berger paints pakistan

7/22/2019 BERGER PAINTS PAKISTAN

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BERGER PAINTS PAKISTAN LIMITED

I NTRODUCTI ON ____________________________________________________________ 3

PURPOSE OF STUDY ________________________________________________________ 4

EXECUTI VE SUMMARY ______________________________________________________ 5

BERGER PAI NTS PAKISTAN LIM I TED ________________________________________ 6

INTRODUCTION ________________________________________________________________ 6

MISSION ________________________________________________________________________ 7

FINANCIAL STATEMENTS _______________________________________________________ 8BALANCE SHEET ______________________________________________________________________ 8PROFIT AND LOSS ACCOUNT __________________________________________________________ 10

RATI O ANALYSIS __________________________________________________________ 11

LEVERAGE RATIOS ________________________________________________________ 12

LONG TERM DEBT RATIO ______________________________________________________ 12INTERPRETATION _____________________________________________________________________ 12CONCLUSION _________________________________________________________________________ 12

DEBT EQUITY RATIO __________________________________________________________ 13INTERPRETATION _____________________________________________________________________ 13CONCLUSION _________________________________________________________________________ 13

TOTAL DEBT RATIO ___________________________________________________________ 14INTERPRETATION _____________________________________________________________________ 14CONCLUSION _________________________________________________________________________ 14

TIME INTEREST EARNED ______________________________________________________ 15INTERPRETATION _____________________________________________________________________ 15CONCLUSION _________________________________________________________________________ 15

CASH COVERAGE RATIO _______________________________________________________ 16INTERPRETATION _____________________________________________________________________ 16CONCLUSION _________________________________________________________________________ 16

LIQUI DI TY RATI OS ________________________________________________________ 17

CURRENT RATIO ______________________________________________________________ 17INTERPRETATION _____________________________________________________________________ 17CONCLUSION _________________________________________________________________________ 17

QUICK RATIO__________________________________________________________________ 18INTERPRETATION _____________________________________________________________________ 18CONCLUSION _________________________________________________________________________ 18

CASH RATIO ___________________________________________________________________ 19INTERPRETATION _____________________________________________________________________ 19CONCLUSION _________________________________________________________________________ 19

NET WORKING CAPITAL _______________________________________________________ 20INTERPRETATION _____________________________________________________________________ 20CONCLUSION _________________________________________________________________________ 20


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NET WORKING CAPITAL TO ASSETS ____________________________________________ 21INTERPRETATION _____________________________________________________________________ 21CONCLUSION _________________________________________________________________________ 21

EF FICIENCY RATIOS _______________________________________________________ 22

TOTAL ASSET TURNOVER ______________________________________________________ 22INTERPRETATION _____________________________________________________________________ 22CONCLUSION _________________________________________________________________________ 22

AVERAGE COLLECTION PERIOD _______________________________________________ 23INTERPRETATION _____________________________________________________________________ 23CONCLUSION _________________________________________________________________________ 23

INVENTORY TURNOVER _______________________________________________________ 24INTERPRETATION _____________________________________________________________________ 24CONCLUSION _________________________________________________________________________ 24

DAYS SALES IN INVENTORIES_________________________________________________ 25INTERPRETATION _____________________________________________________________________ 25

CONCLUSION _________________________________________________________________________ 25

PROFITABI L ITY RATIOS ____________________________________________________ 26

OPERATING PROFIT MARGIN __________________________________________________ 26INTERPRETATION _____________________________________________________________________ 26CONCLUSION _________________________________________________________________________ 26

GROSS PROFIT MARGIN _______________________________________________________ 27INTERPRETATION _____________________________________________________________________ 27CONCLUSION _________________________________________________________________________ 27

NET PROFIT MARGIN __________________________________________________________ 28INTERPRETATION _____________________________________________________________________ 28CONCLUSION _________________________________________________________________________ 28

RETURN ON ASSETS ___________________________________________________________ 29INTERPRETATION _____________________________________________________________________ 29CONCLUSION _________________________________________________________________________ 29

RETURN ON EQUITY ___________________________________________________________ 30INTERPRETATION _____________________________________________________________________ 30CONCLUSION _________________________________________________________________________ 30

EARNING PER SHARE __________________________________________________________ 31INTERPRETATION _____________________________________________________________________ 31CONCLUSION _________________________________________________________________________ 31

OTHER FACTORS AFFECTING COMPANY ____________________________________ 32


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INTRODUCTION

In the current economic conditions, to understand the financial workings and get the assistanceabout the competition in business is the key to success. The analysis of financial statement is

important to analyze the companys performance. Financial statements tell about the past period

and predict the future. Therefore, it is important to have the authentic information for correctdecision making which leads to success.

