LCWU

DEPARTMENT OF MANAGEMENT SCIENCES

LAHORE COLLEGE FOR WOMEN UNIVERSITY

Project topic:
Financial statement analysis of
ITTEFAQ IRON INDUSTRIES LTD:

SUBMITTED BY:
Kaynat Irfan Malik (2025109028)
Asma Shafique (2025109011)
Nida Mashooq (2025109043)
Minha Mumtaz (2025109041)
B. Com 6
SESSION: 2020-2024

SUBMITTED TO:
Dr. Sehrish Ilyas
 Executive Summary
This document presents the financial analysis of ITTEFAQ IRON INDUSTRIES LTD for the years
2017, 2018, 2019, and 2020. The report begins with an overview of the company, including its
mission and vision statement, and highlights its current market position, including share prices,
revenues, and profit margins.
The next section of the report focuses on the horizontal analysis of the company's financial statements
starting with the income statement and followed by the balance sheet. Interpretations of the
horizontal analysis for both statements are provided.
Additionally, the report includes vertical analysis of the income statement and balance sheet for each
year, with their corresponding interpretations.
The ratio analysis section of the report covers liquidity ratios, activity ratios, debt ratios, profitability
ratios, and market ratios, with accompanying bar charts and interpretations. A summary of the ratio
analysis and its interpretations is also provided.
The final section of the report includes recommendations and conclusions based on the financial
analysis.

2
 Table of Content

Overview of Company .................................................................................................. 4

Horizontal analysis of Balance Sheet: .......................................................................... 6
Horizontal analysis of income statement: ..................................................................... 7
Vertical analysis of balance sheet ................................................................................. 9
Vertical analysis of income statement ......................................................................... 10
Ratio Analysis: ............................................................................................................ 12
Liquidity ratio: ............................................................................................................ 12
Activity Ratio .............................................................................................................. 13
Debt Analysis: ............................................................................................................. 16
Profitability Ratio:....................................................................................................... 18
Market Analysis: ......................................................................................................... 22
Summary: .................................................................................................................... 24
Recommendation: ....................................................................................................... 25
Conclusion: ................................................................................................................. 25
Appendix ..................................................................................................................... 26

3
 Overview of Company
The company was founded in 1940 and is headquartered in Lahore, Pakistan. Ittefaq Iron Industries
Ltd. engages in manufacturing and marketing of steel. It offers a range of products such as deformed
bars, girder, T-iron and beam, channel and angel, and steel billets.
Alshafi Group of Companies carries its legacy from Ittefaq Foundries; established by Mian
Muhammad Sharif in early 1940s, from a small foundry to a group of companies having several
sugar, textile, paper and steel mills. After its separation from Ittefaq Foundries during early 1990s;
Alshafi Group inherited Ittefaq Sugar Limited and Brother Steel (Pvt) Ltd. Afterwards Kashmir
Sugar Mills Ltd, Kashmir Feeds Ltd, Alshafi steel (Pvt) Ltd, Ittefaq sons (Pvt) Ltd, Ittefaq Bio Tech
(Pvt) ltd and Kashmir Poultry Breeders (Pvt) Ltd and hatchery farms that later merged in Kashmir
Feeds limited, were established during the period from 1990 to date. The group is now a days actively
working on to unveil its power generation projects with both of its sugar units.
Ittefaq Iron Industries Limited, formerly Ittefaq Sons, is a Pakistani steel bar manufacturer. The
company is specialized in the production of heavy steel sections for residential and industrial
purposes, such as I-beams, H-beams, angles and channels, as well as deformed bars and steel billets.
Ittefaq’s production plant, located on the main Manga Raiwind Road, has an annual installed rolling
capacity of 120,000 MT. It procures scrap from established suppliers mainly from Sweden, UK,
UAE, and Singapore. The company top clients include some of the biggest public sector construction
companies, such as FWO, Descon, Atcon Construction Professional and Zahir Khan & Brothers. The
company’s predecessor Ittefaq Sons (Pvt.) Ltd was incorporated in 2006 by diversified group Al
Shafi Group of Companies, whose businesses include also sugar, textile and paper mills. In 2009
Ittefaq Sons was amalgamated with Al Shafi Steel (Pvt.) Ltd, another steel mill within the same
group, and the new entity was named Ittefaq Iron Industries Limited.

4
Vision:
To contribute to the society by creating better value, innovative technology, high quality steel
products and superior services.

