The share capital and reserves of the company are increasing every year, which shows the strong financial position of the organization. There is a decrease in noncurrent liabilities of the organizations but a well increase in current liabilities. There is a jump in company’s noncurrent assets and current assets.
As for the company's balance sheet, it had 22.92% current assets and 77.08% non-current assets, its shows the strong position of the company in long term perspective. Stores and spares make 15.32% of the current assets while stock in trade compromises 3.03% which shoes that company has we sufficient working capital for day to day activities.
As you can see in the statement of profit and loss, lucky cement’s gross profit is sizable, at 33 percent. The distribution cost, though, are eating up a huge chunk of the revenues; that could be an area in which to cut back. General operating expenses take up a reasonable percentage of sales, leaving lucky cement with about a 15.26 percent bottom-line profit.
Fr final presentation
Group MembersNasir Ali Khan (103137)H.Bilal Ahmad Ch (103145)Bilal Shamim (102119)Waqas Hassan Khan (121812)
What is Cement?History of Cement: old as human civilization Romans used volcanic tuff mixed raw material for their construction Egyptians used it for the construction of PYRAMIDES Mr. Joseph patented artificial cement with a famous building stone obtained from the land of England in 1824.
Introduction Of D.G Khan Cement: State Cement Corporation of Pakistan (S. C. C. P) was established in 1984. In 1977 demand is 3.7 m tons while the production is 3.1 m tons. Main purpose of establishment is to fulfill the demand of Northern Marketing Zone. Selected a place D. G. Khan. The location is ideal because it is near to market as well as prior to raw material. In 1992 SCCP was privatized and purchased by Nishat group of industries. its name changed from SCCP to D. G. Khan Cement Factory. The new plant is the relief for Bhawalpur, Khanewal,Muzafargurh, Bhawalnagar, and Vehari. . Its design capacity of 3300 ton clinker per day. DGKCC has three cement plants, two plants located at Dera Ghazi Khan and one at Khairpur Distt. Chakwal
Mission Statement“D. G. Khan Cement Company committed to produce and supply high quality conforming the local and international standards adopting modern technique satisfying the customer requirements the most competitive prices.”Future Planning: Export their high quality cement The main purpose of ISO 9002 certificate it to get the approval from ISO, they can export their high quality cement according to international standards .
Introduction of Lucky Cement: Lucky Cement Limited was founded in 1994• Lucky Cement Limited is the largest cement producer in Pakistan Its shares are traded on the Karachi Stock Exchange Its symbol in the Karachi Stock Exchange (KSE) is LUCK. Lucky Cement Limited has been sponsored by one of the largest business groups in Pakistan, the Yunus Brothers Group (YB Group),
Organization Structure: managed by the team of professionals. Two production plants & five marketing offices. 1800 permanent employees throughout Pakistan.
Economy overview Per capita income rose from $1073 to $1254 increase of 16.9% Rs196.3billion borrowed from state bank and Rs 275.9 billion by scheduled banks.. Tax collected Rs 1588 billions instead of Rs 1667 billions This is due to floods during july and august 2011 Inflation rate is 14.1% but in last year it was 11.5%
Increase in inflation rate is attribute to increase in in food price This due to increase in price of sugar milk poultry meat etc
Cement sector performance Total sales volume increased by 2.94millions tons Local cement demand increased by 14.6% to 23.53million tons against 19.4million
Past, present and future performance of lucky cement Larger manufacturer Signed a MoU with oracle coal for coal supply Implemented waste heat recovery project in karachi. During 2011 production of clinker and cement increased by 7.92% and 13.05% Due to massive capacity expansion company has been able to consolidate its position
Local sale increased by 12.43% while export declined by 32% Local Market share increased by 12.79% to 15.61% Export segment declined by 33% to 26.21% Financial performance Inventory turnover ratio decline from 19.28 times to 12 times Current ratio increased .7to .81
Debt to equity ratio increased 53%-55% Debt to assets ratio increased by 34%-36% Long term debt to equity decreased 14%-10% Earning per share shrunk from Rs7.92 to Rs 7.65 Lucky cement profit is Rs 3.889 million Cost per ton decreased by 11%
