Report on sitara chemical

4. M. NAVEED

6. CONTENTS
 Introduction
 History
 Vision, Mission and Ethics
 Objective
 Ratio’s
Liquidity
Activity
Profitability
Solvency
 SWOT Analysis
 Suggestion and Conclusion

7. Its product line includes Caustic Soda solid, sodium hypochlorite, caustic
soda liquid, hydrochloric acid, liquid chlorine, Specialty Chemical,
Fertilizer polyester Cotton.
Head Quarter
in Faisalabad
343 Employs
Private Ltd.
Company
Chemical
Division
Textile
Division
Manufactured
Company

8. ╚ Sitara Group of Industries is one of the well-known industrial groups of Pakistan
╚ This group started its industrial activity with textile weaving sector in 1956 under
leadership of two brothers, Haji Abdul Ghafoor (Late) and Haji Bashir Ahmed.
╚ By Haji Bashir Ahmed
╚ SCIL was incorporated in 1981
╚ Began producing caustic soda in 1985
╚ Its specialty chemicals and export division was established in 2001 and agri
chemicals division in 2003.

9. VISION
Strive to develop and
employ innovative
technological solutions
to add value to
business with
progressive and
positive approach.

10. MISSION
Continuing growth
and diversification
for bottom line
results with risks
well contained.

11. BUSINESSES
 Sitara Chemical Industries Ltd.
 Sitara Chemical Industries Ltd. (Textile Division)
 Sitara Textile Industries Ltd.
 Sitara Spinning Mills Ltd.
 Sitara Energy Ltd.
 Aziz Fatima Trust Hospital
 Ghafoor Bashir Children Hospital
 Sitara Developers Ptv. Ltd.
 Sitara Hamza Pvt. Ltd.

12. OBJECTIVES
Safety
Quality
Integrity
Respect
Excellence
Innovation

13. M. SHAHID MUNIR

14. Ratio’s
Activity
Profitabilit
y
Solvency
Liquidity

15. LIQUIDITY
RATIO

16. LIQUIDITY RATIO
“ Liquidity ratios measure the company's ability to meet its
short-term obligations.”
Liquidity Ratios:
Current Ratio
 Quick Ratio
 Absolute Ratio

17. CURRENT RATIO
Definition:
Total current assets to total current
liabilities.
Known as:
Working Capital Ratio
Bench-Mark Rate:
2:1

18. Formula
=
Current Assets/ Current Liabilities
Year 2011 2012
Calculation
=
2,293,235,870/3,940,419,539 2,715,289,032/4,279,702,977
Output
=
0.58 : 1 0.63 : 1
CURRENT RATIO
Current Assets Current

19. LIQUID RATIO
Relationship between
liquid assets and total
current liabilities.
Bench mark rate:
1:1
Acid test ratio, Quick
ratio.
Benefit:
Exact test of liquidity.
Also Known as:

20. LIQUID RATIO
Formula
=
Liquid Assets/ Current Liabilities
Year 2011 2012
Calculation
=
1,401,115,714 1,805,887,700
3,940,419,539 4,279,702,977
Output
=
0.36:1 0.42:1

21. ABSOLUTE LIQUID RATIO
Relates cash , bank and
marketable securities to
current liabilities.
Very strict and
exacting standard of
liquidity.
Bench Mark rate:
0.5:1

22. ABSOLUTE LIQUID RATIO
Formula
=
[Cash + Bank+ Marketable Securities]
Current Liabilities
Years 2011 2012
Calculation
=
140,776,990 79,861,668
4,27,97,02,977 3,94,04,19,539
Output
=
0.04:1 0.02:1

23. FARHAT ABBAS

24. ACTIVITY RATIO

25. ACTIVITY RATIO
“Activity or efficiency ratio
reflects the intensity of a
company’s resource utilization
or how efficient management
team uses its assets or capital to
generate sales.’’ in other words
‘measure the efficiency of
Business’

26. ACTIVITY RATIO
Fixed assets turnover ratio
Working capital turnover ratio
Creditor conversion period
Creditor turnover ratio
Debtors conversion period
Debtors turnover ratio
Stock conversion period
Stock turnover ratio

27. Years 2011 2012
Formula
=
CGS / Average Inventory
Calculation
=
4,663,238,913 5,393,939,325
885,083,340 902,720,830
Output
=
5.27 Times 5.98 Times
STOCK TURNOVER RATIO