Mission:
Ittefaq Steel aims to proceed on its path to be the leading provider of quality steel products, through
empowerment with safe and environmentally sound practice.

Core Values:
Striving for continuous improvement and innovation with commitment and responsibility: Treating
stakeholders with respect, courtesy and competence; Practicing highest personal and professional
integrity; Maintaining teamwork, trust and support with open and can did communication; and
Ensuring cost consciousness in all decisions and operations.

Quality:
Ittefaq iron industries limited is committed to supply quality products strictly as per customer
requirement. They deliver quality products that exceed customer expectations. Quality assurance
laboratory installed is one of the most modern laboratories in Pakistan equipped with the following
testing facilities required for quality production of steel and R & D purpose for further advancement
in the relevant field.

Meritocracy:
To recruit on merit: reward and recognize on performance.

Excellence:
We continuously persue operational efficiencies and process improvements.

Integrity:
To embrace and promote strong ethical and moral principles.

Safety:
Committed to providing a safe working environment for our associates.

5
 Horizontal analysis of Balance Sheet:
HORIZONTAL
ANALYSIS OF
BALANCE SHEET 2018vs2017 2019vs2018 2020vs2019
Share Capital & Reserves

Issued Subscribed & Paid

up Share Capital 0.00% 10.00% 0.00%
Capital Reserves 0.00% 0.00% 0.00%
Equity portion of Sponsers
Loans -28.39% -100.00%
Equity portion of loan from
directors 346.50%
Unappropriate Profit 40.07% 9.71% -14.85%
Surplus on Revaluation of
Fixed Assets 206.89% -10.89% -4.46%
24.69% 3.89% -2.92%
Non-Current Liabilities
Sponsers loan-subordinate 9.00% -100.00% -
Deferred liabilities 26.54% -79.39% 29.41%
Long term finances - - -31.19%
Lease liabilities - - -
Deferred taxation - - 9.62%
15.18% 10.60% -3.48%
Current liabilities
Trade and other payables -15.57% 28.53% -2.72%
Finance cost payable -1.58% -100.00%
Short term borrowings 30.97% 0.58% 11.87%
Current portion of long
term liabilities -100.00%
Current portion of lease
liabilities - - -
Unclaimed dividend - - -40.43%
Mark-up accrued on
borrowing -8.40%
8.75% 11.61% 7.08%

Contingencies and
Commitments
Total equity and liabilities 19.21% 6.48% -0.10%
Assets
Non-current assets
Property, plant and
equipments 33.03% -3.91% 9.67%
Capital W.I.P 264.32% -100.00% -
Long term security deposits -1.hhhtrhtrth55% 0.87% 0.00%
Right-of-use aasets - - 0.00%
33.02% -4.41% 14.11%
Current assets
Stores,spares & loose tools 81.48% -9.62% 35.66%
Stock in trade 73.39% -6.31% -30.53%

6
 Trade debts - considered 21.55% 34.70% 45.10%
good
Advances, depositts, 28.19% 111.08% -32.46%
prepayments & other
receivables
Taxes Refundable 176.59% -17.86% 162.53%
Cash & Bank balances -86.29% -10.69% -43.25%
14.15% 11.13% -5.32%
Total Assets 19.21% 6.48% -0.10%

Interpretation:
In 2020 vs 2019 total equity is -2.92% it mean company’s liabilities exceed its assets. In 2020
vs 20219 non-current liabilities show a decline as compared to 2019 vs 2018 and 2018 vs 2017
means company pay off their liabilities so that’s why company is showing a negative growth
in non-current liabilities. Current liabilities are in positive percentage in 2020 vs 2019 but are
in less as compared to 2019 vs 20218 and 2018 vs 2017 it means company pay off many current
liabilities during 2020 vs 2019. In 2020 vs 2019 the total non-current assets show a growth as
compared to 2019 vs 2018, if a company has a high proportion of non- current assets, this can
be indicator of poor liquidity. 2020 vs 2019 current assets show a growth as compared to 2019
vs 2018 except stock in trade, cash and bank balance and other receivable which means the
company reduce their receivable and this is positive sign. But the total current assets of 2020
vs 2019 showing decline as compared to 2019 vs 2018 and 2018 vs 2017 it means business
current liabilities exceed its current income and assets.