Managers always refer the financial ratios because they indicate the performance of businessunits and the company. Managers are also concerned with the companys ability that whether it

is able to finance its future expansion or not. The ratio analysis helps the financial analysts to

study the performance of investments and determine the value of company by forecasting its

future earnings.

In this report, we have been assigned a project in which the ratio analysis of the company is

extracted and interpreted. In this report, we have tried our best to express our learning throughoutthe semester. The ratio analysis is extracted to show the companys strength and weaknesses and

determines whether the company is sufficiently liquid to meet its current obligations or not. It

shows the companys credit worthiness, efficient utilization of its assets and profitability.

This report analyzes the financial statements of Berger Paints Pakistan Limited for five years in

which the contrast of companys performance is also measured for each year. This report

provides information obtained through ratio analysis regarding the profitability, liquidity and

financial stability of Berger Paints Pakistan Limited for five years. This report will pay particularattention to the earning power, liquidity & credit management, inventory management and debt

management. It will also highlight major strengths and weaknesses with explanation forobserved changes. The report will also comment on the prospects of the company and makerecommendations that would improve Berger Paints Pakistans current performance.


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EXECUTIVE SUMMARY

The ratio analysis of Berger Paints Pakistan Limited has been extracted and interpreted for fiveyears. Interpretation has been followed through by considering 2008 as base year. According to

the analysis, Berger Paints Pakistan Limited is considered to be highly leveraged because of high

long term debt ratio, high debt equity ratio and high total debt ratio. This indicates the higher riskfor the company especially under the fluctuations of interest rates because the equity and capital

and less than the companys debt. Furthermore, time interest earned has increased but it is still

too minimal to be considered as ideal. So, the companys earnings are more than its interest

payable but not the ideal one whereas the companys ability to pay for its cash has beendecreased as compare to the base year, therefore, little amount is left for other operations.

The liquidity ratios for Berger Paints show that the company is able to pay for its currentliabilities with minor fluctuations over the years. The Quick Ratio analysis shows that the

companys present conditions are fair enough but not the ideal ones because the potential

reservoir of cash (net working) capital becomes negative after meeting the current liabilities. Thecompanys cash reservoirs appear to be lower than its assets.

The efficiency ratio shows that the company has worked close to its capacity and the trend for

asset turnover increases whereas the average collection period has become quite efficient. The

companys ability to turnover its inventories has also increased by the period of time and the

company possesses sufficient inventory to maintain its sales which benefits the company fromthe continuous appraisal in the cost of raw materials and inflation.

The profitability ratios show that the companys operating profit margin has increased whereasgross profit margin has decreased. The utilization of assets has seen increasing trend whereas

shareholders equity throughout the year has decreased. The Earnings per share have improvedas compared to the base year.

The company depends on the activities in real estate and construction business. Companys salesare good but it also have an area to grow because infrastructure development activities are taking

place in the country. The rising prices of raw materials, packaging and advertisements has hurt

the companys gross profit due to which the equity has decreased.

The interpretation of ratio analysis has also come with some recommendation to improve the

companys current condition. The company has become dependent on debt therefore, company

should decrease its debt and start increasing its equity with the help of decreasing its expenses,becoming more cost efficient, increasing its sales volume and selling its outstanding number of

shares.


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INTRODUCTION

Berger was established two centuries ago and now it has grown to become one of the worlds

largest paints manufacturer. In Pakistan, history of Berger is as old as history of Pakistan. Bergerstarted its operations in Pakistan in 1950 and was the first organized Paint Company to offer

premium products through import from the United Kingdom.

BERGER PAINTS PAKISTAN LTD. became a public limited company in 1974, when 49.38%

of its shares were acquired by Pakistani investors, while the remaining 50.62% were held by

U.K. parent company, Jenson & Nicholson Limited. In 1991 Slotrapid Limited, a U.K. based

company with diversified business interests, acquiring control of Berger Paints Pakistan Limitedby gaining 50

.62% shares of the company.

Berger established its first local manufacturingfacility in Karachi in 1955. As the countrys

economic and industrial sector expanded the

demand for quality paints also grew and Berger

continued to make extensions in its productrange to meet these requirements.

