Financial Analysis of DG Khan Cement Company Ltd.

Preface
As the world is growing rapidly, the businesses are also moving to become the huge one. And by that result, more and more people want to become a master in these businesses. The main purpose in the finance field is to know how the financial analysis is done. We all know that finance is the blood of any business and without it no business can run. Financial analysis of a company is very difficult and the most important task and by doing this we are able to know the whole financial position and financial structure of the company. Simply by looking at how much cash a company has does not provide enough information. The financial statements need to be analyzed to measure a company’s performance and to compare it with other firm’s in the same industry. The resulting information is intended to be useful to owners, potential investors, creditors, analysts, and others as the analysis evaluates the past performance, future potential and financial position of the firm. This report is an analysis of financial statements of D.G. Khan Cement Company Ltd. This report has been prepared with an objective to develop analytical skills required to interpret the information (explicit as well as implicit) provided by the financial statements and to measure the company’s performance during the past few years. The financial statements are analyzed using traditional evaluation techniques such as horizontal analysis, vertical analysis and trend analysis. Ratios are an important tool in analyzing the financial statements & the company’s profitability, solvency & liquidity. Sincere attempts have been made to make this report error free but if any errors and omissions are found then we apologize for that.

Shabbir Bilal (3839) Sagheer Ahmed (3860) Faizan Ahmed khan (3899)

Nishat group of industries
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Financial Analysis of DG Khan Cement Company Ltd.

Acknowledgement
In the name of “Allah”, the most beneficent and merciful who gave us strength and knowledge to complete this report. This report is a part of our course “Financial Statement Analysis”. This has proved to be a great experience. We would like to express our gratitude to our Financial Accounting teacher Ms. Miss Moona Shamim who gave us this opportunity to fulfill this report. We would also like to thank our colleagues who participated in a focus group session.

Nishat group of industries
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Financial Analysis of DG Khan Cement Company Ltd.

Table of Contents
S.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Particular Preface Acknowledgement Table of content Introduction Liquidity position Activity ratio Debt ratio Profitability ratio Assets Utilization Return on investment Income statement Balance sheet Summarized Income Statement Summarized Balance sheet Horizontal Analysis of Income statement Vertical analysis of income statement Calculation of ratios Page 1 2 3 4-9 10 10-11 12 13 14 15 17-20 21 22 22 23 24 25-29

Nishat group of industries
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With assets over PRs. It also has the distinction of being one of the largest players in each sector.Financial Analysis of DG Khan Cement Company Ltd. Vision Statement To transform the Company into modern and dynamic cement manufacturing company with qualified professionals and fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan. Cement and Financial Services. it ranks amongst the top five business houses of Pakistan. the Group has also interest in Insurance. Paper products and Aviation. the Government of Nishat group of industries Page 4 . The group has become a multidimensional corporation and has played an important role in the industrial development of the country. Power Generation.300 billion. D. Khan Cement Company Limited NISHAT GROUP Nishat Group is one of the leading and most diversified business groups in South East Asia. so as to achieve optimum prices of products of the Company for sustainable and equitable growth and prosperity of the Company. The group has strong presence in three most important business sectors of the region namely Textiles. The Group is considered at par with multinationals operating locally in terms of its quality of products & services and management skills. In addition.G. Mian Mohammad Mansha. In recognition of his unparallel contribution. the chairman of Nishat Group continues the spirit of entrepreneurship and has led the Group successfully to make it the premier business group of the region. Introduction Mission Statement To provide quality products to customers and explore new markets to promote/expand sales of the Company through good governance and foster a sound and dynamic team.

the single largest production line in the country.500 tons clinker per day. Pakistan has also conferred him with “ Sitara-e-Imtiaz”. D.732.L. Distt. the management further expanded the capacity by adding another production line with a capacity of 3. DGKCC started its commercial production in April 1986 with 2000 tons per day (TPD) clinker based on dry process technology. Design of the new plant is based on latest dry process technology. Expansion -Khairpur Project Furthermore. the new plant will have two strings of pre-heater towers.000 M tons of clinker (1. Smidth of Denmark. The new plant would not only increase the capacity but would also provide proximity to the Nishat group of industries Page 5 . Starting from the privatization. The project will be equipped with two vertical cement grinding mills.G. The cement grinding mills are first vertical Mills in Pakistan. one of the most prestigious civil awards of the country.000 M.700 TPD clinker near Kalar Kahar.Financial Analysis of DG Khan Cement Company Ltd. Khan Cement Company Limited (DGKCC). Chakwal.G. The plant and machinery was supplied by M/s F. DGKCC was established under the management control of State Cement Corporation of Pakistan Limited (SCCP) in 1978. the focus of the management has been on increasing capacity as well as utilization level of the plant. Khan Cement Company D. the Group is also setting up a new cement production line of 6. a unit of Nishat group.Tons Cement) constituting about 10% share of the total cement production capacity of the country. DGKCC emerged as the largest cement production plant in Pakistan with annual production capacity of 1. Plant & Machinery was supplied by UBE Industries of Japan. The company undertook the optimization by raising the capacity immediately after the privatization by 200tpd to 2200tpd in 1993. The optimization plan is still underway to increase the total capacity of the two units to 6700 TPD by mid of 2005 from 5500 TPD at present. Capacity Addition To meet the increasing demand and to capitalize on its geographic location. It is list on all the Stock Exchanges of Pakistan.650. the advantage of twin strings lies in the operational flexibility whereby production may be adjusted according to market conditions. It has a countrywide distribution network and its products are preferred on projects of national repute both locally and internationally due to the unparallel and consistent quality. As a result. energy efficient and environmental protection from particulate pollution according to the international standards. First of its kind in cement industry of Pakistan. is the largest cement-manufacturing unit in Pakistan with a production capacity of 5.300 tons per day in year 1998. Acquisition of DGKCC by Nishat Group Nishat Group acquired DGKCC in 1992 under the privatization initiative of the government.

