Maple Leaf Cement Factory Limited

8/14/2019 Maple Leaf Cement Factory Limited

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Presented To:Mr. Hamza

Mukhtar

Presented By:

Mubashar Sharif Umer Shahzad


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Maple Leaf Cement

Factory Limited


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Company Introduction

Came into being on 1st July 1992

MLCF

WCIL

PCGL

Kohinoor Group

MLCFL


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Financial Statements AnalysisFinancial Statements Analy

sis

Analysis could be performed in three ways,Analysis could be performed in three ways,

Economic AnalysisEconomic Analysis

Industry AnalysisIndustry Analysis

Firm AnalysisFirm Analysis


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1.Economic Analysis1.Economic Analys

is

Economic indicators:Economic indicators:

GDP growthGDP growthInflationInflation

Per Capita Income ($1085,Rs.7142)Per Capita Income ($1085,Rs.7142)


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Real GDP GrowthReal GDP GrowthThe real GDP growth in financial year 2008 is found to be 5.8The real GDP growth in financial year 2008 is found to be 5.8

percent that was expected at 7.2 percent.percent that was expected at 7.2 percent.

This deficiency is due to:This deficiency is due to:

Unexpected weakness in commodity producing sectors,Unexpected weakness in commodity producing sectors,

leads to the revival of inflationary pressure.leads to the revival of inflationary pressure.

High energy cost.High energy cost.

Large external current account deficit.Large external current account deficit.

Trade balance $1.96 bnTrade balance $1.96 bnExports $1.53 bnExports $1.53 bn

Imports $2.72 bnImports $2.72 bn


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InflationInflationThe inflation rate in the economy in financialThe inflation rate in the economy in financial

year 2008 isyear 2008 is 10.510.5 percent that is very high aspercent that is very high ascompared to the last yearcompared to the last year7.87.8 percent.percent.

Low DemandLow Demand Inability to reduce prices of petroleumInability to reduce prices of petroleum

products.products.

High international commodity pricesHigh international commodity prices Domestic demand for construction inputs (e.g.Domestic demand for construction inputs (e.g.

metal, copper,etc.)metal, copper,etc.)


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Oil prices changesOil prices changes

Inflationary pressuresInflationary pressures

Higher interest rates.Higher interest rates.

High international commodity pricesHigh international commodity prices(e.g. steel, wheat etc.)(e.g. steel, wheat etc.)


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Prevailing inflation ratesPrevailing inflation rates

0

5

10

15

20

CPI Food Group Non FoodGroup

INFLATION RATE

2005-06H

2006-07H

2007-08H


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IndustryIndustry

AnalysisAnalysis


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Learning Objective in IndustryLearning Objective in Industry

AnalysisAnalysis To determine the opportunities and threats thatTo determine the opportunities and threats that

exists for firms within a competitiveexists for firms within a competitive

environment.environment.

When analyzing an industry, taking all factorsWhen analyzing an industry, taking all factors

into account, should we as a corporation, enterinto account, should we as a corporation, enter

this industry? The end result will be anthis industry? The end result will be an

understanding of what it takes to competeunderstanding of what it takes to compete

successfully.successfully.


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ForcesForces

Threat of New EntrantsThreat of New Entrants

SuppliersSuppliers

BuyersBuyers

Substitute ProductsSubstitute Products


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Obstacles of Growth of LocalObstacles of Growth of Local

industryindustry

Expensive New TechnologyExpensive New Technology Lack of Trained TeachersLack of Trained Teachers

Lack of skilled PersonnelLack of skilled Personnel

Government RegulationsGovernment Regulations

Economic SituationsEconomic Situations


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Attract New Firm in IndustryAttract New Firm in Industry

Government Rules & RegulationsGovernment Rules & Regulations

Policy must be set for the investors in thePolicy must be set for the investors in theindustry in case of taxation.industry in case of taxation.

Availability of skilled LaborAvailability of skilled Labor

Cheaper new technologyCheaper new technology


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Affect on Industry and FirmAffect on Industry and Firm

GDP growth decreased the growth of perGDP growth decreased the growth of per

capita cement consumption from 22.2% incapita cement consumption from 22.2% in

FY07 to 2.9% in FY08.FY07 to 2.9% in FY08.

