose cement being the only cement

manufacturer to have its own loading and storage terminal at Karachi Port.

Lucky Cement is an ISO 9001:2008 and 14001:2004 certified company and also possesses many

other international certifications including Bureau of Indian Standards, Sri Lankan Standard

Institute, Standards Organization of Nigeria, Kenya Bureau of Standards and South African

Bureau of Standards.


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Founder History

Late Abdul Razzak Tabba, the deceased Chairman of the Yunus Brothers Group is

the person behind the success of the Group. He was a prominent business leader and

well liked in the business fraternity. He was an enterprising businessman with

calculated economic thinking.

Mr. Tabba's dynamism, loyalty and vision to make Pakistan stronger among other

nations of the world. Bringing in more industrialization and technology transfer

were the major goals set by him. It was Mr. Tabba’s dynamism that the Group

expanded from regional to international level, despite the economic meltdown.

Under the leadership of Mr. Abdul Razzak Tabba, the Group received more than 20 Exports

Trophies from the Government of Pakistan, for the highest overall exports from the country and

the highest exports in the textile sector.

He was not just a visionary businessman, but also was a leader and philanthropist. All his

philanthropic activities were routed through the Aziz Tabba Foundation, Established for

promotion of charity and other welfare-oriented projects, serving the humanity with unmatched

compassion and entrepreneurship.

Mr. Razzak Tabba strived for excellence through perfect balance between his career and service.

He was also honored with Sitara-e-Imtiaz by the Government of Pakistan.

Mr. Abdul Razzak Tabba is no more among us but his values continue, giving hope and strength

to all the members associated with YB Group.


Mr. A. Razzak Tabba (S.I)The late Chairman& Chief Executive of Lucky Cement

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Dynamism, loyalty and a vision to make our country stronger among the other nations of the

world by bringing in more and more industrialization and technology transfers – these were

some of the many goals set by our late Chairman & Chief Executive Mr. A. Razzak Tabba.

Yunus Brothers Group is one of the largest export house of Pakistan that has grown up

remarkably over the last 50 years. The YB Group is engaged in diversified textile manufacturing

activities consisting of Spinning, Weaving, Processing, Finishing and Stitching. The Group also

owns one of the largest cement manufacturing plant and the second largest yarn manufacturing

capacity in the Country. Besides manufacturing, the Group is also engaged in International

Trading of various commodities.

The Group consists of the following Companies, with an annual turnover of over Rs. 27 Billion

or US$ 450 Million during year 2004~2005 out of which exports amounted to US$ 300 Million.

1. Lucky Cement Limited

2. Gadoon Textile Mills Limited

3. Fazal Textile Mills Limited

4. Yunus Textile Mills

5. Lucky Energy (Private) Limited

6. M/s. Yunus Brothers

7. Lucky Textile Mills

8. Security Electric Power Company Limited


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COMPANY INFORMATION

Board of Directors

Mr. Muhammad Yunus Tabba (Chairman)

Mr. Muhammad Sohail Tabba

Mr. Imran Yunus Tabba

Mr. Jawed Yunus Tabba

Mrs. Rahila Aleem

Mrs. Mariam Tabba Khan

Mr. Ali J. Siddiqui

Mr. Manzoor Ahmed (NIT)

Chief Executive

Mr. Muhammad Ali Tabba

Chief Operating Officer

Mr. Noman Hasan

Director Finance and Company Secretary

Mr. Muhammad Abid Ganatra

FCA, FCMA, FCIS


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Statutory Auditors

M/s. Ernst & Young Ford Rhodes

Sidat Hyder, Chartered Accountants

A member firm of Ernst &

Young Global Limited

Internal Auditors

M/s. M. Yousuf Adil Saleem & Co.,

Chartered Accountants

A member firm of Deloitte Touche

Tohmatsu

Cost Auditors

M/s. KPMG Taseer Hadi and Co.,

Chartered Accountants

Head Office:

6-A, Muhammad Ali Housing Society,

A. Aziz Hashim Tabba Street,

Karachi - 75350

UAN # (021) 111-786-555

Website: www.lucky-cement.com

E-mail: [email protected]


mailto:[email protected]

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Liaison Office

Multan

Dastagir Tower, 1st Floor, Hassan Parwana Road, Near Deira Ada, Multan

Tel: (92-61) 4540556-7

Fax: (92-61) [email protected]

Lahore

2nd Floor, Al Hasan Plaza, Jamia Ashrafia, Main Ferozpur Road, Lahore

UAN: (92-42) 111-786-555

Tel: (92-42) 37530480-2 Fax: (92-42) 37530435 [email protected]

Islamabad

House No. 26, Street No. 8, Sector F-7/3, Islamabad UAN: (92-51) 111-786-555 Tel: (92-51) 2610804-07 Fax: (92-51)2610809

[email protected]

Peshawar

7-Park Avenue, University Town UAN: (92-91) 111-786-555

Tel: (92-91) 5844903-5840271 Fax: (92-91) [email protected]

QuettaF1, First Floor, Institute of Engineers Building, Zarghoon Road,Tel : (92-81) 2837583 Fax : (92-81) 2829267 [email protected]

Production factories:

1) Pezu, District Lakki Marwat, Khyber Pakhtunkhwa

2) 58 Kilometers on Main Super Highway, Gadap Town,

Karachi.







