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2010

[Type the abstract


ANALY
FAUJ
INSTITUTE
of theOF
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document
BUSINESS
MANAGEMENT
here. The abstract is
of the contents of the document.
SIS OF
Type the abstract ANUM
of theIMTITAZ
document KAZI
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FINAN
I
typically a short summary of ID#
the contents
9260 of the document.]
[Type the fax number]
CEMCIAL
STATE
ENT
MENTS
COM
PAN
Y
LIMI
TED
PRESENTED TO:

SIR MAQBOOL-UR-REHMAN

FACULTY OF ACCOUNTS AND FINANCE

INSTITUTE OF BUSINESS MANAGEMENT

PRESENTED BY:

ANUM IMTIAZ KAZI

ID# 9260

ANALYSIS OF FINANCIAL STATEMENTS

DATE: 30TH JANUARY, 2010


CONTENTS
No table of contents entries found.
COMPANY PROFILE
A longtime leader in the cement manufacturing industry, Fauji Cement
Company, Headquartered in Islamabad, operates a cement plant at Jhang
Bahtar, Tehsil Fateh Jang, District Attock in the province of Punjab. The
Company has a strong and longstanding tradition of service, reliability, and
quality that reaches back more than 11 years. Sponsored by Fauji
Foundation, the Company was incorporated in Rawalpindi in 1992.

The cement plant operating in the Fauji Cement is one of the most efficient
and best maintained in the Country and has an annual production capacity of
1.165 million tons of cement. The quality portland cement produced at this
plant is the best in the Country and is preferred in the construction of
highways, bridges, commercial and industrial complexes, residential homes,
and a myriad of other structures, fundamental to Pakistan's economic vitality
and quality of life.

In line with the Cement Industry, Fauji Cement has signed a contract with
Polysius, a German cement plant manufacturing firm for installation of state
of the art, the largest single line (7200 tons per day of clinker) ever
commissioned in Pakistan. Meaningful expansion will help the Company to
expand its market share. The project is expected to be commissioned in the
3rd/4th quarter of 2010.

In pursuance of its commitment to produce cement under stringent


environment friendly conditions, the Company has taken the lead by
installing first ever Refuse Derived Fuel (RDF) Processing Plant at a cost of
Rs. 320 Million. This project acts as a beacon to the entire industrial sector of
the Country towards an environment friendly production, RDF is not only
providing economical fuel to the Company but also contributing towards
solving the problem of Municipal Garbage Disposal. Minimum 300-400 tons
of garbage is being lifted from each garbage dump located at Rawalpindi and
Islamabad. In addition, the other important advantages include reduced use
of fossil fuel, lowering of green house gases in the atmosphere and
availability of compost fertilizer as a by product.

COMPANY HISTORY
Fauji Cement Company Limited was sponsored by Fauji Foundation and
incorporated as a public limited company on 23 November 1992. It obtained
the Certificate of Commencement of Business on 22 May 1993. The
Company has been setup with primary objective of producing and selling
Ordinary Portland Cement (OPC). For the purpose of selection of sound
process technology, state of the art equipment, civil design and project
monitoring, local and foreign consultants were engaged.

The Company entered into a contract with World renowned cement plant
manufacturers M/s F.L. Smidth to carry out design, engineering,
procurement, manufacturing, delivery, erection, installation, testing and
commissioning at site of a new, state of the art, cement plant including all
auxiliary and ancillary equipment, complete in all respects for the purpose of
manufacturing a minimum of 3,000 tpd clinker and corresponding quantity of
Ordinary Portland Cement as per Pakistan/ British Standard Specifications.
The contract came into force on 1 January 1994. Physical work on the project
started in August 1994.

Commissioning activities started in May 1997 generally remained smooth


and trouble free, which enabled first batch of clinker production on 26
September 1997 followed by cement production in November 1997.

Subsequently in 2005, the Plant capacity was increased to 3,700 tons of


clinker per day i.e. 3,885 tons of cement per day.

In line with the Cement Industry, Fauji Cement has signed a contract with
Polysius, a German cement plant manufacturing firm for installation of state
of the art, the largest single line (7200 tons per day of clinker) ever
commissioned in Pakistan. Meaningful expansion will help the Company to
expand its market share. The project is expected to be commissioned in the
3rd/4th quarter of 2010.

