FINANCIAL POSITION OF NISHAT MILLS LIMITED
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Transcript of FINANCIAL POSITION OF NISHAT MILLS LIMITED
CHAPTER: 01
INTRODUCTION AND HISTORY OF THE COMPANY
THIS CHAPTER COVERS
1. Mission Statement Of the Company
2. Vision Statement Of the Company
3. Company Information
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Mission Statement
To provide quality products to customers
and explore new markets to promote/expand
sales of the Company through good governance
and foster a sound and dynamic team, so as to achieve
optimum prices of products of the Company
for sustainable and equitable growth
and prosperity of the Company.
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.
Vision Statement
To transform the Company into a modern and dynamic yarn,
cloth and processed cloth and finished product manufacturing
Company with highly professionals and fully equipped to
play a meaningful role on sustainable basis in the economy of
Pakistan.
To transform the Company into a modern and dynamic power
generating Company with highly professionals and fully
equipped to play a meaningful role on sustainable basis in the
economy of Pakistan.
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COMPANY INFORMATIONBOARD OF DIRECTORS:
Mian Umer Mansha Chairman/Chief Executive Mian Hassan Mansha Mr. Muhammad Nawaz Tishna (NIT) Mr. Khalid Qadeer Qureshi Mr. Muhammad Azam Rana Muhammad Mushtaq Ms. Nabiha Shahnawaz Cheema
AUDIT COMMITTEE:
Mr. Khalid Qadeer Qureshi Chairman/Member Mr. Muhammad Azam Member Ms. Nabiha Shahnawaz Cheema Member
CHIEF FINANCIAL OFFICER:
Mr. Badar-ul-Hassan
COMPANY SECRETARY:
Mr. Khalid Mahmood Chohan
AUDITORS:
Riaz Ahmad & Company Chartered Accountants
LEGAL ADVISOR:
Mr. M. Aurangzeb Khan, Advocate, Chamber No. 6, District Court, Faisalabad.
MILLS:
Nishatabad, Faisalabad (Spinning units and Power Plant) 12 K.M. Faisalabad Road, (Weaving units & Power Plant) Sheikhupura. 21 K.M. Ferozepur Road, Lahore. (Stitching unit) 5 K.M. Nishat Avenue (Weaving, Dyeing & Finishing unit, Off 22 K.M. Ferozepur Road, Lahore. Processing unit, Stitching unit
andPower Plant)
20 K.M. Sheikhupura Faisalabad (Spinning unit)Road, Feroze Watwan
REGISTERED OFFICE
Nishat House,
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SHARES DEPARTMENT
53 - A, Lawrence Road, Lahore. Tel: 042-6367812-16, 042-111 113 333 Fax: 042-6367414
HEAD OFFICE:
7, Main Gulberg, Lahore. Tel: 042-5716351-9, 042-111 332 200 Fax: 042-5716349-50 E-mail: [email protected] Website: www.nishatmillsltd.com
LIAISON OFFICE:
Ist Floor, Karachi Chambers, Hasrat Mohani Road, Karachi. Tel: 021-2414721-23 Fax: 021-2412936
BANKS:
JS Bank Limited KASB Bank Limited Meezan Bank Limited National Bank of Pakistan NIB Bank Limited Standard Chartered Bank (Pakistan) Limited The Hong Kong & Shangai Banking Corporation Limited The Royal Bank of Scotland United Bank Limited BANKERS TO THE COMPANY: Albaraka Islamic Bank B.S.C Allied Bank Limited Askari Bank Limited Bank Alfalah Limited Bank Islami Pakistan Limited Citibank N.A. Crescent Commercial Bank Limited Deutsche Bank Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited
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FINANCIAL ANALYSIS OF THE COMPANY
THIS CHAPTER COVERS: -
1. RATIO ANALYSIS
2. ADVANTAGES OF RATIO ANALYSIS
3. LIMITATION OF RATIO ANALYSIS
4. TYPES OF RATIO ANALYSIS
I. LIQUIDITY RATIO
II. TURNOVER RATIO
III. PROFITABILITY RATIO
IV. LEVERAGE RATIO
5. HORIZONTAL ANALYSIS OF PROFIT & LOSS ACCOUNT
6. HORIZONTAL ANALYSIS OF BALANCE SHEET
7. VERTICAL ANALYSIS OF PROFIT & LOSS ACCOUNT
8. VERTICAL ANALYSIS OF BALANCE SHEET
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RATIO ANALYSIS
The term "accounting ratios" is used to describe significant relationship between
figures shown on a balance sheet, in a profit and loss account, in a budgetary control
system or in any other part of accounting organization. Accounting ratios thus shows the
relationship between accounting data.
Ratio analysis is very important while measuring the performance of the business.
These ratios are carried out from the Income statement and balance sheet. Many parties
including management, investors and Government are interested in these ratios. The
purpose of analysis is to measure the performance of the company and financial health of
the organization.
Advantages of Ratios Analysis
Ratio analysis is an important and age-old technique of financial analysis. The
following are some of the advantages of ratio analysis:
Simplifies financial statements:
It simplifies the comprehension of financial statements. Ratios tell the whole story of
changes in the financial condition of the business
Facilitates inter-firm comparison:
It provides data for inter-firm comparison. Ratios highlight the factors associated
with successful and unsuccessful firm. They also reveal strong firms and weak firms,
overvalued and undervalued firms.
Helps in planning:
It helps in planning and forecasting. Ratios can assist management, in its basic
functions of forecasting for Planning, co-ordination, control and communications.
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Makes inter-firm comparison possible:
Ratios analysis also makes possible comparison of the performance of different
divisions of the firm. The ratios are helpful in deciding about their efficiency or
otherwise in the past and likely performance in the future.
Help in investment decisions:
It helps in investment decisions in the case of investors and lending decisions in the
case of bankers etc.
Limitations of Ratios Analysis
The ratios analysis is one of the most powerful tools of financial management.
Though ratios are simple to calculate and easy to understand, they suffer from serious
limitations.
Limitations of financial statements: Ratios are based only on the information which
has been recorded in the financial statements. Financial statements themselves are
subject to several limitations. Thus ratios derived, there from, are also subject to those
limitations. For example; non-financial changes though important for the business are
not relevant by the financial statements. Financial statements are affected to a very great
extent by accounting conventions and concepts. Personal judgment plays a great part in
determining the figures for financial statements.
Comparative study required: Ratios are useful in judging the efficiency of the
business only when they are compared with past results of the business. However, such a
comparison only provide glimpse of the past performance and forecasts for future may
not prove correct since several other factors like market conditions, management
policies, etc. may affect the future operations.
Ratios alone are not adequate. Ratios are only indicators, they cannot be taken as
final regarding good or bad financial position of the business. Other things have also to
be seen.
Problems of price level changes: A change in price level can affect the validity of
ratios are calculated for different time periods. In such a case the ratio analysis may not
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clearly indicate the trend in solvency and profitability of the company. The financial
statements, therefore, be adjusted keeping in view the price level changes if a meaningful
comparison is to be made through accounting ratios.
Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There
are no well accepted standards or rule of thumb for all ratios which can be accepted as
norm. It renders interpretation of the ratios difficult.
Limited use of single ratios: A single ratio, usually, does not convey much of a sense.
To make a better interpretation, a number of ratios have to be calculated which is likely
to confuse the analyst than help him in making any good decision.
Personal bias: Ratios are only means of financial analysis and not an end in itself.
Ratios have to interpret and different people may interpret the same ratio in different
way.
Incomparable: Not only industries differ in their nature, but also the firms of the
similar business widely differ in their size and accounting procedures etc. It makes
comparison of ratios difficult and misleading.
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Ratio Analysis
Ratio analysis involves the methods of calculating and interpreting financial ratios to
access the firm’s performance and status. The basic inputs to ratio analysis and firm’s
income statement and balance sheet for the periods to be examined.
TYPES OF RATIO ANALYSIS
Two types of Ratio Analysis are generally carried out,
1. Cross Sectional Approach, in this approach, the effectiveness of business is
compared with the competitors business of the same period.
1. Most companies use the Time Series Analysis in which the performance of
company over a period is measured.
Ratio Analysis categories:
A) Liquidity
B) Turnover
C) Profitability
D) Leverage
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LIQUIDITY RATIOS:
Liquidity ratios are the ratios for testing short term solvency or financial position of a business. These are designed to test the ability of the business to meet its short term obligation promptly. A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts
Current Ratio:
Current ratio may be defined as the relationship between current assets and current liabilities. This ratio is also known as "working capital ratio". It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. It is calculated by dividing the total of the current assets by total of the current liabilities.
Components:
The two basic components of this ratio are current assets and current liabilities. Current assets include cash and those assets which can be easily converted into cash within a short period of time, generally, one year, such as marketable securities or readily realizable investments, bills receivables, sundry debtors, (excluding bad debts or provisions), inventories, work in progress, etc. Prepaid paid expenses should also be included in current assets because they represent payments made in advance which will not have to be paid in near future. Current liabilities are those obligations which are payable within a short period of tie generally one year and include outstanding expenses, bills payable, sundry creditors, bank overdraft, accrued expenses, short term advances, income tax payable, dividend payable, etc. However, some times a controversy arises that whether overdraft should be regarded as current liability or not. Often an arrangement with a bank may be regarded as permanent and therefore, it may be treated as long term liability. At the same time the fact remains that the overdraft facility may be cancelled at any time. Accordingly, because of this reason and the need for conversion in interpreting a situation, it seems advisable to include overdrafts in current liabilities.
Limitations of Current Ratio:
This ratio is measure of liquidity and should be used very carefully because it suffers from many limitations. It is, therefore, suggested that it should not be used as the sole index of short term solvency
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1. It is crude ratio because it measure only the quantity and not the quality of the current assets.
2. Even if the ratio is favorable, the firm may be in financial trouble, because of more stock and work in process which is not easily convertible into cash, and, therefore firm may have less cash to pay off current liabilities.
3. Valuation of current assets and window dressing is another problem. This ratio can be very easily manipulated by overvaluing the current assets. An equal increase in both current assets and current liabilities would decrease the ratio and similarly equal decrease in current assets and current liabilities would increase current ratio.
Significance
This ratio is a general and quick measure of liquidity of a firm. It represents the margin of safety or cushion available to the creditors. It is an index of the firm’s
financial stability. It is also an index of technical solvency and an index of the strength of working capital.
A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. An increase in the current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio represents that there has been a deterioration in the liquidity position of the firm. A ratio equal to or near 2 : 1 is considered as a standard or normal or satisfactory. The idea of having double the current assets as compared to current liabilities is to provide for the delays and losses in the realization of current assets. However, the rule of 2 :1 should not be blindly used while making interpretation of the ratio. Firms having less than 2 : 1 ratio may be having a better liquidity than even firms having more than 2 : 1 ratio. This is because of the reason that current ratio measures the quantity of the current assets and not the quality of the current assets. If a firm's current assets include debtors which are not recoverable or stocks which are slow-moving or obsolete, the current ratio may be high but it does not represent a good liquidity position.
current ratio current assets/current liabilitiesyear 2008 2007 2006 2005 2004
Nishat 1.19 1.74 1.3
8 1.
24
0.37
Azgard 9 1.08 1.51 1.1
4 1.
09
1.25
Sapphire 1.28 1.66 1.2
1 1.
21
1.31
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Comments:
Current Ratio clears the extent to which the claim of short term creditors can be met by assets that are to become cash within a year. The best standard ratio is 2:1 so, the Azgard Nine has current ratio below standard. There is a mixed trend from 2004 to 2008. Current Ratio of Sapphire is also like Azgard Nine and Nishat.
Current ratio shows that how many times current assets are available to meet its current liabilities. Azgard Nine current ratio shows mixed trend and it has grater than 1:1 but only in 2007 it is higher than other years. Sapphire also shows mixed trend in current ratio. Nishat current ratio shows increasing trend in 2004, 2005 and in 2006 and in 2007 but decreases 2008 which shows that it has less current assets or current liabilities increases.
Liquidity or Acid Test or Quick Ratio:
Liquid ratio is also termed as "Liquidity Ratio”,” Acid Test Ratio" or "Quick Ratio". It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm to pay its short term obligations as and when they become due
Components:
The two components of liquid ratio (acid test ratio or quick ratio) are liquid assets and liquid liabilities. Liquid assets normally include cash, bank, sundry debtors, bills receivable and marketable securities or temporary investments. In other words they are current assets minus inventories (stock) and prepaid expenses. Inventories cannot be termed as liquid assets because it cannot be converted into cash immediately without a
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loss of value. In the same manner, prepaid expenses are also excluded from the list of liquid assets because they are not expected to be converted into cash. Similarly, Liquid liabilities means current liabilities i.e., sundry creditors, bills payable, outstanding expenses, short term advances, income tax payable, dividends payable, and bank overdraft (only if payable on demand). Some time bank overdraft is not included in current liabilities, on the argument that bank overdraft is generally permanent way of financing and is not subject to be called on demand. In such cases overdraft will be excluded from current liabilities
Significance:
The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It measures the firm's capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio. It is used as a complementary ratio to the current ratio. Liquid ratio is more rigorous test of liquidity than the current ratio because it eliminates inventories and prepaid expenses as a part of current assets. Usually a high liquid ratios an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm's liquidity position is not good. As a convention, generally, a quick ratio of "one to one" (1:1) is considered to be satisfactory.