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BUSINESS STRATEGY

1. Holding and growing local dominance

Further reinforcing our strength is what we keep in focus when designing our business strategies

for the local market.

2. Increasing our share in International market

Broadening our horizons, we have engaged our resources to the unconventional markets to

become accessible to be the construction industry worldwide.

3. Efficiency

Efficiency is reflected in all our business approaches, giving us an edge over the competitors in

cost and energy, by skillful utilization of resources.

4. Sustainable Development

We believe in giving back to the communities we operate in and to the society at large. We

endeavor to stimulate environmental awareness among the stakeholders and have a broad vision

for the sustainable world.

5. HR Excellence

We believe in people development. Our Human Resource is our asset and an important factor in

our success. Our intellectual capital provides a framework that serves as a guiding force for the

organization as a whole.


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Corporate Philosophy

Vision Statement

We envision being the leader of the cement industry in Pakistan, identifying and capitalizing on

new opportunities in the global market, contributing towards industrial progress and sustainable

future, while being responsible corporate citizens.

Mission Statement

Our mission is to be a premium cement manufacturer by building a professional organization,

having state-of-the-art technology, identifying new prospects to reach globally and maintain

service and quality standards to cater to the international construction needs with an

environment-friendly approach.

Logo Philosophy

Recently, we launched our new identity marking a significant milestone in our history. Our new

logo represents the core values that Yunus Brothers uphold and live by. The hexagon presents

our values, attributes and quality parameter which comprises of state of the art technology, our

foresight and innovation to compete with international standards. Our commitment to quality and

the diversity of our portfolio to meet the customer needs. It reflects our journey towards modern

and innovative business practices, smart investment moves, diversity in human resource and

unconventional approaches towards building our corporate image.


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AWARDS

Lucky Cement has a tradition of excellence in business. Various Awards and Achievements

presented to Lucky Cement in recognition of a successful corporate company.

• National CSR Excellence Award

• Brand of the Year Award

• Annual Environment Excellence Award

Recognition from Chamber of Commerce and Industry:

• Karachi Chamber of Commerce and Industry:

Awarded the Export Trophy to Lucky Cement for highest exports of cement from Pakistan.

• Khyber Pakhtunkhwa Chamber of Commerce and Industry:

Awarded the following distinctions:

Top Sales Tax Payer

Top Income Tax Payer

Top Exporter

Top Importer

Exports Trophy 2009 – 2010


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Leadership As Solid As Concrete

I was the first one to reach the top. None, but my shadow was my competition. I relied on the

strength of my body and soul; my guiding stars were faith, honesty and excellence. I fired above

the mark that I intended to hit. Energy and invincible determination with the right motives are

the levers through which I moved the world. Reflecting on my success, it is evident that I am the

unparalleled market leader. Through my strategies, I anticipate the needs of the industry. I have

managed to stay on top with cutting edge solutions, building your dreams and making them a

reality. On my journey, I have left traces for winners to become champions. As I embark on a

new chapter to help shape the future of our nation, you can rest assured that I will deliver you

with leadership as solid as concrete.

I am Lucky Cement!

COMMUNITY DEVELOPMENT:

Water supply Scheme at Darra Pezu:

Lucky Cement established water supply scheme and distribution lines to provide clean

drinking water to the residents of Darra Pezu. The 9 Km water supply line provides clean

drinking water facility to the residents of the rural localities situated in the outskirts of Darra

Pezu town. The distribution line starts from Lucky Cement's Pezu Plant and provides water to

outskirts of Pezu by connecting with two wells made by LCL. From these wells, water is then

passed to the old distribution lines and hence spreads all over Darra Pezu. This water supply line


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provides drinking water to almost 70% of the population of Pezu, which is equal to 5,000

households. Outside Pezu, almost 2,000 households get water from these lines

Ultrasound facility at Mother and Child Health Care Centre

o Lucky Cement, in partnership with Concern for Children Trust (CFC), is setting

up an Ultrasound facility at Mother and Children Health Care Centre (MCH) in

Machar Colony, a slum area in Karachi. The Machar Colony has a population of

approximately 750,000 people deprived of basic necessities of life including

quality health care for women. By establishing this facility, Lucky Cement and

CFC aim's at creating awareness about prenatal and post natal care of mother and

child, safe child birth and prevention and cure of any disabilities in children at an

early stage.