BUSINESS
The Company has been set up with the primary objective of producing and
selling ordinary Portland cement. The finest quality of cement is available for
all types of customers whether for dams, canals, industrial structures,
highways, commercial or residential needs using latest state of the art dry
process cement manufacturing process.

VISION
To transform FCCL into a role model cement manufacturing Company fully
aware of generally accepted principles of corporate social responsibilities
engaged in nation building through most efficient utilization of resources and
optimally benefiting all stake holders while enjoying public respect and
goodwill.

MISSION
FCCL while maintaining its leading position in quality of cement and through
greater market outreach will build up and improve its value addition with a
view to ensuring optimum returns to the shareholders.

STRATEGIES
We shall achieve our vision by maintaining high quality product, relentless
pursuit of customer satisfaction, empowering FCCL employees to lead
cement industry and achieve manufacturing excellence, producing superior
returns to our shareholders.

VALUES
We listen to our customers and improve our product to meet their present
Customers
and future needs.
Our success depends upon high performing people working together in a safe
People and healthy work place where diversity, development and team work are
valued and recognized.
We expect superior performance and results. Our leaders set clear goals and
Accountability
expectations, are supportive and provide and seek frequent feed back.
We support the communities where we do business, hold ourselves to the
Social
highest standards of ethical conduct and environment responsibility, and
Responsibility
communicate openly with public and FCCL employees.
MANAGEMENT

Board of Directors

Lt Gen Hamid Rab Nawaz, HI(M) (Retd) Chairman


Lt Gen Javed Alam Khan, HI(M) (Retd) Chief Executive/ Managing Director
Mr. Qaiser Javed Director
Mr. Riyaz H. Bokhari, IFU Director
Brig Rahat Khan, SI(M) (Retd) Director
Dr. Nadeem Inayat Director
Brig Liaqat Ali, TI(M) (Retd) Director
Brig Agha Ali Hassan, SI(M) (Retd) Director
Brig Parvez Sarwar Khan, SI(M) (Retd) Director
Brig Sajjad Azam Khan, SI(M) TBt (Retd) Company Secretary
Human Resource Committee
Dr. Nadeem Inayat President
Mr. Qaiser Javed Member
Brig Liaqat Ali, TI(M) (Retd) Member
Brig Sajjad Azam Khan, SI(M) TBt (Retd) Secretary
Audit Committee
Mr. Qaiser Javed President
Mr. Riyaz H. Bokhari Member
Brig Rahat Khan, SI(M) (Retd) Member
Dr. Nadeem Inayat Member
Brig Sajjad Azam Khan, SI(M) TBt (Retd) Secretary
Technical Committee
Brig Rahat Khan, SI(M) (Retd) President
Brig Liaqat Ali TI(M) (Retd) Member
Brig Parvez Sarwar Khan SI(M) (Retd) Member
Rais Ahmed Secretary
PRODUCTS
Ordinary Portland Cement
PS:232-2008 (R) : 53 Grade
Ingredients:

- Clinker 95%

- Gypsum 5%
28 days compressive strength up to 9000 psi

Fauji Cement also meets the requirements of following international


standards:

- ASTM-C-150, Type I
- BS EN-197-1, Strength Class 42.5 N

Quality Policy

• EMPHASIS ON 100% CUSTOMER SATISFACTION.

• 100 % EFFECTIVE UTILIZATION OF PLANT CAPACITIES.

• EMPHASIS ON 100% TOP QUALITY HUMAN RESOURCES.

• EMPHASIS ON 100% QUALITY CULTURE.