Ltd. the number of cement units increased from 6 to 9. Power Generation For continuous and smooth operations of the plant uninterrupted power supply is very crucial. During the period of General Zia-ul-Haq. production processes are environment friendly and comply with the World Bank’s environmental standards. It has been certified for “Environment Management System” ISO 14001 by Quality Assurance Services. only one or two units were producing grey cement in the country. During the Ayub era the economy started to grow and the construction activities underwent a boom. denationalization of industrial units boosted the investments. During the following period of Zulfiqar Ali Bhutto all the industrial units. By achieving this landmark. Environmental Management DG Khan Cement Co. The company has its own power generation plant along with WAPDA supply.84 MW. The installed generation capacity is 23.. 1977-88. therefore. DG Khan Cement became the first and only cement factory in Pakistan certified for both ISO 9002 & ISO 14001. During the decade of 1948-58. untapped market of Northern Punjab and NWFP besides making it more convenient to export to Afghanistan from northern borders. The company was also certified for ISO-9002 (Quality Management System) in 1998. no new unit was set up during 1971-77. the number of cement units increased to six. including cement industry. Australia. Housing and construction industries picked up and the demand for Nishat group of industries Page 6 . During the decade of 1958-68. Naz Mansha Mian Raza Mansha Saqib Elahi Khalid Qadeer Qureshi Mohammad Azam Zaka ud din Inayat Officer Ullah Niazi Chairperson/Director Chief Executive/Director Director Director Director Director Director & Chief Financial Why cement sector for our project At the time of independence in 1947.. BOARD OF DIRECTORS • • • • • • • Mrs.Financial Analysis of DG Khan Cement Company Ltd. were nationalized. To meet the growing demand of cement new units were set up..

Through the cement industry in Pakistan has witnessed its lows and high in recent past.851 4. Providence Punjab Sindh NWFP Baluchistan Total Units 8 8 6 1 23 Capacity Tons) 7. By now it has exceeded 10 million tones per annum as a result of establishment of new manufacturing facilities and expansion by existing units. the number of cement units increased from 9 to 23 and finally 24.488 3. from which 4 units are in the public sector while the remaining 19 units are owned by the private sector. The cement industry in Pakistan has become a long way since independence when country had less than half a million tones per annum production capacity. cement increased. The province-wise distribution of cement plant is as under.040 (Million Nishat group of industries Page 7 .Financial Analysis of DG Khan Cement Company Ltd. Thus. Two of the four units in the public sector had to close down their operations due to stiff competition and heavy cost of production. it has recovered during the last couple of years and is buoyant once again. There are total number of units are 23. Privatization and effective price decontrol in 1991-92 heralded a new era in which the industry has reached a level where surplus production after meeting local demand is expected in 1997. The cement plants are located in every province of Pakistan. The cement industry is needed a highly important segment of industrial sector that plays a pivotal role in the socio-economic development.945 0.758 17.

039.039.1 million tons are in the final stage of completion despite the available excess capacity in this sector.000 1. the northern region and the southern region.000 7.039.528.000 1.000 1.500 Expansion 1988 315.500 Nishat group of industries Page 8 .G Khan cement Fauji cement Lucky cement Maple Leaf cement Pioneer cement Sub-Total Southern Region Essa cement Total Expansion New New Expansion New New Expansion New 1964 1996 1988 1988 1997 1996 1998 1994 945.500 630. Three additional cement plants with installed capacity of over 2.843.000 630. Name company of New/ Expansion Year Commission of New Capacity Created(Tons) Northern Region Askari Cement Askari cement Bestway cement D.500 945.000 7. The industry is divided into two broad regions. The following table shows installation of new cement factories and expansion of the existing facilities during the current decade.Financial Analysis of DG Khan Cement Company Ltd.260.500 1. The northern region has over 87 percent share in total cement dispatches while the units based in the southern region contributes 13 percent to the annual cement sales.