Model Village in DI Khan

o After providing relief to the affectees of the massive destructions caused by floods

and heavy rains last year, Lucky Cement focused all the efforts towards

rehabilitation of the IDPs. Lucky Cement generously donated 600 cement bags for

the construction of a model village in Dera Ismail Khan.

Scholarship Program for the students of Pezu

o Lucky Cement's management in Pezu has initiated a merit cum need based

scholarship scheme for the local students of Graduate and Post Graduate levels,

registered with HEC recognized institutions to enable them to acquire higher

education.


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World-Class Primary School in Darra Pezu

o LCL is all set to construct a world-class primary school, near its factory in Pezu,

District Lakki Marwat, in partnership with a renowned NGO, chartered by the

Government of Pakistan and endorsed by the World Bank. This school will be

affiliated with Pakistan's well known school system and will provide access to

quality education to the residents of the area. In first phase, the company will

establish a primary school, which will later be expanded to secondary education

as well. This school will be strategically constructed in an area where there are no

such facilities currently available.

Lucky City School – Pezu

o LCL also runs a well-maintained primary school, up to class five, for the children

of the factory workers in Pezu. The school is registered with Benu Education

Board and provides quality and free of cost education to the children of

employees.

DI Khan Airport Renovation

o The company also took responsibility of the renovation of DI Khan Airport as a

welfare gesture for the locals of the area and to boost overall commerce and

economy. Upgrading of the airport exterior and interior has been completed,

along with provision of furniture for both arrivals and departure lounges.


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Development of the Company

1993 Listed on Karachi, Lahore and Islamabad Stock Exchanges1996 Entered into commercial business with production capacity of 1.2

million tons per annum (Lines A and B at Pezu Plant)1999 Production capacity increased to 1.5 million tons per annum2001 Conversion of Kiln Firing System from furnace oil to coal based2002 Started exporting cement2005 Started new production line (Line C) at Pezu

Inaugurated new production facility in KarachiBecame the largest cement exporter from Pakistan

2006 Started new production line (Line D) in PezuStarted production in Karachi plant (Lines E and F)Became largest cement producer of Pakistan.Acquired transportation fleet of bulkers and ship loaders

2007 Became the first company to export loose cement through sea2008 Set up its own cement storage facility at Karachi Port with the

capacity of 24,000 tonsConversion of furnace oil power generation engines to gas-basedGot listed in London Stock Exchange and became the first cement company in Pakistan to issue GDR

2009 Started the 7th production line (Line G) at Karachi Plant, bringing the total production capacity to 7.75 million tons per annum

2010 Waste Heat Recovery Project started operations at both Karachi and Pezu PlantsAcquired multi-purpose trailers for moving all kinds of payload, either bagged or in raw form

2011 Signed MOU to sell 20 MW electricity to Hyderabad Electric Supply Company (HESCO)Set up a plant at Karachi Plant to replace coal with Tyre Derived Fuel (TDF) to further reduce cost of productionInvested in a joint venture in DR Congo

2012 Started supplying electricity to HESCO.Signed Lol for supply of electricity to PESCO.Invested in a joint venture of cement grinding plant in Iraq.Shares acquisition of ICI Pakistan limited.


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INVESTOR RELATIONS

Lucky Cement realizes the importance of interaction with the existing shareholders and potential

investors of the Company and in this respect participates in various investor conferences held

from time to time domestically or abroad.

For the last couple of years, LCL has been participating in national and international

Conferences to meet and interact with existing and potential investors for attracting foreign

investment into the Country.

These conferences are attended by representatives of Banks, Asset Management companies,

Insurance companies and various other corporate individuals.

Lucky Cement – NTN: 0009807-8

Lucky Cement - Registration Number: 0031182

For any investor related queries and / or grievances, contact our Corporate Affairs Department or

visit SECP’s Investor Complaint Section.

EXPORTS

Pakistan’s first company to export sizable quantity of loose cement and it is the only

cement manufacturer to have a loading and storage terminal at Karachi Port. This state-of-the-art

project is based on the latest European technology and the first in South East Asia and

Middle Eastern region. This terminal is equipped with logistical arrangements to carry loose


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cement, which is transferred to the port from our Karachi Plant via a fleet of especially designed

cement bulkers, they are capable of off-loading loose cement into carrier ships directly through a

unique compressor system installed on each vehicle. Each bulker can carry up to 75 tons of

cement.

Our infrastructure at Karachi port is specially designed to transfer loose cement to the vessels in

the shortest amount of time, making it efficient and reliable for reducing the vessels idle time , in

turn making the shipments timely as per the customer requirements. We have installed cement

storage silos at the port which are capable of storing 24,000 tons of cement. LCL has set up

automatic ship loaders at the site to make a fully automatic loading from the silos when the

vessels arrive. This system works at fast discharge rates and enables quick loading time, ensuring

cement availability at the port anytime; thus playing a major role in increasing our export

capacity. The loading capacity of this terminal is 12,000 tons of loose cement per day, which

depends upon the size and construction of vessel(s). In order to store large amount of cement,

four silos have been installed, each silo has a capacity to store around 6000 metric tons cement,

and underground system has been designed to unload bulkers, store cement into silos and

transfer required quantity of loose cement into vessels.