Pakistans Cement sector is correlated to GDPPakistans Cement sector is correlated to GDP

growth.growth.

In the past years, Pakistans cement sectorIn the past years, Pakistans cement sector

witnessed a robust growth due to the countryswitnessed a robust growth due to the countrys

strong economic growth.strong economic growth.


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However, in FY08, lower GDP growth hasHowever, in FY08, lower GDP growth has

affected the construction activity in theaffected the construction activity in the

country and thus affected the demand forcountry and thus affected the demand for

cement in local market.cement in local market.

Sales volume achieved during the first quarterSales volume achieved during the first quarterwas 749,492 mt of grey cement, 18,664 mtwas 749,492 mt of grey cement, 18,664 mt

white cement.(FY08-373,830..FY07-15003)white cement.(FY08-373,830..FY07-15003)

Despite these high sales volume, the companyDespite these high sales volume, the companysuffered losses.suffered losses.


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Reasons of lossesReasons of losses

Higher production costs.Higher production costs.

Due to inflationary spiral afflicting ourDue to inflationary spiral afflicting our

economy.economy.

Huge input cost of coal.Huge input cost of coal.

Rapid depreciation in exchange rate andRapid depreciation in exchange rate and

mounting interest rate.mounting interest rate. Which adversely affected operating margins ofWhich adversely affected operating margins of

company.company.


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High federal and provisional taxes

Very low selling prices

Cut throat domestic competition

High export expenses

Exorbitant fuel cost

Rise in electricity charges


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Cost of production

40%

10%3%10%

6%

11%

20%

Fuel and power

raw material

salaries

depreciation

other overhead

admin and

selling

finacial charges


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FirmFirm

AnalysisAnalysis


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Maple Leaf Cement

Factory Limited


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Mission Statement

The Maple Leaf Cement Factory Limited stated mission

is to achieve and then remain as the most progressive and

profitable company in Pakistan in terms of industry

standards and stakeholders interests


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Board of Directors

Mr. Tariq Sayeed Saigol (Chairman) Mr. Sayeed Tariq Saigol (Chief Executive)

Mr. Waleed Tariq Saigol Ms. Jahanara Saigol

Mr. S. M. Imran

Mr. Zamiruddin Azar


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Sales Graph

Total Sale

0

2000000

4000000

6000000

8000000

10000000

Years

Sale

2008 20062007

Local & Export Sale

0

1000000

2000000

3000000

40000005000000

2008 2007

Export

Local


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Liquidity RatiosLiquidity Ratios

The decrease in ratio of FY08 is due to the increase inThe decrease in ratio of FY08 is due to the increase in

current liabilities (96%) while current assets werecurrent liabilities (96%) while current assets were

increased only by 48%.increased only by 48%.

Ratios 2009 2008 2007

Current Ratio 0.51:1 0.81 :1 1.08:1


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Current Ratio Graph

CURRENT RATI

-

0.50

1.00

1.50

2004 2005 2006 2007 2008

YEARS

TIMES

Series1


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Ratios 2008 2007 2006

Gross Profit Margin 16.94% 8.35% 37.63%

Net Profit Margin -8.65% 1.13% 18.55%

Return on Asset -2.59% 0.18% 5.53%

Return on Equity -8.09% 0.47% 14.02%

Profitability RatiosProfitability Ratios


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Profitability Ratios

The Profit of MLCFL declined drastically because of an

excess supply situation in industry and falling net

retention prices.

Financial charges formed 20% of production costincreased by 96% because of the increse interest rate in

the economy.


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profit (loss) after taxati

(900,000)

(600,000)

(300,000)

-

300,000

600,000

900,000

1,200,000

2,006 2,007 2,008

Series1


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Production cost (2007& 2

0

700000

1400000

2100000

2800000

3500000

4200000

Fuel&power

Raw

&packing

Material

Salaries

Dep

reciation

&

Amortization

Admin&

Selling

Financial

charges

2007

2008


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Ratios 2008 2007 2006

Inventory turnoverRatio

14.96 9.20 17.72

Days to sell inventory 24.06 39.13 20.31

Days sale Outstanding 34.24 18.88 10.31

Operating Cycle 58.30 58.01 30.62

Total asset turnover 0.30 0.16 0.30

Asset Management RatiosAsset Management Ratios


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Asset Management

The inventory turnover rate increase showingthat it took lesser days for the company to sellits stock trade. However the company average

collection period of account receivableincrease and so did its operating cycle.