610M tons against 2. economic growth slowed down to 5. Nishat group of industries Page 9 . The slight increase in capacity utilization is due to the fact that during the year industry added another 6. Russia and in African countries as well. now the cement is being exported not only to regional neighboring countries.5M tons of new capacity. Demand of cement is directly related with prevailing economic conditions.8% in FY 2008 against 6. During FY 2008 cement sales in the country remained bleak due to uncertainty in political and economic front coupled with fading law and order situation. with a growth of over 24%.8% recorded last year.034M tons last year. During the period under report the capacity utilization of the industry was 81% against 79% last year.395M tons against 21. all time high oil and coal prices coupled with expanding inflationary trend in the country hit badly the cost of production. Dilemma of price war among the cement manufacturers to find out the market share has badly affected the financial health of the cement sector. The cement manufacturers fully poised to explore new export markets. INDUSTRY REVIEW The cement industry of Pakistan again set a new record and sold 30. Contrary to past.Financial Analysis of DG Khan Cement Company Ltd. Pakistani Cement industry fully tapped the export prospects of cement and managed to export hefty 6. witnessing an increase of only over 6%.797M tons last year.112M tons during FY 2008 against 24. rather Pakistani cement is finding its place in South East Asian countries. In addition. Going forward. Clouds of recession are hovering over the economy of Pakistan and having achieved consecutive growth of over 6% in real GDP during last four years. monetary tightening stance of the State Bank of Pakistan to curb inflation in the country posed additional burden in the form of increased lending rates. Total sales in the country were 22.222M tons last year.

02 times 8.37 0.64 0.44 1.31 2006 1.94 days Nishat group of industries Page 10 .96 0.78 times 4.60 2.65 1.43 2005 1.94 times 4.79 times 3. As it is shown in the graph that in 2004 there is the gradual increase in the ratio. and it goes to the boom and it suddenly decreases in 2008.94 2004 1.54 1. Liquidity Position with Graphical Presentation Liquidity Position Liquidity Position Current Ratio Acid Test Ratio Cash Ratio 2008 1.22 1.5 2 1.78 times 6. Activity Ratios Activity Ratios Account Receivables Turnover Account Receivables 2008 41.5 1 0.33 2.45 days 2005 81.89 days 2007 58.20 days 2006 105.Financial Analysis of DG Khan Cement Company Ltd.18 2007 2.45 days 2004 73.62 3 2.5 0 2008 2007 2006 2005 2004 current ratio acid test ratio cash ratio The following graph show the increase and decrease in the variable.21 0.

85 days Nishat group of industries Page 11 .67 times 12. Activity Ratio Inventory Turnover in days Inventory Turnover Ending F.66 days 13.63 days 8.83 times 8.40 times 8.06 days 2005 21.5 days 2004 43.19 times 33.27days 2007 21.89 days 16.Financial Analysis of DG Khan Cement Company Ltd.96 days 24.G Inventory 2008 27. Days in receivable and a/r turn over in day are at very good pace.36 times 18.003 days 2006 14. Turnover in Days 120 100 80 60 40 20 0 2008 2007 2006 2005 2004 A/R turnover A/R turnover in days As the graph depict that the receivables turnover was at normal pace in 2004 to 2005 but it reached to boom in 2006 and started decreasing in 2007.69 days 16.

Financial Analysis of DG Khan Cement Company Ltd.G Debt Ratios Debt Ratios Debt To Equity Ratio Debt Ratio 2008 76 43 2007 53 34 2006 78 44 2005 93 48 2004 85 46 160 140 120 100 80 60 40 20 0 2008 2007 2006 2005 2004 debt/equity ratio debt ratio The debt management ratios of DGKC showed a positive trend during 2007. The debt to asset and equity ratios as well as the long-term debt ratio all receded Nishat group of industries Page 12 . 5 0 4 0 3 0 2 0 1 0 0 20 08 20 07 20 06 20 05 20 04 Inventoryturnover in da ys inventoryturnover endingF inventory .

during the period and this reflected a reduction in dependence on debt financing. the company's However.84 2007 32 34 25 2006 49 49 31 2005 37 46 31 2004 36 35 20 140 120 100 80 60 40 20 0 2008 2007 2006 2005 2004 gross profit margin operating income magin net profit margin Profitability .Financial Year 2002 to Financial Year 2008 The profitability ratios of the company have shown a declining trend since after Nishat group of industries Page 13 . during 2008 the debt ratios of the company rose because the total debt increased in 2008 Profitability Ratios Profitability Ratios Gross Profit Margin Operating Profit Margin Net Profit Margin 2008 15 12 7.Financial Analysis of DG Khan Cement Company Ltd.

