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


2/36

Table of Content

S.No Description PageNo.

0102

03

04

05

06

07

08

09

10

11

12

13

14

2


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


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


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


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


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


8/36

E-MAIL ADDRESS

[email protected]

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


9/36

History

9


10/36

BRANDS AVAILABLE AT LUCKY CEMENT

Lucky CEMENT (REGULAR) Lucky STAR

Lucky GOLD Lucky SULPHATE RESISTANT CEMENT (SRC)

10


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


12/36


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


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


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%


13


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


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


31/36

Loss before tax (19.01%)

Tax 2.31%

Net loss for the year (16.70%)


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


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


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%)


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


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


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


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

Date post:	29-May-2018
Category:	Documents
Upload:	saadii-khan
View:	216 times
Download:	0 times

Financial Report on Lafarge Cement Pakistan

Documents