28. Years 2011 2012
Formula
=
Days in a year
stock turnover ratio
Calculation
=
365/5.27 365/5.98
Output
=
69 Days 61 Days
Inventory Conversion Period

29. Years 2011 2012
Formula =
net credit sales
Avg. account receivables
Calculation = 4,663,238,913 5,393,939,325
512,397,911 893902085
Output = 12.13 Times 11.41 Times
Debtors Turnover Ratio

30. Years 2011 2012
Formula
=
Days in a year
debtor’s turnover ratio
Calculation
=
365 /12.13 365 / 11.41
Result
=
30 Days 32 Days
Debtors/ Receivables Conversion Period

31. Creditors/Payables Turnover Ratio
Years 2012 2011
Formula =
Net Credit purchases
Avg. payable
Calculation
=
4,663,238,913 5,393,939,325
1,439,419,941 1,356,248,460
Output = 3.74 times 3.44 times

32. Years 2011 2012
Formula
=
Days in a year
Creditor’s turnover ratio
Calculation
=
365/3.44 365/3.74
Output = 106 Days 97 Days
Creditor/Payable Conversion Period

33. Formula = C.G.S/Fixed Assets
Year 2011 2012
Calculation = 4,663,238,913 5,393,939,325
8,001,028,528 10,165,371,942
Out Put = 0.58 Times 0.53 Times
Fixed Assets Turnover Ratio

34. WORKING CAPITAL TURNOVER RATIO
How efficiently working capital is being used for the generation of revenues

35. WORKING CAPITAL TURNOVER RATIO
Formula
=
C.G.S/ Average Working Capital
Years 2011 2012
Calculation
=
4,663,238,913 5,393,939,325
-1,647,183,669 -1,564,413,945
Output
=
-2.83 Times -3.45 Times

36. GOHAR IQBAL

37. Profitability Ratio’s

38. PROFITABILITY RATIO
Types of Profitability Ratio

39. Formula =(Gross Profit/ Net Sale)*100
Year 2011 2012
Calculation = (1,553,641,041 (2,069,987,192
6,216,879,954)*100 7,463,926,517)*100
Output = 24.99 % 27.73 %
GROSS PROFIT RATIO

40. Formula =(Net Profit Ratio/Net Sale) * 100
Year 2011 2012
Calculation
=
(427,991,321 (688,481,947
*100
6,216,879,954)*100 7,463,926,517)
Output
=
6.88 % 9.22 %
NET PROFIT RATIO

41. Formula
=
(Operating Profit/ Net Sale) * 100
Year 2011 2012
Calculation =
(1,078,065,020 (1,124,322,227
6,216,879,954)*100 7,463,226,517)*100
Output = 17.34 % 15.06 %
Operating Profit Ratio

42. Formula
=
(C.G.S+ Operating
Expenses)
*100
Net Sales
Years 2011 2012
Calculation
=
(5,046,378,387 (5,832,847,717
*100
6,216,879,954)*100 7,463,926,517)
Output
=
81.17 % 78.15 %
Operating Ratio

43. Formula
=
(Expenses/Net Sale)*100
Year 2011 2012
Calculation
=
(1,078,065,020 (1,124,322,227
6,216,879,954)*100 7,463,926,517)*100
Output
=
17.34 % 12.06 %
EXPENSE RATIO

44. ZEESHAN
ATTIQUE

46. The ratio’s are used to
determine the long term
debt paying capacity of
any organization &
measure the efficiency
of firm regarding
interest payment.
SOLVENCY RATIO

47. In which including…..
SOLVENCY RATIO

48. DEBT EQUITY RATIO
“A solvency ratio calculated as total debt divided by total shareholders
equity”
Three Types of Formulas:
1. Debt to equity Ratio
=
Long term debt
Equity
2. Debt to equity Ratio
=
Total debt
Equity
3. Debt to equity Ratio
=
Long term debt
Long term funds

49. 1. DEBT TO EQUITY RATIO
Year 2011 2012
Formula
=
Long term debt/equity
Calculation
=
1,810,242,786 1,334,775,746
3,786,411,020 4,402,885,955
Output
=
0.48:1 0.30:1

50. 2. DEBT TO EQUITY RATIO
Year 2011 2012
Formula
=
Total debt/equity
Calculation
=
6,765,231,754 7,011,708,546
3,786,411,020 4,402,885,955
Output
=
1.79:1 1.59:1

