Lucky cement final project FR

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Lucky cement final project FR

  1. 1. A PROJECT OF FINANCIAL ANALYSIS ON LUCKY CEMENT
  2. 2. [FINANCIAL ANALYSIS] 27/12/2012 PRESENTED TO: PROF, AYESHA ANWAR PRESENTED BY: Muhammad Tayyab 111405 Muhammad Irfan 103125 M. Qamar Abbas 103141 Farhan Ahmad 091334The Institute of Management Sciences (Pak-AIMS) Page 2
  3. 3. [FINANCIAL ANALYSIS] 27/12/2012 ACKNOWLEDGEMENT We would like to pay our praises and humblest thanks to AL-MIGHTY ALLAH, the most Merciful and Beneficiate of all, who bestowed us with the ability to complete this project. It gives us immense pleasure and honor to extend our thanks to our kind & cooperative . Prof Ayesha Anwar from Faculty ofInstitute of Management Sciences, Lahore for his valuable advices and suggestions throughout our semester, in order to perform well & up to mark..Finally, we pay regards of gratitude to our parents, as they and their prayers for our success are always been a pillar of strength for us in our life.The Institute of Management Sciences (Pak-AIMS) Page 3
  4. 4. [FINANCIAL ANALYSIS] 27/12/2012Table of ContentsINTRODUCTION ............................................................................................................................................. 6Founder History ............................................................................................................................................ 7COMPANY INFORMATION ............................................................................................................................ 9 Board of Directors ..................................................................................................................................... 9BUSINESS STRATEGY ................................................................................................................................... 12 1. Holding and growing local dominance ............................................................................................... 12 2. Increasing our share in International market....................................................................................... 12 3. Efficiency ............................................................................................................................................ 12 4. Sustainable Development.................................................................................................................... 12 5. HR Excellence .................................................................................................................................... 12 Corporate Philosophy.............................................................................................................................. 13 Vision Statement ..................................................................................................................................... 13 Mission Statement................................................................................................................................... 13Logo Philosophy ......................................................................................................................................... 13AWARDS ...................................................................................................................................................... 14 Leadership As Solid As Concrete ............................................................................................................. 15 COMMUNITY DEVELOPMENT: ................................................................................................................ 15Development of the Company .................................................................................................................... 18INVESTOR RELATIONS ................................................................................................................................. 19EXPORTS ...................................................................................................................................................... 19CEMENT MANUFACTURING PROCESS ........................................................................................................ 21QUALITY ASSURANCE .................................................................................................................................. 23CERTIFICATE ................................................................................................................................................ 24PRODUCTS OF THE COMPANY .................................................................................................................... 24 OPC (Ordinary Portland Cement):.......................................................................................................... 24 SRC (Sulphate Resistant Cement): ......................................................................................................... 25 Clinker: ................................................................................................................................................... 25 Block Cement: ........................................................................................................................................ 26SUSTAINABILITY .......................................................................................................................................... 26Building network: ........................................................................................................................................ 31 Pakistan Business Council (PBC).............................................................................................................. 31 CSR Association of Pakistan .................................................................................................................... 31The Institute of Management Sciences (Pak-AIMS) Page 4
  5. 5. [FINANCIAL ANALYSIS] 27/12/2012 Marketing Association of Pakistan (MAP)............................................................................................... 31 US Atlantic Council .................................................................................................................................. 31 Building Network .................................................................................................................................... 32 Pakistan Institute of Corporate Governance (PICG) ............................................................................... 32SAFETY AND SECURITY ................................................................................................................................ 32 Fire Fighting ............................................................................................................................................ 33 Basic Life Support – Cardiopulmonary Resuscitation (CPR).................................................................... 33Vertical Analysis of Financial Performance ................................................................................................. 