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ANALYSIS OF FOOD SECTOR IN PAKISTAN

Submitted To:

Mam Humaira Shahid

Submitted By:

Aiman Ismail Sameen Hussain Hamna Ejaz Iqra Shaqat Zoobia Arshad

M08BBA037 M08BBA061 M08BBA067 M08BBA060 M07BBA015

ACKNOWLEDGMENT
First of all we offer our humblest sincerest thanks to Almighty Allah, the Gracious, Compassionate, Beneficent and the Merciful Who bestowed us the ability to perceive and pursue higher ideas of life. It is one of infinite blessing of God that bestowed us with the potential and ability to complete the present project in time. We humble pay our respect and praise the Holy Prophet (P B U H) who is the originator, source of knowledge and greatest social reformer and put lesson for all humanity, those spiritual, ethical and moral guidelines enlightened our soul. It is a matter of great honor and pleasure for us to express our ineffable gratitude and profound indebtedness to our honorable teacher Mam Humaira Shahid for her kind supervision, valuable suggestions, humble guidance, and untiring help and in exhaustive energy to steer forth us.

TABLE OF CONTENTS

Rafhanmaize Co Limited National Foods Limited Murree Brewery Company Limited Shezan International Limited Mitchells Fruits Farm Limited
STATUS OF FOOD INDUSTRY IN PAKISTAN

1-13 14-24 25-33 34-43 44-51


52

Sameen Hussain M08BBA061

RAFHAN MAIZE
Rafhan Maize is the pioneer in producing diversified type of sweeteners for multiple applications in more than 50 types of industries. The Company processes thousands of tons of corn every year to produce high quality food ingredients and industrial products.

VISION
To be the premier provider of refined agriculturally based products and ingredients in the region.

MISSION STATEMENT
To grow business consistently through positive relationship with customers to attain full customer satisfaction and to bring continual improvement by adopting only those business practices which add value to our customers, employees and shareholders.

CORE VALUES

Safety

Quality

Integrity

Rrespect

Excellence

OPERATING RESULTS
2010 13913 1838 198.99 2009 11428 1297 140.43

Net sales Income tax after tax Earnings per share

Rs.(million) Rs.(million) Rupees

Company has made a steady progress in its financial performance and managed to improve it net sales by 22% as compared to last year. The profit after tax improved to Rs. 1838 million against Rs. 1297 million of last year. Company retained its strong position as the supplier of choice by focusing on good management practices, commitments to quality and better marketing mix.

BUSINESS REVIEW
Company has engaged in long journey during the last several years to achieve excellence and consistent growth in its business. A major key to success has been continuous development of innovative ingredients to meet customers requirements while reducing their cost. Product portfolio spans three major categories Industrial Food & animal nutrition Health ingredients

INVESTMENT
Company has always followed its policy to invest into new technologies and product innovation which is the core strength of its business. Company is well cognizant of market needs and changing business dynamics to continuously enhance its competencies to meet customers needs with higher product standards. Management is determined to optimize its manufacturing capabilities and to maintain companys position as one of the leading ingredient supplier. Over the years, the plant capacity has gradually been increased and company now operates from two locations with sufficient manufacturing capacity to meet market demand.

HORIZONTAL ANALYSIS OF PROFIT AND LOSS ACCOUNT

2010 %
Sales Net Cost of sales Gross profit Distribution cost Administrative expenses Operating profit Other operating income Finance cost Other operating expenses Profit before taxation Taxation Profit after taxation Earnings per share 21.74 18.04 35.41 12.73 12.56 38.66 4.85 35.30 38.02 39.17 34.59 41.69 Rs 41.70

COMMENTS
SALES NET
The sales have increased 21.74% due to continuous development of innovative ingredients.

Both domestic and internationally demand of Cos products have increased as compared to previous year. An increase in sales is also due to lower trade commission. This positive rate of change in sales indicates Cos effectiveness in managing unit sales and market share.

COST OF SALES
There is 18.04% increase in cost of sales as compared to previous year mainly due to increase in sales. More raw materials are used to bring sales at higher level. Co is continuously focus on product quality and brand loyalty, thats why cost has increased due to purchase of superior raw material.

GROSS PROFIT
Gross profit showed an increase of 35.41% which is mainly due to higher sales. Co has lowered its rent, rates, taxes, repair & maintenance cost. There is proportionate change in the ratio of sales to cost of sales. Thats why gross profit has shown an upward trend.

DISTRIBUTION COST
Distribution cost showed an increase of 12.73% which is mainly due to increase advertisement and sale promotion. Co is spending more money in market research & development which will enable the Co to earn higher profit in future. Co has shown upward trend in production and sales thats why salaries, wages and other benefits of employees increased.

ADMINISTRATIVE EXPENSES
Administrative expenses also increased like distribution cost because the Co has increased production so more labor has been employed and their benefits is increased every year. Co is investing considerable time and money on human resource development in the fields of technology and business administration.

Increase in administrative expenses is also due to higher electricity charges. To cater the market, co is spending more money in IT, networking & data communication.

OTHER OPERATING INCOME


There is an upward trend in other operating income mainly due to Markup on staff loans and profit on bank deposits Profit on sale of scrap Profit on sale of pesticides and seeds This shows better utilization of funds.

FINANCE COST
Finance cost has decreased 35.30% due to less mark up on short term running finance. Cost has decreased is also due to lower bank charges.

OTHER OPERATING EXPENSES


Other operating expenses has increased % due to Workers profit participation fund Workers welfare fund

PROFIT BEFORE TAX


There is an increasing trend in profit before tax because of an increase in operating profit. Lower finance cost also contributes in achieving higher profit after tax.

TAXATION
Tax has increased 34.59% mainly due to Higher purchase of raw material Increased sale volume

PROFIT AFTER TAX


There is higher increase of 41.70% in profit after tax due to higher profit before tax as compared to tax.

Profit increased due to targeted advertising, promotion, innovation & effective supply chain strategies.

EARNINGS PER SHARE


EPS has increased from previous year. Its a good sign because market value of share is increased.