The whole system is designed on the basis of PLC (Programmable logic control) system. All

processes go through a fixed repetitive sequence of operations that involves logical steps and

decisions. PLCs are used to control time and regulate the system, the extraction of cement from

bulkers and reloading in to vessels is processed though vacuum pumps and compressors, which

operate through powerful generators. The cement transfer volumes attained through this system


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is approximately 500 metric tons per hour. A strong work force of skilled individuals, including

engineers, technicians and labor are employed at the company’s terminal on port.

With this specialized work force, Lucky Cement is capable of loading around 2000 tons of

bagged cement per day, and 3000 tons cement per day in sling bags. This record rate of loading

is achieved through our well-trained stevedores who maintain load rate and utilize their

capabilities to the maximum. To date, more than 50 million tons of loose cement has been

exported through the plant installed at Karachi port.

CEMENT MANUFACTURING PROCESS

Cement is a fine, soft, powdered substance, made from a mixture of elements that are found in

natural materials such as limestone, clay, iron ore and sand. When cement is mixed with water, it

can bind sand and turns into a hard, solid mass called concrete.

Raw Material Preparation

The key element – Limestone and clay are mined through blasting from rock quarries by setting

off explosives. Limestone and clay contains calcium, silicon, aluminum and iron, which are the

essential elements for cement manufacturing. Latest technology is used for blasting so as to

ensuring vibration, dust, and noise emissions are kept at a minimum level. Blasting produces

materials in a wide range of sizes from approximately 1.5 meters in diameter to smaller particles

less than a few millimeters in diameter. Quarried material is the loaded into trucks or belts for


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transportation to the crushing plant. Through a series of crushers and screens, the Limestone is

reduced to a size less than 100 mm and is stored until required.

Pre - Homogenization

In the dry process, each raw material is proportioned to meet a desired chemical composition and

fed to a vertical steel mill. The raw materials are dried with waste process gases and grinded

through the pressure exerted by three conical rollers in a rotary kiln. The rotary kiln is fired with

an intense flame produced by burning coal, coke, oil, gas or waste fuels. The dry materials

exiting the mill are called "kiln feed". The kiln feed is pneumatically blended to ensure the

chemical composition is well homogenized and is then stored in separate silos until required.

Basic chemical reactions that take place in the kiln, at 1400 °C are: Evaporation of moisture,

calcinations of the Limestone to produce free calcium oxide and reaction of the calcium oxide

with other materials (sand, shale, clay, and iron). This results in a final, nodular, red-hot product

known as "Clinker" which is 3 – 4 centimeters in diameter and can be stored for several months.

Finishing, Packaging and Distribution

The clinker is cooled and grinded into a fine grey powder. The grinding is done through

different-size steel balls. A small amount of gypsum and other process are also added during the

final grinding. The amount of gypsum and process added during the process varies in all of the

final cement products. Each cement product is stored in an individual silo from where it is


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transported to packaging facility for either sack – packaging or bulk transportation. Bulk cement

is distributed through bulkers or is shipped; depending on the customer's needs.

QUALITY ASSURANCE

Lucky Cement greatly emphasizes in manufacturing high quality cement through stringent

quality control techniques and computerized control systems. Using sophisticated equipment like

Distributed Control System (DCS), Programmable Logic Controllers (PLCs) and on line X-Ray

Analyzers. We have one of the best equipped laboratories, with facilities for analysis of raw

material, semi furnished product, furnished product and fuel, to ensure the supply of high quality

product to market.

Quality of the cement has been tested and proven up to the specifications mentioned in Pakistan,

British, Indian, Kenyan, Nigerian, South African and Sri Lankan Standards.

Lucky Cement has been accredited by following international bureaus of Standards:

1. Bureau of Indian Standards

2. Sri Lankan Standard Institute

3. Standards Organization of Nigeria

4. Kenya Bureau of Standards

5. South African Bureau of Standards.

Lucky Cement is also an ISO 9001:2008 and ISO14001:2004 certified company


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CERTIFICATE

PRODUCTS OF THE COMPANY

OPC (Ordinary Portland Cement):

We offer Ordinary Portland Cement (OPC) that is used in all general constructions, especially in

major and prestigious projects where cement is needed to meet stringent quality requirements. It

can also be used in concrete mortars and grouts, etc. Ordinary Portland Cement is


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compatible/consumable with admixture/

retarders, etc.

OPC has easy workability and lower heat

of hydration. We maintain our technical

standard of quality parameter at high level

and with high strength at all ages. Our

OPC cement satisfies EN 196 / 197 – 1,

SABS, BIS, SLSI & PSS – 232 ~ 1983 (R).

