Mughal steel Financial analysis, Ratio analysis, financial detail, including balance sheet 2019.

1. Ratio Analysis

2. Company’s Profile
Mughal Iron & Steel Industries Limited (“Mughal Steel”)
was incorporated in 2010 as a public limited company.
The Company took over the running business of a
partnership concern by the name of “Mughal Steel”
which had been in the steel business for over 50 years
and was being run by the major sponsors of the Company.
Today, Mughal Steel is one of the leading steel companies
in Pakistan in the long rolled steel sector, equipped with
depth of technical and managerial expertise, a reputation
for reliability and a sharply defined business focus, which
has forged the organization into a modern, highly
competitive supplier of steel products.

6. Mr. Mirza Javaid Iqbal (Chairman/Director)
Having joined his family business in 1976, Mr. Javaid Iqbal rose to become a pioneer of
the steel industry of Pakistan. He has not only developed new pathways to achieve
energy efficiency and economies of scale, but has made remarkable contributions
towards the technological advancement and effective documentation of the national
steel industry.
Mr. Khurram Javaid (Chief Executive Officer/Director)
He holds an MBA from the Coventry University, UK and a BSc. from the Lahore School
of Economics in Pakistan. He has made substantial contributions to the Company’s sales
and production network within the country – ensuring that each is at par with the
international standards of the steel industry. He is the man behind incorporating
effective HR planning, policymaking and training
Mr. Muhammad Zafar Iqbal (Chief Financial Officer)
He is working as CFO since incorporation of the Company. He is a Fellow Member of the
Institute of Chartered Accountants of Pakistan. He has vast experience of dealing in
accounts, finance, and taxation and company law related matters. With over 16 years
of experience in leadership positions, he plays an active role in the financial/strategic
planning of the Company.
COMPANY OVERVIEW
KEY MANAGEMENT PROFILE
6

7. CODE OF CONDUCT
CULTURE, VALUES & ETHICAL PRINCIPLES
• Integrity
• Trust
• Diversity
• Ingenuity
• Excellence
• Personal Development
• Fairness
• Teamwork
• Customer Satisfaction
• Laws & Raglations
• Innovation

8. Product line
Key Brands
• Mughal Supreme
• Mughal Super Girder
• Mughal Super Tee

9.  The following companies are listed on the Karachi Stock Exchange Limited classified under Industrial
Metal and Mining sector:
SECTOR OVERVIEW
COMPETITORS
PKR in Million
MISIL ISL INIL CSAP ASL HSPI
Product Type Long & Flat Flat Tubular Tubular Flat Tubular
No. of Shares Outstanding (mn) 82.04 435.00 119.89 62.11 270.96 55.48
Price (PKR) 20.00 28.13 73.46 54.21 10.07 24.78
Market Capitalization 1,641 12,237 8,807 3,367 2,729 1,375
Revenue 5,857 21,280 16,341 4,032 9,259 1,518
Gross Profit 725 2,237 2,102 230 58.8 31.2
Profit After Tax 391 690 503 360 -346 -36
Total Assets 7,074 16,879 16,247 4,733 16,280 7,250
Total Liabilities 3,618 11,109 10,242 726 13746 2678
Total Equity 1,326 5,770 6,004 4,007 2,253 1,243
Earnings Per Share (PKR) 4.76 1.59 4.19 5.8 -1.28 -0.66
Book Value Per Share (PKR) 16.17 13.26 50.08 64.52 9.35 22.4
Price to Earnings (x) 4.20 17.74 17.52 9.35 N/A N/A
Price to Book Value (x) 1.24 2.12 1.47 0.84 1.08 0.3
Key Financials (FY2014)

10.  Driven by strong economic growth number and
high level of consumption, the region is a net
Importer of scrap metal.
 The high demand of scrap metal is fulfilled
through imports from the European Union and
North America. (Source: Steel Year Book 2013)
 China produces almost half of world’s total crude
steel production and consumes most of its
production.
 Japan, South Korea and India are three other
major players in global steel export market that
are present in this region, making it a highly
competitive region.
SECTOR OVERVIEW
REGIONAL MARKET
Regional Trade Trade DynamicsExport of Scrap Mt
Japan 8,150
Singapore 978
Hong Kong 622
Thailand 437
Other Asia 282
South Korea 205
Philippines 170
Taiwan, China 74
Malaysia 53
Indonesia 42
Others -
Total (Asia) 11,013
Import of Scrap Mt
South Korea 9,260
India 5,632
China 4,465
Taiwan, China 4,446
Indonesia 2,399
Viet Nam 2,195
Malaysia 1,921
Thailand 961
Pakistan 875
Bangladesh 282
Others 579
Total(Asia) 33,015