Although liquidity ratio is more rigorous test of liquidity than the current ratio , yet it should be used cautiously and 1:1 standard should not be used blindly. A liquid ratio of 1:1 does not necessarily mean satisfactory liquidity position of the firm if all the debtors cannot be realized and cash is needed immediately to meet the current obligations. In the same manner, a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid. Hence, a firm having a high liquidity ratio may not have a satisfactory liquidity position if it has slow-paying debtors. On the other hand, A firm having a low liquid ratio may have a good liquidity position if it has a fast moving inventories. Though this ratio is definitely an improvement over current ratio, the interpretation of this ratio also suffers from the same limitations as of current ratio
quick ratio (current assets-stock)/current liabilitiesyear 2008 2007 2006 2005 2004
Nishat 0.84 1.33 0.9
6 0.78
0.37
Azgard 9 0.69 1.15 0.8
8 0.64
0.71
Sapphire 0.72 1.17 0.7
3 0.59
0.76
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Comments:
The acid test ratio is also below standard due to heavy short term borrowings. Azgard Nine acid test ratio decreased in year 2005 and in 2008. The quick ratio of Sapphire shows that there is no sufficient liquid asset is available to discharge and settle its current obligation except in year 2007. The rise in current liabilities is due to the expansion of project and short and long term financing. Azgard Nine liquidity is less than standard except in year 2007. Sapphire and Nishat liquidity is not on considerable point. Azgard Nine liquid ratio is more than Sapphire and Nishat which shows that it has more liquidity. Nishat liquidity position is not considerable because it is near to 1 in year 2006 and 2007 which shows that it has liquid assets to meet its current liabilities. Azgard Nine position is not at considerable point. It shows decreasing trend in 2005 and in 2008 and less than 1:1. But it has increasing position in 2004, 2006 and in 2007.
Turnover/ Activity ratios:
Activity ratios are measures of how well assets are used. Activity ratios -- which are, for the most part, turnover ratios -- can be used to evaluate the benefits produced by specific assets, such as inventory or accounts receivable. Or they can be use to evaluate the benefits produced by all a company's assets collectively.
These measures help us gauge how effectively the company is at putting its investment to work. A company will invest in assets – e.g., inventory or plant and equipment – and then use these assets to generate revenues. The greater the turnover, the more effectively the company is at producing a benefit from its investment in assets
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Inventory days.
The number of day’s inventory is also known as average inventory period and inventory holding period. A high number of days inventory indicates that their is a lack of demand for the product being sold. A low days inventory ratio (inventory holding period) may indicate that the company is not keeping enough stock on hand to meet demands. The number of days inventory and inventory turnover ratios are included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.
Inventory Days Inventory Days = Inventory / Cost of Sales*365year 2008 2007 2006 2005 2004
Nishat 91.90 79.10 80.0
0 114.4
6 -
Azgard 9 221.08 177.42 199.3
4 225.7
6 208.5
7
Sapphire 138.85 89.36 96.7
4 143.4
6 64.3
2
Comments:
Azgard Nine inventory days increased in 2005 as compare to 2004 and decreased in 2006 and in 2007 and show increasing in 2008 which shows that management is not efficient for managing inventory period.
The above diagram shows that in 2004 and 2005 Sapphire has high inventory days required converting stock in sale which shows that Sapphire management is not efficient but it decreases with the passage of times and increase in year 2008 and Nishat trend is equal to Sapphire. They were show increase in 2005 and low in 2006 and in 2007 and it increases in 2008.
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Debtors Turnover Ratio or Receivables Turnover Ratio:
Debtor’s turnover ratio indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year.
Significance of the Ratio:
This ratio indicates the number of times the debtors are turned over a year. The higher the value of debtor’s turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It is the reliable measure of the time of cash flow from credit sales. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm.
Debtor's day Trade debtors/Credit sales*365year 2008 2007 2006 2005 2004
Nishat 25.
18 17.67
22.83
28.15
56.29
Azgard 9 64.
14 91.26
84.72
83.68
109.31
Sapphire 42.
30 51.08
54.13
66.75
56.29
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Comments:
Graph shows that Azgard Nine has not a good debtor management to receive the debt or collect the receivables and shows positive trend and debtor’s collection period is grater than creditor’s period. Sapphire position is also considerable but Nishat management has more efficient to collect their receivables whish shows efficient debtor management and in 2004 it is at highest point which indicates unfavorable situation regarding to debtor collection period.
Creditors / Accounts Payable Turnover Ratio
This ratio is similar to the debtor’s turnover ratio. It compares creditors with the total credit purchases. It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include both sundry creditors and bills payable. Same as debtor’s turnover ratio, creditor’s turnover ratio can be calculated in two forms, creditors’ turnover ratio and average payment period.
Significance of the Ratio:
The average payment period ratio represents the number of days by the firm to pay its creditors. A high creditor’s turnover ratio or a lower credit period ratio signifies that the creditors are being paid promptly. This situation enhances the credit worthiness of the company. However a very favorable ratio to this effect also shows that the business is not taking the full advantage of credit facilities allowed by the creditors.
Creditors days Trade Creditors/Credit Sales*365year 2008 2007 2006 2005 2004
Nishat 21.
62 19.69
21.35
26.06
45.33
Azgard 9 48.
74 56.77
92.83
65.34
80.03
Sapphire 18.
38 14.83
30.58
39.33
24.75
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Comments
Azgard Nine creditor’s days increase in 2004 to 2006 and decrease in 2005 to 2007 and in 2007 and 2008. Azgard Nine credit management is better than Nishat and Sapphire it has 93 days for payment which shows it efficiency in 2006. If we compare creditor’s days to debtors day than we can see that Azgard Nine and Nishat is going better to manage its resources
Total Assets Turnover Ratio.
The total assets turnover ratio measures the use of all assets in terms of sales, by comparing sales with net total assets. This interactive tutorial walks you through the calculations as well as where on the financial statements to find the numbers.
FormulaSales/ Total Assets
year 2008 2007 2006 2005 2004
Nishat 0.5
1 0.4
3 0.5
3 0.5
2 1.4
0
Azgard 9 0.3
7 0.2
8 0.2
1 0.4
2 0.5
0
Sapphire 0.7
9 0.8
2 0.8
6 0.7
3 1.2
9
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Comments:
In the above graph we can see that total asset turnover ratio of Azgard Nine Company showing mix trend in the year 2004 to year 2008. Total asset turnover ratio is at highest level in year 2004 and as it compare it with Nishat and Sapphire it is not good even in the last two year 2007, 2008 so we can say it is not using its assets for generating the revenue in a better way than Sapphire and Nisaht cement in 2004 to 2008 and 2004 Sapphire total asset turnover ratio at top so they use much of it for generating revenue.
But Azgard Nine overall situation regarding to total asset turnover ratio is bad than other two competitor.
Fixed Assets Turnover Ratio:
Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets
Formula Cost of sales / Fixed Assetsyear 2008 2007 2006 2005 2004
Nishat 1.5
3 1.35
1.29
1.01
2.92
Azgard 9 0.8
6 0.60
0.49
1.06
0.86
Sapphire 2.1
9 2.10
1.94
1.52
2.92
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Comments:
It shows the utilization of fixed assets, Azgard Nine decreasing the utilization of its fixed assets but it has lower times than Sapphire which has more utilization of fixed assets and at highest level in 2004. Nishat shows the decreasing trend in year 2005 and after it increasing trend still 2008. Nishat has less utilization than Sapphire and high utilization then Azgard Nine.
Profitability Ratios:
Profitability ratios (also referred to as profit margin ratios) compare components of income with sales. They give us an idea of what makes up a company's income and are usually expressed as a portion of each dollar of sales. The profit margin ratios we discuss here differ only by the numerator. It's in the numerator that we reflect and thus evaluate performance for different aspects of the business: The gross profit margin is the ratio of gross income or profit to sales. This ratio indicates how much of every dollar of sales is left after costs of goods sold.
Gross Profit (GP) Ratio:
Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as a percentage. It expresses the relationship between gross profit and sales.
Components:
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The basic components of the calculation of gross profit ratio are gross profit and net sales. Net sales mean those sales minus sales returns. Gross profit would be the difference between net sales and cost of goods sold. Cost of goods sold in the case of a trading concern would be equal to opening stock plus purchases, minus closing stock plus all direct expenses relating to purchases. In the case of manufacturing concern, it would be equal to the sum of the cost of raw materials, wages, direct expenses and all manufacturing expenses. In other words, generally the expenses charged to profit and loss account or operating expenses are excluded from the calculation of cost of goods sold.
Significance
Gross profit ratio may be indicated to what extent the selling prices of goods per unit may be reduced without incurring losses on operations. It reflects efficiency with which a firm produces its products. As the gross profit is found by deducting cost of goods sold from net sales, higher the gross profit better it is. There is no standard GP ratio for evaluation. It may vary from business to business. However, the gross profit earned should be sufficient to recover all operating expenses and to build up reserves after paying all fixed interest charges and dividends.
Formula Gross profit/Sales*100year 2008 2007 2006 2005 2004
Nishat 15.4
1 16.56
16.54
18.77
4.96
Azgard 9 34.1
5 30.28
24.26
25.63
22.66
Sapphire 11.5
7 13.02
9.60
11.32
4.96
Comments:
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Gross profit of Azgard Nine company increasing in 2004 to 2005 and also in year 2007 and 2008 but decrease in 2006, Due to inflation and economic instability in Pakistan and irregular power supply of WAPDA in 2007 and 2008. Gross Profit ratio of three competitors show increasing trend in 2004 to 2005 due to good economic and financial situation of world and good market situation in Pakistan. Sapphire position is more considerable up to 2005 but shows decreasing trend in 2006, 2007 and 2008, and Nishat situation for increase year 2007 but it decrease in all other years.
Operating Profit Ratio:
Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is generally expressed in percentage. It measures the cost of operations per dollar of sales. This is closely related to the ratio of operating profit to net sales.
Components:
The two basic components for the calculation of operating ratio are operating cost (cost of goods sold plus operating expenses) and net sales. Operating expenses normally include (a) administrative and office expenses and (b) selling and distribution expenses. Financial charges such as interest, provision for taxation etc. are generally excluded from operating expenses.
Significance:
Operating ratio shows the operational efficiency of the business. Lower operating ratio shows higher operating profit and vice versa. An operating ratio ranging between 75% and 80% is generally considered as standard for manufacturing concerns. This ratio is considered to be a yardstick of operating efficiency but it should be used cautiously because it may be affected by a number of uncontrollable factors beyond the control of the firm. Moreover, in some firms, non-operating expenses from a substantial part of the total expenses and in such cases operating ratio may give misleading results
Formula Operating Profit Margin = Operating profit /Sale*100year 2008 2007 2006 2005 2004
Nishat 37.91 12.66 12.1
0 17.5
8 7.5
6
Azgard 9 28.18 23.72 16.2
6 18.3
8 16.7
9
Sapphire 14.42 8.60 8.6
8 10.4
3 5.3
5
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Comments:
Azgard Nine company operating profit increasing in 2004 to 2005 and 2007 to 2008 and decreasing in 2006. Operating profit of all three organization show increasing trend in 2004, 2005 and 2007 to 2008 but decreases in 2006 due to increase in operating expenses.
Net Profit/ (Loss) after Tax:
Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage
Significance:
NP ratio is used to measure the overall profitability and hence it is very useful to proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall not be able to achieve a satisfactory return on its investment.
This ratio also indicates the firm's capacity to face adverse economic conditions such as price competition, low demand, etc. Obviously, higher the ratio the better is the profitability. But while interpreting the ratio it should be kept in mind that the performance of profits also be seen in relation to investments or capital of the firm and not only in relation to sales.
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Formula Net profit before tax/Sales*100year 2008 2007 2006 2005 2004
Nishat 33.2
0 7.89
10.71
17.88
9.45
Azgard 9 9.8
8 17.37
25.77
17.91
12.52
Sapphire 6.8
8 3.49
3.31
7.15
3.45
Comments:
The Net Profit margin tells us the ability of a company to generate the earning after meeting all costs of business. There is an increase in net profit in 2006 as compare to 2004 to 2006. In year 2008 company suffered a minimum net profit. The ratio has decreased as compare to previous year due to increase in cost and expansion of project and finance cost. Sapphire shows the increasing trend in 2005 and in year 2007 to 2008 it decrease in year 2006. Nishat top net profit is in year 2008.
Return on Assets:
Where asset turnover tells an investor the total sales for each $1 of assets, return on assets [or ROA for short] tells an investor how much profit a company generated for each $1 in assets. The return on assets figure is also a sure-fire way to gauge the asset intensity of a business. Companies such as telecommunication providers, car
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manufacturers, and railroads are very asset-intensive, meaning they require big, expensive machinery or equipment to generate a profit. Advertising agencies and software companies, on the other hand, are generally very asset-light (in the case of a software companies, once a program has been developed, employees simply copy it to a five-cent disk, throw an instruction manual in the box, and mail it out to stores).