HORIZONTAL ANALYSIS OF BALANCE SHEET


2010 % NON CURRENT ASSETS
Property, plant and equipment Intangible assets Capital work in progress 23.15 1.44

CURRENT ASSETS
Stores and spares Stock in trade Trade debts Loans and advances Trade deposits and short term prepayments Other receivables Cash and bank balances 11.70 168.04 19.51 9.55 14.82 90.99 94.09

CURRENT LIABILITIES

Trade and other payables Markup accrued on shortterm running finance Short term running finance secured Provision for taxation

50.98 3.52 13.61

NONCURRENT LIABILITIES
Deferred taxation 35.12

Share Capital And Reserves


Share capital Reserves 0 24.16

COMMENTS

PROPERTY, PLANT & EQUIPMENT


Property, plant & equipment showed an increase of % due to Cos more investment for bright future. Cos volume of production has increased due to high demand of quality products.

INTANGIBLE ASSETS
In 2009, Co did not have intangible assets.

SAP, software represents financial accounting software which has been acquired during the year.

STORES AND SPARES


Stores and spares showed a growth of 11.70% due to increase plant & machinery. Stores and spares enable the Cos production on continuous basis.

STOCK IN TRADE
There is 168.04% growth in stock in trade as compared to last year. The increase is mainly due to increase in Raw material corn & cobs Work in process Finished goods This positive change is mainly due to increase in raw material. It will save the Co against future price fluctuations in corn & cobs.

TRADE DEBTS
Trade debts have increased 19.51% due to increase unsecured considered goods to customers. It shows Cos trust in their customers.

LOANS AND ADVANCES


Advances increased in 2010 due to increase advances to employees and suppliers of goods & services. Increasing trend in current year is also due to loans to employees. No advances were given to executives and directors of the Co during the year.

TRADE DEPOSITS & SHORT TERM PREPAYMENTS


There is an increasing trend of 14.82% in year 2010 mainly due to increase in security deposits and L/C margin.

RECEIVABLES
Receivables have increased 90.99% due to increase in Receivables considered goods

Receivables from related parties

CASH AND BANK BALANCES


Cash and bank balance decreased 94.09% due to decrease in Cash at bank On current A/C On PLS A/C Cash in hand Trade and other payables There is an increase of 50.98% due to increase in Advances from customers Creditors Security deposits from dealers & contractors Workers welfare fund Employees provident fund Sales tax payable Special excise duty payable Unclaimed dividend

RATIO ANALYSIS
LIQUIDITY RATIOS

Current ratio Quick ratio

2.05 times 0.30 times

ACTIVITY RATIOS
Inventory turnover ratio 3.09 times

DEBT RATIO PROFITABILITY RATIOS


Operating profit margin 21.23%

Net profit margin Earnings per share Return on assets

13.21% Rs 198.99 25.32%

CURRENT RATIO
Cos current ratio for the year 2010 is 2.05:1. It means Co has improved its liquidity.

QUICK RATIO
Cos quick ratio is 0.30:1; it means Cos current assets are 0.30. i.e., if banks give loan to that Co it will receive 0.30 current assets in return of its loan.

INVENTORY TURNOVER RATIO


Cos inventory turnover ratio is 3 for current year that shows Cos improved efficiency.

OPERATING PROFIT MARGIN


There is an increase in this ratio mainly due to Increase in gross profit Higher sales Increase in operating profit

NET PROFIT MARGIN


An increase in this ration is due to Increase in pretax profit Higher sales Higher net profit Earnings per share Return on assets

EARNINGS PER SHARE


EPS has increased from previous year which in Rs198.99 now.

Its a good sign because market value of share is increased.

BUSINESS RISKS, CHALANGES AND FUTURE PROSPECTS


The economic outlook for 2011 remains problematic. Some of the major challenges are Low growth High inflation Rising unemployment Continued fiscal indiscipline Surging food and energy prices Expensive credit to private sector Low foreign investment In view of the prevalent market circumstances, the performance of consuming segments may remain depressed which may impact overall demand for Cos products especially pressure on the cost of maize, utilities and other overhead will continue, however, it may be difficult to include the total impact of cost increases in the price of Cos products. The management of the company is fully aware of the challenges y adopting market driven strategies, optimizing manufacturing capabilities, striving for continued differentiation of Cos products and services and continuing our operational excellence and prudent use of resources. It seems that Cos journey on the track of progress will continue and Co will continue to create value for all stake holders.

AIMAN ISMAIL M08BBA037


NATIONAL FOODS LIMITED
National foods limited (NFL), founded in 1970, and are Pakistans leading multi-category Food Company today with over 250 different products in 12 categories. NFL holds ISO 9001, ISO 22000, and HACCP certifications along with SAP business technology to drive the companys strong commitment to quality and management excellence. NFL is an international brand sold in over 35 countries and it aims to be a Rs. 50 billion company under its Vision 20/20 plan. NFL is dedicated to improving the well-being of society through continuous development of innovative food products and through a wide-ranging corporate social responsibility program.

VISION & MISSION STATEMENT


Our vision is to be a Rs. 50 billion food company by the year 2020 in the convenience food segment by launching products and services in the domestic and international markets that enhance lifestyle and create value for our customers through management excellence at all levels.

CORE VALUES

Passion

Teamwork

Ethics

Customer focus

Leadership

0VER VIEW OF COMPANYS PERFORMANCE

National foods limited have scaled new heights of success and our strong top line growth of 22.96%; with a handsome market share gain; is a testimony that its consolidation phase has borne fruitful results and it has emerged as clear winners in market place. Companys Cost Control & Cost management program has been a great success. It has paid the company attractive dividends and considerable savings in these high inflationary times. The management is very focused in driving out unnecessary costs. During the year many cost saving projects were identified and successfully implemented. The newly cost trackers enable the employees in managing costs efficiently. Company has focused significantly in modernizing its business and building world class processes, which will help it to serve its customers & consumers better in future. Sales & Operational Planning enables the company to plan and make goods more efficiently so that it is able to timely service its customers needs. The integration of key functions of Sales, Marketing, Supply Chain and Finance under one platform has helped the company in deriving synergies. The speed at which the company takes decisions and monitors its performance has increased manifold. It has turned around its exports business and believes that there is great potential for NFL to tap in international markets. It has launched several new brands in these markets to meet consumer needs and is up to date with its customer requirements. It has exciting plans for next year to improve its servicing capabilities. Company believes that its customers are its asset

and therefore it continues to invest and develop this talent. Duo to changing needs, it has reorganized and modernized the organizational structure, adding new positions to the mix. Company has a strong, competitive team with good fusion of fresh talent and its own people, giving it a leading edge in the market place. JCR-VIS has rated National Foods credit quality unchanged for the fifth year in arrow, and they maintained its short term rating as A2 and long term rating as A+.