11. • World crude steel production has increased from 851mt (million metric
ton) in 2001 to 1,649mt for the year 2013
• Potential growth was higher during the period but it was halted due to
economic recession during the period
• Asia produce 65% of the global crude steel making it the most significant
region in the world
• Outlook for 2014 and onward is strong as economy conditions are
expected to be more favorable in coming years
• Developing economies in particular are expected to be lucrative for steel
manufactures
• Biggest threat to the steel market remains overproduction as current
global capacity exceeds the demand
Rank Total Imports (2013) Mt
1 European Union (27) 30.8
2 United States 30.3
3 Germany* 22.1
4 South Korea 19
5 Thailand 15.9
6 Italy* 15.6
7 China 14.8
8 Turkey 14.5
9 France* 13.2
10 Indonesia 12.3
Rank Total Exports (2013) Mt
1 China 61.5
2 Japan 42.5
3 European Union (27) 38.7
4 South Korea 28.9
5 Ukraine 24.7
6 Germany* 24.3
7 Russia 23.6
8 Turkey 17.3
9 Italy* 16.9
10 Belgium-Luxembourg* 16.6
Source: Steel Year Book 2014
SECTOR OVERVIEW
GLOBAL MARKET
World Steel Production ('000 Tonnes) 2009 2010 2011 2012 2013
European Union 139 173 178 169 166
Other Europe 29 34 39 40 39
C.I.S. 98 108 113 111 108
North America 125 84 112 122 119
South America 38 44 48 46 46
Africa 15 17 16 15 16
Middle East 18 20 23 25 27
Asia 811 918 995 1,026 1,123
Oceania 6 8 7 6 6
World 1,237 1,433 1,537 1,545 1,649

12. • The steel industry in Pakistan is dominated by small and
medium-scale re-rolling mills, engaged in re-rolling,
forging and melting activities.
• Current consumption for steel is 3.5mn tonnes (Steel
Year Book 2014). Production lags behind total
consumption hence excess demand is met through
import of semi-finished and finished good .
• Pakistan is still amongst the lowest per capita consumer
of crude steel at 19.1 kg in comparison to regional
average of 262.5kg and world average of 238.2kg.
• Demand is expected to remain high, primarily due the
current Government’s focus on the infrastructural
projects.
• Local steel manufacturer compete against steel
products imported primarily from China, however
recent change in Chinese export regulation have
increased the cost of imported steel, boosting local
industry sales.
SECTOR OVERVIEW
DOMESTIC MARKET
Steel Production by Process
('000 tonnes)
2011 2012 2013
Oxygen-blown Converters 750 750 850
Electric Furnace 100 100 120
Total 850 850 970
Imports of Semi-finished and Finished
Steel Products ('000 tonnes)
2011 2012 2013
Imports of Ingots and Semis 106 41 59
Import of Long Products 145 160 169
Import of Flat Products 1,282 1,663 1,690
Imports of Tubular Products 56 88 141
Total 1,589 1,952 2,059
Import of Raw Material ('000 tonnes) 2011 2012 2013
Import of Pig Iron 9 8 9
Import of Iron Ore 116 - -
Import of Scrap 955 922 875
1,080 930 884

16. Financial Ratios

17. Analysis of Financial Ratios

19. Comments on Financial Ratio Analysis
Profitability ratios
Profitability ratios depicted mix trend. Sales and profits over the years increased. However,
margins in 2019 dropped due to increase in average cost of scrap and related manufacturing
overheads.
Liquidity ratios
As sales volume increased over the years, liquidity position of the Company improved and
resulted in better cash flows. Therefore, ratios started improving from year 2013 and ended in
much better condition in 2019 as compared to year 2013. However, in 2019, current ratio
slightly decreased due to increase in borrowings.
Activity / turnover ratios
The ratios depicted an overall mixed trend over the years. However, inventory days and ratios
became stable 2015 onwards. Receivables days increased due to increase in outstanding
recoveries.
Investment / Market ratios Increased profitability means increased EPS and this is evident
from the figure which has gone up to 5.46 from 5.13 last year. Break-up value per share as at
the close of the year was the year to 29.82 due to increased profitability. The market value of
the share however closed at 25.16 which was lower than last year.
Capital structure ratios
These ratios have continued to get better since 2013 based on increase in equity, improved
results and healthy cash flows, which have helped the Company pay its debts at accelerated
rates and the trend is evident this year. However, long-term debt to equity ratio increased due
to increase in long-term borrowings.