Horizontal analysis of income statement:

2018vs2017 2019vs2020 2020vs2019

Sales 39.53% 9.87% -50.29%
Cost of Sales 37.05% 10.61% -45.42%
Gross Profit 66.71% 3.19% -97.25%
Other operating
income 32.68% -24.92% -29.00%
Distribution and
selling cost 54.73% 54.08% 62.21%
Administrative &
genreral expenses 41.76% 45.49% -11.07%
Other operating cost -1.44%
Finance cost -6.92% 76.64% -65.56%
Workers Profit
Participation Fund 109.59% -100.00% -
Workers welfare fund 143.95% -100.00%
Profit before taxation 108.89% -22.28% -159.24%
Taxation 151.09% -14.37% -61.58%
Profit after taxation 91.55% -26.55% -220.55%
Earnings per share 32.90% -33.50% 21.17%

7
 Interpretation:
In 2020 vs 2019 sales are decline. lIn 2020 vs 2019 gross profit is negative and decline as
compared to 2019 vs 2018 and 2018 vs 2017 which means the cost of production is greater
than total sales. A negative margin can be an indication of a company’s inability to control
costs. In 2020 vs 2019 operating income is negative and decline as compared to 2019 vs 2018
and 2018 vs 2017 it means company spending more money on their operational expenses. In
2020 vs 2019 general and administrative expense is decline with negative sign. Finance cost is
decline in 2020 vs 2019 as compared to 2019 vs 2018 and 2018 vs 2017 it means that company
paid more interest on your loans than received in interest on their investments. In 2020 vs 2019
earning per share is higher than 2019 vs 2018 it mean that a company is more likely to have
extra profit to distribute to its shareholders as dividends as compared to 2019 vs 2018.

8
 Vertical analysis of balance sheet

Equity & Liabilities 2017 2018 2019 2020

Share Capital &
Reserves
Issued Subscribed &
Paid up Share Capital 25.97% 21.78% 22.50% 22.52%
Capital Reserves 15.33% 12.86% 12.07% 12.09%
Equity portion of
Sponsers Loans 0.98% 0.59% - -
Equity portion of
loan from directors - - 0.41% 1.82%
Unappropriate Profit 15.79% 18.55% 19.12% 16.29%
Surplus on
Revaluation of Fixed
Assets 4.55% 11.71% 9.80% 9.37%
62.61% 65.49% 63.90% 62.10%
Non-Current
Liabilities
Sponsers loan-
subordinate 4.83% 4.42% - -
Deferred liabilities 2.63% 2.79% 0.54% 0.70%
Long term finances 4.52% 3.12%
Lease liabilities - - - 0.76%
Deferred taxation - - 2.43% 2.66%
7.46% 7.21% 7.49% 7.24%
Current liabilities
Trade and other
payables 9.39% 6.65% 8.03% 7.82%
Finance cost payable 0.37% 0.30% - -
Short term
borrowings 18.51% 20.34% 19.21% 21.51%
Current portion of
long term liabilities 1.65% - - -
Current portion of
lease liabilities - - - 0.16%
Unclaimed dividend - - 0.24% 0.14%
Mark-up accrued on
borrowing - - 1.12% 1.03%
29.92% 27.29% 28.61% 30.66%
Contingencies and
Commitments
Total equity and
liabilities 100.00% 100.00% 100.00% 100.00%
Assets
Non-current assets
Property, plant and
equipments 26.37% 29.43% 26.56% 29.15%
Capital W.I.P 0.06% 0.17%
Long term security
deposits 0.38% 0.31% 0.30% 0.30%
Right-of-use aasets - - - 1.22%

9
 26.80% 29.91% 26.85% 30.67%
Current assets 0.00% 0.00% 0.00% 0.00%
Stores,spares & loose
tools 2.71% 4.13% 3.51% 4.76%
Stock in trade 28.40% 41.30% 36.34% 25.27%
Trade debts -
considered good 13.46% 13.72% 17.36% 25.21%
Advances, depositts,
prepayments & other
receivables 5.63% 6.06% 12.01% 8.12%
Taxes Refundable 1.01% 2.35% 1.81% 4.75%
Cash & Bank
balances 21.98% 2.53% 2.12% 1.20%
73.20% 70.09% 73.15% 69.33%
Total Assets 100.00% 100.00% 100.00% 100.00%

Interpretation:
The vertical analysis of Balance sheet highlights key elements of the company. Its most
significant assets have always been Cash and Property, plant and equipment, with these assets
representing 100% total asset , Total equity and liabilities also 100%.