BRANDS
It has following brands in market: National Tomato Ketchup National Iodized Salt National Pickles National Basmati Rice National Jams National Fruitily Instant Drink Mix National Jellies National Desserts National Spices

BUSINESS RISKS FUTURE OUTLOOK


The effect of global recession and the tough domestic economy has put considerable pressure on all walks of life. While some of these issues are short term, the lingering effects on consumers and customers represent a fundamental shift in value expectations, which will present challenges and opportunities to the foods industry. Elevated consumer and customer value expectations will be a catalyst for the industry to become more efficient in its operations. It has an enviable position of being market leaders, with leading brands, unparallel

manufacturing and distribution systems and an outstanding team of employees. With these assets and its commitment to build a stronger company. It has well-positioned for future long term growth. 2012 will continue to be a challenging year, but company believes that its business is uniquely positioned to deliver as per plan. The economic environment and volatile security situation present challenges, but it will continue to consolidate its portfolio and with careful management of the value equation and appropriate cost reductions measures, accelerate growth further.

HORIZONTAL ANALYSIS OF PROFIT AND LOSS ACCOUNT

2011 % Sales Cost of sales Gross profit Distribution cost Administrative expenses Operating profit Other operating income 22.96 24.79 18.61 (2.64) 9.76 88.53 47.83

Finance cost Other operating expenses Profit before taxation Taxation Profit after taxation Earnings per share

27.27 94.12 125.63 79.45 164.37 Rs.5.56

COMMENTS
SALES
The sales have increased 22.96% due to continuous development of innovative ingredients. Both domestic and internationally demand of Cos products have increased as compared to previous year. This positive rate of change in sales indicates Cos effectiveness in managing unit sales and market share.

COST OF SALES
There is 24.79% increase in cost of sales as compared to previous year mainly due to increase in sales. More raw materials are used to bring sales at higher level. Co is continuously focus on product quality and brand loyalty, thats why cost has increased due to purchase of superior raw material.

GROSS PROFIT
Gross profit showed an increase of 18.61% which is mainly due to higher sales. There is proportionate change in the ratio of sales to cost of sales. Thats why gross profit has shown an upward trend.

DISTRIBUTION COST
Distribution cost showed a decrease of 2.64% which is mainly due to decrease in salaries, wages and other benefits provided to marketing staff.

ADMINISTRATIVE EXPENSES
Administrative expenses increased because the Co has increased production so more labor has been employed and their benefits are increased every year. Increase in administrative expenses is also due to higher printing and stationery charges.

This increase is also due to an increase in provision for doubtful advances and other.

OTHER OPERATING INCOME


There is an downward trend in other operating income mainly due to Decrease in exchange gain-net. Decrease in return on late payments by trade debtors 100% decrease in insurance claim liabilities.

FINANCE COST
Finance cost has increased 27.27% due to More mark up on long term running finance More mark up on export re-finance More mark up on short term loan

OTHER OPERATING EXPENSES


Other operating expenses has increased 94.12% due to Workers profit participation fund Workers welfare fund

PROFIT BEFORE TAX


There is an increasing trend in profit before tax because of an increase in operating profit. Lower distribution cost also contributes in achieving higher profit after tax.

TAXATION
Tax has increased 79.45 % mainly due to Higher purchase of raw material Increased sale volume

PROFIT AFTER TAX There is higher increase of 164.37% in profit after tax due to higher profit before tax as compared to tax. Profit increased due to targeted advertising, promotion, innovation & effective supply chain strategies. EARNINGS PER SHARE Increased which is a good sign because market value of share is increased.

HORIZONTAL ANALYSIS OF BALANCE SHEET

2011 % NON CURRENT ASSETS Property, plant and equipment Intangible assets Long term deposits CURRENT ASSETS Stores, spares and loose tools Stock in trade Trade debts Advances (2.74) 15.32 13.70 (68.70) (2.56) (65.1) (2.86)

Trade deposits and prepayments Other receivables Cash and bank balances SHARE CAPITAL AND RESERVES Issued, subscribed and paid up capital Unappropraited profit NON-CURRENT LIABILITIES Long term financing Liabilities against assets subject to finance lease Deferred tax Retirement benefits obligations CURRENT LIABILITIES Trade and other payables Accrued interest/ mark up Short term borrowings Current maturity of: Long term financing Liabilities against assets subject to finance lease Taxation-provision less payments Due to government

29.6 (96.9) 0.87

0 55.22

748.75 (100) 9 (56.7)

53.9 (9.18) (25.37)

(77.11) 289 (14.50)

COMMENTS

PROPERTY, PLANT & EQUIPMENT Property, plant & equipment showed a decrease of 2.56% due to decrease in capital
work in progress. It means Co. is finishing its work in progress and moving towards finished goods which are a good sign for bright future.

INTANGIBLE ASSETS
Cos intangible assets decreased due to decline in opening net book value of computer software.

LONG TERM DEPOSITS


They have shown a decreasing trend and it can be for the reason that Co is withdrawing its deposits

STORES AND SPARES


Stores and spares showed a fall of 2.74% due to decrease in capital work in progress

STOCK IN TRADE
There is 15.32% growth in stock in trade as compared to last year. The increase is mainly due to increase in Work in process Finished goods This positive change is mainly due to increase in provision for obsolescence.

TRADE DEBTS
Trade debts have increased 13.70% due to increase in debts considered goods to foreign parties. It shows Cos trust in their customers.