Formula Net Income / Total Assets*100year 2008 2007 2006 2005 2004
Nishat 16.19 3.06 5.
24 8.5
2 14.8
1
Azgard 9 3.28 4.57 4.
94 7.0
3 5.9
6
Sapphire 5.01 1.94 1.
46 3.9
5 2.9
7
Comments:
This ratio measures the return of total investment of the business. Azgard Nine company show mix trend and in 2005 it is at maximum point than others. Decreasing trend from year 2006 to year 2008. Nishat company return on asset is much better than Azgard Nine and Sapphire. it decreases in 2005 to 2007 and than increase in 2008, it is at highest point in 2008, Sapphire also increase in 2004 to 2005 and than it little decrease in 2006 and at goes down in 2007 and becomes increase in 2008.
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Return on Capital Employed (ROCE) Ratio:
Capital employed and operating profits are the main items. Capital employed may be defined in a number of ways. However, two widely accepted definitions are "gross capital employed" and "net capital employed". Gross capital employed usually means the total assets, fixed as well as current, used in business, while net capital employed refers to total assets minus liabilities. On the other hand, it refers to total of capital, capital reserves, revenue reserves (including profit and loss account balance), debentures and long term loans.
Formula Profit before interest and taxation / Capital Employed *100year 2008 2007 2006 2005 2004
Nishat 24.42 4.25 7.
29 12.9
8 (30.48
)
Azgard 9 5.87 6.60 8.
27 13.0
0 10.73
Sapphire 10.41 4.46 5.
07 8.8
5 7.25
Comments:
Azgard Nine return on capital employed is high 2004 and it increase in 2005 but it has decreased in 2006 to 2008. Sapphire return on capital employed increase in 2004 to 2005 and decreases in 2006 and in 2007 and then it go for increase in 2008. Nishat has less return on capital employed is less than its competitors from 2004 to 2007. And at begging Nishat is going to negative its return of capital employed. In 2008 due to
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economic crises Sapphire and Azgard Nine return on equity becomes higher then its competitors.
RETURN ON EQUITY CAPITAL (ROE) RATIO:
In real sense, ordinarily shareholders are the real owners of the company. They assume the highest risk in the company. (Preference share holders have a preference over ordinary shareholders in the payment of dividend as well as capital. Preference share holders get a fixed rate of dividend irrespective of the quantum of profits of the company). The rate of dividends varies with the availability of profits in case of ordinary shares only. Thus ordinary shareholders are more interested in the profitability of a company and the performance of a company should be judged on the basis of return on equity capital of the company. Return on equity capital which is the relationship between profits of a company and its equity, can be calculated as follows.
Equity share capital should be the total called-up value of equity shares. As the profit used for the calculations are the final profits available to equity shareholders as dividend, therefore the preference dividend and taxes are deducted in order to arrive at such profits.
Significance:
This ratio is more meaningful to the equity shareholders who are interested to know profits earned by the company and those profits which can be made available to pay dividends to them. Interpretation of the ratio is similar to the interpretation of return on shareholder's investments and higher the ratio better is.
Formula[(Net profit after tax − Preference dividend) / Equity
share capital] × 100year 2008 2007 2006 2005 2004
Nishat 24.41 4.02 7.7
3 14.5
8 2.6
2
Azgard 9 8.86 11.11 12.4
8 23.9
7 14.9
5
Sapphire 11.08 3.59 3.4
5 10.3
2 7.4
0
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Comments:
In 2005 Azgard Nine cement company return on equity ratio is at highest point and better, in 2006 to 2008 it decreases. Sapphire Company also shows mixed trend. It is going higher in 2005 and than decrease in 2006 to 2007 and it becomes higher in 2008. Nishat company return on equity ratio has mix trend. In 2004 it is at lower side and than it increase in 2005 and it decrease in 2006 and it goes down and become more down in 2007 and go to highest point in 2008. It is the highest point then competitors.
LEVERAGES RATIOS:
A company can finance its assets either with equity or debt. Financing through debt involves risk because debt legally obligates the company to pay interest and to repay the principal as promised. Equity financing does not obligate the company to pay anything -- dividends are paid at the discretion of the board of directors. There is always some risk, which we refer to as business risk, inherent in any operating segment of a business. But how a company chooses to finance its operations -- the particular mix of debt and equity -- may add financial risk on top of business risk Financial risk is the extent that debt financing is used relative to equity. Financial leverage ratios are used to assess how much financial risk the company has taken on. There
are two types of financial leverage ratios: component percentages and coverage ratios. Component percentages compare a company's debt with either its total capital (debt plus equity) or its equity capital. Coverage ratios reflect a company's ability to satisfy fixed obligations, such as interest, principal repayment, or lease payments.
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DEBT TO EQUITY RATIO:
Debt-to-Equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. It is also known as external internal equity ratio. It is determined to ascertain soundness of the long term financial policies of the company.
Formula Total Long Term Debts / Shareholders Fundsyear 2008 2007 2006 2005 2004
Nishat 0.04 0.06 0.1
4 0.2
2 0.0
6
Azgard 9 0.91 1.02 0.7
9 1.2
7 0.4
1
Sapphire 0.09 0.13 0.2
5 0.4
7 0.4
4
Comments:
Nishat shows increasing trend from 2004 to 2005 which shows that they increasing there debts for expansion of project and their short and long term debts increased and decrese trand 2005 to 2008.Azgard Nine debt to equity ratio is lowest point in 2004 and after that it has decrease its situation in next coming years and increases the ratio.
It shows that Azgard nine position in debt to equity is better then its competitors.
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DEBT SERVICE RATIO OR INTEREST COVERAGE RATIO:
Interest coverage ratio is also known as debt service ratio or debt service coverage ratio. This ratio relates the fixed interest charges to the income earned by the business. It indicates whether the business has earned sufficient profits to pay periodically the interest charges.
Significance of debt service ratio:
The interest coverage ratio is very important from the lender's point of view. It indicates the number of times interest is covered by the profits available to pay interest charges.
Formula Net Profit Before Interest and Tax / Fixed Interest Chargesyear 2008 2007 2006 2005 2004
Nishat 7.05 1.66 2.3
3 4.9
9 5.5
4
Azgard 9 0.40 1.08 1.9
2 2.4
3 2.7
3
Sapphire 0.84 0.46 0.3
1 1.6
5 1.3
5
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Comments:
Interest Cover Ratio shows that how many times interest is earned by the company. Azgard Nine company shows decreasing trend from 2004 to 2008 which indicates negative sign for the company and it has unavailability the funds to pay interest expense. Sapphire company is in equal position to Azgard Nine, In 2006 and 2007 Interest cover ration of all the company is not very healthy and it shows that the financial costs are very high and earnings are very low. Management must look into the matter and should improve this ratio. In year 2008 Nishat company earned 7.05 times interest which is higher among all year and easy to pay the interest expense.
INVESTMENTS / SHARE HOLDER RATIOS:
Relationship of gains from investments (including realized capital gains) resulting from insurance operations to earned premiums.
EARNINGS PER SHARE (EPS) RATIO:
Earnings per share ratio (EPS Ratio) are a small variation of return on equity capital ratio and are calculated by dividing the net profit after taxes less preference dividend by the total number of equity shares.
Significance:
The earnings per share is a good measure of profitability and when compared with EPS of similar companies, it gives a view of the comparative earnings or earnings power of the firm. EPS ratio calculated for a number of years indicates whether or not the earning power of the company has increased.
Formula Profit after tax/No. of sharesyear 2008 2007 2006 2005 2004
Nishat 38.4
2 7.58
10.22
12.86
5.17
Azgard 9 2.6
5 3.26
4.97
7.42
4.31
Sapphire 30.7
6 10.77
6.70
14.37
8.58
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Comments:
The earning per share of three companies shown mixed trend in above diagram, earning per share of Azgard Nine company increase in 2005 as compare it to 2004 and it is at highest point in this year and than it decrease in 2006, and it goes more down in 2007 and 2008 which mean there is no earning and it going down. Sapphire and Nishat has also same trends but Nishat has better earning per share ratio as compare it to Sapphire and Azgard Nine. It is at highest point in 2008. The earning per share has increased as compared to the previous year. These companies should better mange its financial position and improve its performance to get out this fall in earning per share.
EARNINGS YIELD.
The earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each dollar invested in the stock that was earned by the company.
Formula Earning Per Share / Market Price Per Share * 100year 2008 2007 2006 2005 2004
Nishat 44.69 5.87 9.7
5 16.9
2 9.7
9
Azgard 9 4.30 6.26 22.5
4 23.1
9 19.1
6
Sapphire 42.46 11.64 9.5
7 15.9
7 12.2
6
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Comments:
Earning Yield of Azgard Nine, Nishat and Sapphire was at lowest point in 2007 due to economic crises. But it has very good condition in 2004 to 2006.Azgard Nine is at lowest point in 2008 due to economic and financial crises and purchase a project of fertilizers. Return on investment of Sapphire and Nishat were very high in 2008.of all these competitors but Sapphire shows a good trend but Azgard nine is less than Sapphire and Nishat.
Market Value of Shareyear 2008 2007 2006 2005 2004
Nishat 85.
97 129.2
0 104.8
0 76.0
0 52.8
0
Azgard 9 61.
56 52.1
0 22.0
5 32.0
0 22.5
0
Sapphire 72.
45 92.5
0 70.0
0 90.0
0 70.0
0
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Comments:
Graph shows that market value of share of Nishat company is high in 2006 to 2007 as compare to Azgard nine and Sapphire. In 2007 it is at highest point, market value of Azgard Nine and Sapphire show mixed trend and Azgard Nine market value of share at high point in 2008 and Sapphire high market value in 2007.
PRICE EARNING RATIO (P/E RATIO):
Price earning ratio (P/E ratio) is the ratio between market price per equity share and earning per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company.
Significance of Price Earning Ratio:
Price earnings ratio helps the investor in deciding whether to buy or not to buy the shares of a particular company at a particular market price
Generally, higher the price earning ratio the better it is. If the P/E ratio falls, the management should look into the causes that have resulted into the fall of this ratio.
Formula Market price per equity share / Earnings per share
year 2008 2007 2006 2005 2004
Nishat 2.24 17.04 10.2
5 5.
91 10.2
1
Azgard 9 23.23 15.98 4.4
4 4.
31 5.2
2
Sapphire 2.36 8.59 10.4
5 6.
26 8.1
6
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Comments:
Price earning ratio of Azgard Nine decreasing from 2004 to 2006 which is not beneficial for the company also unfavorable for the investor and encourage the investors to invest but increase in 2007 and 2008 and at very good position in 2007 and then become better in 2008, Sapphire and Nishat shows mixed trend, Sapphire company maximum price earning ratio in 2006 and lowest in 2008 and Nishat price earning ratio never goes negative and it is at high point in 2007 which encourage the investor, it shows that there is increase in market value of share and decrease in value of earning per share.
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HORIZONTAL AND VERTICAL ANALYSIS
HORIZONTAL ANALYSIS
"In the base statement of previous year every item is given 100% and is subsequent
years these are changed to the related percentages as per base years.”
Importance
Comparative statement can be prepared for several years in a columnar form. The
changes from period to period can be reflected by establishing a base year and making it
100%. Thereafter all such changes are reflected in percentages. This analysis is
invaluable to management and other analysts because the absolute large data are
condensed into percentages. The purpose of horizontal analysis is to highlight the
changes.
Balance Sheet
The purpose o balance sheet is to reflect financial position of an entity on a particular
date. The balance sheet consists of assets, which are the property of the entity, the
liabilities, which are the debts payable to outside investors or suppliers of goods and
services, and the shareholder’s equity, which represents owners’ interest in the entity. At
any given date, assets must be equal to the contributions of the creditors and owners.
Profit And Loss Account
Profit and loss account is also named income statement or income statement or
income and expenditure account or statement of operations and encompasses all sources
of revenue, gain and losses and expenses for a particular period, grouped into various
headings as per charts of accounts of a company. In other words, it summarizes the
results of operations for an accounting period. The net income is closed by transfer to
balance sheet after paying the dividends and appropriations. Sometimes an appropriation
is made to general reserve and still some portion is left as retained earning. The
procedure of horizontal analysis of profit and loss account is same as of balance sheet.