In 2006, Berger established state of the art manufacturing facility in Lahore. This plant hasprovided Berger an edge over its competition through enhanced production. It has enabled

Berger to meet the growing demands of its valued customers across Pakistan. Berger Paints Headoffice is located in Lahore.

Consistent quality has always been Bergers trait. This has been the driving force in making itthe leading brand name backed by premium quality across Pakistan. Berger has the most

comprehensive product range for various paint market segments at different price points. Berger

has earned the admiration and trust of customers by virtue of its superior technology, productquality and a very high level of customized services.

Berger has entered into a number of technical collaboration arrangements with leadinginternational manufacturers. These include the largest paint company in Japan, which enables

Berger to develop Automotive, Vehicle Refinishes and Industrial Paints conforming to

international standards; a Japanese chemical company, for Bumper Paints; PCS Powders, UK for

Powder Coatings; DPI Sendirian Berhad, Malaysia for Road & Runway Markings; Cerachem for


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Construction Chemicals and Asian Paints for Decorative Paints. Recently, Berger acquired

distribution rights of DuPont for Pakistans vehicle refinish paint segment.

Berger is also operating Resin manufacturing facility at its Lahore factory. The resin plant has

high production capacity and has enabled Berger to meet its entire resin needs for themanufacturing of a wide range of quality paints. Berger was the first paint company in Pakistanto set up its own resin production facility.

The company has regional offices in Karachi, Lahore, Islamabad and Territorial Offices in

Gujranwala, Multan, Faisalabad, Peshawar and Hyderabad. A large team of sales personnel and a

wide network of dealers and distributors serve customers in all urban centers across the country.

MISSION

Despite many challenges, Berger Paints has succeeded in staying at the forefront of Pakistanspaint industry. Innovation and technological development has enabled the company to achievecorporate success through its commitment to provide products of the highest quality and

ensuring the ultimate satisfaction of customers.

The companys employees are constantly

encouraged to pursue the Corporate MissionStatement:

We will stay at the forefront ofinnovation and technological

development in the paint industry.

We will achieve corporate successthrough an unwavering commitment to

provide our customers high quality

products to their ultimate satisfaction.

We will vigorously promote and safeguard the interests of our employees, ourshareholders, our suppliers and all business associates.

We will play our role as a good corporate citizen and serve community where we dobusiness.


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FINANCIAL STATEMENTS

BALANCE SHEET

ASSETS 2012 2011 2010 2009 2008

NONCURRENT ASSETS

(Rupees in `000)

Property, plant and equipment 634,304 686,898 715,499 1,052,460 614,447

Assets subject to finance lease - - 6,468 - -

Intangible asset - in progress 14,513 13,513 - - -

Goodwill 40,750 40,750 40,750 40,750 52,350

Long term investments(subsidiaries and an associate)

4,086 5,567 6,962 13,849 13,849

Long term loans 15,437 14,742 9,928 13,916 14,034

Long term deposits 19,263 17,119 13,580 15,337 8,038

Deferred taxation 176,685 131,685 96,022 80,146 37,718

905,038 910,274 889,209 1,216,458 740,436

CURRENT ASSETS

Stores 10,778 8,574 8,375 7,109 6,028

Stock in trade 987,881 1,099,616 966,347 1,011,893 873,297

Trade debts 694,265 655,993 599,377 552,117 569,402

Loans and advances 42,764 26,920 47,633 60,918 84,686Trade deposits and short termPrepayments