SRC (Sulphate Resistant Cement):

By maintaining C3A level within the specified limit of 3.5%, our Sulphate Resistant Cement is

more resistant to Sulphate attacks and is suitable for use in foundations near seashore and canal

linings.

SRC has lower heat of hydration and its strength satisfies B.S 4027 / 1980 & PS 612 / 1989.

Clinker:

We also offer clinker to the customers with their own grinding units. Clinker can be easily

handled by ordinary mineral handling equipment and can be stored for several months without

compromising on the quality. Clinker is the primary product in the cement manufacturing

process where limestone, clay and sand are grinded and heated, before the gypsum is added to

produce the final product of cement.


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Block Cement:

By the nature of product, Block Cement is similar to the SRC, with a significantly darker color

and some low setting time to meet the requirements of the market and for the production of

blocks. Block Cement also maintains C3A level within the specified limit of 3.5%.

BRANDS AVAILABLE AT LUCKY CEMENT

Lucky CEMENT (REGULAR) Lucky STAR

Lucky GOLD Lucky SULPHATE RESISTANT CEMENT (SRC)

SUSTAINABILITY

Business leaders across the globe, appreciate the fact that business is not just about

making quality products or satisfying your clients. Beyond the requirement of legal


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settings, businesses are now required to manage the wider social

and environmental consequences of their actions.

Lucky Cement is actively contributing towards the welfare of the society and plays its part in

areas of education, environmental awareness, and health and community development.

Believing in fair and transparent practices, we have reported separately on our sustainability

initiatives for the financial year 2011. Our Sustainability Report 2011 has been assessed with a

Level Check ‘A’ by the Global Reporting Initiative (GRI). This makes us the only company in

Pakistan to receive Level Check A in the year 2010 – 2011


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Lucky Cement ; 20%

Bestway Cement ; 11%

DG Khan Cement ;

15%Maple Leaf Cement ; 10%Kohat Cement ;

5%

Lafarge Ce-ment ; 6%

Pioneer Cement ; 4%

Attock Cement ; 6%

Others; 23%

CEMENT INDUSTRY MARKET SHARE (FY 2011-12)

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Building network:

Lucky Cement maintains a strong network of association with its corporate stakeholders. Our

association with prominent public and corporate platforms enable

us in strengthening our bond with local as well as international businesses.

Pakistan Business Council (PBC)

PBC represents big businesses, enterprises with substantial investments in

manufacturing and in the financial sector. PBC’s aim is to promote and

facilitate the integration of Pakistani businesses into world economy and to encourage the

development and growth of Pakistani companies.

CSR Association of Pakistan

The CSR Association of Pakistan promotes CSR principles and

practices to businesses in Pakistan because it makes companies

more innovative, productive, and competitive.

Marketing Association of Pakistan (MAP)

MAP is an independent association that promotes the study of all branches of knowledge

relevant to the profession of marketing. It provides facilities for the study of inquiry and research

into marketing problems. The Association enjoys patronage from the Government of Pakistan

and is represented on the Advisory Council of the Ministry of Commerce.

US Atlantic Council

The Atlantic Council has been a preeminent, nonpartisan institution devoted to promoting


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transatlantic co-operation and international security. The council provides an essential forum

for navigating dramatic shifts in economic and political influence.

Building Network

Lucky Cement maintains a strong network of association with its corporate stakeholders. Our

association with prominent public and corporate platforms enable us in strengthening our bond

with local as well as international businesses.

Pakistan Institute of Corporate Governance (PICG)

The PICG undertakes activities geared towards achieving good corporate

governance in the country and creating an enabling environment for

effective implementation of the Code of Corporate Governance. PICG is

focused on encouraging professional interaction between members and to

enhance competitiveness of the domestic corporations.

SAFETY AND SECURITY

For us, safety and security means not just protecting our employees from any hazards, but also

taking all the requisite measures to prevent any harm. We ensure that all our stakeholders are

protected from any potential hazards. Today, when information related to health issues is widely

available and just a click away, there is still a significant lack of knowledge regarding the typical

signs and risk factors associated with serious medical conditions. We effectively control any

risks to injury or health that could arise at the workplace and educate our employees on how to

deal with risks and train them with various first-aid techniques.


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Fire Fighting

We believe that the ample knowledge in first aid and fire fighting support should be an essential

aspect for an office environment as these trainings are important for both the support provider

and the victim and minimizes the potentials of any unpleasant event.

Basic Life Support – Cardiopulmonary Resuscitation (CPR)

Basic life support consists of a number of medical procedures provided to patients with life

threatening conditions that may cause pain or dysfunction. We organized a session on Basic Life

Support training for our employees, which was fruitful in enabling them to identify several life-

threatening emergencies, performing CPR and ease choking in a safe, timely and effective

manner. All the participants actively performed the practical and were given certificates for their

participation.