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NISHAT COMPANY LIMITEDHORIZENTAL BALANCE SHEET
2008 2007 2006 2008 2007
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Share Capital 1,597,857,000
1,597,857,000 1,452,597,000 0% 10%
Reserves 23,549,323,000
28,566,041,000 19,659,812,000 -18% 45%
Accumulated profit -
- -
Total Equity 25,147,180,000
30,163,898,000 21,112,409,000 -17% 43%
SHAREHOLDERS EQUITY
NON CURRENT LIABILITIES
Loan term finances 1,047,794,000
1,773,820,000 2,982,353,000 -41% -41%
liabilities against assets subject to finance lease
-
- 33,031,000 0% -100%
1,047,794,000
1,773,820,000 3,015,384,000 -41% -41%
CURRENT LIABILITIES
Trade and other payables 1,141,227,000
926,593,000 960,436,000 23% -4%
Interest/ mark up on loans 201,847,000
131,744,000 151,236,000 53% -13%
short term borrowings 9,175,518,000
5,018,664,000 4,315,708,000 83% 16%
Current portion of long term liabilities 926,025,000
1,341,565,000 1,342,771,000 -31% 0%
Provision for income tax 276,988,000
230,807,000 281,382,000 20% -18%
11,721,605,000
7,649,373,000 7,051,533,000 53% 8%
CONTIGENCY AND COMMETMENTS
-
- -
TOTAL EQUITY AND LIABILITIES
37,916,579,000
39,587,091,000 31,179,326,000 -4% 27%
ASSETS 2008 2007 2006 0% 0%
NON-CURRENT ASSETS
Property, Plant and Equipment 10,647,310,
000 10,586,159,000 10,611,353,000 1% 0%
Capital Work in progress 13,321,088,
000 15,672,980,000 10,793,026,000 -15% 45%
Loan term loans-secured and deposits 8,122,000
9,523,000 6,377,000 -15% 49%
Loan term loans-secured and deposits 10,541,000
9,342,000 10,130,000 13% -8%
23,987,061,000
26,278,004,000 21,420,886,000 -9% 23%
CURRENT ASSETS
stores, spares parts and loose tools 490,229,000
422,428,000 471,520,000 16% -10%
stock in trade 4,103,648,000
3,106,436,000 3,003,174,000 32% 3%
Trade Debts 1,329,027,000
831,653,000 1,026,884,000 60% -19%
Short term investments 7,129,154,000
8,118,459,000 4,350,146,000 -12% 87%
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loans and advances 403,295,000
411,270,000 418,794,000 -2% -2%
Short term deposit and prepayments 30,400,000
26,395,000 30,525,000 15% -14%
others receivables 370,013,000
322,839,000 407,147,000 15% -21%
Cash and bank balances 73,752,000
69,607,000 50,250,000 6% 39%
13,929,518,000
13,309,087,000 9,758,440,000 5% 36%
TOTAL ASSETS 37,916,579,000
39,587,091,000 31,179,326,000 -4% 27%
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Non-Current Assets
As we can see from the horizontal balance sheet analysis of two years, the total non-current assets have shown increasing trend. In 2007 it increases0% from 2006 and it increases in 2008 by 1% as compare to 2007. This shows investment in fixed assets by the management.
Capital work in process decreased by 45% in year 2007, increased by -15% in year 2008 respectively. Lon-term loans and advances has shown an increasing trend in 2007 by 49%in 2007 and decreased by -15%. Its long term deposits increased in 2007 by -8% and increases in 2008 by 13%
Current Assets
Store, spare and tools has shown decreased in 2007 as compare to 2006 by -10% and increased in 2008 by 16%, which shows that company is in good position as liquidity point of view. Stock in trade shows increasing trend and increased in 2007 by 3% and in 2008 increased by 32%. This average stock of inventory is indication of good inventory management. Trade debts has shown decreasing trend in 2007 as compare to 2006 by -19% and it increased by 60% in 2008.Receivable management is inefficient in 2008 by showing increasing trend. Loans and advances showed an decreasing trend it increased in 2007 by -2% and in 2008 it decreases -2%. Cash and cash in bank has also shown decreasing trend in 2007 and increasing trend in 2008.
Equity and Liabilities
Share capital show a changing trend in 2007 by 10% and 0% increasing trend in 2008. Reserves have increased in year 2007 by 45% and decreased by -18% in 2008, which shows that company, has utilized all its reserves for expansion of project.
Non-Current Liabilities
Non-current liabilities have also shown an decreasing trend in 2007 and decreasing trend in 2008. There is a sharp decrease in year 2007 and also decrease in year 2008. Long term security deposits and retention money also decreases in 2007 by -41% and decreased in 2008 by-41% as compare to 2006 and 2007 respectively. Liabilities against assets decreases in 2007 by -100% and in 2008 by 0% as compare to 2006 and 2008 respectively.
Current Liabilities
Total current liabilities have also shown a increasing trend in 2007 and also increasing trend in 2008. This is also inline with decrease and increase in current assets of the company. Short term financing is taken to meet the working capital requirements. Company is meeting its obligation on regular basis.
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Trade payables decreased in 2007 by -04% but increased in 2008 by 23%. Markup on secured loans also decreased in 2007 by 13% in 2007and increased 53% in 2008. Short term borrowing also increased by 16% in 2007 and 83% in 2008 as compare to 2006 and 2007 respectively.
Finally, size of the company has increased during the last five years. More investment is made in capital assets. Company is in expansion phase since the base year. Investment in new expansion project and technology is being made in order to keep pace with changing business environment.
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NISHAT COMPANY LIMITEDHORIZENTAL PROFIT AND LOSS
2008 2007 2006 2008 2007
SALES 19,267,633,000 17,180,192,000 16,417,358,000 12% 5%
COST OF SALES (16,298,857,000) (14,335,254,000) (13,701,626,000) 14% 5%
GROSS PROFIT 2,968,776,000 2,844,938,000 2,715,732,000 4% 5%
DISTRIBUTION COST (961,711,000) (928,778,000) (663,671,000) 4% 40%
ADMINISTRATIVE EXPENSES (398,757,000) (320,202,000) (264,807,000) 25% 21%
OTHER OPERATING (110,781,000) (91,758,000) (78,689,000) 21% 17%
OTHER OPERATING INCOME 5,806,873,000 671,275,000 277,961,000 765% 141% 4,335,624,000 (669,463,000) (729,206,000) -748% -8%
OPERATING PROFIT 7,304,400,000 2,175,475,000 1,986,526,000 236% 10%
FINANCE COST (907,432,000) (819,267,000) (755,054,000) 11% 9%
share of profit in associated companies - - 527,394,000 0% -100%
(907,432,000) (819,267,000) (227,660,000) 11% 260%
PROFIT BEFORE TAXATION 6,396,968,000 1,356,208,000 1,758,866,000 372% -23%
TAXATION (258,000,000) (145,000,000) (126,000,000) 78% 15%
PROFIT AFTER TAXATION 6,138,968,000 1,211,208,000 1,632,866,000 407% -26%
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ANALYTICAL REVIEW OF PROFIT & LOSS ACCOUNT
Sales of the Company has shown a increasing trend and has increased up to 5% in 2007 and 12% in 2008 as compare to 2006 and 2007 respectively.
Cost of sales has also shown an increasing trend. In last two years the cost has increased, it has increased in 2007 by 5% and in 2008 14% as compare to 2006 and 2007 respectively. This increase is more than the increase in sales which is not good for the company.
Gross profit of the company has also shown a increasing trend during the last two years, because company cost of sale decreases and sale increase, in 2007 gross profit increases 5% and it was 4% in 2008.Selling and distribution expenses also increases in 2007 and 2008 as 40% and 4% This increase in gross profit was due to the decrease in cost of goods sold.
Finance cot increased in 2007 as 9% and increased in 2008 as 11% which used for expansion of new plants of fertilizers. This increase in 2008 which cause the advertisement of the company. Profit before tax show decreasing trend in 2007 year and increase in 2008. It had decreased in 2007 as -23% and in 2008 it was 372%. Profit after tax decreased in 2007 by -26% and it was decrease by 407% in 2008.
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Vertical Analysis
“An analysis of percentage financial statements where all balance sheet items are divided by total assets and all income statement items are divided by net sales or revenue”
The expression of individual financial statement item as percentages of total helps the analyst spot trends with respect to the relative importance of these items over time.
Balance Sheet
Vertical analysis is also called common size analysis. The common size balance sheet is also called 100% balance sheet. The total of assets is the base figures representing 100%. Every item of the balance sheet is related vertically to reflect the vertical mix against the total. The analysis represents internal composition of assets and liabilities. The common size balance sheet analysis reveals the sources of capital and all other sources and the application of sources to assets of the company.
Profit And Loss Account
Similar method as applied for balance sheet is also applicable to profit and loss account. The various items of profit and loss account are related as percentage to sales. For example, items like, cost of goods sold. Operating expenses, gross profit, taxation etc. are reduced to percentages by treating the sales as 100 %. These ratios are also called vertical ratios and mix percentages.
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NISHAT COMPANY LIMITEDVERITCAL PROFIT AND LOSS ACC.
2008 2007 2006 2008 2007 2006
SALES 19,267,633,000 17,180,192,000 16,417,358,000 314% 1418% 1005%
COST OF SALES (16,298,857,000) (14,335,254,000) (13,701,626,000) -265% -1184% -839%
GROSS PROFIT 2,968,776,000 2,844,938,000 2,715,732,000 48% 235% 166%
DISTRIBUTION COST (961,711,000) (928,778,000) (663,671,000) -16% -77% -41%
ADMINISTRATIVE EXPENSES
(398,757,000) (320,202,000) (264,807,000) -6% -26% -16%
OTHER OPERATING (110,781,000) (91,758,000) (78,689,000) -2% -8% -5%
OTHER OPERATING INCOME
5,806,873,000 671,275,000 277,961,000 95% 55% 17% 4,335,624,000 (669,463,000) (729,206,000) 71% -55% -45%
OPERATING PROFIT 7,304,400,000 2,175,475,000 1,986,526,000 119% 180% 122%
FINANCE COST (907,432,000) (819,267,000) (755,054,000) -15% -68% -46%
share of profit in associated companies - - 527,394,000 0% 0% 32%
(907,432,000) (819,267,000) (227,660,000) -15% -68% -14%
PROFIT BEFORE TAXATION
6,396,968,000 1,356,208,000 1,758,866,000 104% 112% 108%
TAXATION (258,000,000) (145,000,000) (126,000,000) -4% -12% -8%
PROFIT AFTER TAXATION
6,138,968,000 1,211,208,000 1,632,866,000 100% 100% 100%
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ANALYTICAL REVIEW OF VERTICLE PROFIT & LOSS ACCOUNT
As we can see from the vertical profit and loss account the sales revenue increased in 2007 by1418% and in 2008 Increased by 314%. Cost of sales also decreased in 2007 by -1184% and it decreased by -265% in 2008, gross profit increased in 2008 by 48% as compared to 2007 and in 2007 it had increased by 235% as compared to 2006.
Selling and distribution expenses had decreased in 2008 by -16% and decreased in 2007 as compared to 2006 which was -77%. Financial charges showed decreasing trend in relation to sales with a decreased in 2008 as compare to 2007 and 2006 Other operating income had increased in 2007 and also increased in 2008 which is Greater then increase in 2007.Profit before taxation has increased in year 2006 and year 2007 and also in year 2008. In year 2008 the profit/loss before taxation was 104% and in 2007 the profit increase by 112% .
Finally the company is improving with the passage of time. Although the profits are not very adequate but the management is very confident that they are working hard and the company will prosper in coming years as most of the capital work has been completed.
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NISHAT COMPANY LIMITEDVERITCAL BALANCE SHEET 2008 2007 2006 2008 2007 2006EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Share Capital 1,597,857,000
1,597,857,000
1,452,597,000 4% 4% 4%
Reserves 23,549,323,000
28,566,041,000
19,659,812,000 62% 75% 52%
Accumulated profit -
- -
Total Equity 25,147,180,000
30,163,898,000
21,112,409,000 66% 80% 56%
SHAREHOLDERS EQUITYNON CURRENT LIABILITIES
Loan term finances 1,047,794,000
1,773,820,000
2,982,353,000 3% 5% 8%
liabilities against assets subject to finance lease
-
-
33,031,000 0% 0% 0%
1,047,794,000
1,773,820,000
3,015,384,000 3% 5% 8%
CURRENT LIABILITIES
Trade and other payables 1,141,227,000
926,593,000
960,436,000 3% 2% 3%
Interest/ mark up on loans 201,847,000
131,744,000
151,236,000 1% 0% 0%
short term borrowings 9,175,518,000
5,018,664,000
4,315,708,000 24% 13% 11%
Current portion of long term liabilities
926,025,000
1,341,565,000
1,342,771,000 2% 4% 4%
Provision for income tax 276,988,000
230,807,000
281,382,000 1% 1% 1%
11,721,605,000
7,649,373,000
7,051,533,000 31% 20% 19%
CONTIGENCY AND COMMETMENTS
-
- -
TOTAL EQUITY AND LIABILITIES
37,916,579,000
39,587,091,000
31,179,326,000 100% 104% 82%
ASSETS 2008 2007 2006 2008 2007 2006
NON-CURRENT ASSETS
Property, Plant and Equipment 10,647,310,00
0 10,586,159,000
10,611,353,000 28% 28% 28%
Capital Work in progress 13,321,088,00
0 15,672,980,000
10,793,026,000 35% 41% 28%
Loan term loans-secured and deposits
8,122,000
9,523,000
6,377,000 0% 0% 0%
Loan term loans-secured and deposits
10,541,000
9,342,000
10,130,000 0% 0% 0%
23,987,061,000
26,278,004,000
21,420,886,000 63% 69% 56%
CURRENT ASSETS
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stores, spares parts and loose tools
490,229,000
422,428,000
471,520,000 1% 1% 1%
stock in trade 4,103,648,000
3,106,436,000
3,003,174,000 11% 8% 8%
Trade Debts 1,329,027,000
831,653,000
1,026,884,000 4% 2% 3%
Short term investments 7,129,154,000
8,118,459,000
4,350,146,000 19% 21% 11%
loans and advances 403,295,000
411,270,000
418,794,000 1% 1% 1%
Short term deposit and prepayments
30,400,000
26,395,000
30,525,000 0% 0% 0%
others receivables 370,013,000
322,839,000
407,147,000 1% 1% 1%
Cash and bank balances 73,752,000
69,607,000
50,250,000 0% 0% 0%
13,929,518,000
13,309,087,000
9,758,440,000 37% 35% 26%
TOTAL ASSETS 37,916,579,000
39,587,091,000
31,179,326,000 100% 104% 82%
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ANALYTICAL REVIEW OF VERTICLE ANALYSIS OF BALANCE SHEET
ASSETS
Non-Current Assets
As we can see from the vertical balance sheet of the company total fixed assets are constant in relation to total assets with little variations. The management is more focusing on working capital management than on fixed asset in last three years as shown by the vertical balance sheet.