12,654 12,127 19,638 24,526 18,171

Other receivables 45,082 37,487 65,928 112,984 391,845

Taxationnet 141,906 130,503 105,508 75,772 40,096

Short term investments 20,080 - - - -

Cash and bank balances 144,013 257,449 282,170 170,875 192,281

2,099,423 2,228,669 2,094,976 2,016,194 2,175,806

TOTAL ASSETS 3,004,461 3,138,943 2,984,185 3,232,652 2,916,242


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SHARE CAPITAL AND

RESERVERS

2012 2011 2010 2009 2008

Share capital 181,864 181,864 181,864 81,864 81,864

Reserves 219,307 219,469 277,593 114,787 213,449

401,171 401,333 459,457 196,651 295,313

Surplus on revaluation of

fixed assets - net of tax

187,720 197,997 210,343 526,650 154,744

NONCURRENTLIABILITIES

Long-term financing 115,000 220,000 - 50,000 116,666

Staff retirement benefits 47,865 47,352 - - -

Liabilities against assets

subject to finance lease

7,675 2,644 4,023 - -

CURRENT LIABILITIES

Trade and other payables 1,096,443 1,140,731 960,277 894,303 989,484

Accrued mark-up 41,008 48,460 44,420 50,785 43,524

Current maturity of long-term

financing

105,000 105,000 50,000 50,000 66,667

Current maturity of liabilities

against assets

- - 2,112 - -

subject to finance lease 1,883 447 - - -

Short term borrowings 1,000,696 974,979 1,253,553 1,464,263 1,249,844

2,245,030 2,269,617 2,310,362 2,459,351 2,349,519

TOTAL LIABILITES 2,415,570 2,539,613 2,314,385 2,509,351 2,466,185

Contingencies and

commitments

3,004,461 3,138,943 2,984,185 3,232,652 2,916,242


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PROFIT AND LOSS ACCOUNT

2012 2011 2010 2009 2008

(Rupees in 000)

Net sales 4,052,009 3,571,510 3,359,276 3,580,302 3,123,311

Cost of sales 3,253,590 2,831,240 2,577,550 2,745,755 2,519,880

Gross profit 798,419 740,270 781,726 834,547 603,431

Distribution cost 534,128 521,739 601,954 594,941 609,415

Administrative expenses 143,872 141,669 133,335 138,654 92,880

678,000 663,408 735,289 733,595 702,295Operating profit 120,419 76,862 46,437 100,952 -98,864

Other operating income 87,528 69,504 126,321 266,875 37,162

207,947 146,366 172,758 367,827 -61,702

Other charges 9,265 2,592 48,323 66,625 35,229

Finance cost 205,762 214,435 252,734 253,906 138,257

215,027 217,027 301,057 320,531 173,486

(Loss)/ profit before

taxation-7,080 -70,661 -128,299 47,296 -235,188

Taxation 3,359 -191 -12,078 20,160 -60,971

(Loss)/ profit after taxation -10,439 -70,470 -116,221 27,136 -174,217

(Loss)/ earnings per sharebasic and diluted

-0.57 -3.87 -8.91 2.21 -25.1


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RATIO ANALYSIS

2012 2011 2010 2009 2008

LEVERAGE RATIOS

Long Term Debt Ratio 0.4 0.59 0.423 0.47 0.28

Debt Equity Ratio 74.63% 75.89% 73.42% 88.83% 39.50%

Total Debt Ratio 0.8 0.8 0.775 0.776 0.84

Time Interest Earned 0.9 time 0.6 time 0.49 time 1.18 time -0.7 time

Cash Coverage Ratio 1.017 0.6 18.43 - -

LIQUIDITY RATIOS

Current Ratio 0.94 time 0.98 time 0.91 time 0.82 time 0.93 time

Quick Ratio 0.5 time 0.5 time 0.49 time 0.41 time 0.55 timeCash Ratio 0.06 0.11 0.12 0.07 0.08

Net Working Capital -145607 -40948 -215384 -443157 -173713

NWC to Assets -0.049 -0.013 -0.072 -0.137 0.059

EFFICIENCY RATIOS

Total Asset Turnover 4.48 3.92 3.78 - -

Average Collection Period 3.71 days 5.28 days 9.71 days 25.73 days -

Inventory Turnover 4.1 3.2 3.5 3 -

Days Sales in Inventories 117.09 days 133.17 days 140.06 day 125.30 days -

PROFITABILITY RATIOS

Operating Profit Margin 3% 2% 1.38% 2.82% -3.16%Gross Profit Margin Ratio 19.70% 20.73% 23.27% 23.30% 19.32%

Net Profit Margin -3% -2% -3.45% 0.75% -5.58%

Return on Assets 0.07 0.09 0.03 0.09 -0.01

Return on Equity -0.02 -0.17 0.09 0.08 -

Earningper Share -0.57 -3.87 -8.9 2.22 -25.1


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LEVERAGE RATIOS

LONG TERM DEBT RATIO

2008 2009 2010 2011 2012

0.28 0.47 0.423 0.59 0.4

INTERPRETATION

In 2008, Long Term Debt Ratio is low which means that company is not highly leveraged

because debt is 0.28 which shows that 0.28 cents of every dollar from capital is in the

form of long term debt.

In 2009, Long Term Debt Ratio is the higher than the base year 2008, which shows thatthe large amount of capital is in form of long term debt as compared to year 2008.

