20000107

Brief recordings

BY SCANNER

Chemical & Pharmaceutical

Leiner Pak Gelatine Limited

Year Ended June 30, 1999

Overview

The company is operating from Lahore while its production facilities are in Kala Shah Kaku in Sheikhupura district of the Punjab province. Sales in terms of value marginally improved by 2.3% to Rs 152.24 million (FY 1997-98: Rs 148.79 million). The directors reported that value of the goods exported amounted to Rs 71.69 million as compared to Rs 68.44 million in the preceding year. It has been also reported that there is glut of Gelatine in the export market and international prices come under pressure due to the glut. Resultantly prices came down by nearly 25%. The company posted gross profit at Rs 44.42 million. Pre-tax profit at Rs 25.91 million and net profit at Rs 24.71 million which reflected growth over previous year's figures by 7.63%, 12.41% and 10.81% respectively. The company announced cash dividend at 13% which was the highest dividend since 1994. The financial position of the balance sheet is robust.

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The company was incorporated in Punjab as a public limited company. It was listed at Karachi Stock Exchange, 16 years ago, in 1984. Its shares are also listed on other stock exchanges in the country. At present the share in the company is trading at Rs 10 at par value. This is ex-dividend price of the share. During 1994 to 1998 the share price mostly remained above par value except for brief periods in 1995 and in 1998 as towards the last quarter of 1998 the price came down to Rs 7. The 6-year highest price was quoted at Rs 16 in 1994 and until 1998 the yearly peak price remained within the tight price band of Rs 16 and Rs 14.

The leadership in the company is quite conscious about regular profit distribution showing excellent social responsiveness to its shareholders. From the published record of the stock exchange since 1994 it can be seen that the management has not missed profit distribution since 1994. The lowest dividend payout rate was recorded in 1994 at 9%. For two years in 1995 and 1996 the dividend was announced at 10% each year. Then the payout increased to 11% in 1997. In 1998 the rate was higher at 12%. For the financial year 1998-99, the period under review, company further improved the payout rate to 13%. Thus it can be seen that the yield to the shareholders investment is gradually increasing.

In the company's shareholding profile its two associated companies' aggregate stake in its equity was to the extent of 41.10 percent, on 30th June 1999, the closing date of the account under review. Khwaja Glass Works Industries (Pvt) Ltd, and Neelum Glass Industries (Pvt) Ltd. are its two associated companies. There are 658 individual shareholders who own 57.54% of the stock of Leiner Pak Gelatine Limited. There are 609 small shareholders with maximum holding of ten thousand shares each and their holding in the share capital of the company is to the extent of 12.93%.

The company is engaged in the manufacture of Gelatine, Di-Calcium phosphate and glue from animal bones and hides. The Annual Report of the company displays advertisement about the company's products which is interesting reading material to understand the usage of Gelatine and highlights significant contribution of the company in fighting against imported Gelatine which is not Helal. External from the advertisement is as under.

".Ñ ice cream, jams, jellies, confectionery, fruit, juices, dairy products like yogurt and sandwich spreads etc. and capsule shells contain Gelatine as an essential constituent.

.Ñ imported Gelatine is derived from the skins and bones of pigs.

.Ñ some unscrupulous people even use glues in edible items which are absolutely unfit for human consumption.

.Ñ we are the only in the world producing Helal Gelatine.

.Ñ best quality pharmaceutical and edible grade Gelatine upto the highest international standards and specifications. Huge quantity is exported to Europe and other countries."

During the year under review, the production capacity of the plant remained grossly under utilised. In the Gelatine Department the utilisation of production capacity was to the extent of 33.6% the output was 2.33% lower than preceding year's Gelatine production of 1032 metric tonnes.

The company also produced 3898 metric tonnes of Di-Calcium phosphate. In this department production was 14.69% lower as compared to the preceding year's. Also the plant capacity was grossly under utilised.

The directors reported glut of Gelatine in the international market exerting pressure on selling prices in the export market which have been reported to go down by nearly 25%. "Gelatine export does not enjoy the benefits of duty drawbacks, export rebate and concessional rates of duty on import of material etc., enjoyed by various other industries." Ñ lamented Chairman Khwaja Mahboob Ilahi.

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Performance Statistics (Million Rupees)

30th June 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 75.00 75.00

Unappropriated Profit 34.90 19.94

Equity: 109.90 94.94

Surplus on Revaluation of Fixed Assets: 8.87 8.87

Current Liabilities: 113.49 121.52

AssetsÉÉÉ

Fixed Assets Ñ Tangible: 82.65 82.32

Other Non Current Assets: 0.47 0.39

Current Assets: 149.14 142.62

Total Assets: 232.26 225.33

Sales, Profit & PayoutÉÉÉ

Sales: 152.24 148.79

Gross Profit: 44.42 41.27

Operating Profit: 27.63 25.44

Other Income: 4.09 4.30

Depreciation: 8.16 7.76

Financial Charges: 4.44 5.48

Profit Before Taxation: 25.91 23.05

Profit After Taxation: 24.71 22.30

Dividend Cash 13% (1998: 12%): 9.75 9.00

Financial RatiosÉÉÉ

Share Price (Rs) 3/1/2000: 10.00 Ñ

Book Value Per Share (Rs): 14.65 12.66

Price Book Value Ratio: 0.68 Ñ

Debt/Equity Ratio: 0:100 0:100

Current Ratio: 1.31 1.17

Asset Turn Over Ratio: 0.65 0.66

Days Receivables: 97 109

Days Inventory: 277 266

Gross Profit Margin (%): 29.18 27.73

Operating Margin (%): 18.15 17.10

Net Profit Margin (%): 16.23 14.99

EPS (Rs): 3.04 2.97

Price/Earning Ratio: 2.34 Ñ

R.O.E. (%): 22.48 23.49

R.O.A. (%): 10.64 9.90

R.O.C.E. (%): 20.80 21.48

Plant Capacity & Production (Metric Tonnes)ÉÉÉ

A. Gelatine (Blended/Unblended)ÉÉÉ

Capacity: 3,000 3,000

Production: 1,008 1,032

Capacity Utilisation (%): 33.60 34.38

B. Di-Calcium PhosphateÉÉÉ

Capacity: 15,000 15,000

Production: 3,898 4,569

Capacity Utilisation (%): 25.99 30.46

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Company information: Chairman: Khwaja Mahboob Ilahi. Managing Director & Chief Executive: Khwaja Imtiaz Ahmed. Company Secretary: Khwaja Ibrar Ahmed. Registered Office: 17/G, Gulberg 2, G.P.O. Box 415, Lahore-54660 (Punjab). Works: 19th Kilometre, Shahrah-e-Pakistan, District Sheikhupura (Punjab).