The total asset turnover ratio Improved inFY08 indicating that the company was able togenerate sufficient sales volume given it totalasset investment.


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Asset Management Graph

Asset managemen

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

2008 2007 2006 2005years

times

Days salesoutstanding

Inventory Turnover in

Days

operating cycle(days


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Ratios 2008 2007 2006

Debt to asset 0.68 0.62 0.61

Debt / Equity (times) 2.13 1.61 1.53

Time interest earned (times) 0.25 0.59 5.79

Long Term debt to equity 0.03 0.98 1.04

Debt Management RatiosDebt Management Ratios


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Debt Management

Firms profitability decline when economy

takes a downturn and in tight monitory policy.

As interest rate increase in FY08 the cost of

borrowing for the firm has increased.

The firm cant pay for its expenses through

earnings and will have to take extra debt to

pay its obliogation.


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Debt Management Graph

Debt Management

-

1.00

2.00

3.00

4.00

5.00

6.00

7.00

2005 2006 2007 2008

years

Debt To Asset

Debt To Equity

Time interst earned


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Non Current Assets 2008 2007 2006

Property, Plant And Equipment 20,081,448 19,330,866 16,088,505

Intangible Assets 15,082 4,578 -

Investments - - 368,881

Loans to employees 6,121 6,373 7,127

Deposits and prepayments 54,014 43,200 15,923

Total 20,156,665 19,385,017 16,480,436

BALANCE SHEET

Rupees in 000


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Current Assets 2008 2007 2006

Stores,Spare and loose tools 33,25,744 2,014,580 1,847,926

Stock in trade 433,952 369,709 200,946

trade debts 743,366 194,587 163,459

Fair value derivative financialinstruments

365,748 242,226 -

Loans and advances 82,814 85,544 299,257

Investments 734,859 944,669 -

BALANCE SHEET


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Deposits and short term

prepayments

54,532 15,373 7,314

Accrued profit 763 402 559

Sale tax, customs and excise duty 57,769 37,742 34,611

Due from gratuity fund trust 9,768 8,539 -

Other receivables 21,780 1,198 9,452

Taxation - net 44,907 14,029 -

Cash and bank balances 118,894 123,359 100,938

TOTAL ASSETS 5,994,896 4,051,957 2,664,462

BALANCE SHEET


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EQUITY AND LIABILTIES 2008 2007 2006

Share Capital and Reserves

Authorized Capital 5,000,000 5,000,000 5,000,000

Issued, subscribed and paid upcapital

4,264,108 4,264,108 3,519,581

Reserves 4,644,355 4,457,328 3,063,529

Unappropriated profit (547,574) 271,601 972,594

Total Equity 8,360,889 8,993,037 7,555,704

BALANCE SHEET


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NON - CURRENTLIABILTIES

2008 2007 2006

Loans from related parties 35,224 250,000 -

Long Term loans and finance 241,539 8,576,657 7,868,948

Redeemable capital 8,000,000 - -

Syndicated term finance 1,000,000 - -

Liabilities against assets subjectto finance lease 957,434 268,040 12,226

BALANCE SHEET


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2008 2007 2006

Lease finance advances andaccured interest thereon

- 979,676 76,146

Long Term deposits 2,582 2,702 2,977

Deferred taxation 154,741 897,183 971,128

Employee' compensated

absences

16,688 13,192 10,250

TOTAL NON -CURRENTLIABILTIES

10,408,208 10,687,450 8,939,675

BALANCE SHEET


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CURRENT LIABILTIES

Current portion of:

2008 2007 2006

redeemable capital - - 41,650

Long Term loans and finances - 1,792,519 538,530

syndicated term finance 1,080,000 - -

Liabilities against assets subjectto finance lease

188,011 13,858 4,481

BALANCE SHEET


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CURRENT LIABILTIES 2008 2007 2006

