20000329

During the year the installed capacity of cement production was raised to 450 thousand metric tons from 150 thousand metric tons. So the average installed production capacity works out to 225 thousand metric tons. The capacity was raised on April 1, 1999.

The unit produces three kinds of cements, ordinary portland cement, slag cement and sulphate resistance cement. Out of the total output of cement at 178.532 thousand metric tons, the company produced 139.422 thousand tons of ordinary portland cement, 32.440 thousand tons of slag cement and 6.670 thousand tons of sulphate resistance cement.

During the year, the companyÕs all kinds of cement output registered 125% growth over the preceding yearÕs output of 79.107 thousand metric tons. The increase in output has not only moved up its output but also capacity the utilisation as the company reached capacity utilisation of 79.35% from the preceding yearÕs 52.74%. This has enabled the company to improve the economies of scale. However, there is still wide gap between the capacity and output for which the relevant notes annexed to the account has clarification.

ÒThe shortfall in production was due to closure on account of synchronising of existing plant with expansion of new unit and slump in the market.Ó

The Chairman Abdul Aziz Essa feels satisfied with the going on stream of the expanded facility. He expressed his gratitude to Almighty Allah and congratulated his team of engineers, directors, managers, erection team Òwho enthusiastically committed themselves for months to set up expansion plant.Ó

He also shared his optimism with the shareholders that, Òthe expanded capacity will be able to substantially improve its performance and operating results in the years ahead.Ó

The directors expressed that the cement industry as a whole is facing two major problems i.e. growth gap between supply and demand and secondly low economic activities, which have exerted exceptional problem on the cement producers. However it seems that nothing daunted the management as not only they increased the output but also turned the table by replacing last yearÕs loss to profit in the year under review.

Cement sales by the company aggregated to 174,785 metric tons as compared to 87,069 metric tons last year.

Gross Sales Revenue reached Rs. 0.642 billion (1997-98: Rs 0.292 billion) out of which Rs. 0.264 billion went to the exchequer.

Net sales in terms of value increased by 118.98% to 377.90 million (1997-98: Rs 172.57 million) and gross profit improved by 443.4% over the preceding yearÕs, so resultantly both gross and operating margins beefed up.

The company posted Net Profit at Rs 48.92 million which replaced the preceding yearÕs loss after taxation at Rs. 11.04 million.

At the ruling price of its share and earning per share at Rs. 1.41, the PER is placed at 9.3x reflecting increased confidence of the investors in the shares of Essa Cement Industries.

The agenda for the AGM of the shareholders of the company had special business to consider 10% bonus stock dividend.

Performance Statistics (Million Rs)

June 1999 1998

Capital & Liabilities:

Paid-up Capital: 346.30 346.30

Reserves: 222.57 173.65

Equity: 568.87 519.95

L.T. Debts: 692.24 661.23

Current Liabilities: 451.63 364.56

Assets:

Fixed Assets -

Tangible: 1,427.26 1,312.13

L.T.D. Deposits: 4.14 4.19

Current Assets: 281.34 229.42

Total Assets: 1,712.74 1,545.74

Sales, Profit & Payout:

Net Sales: 337.90 172.57

Gross Profit: 77.66 14.29

Operating Profit: 68.45 6.30

Other Income: 0.13 0.03

Depreciation: 49.07 31.26

Financial Charges: 14.88 15.72

Profit/(Loss) Before

Taxation: 50.92 (10.14)

Profit/(Loss) After

Taxation: 48.92 (11.04)

Dividend Bonus Stock

10% (1998: Nil): 34.63 Ñ

Financial Ratios:

Share Price (Rs)

25/3/2000: 13.15 Ñ

Book Value

Per Share (Rs): 16.43 15.01

Price Book

Value Ratio: 0.80 Ñ

Debt/Equity Ratio: 55:45 56.54

Current Ratio: 0.62 0.63

Asset Turn Over

Ratio: 0.22 0.11

Gross Profit

Margin (%): 20.55 8.28

Operating

Margin (%): 18.11 3.65

Net Profit

Margin (%): 12.94 (6.40)

EPS (Rs): 1.41 (0.32)

Price/Earning Ratio: 9.32 Ñ

R.O.E. (%): 8.60 (Ñ)

R.O.A. (%): 2.86 (Ñ)

R.O.C.E. (%): 3.87 (Ñ)

CEMENT CAPACITY & PRODUCTION (000 M. TONS)

Installed Capacity: *** 150.00

Capacity (Average

Available): 225.00 Ñ

Production: 178.53 79.11

Capacity

Utilisation (%): 79.35 52.74

*** Installed Capacity upto March 31, 1999 was 150 thousand metric tons, since April 01, 1999 capacity increased to 450 thousand metric tons.

Company Information:

Chairman & Chief Executive: Abdul Aziz Essa; Directors: Ms Humera Essa/Ms Jamila Younus Dada/Zaitoon Hamza Dada/Jawed Aziz Essa/Irfan Aziz Essa/Zafar Uddin Siddiqui; Company Secretary: Jawed Aziz Essa; Registered Office: FL-2/1, Block-6, Gulshan-e-Iqbal, Karachi. Phone/Fax: NA; Email-NA; Factory: Deh Kalo Kohar, Nooriabad Industrial Area, District Dadu (Sindh).