2005. the cement sector experienced declining profitability during 2008.Financial Analysis of DG Khan Cement Company Ltd. Despite a strong growth in cement dispatches.60 33 120 100 80 60 40 20 0 2008 2007 2006 2005 2004 return on total assets return on assets total asset turnover Nishat group of industries Page 14 . The profit margin of the company has decreased continuously along with return on assets (ROA) and return on equity (ROE). . causing the declining trend of the profitability of DGKC. Assets Utilization Asset Utilization Return on Total Assets Return on Assets total asset turnover 2008 24 18.5 24 2007 33 3. This rise in cost of production and raw material have continued into 2008 and further aggravated. The gross profit margin increased in 2006 only to fall in 2007 and 2008.8 15 2006 10 23 74 2005 13 11 35 2004 11 6. The net sales revenue did not increase to an equal extent due to decrease in net retention prices in the sector. The problem of rising input costs had begun in 2007.

. During the year. The performance of DGKC in terms of asset management was weak during 2007. coupled with a higher stock of inventory. This could be traced back to lower sales revenue for the period. Thus the days to convert inventory into sales became less (from approx.37 2006 17 2005 22 2004 13 25 20 15 Return on total equity 10 5 0 2008 2007 2006 2005 2004 Nishat group of industries Page 15 . Return on Investment Return on total equity Return Ratios Return on Total Equity 2008 0. the inventory turnover (days) of the company more than doubled compared to 2006 when the management of inventory seemed most efficient (evident from the lowest inventory turnover in days).Financial Analysis of DG Khan Cement Company Ltd. However.30 2007 0. 100 days in 2007 to 79 days in 2008). in 2008 the asset management of DGKC improved as the inventory turnover rate increased because the company earned sales revenue more in proportion to the increase in inventory.

One of the most important profitability metrics is return on equity [or ROE for short]. Investment Ratios • Price earning ratio Investment ratios Price earning ratio 2008 2007 2006 2005 2004 2.58 4.Financial Analysis of DG Khan Cement Company Ltd.96 8.19 9 8 7 6 5 4 3 2 1 0 2008 2007 2006 2005 2004 Price earning ratio Nishat group of industries Page 16 . Return on equity reveals how much profit a company earned in comparison to the total amount of shareholder equity found on the balance sheet.38 3.81 3.

in’000 1034811 9 607817 1509449 1349755 141067 7955665 464080 230854 470625 2114667 388113 18233 20542 341940 13203 43678 16884 6980 1774 1492 884 4678 3879 5680 7651 2005 Rs. In 000 5392393 305191 990124 766497 58207 3882756 330535 161919 217911 1123716 338970 9637 42235 317155 6923 30284 5909 5881 1374 1276 507 3179 6150 4573 6742 2614113 Nishat group of industries Page 17 . In’000 8887306 511826 1679829 1159214 140464 641962 5 580717 293929 605335 1902567 383159 22913 21840 469367 13108 45349 15373 7159 1784 945 499 6227 4113 3396 9449 2006 Rs.Financial Analysis of DG Khan Cement Company Ltd. Rates and taxes 2008 Rs. Earnings per share are generally considered to be the single most important variable in determining a share's price. In’000 1473244 5 274111 1 2729046 99556 1929858 250749 1246434 7 1368488 480352 1644759 4597486 764204 98530 43904 1354192 3331 83731 25962 15541 5389 3480 1499 9639 6982 2007 Rs.Telegram Printing and Stationery Legal and Professional Charges Estate Development Rent. The EPS of company is fluctuating but in current year it has decreased drastically which is not a good sign for share holders.Cost of Sales Raw and Packing material used Salaries and Wages Electricity and Gas Furnace oil Stores and Spares used Repair and maintenance Insurance Deprecation on property plant and Equipment Deprecation on assets subjects to finance lease Royalty Excise Duty Vehicle Running Postage Telephone . In’000 6730756 641351 1141756 877924 72867 527956 0 374287 185914 322979 1493514 357762 9997 23642 330100 11311 31652 10450 5724 1831 1581 548 3930 3091 4139 4896 2004 Rs. Excise Duty Special Excised Duty Sales tax Commission to stockiest Sales Net -. Annexure Summarized Income Statement Summarized Income Statement Sales Net Local Sales Export Sales Less. It is also a major component used to calculate the price-to-earnings valuation ratio. An important aspect of EPS that's often ignored is the capital that is required to generate the earnings (net income) in the calculation.

