COMPANY LAW PROJECT

NAME: BASEER ASLAM

CLASS: BSAF 7D
COURSE: COMPANY LAW

SUBMITTED TO: SIR HAKIM ALI

 “ABBOTT LABS PAKISTAN LTD”

INTRODUCTION:

VISION: “To be the most admired healthcare company in Pakistan.”

MISSION: “To deliver consistently superior products and services which contribute
significantly to improve the quality of life of consumers.”

NATURE OF BUSINESS: Abbott Labs Pakistan Ltd is a public limited corporation which is
listed on the Pakistan Stock Exchange (PSX) market by the code name “ABOT”.

BRIEF HISTORY OF THE COMPANY: Abbott Laboratories Pakistan Limited (the

Corporation) is a public limited company formed in Pakistan on July 02, 1948, specializing in
the production of medications and health management. Its shares are traded on the Pakistan
Stock Exchange. Abbott began operations in Pakistan in 1948 as a marketing subsidiary of its
parent firm in the United States. In Karachi, the firm has two manufacturing facilities: Landhi
and Korangi. Pain management, anesthetics, diabetic treatment, medical nutrition, and anti-
infectives are among the products produced by the company. It sells both its own-brand
medicines and branded generic pharmaceuticals.
ORGANOGRAM:
PRODUCTS: Following are their main products that Abbott Labs Pakistan Ltd deals in
 Diabetes Care
 Diagnostics
  Nutrition
 Pharmaceuticals

NUMBER OF EMPLOYEES: 1,469 EMPLOYEES

CORPORATE GOVERNANCE:
a. Board Independence YES
b. Gender Diversity YES
c. Ownership MUNIR A. SHAIKH(Chairman), SYED ANIS
AHMED(CEO), ESHAN ALI MALIK(Director),
AYLA MAJID(Director), MOHSIN ALI
NATHANI(Director), MUHAMMAD ANJUM
LATIF RANA(Director), SEEMA
KHAN(Director)
d. Women on board YES
e. CEO duality YES

SUSTAINABILITY:
a. Produce sustainability report YES
b. Specialized sustainable committee NOT AVAILABLE
c. Research and development YES

ENVIRONMENT MANAGEMENT:
a. Environment Disclosure YES (ZERO WASTE TO LAND-FILL
INITIATIVE) ZWLF
b. Climate Change YES

CORPORATE SOCIAL RESPONSIBILITY (CSR):

a. CSR Disclosure YES
b. CSR amount NOT MENTIONED
c. Donations 2017: Rs 4,103,000
2018: Rs 1,000,000
2019: Rs 5,740,000
2020: Rs 4,799,000
CAUSES OF CSR:
Employee health camp, Flu vaccination, Tree plantation, Blood center program, Quality
education, Poverty elimination etc.
They produce sustainability report in their every annual report, very hefty amount also spent
every year by the company in RESEARCH & DEVELOPMENT sector, Abbott makes sure to
focus on sustainability goals like No poverty, Zero hunger, Good health and wellbeing, Quality
education, Clean water and sanitation, Life on land, etc. Environment management according to
Abbott they are completely generating their electricity through solar power, Abbott also assures
that all the waste during the production should be recycled by doing “ZERO WASTE TO
LANDFILL INITIATIVE”, other that WATER CONSERVATION, QUALITY ASSURANCE,
HEALTH & SAFETY is also being considered by Abbott Labs Pakistan. Now moving to the
Corporate Social Responsibility (CSR), the disclosure of CSR is available in every annual report
of the Abbott. Abbott makes sure to donate 2% of their annual profit by looking at the data we
have collected so far Abbott donated the highest amount in 2019 which is approx. 5.8 million
PKR and the lowest is 8.68 lakhs in 2015, the cause of CSR is eliminate poverty, provide quality
education, clean water and sanitation, etc. Abbott makes sure to contribute to world and its
human by giving big donations every year which decreases the poverty in the nation, helps
nation to go green, provide clean water.