20. Liquidity
analysis`
• Current ratio
• Quick ratio
• Working
capital
Profitability
analysis
Solvency analysis
• Debt equity
ratio
• Debt service
interest
converge ratio
Efficiency
analysis
• Inventory
turnover ratio
• Debtors
turnover ratio
• Asset
turnover ratio
• Gross profit
magin
• Operating
profit
margin
• Net profit
margin

21. Liquidity analysis

22. Current ratio
=
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
2013
2664779
3846502
= 𝟎. 𝟔𝟗
2014
1539408
2899970
= 𝟎. 𝟓𝟑
2:1 is the bench mark.
This shows the ability of the company to cover its current
liabilities with current asset. As the current ratio decreases 2014
,shows that the company’s ability to pay its liabilities has been
decreased which is a bad sign.

23. Quick ratio
=
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡 − (𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 + 𝑝𝑟𝑒𝑝𝑎𝑦𝑚𝑒𝑛𝑡𝑠)
𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
2013
2664779 − (72357 + 21125)
3846502
=0.66
2014
1539408 − (60679 + 15506)
2899970
=0.50
1:1 is the bench mark
It shows the ability of a company to pay its
current liabilities through its most liquid assets. in
2014 it decreases to 0.50 which shows that the
company cannot pay its debts without its
inventory . It should b 1:1 or higher.
So the company is not showing a good sign.

24. Working capital
= current asset – current liabilities
2013
2664779-3846502
= -1181733
2014
1539408-2899970
= -1360562
The decrease in working capital in 2013 has been
increased by 15% in 2014, which shows that in
both years the company’s current liabilities
exceed its current assets which is not good for
company’s health.

25. Interpretation
After the liquidity analysis we conclude
that the liquidity position of a company for
2014 is not progressive as the company is
not in a position to discharge their short
term liabilities.
0
0.2
0.4
0.6
0.8
Current ratio quick ratio
Liquidity analysis
2013 2014

26. Profitability
analysis

27. Gross profit ratio
=
𝑔𝑟𝑜𝑠𝑠 𝑝𝑟𝑜𝑓𝑖𝑡
𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
*100
2013
789289
4840142
∗ 100
=16 %
2014
273712
3670299
∗ 100
=7.4 %
Higher the ratio , higher will be the company’s ability to
produce goods and services at low cost with high sales
the above figures show a decrease in the ratio in 2014
and it is not favorable. We can interpret that the
company has increased their cost of goods but their
sales are not increasing.

28. Operating profit ratio
=
𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡
𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
* 100
2013
294182
4840142
∗ 100
=6.07 %
2014
369951
2670299
∗ 100
=10.07 %
Higher is better.
As the operating profit ratio of has increased in
2014 which shows that the company have lower
down their operating expenses or may have
changed their policies with regard to expenses
but overall it’s a good sign.

29. Net profit margin
=
𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥
𝑛𝑒𝑡 𝑠𝑎𝑙𝑒𝑠
*100
2013
=
3451785
4840142
∗ 100
= 71.3%
2014
=
2974710
3670299
∗ 100
=81.04%
Higher the ratio , higher will the firm’s ability to
pay its taxes. These figures show that the
company has lowered their expenses as the net
profit ratio has increased in 2014 and thus make
themselves able to control its cost

30. Interpretation
The decrease in gross profit ratio does not
mean that the company's sales has been
decreased as their operating profit and net
profit has been increased so the overall
profitability is satisfactory
16% 6.07%
71.30%
7.40% 10.07%
81.04%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Gross profit ratio Operating profit ratio Net profit margin
Profitability analysis
2013 2014 Column1

31. Solvency analysis

32. Debt equity ratio
=
𝑡𝑜𝑡𝑎𝑙 𝑙𝑜𝑛𝑔 𝑡𝑒𝑟𝑚 𝑑𝑒𝑏𝑡𝑠
𝑆ℎ𝑎𝑟𝑒 ℎ𝑜𝑙𝑑𝑒𝑟 𝑓𝑢𝑛𝑑
2013
338798
14665588
= 𝟎. 𝟎𝟐𝟑
2014
330465
15044522
= 𝟎. 𝟎𝟐𝟏
1:1 is the bench mark
Ratio has decreased in 2014 and become 0.021:1 which
shows that the creditors of have provided 2.1% of asset
for each Rs 1 of asset provided by shareholders. Lower
the ratio , lower will be the risk for creditors and
investors to invest in a business because it is the
indication of greater protection to their money.