ADVANCES

Advances decreased in 2011 mainly due to decrease in advances to employees against salary and expenses.

TRADE DEPOSITS & SHORT TERM PREPAYMENTS


There is an increasing trend of 29.6% in year 2011 Due to increase in deposits that are considered good Due to increase in prepayments

OTHER RECEIVABLES
Receivables have decreased 96.9% due to decrease in Receivables in workers participation fund Receivables from related parties

CASH AND BANK BALANCES Cash and bank balance increased 0.87% due to increase in Cash at bank in foreign currency account LONG TERM FINANCING
This has increased due to advances taken up by the Co. from different banks against mortgage of property of company.

DEFERRED TAX
It showed an increasing trend because of accelerated tax depreciation/amortization.

TRADE AND OTHER PAYABLES


They have increased due to increase In Creditors In Workers participation fund In Workers welfare fund In Advances from customers

ACCRUED INTEREST/MARK UP

It has decreased by 9.18% due to decrease in mark up both on short term and long term borrowings.

SHORT TERM BORROWINGS


They have shown a decreasing trend due to decrease In Murabaha loan In Running finance

DUE TO GOVERNMENT
It has decreased by 14.50% due to decrease in sales tax

RATIO ANALYSIS
2011 LIQUIDITY RATIOS Current ratio Quick ratio ACTIVITY RATIOS Operating cycle No. of days in inventory Receivables turnover Payable turnover Inventory turnover ratio DEBT RATIO Debt to equity ratio 18.39% 1.23 times 0.20 times 138.56 days 149.57times 20.42 times 12.63 times 2.44 times

PROFITABILITY RATIOS Gross profit margin Operating profit margin Net profit margin Return on assets Return on equity INVESTMENT/ MARKET RATIOS Earnings per share Price earning ratio Dividend payout ratio Rs. 5.56 13.48 times 44.93% 28.51% 8.83% 4.80% 8.08% 27.70%

COMMENTS CURRENT RATIO


Cos current ratio for the year 2011 is 1.23:1. It means Co has improved its liquidity.

QUICK RATIO
Cos quick ratio is 0.20:1; it means Cos current assets are 0.20. i.e., if banks give loan to that Co it will receive 0.20 current assets in return of its loan.

INVENTORY TURNOVER RATIO


Cos inventory turnover ratio is 2.44 for current year that shows Cos improved efficiency.

GROSS PROFIT MARGIN


Has increased because sales have increased in proportion to cost of sales.

OPERATING PROFIT MARGIN

There is an increase in this ratio mainly due to Increase in gross profit Higher sales Increase in operating profit

NET PROFIT MARGIN


An increase in this ratio is due to Increase in pre-tax profit Higher sales Higher net profit Earnings per share Return on assets

EARNINGS PER SHARE


EPS has increased from previous year which in Rs5.56 now. Its a good sign because market value of share is increased.

MURREE BREWERY

HAMNA EJAZ M08BBA067

MURREE BREWERY
INTRODUCTION OF THE COMPANY
Murree Brewery Company Limited was established in 1860 and is based in Rawalpindi. It manufactures and sells alcoholic and non-alcoholic products in Pakistan and internationally. It is composed of three divisions known as liquor, glass and tops division amongst which liquor is the most profit making division. The Murree Brewery produces a wide variety of Beer's, Liquor's and non alcoholic products. Our Premium products include Murree's Millennium Beer,

Murree's Classic Beer, Lite Export Pils, Eight and Twelve years old Single Malt Whiskies, Vintage with a blend of a Scotch Grain Whisky, Silver Top Gin, Bolskaya Vodka and Doctor's Brandy.

VISION Our office is in market MISSION STATEMENT


We the people of Murree Brewery co. make personal commitments to first understand our customers requirement then to meet & exceed their expectations, by performing the correct task on time. Continuous improvement. Alignment of our mission & goals. Responsibility and respect of our jobs and each other. Educate one another.

PRODUCTS OF MURREE BREWERY


Alcoholic products Non-alcoholic products Tetra pack juices Glass production

MURREE BREWERY COMPANY LIMITED Profit & loss (2009-2010) Horizontal analysis

Name TURNOVER DUTIES AND TAXES NET TURNOVER COST OF SALES GROSS PROFIT Distribution cost

2010

2009

% 14.56 11.20 16.11 11.71 27.24 11.30 6.10 306.92 43.14 52.64 -43.86 53.90 67.37 46.10 32.83

3,242,649 3,714,896 1,021,934 1,136,363 2,220,715 2,578,533 1,591,385 1,777,770 629,330 159,907 800,763 177,976 119,877 61,839 37,661 527,088 2,507 524,581 209,252 315,329 21.85

Administrative expenses 112,989 Other operating income Other expenses EBIT FINANCE COST 15,197 26,311 345,320 4,466

PROFIT BEFORE TAXATION 340,854 PROVISION FOR TAXATION 125,022 NET PROFIT EPS 215,832 16.45

COMMENTS ON THE ANALYSIS OF PROFIT & LOSS ACCOUNT


The company showed a 16% increase in net turnover, from Rs 3.242 million in FY09 to Rs 3.714 million in FY10. However, the sales trend shows that 16% sales increase over FY09-10 was less than 30% increase over previous years. The company did not perform significantly well in FY10 showing deficiencies in distribution system as well as impact of overall economic downturn.

The cost of sales increased by 11% from Rs 1.591 million in FY09 to Rs 1.777 million in FY10, indicating strong COGS management. The gross profit consequently increased from Rs 629 million in FY09 to Rs 800 million in FY10, registering a 27% increase. Distribution cost and administrative expenses increased by 11% and 6% respectively. Other income increased 307% causing EBIT to increase by 53% from Rs 345 million in FY09 to Rs 527 million in FY10. Finance cost decreased by 44% due to retirement of short term running finance and consequent mark-up savings. However, taxation increased by 67% due to increase in current taxation, leading to an overall 46% increase in net profit from Rs 215 million in FY09 to Rs 315 million in FY10. This was reflected in 33% increase in EPS, from Rs 16.45 per share in FY09 to Rs 21.85 per share in FY10.