Fauji Cement Company Limited (FCCL) is a Pakistan-based company. The Company


is engaged in the manufacturing and sale of ordinary Portland cement. The
Company operates a cement plant at Jhang Bahtar, Tehsil Fateh Jang, District Attock
in the province of Punjab. As of June 30, 2010, the Company had installed capacity
to produce 1,165,500 metric tons of cement. During the fiscal year ended June 30,
2010, the Company produced 1,066,625 tons of clinker and 1,183,684 tons of
cement.
MANUFACTURING PROCESS
Fauji Cement is manufactured from best quality raw materials
using dry process. Major portion of such raw ingredients consists of
Limestone and Clay. The raw materials are quarried, crushed and
corrected. After which they are mixed in the correct proportions to
form the best raw mix. The raw mix is then ground in a raw mill
and subsequently
burnt in a rotary
kiln at a
temperature
around 1450 °C.
The raw materials
undergo a number
of complex
chemical
reactions in the
burning phase
and leave the kiln
as cement clinker,
consisting of
agglomerate of
clinker minerals.
Finally the clinker
is ground to a fine
powder called
cement, in a
Cement Mill
together with 4-
6% gypsum. The
gypsum serves to
retard the setting
time of the
cement, which
would otherwise harden, immediately with the addition of water.
Local Sales

• Fauji Cement Company supplies cement throughout Pakistan especially in the provinces of
Punjab, AJK and NWFP through extensive dealer’s network.

• Fauji cement is a first choice for all hydro electric power projects and projects which
specially requires strength and durability to overcome structural problems.

Direct Sales
Direct sales have been made to mega and large projects. Some of them are:-

- CGGC- CMEC- NJ (Neelum Jehlum Hydro Electric Power Project), Muzaffarabad City
- Mangla Dam Raising Development Project
- Motorway (M1-Project, Islamabad-Peshawar)
- Bahria Town / Safari Villas, Rawalpindi City
- Pak Gulf Construction Pvt Ltd (CENTAURUS)
- Karakorum Highway (KKH Project) Islamabad
- Dong Fang Electric Corp, Batagram, NWFP
- Yucel Turk Const (Pvt)Ltd, Mansehra City
- Sino Hydro Power Project, Duber Khwar, Bisham Swat City
- Siyahkalem Engineering,Construction Company, Muzaffarabad City
- Essem Hotel and Serena Hotel, Islamabad.
- Malakand (Dargai) Hydro Power Projects
- Army Housing Schemes
- Air Force Housing Schemes
- National Logistic Cell Projects
- Fauji Foundation Projects
- Agha Khan Development Network, Muzaffarabad City.
- Projects of Izhar Group of Industries.
- Mineral Development Project, Islamabad.
- A Q Khan Laboratory, Rawalpindi City
- National Highway Authority Projects
- Shifa International Hospital, Islamabad.
- Habib Rafique (Pvt)Ltd, Islamabad.

Exports

Fauji Cement is one of the major exporters of cement to Afghanistan, with an effective
presence in all cities. Our dealer’s network effectively cover the markets of Jalalbad, Kabul,
Northern Afghanistan (Kunduz-Mazar Sharif and surrounding areas) and other markets of
Afghanistan.
We also export to Tajikistan and India.

INVESTORS
Pattern of the shareholding is as under

Shares Percentage

Fauji Foundation including Directors


235,938,214 31.7981
FFC
93,750000 12.6350
FFBL
18,750,000 2.5270
FOTCO
18,750,000 2.5270
General Public
374,800,472 50.5129
Total: 100.00%

