Dedication

We want to dedicate our report to all the people who helped and pray for us. People who bring lots of happiness in our lives, including first of all our parents, their prayers are always with us. Then our honourable teachers, they guide us in difficult time especially in studies; their guidance will be with us in every field of our lives. We were unable to prepare this report without their guidance. Then our friends will always be with us throughout our lives and we will miss them in future. So, we are going to dedicate this report all the above people who are colours of our lives. We think without them our lives will be colourless.

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Acknowledgement

We are very thankful to our teacher PROF. HAFIZ IMRAN for providing us a chance to Know that theoretical concepts are applicable in practical life. It was a very good experience for us. We are also very thankful to the persons who helped us in making this report.

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Al Ghazi tractors

INTRODUCTION:

Al Ghazi tractors was established in 1983, the plant of this corporation is located in DERA GHAZI KHAN. In the plant of Al Ghazi they manufactures New Holland tractors and generators with Fiat New Holland. 1991 the other corporation named Al-Futtaim took the management control of Al-Ghazi and this is the Group of Dubai. This group who took the management control of Al-Ghazi acquire about 50% shares of this corporation. The head office of Al-Ghazi is located in Karachi, Pakistan.

Parvez Ali who is the engineer in this corporation who did his Masters from the renowned university named George Washington DC. He has associated with this organization from its inception in 1983, first as a general Managing Director. He is also certified Director From PICG.

This corporation has been manufacturing quality tractors based on ISO 9001: 2008 standards. This corporation also register their corporation and certifies from Moody International and their validation is up to December 2012. This corporation manufactures 350000 tractors and they serve in the whole country and especially the agriculture sector. The plant which they planted produce 115 tractors in 8 hours shift because they double the shift of employees because the demand of tractors increasing day by day and they produce 30000 tractors per annum in a single shift.

AGTL is the first automobile company in Pakistan who ears the ISO- 9002 Certificate. The main and major strategy of this company is to produce products with high quality by the low cost.

Today the Board of directors comprised of two executives who also have to manage and they have also responsibility of day to day operations which operate in the organization and these two directors are (CEO and CFO) and six members are those who are not in the list of directors and they have no such responsibility like these two. The majority of our directors are non executive directors. This company is incorporated in 1983 and privatized in 1991. The ERP solution to put the IT process in full circle is first time introduced in Pakistan by this corporation. In 2002 the complete ERP inter- links all processes and supports company’s wider strategic objectives. AGTL operates with disciplined focus on all management activities and its most

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important asset is its human capital. The company make effort to make each process efficient, to drive down cost per tractor. AGTL is the only automobile company which has not raised its selling price ever since these were reduced and agreed with the government. The company is not charge high its price because they produce products in a bulk quantity and when they produce in bulk the cost of per product reduces. To eliminate waste and to reduce cost they all focus on target market, customer focus and to add continuously customer care centers to give fillip to mechanization of farming in country

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Management

Mr. Parvez Ali

CEO & Managing DirectorAn engineer by profession, Mr. Parvez Ali, did his Masters in Engineering Administration from George Washington University in Washington DC. He has been associated with Al-Ghazi from the date of its inception in 1983 - first as General Manager (Technical) and Deputy Managing Director. He is also a Certified Director from PICG.

Board of Directors:

Mr. Charles Leonard Hunt Non-Executive Chairman

Mr. M Ali Qaiyum Independent Non-Executive Director

Mr. Majid-ul-Ahsan Syed Non-Executive Director

Mr. Kahif Lawai Chief Financial Officer and Director

Mr. Giovanna Barbieri Non-Executive Director

Mr. Michele Lombardi Non-Executive Director

Mr. Damiano Cretarola Non-Executive Director

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Auditors:

A.F Ferguson & Co

Chartered Accountants

Karachi

Bankers:

Askari Bank Limited

Habib Bank Limited

Meezan Bank Limited

Faysal Bank Limited

Standard Chartered Bank (Pakistan) Limited

Bank AL-Habib Limited

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Products

Tractors:

All models share the exclusive combination of performance, flexibility and safety that has become our hallmark. In our opinion, these characteristics must be experienced as a whole and not seen in isolation. 

Model 480S is a 55hp, 3 Cylinder quality tractor, designed to meet your expectations in a cost effective manner.

This model is also available in Econo and Power Steering.

Model 640 is a 75hp, 4 Cylinder quality tractor, designed to meet your expectations in a cost effective manner.