37Horizontal Analysis of SOFP ........................................................................................................................ 38Vertical Analysis of Statement of Financial Position................................................................................... 40Horizontal Analysis of Statement of Financial Position .............................................................................. 41Ratio Analysis of Lucky Cement Lemited. ................................................................................................... 42 Current Ratio:.......................................................................................................................................... 43 Inventory Turnover: ................................................................................................................................ 43 Gross Profit Ratio: .................................................................................................................................. 43 Operating Profit Margin:......................................................................................................................... 43 Net Profit Ratio: ...................................................................................................................................... 44 Return on Capital Employed ................................................................................................................... 44 Return on Assets: .................................................................................................................................... 44 Assets Turnover Ratio: ........................................................................................................................... 44 Quick Ratio: ............................................................................................................................................ 45 Debt ratio: ............................................................................................................................................... 45 Interest cover:.......................................................................................................................................... 45 Earning per share: ................................................................................................................................... 46Standards, amendments and interpretations adopted during the year ......................................................... 46Recommendations and Financial Strategy: ................................................................................................ 47Conclusion: .................................................................................................................................................. 47The Institute of Management Sciences (Pak-AIMS) Page 5
  6. 6. [FINANCIAL ANALYSIS] 27/12/2012INTRODUCTIONLucky cement Sponsored by well known “YunusBrothers Group” – one of the largest export houses of Pakistan, Lucky Cement Limited currentlyhas the capacity of producing 25,000 tons per day of dry process Cement.Lucky Cement Limited (LCL) is Pakistan‟s largest producer and leading exporter of qualitycement with the production capacity of 7.75 million tons per annum. The company is listed onKarachi, Lahore, Islamabad and London Stock Exchanges.Over the years, the Company has grown substantially and is expanding its business operationswith production facilities at strategic locations in Karachi to cater to the Southern regions, Pezuand Khyber Pakhtunkhwa to furnish the Northern areas of the country. Lucky Cement isPakistan‟s first company to export sizeable quantities of loose cement being the only cementmanufacturer to have its own loading and storage terminal at Karachi Port.Lucky Cement is an ISO 9001:2008 and 14001:2004 certified company and also possesses manyother international certifications including Bureau of Indian Standards, Sri Lankan StandardInstitute, Standards Organization of Nigeria, Kenya Bureau of Standards and South AfricanBureau of Standards.The Institute of Management Sciences (Pak-AIMS) Page 6
  7. 7. [FINANCIAL ANALYSIS] 27/12/2012Founder HistoryLate Abdul Razzak Tabba, the deceased Chairman of the Yunus Brothers Group isthe person behind the success of the Group. He was a prominent business leader andwell liked in the business fraternity. He was an enterprising businessman withcalculated economic thinking.Mr. Tabbas dynamism, loyalty and vision to make Pakistan stronger among othernations of the world. Bringing in more industrialization and technology transferwere the major goals set by him. It was Mr. Tabba‟s dynamism that the Groupexpanded from regional to international level, despite the economic meltdown. Mr. A. Razzak Tabba (S.I) The late Chairman & Chief Executive of Lucky CementUnder the leadership of Mr. Abdul Razzak Tabba, the Group received more than 20 ExportsTrophies from the Government of Pakistan, for the highest overall exports from the country andthe highest exports in the textile sector.He was not just a visionary businessman, but also was a leader and philanthropist. All hisphilanthropic activities were routed through the Aziz Tabba Foundation, Established forpromotion of charity and other welfare-oriented projects, serving the humanity with unmatchedcompassion and entrepreneurship.Mr. Razzak Tabba strived for excellence through perfect balance between his career and service.He was also honored with Sitara-e-Imtiaz by the Government of Pakistan.Mr. Abdul Razzak Tabba is no more among us but his values continue, giving hope and strengthto all the members associated with YB Group.The Institute of Management Sciences (Pak-AIMS) Page 7
  8. 8. [FINANCIAL ANALYSIS] 27/12/2012Dynamism, loyalty and a vision to make our country stronger among the other nations of theworld by bringing in more and more industrialization and technology transfers – these weresome of the many goals set by our late Chairman & Chief Executive Mr. A. Razzak Tabba.Yunus Brothers Group is one of the largest export house of Pakistan that has grown upremarkably over the last 50 years. The YB Group is engaged in diversified textile manufacturingactivities consisting of Spinning, Weaving, Processing, Finishing and Stitching. The Group alsoowns one of the largest cement manufacturing plant and the second largest yarn manufacturingcapacity in the Country. Besides manufacturing, the Group is also engaged in InternationalTrading of various commodities.The Group consists of the following Companies, with an annual turnover of over Rs. 27 Billionor US$ 450 Million during year 2004~2005 out of which exports amounted to US$ 300 Million. 1. Lucky Cement Limited 2. Gadoon Textile Mills Limited 3. Fazal Textile Mills Limited 4. Yunus Textile Mills 5. Lucky Energy (Private) Limited 6. M/s. Yunus Brothers 7. Lucky Textile Mills 8. Security Electric Power Company LimitedThe Institute of Management Sciences (Pak-AIMS) Page 8