Future outlook Price of cement is expected to increase Local cement sale can also be increased due to the construction of 8dams in province Working capital ratio can easily improve
D G Khan Cement Present, Past & Future Performance: It is a unit of Nishat group I t is producer and seller of ordinary portland and sulphate resistant cement PAT declined by Rs388m toRs177m EPS decreased 1.06 - .49 current ratio is 1.19:1
Future outlook As GDP increased in 2011 by 4.5% so its expected higher per capita cement consumption The infrastructure redevelopment of flood affected areas is also a potential area for demand of cement to grow DGKC is trying to cut down the costs that have significantly and adversely impacted its profits. To reduce electricity cost, DGKC has started a project of power generation from waste heat at DGK Site
DGKC has also decided to use municipal solid waste as fuel for heating purposes. Beneficiary for to reduce PC help to resolve environmental issues
THE HORIZONTAL ANALYSIS OF COMPANY HORIZONTAL ANALYSIS OF BALANCE SHEET
D.G. Khan Cement Company INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31,…. 2007 2008 2009 2010 2011 100.00% 100.00% 100.00% 100.00% 100.00%Net Sales 68.34% 84.60% 68.50% 52.92% 74.88%Cost of Sales 31.65% 15.40% 31.50% 22.50% 25.58%Gross Profit -1.62% -0.89% -0.78% -0.77% -1.54%Administrative expenses -1.01% -4.52% -10.37% 11.81% 6.54%Selling and distribution expenses -2.17% -4.67% -4.42% -2.49% -2.18%Other operating expenses _ _ -1.42% -0.18% -1.22%Impairment on investments 7.47% 6.80% 4.27% 4.71% 5.71%Other operating income 34.32% 15.10% 18.78% 30.52% 41.77%Profit from operations -7.28%Finance cost -14.05% -14.50% -6.23% -8.70%Profit before tax -2.02% 4.34% 24.29% 26.82% 33.07% -1.52% 1.58% -1.39%Taxation -1.42% 1.73% 25.20% -2.44% 2.92%Net profit 22.87% 31.34%
D.G. Khan Cement Companyh BALANCE SHEET AS AT DECEMBER 31,….. 2007 2008 2009 2010 2011ASSETSNON-CURRENT ASSETSProperty, Plant and equipment 42.74% 44.19% 56.90% 58.70% 62.40%capital work in process 0.15% 0.11% 0.35% 0.21% 0.13%Long term investments 15.29% 13.07% 7.42% 19.40% 13.86%Long term loans, advances and deposits 0.38% 1.00% 0.39% 2.68% 1.55%CURRENT ASSETSStores, spares and loose tools 2.89% 4.42% 6.87% 1.40% 5.45%Stock-in trade 0.57% 0.85% 2.10% 8.19% 4.88%Trade debts 0.57% 0.70% 1.20% 0.46% 2.68%Investments 32.72% 29.00% 18.22% 12.80% 24.78%Advances, deposits, and other receivables 0.57% 1.50% 2.12% 2.68% 1.90%Cash and bank balances 0.22% 0.43% 0.57% 1.50% 0.45%EQUITY AND LIABILITIESCAPITAL AND RESERVESAuthorised capital 19.30% 19.20% 23.40% 20.00% 22.50%Issued, subscribed and paid-up 4.80% 4.80% 7.10% 9.36% 8.22%Reserves 57.20% 53.07% 40.70% 38.60% 44.80%Accumulated profit 3.40% 0.09% 1.11% 2.55% 3.75%Total Equity 65.40% 57.70% 48.90% 70.51% 74.80%LIABILITIESNON-CURRENT LIABILITIESLong term finances 16.70% 16.10% 10.20% 12.14% 15.80%Long term deposits 0.07% 0.14% 0.07% 1.05% 0.55%Retirement and other benefits 0.07% 0.10% 0.18% 0.48% 0.19%Deferred taxation 3.10% 2.50% 3.30% 2.88% 3.45%CURRENT LIABILITIESTrade and other payables 1.98% 2.63% 3.35% 2.98% 3.50%Accrued markup 0.66% 0.70% 1.24% 0.88% 0.12%Short term borrowing - secured 7.62% 14.61% 21.20% 18.60% 22.23%Current portion of non-current liabilities 3.94% 5.16% 11.10% 8.24% 6.78%Provision for taxation 0.06% 0.06% 0.08% 0.12% 0.15%Total 14.58% 23.38% 37.25% 30.82% 32.78%
Analysis of Income statement DGKC D.G Khan common size analysis of income statement shows that it has high cost of goods sold from last years Gross Profit of the Co has decreasing trend due to high cost of goods sold. Operative and selling expense are minimal and project a 31.34% net profit
Analysis of BALANCE SHEET DGKC Increase in cash and market able securities 24.08% more than previous two years while receivables are 1.34% Inventories are constant at 9.99% making current assts 37% of total assets more than last two years Net fixed assets are 52.85% of which 69% includes building machinery and equipment Total current liabilities are 26.70% of which 19% isare short term debts Long term liabilities are 9% in total less than last year Total equity is 59.1% of which 41% are retained earnings and rest 17 is divided between common stcock and paid in capital