This model is also available with Disk Brakes

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Model 640S is a 85hp, 4 Cylinder quality tractor, designed to meet your expectations in a cost effective manner.

This Model is also available with Disk brakes.

Model Ghazi is a 65hp, 3 Cylinder quality tractor, designed to meet your expectations in a cost effective manner.

Model NH 55-56 is a 55hp, 3 Cylinder quality tractor, designed to meet your expectations in a cost effective manner.

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Model NH 6056 is a 65hp, 3 Cylinder quality tractor, designed to meet your expectations in a cost effective manner.

Model NH 70-56 4WD is a 85hp, 4 Cylinder quality tractor, with Hydrostatic Power Steering designed to meet your expectations in a cost effective manner.

Generators:

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Implements:

CULTIVATOR DISK HARROW

ROTAVATOR CUM BED FORMER ARTICULATED AERIAL PLATFORM

POTATO DIGGER BOOM SPRAYER

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MOULD BOARD PLOUGH TRACTOR MOUNTED BACK HOE

ROAD SWEEPER FRONT-END LOADER

LAWN MOVER MAIZE SHELLER

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DISC PLOUGH FRONT MOUNTED FORK LIFTER

TRACTOR OPERATED FLOUR MILL SAFARI CABIN

HYDRAULIC TIPPING TROLLEY

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Swot Analysis

Strengths Weakness The company has

established itself as one of the leading tractor manufacturers in the country. Our most competitive advantage is the quality of our tractors. AGTL has over the years supplied 400,000 plus tractors. We are the lowest cost producers of a quality product.

The company has a strong financial base with no debts and no bank borrowings.

The company has a strong dealer network in everywhere of the country.

The company now has diversified its business into high efficiency irrigation system, generator and manufacturing of agricultural machines with

Reduced loaning from the bank and inconsistent polices.

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potential to export.

Opportunity Threats Pakistan needs around on

million tractors more if the ratio of one tractor to fifty acres is to be attained the international standards in one tractor to twenty five acres and even lesser in the first world countries. The opportunities therefore are glore.It is the government that needs to lead in the pursuit of prioritizing Pakistan agrarian economy.

Launch of new products like four wheel drive tractor and generator.

Installation of smart irrigation solutions through Drip Irrigation systems has accelerated during the year and is expected to increase in years to come.

Challenges being faced by the economy current account defict,power outages,paramount political and geo strategic issues.

Sharp increases in costs of inputs: withdrawal of subsidies especially on electricity, gas etc.

Inconsistent government policies.

Financial Data

Balance Sheet Summary

2013 2014Comparison

Current assets Rs. (000)

9,367,867 9,477,010109,143

Current liabilities Rs. (000)

1,537,894 1,349,292-188,602

Fix Assets 404,433 466,751 62,318Net working capital Rs. (000)

7,829,973 8,127,718297,745

Long term liabilities Rs. (000)

69,580 87,90518,325

Total Liabilities 1,607,474 1,437,197 -170,277 Profit & Loss Summary

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Net sales Rs. (000) 9,262,626 8,780,685 -481,941COGS 7,193,257 6,512,544 -680,713Net purchases Rs.(000)

6,584,131 6,243,344-340,787

Gross profit Rs. (000)

2,069,369 2,268,143198,774

Operating profit Rs. (000)

2,023,294 2,251,937228,643

EBIT 2,023,294 2,251,937 228,643Net profit Rs. (000) 1,371,490 1,574,744 203,254Total Assets 9,826,433 9,998,692 172,259

Other Data 2013 2014 ComparisonMarket price

per share235 237.62 2.62

Earning per share

23.66 27.17 3.51

Book value per share

141.79 147.53 5.74

Dividend per share

18.49 21.04 2.55

No Of shares 57964 57964 0

Six years Analysis:

Figures in (‘000’)

1. Net sale of the Al Ghazi decreased by 481,941.

2. Gross profit increased by 198,774.3. Company liabilities decreased as compared to previous years.4. Production is affected due to the economic conditions and decreased more than previous

years.5. Company assets increasing but liabilities, operating financial and other expenses also

increased as compared to previous years.6. Dividend paid this year is more than the last year by the amount 2.55. 7. Liquidity ratios increasing in 2014 as compared to previous years, so company have large

margin to cover its short term debts.8. Profitability ratios of the company is decreasing it means that company is earning less

profits as compared to the previous years.