  9. 9. [FINANCIAL ANALYSIS] 27/12/2012COMPANY INFORMATIONBoard of DirectorsMr. Muhammad Yunus Tabba (Chairman)Mr. Muhammad Sohail TabbaMr. Imran Yunus TabbaMr. Jawed Yunus TabbaMrs. Rahila AleemMrs. Mariam Tabba KhanMr. Ali J. SiddiquiMr. Manzoor Ahmed (NIT)Chief ExecutiveMr. Muhammad Ali TabbaChief Operating OfficerMr. Noman HasanDirector Finance and Company SecretaryMr. Muhammad Abid GanatraFCA, FCMA, FCISThe Institute of Management Sciences (Pak-AIMS) Page 9
  10. 10. [FINANCIAL ANALYSIS] 27/12/2012Statutory AuditorsM/s. Ernst & Young Ford RhodesSidat Hyder, Chartered AccountantsA member firm of Ernst &Young Global LimitedInternal AuditorsM/s. M. Yousuf Adil Saleem & Co.,Chartered AccountantsA member firm of Deloitte ToucheTohmatsuCost AuditorsM/s. KPMG Taseer Hadi and Co.,Chartered AccountantsHead Office:6-A, Muhammad Ali Housing Society,A. Aziz Hashim Tabba Street,Karachi - 75350UAN # (021) 111-786-555Website: www.lucky-cement.comE-mail: info@lucky-cement.comThe Institute of Management Sciences (Pak-AIMS) Page 10
  11. 11. [FINANCIAL ANALYSIS] 27/12/2012Liaison Office Dastagir Tower, 1st Floor, Hassan Parwana Road, Near Deira Ada, Multan Tel: (92-61) 4540556-7Multan Fax: (92-61) 4540558 multan@lucky-cement.com 2nd Floor, Al Hasan Plaza, Jamia Ashrafia, Main Ferozpur Road, Lahore UAN: (92-42) 111-786-555Lahore Tel: (92-42) 37530480-2 Fax: (92-42) 37530435 lahore@lucky-cement.com House No. 26, Street No. 8, Sector F-7/3, Islamabad UAN: (92-51) 111-786-555Islamabad Tel: (92-51) 2610804-07 Fax: (92-51)2610809 dm@lucky-cement.com 7-Park Avenue, University Town UAN: (92-91) 111-786-555Peshawar Tel: (92-91) 5844903-5840271 Fax: (92-91) 5850969 peshawar@lucky-cement.com F1, First Floor, Institute of Engineers Building, Zarghoon Road,Quetta Tel : (92-81) 2837583 Fax : (92-81) 2829267 quetta@lucky-cement.comProduction factories:1) Pezu, District Lakki Marwat, Khyber Pakhtunkhwa2) 58 Kilometers on Main Super Highway, Gadap Town, Karachi.The Institute of Management Sciences (Pak-AIMS) Page 11
  12. 12. [FINANCIAL ANALYSIS] 27/12/2012BUSINESS STRATEGY1. Holding and growing local dominanceFurther reinforcing our strength is what we keep in focus when designing our business strategiesfor the local market.2. Increasing our share in International marketBroadening our horizons, we have engaged our resources to the unconventional markets tobecome accessible to be the construction industry worldwide.3. EfficiencyEfficiency is reflected in all our business approaches, giving us an edge over the competitors incost and energy, by skillful utilization of resources.4. Sustainable DevelopmentWe believe in giving back to the communities we operate in and to the society at large. Weendeavor to stimulate environmental awareness among the stakeholders and have a broad visionfor the sustainable world.5. HR ExcellenceWe believe in people development. Our Human Resource is our asset and an important factor inour success. Our intellectual capital provides a framework that serves as a guiding force for theorganization as a whole.The Institute of Management Sciences (Pak-AIMS) Page 12
  13. 13. [FINANCIAL ANALYSIS] 27/12/2012Corporate PhilosophyVision StatementWe envision being the leader of the cement industry in Pakistan, identifying and capitalizing onnew opportunities in the global market, contributing towards industrial progress and sustainablefuture, while being responsible corporate citizens.Mission StatementOur mission is to be a premium cement manufacturer by building a professional organization,having state-of-the-art technology, identifying new prospects to reach globally and maintainservice and quality standards to cater to the international construction needs with anenvironment-friendly approach.Logo PhilosophyRecently, we launched our new identity marking a significant milestone in our history. Our newlogo represents the core values that Yunus Brothers uphold and live by. The hexagon presentsour values, attributes and quality parameter which comprises of state of the art technology, ourforesight and innovation to compete with international standards. Our commitment to quality andthe diversity of our portfolio to meet the customer needs. It reflects our journey towards modernand innovative business practices, smart investment moves, diversity in human resource andunconventional approaches towards building our corporate image.The Institute of Management Sciences (Pak-AIMS) Page 13
  14. 14. [FINANCIAL ANALYSIS] 27/12/2012AWARDSLucky Cement has a tradition of excellence in business. Various Awards and Achievementspresented to Lucky Cement in recognition of a successful corporate company. • National CSR Excellence Award • Brand of the Year Award • Annual Environment Excellence AwardRecognition from Chamber of Commerce and Industry: • Karachi Chamber of Commerce and Industry:Awarded the Export Trophy to Lucky Cement for highest exports of cement from Pakistan. • Khyber Pakhtunkhwa Chamber of Commerce and Industry:Awarded the following distinctions:Top Sales Tax PayerTop Income Tax PayerTop ExporterTop ImporterExports Trophy 2009 – 2010The Institute of Management Sciences (Pak-AIMS) Page 14
  15. 15. [FINANCIAL ANALYSIS] 27/12/2012Leadership As Solid As ConcreteI was the first one to reach the top. None, but my shadow was my competition. I relied on thestrength of my body and soul; my guiding stars were faith, honesty and excellence. I fired abovethe mark that I intended to hit. Energy and invincible determination with the right motives arethe levers through which I moved the world. Reflecting on my success, it is evident that I am theunparalleled market leader. Through my strategies, I anticipate the needs of the industry. I havemanaged to stay on top with cutting edge solutions, building your dreams and making them areality. On my journey, I have left traces for winners to become champions. As I embark on anew chapter to help shape the future of our nation, you can rest assured that I will deliver youwith leadership as solid as concrete.I am Lucky Cement!COMMUNITY DEVELOPMENT: Water supply Scheme at Darra Pezu: Lucky Cement established water supply scheme and distribution lines to provide cleandrinking water to the residents of Darra Pezu. The 9 Km water supply line provides cleandrinking water facility to the residents of the rural localities situated in the outskirts of DarraPezu town. The distribution line starts from Lucky Cements Pezu Plant and provides water tooutskirts of Pezu by connecting with two wells made by LCL. From these wells, water is thenpassed to the old distribution lines and hence spreads all over Darra Pezu. This water supply lineThe Institute of Management Sciences (Pak-AIMS) Page 15