Vertical analysis of income statement

2017 2018 2019 2020

Sales 100.00% 100.00% 100.00% 100.00%
Cost of Sales 91.63% 90.00% 90.61% 99.48%
Gross Profit 8.37% 10.00% 9.39% 0.52%
Other operating
income 0.12% 0.11% 0.08% 0.11%
Distribution and
selling cost 0.30% 0.33% 0.46% 1.51%
Administrative &
genreral expenses 0.88% 0.89% 1.18% 2.11%
Other operating
cost 0.40% 0.79%
Finance cost 2.51% 1.67% 2.69% 1.86%
Workers Profit
Participation
Fund 0.24% 0.36% - -
Workers welfare
fund 0.09% 0.16% - -
Profit before
taxation 4.47% 6.70% 4.74% -5.65%
Taxation -1.30% -2.34% -1.83% -1.41%
Profit after 3.17% 4.35% 2.91% -7.06%
taxation
Earning per 0.00% 0.00% 0.00% 0.00%
share

10
 Interpretation:
Income statement of company calculate the revenue and expenses of company the total revenue of
company 100%. Out of 100% of total revenue cost of revenue is 99.48%, out of 100% of total
revenue Gross profit of the company is 0.52%, Operating Profit is 0.11% out of 100% of total
revenue, Out of 100% of total revenue Distribution and selling cost is 1.51%, Out of 100% of total
revenue Administrative & general expenses is 2.11%, Out of 100% of total revenue other operating
cost is 0.79%, Out of 100% of total revenue finance cost is 1.86%, Out of 100% of total revenue
worker profit participation fund is 0, Out of 100% of total revenue workers welfare fund is 0, Out of
100% of total revenue profit before taxation is -5.65%, Out of 100% of total revenue taxation is -
1.41%, Out of 100% of total revenue profit after taxation is -7.06%.

11
 Ratio Analysis:
Liquidity ratio:
Current Ratio
2017 2018 2019 2020
Current Assets 3699007748 4,222,430,519 4,692,213,215 4,442,819,049
Current
liabilities 1,512,100,002 1,644,335,579 1,835,193,101 1,965,106,207
Current Ratio 2.45 2.57 2.56 2.26

Current Ratio
2.60
2.50
2.40
2.30
2.20
2.10
2017 2018 2019 2020
Interpretation:
Include this points in interpretation:
The current ratio of 2017 is 2.45, 2018 is 2.57, 2019 is 2.56 and 2020 is 2.26
The current ratio of Ittefaq iron industries LTD is 2.45 in 2017, 2.57 in 2018, 2.56 in 2019
and 2.26 in 2020
In 2018 and 2019 Current ratio is more favorable.
There has been an increasing trend. This increasing trend implies by referring to the large
value in numerator and small denominator.

Quick Ratio
2017 2018 2019 2020
Quick assets 2,264,020,513 1,734,326,902 2,361,177,541 2,823,363,435
Current
liabilities 1,512,100,002 1,644,335,579 1,835,193,101 1,965,106,207
Quick Ratio 1.50 1.05 1.29 1.44

Quick Ratio
2.00

1.50

1.00

0.50

0.00
2017 2018 2019 2020

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Interpretation:
Include this points in interpretation:
The quick ratio of 2017 is 1.50, 2018 is 1.05, 2019 is 1.29 and 2020 is 1.44.
The quick ratio of Ittefaq iron industries LTD is 1.50 in 2017, 1.05 in 2018, 1.29 in 2019 and
1.44 in 2020.
In 2017 and 2020 Quick ratio is more favorable.
There has been an increasing trend. This increasing trend implies by referring to the large
value in numerator and small denominator.

Activity Ratio
Inventory Turnover
2017 2018 2019 2020
Cost of good sold 4,070,358,212 5,578,257,662 6,809,786,461 3,367,569,092
Inventory 1,434,987,235 2,488,103,617 2,331,035,674 1,619,455,614
Inventory
turnover 2.84 2.24 2.92 2.08

Inventory turnover
4.00

3.00

2.00

1.00

0.00
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The inventory turnover ratio of 2017 is 2.84, 2018 is 2.24, 2019 is 2.92 and 2020 is 2.08.
The inventory turnover ratio of Ittefaq iron industries LTD is 2.84in 2017, 2.24 in 2018, 2.92
in 2019 and 2.08 in 2020.
In 2019 and 2017 Inventory turnover ratio is more favorable.
There has been an increasing trend. This increasing trend implies by referring to the large
value in numerator and small denominator.

