Final Report Tripack | Capital Structure | Cash Flow Statement

Analysis of Profit/Loss Account,Balance Sheet,Statement in changes in equity and Cash flow statement of any listed


Muhammad Hassaan Ali

Ammad Ahmed Khan

DATED: 17TH April, 2012




Tri-Pack Films Limited (Tri-Pack), a public limited company, is a joint venture between Mitsubishi Corporation of Japan and Packages Limited of Pakistan. Tri-Pack was incorporated in Pakistan in 1993 and commenced commercial production in 1995. The Company is listed on the Karachi, Lahore and Islamabad Stock Exchanges. It has a paid up capital of Rs 300 million and its revenue has exceeded Rs 7.1 billion in 2008.

Credit Rating
The Pakistan Credit Rating Agency (Pvt) Ltd. (PACRA), an affiliate of IBCA Limited, UK has assigned our company a long-term rating of “A+” (single A plus) and a short term rating of “A1” (single A one). This confirms a strong capacity of the company for timely payment of its financial commitments.

Production Facilities
In 1993,Tri-Pack started its operations with one plant having a capacity to produce 5,400 tonnes finished BOPP film per annum. To meet the rising demand of the country and to cater customer needs efficiently in time, the Company decided to go into expansion and added another line of BOPP film in 2001, thus increasing the installed capacity to manufacture BOPP film from 5,400 tonnes to 10,800 tonnes annually. In 2004 the Company installed its third manufacturing line of 16,000 tonnes per annum at Port Qasim Industrial Zone, Karachi. In 2007, the debottlenecking of line 3 increased the production facility by 1,000 tonnas per annum at Port Qasim Karachi. Thus increasing total installed capacity to 27,800 tonnes per annum. In 2008 the Company installed it Cast Polypropylene Film (CPP) manufacturing line of 7,000 tonnes per annum. While selecting plant and equipment, due care was taken to ensure that the new production line would be based on the latest technology available. The enhanced features in our new line of BOPP & CPP have further improved our operational efficiency and provided us with the technical capabilities to fully respond to the expectations of our customers. Biaxially Oriented Polypropylene (BOPP) Film

form fill seal and side weld bag manufacture. CPP offers high gloss. This packaging film is available in four different grades ie Plain. lamination. The principal properties of our products are: Good barrier to moisture Excellent transparent gloss Good printability Good sealability Cast Polypropylene (CPP) Film CPP is an extrusion cast poly propylene film with treatment on one side. and its thickness ranges between 12 to 50 microns. OTHERS PRODUCTS MATT FINISH BOPP FILM MT PLAIN NON HEAT SEALABLE BOPP FILM NS2W SHEET LAMINATION PLAIN NON HEAT SEALABLE BOPP FILM NS1P CIGARETTE GRADE HEAT SEALABLE (HIGH SHRINK) BOPP FILM BNC (HS) COMPOSITE HEAT SEALABLE BOPP FILM BS2P CIGARETTE GRADE HEAT SEALABLE BOPP FILM BNC WEB LAMINATION PLAIN NON HEAT SEALABLE BOPP FILM NS2P HIGH GLOSS PLAIN NON HEAT SEALABLE BOPP FILM NS2HG TRANSPARENT LABEL NON HEAT SEALABLE BOPP FILM NS2PL 3 . Pearlized and Metalized. It offers improved seal strength and excellent sheet flatness for superior performance on high speed sealing equipment either by itself or in laminated form. This film is particularly well suited for coating. Composite.Tri-Pack’s BOPP films are the products of state of the art technology. This film is available in different grades and its thickness ranges from 20-150 micron. low haze and good barrier properties.


Vision To increase the value for our customers. shareholders and employees by maintaining role of market leader in the country while at the same time operating internationally to mark our presence globally. 5 .

6 .

objectivity and financial prudence. rules and regulations of the Government.STATEMENT OF ETHICS  Tri-Pack Films Limited shall endeavor to promote fair business practices and conduct the business with the principles of integrity. Employees must avoid conflicts of interest between their private financial activities and conduct of company business. All managers and supervisors shall be responsible to see that there is no violation of laws within their area of responsibility which proper supervision could have prevented. All employees are expected to adhere to all internal corporate rules and policies in the performance of their jobs. It is the policy of Tri-Pack Films Limited to observe all applicable laws. Accordingly every director and employee will obey the law of the land. The manager and supervisor shall still be responsible if he/she delegates particular tasks.     7 . Any director and employee guilty of violation will be liable to disciplinary consequences.


Value added and its Distribution 9 .

2010 10 .BALANCE SHEET As at December 31.

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Vertical and Horizontal Analysis 12 .

2010 13 .PROFIT AND LOSS ACCOUNT For the year ended December 31.

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2010 15 .STATEMENT OF CHANGES IN EQUITY For the year ended December 31.

2010 16 .CASH FLOW STATEMENT For the year ended December 31.

Summary of Cash Flow Statement 17 .