TREND ANALYSIS OF MURREE BWERRY BALANCE SHEET (2009-2010)

ASSET SIDE OF BALANCE SHEET

Names Assets Plant & machinery Investment in property Long term advances Long term deposits Current assets Stores spare parts Stock in trade Trade debt Advances Short terms pre payment Interest accrued Other receivable Investments Advance income tax

2010 2997.183 96,405 1,546 3481

2009 2946.626 78207 631 2704

% 1.715 23.2 145 28.6

72,384 595,396 38885 18936 5545 2087 3787 74704 -

102,474 503415 88697 15035 4295 50 2749 69083 25744

-29.36 18.2 -56.15 25.9 29.10 4074 37.75 8.1

Cash and balances

552986

22240

2386

LAIBILITY SIDE OF BALANCE SHEET


Names SHARES CAPITAL & RESERVES Capital reserves Unappropiated profit Surplus on revaluation of property plant & equipment NONCURRENT LIABILITIES Liabilities against finance lease Deferred staff Deferred taxation CURRENT LIABILITIES Current proportion of liabilities of assets finance lease Trade and other payments Tax provision Net profit after taxation 2010 2009 %

144,334 916729 2346692

131213 668588 2358832

9.9 2.4 -5.0

1633 23713 150156

1072 15769 137529

52.3 50 91

1050

2222

52

464485 35544 315329

367596 215837

116 46.09

COMMENTS ON THE ANALYSIS OF BALANCE SHEET OF THE MURREE BWERRY


There is an increase in the plant and machinery by in 2010 by 1% because company has acquired new assets that are increasing the company volume of production. There is increase in the investment because the company is making investment

Long term investment has increased due to the high interest of 11%and are repayable in the period of three years Long term deposits have increased it is +ve sign for the company There is downfall in the spare tools because company have disposed off the spare parts of the old machinery The stock in trade has decreased because company has acquired more raw materials to increase its volume of production by selling its finished goods. Trade in debt is decreased because the money is not being recovered and the company has to create a provision for doubtful goods. There is an increase in advances held for trading because company has increased some funds to invest in market. Cash and bank balances have increased it is positive impact on the company due to large rate of interest on the accounts maintained in the foreign currency with the bank. Other receivables have increased due to the increase in pension fund of the company. There is an increase in the reserves it is a +ve sign for the company because the shares are being traded actively. Shareholder have confidence in the company Unappropiated profit have increase because the depreciation is value is added to it Thats why there is a decrease is the surplus of revaluation of asset. Liabilities have increased because company is paying lease for the assets it has acquired to increase its business Deferred staff liabilities have increased because company employees are contributing towards the fund of retirement. Company has made a provision for it too. Trade and other payable have increased due to the increase in accrued liabilities and advances from customers. In 2010 the company has made provision for the taxation. NPAT have increased because the company has earned profit on the sales it is a+ ve for the company.

RATIO ANALYSIS OF MURREE BREWERY OF 2010 AND 2009 Name of ratio


Gross Profit Margin Operating Profit Margin Pretax Profit To Sales

2010
31.05% 9.72% 14.12

2009
28.34% 12.23% 10.5%

After Tax Profit To Sales Return On Equity Current Ratio Debit Equity Ratio Asset Turnover Ratio Days Of Inventory Maintained Days A/C Receivable

8.4% 8.33% 2.72% 0.18% 0.58 120.57 Days 5.43 Days

6.6% 6.10% 2.79% 0.15 % 0.55 114.23days 11.760days

Reasons for the Ration Analysis


The gross profit margin increased from 28.34% in FY09 to 31.05% in FY10 indicating the efficient management of cost of goods sold. Operating profit margin increased from 9.72% to 12.23% over the same period. The increase in pre tax profit shows that there is increase in the other operating income. It is positive sign for the company. After tax profit has also increased due to the increase in massive increase in the sales, volume of production in all three division have also increased. Major increase in liquor production. The profitability ratio shows that company is in profit and have increased volume of sale. The company is generating profit and have a sound position in market. Return on equity has increased due to the increase in NPAT, it is also positive sign for the company, shareholders have interest in the equity of the company because it share are maintain its value in the market. The current ratio fell slightly from 2.79 in FY09 to 2.72 in FY10. Due to the increase in liabilities of the company as compared to the previous years. Liabilities have majorly increased because of the increase in trade in other payables and this year provision for tax is also created. The liquidity position of company remains strong. Debit equity ratio have also increased because slightly because the company have taken long term loans for the creation of asset. It is the positive sign and the company is having the faith of its creditors. The solvency position is good. Assets turnover ratio increase shows increase it is + ve for the company. Inventory turnover increased from 114.23 days in FY09 to 120.57 days in FY10. This indicates that FY10 was an inefficient year with respect to inventory management. The day sales outstanding decreased from 11.76 days in FY09 to 5.43 days in FY10, signifying stronger receivables management in FY10.

These ratios show that the company is generating sufficient sales, given in the investment in total assets and the shareholders' equity put into the company.

CONCLUSION ON MURREE BREWERY


o Though there is decrease in the liquidity ratio of the company but they have faith of their shareholder. o The market value of share of the company has improved it can be seen that the company is earning profit. o Company has also declared a cash dividend of @50% and 20% bonus shares on the existing capital which shows that company is performing very well. o They have also maintained their exports and earned profit. o In the end it can be said that company has consistently improving and have a better outlook in future.

RISKS TO THE COMPANY


The company being a liquor producing co. in Pakistan has to bear some fundamentalist view of the Muslims. The ups and down in the political sector Export barriers The ups and downs in the economy High inflation trend prevailing in the country. Inefficient trade policy. The company has to control his costs Has to bulid new promotion a strategy for the juice because of its competitors.