Property, plant and equipment have shown a same trend in year 2006 which was 28% and in 2007 also which was 28% and after that improvement in last year 2008 that was 28% Capital work in progress was increased in 2007 as compare to 2006, Store spare held for capital expenditures increase in 2007 and 2008. Long-term deposits remains the same by 0% in 2006 and 0% and 0% increased in 2007 and 2008.
Current Assets
Total current assets have shown an increasing trend over the last three year period. Stores and spares declined in year 2007 after that it has shown an increasing trend. In 2006 it increased by 1%, n 2007 1% and in 2008 it was 1%.
Stock in trade has shown an increasing trend. Stock in trade is about 8% of the total current assets in 2006 and it was 8% of total assets in 2007 and11% in 2008. Stores and spares have the largest portion
among all current assets. Receivable had 1% o total assets in 2006 and they were 1% in 2007 and 1% in 2008. Trade debtors were 3% in 2006, 2% in 2007 and 4% in 2008. Cash and cash equivalent were 0% in 2006, 0% in 2007 and 0% n 2008.
EQUITY AND LIABILITIES
Share capital and reserves have shown increasing trend. appropriated profit has shown increasing trend and company had gain in 2008. Issued, subscribed and paid up capital was 4% of total liabilities in 2006 same 4% in 2007 and it was also 4% in 2008. Reserves were increased were 52%, 75% and 62% in 2006,2007 and 2008 respectively.
Non-Current Liabilities
Total long-term liabilities of the company have shown increasing trend in relation to total liabilities except marginally increase in year 2008. The company is focusing on equity financing than debts due to the higher financing costs. Liabilities against assets have shown a mix trend over the last three year period.
49/85
Long term financing was 8% in 2006, 5% in 2007 and 3% in 2008 to all of its liabilities.
Current Liabilities
Short term liabilities have shown an increasing trend during the last three years as shown in the vertical balance sheet of the company. Trade and other payables have shown an increasing trend with a marginal increase in last year. Trade an other payables increased in 2007 and 2008, in 2006 they were 3%, 2%in 2007 and 3% in 2008. Short term financing increased, it was 11% in 2006, 13% in 2007 and 24% in 2008.
50/85
CHAPTER # 03
1) Company Analysis
2) Company Life Cycle
51/85
COMPANY ANALYSIS:
Directors are pleased to present the 60th annual report and audited accounts for the year
ended June 30, 2008 Nishat Mills has earned profit after tax Rs 6,138.968 Million for
the year ended June 30, 2008. The profit increased by 406.85% as compared to Rs.
1,211.208 Million for the pervious period. this increase in profit is mainly due to capital
gain of Rs. 5,060.413 million resulting from mark to market transaction of our
investment in MCB Bank shares, and increase in dividend income by Rs. 230.765
million. resulting from mark to market transaction of our 4.35 % respectively as
compared to the previous Period. Percentage increase in gross profit does not
commensurate with that of sales due to the facts that there was an increase of 22.62 % in
local cotton rates (2008: Rs. 3,047/mound, 2007: Rs. 2,485/mound) and an increase of
7.65 % in imported cotton rate (2008: Rs. 3,714/mound, 2007: Rs. 3,450/mound).
Finance cost increase by 10.76 % mainly due to increase in average borrowing by 5%.
The Board of Directors of the company has recommended 25% cash dividend (2007:
25% cash dividend) and recommends transferring Rs. 4,870 Million (2007: Rs. 1,244
Million) to general reserve.
General market scenario & future prospects
In fiscal year ended june 2008 observed some major changes in world economics in
general and for textile sector in particular. This year witnessed crude oil touching the
record high of $140 per barrel, substitution of food crops to biofuel crops, rising capital
and commodity price indexes and galloping inflation in all major economies of the
world. Overall there was a major shift in fuel, labor and operating costs of all business
activities. For textile sector, matters were further complicated by an unprecedented rise
in cotton prices in September and October 2007, with no signs of stability by the year
end. Additional factors were energy crises at domestic level, low yield of cotton in
Pakistan and a very weak demand from US and European and credit crunch for general
consumers. Although softening of Pak Rupee against US dollar helped to cover a small
factor of this accumulated cost pressure, the overall picture for domestic textiles industry
was that of inflating costs and a deflating product demand. Forecasting future is
intricate in the present scenario of the country and capricious market. It mainly depends
upon cotton market for the coming season, which seems bullish. As per estimate of
52/85
experts, Pakistani cotton production is short by approximately 30 to 35 % as compared to
the demand. We need our government to chalk out a proper and long term textile policy
for the survival of industry. On our part, we need to increase customers profile and
explore new markets to increase business volumes. Our strategy to drive our marketing
activities would be the timely adoption of innovative products, finishes and production
technique.
Spinning Section
The year 2008 mainly started with difficulties in the shape of the bullish and uncertain
cotton market. Ever highest cotton prices were seen this year in Pakistan. Cotton prices
started with Rs. 2,900/maund and went up to Rs. 4,000/ maund during this year. Most of
the Spinning mills remained in a serious cotton crisis through out the year.
We have, however, by passed these crises by following our one time cotton buying
policy and same has also helped us to maintain steady quality results. Demand of 100%
grey cotton yarn remained steady and we tried to uphold the prices along with market
and to keep over all spinning in profits. by the end of year, far east market. showed good
response in terms of demand and prices of carded & combed yarn. Far East remained our
main selling market of cotton yarn. USA had some steady demand during this year,
where as in Europe demand of cotton yarn was reduced more. Development in terms of
machinery is in progress for better quality of yarn. Installation of state of art ring frames
is under way at one ofour spinning units.
Weaving Section
During the year under review, we have observed highest ever yarn prices which made the
job more difficult. The increases in the yarn price was not absorbed by the fabric prices.
We faced a lot of difficulties to win the business in international market because of high
raw material prices. Moreover, political instability, law and order situation and energy
crisis (Oil, Gas and Power shortage), increased our cost of production and held our
product uncompetitive in international market. It is becoming difficult to maintain our
performance in the present scenario. Fareast market showed difficult on ground of price.
Business in South America reduced by 80% in comparison with previous period because
of the bullish yarn market and cheaper prices from competitors. Our wider width looms /
home textiles greige capacity continued facing decline in prices. Our strategy in this
competition was to diversify ourselves customer wise, market wise and product wise.
53/85
This was the only way to survive in such uncertain market. Another strategy was to cut
costs by bringing innovative technologies. We continued to replace our old looms with
the new state of the art looms and got new looms in different widths to meet the varying
requirements of all our customers. This is the first time that Nishat has looms with 90”
width. By having these looms, we will be more competitive and can supply all types of
greige fabric in varying widths. We hope that after getting these new looms, we would
not lose any business because of the width problem, especially stretch articles. Moreover,
we are planning for PFD plant in our weaving to give PFD fabrics to our customers, as
many customers in Europe are asking for PFD fabrics instead of weaved fabric. In this
way, we will be much competitive product wise and quality wise. It would increase our
customer profit in Europe. We are also trying to reduce our production lead times by
bringing state of the art looms. Customer services, keeping stocks for special fulfillment,
yarns and fibers, are our major tools for a better lead time. We have added new European
customers and started to increase business in France, Denmark, turkey and Poland
markets to fulfill the gap of the Fareast and South American markets. Our business in the
special and technical fabric (Antistatic, Fire retardant, and military fabrics) has also
increased with continuation of orders. We have increased the sales volumes to Nishat
Dyeing and Finishing with a better product mix. We have launched several new products
like Viscose Lycra, Cotton/Kapok/Lycra, Bamboo Lycra and Linen based items etc. in
the Fairs/ Exhibitions and developed the same in different
markets.
Processing and Stitching Section
The year 2008 was a difficult year for fabric processing mills as in addition to the
domestic challenging scenario, recession of American market further slowed down the
entire business
cycle. Retailers were stuck up with high inventory levels, which hindered new ventures.
Unanticipated bankruptcy of some major textile businesses including, Dan River, Linen
& Things, Goody’s Family Inc also gave unprecedented setback to an already fading
market. This
situation did not allow suppliers to increase any prices to overcome excessive overhead
costs
and ease out the worsening condition. Even though all major concerns were facing
54/85
a perpendicular decline in the revenues, our company was able to sustain its sales in step
with the plant efficiency. A particular focus was conferred upon enhancing production
efficiency are drawing more production in less number of hours and with optimum
workforce. With reference to this cost cutting strategy, an important step was taken by
shifting the Faisalabad stitching unit to Lahore, adjacent to the processing plant. This
adaptation is
expected to play an extra ordinary role in improving the supply, operations’ management
and reduction in transportation costs. It will overcome unnecessary operational delays
and costs. Moreover, this stitching unit is being upgraded with the latest machinery and a
state of the art switch-track system that will enhance the working efficiency enormously
along with the product quality. We are installing caustic soda recovery plant to have
further value addition, cost reduction and diversification in production resources. We
have installed new gerbur cutting
equipment in our sewing operation. For exports, European market remained our main
bread & butter earner during the period due to its economic and currency strength.
Devaluation of rupee provided an auxiliary edge to European customers to shop more on
our existing prices, which consequently increased our production & sales. We are
exploring more
opportunities to enhance our strong presence in European market. Furthermore, a lot of
developmental works are underway for American market for regular and branded items.
With escalating value of Chinese currency, Pakistani market is once again expected to
attract US importers. Coupled with Nishat’s capabilities and competencies, our vertically
integrated production facilities that can turn raw cotton in final finished consumer.
product, always attract attention of US clients. We are very positive to materialize
currentdevelopments into tangible sales in near future.
Nishat Dyeing & Finishing – (NDF)Given the circumstances of textile industry and all challenges, NDF managed to perform
quite well. NDF not only managed to retain all its major customers despite the cut throat
price competition, but also increased its customer base both in US as well as in Europe.
Thereby the low demand by existing customers due to poor retail was covered well by
addition of this new business. This increase in customer base was both due to the
complete verticality offered to customer for fabric till finished garments. as well as to the
increased marketing activities on tapping new customers. The overall picture is not
55/85
expected to improve Much in the next fiscal year as in the market still remains highly
unstable. All the factors contribution to the current inflationary pressures and weak
demand are still present and far from being settled. As much as it is hard to establish a
firm marketing strategy in such a volatile market, NDF has formulated the key principles
follow in the next fiscal year.
These revolve around a further expansion in its customer base, retaining the current
major customers, increasing marketing efforts in the still profitable European market and
concentrated
effort towards specialized finished over regular run-of-the-mill products to fetch better
margins.
Power GenerationNishat has 80 MW of self power generation facilities at different sites. We have always
concentrated on installation of most modern and efficiency to power generation machine
to get
more with less fuel consumption. Out of the total generation capacity, 46 MW generation
is done through most modern and highly efficiency gas fired generators and their design
is based on “tri-generation” concept i.e. besides generating power these plants are
producing steam for use in processing, for further power generation and hot water for
process use or air conditioning. This concept makes it possible to use the precious energy
to to maximize profitability of the company and help reduce environmental pollution.
Keeping in view the current power shortage in the country, Nishat has responded to
beckon of the Government and sold its excessive power
from different locations to the local distribution companies.
56/85
Company Life Cycle
Last Five Years Sales of the Company
Comments:
In the above graph you can see in the year 2008 sale of the company at highest point and it is showing increasing trend from 2004 so company sale is at increasing side in the year of 2004 to 2008 there is no much difference between the sale this increasing trend due to expansion of plant and due to the consumption and the demand in the market so we can say that Nishat Mills product’s demand is increasing in the local market and international market.
57/85
CHAPTER # 04
1. Five Years Review
2. Recommendation
3. Conclusion
4. Bibliography
58/85
FIVE YEARS REVIEW
Explanation:
In the above chat we can see the profit position of the company during the year 2004 to 2008 in these five years company profitability position is better in 2008 as compare it with other years, so we can say that company was in much better position in 2008.
