Presented ByPresented By

Muhammad Zuhair AltafMuhammad Zuhair Altaf

MBC-08-36MBC-08-36

PresentationOf

Analysis of Financial Statements

OnD.G.Khan Cement Company

LTD

Vertical analysis of Balance Vertical analysis of Balance SheetSheet

Vertical analysis of Balance SheetVertical analysis of Balance Sheet

Horizontal Analysis of Balance Horizontal Analysis of Balance SheetSheet

Horizontal Analysis of Balance SheetHorizontal Analysis of Balance Sheet

Vertical Analysis of Income Vertical Analysis of Income StatementStatement

Vertical Analysis of Income statementVertical Analysis of Income statement

Horizontal Analysis of Income Horizontal Analysis of Income StatementStatement

Horizontal Analysis of Income StatementHorizontal Analysis of Income Statement

ProfibilityProfibility

huge capacity expansion plans took place in huge capacity expansion plans took place in 20082008excess supply in the market resorted to excess supply in the market resorted to price warsprice wars highest sales revenue of Rs 12.445 billion in highest sales revenue of Rs 12.445 billion in FY08FY08the gross profit in FY08 was around 6% the gross profit in FY08 was around 6% lower than 07 lower than 07

Profibility

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

1 2 3 4

Gross Profit Margin Profit Margin on Sales

Return on Assets Return on Equity

ProfibilityProfibility

140% increase in the cost of sales 140% increase in the cost of sales Major input costs increased resulted in a loss after Major input costs increased resulted in a loss after taxation of Rs 53.230 million in FY08taxation of Rs 53.230 million in FY08rising fuel and power prices rising fuel and power prices cost of production went up due rise in prices of cost of production went up due rise in prices of imported coalimported coallocal coal has high sulphur content local coal has high sulphur content hike in the international coal prices , the hike in the international coal prices , the depreciation in rupee, higher interest rates depreciation in rupee, higher interest rates

Profibility

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

1 2 3 4

Gross Profit Margin Profit Margin on Sales

Return on Assets Return on Equity

LiquidityLiquidity

strengthening since the past few strengthening since the past few years and in FY07, its liquidity years and in FY07, its liquidity position was most favorable because position was most favorable because of increase in current asset of increase in current asset

Liquidity

0

1

2

3

1 2 3 4

Current Ratio

LiquidityLiquidity

In FY08 63% rise in current liabilities In FY08 63% rise in current liabilities caused a decrease in the liquidity of caused a decrease in the liquidity of the company the company

Liquidity

00.010.020.030.04

1 2 3 4

Cash ratio

AssetAsset Management Management

asset management was weak during FY07asset management was weak during FY07ITO doubled compared to FY06 from 48 to 100 ITO doubled compared to FY06 from 48 to 100 days and DSO from 3 to 10 compared to FY08days and DSO from 3 to 10 compared to FY08In FY08, the asset management of DGKC In FY08, the asset management of DGKC improved because the company earned more improved because the company earned more revenue in proportion to the increase in inventoryrevenue in proportion to the increase in inventoryDSO increased slightly because the trade debt DSO increased slightly because the trade debt receivables receivables

Asset Management

0

20

40

60

80

100

120

1 2 3 4

ITO (Days)

Days SalesOutstanding

OperatingCycle

Asset Asset ManagementManagement

sales to equity and total asset sales to equity and total asset turnover declining trend till FY07 turnover declining trend till FY07 increased in FY08increased in FY08

Higher growth in sales increased the Higher growth in sales increased the sales/equity ratio sales/equity ratio

effective management of the effective management of the company's assets company's assets

Asset management

0

0.2

0.4

0.6

1 2 3 4

Sales/Equity

Total AssetTurnover

Debt Debt ManagementManagement

positive trend till FY07 and least in FY07 reflected positive trend till FY07 and least in FY07 reflected a reduction in the company's dependence on debt a reduction in the company's dependence on debt financingfinancingIn FY08 the debt ratios of the company rose In FY08 the debt ratios of the company rose because due to increase in the current liabilities because due to increase in the current liabilities which is almost doubled and is 55% of the total which is almost doubled and is 55% of the total debt debt Long-term debt to equity increased because of a Long-term debt to equity increased because of a decline in the equity base due to fall in reserves decline in the equity base due to fall in reserves

Debt Management

0

20

40

60

80

100

1 2 3 4

Debt To Asset

Debt /Equity

Long termdebt to equity

Times InterestEarned

Debt Debt ManagementManagement

TIE ratio continued to fall in FY08 due to TIE ratio continued to fall in FY08 due to substantial rise in finance charges & high interest substantial rise in finance charges & high interest operating income in FY08 decreased because the operating income in FY08 decreased because the operating expenses increased a lot operating expenses increased a lot Due to the losses the company incurred in FY08, Due to the losses the company incurred in FY08, management did not recommend any dividendmanagement did not recommend any dividend

Debt Management

0

20

40

60

80

100

1 2 3 4

Debt To Asset

Debt /Equity

Long termdebt to equity

Times InterestEarned

Future OutlookFuture Outlook

In the budget FY09, CED increased Rs 900 per ton In the budget FY09, CED increased Rs 900 per ton from current Rs 750 per ton GST by 1%.from current Rs 750 per ton GST by 1%.Public Sector Development Program (PSDP) Public Sector Development Program (PSDP) budget of Rs 550 billion is cutbudget of Rs 550 billion is cutCement consumption is correlated to GDP growth Cement consumption is correlated to GDP growth In budget, an allocation of Rs. 75bn construction In budget, an allocation of Rs. 75bn construction and improvement of dams and water reservoirs & and improvement of dams and water reservoirs & Rs. 37bn. allocated for roads and highways Rs. 37bn. allocated for roads and highways Exports so far shown a strong growthExports so far shown a strong growthexporting cement to Afghanistan exporting cement to Afghanistan growing opportunities in the Middle East growing opportunities in the Middle East effects of global recession may impact effects of global recession may impact Indian market has been closed as India banned Indian market has been closed as India banned import of cement because of escalating tensions import of cement because of escalating tensions

Future OutlookFuture Outlookmanufacturers are compelled to import manufacturers are compelled to import coal due to high sulphur content in local coal due to high sulphur content in local coal because of corrosioncoal because of corrosion

the coal & gas prices has risen the coal & gas prices has risen

The company's largest Vertical Cement The company's largest Vertical Cement Grinding Mill at DG Khan site to start Grinding Mill at DG Khan site to start commercial production in FY09 commercial production in FY09

Increased production generate higher Increased production generate higher sales sales

Future OutlookFuture Outlookcost of production and operating cost of production and operating expenses will be criticalexpenses will be criticala project of power generation from a project of power generation from waste about 10.4MW waste about 10.4MW negotiations with equipment negotiations with equipment suppliers are underway suppliers are underway use municipal solid waste use municipal solid waste resolve the environmental issues & resolve the environmental issues & save huge foreign exchange save huge foreign exchange