I.P Transfer from Trail run Closing W.Financial Analysis of DG Khan Cement Company Ltd. Rates and taxes Entertainment School expenses Fees and subscription Other Expenses Auditors Remuneration Total Administrative Expenses Selling and Distribution Expense Salaries Wages Electricity Repair and Maintenance Insurance Deprecation on property plant and Equipment Deprecation on leased property 5753 2079 1053401 3 142686 (118292) 1055840 7 107804 (118863) (11059) 19302 1052804 6 1936301 57150 2985 1620 1685 11956 126 3545 3441 2210 3522 6783 176 1136 9004 1982 3424 110745 438722 9 161989 50462 (142686) 445699 4 5058 39300 (69728) (25370) 43984 438764 0 203198 5 48958 2678 1324 1277 9027 1571 5353 2738 1897 3369 6104 2699 2780 8491 2966 2937 104169 4155837 50205 (161989) 4044053 19468 (5058) 14410 65641 3992822 3962843 40950 2684 1210 3147 7261 1213 4066 6093 4983 6394 10377 2561 3277 6975 3458 17304 121953 317734 8 210983 (50205) 333812 6 38616 (19468) 19148 26505 333076 9 194879 1 31056 2566 1243 3099 9742 4945 2678 3103 1913 1365 2410 872 795 6177 1855 1926 735 76480 88603 (210983) 2491733 44145 (38616) 5529 2497262 1385494 27342 3125 1461 1992 12425 1382 1752 3841 1256 2471 2448 439 766 5944 937 360 704 68645 35431 875 299 497 1342 1940 1235 1553 3438 3720 296 29727 670 884 235 1132 1603 1361 1094 2312 1406 189 2643 23997 443 225 172 324 1225 855 891 1272 1561 294 1569 23 - 14616 383 40 306 900 88 765 944 643 495 1432 358 2213 13572 1805 17474 345 121 1397 895 814 855 913 981 1045 398 1919 Nishat group of industries Page 18 .Telegram Printing and Stationery Legal and Professional Charges Traveling and conveyance Rent.I.P Cost of Goods Manufactured Opening stock of finished goods Transfer from Trail run Closing Stock of finished goods Cost of good sold -)Own consumption Capitalized Cost of Goods Sold Gross Profit -) Administrative Expenses Salaries Wages Electricity Repair and Maintainance Insurance Deprecation on property plant and Equipment Deprecation on assets subjects to finance lease Vehicle Running Postage Telephone . Freight Charges Other Expenses Opening W.

Financial Analysis of DG Khan Cement Company Ltd. Rates and taxes Traveling and conveyance Entertainment Advertisement and Sales Promotion Freight Charges-local Freight and Handling Charges-Export Other Expenses Total Selling and Distribution Expenses Other Operating Expenses Workers’ profit participation fund Book Value of Asset written off Donation Worker welfare fund Exchange loss Loss on Disposal of Property Plant and Equipment Loss on Sale and Lease back transactions Total Other Operating Expenses Other Operating Income Income from Financial Assets Income on Bank Deposits Interest on Loan to Employees Gain on derecognizing of investment Dividend Income From -Related Parties -Others Total Income from financial Assets Income from non financial assets Rental Income Profit on sales of property plant and assets 3395 14135 492219 2595 562970 9734 5000 580953 595687 1659 182 465656 118 467615 50 19637 2179 65122 93145 11050 35112 414 139721 363 181 265763 120 266427 1501 34352 182006 9844 191850 38560 31239 2419 60905 83058 4530 6198 93786 535 290 34460 85730 121015 60829 206 61735 727 128 820303 143 821301 582 276 543173 152284 26 696341 2847 3567 7609 4562 2116 6986 294114 1980 3827 1351 289 128462 141701 20049 35351 12341 37 9860 90 20049 - 1592 4488 10394 6973 1858 846606 1634 4490 4170 1208 303 479420 2002 3207 2911 2002 729 500 707692 186267 329 42655 35351 42655 12439 83 305027 35351 73772 12543 101 73772 17229 1040737 499413 584 323183 28281 103324 6564 98 Nishat group of industries Page 19 . Vehicle Running Postage Telephone .Telegram Printing and Stationery Rent.

Financial Analysis of DG Khan Cement Company Ltd.Provident fund -Short term borrowings -Finance lease workers profit participation fund Loss on derivative financial instruments Loss on Foreign currency forward Guarantee commission Bank charges Total finance Cost Excess of Acquire Interest in the net assets of acquire Share of loss of Associated company Profit before Taxation -)Taxation For the year . Scrap Sales Mark up on loans Provisions and unclaimed balances returned back Exchange gain Others Total other operating income Profit from operations Finance Cost Long term finances .Long term loans .Preferred dividend .Non participatory redeemable capital .current .Deferred Prior Year -Current -Deferred Total taxation 522 205308 4165 15569 (176629 8) 86194 (8674) (175273 ) 108214 (309167) (5) 1513505 197.000 (32422) (5000) 3908802 1679 4994 450696 (9573) 3448533 329 7804 1405 6860 304041 212127 1 40000 464000 193 (65000) 242531 2 -439193 871 4235 224601 1120415 28700 297000 10222 (10000) 1345016 -325922 Net Income 25685 162247 1 241845 5 168207 8 794493 Nishat group of industries Page 20 .700 103324 1813 4496 468173 (14163) 172047 1 40500 1027000 33000 312435 (247435) 220239 3 -98.Finance under markup .