  16. 16. [FINANCIAL ANALYSIS] 27/12/2012provides drinking water to almost 70% of the population of Pezu, which is equal to 5,000households. Outside Pezu, almost 2,000 households get water from these lines Ultrasound facility at Mother and Child Health Care Centre o Lucky Cement, in partnership with Concern for Children Trust (CFC), is setting up an Ultrasound facility at Mother and Children Health Care Centre (MCH) in Machar Colony, a slum area in Karachi. The Machar Colony has a population of approximately 750,000 people deprived of basic necessities of life including quality health care for women. By establishing this facility, Lucky Cement and CFC aims at creating awareness about prenatal and post natal care of mother and child, safe child birth and prevention and cure of any disabilities in children at an early stage. Model Village in DI Khan o After providing relief to the affectees of the massive destructions caused by floods and heavy rains last year, Lucky Cement focused all the efforts towards rehabilitation of the IDPs. Lucky Cement generously donated 600 cement bags for the construction of a model village in Dera Ismail Khan. Scholarship Program for the students of Pezu o Lucky Cements management in Pezu has initiated a merit cum need based scholarship scheme for the local students of Graduate and Post Graduate levels, registered with HEC recognized institutions to enable them to acquire higher education.The Institute of Management Sciences (Pak-AIMS) Page 16
  17. 17. [FINANCIAL ANALYSIS] 27/12/2012 World-Class Primary School in Darra Pezu o LCL is all set to construct a world-class primary school, near its factory in Pezu, District Lakki Marwat, in partnership with a renowned NGO, chartered by the Government of Pakistan and endorsed by the World Bank. This school will be affiliated with Pakistans well known school system and will provide access to quality education to the residents of the area. In first phase, the company will establish a primary school, which will later be expanded to secondary education as well. This school will be strategically constructed in an area where there are no such facilities currently available. Lucky City School – Pezu o LCL also runs a well-maintained primary school, up to class five, for the children of the factory workers in Pezu. The school is registered with Benu Education Board and provides quality and free of cost education to the children of employees. DI Khan Airport Renovation o The company also took responsibility of the renovation of DI Khan Airport as a welfare gesture for the locals of the area and to boost overall commerce and economy. Upgrading of the airport exterior and interior has been completed, along with provision of furniture for both arrivals and departure lounges.The Institute of Management Sciences (Pak-AIMS) Page 17
  18. 18. [FINANCIAL ANALYSIS] 27/12/2012Development of the Company 1993 Listed on Karachi, Lahore and Islamabad Stock Exchanges 1996 Entered into commercial business with production capacity of 1.2 million tons per annum (Lines A and B at Pezu Plant) 1999 Production capacity increased to 1.5 million tons per annum 2001 Conversion of Kiln Firing System from furnace oil to coal based 2002 Started exporting cement 2005 Started new production line (Line C) at Pezu Inaugurated new production facility in Karachi Became the largest cement exporter from Pakistan 2006 Started new production line (Line D) in Pezu Started production in Karachi plant (Lines E and F) Became largest cement producer of Pakistan.Acquired transportation fleet of bulkers and ship loaders 2007 Became the first company to export loose cement through sea 2008 Set up its own cement storage facility at Karachi Port with the capacity of 24,000 tons Conversion of furnace oil power generation engines to gas-based Got listed in London Stock Exchange and became the first cement company in Pakistan to issue GDR 2009 Started the 7th production line (Line G) at Karachi Plant, bringing the total production capacity to 7.75 million tons per annum 2010 Waste Heat Recovery Project started operations at both Karachi and Pezu Plants Acquired multi-purpose trailers for moving all kinds of payload, either bagged or in raw form 2011 Signed MOU to sell 20 MW electricity to Hyderabad Electric Supply Company (HESCO) Set up a plant at Karachi Plant to replace coal with Tyre Derived Fuel (TDF) to further reduce cost of production Invested in a joint venture in DR Congo 2012 Started supplying electricity to HESCO. Signed Lol for supply of electricity to PESCO. Invested in a joint venture of cement grinding plant in Iraq. Shares acquisition of ICI Pakistan limited.The Institute of Management Sciences (Pak-AIMS) Page 18
  19. 19. [FINANCIAL ANALYSIS] 27/12/2012INVESTOR RELATIONSLucky Cement realizes the importance of interaction with the existing shareholders and potentialinvestors of the Company and in this respect participates in various investor conferences heldfrom time to time domestically or abroad.For the last couple of years, LCL has been participating in national and internationalConferences to meet and interact with existing and potential investors for attracting foreigninvestment into the Country.These conferences are attended by representatives of Banks, Asset Management companies,Insurance companies and various other corporate individuals.Lucky Cement – NTN: 0009807-8Lucky Cement - Registration Number: 0031182For any investor related queries and / or grievances, contact our Corporate Affairs Department orvisit SECP‟s Investor Complaint Section.EXPORTS Pakistan‟s first company to export sizable quantity of loose cement and it is the onlycement manufacturer to have a loading and storage terminal at Karachi Port. This state-of-the-artproject is based on the latest European technology and the first in South East Asia andMiddle Eastern region. This terminal is equipped with logistical arrangements to carry looseThe Institute of Management Sciences (Pak-AIMS) Page 19
  20. 20. [FINANCIAL ANALYSIS] 27/12/2012cement, which is transferred to the port from our Karachi Plant via a fleet of especially designedcement bulkers, they are capable of off-loading loose cement into carrier ships directly through aunique compressor system installed on each vehicle. Each bulker can carry up to 75 tons ofcement.Our infrastructure at Karachi port is specially designed to transfer loose cement to the vessels inthe shortest amount of time, making it efficient and reliable for reducing the vessels idle time , inturn making the shipments timely as per the customer requirements. We have installed cementstorage silos at the port which are capable of storing 24,000 tons of cement. LCL has set upautomatic ship loaders at the site to make a fully automatic loading from the silos when thevessels arrive. This system works at fast discharge rates and enables quick loading time, ensuringcement availability at the port anytime; thus playing a major role in increasing our exportcapacity. The loading capacity of this terminal is 12,000 tons of loose cement per day, whichdepends upon the size and construction of vessel(s). In order to store large amount of cement,four silos have been installed, each silo has a capacity to store around 6000 metric tons cement,and underground system has been designed to unload bulkers, store cement into silos andtransfer required quantity of loose cement into vessels.The whole system is designed on the basis of PLC (Programmable logic control) system. Allprocesses go through a fixed repetitive sequence of operations that involves logical steps anddecisions. PLCs are used to control time and regulate the system, the extraction of cement frombulkers and reloading in to vessels is processed though vacuum pumps and compressors, whichoperate through powerful generators. The cement transfer volumes attained through this systemThe Institute of Management Sciences (Pak-AIMS) Page 20