13
Average Collection Period
2017 2018 2019 2020
Account
receivables 964,920,424 1,191,738,883 1,884,012,617 2,136,158,416
Sales per day 12,170,144 16,980,820 18,656,949 9,274,314
Average
collection peroid 79.29 70.18 100.98 230.33

Average collection peroid

250.00
200.00
150.00
100.00
50.00
0.00
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The average collection period ratio of 2017 is 79.29 days, 2018 is 70.18 days, 2019 is 100.98
days and 2020 is 230.33days.
The average collection period ratio of Ittefaq iron industries LTD is 79.29 days in 2017, 70.18
days in 2018, 100.98 days in 2019 and 230.33 days in 2020.
In 2017 and 2018 Average collection period is favorable.

Total Asset Turnover

2017 2018 2019 2020
Sales 4,442,102,678 6,197,999,269 6,809,786,461 3,385,124,629
Total assets 5,053,629,761 6,024,369,405 6,414,696,683 6,408,306,473
Total asset
turnover 0.88 1.03 1.06 0.53

Total asset turnover

1.20
1.00
0.80
0.60
0.40
0.20
0.00
2017 2018 2019 2020

14
Interpretation:
Include this points in interpretation:
The total assets turnover ratio of 2017 is 0.88, 2018 is 1.03, 2019 is 1.06 and 2020 is 0.53.
The total assets turnover ratio of Ittefaq iron industries LTD is 0.88in 2017, 1.03 in 2018,
1.06 in 2019 and 0.53 in 2020.
In 2019 and 2018 Total assets turnover ratio is more favorable.

Average Payment Period

2017 2018 2019 2020
Account
payables 474,704,584 400,814,539 515,168,890 501,148,745
Average
purchase per
day 10,896,325 14,281,837 13,433,791 3,780,640
Average
payment period 43.57 28.06 38.35 132.56

Average payment period

140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The average payment period ratio of 2017 is 43.57 days, 2018 is 28.06 days, 2019 is 38.35
days and 2020 is 132.56 days.
The average payment period ratio of Ittefaq iron industries LTD is 43.57 days in 2017, 28.06
days in 2018, 38.35 days in 2019 and 132.56 days in 2020.
In 2018 Average payment ratio is more favorable.

15
Debt Analysis:
Debt ratio
2017 2018 2019 2020
Total liabilities 1,889,344,756 2,078,857,862 2,315,765,188 2,428,946,472
Total assets 5,053,629,761 6,024,369,405 6,414,696,683 6,408,306,473
Debt Ratio 37.39% 34.51% 36.10% 37.90%

Debt Ratio
39.00%
38.00%
37.00%
36.00%
35.00%
34.00%
33.00%
32.00%
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The debt ratio of 2017 is 37.39%, 2018 is 34.51%, 2019 is 36.10% and 2020 is 37.90%.
The debt ratio of Ittefaq iron industries LTD is 37.39%in 2017, 34.51% in 2018, 36.10% in
2019 and 37.90%in 2020.
In 2020 and 2017 Debt ratio is more favorable because they have higher degree of
indebtedness.
Time Interest Earned Ratio
2017 2018 2019 2020
EBIT 5,318,825 7,056,825 5,298,161 3,761,503
Interest 111,407,620 103,693,135 183,160,487 63,087,896
Time interest
earned Ratio 4.77% 6.81% 2.89% 5.96%

Time intrest earned Ratio

8.00%

6.00%

4.00%

2.00%

0.00%
2017 2018 2019 2020

16
Interpretation:
Include this points in interpretation:
The time interest earned ratio of 2017 is 4.77%, 2018 is 6.81% 2019 is 2.89% and 2020 is
5.96%.
The time interest earned ratio of Ittefaq iron industries LTD is 4.77%in 2017, 6.81% in 2018,
2.89% in 2019 and 5.96% in 2020.
In 2018 and 2020 Time interest earned ratio is more favorable.