In 2010, Long Term Debt Ratio is has increased than the base year 2008 which represents

the increase in amount of capital in the form of long term debt as compared to year 2008.In 2011, Long Term Debt Ratio is the highest than the base year 2008 which shows that

the companys amount of capital in the form of long term debt is has too much increased

as compared to year 2008.In 2012, Long Term Debt Ratio has decreased but it is still higher than the base year 2008

which represents that the increase exists in amount of capital in the form of long term

debt as compared to the year 2008.

CONCLUSIONThe Long Term Debt Ratio has increased but it is has decreased when we compare it with the

past 5 years performance. Therefore, in order to decrease Long Term Debt Ratio, companyshould decrease its debt from its equity. In this way companys leverage can be decreased.

0

0.1

0.2

0.3

0.4

0.5

0.6

year 2008 year 2009 year 2010 year 2011 year 2012

LONG TERM DEBT RATIO


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DEBT EQUITY RATIO

2008 2009 2010 2011 2012

39.50% 88.83% 73.42% 75.89% 74.63%

INTERPRETATION

In 2008, the Debt Equity Ratio is lower which represents that debt is lower than theequity which shows the lower risk for company in bad times.

In 2009, the Debt Equity Ratio has increased to a great extent base year 2008 which

shows that debt is higher than the equity and represents risk for the company.

In 2010, the Debt Equity Ratio is slightly lower than the base year 2008 which shows that

debt is still higher than the equity and risk exists for the company.In 2011, the Debt Equity Ratio for the company is higher as compared to the base year

2008 which represents that the debt is much higher than the equity and therefore, the risk

is also the higher.In 2012, the Debt equity Ratio for the company is higher as compared to the base year

2008 which represents the debt is much increased than the equity and the risk has also

increased for the company.

CONCLUSION

The Debt Equity Ratio is higher as compared to the five years analysis of the company.

Therefore, in order to decrease the Debt Equity Ratio, the company should decrease its long termdebt and increase its equity. As a matter of fact, equity can be increased by increasing revenues,

decreasing expenses, selling and increasing outstanding number of shares etc.

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%


DEBT EQUITY RATIO


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TOTAL DEBT RATIO

2008 2009 2010 2011 2012

0.84 0.776 0.775 0.8 0.8

INTERPRETATION

In 2008, the Total Debt Ratio is 0.84 which shows that 0.84 cents of every dollar fromcapital is in the form of total debt (short term debt and long term debt). This represents

that the company is highly leveraged and fluctuations in interest rate will cause higher

risk for the company as the equity is much lower than the total debt.

In 2009, the Total Debt Ratio is decreased as compared to the base year 2008 which

shows that the debt and risk are decreased.In 2010, the Total Debt Ratio for the company is decreased as compared to the base year

2008, which represents that in 2010 the debt, and risk were much lower and equity washigher than the year 2008.

In 2011, the Total Debt Ratio for the company was decreased but it was relatively low as

compared to the base year 2008 which represents that the debt and risk has minor

decrease and equity was increased.In 2012, the Total Debt Ratio for the company was lower as compared to the base year

2008 which shows that debt and risk were decreased and the equity was increased.

CONCLUSION

The Total Debt Ratio is higher but fluctuations are seen in the five years analysis of the

company. Therefore, the company is considered to be as highly leveraged and in order todecrease the total debt ratio, company should decrease its debt and increase its equity which can

be increased by generating revenues, decreasing expenses, selling and increasing outstanding

number of shares etc.

0.770.78

0.79

0.8

0.81

0.82

0.83

0.84

0.85

2007.5 2008 2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5

TOTAL DEBT RATIO


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TIME INTEREST EARNED

2008 2009 2010 2011 2012

-0.7 time 1.18 time 0.49 time 0.6 time 0.9 time

INTERPRETATION

In 2008, the Time Interest Earned also knows as Margin of Safety is -0.7 times which

shows that the earnings of the company are 0.7 times less than its interest payable.

In 2009, the Time Interest Earned is increased to a great extent that it has becomepositive as compared to the base year 2008 which represents that companysearnings are

higher than its interest payable.

In 2010, the Time Interest Earned has slight increase which shows that the earnings of the

company has increased as compared to the base year 2008 and the company is still able tomeet its interest payable with its earnings.

In 2011, the Time Interest Earned has increased as compared to the base year 2008 which

shows that the earnings of the company have also increased.In 2012, the Time Interest Earned has increased as compared to the base year which

shows that companys earnings are higherthan its interest payable.