advances and deposits Total Non-Current Assets Current Assets Stores spares and loose tools Stock in trade 2008 2007 2006 2005 2004 9500000 500000 1000000 0 2535412 2763472 2 32399 3052844 0 8871051 393 73890 54018 1251000 1025035 2 1450074 391610 8194330 2828202 35090 1289930 6 5367809 8 2422427 3 6839 2488307 6592332 524176 3383592 7 2323883 9500000 500000 10000000 2535412 29630084 1757689 33923185 8686447 1141 79467 39862 1624000 10430917 1027274 342612 3942972 2042281 35090 7390229 51744331 22117551 133376 1907063 8174474 196913 32529377 1496291 295140 144245 16933790 229315 116173 19214954 51744331 2500000 500000 3000000 1843937 8351 15085354 2330558 19268200 7372468 28886 33814 26572 1559000 9020740 1406869 340757 2613695 1619025 35090 6015436 34304376 7521723 295058 11759677 4482213 335810 24394481 836049 226286 74165 8543763 152465 77167 9909895 34304376 2500000 500000 3000000 1843937 7196568 277493 9317998 4899225 131985 28674 45765 537000 5642649 1154426 960620 599674 306048 35090 3055858 1801650 5 6637237 317262 3983175 2610634 271428 1381973 6 1035081 100994 76238 2769134 121486 93836 2500000 50000 300000 1676306 4389088 251661 6317055 2730573 83487 30365 38150 138000 3020575 493968 1360677 487254 35090 2376989 11714619 6128083 166583 1126108 1387681 25021 8833476 938847 298538 52622 1386816 120329 83991 2881143 11714619 Nishat group of industries Page 21 .Financial Analysis of DG Khan Cement Company Ltd. Summarized Balance Sheet Summarized Balance Sheet Equity and Liabilities Capital and Reserves Authorized Capital -950000000@ ordinary share10 -50000000@ preference share10 Issued subscribed and paid up capital Share deposit money Reserves Un-appropriated profit Total capital and Reserve Non Current Liabilities Long term finance Liabilities against subject to finance lease Long term deposits Retirement and other benefits Deferred Taxation Total Non-Current liabilities Current Liabilities Trade and other payables Accrued markup Short term borrowing Current portion of noncurrent liabilities Derivative foreign currency forward options Provision for taxation Total Current liabilities Total Liabilities Assets Non-Current Assets Property plant and equipment Assets subject to finance lease Capital work in progress Investments Long term loans.

122 (139.76 9 1.163 1.030.996 -10.497.674 -250.962.82 2 3.720.905 -93.47 1 -98.462 1.480 -60.72 1 479.041 2004 3.56 0 3.682.953 -34.622.169 -65.352 -191.53 3 1.948.66 5 3.26 2 1.31 3.445.230 -0.37 9.80 2 -450.344 1.658 -561.387.992.47 1 6.031.49 4 -68.14 2005 5.581 -1.79 1 -76.45 5 10.700 -53.31 2 -304.696 -9.759 -14.43 2006 7.493 4.786 707.955.01 6 -224.723 1.12 7. deposits.84 3 -121.27 1 -439.425.573 3.12 2007 6.000 1.908.07 8 2.913 847.645 -38.922 794.735 128.64 0 2.41 5 -325.692 2.202.43 6. prepayments and other Receivables Cash and bank balance Total Current Assets Total 1300325 463446 1508260 5 427832 244080 1984217 1 5367809 8 4196769 1801650 5 Overview of income statement Overview of Income statement Sales Cost of sales Gross profit Administrative expenses Selling and distribution expenses Other operating expenses Other operating income Profit from operations Finance cost Share of loss of associated companies Profit\ Loss before tax Taxation Profit\ Loss for the year Basic earnings per share Rupees Earnings per share 2008 12.837 -8.193 1.273 -111.385. Gross Receivables Investments Advances.82 1.465 -581.330.448.21 0.78 Overview of Balance sheet Overview of Balance sheet 2008 2007 2006 2005 2004 Nishat group of industries Page 22 .418.530.915.114 3.601 2.345.75 6 2.419.882.930 197.850 294.07 8 9.560 -61.39 3 -467.121.62 5 4.98 5 -104.120.420 2.279.749.Financial Analysis of DG Khan Cement Company Ltd.507.