Fixed Payment Coverage Ratio:

2017 2018 2019 2020
Earnings before interest +lease
payments 5,318,825 7,056,825 5298161 62405637
interest +lease payments
+{(principal+preferred dividend
)*[1/1-T] 157173870.3 159521518.9 770552949.2 428,638,892
Fixed paymemt coverage ratio 0.03 0.04 0.01 0.15

Fixed paymemt coverage ratio

0.20

0.15

0.10

0.05

0.00
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The fixed payment coverage ratio of 2017 is 0.03, 2018 is 0.04 2019 is 0.01 and 2020 is 0.15
The fixed payment coverage ratio of Ittefaq iron industries LTD is 0.03 in 2017, 0.04 in 2018,
0.01 in 2019 and 0.15 in 2020.
All ratios of fixed payment coverage ratio is less than 1.

17
Profitability Ratio:
Gross Profit Margin
2017 2018 2019 2020
Gross profit 371,744,466 619,741,607 639,530,896 17,555,537
Sale 4,442,102,678 6,197,999,269 6,809,786,461 3,367,569,092
Gross profit
margin 8.37% 10.00% 9.39% 0.52%

Gross profit margin

15.00%

10.00%

5.00%

0.00%
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The Gross profit margin ratio of 2017 is 8.37%, 2018 is 10.00% 2019 is 9.39% and 2020 is
0.52%.
The Gross profit margin ratio of Ittefaq iron industries LTD is 8.37%in 2017, 10.00% in
2018, 9.39% in 2019 and 0.52% in 2020.
In 2018 Gross profit margin is more favorable.

Operating Profit Margin

2017 2018 2019 2020
Operating profit 5,318,825 7,056,825 5,298,161 3,761,503
Sales 4,442,102,678 6,197,999,269 6,809,786,461 3,385,124,629
Operating profit
margin 0.12% 0.11% 0.08% 0.11%

18
 Operating profit margin
0.15%

0.10%

0.05%

0.00%
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The Operating profit margin ratio of 2017 is 0.12%, 2018 is 0.11% 2019 is 0.08% and 2020 is
0.11%.
The Operating profit margin ratio of Ittefaq iron industries LTD is 0.12%in 2017, 0.11% in
2018, 0.08% in 2019 and 0.11% in 2020.
In 2017, 2018 and 2020 Operating profit margin is more favorable.

Net Profit Margin

2017 2018 2019 2020
Earning avaliable
for common
stakeholder 57,875,622 145,321,034 198,190,844 238,925,792
Sales 4,442,102,678 6,197,999,269 6,809,786,461 3,385,124,629
Net profit margin 1.30% 2.34% 2.91% 7.06%

Net profit margin

10.00%

5.00%

0.00%
2017 2018 2019 2020

19
Interpretation:
Include this points in interpretation:
The Gross profit margin ratio of 2017 is 1.30%, 2018 is 2.34% 2019 is 2.91% and 2020 is
7.06%.
The Gross profit margin ratio of Ittefaq iron industries LTD is 1.30%in 2017, 2.34% in 2018,
2.91% in 2019 and 7.06% in 2020.
In 2020 Net profit margin is more favorable.

Earning Per Share

2017 2018 2019 2020
Earning avaliable
for common
stakeholder 57,875,622 145,321,034 198,190,844 238,925,792
No of shares of
common
stocholder 131,221,240 131,221,240 144,343,364 144,343,364
Earnings per
share 0.44 1.11 1.37 1.66

Earning per share

2.00

1.50

1.00

0.50

0.00
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The Gross profit margin ratio of 2017 is 0.44, 2018 is 1.11, 2019 is 1.37 and 2020 is 1.66.
The Gross profit margin ratio of Ittefaq iron industries LTD is 0.44 in 2017, 1.11 in 2018,
1.37 in 2019 and 1.66 in 2020.
In 2020 EPS is more favorable.

20
Return On Total Assets
2017 2018 2019 2020
Earning avaliable
for common
stakeholder 57,875,622 145,321,034 198,190,844 238,925,792
Total assets 5,053,629,761 6,024,369,405 6,414,696,683 6,408,306,473
Return on total
assets 1.15% 2.41% 3.09% 3.73%

Return on total assets

4.00%

3.00%

2.00%

1.00%

0.00%
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The Gross profit margin ratio of 2017 is 1.15%, 2018 is 2.41% 2019 is 3.09% and 2020 is
3.73%.
The Gross profit margin ratio of Ittefaq iron industries LTD is 1.15%in 2017, 2.41% in 2018,
3.09% in 2019 and 3.73% in 2020.
In 2020 and 2019 ROA is more favorable.

