20000405

Brief recordings

The ill timed expansion in the industryÕs cement production capacity in the previous years further aggravated the precarious situation. This has left domino effect on the large capital intensive cement industry. Moreover the industry is highly leveraged so the lending institutions have also been trapped into this quagmire as their financing to this sector has become relatively more infected than most of other sectors.

While sharing his perception for near term with the shareholders, the Chief Executive of the company, Mohammad Amin Dadabhoy has not able construct future scenario with optimism he feels,

ÒIn the next couple of years the sluggish marketing scenario is likely to prevail unless there are some rapid changes in the socio-economic conditions.

Export of cement from Pakistan has great potential but the international prices being very low, it is very difficult to compete with current cost.

The current industry also requires government support in further reducing the excise duty, reduction in cost of inputs and by encouraging export of cement through incentives in the form of favourable duty drawbacks making our prices comparable in the international market.Ó

However the redoubtable leadership in this company remained undaunted and kept the company profitable for the last two years in 1998-99 and the preceding years.

The prevailing adverse conditionsÕ have not enabled the company to maintain the sale at preceding yearÕs level and production nearest to the installed capacity.

Production of all kinds of cement was recorded at 374.4 thousand metric tonnes and reflected 31.6% decrease as compared to the preceding yearÕs output of 547 thousand tonnes. So the production efficiency suffered as capacity utilisation was reduced to 62.6% of the installed capacity of 598 thousand metric tonnes. Production figures are the lowest since 1993.

Sales declined by 29.7% compared to the preceding yearÕs and cost of sales amounting to Rs 621.3 decreased by 28%. The decline in the amount of cost of sales was not commensurate to decrease in sales. Resultantly gross profit margin lost 2.14 percentage points from previous yearÕs.

On the other hand, other income reduced by Rs 8.6 million. At the same time operating expenses escalated by Rs 7.4 million over the previous yearÕs.

So operating profit was reduced to a little more than one quarter of last yearÕs Rs 96.86 million.

At the bottom line the company was able to break-even with nominal profit of Rs 1.7 million.

The EPS works out to Rs 0.04 as compared to Rs 0.35 in the previous year.

This small amount of profit only slightly reduced the accumulated loss, while the accumulated losses remained at large amount of Rs 116 million and almost devoured the reserves in the sum of Rs 123.22 million. However the break-up value of the share remained above its par value.

The market value of the share at Rs 8.10 is at 19% discount to its par value. The market of the share also reflects 90% diminution in value relative to its 6-year highest price recorded in 1994 at Rs 81.50.

The renowned chartered accountancy firm Ford, Rhodes, Robson, Morrow, who are the external auditors of the company, have made certain observations without qualifying their opinion. The matter has been clarified by the directors in the report which appears convincing. There are about the companyÕs judicial applications regarding NDFC.

The company has succeeded in obtaining ISO 9002 certification.

Performance Statistics (Million Rs)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 398.69 398.69

Reserves: 123.22 123.22

Accumulated

(Losses): (115.75) (117.45)

Equity: 406.16 404.46

Surplus on

Revaluation F/A: 487.69 487.69

L.T. Debts: 601.39 758.73

L.T. Deposits Ñ

Dealers etc: 35.10 28.85

Current Liabilities: 388.59 330.59

AssetsÉÉÉ

Fixed Assets Ñ Tangible: 1,550.30 1,586.87

L.T. Investments: 71.33 77.33

Other Non Current

Assets: 2.14 10.27

Current Assets: 295.16 335.85

Total Assets: 1,918.93 2,010.32

Sales, Profit & PayoutÉÉÉ

Net Sales: 703.14 1,000.37

Gross Profit: 81.84 137.89

Other

Operating Income: 6.07 14.64

Operating Profit: 24.81 96.86

Depreciation: 34.33 44.75

Financial Charges: 19.32 76.87

Profit Before Taxation: 5.21 19.00

Net Profit After

Taxation: 1.70 13.99

Accumulated

Losses B/F: (117.45) (131.44)

Financial RatiosÉÉÉ

Share

Price (Rs) 31/3/2000: 8.10 Ñ

Book Value

Per Share (Rs): 10.19 10.07

Price/Book

Value Ratio: 0.79 Ñ

Debt/Equity Ratio: 40:60 46:54

Current Ratio: 0.76 1.02

Asset Turnover Ratio: 0.37 0.50

Days Receivables: 49 39

Days Inventory: 14 13

Gross Profit

Margin (%): 11.64 13.78

Operating Margin (%): 3.53 9.68

Net Profit Margin (%): 0.24 1.40

EPS (Rs): 0.04 0.35

Price/Earning Ratio: 202 Ñ

R.O.E. (%): 0.42 3.46

R.O.A. (%): 0.09 0.70

R.O.C.E. (%): 0.11 0.83

Plant Capacity & Production (Ô000 M. Tonnes)ÉÉÉ

A) Cements All KindÉÉÉ

Capacity: 598.00 598.00

Production: 374.38 547.05

Capacity

Utilisation (%): 62.60 91.48

B) ÒDecrease in production is due to a slump in the market, resulting in the low production during the year.Ó

Company information: Chairman: Mohammad Hussain Dadabhoy. Chief Executive: Mohammad Amin Dadabhoy. Directors: Ms. Humaira Dadabhoy/Ms. Razia Hussain Dadabhoy Yasmeen Dadabhoy/ Fazal Karim Dadabhoy/ Naseemuddin. Company Secretary & GM Finance: Nayyar Karim. Factory Nooriabad Deh Kalu Kohar, Distt. Dadu (Sindh). Registered Office: Maqbool Commercial Complex Sharah-e-Faisal, Karachi (Sindh). Phone: NA. Fax: NA. E-mail: NA.