  21. 21. [FINANCIAL ANALYSIS] 27/12/2012is approximately 500 metric tons per hour. A strong work force of skilled individuals, includingengineers, technicians and labor are employed at the company‟s terminal on port.With this specialized work force, Lucky Cement is capable of loading around 2000 tons ofbagged cement per day, and 3000 tons cement per day in sling bags. This record rate of loadingis achieved through our well-trained stevedores who maintain load rate and utilize theircapabilities to the maximum. To date, more than 50 million tons of loose cement has beenexported through the plant installed at Karachi port.CEMENT MANUFACTURING PROCESSCement is a fine, soft, powdered substance, made from a mixture of elements that are found innatural materials such as limestone, clay, iron ore and sand. When cement is mixed with water, itcan bind sand and turns into a hard, solid mass called concrete.Raw Material PreparationThe key element – Limestone and clay are mined through blasting from rock quarries by settingoff explosives. Limestone and clay contains calcium, silicon, aluminum and iron, which are theessential elements for cement manufacturing. Latest technology is used for blasting so as toensuring vibration, dust, and noise emissions are kept at a minimum level. Blasting producesmaterials in a wide range of sizes from approximately 1.5 meters in diameter to smaller particlesless than a few millimeters in diameter. Quarried material is the loaded into trucks or belts forThe Institute of Management Sciences (Pak-AIMS) Page 21
  22. 22. [FINANCIAL ANALYSIS] 27/12/2012transportation to the crushing plant. Through a series of crushers and screens, the Limestone isreduced to a size less than 100 mm and is stored until required.Pre - HomogenizationIn the dry process, each raw material is proportioned to meet a desired chemical composition andfed to a vertical steel mill. The raw materials are dried with waste process gases and grindedthrough the pressure exerted by three conical rollers in a rotary kiln. The rotary kiln is fired withan intense flame produced by burning coal, coke, oil, gas or waste fuels. The dry materialsexiting the mill are called "kiln feed". The kiln feed is pneumatically blended to ensure thechemical composition is well homogenized and is then stored in separate silos until required.Basic chemical reactions that take place in the kiln, at 1400 °C are: Evaporation of moisture,calcinations of the Limestone to produce free calcium oxide and reaction of the calcium oxidewith other materials (sand, shale, clay, and iron). This results in a final, nodular, red-hot productknown as "Clinker" which is 3 – 4 centimeters in diameter and can be stored for several months.Finishing, Packaging and DistributionThe clinker is cooled and grinded into a fine grey powder. The grinding is done throughdifferent-size steel balls. A small amount of gypsum and other process are also added during thefinal grinding. The amount of gypsum and process added during the process varies in all of thefinal cement products. Each cement product is stored in an individual silo from where it isThe Institute of Management Sciences (Pak-AIMS) Page 22
  23. 23. [FINANCIAL ANALYSIS] 27/12/2012transported to packaging facility for either sack – packaging or bulk transportation. Bulk cementis distributed through bulkers or is shipped; depending on the customers needs.QUALITY ASSURANCELucky Cement greatly emphasizes in manufacturing high quality cement through stringentquality control techniques and computerized control systems. Using sophisticated equipment likeDistributed Control System (DCS), Programmable Logic Controllers (PLCs) and on line X-RayAnalyzers. We have one of the best equipped laboratories, with facilities for analysis of rawmaterial, semi furnished product, furnished product and fuel, to ensure the supply of high qualityproduct to market.Quality of the cement has been tested and proven up to the specifications mentioned in Pakistan,British, Indian, Kenyan, Nigerian, South African and Sri Lankan Standards.Lucky Cement has been accredited by following international bureaus of Standards: 1. Bureau of Indian Standards 2. Sri Lankan Standard Institute 3. Standards Organization of Nigeria 4. Kenya Bureau of Standards 5. South African Bureau of Standards.Lucky Cement is also an ISO 9001:2008 and ISO14001:2004 certified companyThe Institute of Management Sciences (Pak-AIMS) Page 23
  24. 24. [FINANCIAL ANALYSIS] 27/12/2012CERTIFICATEPRODUCTS OF THE COMPANYOPC (Ordinary Portland Cement):We offer Ordinary Portland Cement (OPC) that is used in all general constructions, especially inmajor and prestigious projects where cement is needed to meet stringent quality requirements. ItThe Institute of Management Sciences (Pak-AIMS) Page 24
  25. 25. [FINANCIAL ANALYSIS] 27/12/2012can also be used in concrete mortars andgrouts, etc. Ordinary Portland Cement iscompatible/consumable with admixture/retarders, etc.OPC has easy workability and lower heatof hydration. We maintain our technicalstandard of quality parameter at high leveland with high strength at all ages. Our OPC cement satisfies EN 196 / 197 – 1, SABS, BIS, SLSI& PSS – 232 ~ 1983 (R).SRC (Sulphate Resistant Cement):By maintaining C3A level within the specified limit of 3.5%, our Sulphate Resistant Cement ismore resistant to Sulphate attacks and is suitable for use in foundations near seashore and canallinings.SRC has lower heat of hydration and its strength satisfies B.S 4027 / 1980 & PS 612 / 1989.Clinker:We also offer clinker to the customers with their own grinding units. Clinker can be easilyhandled by ordinary mineral handling equipment and can be stored for several months withoutcompromising on the quality. Clinker is the primary product in the cement manufacturingprocess where limestone, clay and sand are grinded and heated, before the gypsum is added toproduce the final product of cement.The Institute of Management Sciences (Pak-AIMS) Page 25
  26. 26. [FINANCIAL ANALYSIS] 27/12/2012Block Cement:By the nature of product, Block Cement is similar to the SRC, with a significantly darker colorand some low setting time to meet the requirements of the market and for the production ofblocks. Block Cement also maintains C3A level within the specified limit of 3.5%. BRANDS AVAILABLE AT LUCKY CEMENT Lucky CEMENT (REGULAR) Lucky STAR Lucky GOLD Lucky SULPHATE RESISTANT CEMENT (SRC)SUSTAINABILITYBusiness leaders across the globe, appreciate the fact that business is not just aboutmaking quality products or satisfying your clients. Beyond the requirement of legalThe Institute of Management Sciences (Pak-AIMS) Page 26