Return On Common Equity

2017 2018 2019 2020
Earning
avaliable for
common
stakeholder 57,875,622 145,321,034 198,190,844 238,925,792
Common stock
equity 1,312,212,400 1,312,212,400 1,443,433,640 1,443,433,640
Return on
common equity 4.41% 11.07% 13.73% 16.55%

21
 Return on common equity
20.00%

15.00%

10.00%

5.00%

0.00%
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The Gross profit margin ratio of 2017 is 4.41%, 2018 is 11.07% 2019 is 13.73% and 2020 is
16.55%.
The Gross profit margin ratio of Ittefaq iron industries LTD is 4.41%in 2017, 11.07% in
2018, 13.73% in 2019 and 16.55% in 2020.
In 2020 and 2019 ROE is more favorable.

Market Analysis:
Price Earnings Ratio
2017 2018 2019 2020
Market price
per share 32.65 13.98 6.49 6.91
Earnings per
share 0.44 1.11 1.37 1.66
Price earnings
ratio 74.20 12.59 4.74 4.16

Price earning ratio

80.00

60.00

40.00

20.00

0.00
2017 2018 2019 2020

22
Interpretation:
Include this points in interpretation:
The Price earnings ratio of 2017 is 74.20, 2018 is 12.59, 2019 is 4.74 and 2020 is 4.16.
The Price earnings ratio of Ittefaq iron industries LTD is 74.20 in 2017, 12.59 in 2018, 4.7 in
2019 and 4.16 in 2020.
In 2017 P/E is more favorable because investor have greater confidence.

Market Book Ratio

2017 2018 2019 2020
Market price
per share 32.65 13.98 6.49 6.91
Book value per
share 10 10 10 10
Market book
ratio 3.27 1.40 0.65 0.69

Market book ratio

4

0
2017 2018 2019 2020

Interpretation:
Include this points in interpretation:
The Market book ratio of 2017 is 3.27, 2018 is 1.40, 2019 is 0.65 and 2020 is 0.69.
The Market book ratio of Ittefaq iron industries LTD is 3.27 in 2017, 1.40 in 2018, 0.65 in
2019 and 0.69 in 2020.
In 2017 M/E is more favorable.

23
 Summary:
Liquidity:
The overall liquidity of the firm seems to exhibit reasonably stable trend. The firm's Current
ratio liquidity seems to be good in 2018 or 2019 as compare to the 2017 and 2020. The firm's
Quick ratio liquidity seems to be good in 2017 or 2020 as compare to the 2018 and 2019.

Activity:
Ittefaq iron industries LTD inventory appears to be in good shape. Their inventory management
is good. In 2017 and 2018 have good collection period as compared to 2019 and 2020. In 2018
lucky cement has good average payment period. In 2019 and 2018 company has good asset
turnover then 2017 and 2020.

Debt:
In 2020 and 2017, company's debt ratio is favorable because they have higher degree of
indebtedness. In 2018 and 2020 times interest ratio is favorable as compare to the times interest
ratio of 2019 and 2017. All Fixed payment coverage ratio is less than 1.

Profitability:
The gross profit margin was better in 2018 and 2019 than 2017 and 2020. In 2017, 2018 and
2020 operating profit margin is favorable then 2019.In 2020 net profit margin is more
favorable. Ittefaq iron industries LTD EPS is high on 2020 than 2017, 2018, 2019. ROA &
ROE are high in 2020 and 2019 as compared to the 2018 and 2017.

Market:
In 2017 P/E is favorable because investor have greater confidence in Ittefaq iron industries
LTD as compared to the 2018, 2019 and 2020. In 2017 M/E is favorable as compared to the
2018, 2019 and 2020. The P/E and M/B ratios reflect the firms decreased profitability over
2018-20 period.

24
 Recommendation:
Horizontal analysis represents changes over years or periods, while vertical analysis
represents amounts as percentages of a base figure. Horizontal analysis usually examines
many reporting periods, while vertical analysis typically focuses on one reporting period. To
increase owner’s equity company should reduce their liabilities, pay off debts, reduce
operating costs and increase profit margin. Depreciation, depletion or amortization should be
used to reduce the amount of a non-current asset on the balance sheet.