59/85
RECOMMENDATIONS
o The Company should design effective internal control system, which not only increase the efficiency but also reduce the pressure exists on accounts and finance department.
o The Company should arrange training and orientation programs for its employees on regular basis so that they can equip themselves with the latest developments in the field of finance and accounts.
o Monthly accounts should be prepared on regular basis so that it will help the management to make better and timely decisions.
o Calculations of mark-up should be made by the Company to reconcile and check the mark-up charged by the banks to keep a good control on the financial charges charged by the banks.
o Trade debtors and creditors balances reconciliations should be made on monthly basis along with keeping the balances updated by sending balance confirmations letters to the parties’ The selection criteria should also be improved. The company should select the educated and experienced employees and along with there should be a proper training system for them
Conclusion
Directors are pleased to present the 60th annual report and audited accounts for the
year ended June 30, 2008 Nishat Mills has earned profit after tax Rs 6,138.968 Million
for the year ended June 30, 2008. The profit increased by 406.85% as compared to Rs.
1,211.208 Million for the pervious period. this increase in profit is mainly due to capital
gain of Rs. 5,060.413 million resulting from mark to market transaction of our
investment in MCB Bank shares, and increase in dividend income by Rs. 230.765
million. resulting from mark to market transaction of our 4.35 % respectively as
compared to the previous Prriod. Percentage increase in gross profit does not
commensurate with that of sales due to the facts that there was an increase of 22.62 % in
local cotton rates (2008: Rs. 3,047/maund, 2007: Rs. 2,485/maund) and an increase of
7.65 % in imported cotton rate (2008: Rs. 3,714/maund, 2007: Rs. 3,450/maund).
Finance cost increase by 10.76 % mainly due to increase in average borrowing by 5%.
The Board of Directors of the company has recommended 25% cash dividend
(2007: 25% cash dividend) and recommends transferring Rs. 4,870 Million (2007: Rs.
1,244 Million) to general reserve.
60/85
In fiscal year ended june 2008 observed some major changes in world economics in
general and for textile sector in particular. This year witnessed crude oil touching the
record high of $140 per barrel, substitution of food crops to biofuel crops, rising capital
and commodity price indexes and galloping inflation in all major economies of the
world. Overall there was a major shift in fuel, labor and operating costs of all business
activities. For textile sector, matters were further complicated by an unprecedented rise
in cotton prices in September and October 2007, with no signs of stability by the year
end. Additional factors were energy crises at domestic level, low yield of cotton in
Pakistan and a very weak demand from US and European and credit crunch for general
consumers. Although softening of Pak Rupee against US dollar helped to cover a small
factor of this accumulated cost pressure, the overall picture for domestic textiles industry
was that of inflating costs and a deflating product demand. Forecasting future is
intricate in the present scenario of the country and capricious market. It mainly depends
upon cotton market for the coming season, which seems bullish. As per estimate of
experts, Pakistani cotton production is short by approximately 30 to 35 % as compared to
the demand. We need our government to chalk out a proper and long term textile policy
for the survival of industry. On our part, we need to increase customers profile and
explore new markets to increase business volumes. Our strategy to drive our marketing
activities would be the timely adoption of innovative products, finishes and production
technique.
The year 2008 mainly started with difficulties in the shape of the bullish and
uncertain cotton market. Ever highest cotton prices were seen this year in Pakistan.
Cotton prices started with Rs. 2,900/mound and went up to Rs. 4,000/ mound during this
year. Most of the Spinning mills remained in a serious cotton crisis through out the year.
We have, however, by passed these crises by following our one time cotton buying
policy and same has also helped us to maintain steady quality results. Demand of 100%
grey cotton yarn remained steady and we tried to uphold the prices along with market
and to keep over all spinning in profits. by the end of year, far east market. showed good
response in terms of demand and prices of carded & combed yarn. Far East remained our
main selling market of cotton yarn. USA had some steady demand during this year,
where as in Europe demand of cotton yarn was reduced more. Development in terms of
61/85
machinery is in progress for better quality of yarn. Installation of state of art ring frames
is under way at one of our spinning units.
During the year under review, we have observed highest ever yarn prices which
made the job more difficult. The increases in the yarn price was not absorbed by the
fabric prices. We faced a lot of difficulties to win the business in international market
because of high raw material prices. Moreover, political instability, law and order
situation and energy crisis (Oil, Gas and Power shortage), increased our cost of
production and held our product uncompetitive in international market. It is becoming
difficult to maintain our performance in the present scenario. Fareast market showed
difficult on ground of price. Business in South America reduced by 80% in comparison
with previous period because of the bullish yarn market and cheaper prices from
competitors. Our wider width looms / home textiles greige capacity continued facing
decline in prices. Our strategy in this competition was to diversify ourselves customer
wise, market wise and product wise. This was the only way to survive in such uncertain
market. Another strategy was to cut costs by bringing innovative technologies. We
continued to replace our old looms with the new state of the art looms and got new looms
in different widths to meet the varying requirements of all our customers. This is the
first time that Nishat has looms with 90” width. By having these looms, we will be more
competitive and can supply all types of grieve fabric in varying widths. We hope that
after getting these new looms, we would not lose any business because of the width
problem, especially stretch articles. Moreover, we are planning for PFD plant in our
weaving to give PFD fabrics to our customers, as many customers in Europe are asking
for PFD fabrics instead of weaved fabric. In this way, we will be much competitive
product wise and quality wise. It would increase our customer profit in Europe. We are
also trying to reduce our production lead times by bringing state of the art looms.
Customer services, keeping stocks for special fulfillment, yarns and fibers, are our major
tools for a better lead time. We have added new European customers and started to
increase business in France, Denmark, turkey and Poland markets to fulfill the gap of the
Fareast and South American markets. Our business in the special and technical fabric
(Antistatic, Fire retardant, and military fabrics) has also increased with continuation of
orders. We have increased the sales volumes to Nishat Dyeing and Finishing with a
better product mix. We have launched several new products like Viscose Lycra,
Cotton/Kapok/Lycra, Bamboo Lycra and Linen based items etc. in the Fairs/ Exhibitions
and developed the same in different markets.
62/85
The year 2008 was a difficult year for fabric processing mills as in addition to the
domestic challenging scenario, recession of American market further slowed down the
entire business cycle. Retailers were stuck up with high inventory levels, which hindered
new ventures. Unanticipated bankruptcy of some major textile businesses including, Dan
River, Linen & Things, Goody’s Family Inc also gave unprecedented setback to an
already fading market. This situation did not allow suppliers to increase any prices to
overcome excessive overhead costs and ease out the worsening condition. Even though
all major concerns were facing
a perpendicular decline in the revenues, our company was able to sustain its sales
in step with the plant efficiency. A particular focus was conferred upon enhancing
production efficiency are drawing more production in less number of hours and with
optimum workforce. With reference to this cost cutting strategy, an important step was
taken by shifting the Faisalabad stitching unit to Lahore, adjacent to the processing plant.
This adaptation is expected to play an extra ordinary role in improving the supply,
operations’ management and reduction in transportation costs. It will overcome
unnecessary operational delays and costs. Moreover, this stitching unit is being upgraded
with the latest machinery and a state of the art switch-track system that will enhance the
working efficiency enormously along with the product quality. We are installing caustic
soda recovery plant to have further value addition, cost reduction and diversification in
production resources. We have installed new Gerber cutting equipment in our sewing
operation. For exports, European market remained our main bread & butter earner during
the period due to its economic and currency strength. Devaluation of rupee provided an
auxiliary edge to European customers to shop more on our existing prices, which
consequently increased our production & sales. We are exploring more opportunities to
enhance our strong presence in European market. Furthermore, a lot of developmental
works are underway for American market for regular and branded items. With escalating
value of Chinese currency, Pakistani market is once again expected to attract US
importers. Coupled with Nishat’s capabilities and competencies, our vertically integrated
production facilities that can turn raw cotton in final finished consumer. product, always
attract attention of US clients. We are very positive to materialize current developments
into tangible sales in near future.
Given the circumstances of textile industry and all challenges, NDF managed to
perform quite well. NDF not only managed to retain all its major customers despite the
63/85
cut throat price competition, but also increased its customer base both in US as well as in
Europe. Thereby the low demand by existing customers due to poor retail was covered
well by addition of this new business. This increase in customer base was both due to the
complete verticality offered to customer for fabric till finished garments. as well as to the
increased marketing activities on tapping new customers. The overall picture is not
expected to improve Much in the next fiscal year as in the market still remains highly
unstable. All the factors contribution to the current inflationary pressures and weak
demand are still present and far from being settled. As much as it is hard to establish a
firm marketing strategy in such a volatile market, NDF has formulated the key principles
follow in the next fiscal year.
These revolve around a further expansion in its customer base, retaining the current
major customers, increasing marketing efforts in the still profitable European market and
concentrated effort towards specialized finished over regular run-of-the-mill products to
fetch better margins.
Nishat has 80 MW of self power generation facilities at different sites. We have
always concentrated on installation of most modern and efficiency to power generation
machine to get more with less fuel consumption. Out of the total generation capacity, 46
MW generation is done through most modern and highly efficiency gas fired generators
and their design is based on “tri-generation” concept i.e. besides generating power these
plants are producing steam for use in processing, for further power generation and hot
water for process use or air conditioning. This concept makes it possible to use the
precious energy to maximize profitability of the company and help reduce environmental
pollution. Keeping in view the current power shortage in the country, Nishat has
responded to beckon of the Government and sold its excessive power from different
locations to the local distribution companies.
64/85
Bibliography
REFERENCE & SOURCES USED
1) http://www.nishatmillsltd.com/nishat/invest.html
2) http://www.nonprofitsassistancefund.org/files/MNAF/ToolsTemplates/NonprofitFinancialRatios.pdf
3) http://www.azgard9.com/html/financial-info/2008/Security%20Analys_g%20-%20Q1.pdf
4) http://www.azgard9.com/html/financial-info/2008/Consolidated%20ANL.pdf
5) http://www.azgard9.com/html/financial-info/2008/Azgard%209%20AR07%20Consolidati%20(2).pdf
6) http://www.azgard9.com/html/financial-info/2007/ANNUAL%20REPORT-2006%20PAGE%2021%20TO%20110.pdf
7) http://www.azgard9.com/html/financial-information.htm
8) http://www.sapphire.com.pk/cstmaccounts.htm
9) http://www.sapphire.com.pk/home.htm
References
Special Thanks to
Mr. Muhammad Zeshan Raza
65/85
CHAPTER # 05
Annexure:
1) Five Years Balance Sheet of Nishat Mills limited Company
2) Five Years Profit and Loss account of Nishat Mills limited Company
3) Five Years Balance Sheet of Azgard Nine Pvt limited Company
4) Five Years Profit and Loss account of Azgard Nine Pvt limited Company
5) Five Years Balance Sheet of Sapphire Mills limited Company
6) Five Years Profit and Loss account of Sapphire Mills limited Company
7) Ratio Working of Nishat, Sapphire and Azgard Nine Company
66/85
NISHAT PVT. LIMITED
BALANCE SHEET
FOR THE YEAR ENDED 2008 2008 2007 2006 2005 2004EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Share Capital
1,597,857,000
1,597,857,000
1,452,597,000
1,452,597,000
1,597,857,000
Reserves
23,549,323,000
28,566,041,000
19,659,812,000
11,353,517,000
28,566,041,000
Accumulated profit
-
-
-
-
-
Total Equity
25,147,180,000
30,163,898,000
21,112,409,000
12,806,114,000
30,163,898,000
SHAREHOLDERS EQUITYNON CURRENT LIABILITIES
Loan term finances
1,047,794,000
1,773,820,000
2,982,353,000
2,796,512,000
1,773,820,000
liabilities against assets subject to finance lease
-
-
33,031,000
61,643,000
-
1,047,794,000
1,773,820,000
3,015,384,000
2,858,155,000
1,773,820,000
CURRENT LIABILITIESTrade and other payables
1,141,227,000
926,593,000
960,436,000
812,216,000
926,593,000
Interest/ mark up on loans
201,847,000
131,744,000
151,236,000
88,449,000
131,744,000
short term borrowings
9,175,518,000
5,018,664,000
4,315,708,000
4,284,815,000
5,018,664,000
Current portion of long term liabilities
926,025,000
1,341,565,000
1,342,771,000
711,164,000
1,341,565,000
Provision for income tax
276,988,000
230,807,000
281,382,000
356,689,000
230,807,000
11,721,605,000
7,649,373,000
7,051,533,000
6,253,333,000
7,649,373,000
CONTIGENCY AND COMMETMENTS
-
-
-
-
-
TOTAL EQUITY AND LIABILITIES
37,916,579,000
39,587,091,000
31,179,326,000
21,917,602,000
39,587,091,000
ASSETS 2008 2007 2006 2005 2004
NON-CURRENT ASSETSProperty, Plant and Equipment
10,647,310,000
10,586,159,000
10,611,353,000
9,151,096,000
2,429,954,944
Capital Work in 13,321,088,000
15,672,980,000
10,793,026,000
5,003,177,000
57,608,750
67/85
progressLoan term loans-secured and deposits
8,122,000
9,523,000
6,377,000
4,890,000
Loan term loans-secured and deposits
10,541,000
9,342,000
10,130,000
12,022,000
23,820,007
23,987,061,000
26,278,004,000
21,420,886,000
14,171,185,000
2,511,383,701
CURRENT ASSETSstores, spares parts and loose tools
490,229,000
422,428,000
471,520,000
424,827,000
1,249,572,742
stock in trade
4,103,648,000
3,106,436,000
3,003,174,000
2,897,392,000
Trade Debts
1,329,027,000
831,653,000
1,026,884,000
877,358,000
1,150,579,738
Short term investments
7,129,154,000
8,118,459,000
4,350,146,000
2,173,530,000
109,138,820
loans and advances
403,295,000
411,270,000
418,794,000
424,533,000
245,255,091
Short term deposit and prepayments
30,400,000
26,395,000
30,525,000
39,180,000
13,497,444
others receivables
370,013,000
322,839,000
407,147,000
388,598,000
-
Cash and bank balances
73,752,000
69,607,000
50,250,000
520,999,000
56,528,131
13,929,518,000
13,309,087,000
9,758,440,000
7,746,417,000
2,824,571,966
TOTAL ASSETS
37,916,579,000
39,587,091,000
31,179,326,000
21,917,602,000
5,335,955,667
68/85
NISHAT PVT. LIMITED
PROFIT & LOSS A/C
FOR THE YEAR ENDED 20082008 2007 2006 2005 2004
SALES
COST OF SALES
19,267,633,000
17,180,192,000
16,417,358,000
11,374,630,000
7,461,055,757
(16,298,857,000)
(14,335,254,000)
(13,701,626,000)
(9,239,731,000)
7,091,114,328
GROSS PROFIT
2,968,776,000
2,844,938,000
2,715,732,000
2,134,899,000
14,552,170,085
DISTRIBUTION COST ADMINISTRATIVE EXPENSES
(961,711,000)
(928,778,000)
(663,671,000)
(510,246,000)
-
OTHER OPERATING
(398,757,000)
(320,202,000)
(264,807,000)
(175,040,000)
54,689,456 OTHER OPERATING INCOME
(110,781,000)
(91,758,000)
(78,689,000)
(70,978,000)
27,986,950
5,806,873,000
671,275,000
277,961,000
621,569,000
111,644,873
4,335,624,000
(669,463,000)
(729,206,000)
(134,695,000)
194,321,279
OPERATING PROFIT
7,304,400,000
2,175,475,000
1,986,526,000
2,000,204,000
14,746,491,364
FINANCE COSTshare of profit in associated companies
(907,432,000)
(819,267,000)
(755,054,000)
(407,696,000)
127,260,241
-
-
527,394,000
440,846,000
13,544,903
(907,432,000)
(819,267,000)
(227,660,000)
33,150,000
140,805,144
PROFIT BEFORE TAXATION
6,396,968,000
1,356,208,000
1,758,866,000
2,033,354,000
14,887,296,508
TAXATION
(258,000,000)
(145,000,000)
(126,000,000)
(166,000,000)
85,046,149 PROFIT AFTER TAXATION
6,138,968,000
1,211,208,000
1,632,866,000
1,867,354,000
14,972,342,657
69/85
AZGARD NINE PVT LIMITED
BALANCE SHEET
AS AT 31 DECEMBER 2008
2008 2007 2006 2005 2004 EQUITY AND LIABILITIES
Rs. Rs. Rs. Rs. Rs.