Financial Ratio Analysis of D.G Khan Cement & Lucky Cement Liquidity Ratios Current Ratio: The purpose of using liquidity ratio is to determine the ability of the company for paying off its short term debts. The higher value of liquidity ratios reflects that the company is well secured in performing its obligations of short term debts. The calculation of current ratio shows that D.G khan cement is well secured in this region. is not so secured. So it is therefore that the company current ratio is better in 2011. Quick Ratio The purpose of using liquidity ratio is to determine the ability of the company for paying off its short term debts. The higher value of liquidity ratios reflects that the company is well secured in performing its obligations of short term debts. The calculation of quick ratio shows that Company is well secured in this region.. The Company can easily meets its short term liabilities. Even is position with respect to Inventory Turnover is also better.
Assets management ratioInventory Turnover: Ratios that are typically used to analyze how well accompany uses its assets and liabilities internally. These ratios are meaningful when compared topers/competitors in the same industry and can identify business that are better managed relative to the others. Also, efficiency ratios are important because an improvement in the ratios usually translate to improved profitability.
Debt Management Debt ratio Debt ratio is the measure to check the equity to borrowed funds/long term financing. The best measure is the gearing ration (The results of the company shows that they are highly geared as the portion of their borrowed money is very much higher than the owners equity. The other best measure is to check, how much the profit covers its interest. The higher t he interest cover ratio value, the more safe the company position is. In the present case, both the companies are almost covering its interest through its profit with the ratio of 1:1.
Profitability Return on equity D.G Khan cement is very strong in this area and proved that the management is well employing it Capital Employed (capital investment) generating almost 4.5 times more return than the Stock or Shares and Long-term Liabilities. Return on asset D.G Khan cement is very strong in this area and proved that the management is well employing it Return on generating almost 2.5 times more return. As compared to lucky cement
Net Profit Ratio: lucky cement has generated 1.01% Net Profit as compare to previous year whose Net Profit is 1.45%.We can drive result that lucky cement is performing well.Gross Profit Ratio: Profitability ratios are the measure of assessing business performance of generating profits with respect to its expenses and other relevant expenses in a specific period of time say one year. The higher value as compare to the competitors or industry average or relative to previous period show the business is going well. In the present case, Company D.G Khan cement generated 23.6% Gross Profit as compare to year in 2010 which Gross Profit was 16.6% which shows that 2011 has better managed its COGS which resulted in increase of the Gross Profit.
• Interest cover Interest cover ratio is the measure to check the equity to borrowed funds/long term financing. The best measure is the gearing ration (Debt to equity). The results of the company shows that they are highly geared as the portion of their borrowed money is very much higher than the owners equity. The other best measure is to check, how much the profit covers its interest. The higher t he interest cover ratio value, the more safe the company position is. In the present case, both the companies are almost covering its interest through its profit with the ratio of 1:1. Earning per share: Most important is what the company is paying back to its investors/owners. The greater value of EPS maintain the investors and owners confidence on the company. The Company is paying almost double the value and building its better image before the investors. Debt equity ratio: Debt equity ratio is the measure to check the equity to borrowed funds/long term financing. The best measure is the (Debt to equity). The results of both the company shows that they are highly geared as the portion of their borrowed money is very much higher than the owners equity. The other best measure is to check, how much the profit covers its interest. The higher t he interest cover ratio value, the more safe the company position is. In the present case, both the companies are almost covering its interest through its profit with the ratio of 1:1.
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