Company Snapshot
===========================================
Symbol FCCL
-------------------------------------------
Nature of the Business Cement Production
Market Price Rs 4.94
Outstanding Shares 741,988
Market Capitalization 3,665,421
EPS Rs 0.31
Price/Earnings 20.87
Production Of Selected Large-Scale Manufacturing Items
Perce
ntage Adj Percentage
Adjus Chang ust Change
e We
Weig ted ed
Items Items igh
hts Weig We F
ts
hts FY FY igh Y
ts 1 FY11
10 11
0
- Automobil 3.9 5.2 2
24.49 32.62
Textile 0.0 14. e 55 68 3.
2 3
3 6
- Cars & 2.5 3.3 -
13.06 17.40 -
Cotton Yarn 12. jeeps 34 75 0.
6 4 0.3
9 3
Tractors 0.7 0.9 2
10.05 -
Cotton Cloth 7.549 2.6 00 32 6.
6 3.1
6
LCVs 0.4 0.5 -
13. 41 87 3
Cotton Ginned 3.368 4.486 0.0
0 7.
0
- - 0.1 0.1 2
Other Five Items 0.509 0.677 13. 32. Motorcycle 37 82 8.
5 3s 2
Buses 0.0 0.1 -
Food, Beverages & 14.35 19.11 - - 84 12 2
Tobacco 2 6 4.1 5.3 2.
2
Trucks 0.0 0.0 -
60 80 4
Vegetable Ghee 4.242 5.651 3.0 2.4
5.
9
Metal 3.4 4.6 -
industries 75 28 5
Sugar 4.150 5.527 0.0 0.0
0.
5
Pig iron 1.6 2.1 -
-
- 13 49 6
Cigarettes 3.055 4.069 12.
3.4 2.
4
2
Coke 1.4 1.9 4
17. 20.
Cooking Oil 1.319 1.757 41 19 0.
9 4
6
Billets 0.3 0.4 -
40 52 4
Wheat Milling 0.988 1.315 6.2 6.1
6.
6
H.R/coils 0.0 0.1 -
- - and plates 81 08 5
Tea 0.319 0.425
3.5 8.3 5.
4
-
15.
Beverages 0.279 0.372 12.
8
8
- Fertilizers 3.3 4.5 -
Petroleum products 5.232 6.969 20. 5.9 83 06 2.
1 7
1.8 2.5 -
Pharmaceuticals 5.030 6.700 0.5 0.0 Phosphatic 85 11 9.
9
1.4 1.9 -
Tablets 2.575 3.430 0.4 0.7 Nitrogenou 98 95 1.
s 4
- 11. Electronic 2.4 3.3 3.
Syrup 1.525 2.031
1.2 3 s 85 10 2
Electric 0.5 0.7 -
Injections 0.444 0.591 36.
1.3 s 2.
3
5
0.5 0.7 4.
10.
Capsules 0.217 0.289 2.5 Refrigerato 89 85 9
3
rs
Deep 0.3 0.5 3
28.
Other Two Items 0.270 0.359 4.0 freezers 99 32 7.
0
9
TV sets 0.2 0.3 -
- 26 02 4
Chemicals 4.800 6.393 7.7
2.1 2.
1
- Air 0.0 0.0 3
-
Caustic Soda 0.731 0.974 26. conditioner 74 99 5.
5.7
4 s 1
Electric 0.1 0.2 1
12.
Soda Ash 0.088 0.551 5.0 Fans 83 43 4.
8
2
Other five 0.4 0.5 6.
Other Ten Items 3.981 4.869 0.8 3.8
items 44 91 4
24. Engineerin 0.4 0.5 9.
Non Metallic Minerals 4.192 5.583 9.1
8 g items 46 94 3
Safety 0.2 0.3 5.
13. -
Cement 4.141 5.516 razor 60 46 0
5 4.7
blades
- Bicycles 0.0 0.0 3
Glass Sheets 0.051 0.067 2.1 13. 64 86 3.
0 9
Sewing 0.0 0.1 -
- 37. machines 81 07 1
Leather Products 2.272 3.027
9.3 3 6.
1
- Power 0.0 0.0 2
22.
Paper & Board 0.600 0.799 10. looms 16 21 2.
8
1 6
Diesel 0.0 0.0 -
38. - engines 11 15 5
Tyres & Tubes 0.303 0.404
3 0.5 1.
2
- Other five 0.0 0.0 -
29.
Wood Products 0.030 0.040 61. items 14 19 8.
0
9 9
-
1.
Overall Growth
0
ANALYSIS OF FINANCIAL
STATEMENTS
2000-2009
Fauji Cement Co Ltd
Summarized Income Statement

For the Year Ended 30 June, 2003 To 2007 (in 000)