1) What Cash Flow Statement indicates? A company can use a cash flow statement to predict future cash flow.Let’s see step by step Cash flow from operating activities Cash generated from operation has an increase of about 45. Profit on bank balances which may be in form of interest has been received with an increase of 25. Over all the net cash flow from investing activities has been reduced to 154. which helps with matters in budgeting. When we look at the cash flow statement of Tri Pack by the end of the year December 31st 2010 we find tremendous growth . 18 . For investors.9% from the previous year 2009. However.3 % We can see there is also a increase in staff retirement benefits and income taxes which are paid but due to increase in cash due to operations we are able to see our Net cash inflow from operating activities increased by 418. the better. this is not a hard and fast rule. how much of that cash stems from core operations. the investor can get a very clear picture of what some people consider the most important aspect of a company: how much cash it generates and. the cash flow reflects a company's financial health: basically.432(000) which is an increase of about 46. Cash flow from investing activities Company has not done any major investment its fixed capital expenditure cost has been reduced by 54 %. particularly. Acquisition on intangible has also been reduced by 62. assets and liabilities.046(000). By adjusting earnings. revenues. the more cash available for business operations.3% Sales of some disposed fixed asset have been carried out in which company had some earning of about 3.2%. Sometimes a negative cash flow results from a company's growth strategy in the form of expanding its operations.661(000) which is about 53% from the previous year 2009.3 % from the last year Payment on account of accumulated compensated absences has been reduced by 17.

whereas net cash out flow from financing activities has been increased by 18.337(000) while in previous year they have a negative figure of about (376546) (000) which is a remarkable change of about 114 % from the last year 2009.Cash flow from financing activities Company is coming in to stable position from the previous year there is no change in long term finances.9 %. Finance cost has been paid in which there is a little reduction. In the end of the year company had the cash and cash equivalents in the hand of about 54. Dividends are paid more which is bringing out a positive picture of organization. 19 .

 Reserves increase in the current year end from 1.652 to 1.001.  Operating Profit increases from 778.929 to 956.They must utilize their finance is expansion of projects.219. In reality.491.280 to 1.125 indicates that amount of Retained earnings increases. A firm's capital structure is then the composition or 'structure' of its liabilities. is referred to as the firm's leverage. e. Investors can invest their capital in that company. capital structure may be highly complex and include dozens of sources. It has a big amount of capital.620.000 to 375. Gearing Ratio is the proportion of the capital employed of the firm which come from outside of the business finance. If the current finance management keeps doing their work in this way they can get huge profits. 608. their earning per share has also been increased by 6 % in current year 2010 . by taking a short term loan etc.687 to 7.e.  Increment on net sale defines that company is in Boom phase.035. what changes it may face? In finance. Tri Pack is going on a positive way it’s on a right track it has 34% of reserves and 8 % of liabilities.296. 80% in this example.571  Gross Profit increases from 990. a firm that sells $20 billion in equity and $80 billion in debt is said to be 20% equityfinanced and 80% debt-financed.  Debt to equity ratio maintains on the basis of noncurrent liabilities i. debt. The company has reduced its liabilities to 13 % to 8 % there is percentage change of -38 % which is a good sign.070 in the current year.2) Keeping in view capital structure of company. 20 .751 in the current year.096 shows that current ratio & liquidity position are in stable position.195 to 2. capital structure refers to the way a corporation finances its assets through some combination of equity.  Net Sales Increases in the current year from 5. The firm's ratio of debt to total financing. For example.685.000  Current liabilities & provision shows that amount decreases in the current year from 2. or hybrid securities. Share capital of this company is also increases.g.

if it didn’t affect their Vision.873. overall impact of this scenario is that liquidity ratio maintains & the financial position of the company are in a boom phase. Either they can expand their business or they can diversify . 21 .What should company undertake to pursue growth? If we look at company from different angles we find company is in a very good position it is reducing its liabilities its reserves are also increasing it also have a good capital in hand.096.745 to 1. The market price of share is also increasing.  Current Asset increases in the current year from 2. It’s a favorable position for company to pursue growth. Non-Current asset Decreases from 2.163 in the current year .They can get loan through Debt financing and Equity financing both. They can expand their organization as they are doing it by expansion of their BOPP plan through Debt financing and internally generated cash. 3) Financial Planning . It’s also giving a good amount of Dividend to its shareholders.582 in the current year shows that depreciation involves in this scenario.420.As company is financially established.Comapny can easily get the debt on soft terms and condition from banks.082 to 2. They can also diversify their business like Engro Pakistan (pvt) Ltd.526.