ZUBIA ARSHAD M07BBA015


SHEZAN INTERNATIONAL LIMITED The Shezan International Limited was incorporated on May 30, 1964 as a Private Limited Company. Shezan International Limited was conceived as a joint venture by the Shahnawaz Group, Pakistan and Alliance Industrial Development Corporation, U.S.A. in 1964. Shezan is the largest food processing unit having developed and installed the capacity to meet the country's local as well as export needs. In 1971, Shahnawaz group purchased all the shares of Alliance Industrial Development Corporation with the permission of the Government of Pakistan. In 1980-81 a separate unit was installed in Karachi. Shezan International's Head Office is Located in Lahore

VISION To be known as leader of quality products in the region. Dedication to quality is a way of life at our company. In its a c t i v i t i e s t h e c o m p a n y w i l l p u r s u e g o a l s a i m e d a t t h e achievement of profitable business .these results will be d e r i v e d f r o m t h e d e d i c a t e d e f f o r t s o f e a c h e m p l o y e e i n conjunction with supportive participation from management at all levels of the company. MISSION STATEMENT Our mission is to provide the highest quality fruit and vegetables related juices and products to retail and food service customers. We want to be the recognized industry leader in quality and service, providing more than expected for our customers, employees and stakeholders. We will accomplish this by maintaining a tradition of pride in our products, growth through innovation, integrity in the management of our business, and commitment to Team Management and Quality Improvement Process.

HORIZONTAL ANALYSIS OF PROFIT AND LOSS ACCOUNT

Sales Cost of sales

2011 % 16.40 17.20

Gross profit Distribution cost Administrative expenses Operating profit Other operating income Finance cost Other operating expenses Profit before taxation Taxation Profit after taxation Earnings per share

14.11 7.81 13.02 27 (32.46) 55.51 26.01 21.55 16.40 24.00 Rs 24

COMMENTS SALES The sales have increased 16.40% due to continuous development of innovative ingredients. Increase in sales shows the increased demand of Cos products Both domestic and internationally compared to previous year.

This positive rate of change in sales indicates Cos effectiveness in managing unit sales and market share. COST OF SALES There is 17.20% increase in cost of sales which is mainly due to increase in sales. More raw materials are used to bring sales at higher level. Co is continuously focusing on product quality and brand loyalty, thats why cost has increased due to purchase of superior raw material. GROSS PROFIT Gross profit showed an increase of 14.11% which is mainly due to higher sales. There is proportionate change in the ratio of sales to cost of sales. Thats why gross profit has shown an upward trend. DISTRIBUTION COST Distribution cost showed an increase in value to 7.81% which is mainly due to increase in salaries, wages and other benefits provided to marketing staff. ADMINISTRATIVE EXPENSES Administrative expenses increased 13% because the Co has increased production so more labor has been employed and their benefits are increased every year. Increase in administrative expenses is also due to higher printing and stationery charges. This increase is also due to an increase in provision for doubtful advances and other.

OTHER OPERATING INCOME There is an downward trend in other operating income (32.46) mainly due to Decrease in exchange gain-net. Decrease in return on late payments by trade debtors 100% decrease in insurance claim liabilities. FINANCE COST Finance cost has increased 55.51% due to More mark up on long term running finance More mark up on export re-finance More mark up on short term loan

OTHER OPERATING EXPENSES Other operating expenses has increased 26.01% due to Workers profit participation fund Workers welfare fund PROFIT BEFORE TAX There is an increasing trend in profit before tax 21.11% because of an increase in operating profit. Lower distribution cost also contributes in achieving higher profit after tax.

TAXATION Tax has increased 16.40 % mainly due to Higher purchase of raw material Increased sale volume

PROFIT AFTER TAX There is higher increase of 24% in profit after tax due to higher profit before tax as compared to tax. Profit increased due to targeted advertising, promotion, innovation & effective supply chain strategies. EARNINGS PER SHARE EPS has increased from previous year. Its a good sign because market value of share is increased.

HORIZONTAL ANALYSIS OF BALANCE SHEET 2011 % NON CURRENT ASSETS

Property, plant and equipment Investment in associates Investment available for sale Long term deposits CURRENT ASSETS Stores, spares and loose tools Stock in trade Trade debts Advances Trade deposits and prepayments Accrued financial payments Income tax recoverable Cash and bank balances Total current Assets SHARE CAPITAL AND RESERVES Issued, subscribed and paid up capital Reserves Unappropraited profit NON-CURRENT LIABILITIES Liabilities against assets subject to finance lease Deferred tax CURRENT LIABILITIES 9.7 20.32

1.4 (0.20) 40.50 (11.80)

(115.53) 27.30 18.31 13.62 (23.83) (36.73) (3.83) (20.42) 21.11

(175) 6.8

Trade and other payables Accrued interest/ mark up Short term borrowings Current position of liabilities against Assets subject to lease Taxation-provision less payments Total Liabilities

18.98 55.21 55.45

12.88 7.23 22.22 COMMENTS

PROPERTY, PLANT & EQUIPMENT Property, plant & equipment showed an increase of 1.40% due to increase in capital work in progress. INTANGIBLE ASSETS Cos intangible assets decreased due to decline in opening net book value of computer software. LONG TERM DEPOSITS They have shown a decreasing trend and it can be for the reason that Co is withdrawing its deposits STORES AND SPARES Stores and spares showed a fall of 15% due to decrease in capital work in progress STOCK IN TRADE There is 27.31% growth in stock in trade as compared to last year. The increase is mainly due to increase in Work in process Finished goods This positive change is mainly due to increase in provision for obsolescence.

TRADE DEBTS Trade debts have increased 18% due to increase in debts considered goods to foreign parties. It shows Cos trust in their customers. ADVANCES Advances increased in 2011 mainly due to increase in advances to employees against salary and expenses. TRADE DEPOSITS & SHORT TERM PREPAYMENTS There is an decreasing trend of 23.8% in year 2011 Due to decrease in deposits that are considered good Due to decrease in prepayments ACCRUED FINANCIAL INCOME Accrued financial income have decreased 36.7% due to INCOME TAX RECOVERABLE Income tax recoverable has decreased to 3.8% in 2011. CASH AND BANK BALANCES Cash and bank balance decreased 20.4% due to decrease in Cash at bank in foreign currency account TRADE AND OTHER PAYABLES They have increased 18.9% due to increase In Creditors In Workers participation fund In Workers welfare fund In Advances from customers

ACCRUED INTEREST/MARK UP It has decreased by 55.2% due to decrease in mark up both on short term and long term borrowings.