  27. 27. [FINANCIAL ANALYSIS] 27/12/2012settings, businesses are now required to manage the wider socialand environmental consequences of their actions.Lucky Cement is actively contributing towards the welfare of the society and plays its part inareas of education, environmental awareness, and health and community development.Believing in fair and transparent practices, we have reported separately on our sustainabilityinitiatives for the financial year 2011. Our Sustainability Report 2011 has been assessed with aLevel Check „A‟ by the Global Reporting Initiative (GRI). This makes us the only company inPakistan to receive Level Check A in the year 2010 – 2011The Institute of Management Sciences (Pak-AIMS) Page 27
  28. 28. [FINANCIAL ANALYSIS] 27/12/2012The Institute of Management Sciences (Pak-AIMS) Page 28
  29. 29. [FINANCIAL ANALYSIS] 27/12/2012 CEMENT INDUSTRY MARKET SHARE (FY 2011-12) Lucky Cement Others, 23% Attock Cement , 20% , 6% Bestway Cement , 11% DG Khan Cement Pioneer , 15% Maple Leaf Cement , 4% Cement , 10% Lafarge Cement , 6% Kohat Cement , 5%The Institute of Management Sciences (Pak-AIMS) Page 29
  30. 30. [FINANCIAL ANALYSIS] 27/12/2012The Institute of Management Sciences (Pak-AIMS) Page 30
  31. 31. [FINANCIAL ANALYSIS] 27/12/2012Building network:Lucky Cement maintains a strong network of association with its corporate stakeholders. Ourassociation with prominent public and corporate platforms enableus in strengthening our bond with local as well as international businesses.Pakistan Business Council (PBC)PBC represents big businesses, enterprises with substantial investments inmanufacturing and in the financial sector. PBC‟s aim is to promote andfacilitate the integration of Pakistani businesses into world economy and to encourage thedevelopment and growth of Pakistani companies.CSR Association of PakistanThe CSR Association of Pakistan promotes CSR principles andpractices to businesses in Pakistan because it makes companiesmore innovative, productive, and competitive.Marketing Association of Pakistan (MAP)MAP is an independent association that promotes the study of all branches of knowledgerelevant to the profession of marketing. It provides facilities for the study of inquiry and researchinto marketing problems. The Association enjoys patronage from the Government of Pakistanand is represented on the Advisory Council of the Ministry of Commerce.US Atlantic CouncilThe Atlantic Council has been a preeminent, nonpartisan institution devoted to promotingThe Institute of Management Sciences (Pak-AIMS) Page 31
  32. 32. [FINANCIAL ANALYSIS] 27/12/2012transatlantic co-operation and international security. The council provides an essential forumfor navigating dramatic shifts in economic and political influence.Building NetworkLucky Cement maintains a strong network of association with its corporate stakeholders. Ourassociation with prominent public and corporate platforms enable us in strengthening our bondwith local as well as international businesses.Pakistan Institute of Corporate Governance (PICG)The PICG undertakes activities geared towards achieving good corporategovernance in the country and creating an enabling environment foreffective implementation of the Code of Corporate Governance. PICG isfocused on encouraging professional interaction between members and toenhance competitiveness of the domestic corporations.SAFETY AND SECURITYFor us, safety and security means not just protecting our employees from any hazards, but alsotaking all the requisite measures to prevent any harm. We ensure that all our stakeholders areprotected from any potential hazards. Today, when information related to health issues is widelyavailable and just a click away, there is still a significant lack of knowledge regarding the typicalsigns and risk factors associated with serious medical conditions. We effectively control anyrisks to injury or health that could arise at the workplace and educate our employees on how todeal with risks and train them with various first-aid techniques.The Institute of Management Sciences (Pak-AIMS) Page 32
  33. 33. [FINANCIAL ANALYSIS] 27/12/2012Fire FightingWe believe that the ample knowledge in first aid and fire fighting support should be an essentialaspect for an office environment as these trainings are important for both the support providerand the victim and minimizes the potentials of any unpleasant event.Basic Life Support – Cardiopulmonary Resuscitation (CPR)Basic life support consists of a number of medical procedures provided to patients with lifethreatening conditions that may cause pain or dysfunction. We organized a session on Basic LifeSupport training for our employees, which was fruitful in enabling them to identify several life-threatening emergencies, performing CPR and ease choking in a safe, timely and effectivemanner. All the participants actively performed the practical and were given certificates for theirparticipation.The Institute of Management Sciences (Pak-AIMS) Page 33
  34. 34. [FINANCIAL ANALYSIS] 27/12/2012The Institute of Management Sciences (Pak-AIMS) Page 34
  35. 35. [FINANCIAL ANALYSIS] 27/12/2012The Institute of Management Sciences (Pak-AIMS) Page 35
  36. 36. [FINANCIAL ANALYSIS] 27/12/2012 Lucky Cement Limited. Consolidated Profit and Loss Account For the year ended June 30,2012 2012 2011 2010 Analysis Rs.000 Rs.000 Rs.000 Vertical HorizontalGross Sales 39,123,147 31,767,053 29,052,901 100% 134.66%Less: Sales Tax and Excise Duty 5,485,629 5,545,549 4,226,459 14% 129.79%Rebates and Commission 314,983 203,985 317,649 1% 99.16% 5,800,612 5,749,534 4,544,108 15% 127.65%Net Sales 33,322,535 26,017,519 24,508,793 85% 135.96%COST OF SALES 20,601,261 17,306,519 16,529,932 53% 124.63%GROSS PROFIT 12,721,274 8,711,000 7,978,861 33% 159.44%Distribution costs 3,236,721 3,236,425 3,433,047 8% 94.28%Administrative expenses 474,135 313389 303244 1% 156.35%Finance costs 253,234 517,788 569,184 1% 44.49%Other charges 438,411 325,482 257,774 1% 170.08%other income 5,204 2,486 1,902 0% 273.61%Profit before taxation 8,323,977 4,320,402 3,417,514 21% 243.57%Taxation 333,225 260,175 195,697 1% 170.28%Deferred 1,208,336 89,946 84,360 3% 1432.36% 1,541,561 350,121 280,057 4% 550.45%Profit before taxation 6,782,416 3,970,281 3,137,457 17% 216.18%other comprehensive income - - -Total comprehensive income 6,782,416 3,970,281 3,137,457 17% 216.18% The Institute of Management Sciences (Pak-AIMS) Page 36
  37. 37. [FINANCIAL ANALYSIS] 27/12/2012Vertical Analysis of Financial PerformanceThe vertical analysis shows very good performance of the organization, Cost of Services are52% of sales with a resulting Gross Profit of 33% this is good performance of the company anddespite very good sales revenue of over Rs. 391 Billion the profitability of the organization isvery good for the company. Company achievement is so high.In distribution cost major expense is incurred on Advertisement and distribution which is Rs. 32Billion and it is extremely high as well.Administrative expenses of the organization still increase with the previous year 1% of thetotal sales revenue and amounts more than Rs. 4.74 Billion it is also very high.Finance Cost of organization is decrease as compare to previous year that cost are Rs. 2.53Billion and it comprise almost 1% of the sales revenue.Just because of the above mentioned main points organization performance is so good andincrease the net sales as compare to the previous.As you can see in the statement of profit and loss, lucky cement‟s gross profit is sizable, at 33percent. The distribution cost, though, are eating up a huge chunk of the revenues; that could bean area in which to cut back. General operating expenses take up a reasonable percentage ofsales, leaving lucky cement with about a 17 percent bottom-line profit.The Institute of Management Sciences (Pak-AIMS) Page 37