SHARE CAPITAL AND RESERVES
ISSUED, SUBSCRIBED AND PAID UP CAPITAL
3,827,118,540
3,788,822,900
3,788,838,900
1,737,308,680
1,737,308,680
RESERVES 3,532,469,002
3,530,626,122
3,578,262,182
403,331,469
362,142,241
Inappropriate Profit 2,764,494,959
2,400,605,174
1,807,067,052
952,462,490
410,657,982
10,124,082,501
9,720,054,196
9,174,168,134
3,093,102,639
2,510,108,903
Surplus on revaluation of property, Plant and equipment
219,356,257
239,073,077
257,360,867
278,943,671
306,564,511
Non current liabilities
Redeemable capital Secured
3,962,461,561
4,491,185,372
2,268,598,953
2,333,220,175
1,147,729
Long term finance secured
2,686,842,500
2,973,551,252
3,519,216,988
347,920,000
750,000,000
Liabilities against assets subject to finance lease
25,210,944
14,357,005
9,622,618
40,173,972
116,503,819
6,674,515,005
7,479,093,629
5,797,438,559
2,721,314,147
867,651,548
Current Liabilities
Current Portion of non current liabilities
1,470,921,493
981,049,256
450,047,125
433,780,774
363,081,881
Short term Borrowings
6,574,080,304
3,820,688,516
6,006,117,630
3,142,402,324
1,492,909,892
derivative financial liabilities
50,536,909
34,369,582
32,021,607
-
-
Trade and other payables
1,350,500,115
1,030,875,769
1,243,588,067
791,641,172
691,981,192
Due to related parties- unsecured
426,768,193
-
-
-
-
Markup accrued on borrowings
466,226,443
317,690,929
195,249,017
79,679,935
64,824,871
70/85
Unclaimed dividend 14,686,046
9,694,014
22,312,061
362,062
95,414
10,353,719,503
6,194,368,066
7,949,335,507
4,447,866,267
2,612,893,250
Contingencies and commitments
-
-
-
-
-
27,371,673,266
23,632,588,968
23,178,303,067
10,541,226,724
6,297,218,212
ASSETS 2008 2,0
07
2,006
2,005
2,004 Non-current assets Rs. Rs. Rs. Rs. Rs.
Property, Plant and equipment
7,734,950,547
7,643,649,558
7,601,895,866
3,113,043,032
2,847,936,402
Capital work in progress
918,670,893
167,987,854
150,650,477
2,459,655,906
84,292,338
intangible assets 33,536,216
51,142,669
60,544,809
73,937,276
88,375,589
Long term investments
7,521,644,051
6,391,905,201
6,303,488,906
4,670,138
2,666,296
Long term deposits 19,777,502
20,239,502
19,906,757
29,745,135
18,517,830
16,228,579,209
14,274,924,784
14,136,486,815
5,681,051,487
3,041,788,455
Current assets
Stores spares and loose tools
201,693,270
125,468,877
101,762,486
87,790,355
72,608,693
Stock in trade 4,034,103,119
2,246,132,173
2,022,510,924
2,034,180,550
1,394,729,330
Trade receivable 1,777,232,612
1,657,196,735
1,134,897,149
1,013,883,584
945,111,856
Derivative financial assets
175,673,993
388,993,278
555,680,244
13,458,916
-
Advances, deposits, prepayments and other receivables
789,515,062
1,004,944,292
857,744,304
895,807,879
712,923,170
Current Taxation 63,948,605
51,050,683
-
-
-
Short Term investment
4,018,853,586
3,838,444,830
3,788,315,521
769,411,595
109,148,931
Cash and Bank Balances
82,073,810
45,433,316
580,905,624
45,642,358
20,907,777
11,143,094,057
9,357,664,184
9,041,816,252
4,860,175,237
3,255,429,757
27,371,673,266
23,632,588,968
23,178,303,067
10,541,226,724
6,297,218,212
71/85
Profit and Loss Accountfor the year ended 31-12-208
2008
2,007 2 ,006
2, 005
2,004
Rs. Rs. Rs. Rs. Rs.
Sales - Net 10,113,499,351
6,628,341,926
4,889,681,966
4,422,472,357
3,155,912,427
Cost of Sales (6,660,223,767)
(4,620,988,950)
(3,703,361,406)
(3,288,786,063)
(2,440,779,273)
Gross Profit 3,453,275,584
2,007,352,976
1,186,320,560
1,133,686,294
715,133,154
Administrative and selling expenses
(603,529,743)
(435,185,073)
(391,290,338)
(320,622,883)
(185,112,548)
Operating Profit 2,849,745,841
1,572,167,903
795,030,222
813,063,411
530,020,606
Other income - Net
620,148,589
641,224,883
1,122,601,656
305,447,731
9,864,791
Finance cost (2,470,391,655)
(1,061,933,212)
(657,548,074)
(326,374,206)
(144,623,062)
Profit before Taxation
999,502,775
1,151,459,574
1,260,083,804
792,136,936
395,262,335
taxation (102,218,852)
(72,007,073)
(115,569,082)
(50,843,271)
(20,000,000)
Profit after Taxation
897,283,923
1,079,452,501
1,144,514,722
741,293,665
375,262,335
72/85
SHAPPHIRE (PVT). LIMITED
BALANCE SHEET
FOR THE YEAR ENDED 2008
ASSETS 2008 2007 2006 2005 2004
NON-CURRENT ASSETS
Property, Plant and Equipment 3,936,3
57,164
3,793,621,479
3,721,368,562
3,124,152,756
2,429,954,944
Capital Work in progress 136,6
65,017
309,357,308
202,119,669
166,674,519
57,608,750
Intangible Assets
1,035,155
1,863,283
2,691,411
3,519,539
Investment Property
140,660,297 - - -
333,581,557
Long term Investment
550,455,739
400,087,567
404,687,567
359,687,567 -
Loan term loans-secured and deposits
18,609,945
27,886,920
24,224,793
26,179,194
23,820,007
4,783,783,317
4,532,816,557
4,355,092,002
3,680,213,575
2,844,965,258
CURRENT ASSETS
Inventories
3,278,652,891
1,949,146,494
1,908,734,607
1,860,863,775
1,249,572,742
Trade Debts
1,129,634,217
1,280,852,424
1,181,491,096
976,382,566
1,150,579,738
Loan and advances
61,803,031
115,677,608
41,516,776
31,165,687
109,138,820
Investments
- - - -
245,255,091
Advance/ refundable income tax
96,288,064
36,985,119
51,613,256
176,041,185
131,021,514
Trade deposits and short term prepayments
7,173,454
5,253,941
3,300,053
1,228,857 -
Other receivables
78,562,147
119,316,598
121,598,423
47,125,900
13,497,444
Short term investments -
73/85
2,821,493,005 3,032,180,857 1,521,732,569 503,644,001
Cash and bank balances
66,874,980
53,774,469
33,312,085
41,256,301
56,528,131
7,540,481,789
6,593,187,510
4,863,298,865
3,637,708,272
2,955,593,480
TOTAL ASSETS
12,324,265,106
11,126,004,067
9,218,390,867
7,317,921,847
5,800,558,738
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Share Capital
200,831,400
200,831,400
200,831,400
200,831,400
200,831,400
Reserves
4,758,930,127
5,601,774,092
3,558,561,976
2,307,510,163
1,954,795,027
Accumulated profit
617,730,082
216,262,838
134,535,088
288,773,074
172,307,002
Total Equity
5,577,491,609
6,018,868,330
3,893,928,464
2,797,114,637
2,327,933,429
SHAREHOLDERS EQUITY
NON CURRENT LIABILITIES
Redeemable Capital
- - - - -
Loan term finances
469,501,210
734,946,877
934,380,957
1,188,017,068
940,304,765
Custom duty payable
-
188,878
188,878
188,878
188,878
Deferred liabilities
396,649,544
407,355,062
366,278,699
326,710,352
279,462,992
866,150,754
1,142,490,817
1,300,848,534
1,514,916,298
1,219,956,635
CURRENT LIABILITIES
74/85
Trade and other payables
490,810,513
371,952,583
667,349,055
575,330,266
505,961,833
Interest/ mark up on loans
82,211,756
71,196,500
58,954,600
45,081,569 -
short term borrowings
4,923,882,728
3,109,232,345
2,611,402,600
1,933,610,996
1,540,819,433
Current portion of long term liabilities
322,903,996
347,063,492
603,236,109
352,343,252
147,896,239
Current portion of gratuity fund
- -
24,078,287 - -
Provision for income tax
60,813,750
65,200,000
58,279,967
99,133,295
57,629,936
Dividend payable
- -
313,251
391,534
361,233
CONTIGENCY AND COMMETMENTS
5,880,622,743
3,964,644,920
4,023,613,869
3,005,890,912
2,252,668,674
TOTAL EQUITY AND LIABILITIES
12,324,265,106
11,126,004,067
9,218,390,867
7,317,921,847
5,800,558,738
75/85
SHAPPHIRE (PVT). LIMITED
PROFIT & LOSS A/C
FOR THE YEAR ENDED 2008
2008 2007 2006 2005 2004
SALES
9,746,607,946
9,152,455,933
7,966,281,051
5,338,810,168
7,461,055,757
COST OF SALES
8,618,580,605
7,961,253,425
7,201,536,030
4,734,528,479
7,091,114,328
GROSS PROFIT
1,128,027,341
1,191,202,508
764,745,021
604,281,689
369,941,429
DISTRIBUTION COST
442,316,060
391,366,747
41,676,645
29,575,561
-
ADMINISTRATIVE EXPENSES
115,086,239
91,860,697
77,811,031
49,747,754
54,689,456
OTHER OPERATING
500,000
16,367,023
13,866,302
20,088,074
27,986,950
OTHER OPERATING INCOME
835,158,563
95,620,045
59,902,250
51,726,587
111,644,873
277,256,264
403,974,422
73,451,728
47,684,802
28,968,467
OPERATING PROFIT
1,405,283,605
787,228,086
691,293,293
556,596,887
398,909,896
RE-MEASUREMENT OF HELD FOR TRADING INVESTMENTS
-
-
-
-
751,601
FINANCE COST
734,683,187
467,520,225
427,833,551
174,923,488
127,260,241
OTHER CHARGES
-
-
-
-
13,544,903
734,683,187
467,520,225
427,833,551
174,923,488
141,556,745
PROFIT BEFORE TAXATION
670,600,418
319,707,861
263,459,742
381,673,399
257,353,151
TAXATION
52,870,336
103,445,023
128,924,654
92,900,325
85,046,149
PROFIT AFTER TAXATION
617,730,082
216,262,838
134,535,088
288,773,074
172,307,002
76/85
Ratio analysis
current ratio current assets/current liabilitesyear 2008 2007 2006 2005 2004
Nishat (13929518000/11721605000)
13309087000/7649373000
(9758440000)/7051533000
(7746417000)/6253333000
(2824571966)/7649373000
Azgard 9 (11143094057/10353719503)
(9357664184/6194368066)
(9041816252/7949335507)
(4860175237/4447866267)
(3255429757/2612893250)
Sapphire (7540481789/5
880622743) (6593187510/3964644920)
(4863298865/4023613869)
(3637708272/3005890912)
(2955593480/2252668674)
quick ratioquick ratio (current assets-stock)/current liabilites
year 2008 2007 2006 2005 2004
Nishat (13929518000-4103648000)/1
1721605000
(13309087000-
3106436000)/7649373000
(9758440000-3003174000)/7
051533000
(7746417000-
2897392000)/6253333000
(2824571966-0)/7649373000
Azgard 9 (11143094057-4034103119)/1
0353719503
(9357664184-2246132173)/6
194368066
(9041816252-2022510924)/7
949335507
(4860175237-
2034180550)/4447866267
(3255429757-1394729330)/2