51. 3. DEBT TO EQUITY RATIO
Year 2011 2012
Formula
=
Long term debt/Long term funds
Calculation
=
1,810,242,786 1,334,775,746
5,596,653,806 5,737,661,701
Output
=
0.32:1 0.23:1

52. This ratio establishes
the relationship
between proprietor's
fund to total
resources of the unit.
PROPRIETARY RATIO
Formula:
Equity
Total Funds

53. FORMULA =(Equity/Total Funds)*100
Years 2011 2012
Calculation
=
(3,786,411,020 (4,402,885,955
8,001,028,528)*100 12,880,660,974)*100
Output = 36.78 % 34.18 %
PROPRIETARY RATIO
In 2011 is contributed by the proprietor was 36.78%
But in 2012 this contributed was decreased and the figure
was 34.18% remaining

54. This ratio measures
the relationship
between the long
term funds and the
fixed assets
FIXED ASSETS RATIO
Formula:
Fixed Assets
Long term
Funds

55. Formula
=
Fixed Assets/Long Term Funds
Years 2011 2012
Calculation
=
8,001,028,528 10,165,371,942
6,611,223,235 7,134,891,524
Output
=
1.21% 1.42%
FIXED ASSETS RATIO

56. FORMULA
=
EBIT/Interest
Years 2011 2012
Calculation
=
1,213,154,939 1,669,465,200
703,493,583 682,871,270
Output
= 2.44 Times 1.72 Times
INTEREST COVERAGE RATIO

57. Akbar Butt

58. Earning Per Share
EPS:
EPS is the most important
term for the investors of
stock exchange
Definition:
“This ratio tells us
about how much
earning on “1” share”.

59. Formula
=
Profit After Tax/Number Of
Shares Outstanding
Year 2011 2012
Calculation=
427,991,321 688,481,947
21,429,407 21,429,407
Output = Rs. 19.97 Rs. 32.13
EARNING PER SHARE

60. RETURN ON INVESTMENT RATIO

61. Return On Investment Ratio
Return on investment
is the primary ratio to
measure the overall
profitability and
efficiency of business.

62. 2 TYPES
Return On
Investment
Ratio
Return on
Equity
Return on
capital
employed

63. FORMULA =(EBIT/Capital Employed)*100
Year 2011 2012
Calculation
=
(1,213,154,939 (1,669,465,200
6,353,844,859)*100 8,600,957,997)*100
Output 19.09 % 19.41 %
Return On Capital Employed

64. FORMULA =(Profit After Tax/Equity)*100
Year 2011 2012
Calculation
=
(427,991,321 (688,481,947
3,786,411,020)*100 4,402,885,955)*100
Output = 11.30 % 15.64 %
Return On Equity / Share Holder Funds

65. ARFAN M. AFZAL

67. SWOT ANALYSIS
Strength
 Largest manufacture caustic soda
 Largest Shareholder
 Advance Technology
 Plant Infrastructure
 Strong Management
 Strong Brand name
 Financially Sound

68. SWOT ANALYSIS
Weaknesses
 Need Considerable Market to Sustain
 Lack of Operations in Abroad
 Relying on Permanent Customers

69. Opportunities
 Increase Production Capacity
 Increase Product Line
 Taking Advantage of Geographic
position
 Provide Online Customer
Service Ordering System
SWOT ANALYSIS

70. Threats
Competitors
Economic Environment
Energy Crises
Threat of Stakeholders
Unstable Law & Order Situation
SWOT ANALYSIS

71. POSITIVE POINTS
 We did not found much difference in the
SWOT Analysis of SCIL. They are
performing pretty well and have
strong strategic direction.
 When we Comparison with other
Chemical industries like NIMIR the
SCIL worked in well Condition.

72. SUGGESTIONS
 For the Market Development, it is opportunity for them to export their
product in new markets.
 Sitara Chemical Industry must involve employees in decision making.
 Increase the Basic salary of its employees to increases their motivations.
 Avoid more credit Purchases.
 Control the Cost of product with the use of Advance Technology.
Another they have to make segment in
their website through which they can
provide online customer services in which
customer can place
order and provide Feedback as well, this
will help them to capture more customers
throughout the world

73. CONCLUSION
 After the completion of ratio analysis ,we have concluded
that the Industry has good will in market but this year some
profitability ratios decreased & some increased as
compare to previous year plus E P S. It’s means that the
company has to take measures to maintain its position
 But still there is some room for improvement in compensation
system, and employment Planning.

74. T
H
A
N
K
S