SHORT TERM BORROWINGS They have shown a increasing trend due to increase In Murabaha loan In Running finance PROVISION FOR TAXATION It has shown an increasing trend up to 7.2% RATIO ANALYSIS

LIQUIDITY RATIOS Current ratio Quick ratio ACTIVITY RATIOS Inventory turnover ratio Days Account Receivables DEBT RATIO PROFITABILITY RATIOS Operating profit margin Net profit margin Earnings per share Return on assets CURRENT RATIO Cos current ratio for the year 2011 is 1.64:1. It means Co has improved its liquidity. 5.9% 3.33% Rs 23.43 72.2% 0.03 0.51 1.64 0.36

QUICK RATIO Cos quick ratio is 0.36:1; it means Cos current assets are 0.36. i.e., if banks give loan to that Co it will receive 0.36 current assets in return of its loan. INVENTORY TURNOVER RATIO Cos inventory turnover ratio is . for current year that shows Cos improved efficiency. OPERATING PROFIT MARGIN There is an increase of 5.9% in this ratio mainly due to Increase in gross profit Higher sales Increase in operating profit NET PROFIT MARGIN An increase of 3.33% in this ratio is due to Increase in pre-tax profit Higher sales Higher net profit Earnings per share Return on assets EARNINGS PER SHARE EPS has increased from previous year which in Rs23.43 now. Its a good sign because market value of share is increased.

BUSINESS RISKS, CHALANGES AND FUTURE PROSPECTS The economic outlook for 2011 remains problematic. Some of the major challenges are

Low growth High inflation Rising unemployment Continued fiscal indiscipline Surging food and energy prices Expensive credit to private sector Low foreign investment In view of the prevalent market circumstances, the performance of consuming segments may remain depressed which may impact overall demand for Cos products especially pressure on the cost of maize, utilities and other overhead will continue, however, it may be difficult to include the total impact of cost increases in the price of Cos products. The management of the company is fully aware of the challenges y adopting market driven strategies, optimizing manufacturing capabilities, striving for continued differentiation of Cos products and services and continuing our operational excellence and prudent use of resources. It seems that Cos journey on the track of progress will continue and Co will continue to create value for all stake holders.

IQRA SHOUKAT M08BBA060


MITCHELLS FRUITS FARM LIMITED Mitchells is the oldest food company in Pakistan. It was established in 1933 by Francis J. Mitchell under the name of Indian Mildura Fruit Farms Ltd. After the country gained

independence in 1947, the company's name was changed to "MITCHELLS Fruit Farms Ltd." with the brand name of "MITCHELLS". Mitchells is the only major food company in Pakistan today with fully integrated operations having its own growing and processing facilities at one location. Modern high-volume industries equipment, professional management and a trained workforce all combine to ensure that Mitchells continues its dominance as the innovator, market leader and trend setter. In this regard a major step was taken in 1998, when Mitchells became the first food company in Pakistan to achieve ISO 9001 accreditation, thus becoming more competitive on the international stage also. Countrywide sales are managed by fully computerized and inter-linked regional sales offices ensuring a smooth distribution system with nationwide coverage. Highly qualified executives, using modern management tools, handle marketing, commercial, financial and accounting functions from the Head Office in Lahore.

VISION & MISSION STATEMENT

To be competitive in the growing market as the quality managed company. To be a Leader in the markets we serve by providing quality products and efficient services to our consumers while learning from their feedback to set even higher standards for our products. To be a Company that continuously enhances its superior technological competence to provide innovative solutions and superior products as per requirement of the market place. To be a Company that attracts and retains outstanding people by creating a culture that fosters openness and innovation, promotes individual growth, and rewards initiative and performance.

OVERVIEW OF COMPANYS CURRENT POSITION:


Modern trade results in boost u of exports by 8%. There is an increase in operating profit margin. There is less increase in financial charges due to sound management and improve supply chain. After tax profit for the year is increased. After discounting some growth of the non-performing products of the companys sales growth for the year end is almost 30%, the transactions between the related parties are made at arms length prices. As a matter of economic and social problems, company is facing a countries poor economic condition. As a result the manufacturing operations with frequent electricity and gas outages admit low economic growth together with high inflation remained an ending challenge.

HORIZONTAL ANALYSIS OF PROFIT AND LOSS ACCOUNT

sales Cost of sales Gross profit Administration expenses Distribution expenses Other operating expenses Other operating income Profit from operations Finance cost Profit before tax Taxation Profit for the year Earnings per share

2011 % 30.3 30.42 29.9 9.4 34.8 18.66 45.17 37.15 1.98 56.26 52.68 58.01 58.02

COMMENTS
SALES: Sales have increase for 2011 due to increase in selling price. People have confidence over the company. Brand loyalty is present Exports of the companys product for the year have increase.

COST OF SALES: Due to inflation rises of raw material has increased. As sales volume increase, cost of production also increased. Superior products demand.

GROSS PROFIT: As the size of sales increased the gross profit for the company also rises. There is proportionate change in the ratio of sales to cost of sales. Thats why gross rofit has shown an upward trend.

ADMINISTRATIVE EXPENSES: Administration expenses increased because the Co has increased production so more labor has been employed and their benefits are increased every year. Employees wages also increased due to inflation.

DISTRIBUTION EXPENSES: As the sales of every single product has increased due to inflation. The marketing expenses of the company raise so much. Company should take measure in order to cover these expenses.

OTHER OERATING INCOMES: Exchange gain has increase in 2011. There is an increase in scrap sales of the company. Others sources of companys also shows an upward trend.

OTHER OPERATING EXPENSES: Workers profit participation funds have increased. Workers welfare fund has also increased. While the donation by the company decreases for current year.

FINANCE COST: There is an increase of almost 2%. Markup on short term finance reduces. There is an increase in workers participation fund. There is an increased in bank and other charges of the company.