This film is particularly well-suited for coating.Summary Tri-Pack Films Limited (Tri-Pack) . Tri-Pack produces two types of packaging films used in packaging for consumer goods. BOPP films are produced in four different grades . pearlised and metalised . Incorporated in 1993. First type is the moisture-resistant 'biaxially oriented polypropylene' (BOPP) film. form fill seal and side welded bag manufacturing. The total installed capacity for BOPP films stands at 29.and their thickness ranges from 12 to 50 microns. Tri-Pack is listed on all the three bourses of the country. an integrated packaging company.000 tons per annum.000 tons per annum. lamination. Tri-Pack is a fairly leveraged company and it enjoys long-term rating of "A+" and a short-term rating of "A1" by PACRA.plain. 22 . CPP films are also available in different grades and their thickness ranges from 20 to 150 microns. with a paid-up capital of Rs 300 million. Tri-Pack has CPP film manufacturing capacity of 7. Packages involved in production of packaging films used by packaging companies. composite.a joint venture between Mitsubishi Corporation of Japan and Packages Limited of Pakistan . the Company commenced commercial production in 1995. The former also holds 33. The second type of film is the high-gloss and low-haze 'cast polypropylene' (CPP) film. is a big buyer of the packaging films produced by Tri-Pack.3 percent equity in the latter.

sales' volume of packaging companies and in turn. This phenomenon has greatly benefited Tri-Pack's sales that crossed Rs 9 billion for the first time in 2010. The expenses ate up 2 percent of net sales in 2010. Renewed focus on domestic sales through aggressive marketing and government actions against smuggling via Afghan transit trade and under-invoicing of BOPP films helped the company compete better in 2010. cost of sales remained steady at 84 percent during the year.Financial performance Sales As the penetration and consumption of fast-moving consumer goods are increasing. In 2010. demand for packaged goods is also on the rise. Fluctuations in the price of crude oil. to meet the surge in demand. 23 . As percentage of net sales. compared to 1 percent in 2009. another major raw material. as only about 3 percent of total sales is generated through exports this year. Administrative expenses also rose by 27 percent in 2010. the distribution costs grew by 23 percent in 2010 and stayed the same as a percentage of net sales in 2010 and 2009. also exacerbated the Company's COGS. Cost of Sales Growth in the cost of sales outstripped the increase in net sales during 2010. Operating Expenditures Owing to higher freight costs. The 36 percent growth is primarily on account of higher utilisation of raw materials. especially polypropylene granules. those of their suppliers has also been increasing. when money spent on salaries and wages was more than what was spent during the preceding two years. the Company's net sales grew by a magnificent 34 percent over 2009. Resultantly. Tri-Pack's sales are heavily tilted towards domestic business.

8 million in 2010. its profit margins have somewhat declined. "other income" for the Company declined by 37 percent over the previous year owing to nil returns on placement of certificate of deposits at an associated investment bank.49 percent. the gross profit increased by 23 percent in 2010 over 2009. gross margin shed 140 bps over the period. however.47 in 2008 and Rs 16 in 2008. It was higher taxation charges that reduced the net profits to Rs 494. Net margins have. For instance. 24 . as the bottom-line grew by 7 percent year-on-year. led to a growth of 29 percent in pre-tax profits. declined during the period under review to 6. trading above Rs 100 and consistently offering a price-to-earnings ratio above 6. Tri-Pack's finance costs declined by 7 percent in 2010. coupled with managed expenditures. "Other expenses" increased by 33 percent over the preceding year on account of higher spending in workers' profit participation fund and workers' welfare fund. yet the operating margins lost 115 bps. as the lower mark-up payments on long-term finances were more than to offset the higher mark-up payments on short-term finances. Tri-Pack's earnings per share came in at Rs 16. the company's operating profits increased by 23 percent. however. compared to Rs 15. During same period.Other Income & Expenses During 2010. Strong domestic sales. Profitability & Margins While the Company's profitability has improved in absolute terms over the last three years.49 in 2010. The company's stock has performed consistently over the last three calendar years.

The debt-to-equity ratio dropped to 0. However. There is less debt accumulation in the company's capital structure. during the preceding two years.000 tons.5 million at the end of 2009.2. The project is being financed with a mix of debt and internal cash generation and is targeted to be operational by 2012. respectively. as movements in the prices of crude oil and polypropylene granules directly impact the Company's cost of sales and resulting margins. from 0. The Company seems set to achieve operational efficiency during the year. at a budgeted cost of Rs 5. Future Outlook To cater to increased demand of its BOPP films in the packaging industry. The Company's current ratio has also improved to 1. the Company encounters challenges on the raw materials' front.3 times in 2008.3. from 1. the rising demand of packaged goods and the zeal of Pakistani multinationals to increase their year-on-year volumes. 25 .3 million at the end of 2010.Liquidity The Company's cash flows improved to Rs 54. Leverage Tri-Pack's leverage position is much better in 2010 than it was during the preceding two years.4 in 2009.2 in 2010. Tri-Pack stands to benefit from both.9 times in 2009 and 4.2 billion. compared to a negative cash generation of Rs 376. turning over its inventory 5 times in 2010. Being part of the supply-chain of packaged goods industry. TriPack decided this year to expand its production capabilities by setting-up a new BOPP plant with a capacity of 40. compared to 3. Company's interest paying ability also seems to have improved as the financial charges dropped and operating profits increased in 2010.

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