  38. 38. [FINANCIAL ANALYSIS] 27/12/2012Horizontal Analysis of SOFPWhen we do a horizontal analysis of the organization we come to find that the sales oforganization have increased by 37% but surprisingly its cost of services increased by 24%which clearly indicates that the management of the organization is in a very good shape and thecorresponding cost of sales to with better management. As a result even the increase in sales hasresulted that company grow well and performance is so good as compared to the previous year itis still growing and improve the sale volume on the organization in the coming year.Gross profit of the organization is decreased by 59% which indicates clearly that companygoing to improve and cost of good is not effect on the profit of the company.Exchange profit of the organization in the year 2012 has increased by 143% slightly change inthe cost of the current year.Due to all above results and good business performance the overall profit of the organization hasincreased by 116% which is make stronger of the organization and in the future it may increasethe plant and business.The Institute of Management Sciences (Pak-AIMS) Page 38
  39. 39. [FINANCIAL ANALYSIS] 27/12/2012 Lucky Cement Limited. Consolidated Statement of Financial Position As on June 30, 2012 2012 2011 2010 AnalysisASSETS Rs.000 Rs.000 Vertical HorizontalNON CURRENT ASSETSFixed assetsProperty, plant and equipment 31,016,532 31,705,156 31,378,255 76.34% 98.85%Intangible 1,514 1,685 2,977 0.00% 50.86% 31,018,046 31,706,841 31,381,232 76.34% 98.84%Long term loan advances 55,373 55,373 55,373 0.14% 100.00%Long term deposit 3,175 3,175 2,175 0.01% 145.98% 31,076,594 31,765,389 31,438,780 76.48% 98.85%CURRENT ASSETSStores and spares 5,396,220 6,313,584 4,008,288 13.28% 134.63%Stock in-Trade 1,276,433 1,248,538 608,813 3.14% 209.66%Trade debts 1,050,639 620,961 779,305 2.59% 134.82%Loans and advances 148,189 72,164 86,471 0.36% 171.37%Trade deposits and Short Term Prepayments 67,894 38,669 48,807 0.17% 139.11%Other receivables 105,677 218,884 204,249 0.26% 51.74%Tex refunds due from the Government 538,812 538,812 538,812 1.33% 100.00%Taxation – net 126,361 41,652 145,151 0.31% 87.05%Sales Tax –refundable 0 0 117,939 0.00% 0.00%Cash and bank balances 844,422 351,202 333,629 2.08% 253.10% 9,554,647 9,444,466 6,871,464 23.52% 139.05%Total Assets 40,631,241 41,209,855 38,310,244 100.00% 106.06%EQUITY AND LIABILITIESSHARE CAPITAL AND RESERVESShare capital 3,233,750 3,233,750 3,233,750 7.96% 100.00%Reserves 30,027,995 24,539,079 21,862,179 73.90% 137.35% The Institute of Management Sciences (Pak-AIMS) Page 39
  40. 40. [FINANCIAL ANALYSIS] 27/12/2012 33,261,745 27,772,829 25,095,929 81.86% 132.54%NON-CURRENT LIABILITIESLong term Finance 392,898 658,298 1,658,600 0.97% 23.69%Long Term Deposits 52,752 37,306 31,957 0.13% 165.07%Deffered Libilities 3,299,522 2,044,633 1,882,067 8.12% 175.31% 3,745,172 2,740,237 3,572,624 9.22% 104.83%CURRENT LIABILITIESTrade and other payables 3,345,605 4,043,689 3,043,320 8.23% 109.93%Accrued interest 13,319 85,448 155,500 0.03% 8.57%Short-term borrowings 0 6,302,282 6,267,112 0.00% 0.00%Current Long-term financing 265,400 265,400 175,759 0.65% 151.00% 3,624,324 10,696,819 9,641,691 8.92% 37.59%CONTINGENCIES AND COMMITMENTSTOTAL EQUITY AND LIABILITIES 40,631,241 41,209,885 38,310,244 100.00% 106.06% Vertical Analysis of Statement of Financial Position Asset side of the SOFP is very good and favourable there is no indication of unfavourable ratio between the Fixed and Current assets as the Fixed assets are 77% of the total assets which is very normal and the Current Assets are 23% of the total assets and it is also veru normal and favourable. On the other hand the liability side is in a very good shape and it shows that the equity side of the SOFP is very positive due to good balance of reserves which are due to accumulated profit of the previous years. Another alarming fact is the Current Liabilities as they comprise of 9% of the total libilities and Non-Current liblities are also 9% and equity is 82% as show in the above statement of The Institute of Management Sciences (Pak-AIMS) Page 40
  41. 41. [FINANCIAL ANALYSIS] 27/12/2012the financial position it is very strong position of the company , which indicates that theorganization has to pay off of the organization is very little and strong equity of the organization.Horizontal Analysis of Statement of Financial PositionHorizontal analysis of the SOFP shows that at Asset side Cash and bank balances has beenincrease significantly and it has increase by 153% amounting about Rs. 8.4 Billion, short terminvestments have also been increase by 139% which means that the orgnaization has sold itsinvestments to generate cash.Liability side of the SOFP has also became very strong and very huge change as compared tothe previous year, balance of the reserves has been increased by 30% which is due to the increasein the profits of the organization during the past years. Long term financing of the organizationhas been decrease by 77% amounting a very heavy amount of Rs. 12.75 billion, as the overalllong term financing is decrease, hence it will also decrease the overall finance cost in the futureand it will also decrease the current liability of ineterest expenses.Current Liabilities of the organization have also been decrease by 62% which the horizantialimprovement of the organization.The share capital and reserves of the company are increasing every year, which shows the strongfinancial position of the organization. There is a increase in noncurrent liabilities of theorganizations as 4% in that year but a well decrease in current liabilities 62%. There is a jump incompany‟s noncurrent assets and current assets.The Institute of Management Sciences (Pak-AIMS) Page 41
  42. 42. [FINANCIAL ANALYSIS] 27/12/2012Ratio Analysis of Lucky Cement Lemited. 2012 2011 2010Current Ratio 2.46 0.88 0.71Quick Ratio 1.15 0.29 0.30Gross Profit Ratio 33% 27% 27%Operating Profit Margin 21% 14% 12%Net Profit Ratio 17.34% 12.50% 10.80%Return on Capital Employed 22.57% 11.23% 9.84%Return on Assets 20.49% 10.48% 8.92%Asset Turnover 0.97 0.77 0.76Earning per share 20.09 12.28 9.7Capital Gearing Ratio 306% 219% 301%Debt Ratio 18% 33% 34%Interest Cover 32.87% 8.34% 6.00%The Institute of Management Sciences (Pak-AIMS) Page 42