612893250
Sapphire (7540481789-3278652891)/5
880622743
(6593187510-1949146494)/3
964644920
(4863298865-1908734607)/4
023613869
(3637708272-
1860863775)/3005890912
(2955593480-1249572742)/2
252668674
77/85
inventory day
Inventory Days Inventory Days = Inventory / Cost of Sales*365year 2008 2007 2006 2005 2004
Nishat (4103648000/16298857000)*3
65
(3106436000/14335254000)
*365
(3003174000/13701626000)
*365
(2897392000/9239731000)
*365
(0/7091114328)*365
Azgard 9 (4034103119/6660223767)*36
5
(2246132173/4620988950)*
365
(2022510924/3703361406)*
365
(2034180550/3288786063)
*365
(1394729330/2440779273)*
365
Sapphire (3278652891/8618580605)*36
5
(1949146494/7961253425)*
365
(1908734607/7201536030)*
365
(1860863775/4734528479)
*365
(1249572742/7091114328)*
365
Debtor's day
Debtor's day Trade debtors/Credit sales*365year 2008 2007 2006 2005 2004
Nishat (1329027000/19267633000)*3
65
(831653000/17180192000)*
365
(1026884000/16417358000)
*365
(877358000/11374630000)
*365
(1150579738/7461055757)*
365
Azgard 9 (1777232612/10113499351)*3
65
(1657196735/6628341926)*
365
(1134897149/4889681966)*
365
(1013883584/4422472357)
*365
(945111856/3155912427)*3
65
Sapphire (1129634217/9746607946)*36
5
(1280852424/9152455933)*
365
(1181491096/7966281051)*
365
(976382566/5338810168)*
365
(1150579738/7461055757)*
365
78/85
Creditors days
Creditors days Trade Creditors/Credit Sales*365year 2008 2007 2006 2005 2004
Azgard 9 (1350500115/10113499351)*3
65
(1030875769/6628341926)*
365
(1243588067/4889681966)*
365
(791641172/4422472357)*
365
(691981192/3155912427)*3
65
Sapphire (490810513/9746607946)*365
(371952583/9152455933)*3
65
(667349055/7966281051)*3
65
(575330266/5338810168)*
365
(505961833/7461055757)*3
65
Nishat (1141227000/19267633000)*3
65
(926593000/17180192000)*
365
(960436000/16417358000)*
365
(812216000/11374630000)
*365
(926593000/7461055757)*3
65
Total Asset TurnoverFormula Sales/ Total Assets
year 2008 2007 2006 2005 2004
Nishat (19267633000/37916579000)
(17180192000/39587091000)
(16417358000/31179326000)
(11374630000/2191760200
0)
(7461055757/5335955667)
Azgard 9 (10113499351/27371673266)
(6628341926/23632588968)
(4889681966/23178303067)
(4422472357/10541226724
)
(3155912427/6297218212)
Sapphire (9746607946/1
2324265106) (9152455933/11126004067)
(7966281051/9218390867)
(5338810168/7317921847)
(7461055757/5800558738)
79/85
Fixed Asset Turnover Ratio
Formula Cost of sales / Fixed Assetsyear 2008 2007 2006 2005 2004
Nishat (16298857000/10647310000)
(14335254000/10586159000)
(13701626000/10611353000)
(9239731000/9151096000)
(7091114328/2429954944)
Azgard 9 (6660223767/7
734950547) (4620988950/7643649558)
(3703361406/7601895866)
(3288786063/3113043032)
(2440779273/2847936402)
Sapphire (8618580605/3
936357164) (7961253425/3793621479)
(7201536030/3721368562)
(4734528479/3124152756)
(7091114328/2429954944)
Gross profit to SalesFormula Gross profit/Sales*100
year 2008 2007 2006 2005 2004
Azgard 9 (3453275584/10113499351)*1
00
(2007352976/6628341926)*
100
(1186320560/4889681966)*
100
(1133686294/4422472357)
*100
(715133154/3155912427)*1
00
Sapphire (1128027341/9746607946)*10
0
(1191202508/9152455933)*
100
(764745021/7966281051)*1
00
(604281689/5338810168)*
100
(369941429/7461055757)*1
00
Nishat (2968776000/19267633000)*1
00
(2844938000/17180192000)
*100
(2715732000/16417358000)
*100
(2134899000/11374630000
)*100
(369941429/7461055757)*1
00
80/85
Operating Profit MarginFormula Operating Profit Margin = Operating profit /Sale*100
year 2008 2007 2006 2005 2004
Nishat (7304400000/19267633000)*1
00
(2175475000/17180192000)
*100
(1986526000/16417358000)
*100
(2000204000/11374630000
)*100
(564262708/7461055757)*1
00
Azgard 9 (2849745841/10113499351)*1
00
(1572167903/6628341926)*
100
(795030222/4889681966)*1
00
(813063411/4422472357)*
100
(530020606/3155912427)*1
00
Sapphire (1405283605/9746607946)*10
0
(787228086/9152455933)*1
00
(691293293/7966281051)*1
00
(556596887/5338810168)*
100
(398909896/7461055757)*1
00
Net Profit/ (Loss) Before TaxFormula Net profit before tax/Sales*100
year 2008 2007 2006 2005 2004
Nishat (6396968000/19267633000)*1
00
(1356208000/17180192000)
*100
(1758866000/16417358000)
*100
(2033354000/11374630000
)*100
(705067852/7461055757)*1
00
Azgard 9 (999502775/10113499351)*10
0
(1151459574/6628341926)*
100
(1260083804/4889681966)*
100
(792136936/4422472357)*
100
(395262335/3155912427)*1
00
Sapphire (670600418/9746607946)*100
(319707861/9152455933)*1
00
(263459742/7966281051)*1
00
(381673399/5338810168)*
100
(257353151/7461055757)*1
00
81/85
Net Profit/ (Loss) after interest and TaxFormula Net profit after tax/Sales*365
year 2008 2007 2006 2005 2004
Nishat (6138968000/19267633000)*1
00
(1211208000/17180192000)
*100
(1632866000/16417358000)
*100
(1867354000/11374630000
)*100
(790114001/7461055757)*1
00
Azgard 9 (897283923/10113499351)*10
0
(1079452501/6628341926)*
100
(1144514722/4889681966)*
100
(741293665/4422472357)*
100
(375262335/3155912427)*1
00
Sapphire (617730082/9746607946)*100
(216262838/9152455933)*1
00
(134535088/7966281051)*1
00
(288773074/5338810168)*
100
(172307002/7461055757)*1
00
Return on AssetsFormula Net Income / Total Assets*100
year 2008 2007 2006 2005 2004
Nishat (6138968000/37916579000)*1
00
(1211208000/39587091000)
*100
(1632866000/31179326000)
*100
(1867354000/21917602000
)*100
(790114001/5335955667)*1
00
Azgard 9 (897283923/27371673266)*10
0
(1079452501/23632588968)
*100
(1144514722/23178303067)
*100
(741293665/10541226724)
*100
(375262335/6297218212)*1
00
Sapphire (617730082/12324265106)*10
0
(216262838/11126004067)*
100
(134535088/9218390867)*1
00
(288773074/7317921847)*
100
(172307002/5800558738)*1
00
82/85
Return on Capital employedFormula Profit before interest and taxation / Capital Employed *100
year 2008 2007 2006 2005 2004
Nishat (6396968000/26194974000)*1
00
(1356208000/31937718000)
*100
(1758866000/24127793000)
*100
(2033354000/15664269000
)*100
(705067852/-2313417333)*
100
Azgard 9 (999502775/17017953763)*10
0
(1151459574/17438220902)
*100
(1260083804/15228967560)
*100
(792136936/6093360457)*
100
(395262335/3684324962)*1
00
Sapphire (670600418/6443642363)*100
(319707861/7161359147)*1
00
(263459742/5194776998)*1
00
(381673399/4312030935)*
100
(257353151/3547890064)*1
00
Return on equity Ratio (ROE)Formula [(Net profit after tax − Preference dividend) / Equity share capital] × 100
2008 2007 2006 2005 2004
Nishat ((6138968000-0)/2514718000
0)*100
((1211208000-0)/301638980
00)*100
((1632866000-0)/211124090
00)*100
((1867354000-0)/1280611
4000)*100
((790114001-0)/3016389800
0)*100
Azgard 9 ((897283923-0)/1012408250
1)*100
((1079452501-0)/972005419
6)*100
((1144514722-0)/917416813
4)*100
((741293665-0)/309310263
9)*100
((375262335-0)/2510108903
)*100
Sapphire ((617730082-
0)/5577491609)*100
((216262838-0)/6018868330
)*100
((134535088-0)/3893928464
)*100
((288773074-0)/279711463
7)*100
((172307002-0)/2327933429
)*100
83/85
Debt to Equity RatioFormula Total Long Term Debts / Shareholders Funds
2008 2007 2006 2005 2004
Nishat (1047794000/2
5147180000) (1773820000/30163898000)
(3015384000/21112409000)
(2858155000/12806114000
)
(1773820000/30163898000)
Azgard 9 (6674515005/7
359587542) (7479093629/7319449022)
(5797438559/7367101082)
(2721314147/2140640149)
(867651548/2099450921)
Sapphire (469501210/49
59761527) (734946877/5
802605492) (934380957/3
759393376) (1188017068/2508341563)
(940304765/2155626427)
Interest Coverage RatioFormula Net Profit Before Interest and Tax / Fixed Interest Charges]
2008 2007 2006 2005 2004
Nishat (6396968000/9
07432000) (1356208000/
819267000) (1758866000/
755054000) (2033354000/407696000)
(705067852/127260241)
Azgard 9 (999502775/24
70391655) (1151459574/1061933212)
(1260083804/657548074)
(792136936/326374206)
(395262335/144623062)
Sapphire (617730082/73
4683187) (216262838/4
67520225) (134535088/4
27833551) (288773074/174923488)
(172307002/127260241)
84/85
Earning Per ShareFormula Profit after tax/No. of shares
2008 2007 2006 2005 2004
Nishat (6138968000/1
59785736) (1211208000/
159789974) (1632866000/
159771625) (1867354000/145206376)
(790114001/152826693)
Azgard 9 (897283923/33
8597707) (1079452501/
331120399) (1144514722/
230284652) (741293665/
99904807) (375262335/8
7067827)
Sapphire (617730082/20
082252) (216262838/2
0080115) (134535088/2
0079864) (288773074/
20095551) (172307002/2
0082401)
Earning YieldFormula Earning Per Share / Market Price Per Share * 100
2008 2007 2006 2005 2004
Nishat(38.42/85.97)*1
00(7.58/129.2)*1
00(10.22/104.8)*
100(12.86/76)*10
0(5.17/52.8)*10
0
Azgard 9(2.65/61.56)*10
0(3.26/52.1)*10
0(4.97/22.05)*1
00(7.42/32)*100
(4.31/22.5)*100
Sapphire(30.76/72.45)*1
00(10.77/92.5)*1
00(6.7/70)*100
(14.37/90)*100
(8.58/70)*100
Market Value of Share
2008 2007 2006 2005 2004Nishat 85.97 129.20 104.80 76.00 52.80
Azgard 9 61.56 52.10 22.05 32.00 22.50 Sapphire 72.45 92.50 70.00 90.00 70.00
Price Earning RatioFormula Market price per equity share / Earnings per share
2008 2007 2006 2005 2004Nishat (85.97/38.42) (129.2/7.58) (104.8/10.22) (76/12.86) (52.8/5.17)
Azgard 9 (61.56/2.65) (52.1/3.26) (22.05/4.97) (32/7.42) (22.5/4.31) Sapphire (72.45/30.76) (92.5/10.77) (70/6.7) (90/14.37) (70/8.58)
85/85