66) - 2005 135.Financial Analysis of DG Khan Cement Company Ltd.34 % (175.03 112.66) (89.95 290.89 180. Capital and Reserve Non-current Liabilities Current Liabilities Assets Non-current Assets Current Assets 33835927 19842171 3252937 7 1921495 4 2439448 1 9909895 1381973 6 4196769 8833476 2881143 30528440 10250352 12899306 3392318 5 1043091 7 7390229 1926820 0 9020740 6015436 9317998 5642649 3055858 6317055 3020575 2376989 Horizontal Analysis of Income Statements 2008 Net sales Cost of sale Gross profit administrative expense selling &dist. expenses other operating expense other Operating income profit from operation finance cost share of loss of 321.88) (226.02 (177.41) - 2007 165.38) 140.76) 228.25) - 2004 100 % 100 100 100 100 -100 100 100 100 100 Page 23 Nishat group of industries .26) - 2006 204.89 % (159.75) (168.74 (208.95) (151.33) (145.20 163.89) 286.53 (786.61 (200.97 (133.58) 139.09) (310.29) 550.90) 659.7) 146.41) (157.32) 373.66 (151.32 (1345.01 % (421.98) (964.75 (61.66 (111.

06) 204. Company is also increasing trend in other operating income.52) (4.45) (1.79 12.77) (0.18%) 49. But on the other hand Cost of goods sold jump quickly.66) 3.09%) 36.79 (316.88) (4.94 2004 100 % (64.37 34. associated company income before taxes Provision for taxation Net profit 15.13 2005 100% (63.40 45.35%) 31.31 2006 100% (50.64 (61.53) (0.14 2007 100% (68.59) 3. expenses other operating expense other Operating income profit from operation 100% (84. This is not a good trend.46%) 15. Cost of goods sold of the Co increases due to expensive raw materials.68 (1. Vertical Analysis of Income Statements 2008 Net sales Cost of sale Gross profit administrative expense selling &dist.32%) 35.41) 3.47 34.78) 13.43) (2.81 (1. Other operating expenses of the Company are increasing quickly.70 49. Gross profit of the co decreases from last years due to high cost of goods sold.99) (1.62) (1.72 100 100 100 Horizontal analysis of income statement shows that net sales of the Co has increasing trend.64 Nishat group of industries Page 24 .01) (2. Profit from operations also decreases.78) 6.75) 211. Co also has high finance cost from last years.23 153.17) 7. Income before taxes has decreasing trend due to high cost of goods sold and finance cost.35 (0.56 (30. Net profit of the Company is Very small as compare to last years.91 (1. Administrative and selling expense of the Co has decreasing trend.15) (1.Financial Analysis of DG Khan Cement Company Ltd.64 (1.40 189.33 (134.21 307.05) 304.

Operative expense of the co has minimum portion in the income statement.53) 25.76) (5. Profit from operations also has decreasing trend.95) 30. Nishat group of industries Page 25 . Provision for income taxes also has decreasing trend.Financial Analysis of DG Khan Cement Company Ltd.78) - In vertical analysis of income statement shows that has high cost of goods sold from last years.40 40.32) 31.20 (7.41 (1.66) (0.46 (5.22) 26.18 (8.12) 43.66) 1.86 (8.86 28.69 (0. Share of loss of associated co also increases Income before taxes also decreases from last years. Gross Profit of the Co has decreasing trend.28) (0.17) 0.39) 20.80 (1.34 (12.27 (5.61) 20. This is decrease due to high cost of goods sold. finance cost Excess of acquires interest in the net assets of acquire share of loss of associated company income before taxes Provision for taxation Net profit (14.

Inventory turnover = Cost of Goods sold/Average Inventory Year 2008 2007 2006 2005 2004 Calculation 10528046/797732.50 5279560/64430 3882756/52622 Account Receivables Turnover 41.003 days 8. Account Receivables Turnover =Net Sales /Average Receivables Year 2008 2007 2006 2005 2004 Calculation 12464347/30384550 6419625/109205 7955665/75201.84 days 4.27 days 8.44 73.20 3.89days 6.67 8.G Inventory 33.79 81.95 3.40 16. Ending Finished Good Inventory Turnover=Cost of Goods sold / Average Ending Finish Good Inventory Year 2008 2007 2006 2005 2004 Calculation 10528046/31643 4387640/54812 3992822/46073 3330769/26505 2497262/13252 Ending F.5 days 18.19times 16.78 105.45 4.Financial Analysis of DG Khan Cement Company Ltd.50/7955665/365 64430/5279560/365 52622/3882756/365 Account Receivables turnover in days 8. Calculations Liquidity Ratios 1.78 2.45 4. Account Receivables turnover in days =Average Receivables/Net Sales/365 Year 2008 2007 2006 2005 2004 Calculation 303845500/12464347/365 109205/6419625/365 75201.02times 58.36 Nishat group of industries Page 26 .66 days 12.83 24.5 4387640/260713 3992822/163640 3330769/199766 2497262/298538 Inventory turnover 13.