  43. 43. [FINANCIAL ANALYSIS] 27/12/2012Current Ratio:The purpose of using liquidity ratio is to determine the ability of the company for paying off its short termdebts. The higher value of liquidity ratios reflects that the company is well secured in performing itsobligations of short term debts. The calculation of current ratio shows that lucky cement is well secured inthis region. Its current ratio is 2.64 more than previous year .88Inventory Turnover:If we compare the inventory turnover it is 3.84 in year 2011 and 5.84 this year. This shows that companyhas lower its efforts to convert its inventory into sales due to several reasons like power shortage.Gross Profit Ratio:Profitability ratios are the measure of assessing business performance of generating profits withrespect to its expenses and other relevant expenses in a specific period of time say one year. Thehigher value as compare to the competitors or industry average or relative to previous periodshow the business is going well. In the present case, Company Lucky cement generated 27.00Gross Profit as compare to year in 2011 which Gross Profit was 33.00 which shows that 2012has better managed its COGS which resulted in increase of the Gross Profit.Operating Profit Margin:Company has generated 14% Operating Profit in 2011 and as compare to previous year in 2012Operating Profit is 21%. Company decrease their finance cost and slightly change in CGS that isand sales revenue is so high as compared to the previous year and performance is so increase inthat year.The Institute of Management Sciences (Pak-AIMS) Page 43
  44. 44. [FINANCIAL ANALYSIS] 27/12/2012Net Profit Ratio:Company has generated 12.50% Net Profit in 2011 and as compare to previous year in 2012 NetProfit is 17.40%. This improvement is so high in the net profit that company improved hisperformance beyond the previous years. Company decrease his finance cost also increases hisincome that is effective on the increase the Net profit ratio.Return on Capital EmployedLucky cement is very strong in this area and proved that the management is well employing itCapital Employed (capital investment) generating almost 22.57% in this year and the previousyear ROCE was 11.23% that show the strong area of the company management and more returnthan the Stock or Shares and Long-term Liabilities.Return on Assets:Lucky Cement is increase in return on assets in this year that would be 20% in 2012 and in 2011that was 10% Company financial position is strong as compare to the previous year.Assets Turnover Ratio:Assets Turnover show that how much company has generated by employing on unit of currency.Lucky cement is generating about 0.96 revenues against Re.1.0 assets. This reveals that althoughthe return is very good in 2011 however performing so well in 2012.The Institute of Management Sciences (Pak-AIMS) Page 44
  45. 45. [FINANCIAL ANALYSIS] 27/12/2012Quick Ratio:The purpose of using liquidity ratio is to determine the ability of the company for paying off itsshort term debts. The higher value of liquidity ratios reflects that the company is well secured inperforming its obligations of short term debts. The calculation of quick ratio shows thatCompany is well secured in this region.. The Company can easily meets its short termliabilities. Even is position with respect to Inventory Turnover is also better. Company QuickRatio in 2011 was 0.29:1 but in 2012 Quick Ratio is 1.15:1 that show the company well securedin performing its obligation in short term debts.Debt ratio:Gearing ratio is the measure to check the equity to borrowed funds/long term financing. The bestmeasure is the gearing ratio (Debt to equity). The results of the company show that they arehighly geared as the portion of their borrowed money is very much higher than the ownersequity. The other best measure is to check, how much the profit covers its interest. The higherthe interest cover ratio value, the more safe the company position is. The debt ratio in 2011 was33% and in 2012 debt ratio is 18% show the company decrease the payables and remove allshort term borrowing and also decrease the long term financing that impact on the debt ratio andstrong position of the company show as well.Interest cover:Interest cover ratio is the measure to check the equity to borrowed funds/long term financing.The best measure is the gearing ratio (Debt to equity). The results of the company show that theyare highly geared as the portion of their borrowed money is very much higher than the ownersThe Institute of Management Sciences (Pak-AIMS) Page 45
  46. 46. [FINANCIAL ANALYSIS] 27/12/2012equity. The other best measure is to check, how much the profit covers its interest. The higherthe interest cover ratio value, the more safe the company position is. Interest Cover was 8.2 in2011 and in 2012 it is so high 32.87 that is four time double in that year and company show sothe high equity in present and it would shows as well strong financial position.Earning per share:Most important is what the company is paying back toits investors/owners. The greater value ofEPS maintain the investors and owners confidence on the company.The Company is payingalmost double the value and building its better image before the investors. The previous yearEPS was 12.28 and in 2012 it is increase by 20.9 that is greater value of EPS in present.Standards, amendments and interpretations adopted duringthe yearThe accounting policies adopted in the preparation of these financial statements are consistentwith those of the previous financial year except as described below:New and amended standards and interpretationsThe Company has adopted the following new and amended IFRS and IFRIC interpretationswhich became effective during the year:IFRS 7 Financial Instruments: Disclosures (Amendment)IAS 24 Related Party Disclosure (Revised)IFRIC 14 Prepayments of a Minimum Funding Requirements (Amendment)In May 2010, International Accounting Standards Board (IASB) issued amendments to variousstandards primarily with a view toThe Institute of Management Sciences (Pak-AIMS) Page 46
  47. 47. [FINANCIAL ANALYSIS] 27/12/2012removing inconsistencies and clarifying wording. These improvements are listed below:IFRS 7 Financial Instruments : Disclosures (Clarification of disclosures)IAS 1 Presentation of Financial Statements (Clarification of statement of changes in equity)IAS 34 Interim Financial Reporting (Significant events and transactions)IFRIC 13 Customer Loyalty Programmes (Fair value of award credits) Recommendations and Financial Strategy: In cement industry have some issue regarding electricity but the company should have to improve their strategies and omit these issues. The company should have to payoff its long term debts to avoid such a heavy finance costs. Finally, it needs more exemplary leadership, expand their business in foreign counties and improve pricing stretgies and aslo improve its performance.Conclusion:Lucky Cement Lamited is one of the largest cement company in pakistan is financial performancin 2012 is so good as compaird to the previous yares.Company management is so strong and strategies that are used is very usefull for the companybetterment and its growth. Due to state issues like electrocity, gas and other facters not effect onthe company performance but aslo company dramatically company growth going high. Companyshould grow their business as multinationl and export the product in the other countries.Thank you!The Institute of Management Sciences (Pak-AIMS) Page 47

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