TAXATION: Taxation of the company has increased by 52%. Majorly the current portion of the company increased by many times. As the sales volume and prices of raw material increases due to which the amount of tax also increased.

PROFIT BEFORE TAX

There is an increasing trend in profit before tax because of an increase in operating profit.

Lower distribution cost also contributes in achieving higher profit after tax.
EARNINGS PER SHARE EPS has increased from previous year. Its a good sign because market value of share is increased

HORIZONTAL ANALYSIS OF BALANCE SHEET


2011 % NON CURRENT ASSET Property, plant and equipment Intangible assets Long term loans and deposits Biological assets CURRENT ASSETS Stores, spares and loose tools Stock in trade Trade debts Advances, deposits, repayments and other receivables Cash and bank balances Capital and reserves Reserves Un appropriated profit NON CURRENT LIABILITIES Deferred liabilities CURRENT LIABILITIES Short term running finances-secured Credits, accrued and other liabilities Accrued finance cost on short term running finances Contingencies and commitments Total equity and liabilities 6.30 51.5 -----3.74

(25.2) 35.14 55.3 (33.58) 67.08

------21.6

5.1

(7.09) 62.22 (35.3) 18.53 16.45

COMMENTS
UN APPROPRIATED PROFIT: There is an increase of 21.6%. Its only because of increase in fund for the employees by the company.

DEFERRED LIABILITIES: Deferred taxation for the 2011 has been decrease. Retirement and other benefits for the employees have been increased.

CREDITS ACCURRED AND OTHER LIBILITIES: There is an increase in credit liability because of o o o o Increase in trade creditors. There is an increase in advances from customers. Workers profit participation fund also increased. Workers welfare funds also increases.

SHORT TERM RUNNING FINANCES-SECURED: There is a decrease in short term liabilities of the company. Its good sign that company is paying off its current liabilities.

PROPERTY, PLANT AND EQUIPMENT: There is an increase in capital work in progress. Operating fixed assets have also been increase.

INTANGIBLE ASSETS: There is an increase in intangible assets due to increase in administration expenses. Net book value of the assets has been increased.

LONG TERM LOANS AND DEPOSITS: There is no long term loans and deposits of the company in 2011. Its a good sign, as company is efficient in recovering its long term assets.

BIOLOGICAL ASSETS:

There is an increase in biological assets of the company. As lives stocks and no of trees have been increased.

STORES, SPARES AND LOOSE TOOLS: There is a decrease in the value of stores, spares and loose tools. Large provision of obsolete items is deducted.

STOCK IN TRADE: There is an increase in stock in trade due to o Increase in raw material amount. o Increase in packing material. o There is also an increase in finished goods.

TRADE DEBTS: There is an increase in trade debts. As considerable doubtful has been increased.

ADVANCES, DEPOSITS AND PRE PAYMENTS: There is a decrease in advances of the company. Opening charges have also been reduced.

CASH AND BANK BALANCES: There is an increase in cash and bank balance of the company. There is an increase of balances in current account in 2011.

RATIO ANALYSIS:

2011 % Profitability ratio Operating margin profit Net profit margin Earning per share Return on asset Liquidity ratio Current ratio Quick ratio Debt equity ratio Activity ratio Asset turnover ratio Days inventory maintained Days a/c receivable 8.16 4.09 14.57 9.6 1.33 times 0.34 times 24.6 2.34 times 6.79 12.8 COMMENTS:

2010 % 7.75 3.37 9.22 7.07 1.27 times 0.36 times 24.91 2.09 times 2.50 10.8

OPERATING PROFIT MARGIN: There is an increase in operating profit margin. The gross profit margin plus income from other sources also been increased. There is a proper management and low administration expenses as compare to other companies.

NET PROFIT MARGIN: Taxation amount increase due to increase in sales. The profit margin also increases by 58%.

EARNING PER SHARE: There is an increase in earnings per share. As the profit of the company increases for the year, the earning per share of the company rises by 58%

RETURN ON ASSETS:

For the year 2011 the return on assets increased from 7 to 9.6%. Earnings for the common share holder increased greater as compare to the increase in fixed assets.

CURRENT RATIO: There is an increase in current ratio of the company. There is an increase in current assets as compare to the current liabilities.

QUICK RATIO: There is a decrease in quick ratio of the company. Small decrease in quick ratio, due to decrease in the value of inventories. Decrease in the value of inventories is a good sign for the company.

RETURN ON EQUITY: A very positive increase in the ratio of return on equity. It will gain the confidence of investors.

DEBT EQUITY RATIO: There is a decrease in debt equity ratio. Its a good point for the company, as its long term debts reduces by 0.31%.

FINANCIAL RISK MANAGEMENT: The companys activities expose it to a variety of financial risk, market risk, credit risk and liquidity risk. The companys overall risk management programmed focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance. Currently the company foreign exchange risk expose is restricted to the amounts receivable/ payable from/ to the foreign entities. The company has no significant long term interest bearing assets. The company interest rate risk arises from short term borrowing. Borrowings obtained at variable rates expose the company to cash flow interest rate risk. The company manages liquidity risk by managing sufficient cash and the availability of finding through adequate amount of committed credit facilities. Companys credit risk for last year has been decrease.

STATUS OF FOOD INDUSTRY IN PAKISTAN


According to the Census of Manufacturing Industries there were 822 units engaged in the manufacture of Food and Beverages. According to the UNIDO (United Nations Industrial Development Organization) it is the largest manufacturing industries of the country. Value of production stood at Rs.46.170 billion. Food processing is a relatively capital intensive industry. The share of food in the manufacturing industry is declining. It was 32.66 per cent in 20092010. The growth rate in the food industry has been estimated at 7.46 per cent per annum. The most rapidly growing items are dairy products fish processed, bakery items, sugar, biscuits and confectioneries, fruit juices and other soft beverages. Rapid export growth has characterized fish preparation, fruit preserves, dry fruits, some beverages and sugar, and honey preparation. Food products (except rice) do not however, make up a significant proportion of Pakistani exports and there is a considerable potential for expanding such exports, specially to Europe and the Gulf region.