5/10528046/365 260713/4387640/365 163640/3992822/365 199766/3330769/365 298538/2497262/365 Inventory turnover in days 27.22:1 99306 (116173+16933790+144245)/739 2007 2. Working Capital = Current Assets – Current Liabilities Rupees’000) Year Working Capital 2008 =6942865 2007 =11824725 2006 =3894459 2005 =1140911 2004 =504154 7.89 43.54:1 2007 19214954/7390229 2.66 days 21.64:1 Nishat group of industries Page 27 . Current Ratio= Current Assets/Current Liabilities Year Calculation Current Ratio 2008 19842171/12899306 1.44:1 327 2005 (6931615+67244)/6344831 0.60:1 2006 9909895/6015436 1. Quick Ratio= (Cash Equivalent + Marketable Securities+ Net Receivables)/Current Liabilities Year Calculation Quick Ratio (244080+15082605+463446)/128 2008 1.21:1 8.65:1 2005 4196769/3055858 1.Financial Analysis of DG Khan Cement Company Ltd.33:1 0229 (7235749+502387+969891)/8429 2006 1. Inventory Turnover in Days =Average inventory /cost of goods sold /365 Year 2008 2007 2006 2005 2004 Calculation 797732.96 21.63 (Amount in Calculation 19842171-12899306 19214954-7390229 9909895-6015436 4196769-3055858 2881143-2376989 6. 5.37:1 2004 2881143/2376989 1.69 14.96:1 2004 (5078613+5503)/4524698 0.

70 10.12times 2007 4387640/7859592 0.55 2006 3992822/2517685 1. 9. Net Profit Margin= Earning after tax (EAT)/Net Sales Year Calculation Net Profit Margin 2008 97753/12464347 7.9 Long Term Debt Paying Ability 1.18 2007 (116173+16933790)/7390229 2.84% 2007 1636634/6419625 25 2006 2428028/7955665 31 2005 1682078/5279560 31 2004 794493/3882756 20 Nishat group of industries Page 28 . Working Capital Turn Over= Cogs/Average Working Capital Working Capital Turn Year Calculation Over 2008 10528046/9383795 1.40 2004 2497262/504154 4.31 2006 (77167+8543763)/6015436 1. Cash Ratio or Super quick ratio =Cash Equivalent +Marketable Securities /Current liabilities Year Calculation Cash Ratio 2008 (244080+185082605)/12899306 1.Financial Analysis of DG Khan Cement Company Ltd.58 2005 3330769/8225320 0.42 2004 3882756/504154 7.50 6. Debt Equity Ratio=Total Liabilities/Shareholder’s Equity Year Calculation Debt Equity Ratio 2008 23149658/30528440 76% 2007 17821146/33923185 53 2006 15036176/19268200 78 2005 8698507/9317998 93 2004 5397564/6317055 85 Profitability Ratios 1. Debt Ratio =Total Liabilities/Total Assets Year 2008 2007 2006 2005 2004 Calculation 23149658/53678098 17821146/51744331 15036176/34304376 8698507/9317998 5397564/6317055 Fixed Charge coverage 43% 34% 44% 93% 85% 2.43 2005 5279560/822532.

Total Asset Turnover = Cogs/Average total Assets Total Assets Year Calculation Turnover 2008 10528046/52711214.5% 2007 1636634/43024353. 2.50 19.50 18.50 37.9 Times 2007 4387640/43024353.4 2004 2497262/11714619 21.3 3.19 2006 3992822/10723490.8 2006 2428028/10723490.50 23 2005 1682078/14865562 11 2004 794493/11714619 6.50 3.Financial Analysis of DG Khan Cement Company Ltd.50 10.8 4. Sales to Fixed Assets =Net Sales /Average Net fixed Assets Year 2008 2007 2006 2005 Calculation 12464347/(24231112+22250927)/2 6419625/(7816781++22250927)/2 7955665/(7816781+6954499)/2 5279560/(6954499+6294666)/2 Sales to Fixed Assets 54% 43 108 80 Nishat group of industries Page 29 . Operating profit Margin = Earning before income and tax (EBIT)/Net Sales Operating Income Year Calculation Margin 2008 1513505/12464347 12% 2007 2202393/6419625 34 2006 3908802/7955665 49 2005 2425312/5279560 46 2004 1345016/3882756 35 Assets Utilization 1. Return on Assets = Earning after tax + interest/Average total Assets Year Calculation Return on Assets 2008 97753/52711214.23 2005 3330769/14865562 32.

08 2007 30.81 2006 30.78 8.14 3.97/6.82 3.97/9.68 Investment Ratios 1.97/7.43 4. Price/Earning ratio=Market price per share/ Earning per share Year Calculation Price/Earning ratio 2008 30. Gross profit margin=Gross profit/Net sales Year 2008 2007 2006 2005 2004 Calculation 1936301/12464347 2031985/6419625 3962843/7955665 1948791/5279560 1385494/3882756 Gross profit margin 15.81 36.65 49.38 2005 30.Financial Analysis of DG Khan Cement Company Ltd.97/3.96 2004 30. 2004 3882756/6294666 62 2.19 Nishat group of industries Page 30 .53% 31.97/0.91 35.12 258.

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