Short term finance 3,369,738 797,585 947,160

Trade and other payable 2,495,559 719,311 752,172

Accured profit and interest /mark-up

194,568 378,675 279,112

Taxation -net - - 31,828

Dividends 54,588 54,539 54,586

TOTAL EQUITY ANDLIABILTIES

26,151,561 23,436,974 19,144,898

BALANCE SHEET


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Short term finance 3,369,738 797,585 947,160

Trade and other payable 2,495,559 719,311 752,172


194,568 378,675 279,112

Taxation -net - - 31,828

Dividends 54,588 54,539 54,586


26,151,561 23,436,974 19,144,898

BALANCE SHEET


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2008 2007 2006

Sale 7,815,829 3,711,081 5,709,792

Less: cost of sale (6,491,999) (3,401,188) (3,561,212)

Gross profit 1,323,830 309,893 2,148,580

Administrative expenses (121,236) (67,291) (60,474)

Distribution cost (834,849) (69,021) (20,961)

Other operating expenses (24,838) (18,371) (118,024)

INCOME STATEMENT


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2008 2007 2006

Other operating income 105,656 43,224 26,671

Operating profit from operation 448,563 198,434 1,975,792

Finance cost (1,812,807) (338,453) (340,978)

Profit / (Loss) before taxation (1,364,244) (140,019) 1,634,814

Taxation

Current:

Deferred:

44,815

(732,924)

(94,77)

(172,589)

(28,536)

(547,038)

Profit (loss) after taxation (676,135) (42,047) (1,059,240)

Earning Per Share (1.96) (0.03) 3.38

INCOME STATEMENT


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COMMON SIZE

ANALYSIS


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Property, Plant And Equipment 76.79% 82.48% 84.04%

Intangible Assets 0.06% 0.02% 0.00

Investments 0.00 0.00 1.93%

Loans to employees 0.02% 0.03% 0.04%

Deposits and prepayments 0.21% 0.18% 0.08%

BALANCE SHEET


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Stores, Spare and loose tools 12.72% 8.60% 9.65%

Stock in trade 1.66% 1.58% 1.05%

trade debts 2.84% 0.83% 0.85%


1.40% 1.03% 0.00

Loans and advances 0.32% 0.36% 1.56%

Investments 2.81% 4.03% 0.00

BALANCE SHEET


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prepayments

0.0029% 0.07% 0.04%

Accrued profit 0.22% 0.0017% .0029%

Sale tax, customs and excise duty 0.04% 0.16% 0.18%

Due from gratuity fund trust 0.04% 0.04% 0.00

Other receivables 0.08% 0.01% 0.05%

Taxation - net 0.17% 0.06% 0.00

Cash and bank balances 0.45% 0.53% 0.53%

TOTAL ASSETS 100% 100% 100%

BALANCE SHEET


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Authorized Capital ---------- ----------- ------------


16.31% 18.19% 18.38%

Reserves 17.76% 19.02% 16.00%

Unappropriated profit -2.09% 1.16% 5.08%

Total Equity 31.97% 38.37% 39.47%

BALANCE SHEET


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2008 2007 2006

Loans from related parties 0.13% 1.07% 0.00

Long Term loans and finance 0.92% 36.59% 41.10%

Redeemable capital 30.59% 0.00 0.00

Syndicated term finance 3.82% 0.00 0.00


3.66% 1.14% 0.06%

BALANCE SHEET


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2008 2007 2006


0.00 2.90% 0.39%

Long Term deposits 0.01% 0.01% 0.02%

Deferred taxation 0.59% 3.83% 5.07%

Employee' compensatedabsences

0.065 0.06% 0.05%

BALANCE SHEET


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CURRENT LIABILTIES

Current portion of:

2008 2007 2006

redeemable capital 0.00 0.00 0.22%

Long Term loans and finances 0.00 7.65% 2.81%

syndicated term finance 4.13% 0.00 0.00


0.72% 0.06% 0.02%

BALANCE SHEET


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Short term finance 12.89% 3.40% 4.95%