2003 2004 2005 2006 2007

Rupees Rupees Rupees Rupees Rupees

SALES 2,488,992 3,247,262 3,921,363 5,683,456 4,780,036

Less : Sales tax and excise duty 978,254 951,031 1,076,219 1,397,317 1,316,753

NET SALES 1,510,738 2,296,231 2,845,144 4,286,139 3,463,283

Less: Cost of sales

Raw Material 75,725 115,164 136,819 205,751 235,379

Direct Labor 65,299 91,289 87,091 142,070 133,780

Factory Overhead

Rent Rate & Taxes 882 952 1,378 2,562 2,213

Fuel Consumed 472,772 564,591 699,818 843,909 979,044

Power Consumed 246,489 310,041 332,383 393,785 431,609

Depreciation 245,737 243,056 251,981 261,566 276,244

Other F.OH 192,730 238,876 245,183 325,001 355,819

Total F.OH 1,158,610 1,357,516 1,530,743 1,826,823 2,044,929

Total Manufacturing Cost 1,299,634 1,563,969 1,754,653 2,174,644 2,414,088

Work in Process 37,601 -21,944 16,137 -82,047 -21,550

Cost of goods manufactured 1,337,235 1,542,025 1,770,790 2,092,597 2,392,538

Finished goods -2,104 13,381 -7,223 2,430 -20,750

Cost of Sales 1,335,131 1,555,406 1,763,567 2,095,027 2,371,788

Gross Profit 175,607 740,825 1,081,577 2,191,112 1,091,495

Less Operating Expenses

General & Admin Expenses

Salary, wages and benefits 15,408 21,817 21,835 35,663 42,439

Traveling and entertainment 2,933 2,053 3,320 4,769 3,487

Legal and Professional charges 12,117 1,655 3,148 3,490 2,281

Other General and Admin Expenses 7,917 14,542 13,991 22,706 23,095

Total 38,375 40,067 42,294 66,628 71,302

Selling and Distribution Expenses

Salary, wages and benefits 7,992 12,011 11,085 21,388 20,651


FINANCIAL RATIOS
LIQUIDITY
• Current Ratio

The current ratio determines short term debt paying ability and is computed as:

Current Ratio = Current Assets / Current Liabilities

Current Ratio ( Amounts in Rs. “000”)

Years 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Current 0.24 1.53 1.54 0.92 1.25 1.35 2.16 0.81


Ratio in
Times

Interpretation
In the above table the ratio is increasing in the first years that mean the company
has more funds to pay its current liabilities. But in the coming year there is a
decrease in the ratio. That affects the company’s debt paying ability. In the last two
years the ratio increased due to increase in the current assets. So that is the
positive sign for the company. It increases the short term, liquidity of the company
and it attracts the short term loan providers on the cost of profitability.

• Acid Test Ratio / Quick Ratio

The acid test ratio relates the most liquid assets to current liabilities. Inventory is
removed from current assets when computing the acid test ratio. Reason for
removing inventory is that inventory may be slow moving or possibly obsolete and
parts of the inventory may have been pledged to specific creditors.
Acid Test Ratio / Quick Ratio = (Current Assets – Inventory) / Current
Liabilities

Acid Test Ratio ( Amounts in Rs. “000”)

Years 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Current 721,33 574,461 1,113,721 1,579,382 1,953,527


Assets 8

Inventory 236,60 259,000 353,806 635,978 652,078


2

Current 472332 372116 1206946 1267199 1442287


Liabilities

Acid Test 1.03 0.85 0.63 0.74 0.90 2.06 0.74


Ratio

Interpretation
In the above table we can see that there is a decreasing trend in the ratio. This ratio
is taken on the basis of quick assets (cash or cash equivalents). The main reason of
the decline is the increase in the current liabilities. The other reason is increase in
the inventory that decreases the required ratio.

• Cash Ratio
The best indicator for the company’s short term liquidity may be the cash ratio. It is
computed as follows,

Cash Ratio = (Cash & Cash Equivalent + Marketable Securities) / Current


Liabilities

Cash Ratio ( Amounts in Rs. “000”)

Years 2003 2004 2005 2006 2007

Cash & Cash Equivalent & 193992 197088 603110 847590 423133
Marketable Securities

Current Liabilities 472332 372116 1206946 1267199 1442287

Cash Ratio 0.41 0.53 0.50 0.67 0.29

0.80
0.67
0.70
Cash Ratio ( Times)

0.60 0.53 0.50


0.50 0.41
Series1
0.40 0.29
0.30
0.20
0.10
0.00
2003 2004 2005 2006 2007
Years

Interpretation
A high cash ratio indicates that the firm is not using its cash to its best advantage. A
cash ratio that is too low could indicate an immediate problem with paying bills.

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