FINANCIAL PERFORMANCE:

2022
Years 221.69
Stock Price 36.10%
RI (Return of Individual Company) 0.86%
Market return
7.3
Risk free rate
9,753,839
EBIT (Rupees in '000)
Credit Rating Not Given
Interest Expense (Rupees in '000) 8,498,844
Debt (Rupees in '000) 11,213,109
Cash (Rupees in '000) 6,566,992
Cost of equity (%) 100.22%
Cost of debt (%) 75.79%
Cost of debt after tax (%) 49.27%
Weighted Average Cost of Capital (WACC)
80%

MEASURING INVESTMENT RETURNS:

Years 2022
 Net Profit Margin (%) 13.38%
Return on Equity (%) 34.59%
Return on Assets (%) 21.30%
Dividend Payout (%)
77.19%
EPS (Rupees)

58.19
Price to earnings ratio (Times) 11.77
Interest Coverage Ratio (Times) 96.18

EMPIRICAL ANALYSIS:
Identification of 3 problems related to the efficient use of corporate finance:
 Problem 1: Abbott faced the major problem was COVID-19 in which their sales,
productivity, employment power, etc got decreased.
 Problem 2: By looking at the data we can clearly identify that the cost of debt in 2023 is
75.79% which is absolute high, This shows that company is very risky and not suitable
for investing purpose. Investors are reluctant and they invest in only those companies
which have low cost of debt.
 Problem 3: The third problem is clearly about price to earnings ratio which got decreased
in 2022 (11.77 times) while in the 2021 it was (16.30 times), So it got decreased with a
difference of (4.53 times) which is not a healthy signal for the investor to invest in the
company with decreasing price to earnings ratio.
Actions executed by the company so far to overcome these problems:
 Solution 1: The company took appropriate measures and with complete vaccination of
employees they still able to provide excellent services in those hard times all because of
the cooperative staff and good management.
 Solution 2: The company has significantly taken step to reduce their cost of debt, they
have developed a budget to track their expenses, from now onwards they will pay their
high interest debts first, they will reduce the number of credits they got and don’t take
any more debt.
 Solution 3: The company got solutions to rise price to earnings ratio, they will reinvest
their earnings rather than spending, moreover they will decrease their dividends to boost
the P/E ratio and evaluate the company debt and will reduce it.
Actions suggested by me that the company should initiate:
 Solution 1: The company must be prepared and aware for future disasters, If mishap will
happen in future then what they will do, Employees should be trained and guided
according to the situations.
 Solution2: The Company must reduce its spending on cars, health benefits, etc of
employees, expenditures are the main cause of rise in cost of debt.
  Solution 3: The Company must determine its long term goals, focus on repeat customers,
use effective marketing strategies, review their online presence. These factors will help
them to increase their price to earnings ratio.

CONCLUSION:
Abbott Laboratories Pakistan Ltd has demonstrated a strong commitment to its vision of
becoming the most admired healthcare company in Pakistan, with a mission centered on
consistently delivering superior products and services to enhance the quality of life for
consumers. The company, since its establishment in 1948, has evolved into a prominent player in
the pharmaceutical and healthcare sector of Pakistan, contributing significantly to various aspects
of health management.

Abbott's diverse product portfolio, including diabetes care, diagnostics, nutrition, and
pharmaceuticals, reflects its dedication to addressing a wide range of health needs. The
organization's corporate governance structure, sustainability initiatives, and environmental
management practices align with global standards, emphasizing transparency, gender diversity,
and responsible business conduct.

The company's financial performance, as indicated by key metrics such as stock price, return on
equity, and net profit margin, underscores its position as a financially robust entity. However,
challenges have arisen, notably the impact of the COVID-19 pandemic, leading to decreased
sales and productivity.

Financial analysis reveals concerns about the high cost of debt and a declining price-to-earnings
ratio. Abbott has taken commendable steps to address these issues, including vaccination efforts
to combat the pandemic's effects, implementing measures to reduce the cost of debt, and
strategizing to improve the price-to-earnings ratio.

Moving forward, suggested actions include proactive disaster preparedness, cost-cutting

measures, and a focus on long-term goals and customer retention. These actions, if implemented
effectively, can contribute to Abbott's resilience in the face of uncertainties and enhance its
financial performance. Overall, Abbott Laboratories Pakistan Ltd remains poised to navigate
challenges, leveraging its history, corporate values, and strategic initiatives for sustained success
in the healthcare sector.