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Lucky Cement Limited.Consolidated Profit and Loss Account

For the year ended June 30,20122012 2011 2010 Analysis

Rs.000 Rs.000 Rs.000 Vertical Horizontal

Gross Sales 39,123,147 31,767,053 29,052,901 100% 134.66%

Less: Sales Tax and Excise Duty 5,485,629 5,545,549 4,226,459 14% 129.79%

Rebates and Commission 314,983 203,985 317,649 1% 99.16%

5,800,612 5,749,534 4,544,108 15% 127.65%

Net Sales 33,322,535 26,017,519 24,508,793 85% 135.96%

COST OF SALES 20,601,261 17,306,519 16,529,932 53% 124.63%

GROSS PROFIT 12,721,274 8,711,000 7,978,861 33% 159.44%

Distribution costs 3,236,721 3,236,425 3,433,047 8% 94.28%

Administrative expenses 474,135 313389 303244 1% 156.35%

Finance costs 253,234 517,788 569,184 1% 44.49%

Other charges 438,411 325,482 257,774 1% 170.08%

other income 5,204 2,486 1,902 0% 273.61%

Profit before taxation 8,323,977 4,320,402 3,417,514 21% 243.57%

Taxation 333,225 260,175 195,697 1% 170.28%

Deferred 1,208,336 89,946 84,360 3% 1432.36%

1,541,561 350,121 280,057 4% 550.45%

Profit before taxation 6,782,416 3,970,281 3,137,457 17% 216.18%

other comprehensive income - - -

Total comprehensive income 6,782,416 3,970,281 3,137,457 17% 216.18%


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Vertical Analysis of Financial Performance

The vertical analysis shows very good performance of the organization, Cost of Services are

52% of sales with a resulting Gross Profit of 33% this is good performance of the company and

despite very good sales revenue of over Rs. 391 Billion the profitability of the organization is

very good for the company. Company achievement is so high.

In distribution cost major expense is incurred on Advertisement and distribution which is Rs. 32

Billion and it is extremely high as well.

Administrative expenses of the organization still increase with the previous year 1% of the

total sales revenue and amounts more than Rs. 4.74 Billion it is also very high.

Finance Cost of organization is decrease as compare to previous year that cost are Rs. 2.53

Billion and it comprise almost 1% of the sales revenue.

Just because of the above mentioned main points organization performance is so good and

increase the net sales as compare to the previous.

As you can see in the statement of profit and loss, lucky cement’s gross profit is sizable, at 33

percent. The distribution cost, though, are eating up a huge chunk of the revenues; that could be

an area in which to cut back. General operating expenses take up a reasonable percentage of

sales, leaving lucky cement with about a 17 percent bottom-line profit.


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Horizontal Analysis of SOFP

When we do a horizontal analysis of the organization we come to find that the sales of

organization have increased by 37% but surprisingly its cost of services increased by 24%

which clearly indicates that the management of the organization is in a very good shape and the

corresponding cost of sales to with better management. As a result even the increase in sales has

resulted that company grow well and performance is so good as compared to the previous year it

is still growing and improve the sale volume on the organization in the coming year.

Gross profit of the organization is decreased by 59% which indicates clearly that company

going to improve and cost of good is not effect on the profit of the company.

Exchange profit of the organization in the year 2012 has increased by 143% slightly change in

the cost of the current year.

Due to all above results and good business performance the overall profit of the organization has

increased by 116% which is make stronger of the organization and in the future it may increase

the plant and business.


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Lucky Cement Limited.Consolidated Statement of Financial Position

As on June 30, 20122012 2011 2010 Analysis

ASSETS Rs.000 Rs.000 Vertical Horizontal NON CURRENT ASSETS

Fixed assetsProperty, plant and equipment 31,016,532 31,705,156 31,378,255 76.34% 98.85%Intangible 1,514 1,685 2,977 0.00% 50.86%

31,018,046 31,706,841 31,381,232 76.34% 98.84%Long term loan advances 55,373 55,373 55,373 0.14% 100.00%Long term deposit 3,175 3,175 2,175 0.01% 145.98%

31,076,594 31,765,389 31,438,780 76.48% 98.85%

CURRENT ASSETS

Stores and spares 5,396,220 6,313,584 4,008,288 13.28% 134.63%Stock in-Trade 1,276,433 1,248,538 608,813 3.14% 209.66%Trade debts 1,050,639 620,961 779,305 2.59% 134.82%Loans and advances 148,189 72,164 86,471 0.36% 171.37%Trade deposits and Short Term Prepayments 67,894 38,669 48,807 0.17% 139.11%Other receivables 105,677 218,884 204,249 0.26% 51.74%Tex refunds due from the Government 538,812 538,812 538,812 1.33% 100.00%Taxation – net 126,361 41,652 145,151 0.31% 87.05%Sales Tax –refundable 0 0 117,939 0.00% 0.00%Cash and bank balances 844,422 351,202 333,629 2.08% 253.10%