Trade and other payable 9.54% 3.07% 3.93%


0.74% 1.62% 1.46%

Taxation -net 0.00 0.00 0.17%

Dividends 0.21% 0.23% 0.29%


100% 100% 100%

BALANCE SHEET


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2008 2007 2006

Sale 100% 100% 100%

Less: Cost of sale 83.06% 91.65% 62.37%

Gross profit 16.94% 8.35% 37.63%

Administrative expenses 1.55% 1.81% 1.06%

Distribution cost 10.68% 1.86% 0.37%

Other operating expenses 0.32% 0.50% 2.07%

INCOME STATEMENT


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2008 2007 2006

Other operating income 1.35% 1.16% 0.47%

Operating profit from operation 5.74% 5.35% 34.60%

Finance cost 23.19% 9.12% 5.97%

Profit / (Loss) before taxation -17.45% -3.77% 28.63%

Taxation

Current:

Deferred:

0.57%

9.38%

0.26%

4.655

0.50%

9.58%

Profit (loss) after taxation -8.65% 1.13% 18.55%

INCOME STATEMENT


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INDEX

ANALYSIS


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Property, Plant And Equipment 124.82% 120.15% 100%

Intangible Assets 0.00 0.00 0.00

Investments 0.00 0.00 100%

Loans to employees 85.88% 89.42% 100%

Deposits and prepayments 339.22% 271.31% 100%

BALANCE SHEET


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Stores, Spare and loose tools 179.97% 109.02% 100%

Stock in trade 215.95% 183.98% 100%

trade debts 454.77% 119.04% 100%


0.00 0.00 0.00

Loans and advances 27.67% 28.59% 100%

Investments 0.00 0.00 0.00

BALANCE SHEET


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prepayments

745.58% 210.19% 100%

Accrued profit 136.49% 71.91% 100%

Sale tax, customs and excise duty 166.91% 109.05% 100%

Due from gratuity fund trust 0.00% 0.00 0.00

Other receivables 230.43% 12.67% 100%

Taxation - net 0.00 0.00 0.00

Cash and bank balances 117.79% 122.21% 100%

TOTAL ASSETS 136.60% 122.42% 100%

BALANCE SHEET

C S


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Authorized Capital ---------- ----------- ------------


121.15% 121.15% 100%

Reserves 151.60% 145.50% 100%

Unappropriated profit -56.30% 27.93% 100%

Total Equity 110.66% 119.02% 100%

BALANCE SHEET

BALANCE SHEET


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2008 2007 2006

Loans from related parties 0.00 0.00 0.00

Long Term loans and finance 3.07% 108.99% 100%

Redeemable capital 0.00 0.00 0.00

Syndicated term finance 0.00 0.00 0.00


7831.13% 2192.38% 100%

BALANCE SHEET

BALANCE SHEET


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2008 2007 2006


0.00 916.67% 100%

Long Term deposits 86.73% 90.76% 100%

Deferred taxation 15.93% 92.39% 100%

Employee' compensatedabsences

162.81% 128.70% 100%

BALANCE SHEET

BALANCE SHEET


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CURRENT LIABILTIES

Current portion of:

2008 2007 2006

redeemable capital 0.00 0.00 100%

Long Term loans and finances 0.00 332.85% 100%

syndicated term finance 0.00 0.00 0.00


4195.74% 309.26% 100%

BALANCE SHEET

BALANCE SHEET


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Short term finance 355.77% 84.21% 100%

Trade and other payable 331.78% 95.63% 100%

Accured profit and interest /mark-up 69.71% 135.67% 100%

Taxation -net 0.00 0.00 100%

Dividends 100.004% 99.91% 100%


136.60% 122.42% 100%

BALANCE SHEET

INCOME STATEMENT


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2008 2007 2006

Sale 136.88% 65% 100%

Less: Cost of sale 182.30% 95.51% 100%

Gross profit 61.61% 14.42% 100%

Administrative expenses 200.48% 111.27% 100%

Distribution cost 3982.87% 329.28% 100%

Other operating expenses 21.04% 15.57% 100%

INCOME STATEMENT

INCOME STATEMENT


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2008 2007 2006

Other operating income 396.15% 162.06% 100%

Operating profit from operation 22.70% 10.04% 100%

Finance cost 531.65% 99.26% 100%

Profit / (Loss) before taxation -83.45% -8.56% 100%

Taxation

Current:

Deferred:

-157.05%

133.98%

33.21%

31.55%

100%

100%

Profit (loss) after taxation -63.83% 3.97% 100%

INCOME STATEMENT


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Maple Leaf Cement Factory Limited

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