20000212

Brief recordings

Ñ BY SCANNER Ñ

Chemical & Pharmaceutical

Data Agro Limited

Year Ended June 30, 1999

Overview

The year under review was bad for the company, despite increase in sales by 17.2% to Rs 30.05 million (FY 1997-98: Rs 25.63 million). The company turned large gross loss at Rs 10.34 million. The directors reported that the purchase price remained high beyond expectations and sale price did not rise as was earlier predicted. So cost of goods sold figure escalated significantly so gross loss appeared. Then the company wrote-off large stock in the sum of Rs 11.1 million, brought forward from the previous year. They reported, "our germination testing showed that the stock's percentage of seed germination had fallen below acceptable levels. We could not compromise on the quality of our product and therefore wrote-off the stock." The company turned net loss at Rs 6.58 million. After the balance sheet under review, the company retired substantial loan from first capital injected into the enterprise which has shown positive impact.

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Data Agro Limited was initially incorporated as a private limited company on November 10, 1992 in the province of Punjab. The company was converted into a public limited company on March 06, 1994. The main activity of the company is production and processing of agro seeds.

During the financial year 1998-99, the period under review, the total size of the balance shrunk to Rs 88.71 million from the previous year's figure of Rs 101.22 million.

The paid-up capital of Rs 40 million has been completely wiped-off due to the accumulated deficit of Rs 59.47 million. The accumulated deficit increased to Rs 59.47 million from Rs 34.94 million of the preceding year. Resultantly, at the end of the year under review, the shareholders' equity turned into negative figure of Rs 19.47 million replacing the previous year's positive balance in the shareholders' equity account. This negative equity figure shrunk the size of the balance sheet.

On the other hand the redeemable capital (bank borrowing) including current maturities was with higher outstanding amount as compared to preceding year's. Redeemable capital increased to Rs 57.20 million from Rs 54.65 million in the previous year.

Current liabilities increased mainly due to rise in the current maturities of redeemable capital. This facility was availed from Prime Bank, Altowfeek Investment Bank, Gulf Commercial Bank and Habib Bank.

Current liabilities outstripped current assets therefore, the current ratio was upset to 0.23 from the preceding year's ratio of 1.52.

Current assets substantially declined due to 82% depletion in stock-in-trade plus 28% adjustment in outstanding receivables. The period of inventory reduced to merely 19 days from the preceding year's Rs 232 days. The period for receivables reduced to 50 days from 82 days in the preceding year's.

The external auditors, in their report to the members of Data Agro Limited have drawn attention to their note #2.1 embedded in the accounts, without qualifying their opinion. The note states about the factors that raise doubt regarding the company's ability to continue as a, "going concern." The note states.

"The Company has recorded a loss of Rs 24.531 million after taxation, accumulated losses of Rs 59.431 million and reported negative working capital of Rs 31.94 million i.e. excess of current liabilities over current assets.

These factors create substantial doubts as to ability of the company to continue as a 'going concern.' However, these accounts have been prepared on 'going concern' basis and without any adjustments relating to realisation of Company's assets and liquidation of its liabilities. The validity of the accounts largely depends on management's future plans, favourable market conditions and continued support from sponsors and company bankers in the form of fresh equity injection or short and long term financial assistance at competitive terms and rescheduling of existing finances."

The directors have given very positive response to the auditors' observations as they affirmed their resolve and commitment to keep the company not only a going concern but to make it very profitable in the near future with low debt and prudent increases in sales. They reported that the management has raised additional capital of Rs 26 million. This fund has been inducted after the date of the balance sheet under review. The money has been utilised in retirement of debts and producing positive impact.

The strategic decision is to bring down the debt to a controllable level and at the same time bring about diversification in sales.

During the year the company, recorded sales at Rs 30.05 million which improved by 17.2% over the previous year's sales of Rs 25.63 million. Despite significant growth in sales, Data Agro turned gross and operating losses. Towards the bottom line the loss was more pronounced as compared to the last year's figure because last year, relatively large amount of unusual item was written to the credit of income account. Net loss of the year at Rs 24.53 million replaced the preceding year's net profit of Rs 6.58 million.

The share in the company is quoted at Rs 1.50 per 10-rupee share. In other words this price translates into heavy discount relative to its par value.

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Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 40.00 40.00

Accumulated (Loss)/(Profit): (59.47) (34.94)

Shareholders' Equity: (19.47) 5.06

Surplus on Revolution on F/A: 32.96 32.96

L.T. Debts: 33.59 49.31

Current Liabilities: 41.63 13.89

AssetsÉÉÉ

Fixed Assets: 79.02 79.80

Other Non Current Assets: Ñ 0.29

Current Assets: 9.69 21.13

Total Assets: 88.71 101.22

Sales, Profit & PayoutÉÉÉ

Sales: 30.05 25.63

Gross Profit/(Loss): (10.34) 7.14

Operating Profit/(Loss): (16.44) 2.98

Other Income: 1.05 0.33

Depreciation: 8.46 7.76

Financial Charges: 9.09 8.02

Unusual Items: Ñ 11.63

(Loss)/Profit Before Taxation: (24.48) 6.58

(Loss)/Profit After Taxation: (24.53) 6.58

Loss B/F: 34.94 41.52

Financial RatiosÉÉÉ

Share Price (Rs) 9/2/2000: 1.50 Ñ

Book Value Per Share (Rs): (4.87) 1.27

Price/Book Value Ratio: Ñ Ñ

Debt/Equity Ratio: 71:29 56:44

Current Ratio: 0.23 1.52

Asset Turnover Ratio: 0.34 0.25

Days Receivables: 50 82

Days Inventory: 19 232

Gross Profit/(Loss) to Sales (%): (34.41) 0.28

Operating (Loss)/Profit to Sales (%): (54.71) 11.63

Net Profit/(Loss) to Sales (%): (81.63) 25.67

Profit/(Loss) Per Share (Rs): (6.13) 1.65

Price/Earning Ratio: (Ñ) Ñ

R.O.E. (%): (Ñ) 130.00

R.O.A. (%): (Ñ) 6.50

R.O.C.E. (%): (Ñ) 8.96

Plant Capacity & Production (Metric Tonnes)ÉÉÉ

A. Delinted Cotton SeedÉÉÉ

Capacity: 10,000 10,000

Production: 1,160 1,159

Capacity Utilisation (%): 11.6 11.59

B. Other Seeds: 10,000 10,000

Production: Nil Nil

Capacity Utilisation (%): Nil Nil

C. "Capacity for 24 hours per 100 days due to perishable nature of the product, the actual production is limited to market demand."

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Company information: Chief Executive: Faaiz Rahim Khan. Director: Mohammad Farooq Naseem. Company Secretary: Mohammad Azam. Registered Office: 3-A, Race View, Jail Road, Lahore. Factory: Khanewal-Kabir Wala Road, District Khanewal.