9,554,647 9,444,466 6,871,464 23.52% 139.05%Total Assets 40,631,241 41,209,855 38,310,244 100.00% 106.06%

EQUITY AND LIABILITIESSHARE CAPITAL AND RESERVESShare capital 3,233,750 3,233,750 3,233,750 7.96% 100.00%Reserves 30,027,995 24,539,079 21,862,179 73.90% 137.35%

33,261,745 27,772,829 25,095,929 81.86% 132.54%


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NON-CURRENT LIABILITIESLong term Finance 392,898 658,298 1,658,600 0.97% 23.69%Long Term Deposits 52,752 37,306 31,957 0.13% 165.07%Deffered Libilities 3,299,522 2,044,633 1,882,067 8.12% 175.31%

3,745,172 2,740,237 3,572,624 9.22% 104.83%

CURRENT LIABILITIESTrade and other payables 3,345,605 4,043,689 3,043,320 8.23% 109.93%Accrued interest 13,319 85,448 155,500 0.03% 8.57%Short-term borrowings 0 6,302,282 6,267,112 0.00% 0.00%Current Long-term financing 265,400 265,400 175,759 0.65% 151.00%

3,624,324 10,696,819 9,641,691 8.92% 37.59%CONTINGENCIES AND COMMITMENTSTOTAL EQUITY AND LIABILITIES 40,631,241 41,209,885 38,310,244 100.00% 106.06%

Vertical Analysis of Statement of Financial Position

Asset side of the SOFP is very good and favourable there is no indication of unfavourable ratio

between the Fixed and Current assets as the Fixed assets are 77% of the total assets which is very

normal and the Current Assets are 23% of the total assets and it is also veru normal and

favourable.

On the other hand the liability side is in a very good shape and it shows that the equity side of the

SOFP is very positive due to good balance of reserves which are due to accumulated profit of

the previous years.

Another alarming fact is the Current Liabilities as they comprise of 9% of the total libilities

and Non-Current liblities are also 9% and equity is 82% as show in the above statement of


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the financial position it is very strong position of the company , which indicates that the

organization has to pay off of the organization is very little and strong equity of the organization.

Horizontal Analysis of Statement of Financial Position

Horizontal analysis of the SOFP shows that at Asset side Cash and bank balances has been

increase significantly and it has increase by 153% amounting about Rs. 8.4 Billion, short term

investments have also been increase by 139% which means that the orgnaization has sold its

investments to generate cash.

Liability side of the SOFP has also became very strong and very huge change as compared to

the previous year, balance of the reserves has been increased by 30% which is due to the increase

in the profits of the organization during the past years. Long term financing of the organization

has been decrease by 77% amounting a very heavy amount of Rs. 12.75 billion, as the overall

long term financing is decrease, hence it will also decrease the overall finance cost in the future

and it will also decrease the current liability of ineterest expenses.

Current Liabilities of the organization have also been decrease by 62% which the horizantial

improvement of the organization.

The share capital and reserves of the company are increasing every year, which shows the strong

financial position of the organization. There is a increase in noncurrent liabilities of the

organizations as 4% in that year but a well decrease in current liabilities 62%. There is a jump in

company’s noncurrent assets and current assets.


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Ratio Analysis of Lucky Cement Lemited.

2012 2011 2010

Current Ratio 2.46 0.88 0.71

Quick Ratio 1.15 0.29 0.30

Gross Profit Ratio 33% 27% 27%

Operating Profit Margin 21% 14% 12%

Net Profit Ratio 17.34% 12.50% 10.80%

Return on Capital Employed 22.57% 11.23% 9.84%

Return on Assets 20.49% 10.48% 8.92%

Asset Turnover 0.97 0.77 0.76

Earning per share 20.09 12.28 9.7

Capital Gearing Ratio 306% 219% 301%

Debt Ratio 18% 33% 34%

Interest Cover 32.87% 8.34% 6.00%


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Current Ratio:

The purpose of using liquidity ratio is to determine the ability of the company for paying off its short term

debts. The higher value of liquidity ratios reflects that the company is well secured in performing its

obligations of short term debts. The calculation of current ratio shows that lucky cement is well secured in

this region. Its current ratio is 2.64 more than previous year .88

Inventory Turnover:

If we compare the inventory turnover it is 3.84 in year 2011 and 5.84 this year. This shows that company

has lower its efforts to convert its inventory into sales due to several reasons like power shortage.

Gross Profit Ratio:

Profitability ratios are the measure of assessing business performance of generating profits with

respect to its expenses and other relevant expenses in a specific period of time say one year. The

higher value as compare to the competitors or industry average or relative to previous period

show the business is going well. In the present case, Company Lucky cement generated 27.00

Gross Profit as compare to year in 2011 which Gross Profit was 33.00 which shows that 2012

has better managed its COGS which resulted in increase of the Gross Profit.