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Financial ratios

Liquidity Ratio 2013 2014 ResultCurrent Ratio 6.09:1 7.02:1 Good

Liquid Ratio 4.93:1 5.31:1 Good

Absolute Liquid Ratio

5.30:1 4.82:1 Bad

Explanation:

The condition is favourable. Increase in operating cycle is mainly due to higher asset balance at the yearend. All the liquid ratios are increasing.

Solvency 2013 2014 ResultDebt Ratio 0.16:1 0.14:1 Good

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Equity Ratio 0.83:1 0.85:1 Bad

Debt to Equity Ratio

0.00846:1 0.01:1 Bad

Explanation:

The condition is favourable for debt ratio an unfavourable for equity and debt to equity ratio. Total debts are increasing than 2013.

Activity

1 Total asset turn over 0.94 t 0.87 t bad

2 Fix asset turnover 22.9 t 18.81 t bad

3 Current asset turnover 0.98 t 0.926 t bad

4 Working capital turnover 1.18 t 1.08 t bad

5 A/R turnover 55.69 t 636.46 t good6 A/P turnover 4.281 t 4.63 t good7 Inventory turnover 4.2 t 2.96 t bad8 Collection period 6.55 d 0.59 d good9 Payment period 85.255 d 56.02 d bad10 Age of Inventory 86.71 d 123.09 d bad

Explanations:

1. The condition is unfavourable. It means company is not using is assets efficiently and have problems.

2. The condition is unfavourable.3. The condition is unfavourable. It means that the company does achieve maximum sales

with minimum investment in current assets. 4. The condition is unfavourable. It means that company does not using its capital efficiently

in 2014 the condition is gradually better. 5. The condition is favourable. The higher ratios mean that company collecting its

receivables more frequently. 6. The higher is favourable; it indicates that the company pays its bills frequently and

regularly.7. The condition is unfavourable. It means that in more time company collect its receivable.8. The condition is favourable. It means that company collects its payments earlier.9. The condition is unfavourable. It means company pay its payables earlier.

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10. The condition is unfavourable. It means company keep its inventory longer than 2013.

Profitability1 Gross profit ratio 22.34 % 25.83 % Good2 Operating profit ratio 21.84 % 25.64 % Good3 Net profit ratio 14.8 % 17.93 % Good4 Return on asset 13.95 % 15.74 % Good5 Return on Equity 16.68 % 18.41 % Good

Explanation:

1. The condition is favourable. The high profit margin shows that the company is earning more profit.

2. The condition is favourable. Company has more money.3. The condition is favourable. Higher ratio indicates that company is generating more

revenue.4. The condition is favourable because company is more efficiently managing its assets to

produced greater amount of income.5. The higher answer is favourable.

Market Analysis      Price earning Ratio 9.92 8.77  BadMarket to book ratio 1.65 1.61  BadDividend yield ratio 7.86 % 8.85 %  GoodDividend payment ratio 78.14 % 77.43 %  Bad

Comparison of Al ghazi with Millat tractors:

Liquidity Ratio Al Ghazi Tractor

Millat Tractors

Comparison Result Favourable

Al Ghazi Millat

Current Ratio 7.02:1 2.17:1 4.85:1 Liquid Ratio 5.31:1 1.15:1 4.16:1

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Absolute Liquid Ratio

4.82:1 0.45:1 4.37

Solvency

Debt Ratio 0.14:1 0.01:1 0.13:1 Activity

Total asset turn over

0.87 t 2.36 t 1.49 t

Fix asset turnover

18.81 t 23.91 t 5.1 t

Current asset turnover

0.92 t 3.06 t 2.14 t

A/R turnover 636.46 t 30.28 t 606.18 t A/P turnover 4.63 t 7.51 t 2.88 t

Inventory turnover

2.96 t 5.15 t 2.19 t

Profitability

Gross profit ratio 25.83% 17.19% 8.64% Operating profit

ratio25.64% 12.80% 12.84%

Net profit ratio 17.93% 8.90% 9.03%

Return on asset 15.74% 31.11% 15.37%

Return on Equity 18.41% 33.02% 14.61%

Market AnalysisPrice earning

Ratio8.77 14.92 6.15

Market to book ratio

1.61

Dividend yield ratio

8.85% 7.96 787.15%

Dividend payment ratio

77.43% 119.56 11878.57%

Explanation:

The liquidity ratios are better in Al ghazi tractors. Millat tractors heave best activity ratios. The profitability ratio is better in Al Ghazi as compared to Millat tractors. It means that Al Ghazi is generating more revenue.

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