Conclusion:
Ittefaq iron industries LTD has been able to transform itself as a business leader. Their
business is to manufacture iron bars, girders and related products. The company’s rolling mill
can produce structural steel. This has further allowed us to explore new markets and export a
wide range of products globally as a product

25
 Appendix
Balance Sheet
Equity & 2017 2018 2019 2020
Liabilities
Share Capital &
Reserves
Issued Subscribed & 1,312,212,400 1,312,212,400 1,443,433,640 1,443,433,640
Paid up Share
Capital
Capital Reserves 774,507,925 774,507,925 774,507,925 774,507,925
Equity portion of 49,724,864 35,606,842 - -
Sponsers Loans
Equity portion of - - 26,118,927 116,622,256
loan from directors
Unappropriate Profit 797,968,074 1,117,729,263 1,226,215,557 1,044,147,834
Surplus on 229,871,741 705,455,113 628,655,446 600,648,346
Revaluation of
Fixed Assets
3,164,285,004 3,945,511,543 4,098,931,495 3,979,360,001
Non-Current
Liabilities
Sponsers loan- 244,264,194 266,247,972
subordinate
Deferred liabilities 132,980,560 168,274,311 34,675,128 44,874,611
Long term finances - - 290,210,289 199,706,959
Lease liabilities - - 48,618,353
Deferred taxation - - 155,686,670 170,667,342
377,244,754 434,522,283 480,572,087 463,840,265
Current liabilities
Trade and other 474,704,584 400,814,539 515,168,890 501,148,745
payables
Finance cost payable 18,580,147 18,286,947 - -
Short term 935,472,278 1,225,234,093 1,232,283,431 1,378,552,864
borrowings
Current portion of 83,342,994 - - -
long term liabilities
Current portion of - - - 10,025,781
lease liabilities
Unclaimed dividend - - 15,589,883 9,286,705
Mark-up accrued on - - 72,150,897 66,092,112
borrowing
1,512,100,002 1,644,335,579 1,835,193,101 1,965,106,207

Contingencies and
Commitments
Total equity and 5,053,629,761 6,024,369,405 6,414,696,683 6,408,306,473
liabilities
Assets
Non-current assets
Property, plant and 1,332,684,239 1,772,805,148 1,703,511,242 1,868,322,054
equipments
Capital W.I.P 2, 834,248 10,325,712

26
Long term security 19,103,526 18,808,026 18,972,226 18,972,226
deposits
Right-of-use aasets 78,193,144
1,354,622,013 1,801,938,886 1,722,483,468 1,965,487,424
Current assets
Stores,spares & 137,202,627ss 248,995,725 225,053,856 305,300,914
loose tools
Stock in trade 1,434,987,235 2,488,103,617 2,331,035,674 1,619,455,614
Trade debts - 680,207,444 826,766,553 1,113,616,537 1,615,818,104
considered good
Advances, depositts, 284,712,980 364,972,330 770,396,080 520,340,312
prepayments &
other receivables
Taxes Refundable 51,087,429 141,303,942 116,060,882 304,689,641
Cash & Bank 1,110,810,033 152,333,352 136,050,186 77,214,464
balances
3,699,007,748 4,222,430,519 4,692,213,215 4,442,819,049
Total Assets 5,053,629,761 6,024,369,405 6,414,696,683 6,408,306,473

Income statement:
2017 2018 2019 2020
Sales 4,442,102,678 6,197,999,269 6,809,786,461 3,385,124,629
Cost of Sales 4,070,358,212 5,578,257,662 6,170,255,565 3,367,569,092
Gross Profit 371,744,466 619,741,607 639,530,896 17,555,537
Other operating 5,318,825 7,056,825 5,298,161 3,761,503
income
Distribution and 13,216,251 20,450,119 31,509,391 51,111,490
selling cost
Administrative & 38,973,373 55,249,060 80,382,253 71,484,428
genreral expenses
Other operating 27,141,913 26,752,167
cost
Finance cost 111,407,620 103,693,135 183,160,487 63,087,896
Workers Profit 10,673,302 22,370,306 - -
Participation Fund
Workers welfare 4,055,855 9,894,195 - -
fund
Profit before 198,736,890 415,141,617 322,635,013 -191,118,941
taxation
Taxation -57,875,622 -145,321,034 -124,444,169 -47,806,851
Profit after 140,861,268 269,820,583 198,190,844 -238,925,792
taxation
Earning per share 2 2 1 2

27