Operating Profit Margin:

Company has generated 14% Operating Profit in 2011 and as compare to previous year in 2012

Operating Profit is 21%. Company decrease their finance cost and slightly change in CGS that is

and sales revenue is so high as compared to the previous year and performance is so increase in

that year.


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Net Profit Ratio:

Company has generated 12.50% Net Profit in 2011 and as compare to previous year in 2012 Net

Profit is 17.40%. This improvement is so high in the net profit that company improved his

performance beyond the previous years. Company decrease his finance cost also increases his

income that is effective on the increase the Net profit ratio.

Return on Capital Employed

Lucky cement is very strong in this area and proved that the management is well employing it

Capital Employed (capital investment) generating almost 22.57% in this year and the previous

year ROCE was 11.23% that show the strong area of the company management and more return

than the Stock or Shares and Long-term Liabilities.

Return on Assets:

Lucky Cement is increase in return on assets in this year that would be 20% in 2012 and in 2011

that was 10% Company financial position is strong as compare to the previous year.

Assets Turnover Ratio:

Assets Turnover show that how much company has generated by employing on unit of currency.

Lucky cement is generating about 0.96 revenues against Re.1.0 assets. This reveals that although

the return is very good in 2011 however performing so well in 2012.


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Quick Ratio:

The purpose of using liquidity ratio is to determine the ability of the company for paying off its

short term debts. The higher value of liquidity ratios reflects that the company is well secured in

performing its obligations of short term debts. The calculation of quick ratio shows that

Company is well secured in this region.. The Company can easily meets its short term

liabilities. Even is position with respect to Inventory Turnover is also better. Company Quick

Ratio in 2011 was 0.29:1 but in 2012 Quick Ratio is 1.15:1 that show the company well secured

in performing its obligation in short term debts.

Debt ratio:

Gearing ratio is the measure to check the equity to borrowed funds/long term financing. The best

measure is the gearing ratio (Debt to equity). The results of the company show that they are

highly geared as the portion of their borrowed money is very much higher than the owners

equity. The other best measure is to check, how much the profit covers its interest. The higher

the interest cover ratio value, the more safe the company position is. The debt ratio in 2011 was

33% and in 2012 debt ratio is 18% show the company decrease the payables and remove all

short term borrowing and also decrease the long term financing that impact on the debt ratio and

strong position of the company show as well.

Interest cover:

Interest cover ratio is the measure to check the equity to borrowed funds/long term financing.

The best measure is the gearing ratio (Debt to equity). The results of the company show that they

are highly geared as the portion of their borrowed money is very much higher than the owners


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equity. The other best measure is to check, how much the profit covers its interest. The higher

the interest cover ratio value, the more safe the company position is. Interest Cover was 8.2 in

2011 and in 2012 it is so high 32.87 that is four time double in that year and company show so

the high equity in present and it would shows as well strong financial position.

Earning per share:

Most important is what the company is paying back toits investors/owners. The greater value of

EPS maintain the investors and owners confidence on the company.The Company is paying

almost double the value and building its better image before the investors. The previous year

EPS was 12.28 and in 2012 it is increase by 20.9 that is greater value of EPS in present.

Standards, amendments and interpretations adopted during

the year

The accounting policies adopted in the preparation of these financial statements are consistent

with those of the previous financial year except as described below:

New and amended standards and interpretations

The Company has adopted the following new and amended IFRS and IFRIC interpretations

which became effective during the year:

IFRS 7 Financial Instruments: Disclosures (Amendment)

IAS 24 Related Party Disclosure (Revised)

IFRIC 14 Prepayments of a Minimum Funding Requirements (Amendment)

In May 2010, International Accounting Standards Board (IASB) issued amendments to various

standards primarily with a view to


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removing inconsistencies and clarifying wording. These improvements are listed below:

IFRS 7 Financial Instruments : Disclosures (Clarification of disclosures)

IAS 1 Presentation of Financial Statements (Clarification of statement of changes in equity)

IAS 34 Interim Financial Reporting (Significant events and transactions)

IFRIC 13 Customer Loyalty Programmes (Fair value of award credits)

Recommendations and Financial Strategy:

In cement industry have some issue regarding electricity but the company should have to

improve their strategies and omit these issues.

The company should have to payoff its long term debts to avoid such a heavy finance

costs.

Finally, it needs more exemplary leadership, expand their business in foreign counties

and improve pricing stretgies and aslo improve its performance.

Conclusion:Lucky Cement Lamited is one of the largest cement company in pakistan is financial performanc

in 2012 is so good as compaird to the previous yares.

Company management is so strong and strategies that are used is very usefull for the company

betterment and its growth. Due to state issues like electrocity, gas and other facters not effect on

the company performance but aslo company dramatically company growth going high. Company

should grow their business as multinationl and export the product in the other countries.

Thank you!


Lucky cement final project FR

Business

Transcript of Lucky cement final project FR