33. Debt service interest coverage ratio
=
𝑒𝑎𝑟𝑛𝑖𝑛𝑔 𝑏𝑒𝑓𝑜𝑟𝑒 𝑖𝑛𝑡𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑡𝑎𝑥
𝑓𝑖𝑥𝑒𝑑 𝑖𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑐ℎ𝑎𝑟𝑔𝑒𝑠
2013
3893429
849839
= 𝟒. 𝟓𝟖 𝒕𝒊𝒎𝒆𝒔
2014
3401852
890163
= 𝟑. 𝟖𝟐 𝒕𝒊𝒎𝒆𝒔
1:1 is the bench mark.
As the debt service interest coverage ratio has
been decreased in 2014 which shows that the
company has 3.82 rupees to pay 1 Rs tax which
shows good solvency position because higher is
better .

34. Interpretation
The company is in a better position to
finance its business by obtaining
further debts from financial
institutions or other appropriate
resources.
0
1
2
3
4
5
Debt equity ratio Debt service
interest coverage
ratio
Solvency analysis
2013 2014 Column1

35. Efficiency analysis

36. Inventory turnover ratio
=
𝐶𝐺𝑆
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 @ 𝑐𝑜𝑠𝑡
2013
4050853
62225.1
= 𝟔𝟓. 𝟏𝟎 times
2014
3396587
66599.7
= 𝟓𝟏. 𝟎𝟔 𝒕𝒊𝒎𝒆𝒔
Higher is better.
As inventory turnover ratio deteriorated from 2013 to
2014 which shows that the ability to sell inventory has
decreased. As this ratio was supposed to be high but
it decreases by 21% which is not favorable.

37. Inventory conversion period
=
365
𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜
2013
365
65.10
= 5.6 days
2014
365
51.06
= 𝟕. 𝟏 𝒅𝒂𝒚𝒔
Lower is better.
It shows that in 2013 the company dispose off its
inventory in 5.6 days but in 2014 it goes up to 7.1
days that means that the company’s efficiency has
decreased.

38. Debtors turnover ratio
=
𝑎𝑛𝑛𝑢𝑎𝑙 𝑛𝑒𝑡 𝑐𝑟𝑒𝑑𝑖𝑡 𝑠𝑎𝑙𝑒𝑠
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠
2013
4840142
20074.4
= 241.11 times
2014
3670299
19982.02
= 183.68 times
Higher is better
It measures company's efficiency in collecting its
sales on credit and collection policies. As the ratio
highly decreased it indicate that your business
needs to improve its credit policies and collection
procedures. While in 2013 it was far more better.

39. Receivable collection period
=
𝑛𝑜 𝑜𝑓 𝑑𝑎𝑦𝑠 𝑝𝑒𝑟 𝑦𝑒𝑎𝑟
𝑑𝑒𝑏𝑡𝑜𝑟′ 𝑠 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜
2013
365
241.11
= 1.51 days
2014
365
183.68
= 1.99 𝑑𝑎𝑦𝑠
Lower is better
It shows the ability of the company to collect its
receivable in a specific time . As the data shows
that in 2013 they collects receivables in 1.5 days
while it goes up to 1.99 days in 2014 which means
that the company is now recovering late as
compare to previous year. But it is a slight change

40. Asset turnover ratio
=
𝐶𝐺𝑆
𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑡𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠
2013
4050853
38897767
= 𝟎. 𝟏𝟎𝟒 𝐭𝐢𝐦𝐞𝐬
2014
3396587
39788398
= 𝟎. 𝟎𝟖𝟓 times
Higher is better.
Asset turn over ratio of DH Corporation in 2014
has been decreased by 18.3% . As this ratio is
supposed to be high so we can interpret that the
company generated more revenue of asset
investment in 2013 as compared to 2014.

41. Interpretation
The efficiency analysis shows that the
company was more efficient in 2013
and in 2014 it losses its efficiency
which is unfavorable for company
0
50
100
150
200
250
300
Inventory turnover
ratio
Debtors turnover
ratio
Asset turnover
ratio
Efficiency ratios
2013 2014

42. Thank you.