CONCLUSION

The Time Interest Earned has fluctuation which shows that during the five years, the companys

ability to pay interest from its earnings was in negative and with the passage of time, thecompany managed to increase its Time Interest Earned and became able to pay its interest

payable but the company still needs to increase its interest payable which can be increased by

increasing the earnings of the company.

-1

-0.5

0

0.5

1

1.5

2007.5 2008 2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5

TIME INTEREST EARNED


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CASH COVERAGE RATIO

2008 2009 2010 2011 2012

- - 18.43 0.6 1.017

INTERPRETATION

In 2010, the Cash Coverage Ratio shows that the company has the highest cash from the

operations to pay its interest payments with cash. Although, 1.017 is not sufficient to paybecause then very little amount will be left for other operations but still company is able

to pay its interest payments.

In 2011, the Cash Coverage ratio is decreased as compared to the base year 2010 which

represents that the companys ability to pay its interest payments with cash has decreased.In 2012, the Cash Coverage Ratio has decreased as compared to the base year 2010

which shows that the companys ability to pay its interest payments with its cash has also

decreased. Although, 1.017 is not sufficient to pay because then very little amount will beleft for other operations but still company is able to pay its interest payments.

CONCLUSION

The Cash Coverage Ratio of the company through the overall analysis of three years shows the

companys ability to pay its interest by cash was highest in the beginning but with the passage of

time, it started declining but minor improvements are seen in the last two year. Therefore, in

order to increase the Cash Coverage Ratio, the company must increase its earnings and shouldmake depreciation conservative because depreciation is the amount which never goes out of the

company and its helps the company to decrease its payables.

CASH COVERAGE RATIO

year 2010

year 2011

year 2012


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LIQUIDITY RATIOS

CURRENT RATIO

2008 2009 2010 2011 2012

0.93 time 0.82 time 0.91 time 0.98time 0.94time

INTERPRETATION

In 2008, the Current Ratio of the company is 0.93 which shows the companys ability to

pay (currents assets) is 0.93 times than its current liabilities. This value is not so high to

be considered as ideal as the value is too minimal.

In 2009, the Current Ratio of the company has decreased as compared to the base year2008 due to which companys ability to pay its current liabilities has decreased to a great

extent.In 2010, the Current Ratio of the company was slightly decreased as compared to the

base year 2008 and the companys ability to pay its current liabilities decreased.

In 2011, the Current Ratio of the company was high as compared to the base year 2008

which comprises of that the companys ability to pay its current liabilities was increased.In 2012, the Current Ratio of the company was slightly higher than its base year 2008

which represents that the company was able to pay its current liabilities as they fell due.

CONCLUSION

The Current Ratio has minor fluctuations over the time of five years which represents that the

company is able to pay its current liabilities with the help of its current assets but this extent isnot considered as ideal because the companys liquidity is too minimal. Therefore, the company

must increase its current assets by increasing its receivables (increasing sale) & selling and

increasing outstanding number of shares.

0.7

0.75

0.80.85

0.9

0.95

1


CURRENT RATIO


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QUICK RATIO

2008 2009 2010 2011 2012

0.55 time 0.41 time 0.49 time 0.5time 0.5time

INTERPRETATION

In 2008, the Quick Ratio of the company shows the companys ability to pay (currentassets apart from inventory) is 0.55 times than its current liabilities. This value is not so

high to be considered as ideal as the value is too minimal.

In 2009, the Quick Ratio of the company is decreased as compared to the base year 2008

which represents that the companys ability to pay its current liabilities has decreased.

In 2010, the Quick Ratio of the company is decreased to a small extent as compared tothe base year 2008 which shows that the companys ability to pay its current liabilities

has also decreased.In 2011, the Quick Ratio of the company has decreased as compared to the base year

2008 which represents that the companys ability to pay its current liabilities was much

lower than the base year.In 2012, the Quick Ratio of the company is decreased as compared to the base year 2008

which shows that the companys ability to pay its current liabilities has decreased.

CONCLUSION

The Quick Ratio of the company has slight fluctuations which show that over the period of fiveyears the companys ability to pay has not increased to a high extent apart from its inventories.

Therefore, the company possesses low liquidity. However, the company can increase its liquidityby increasing sales to increase its accounts receivables and by selling and increasing outstanding

number of shares.

0

0.1

0.2

0.3

0.4

0.5

0.6


QUICK RATIO


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CASH RATIO

2008 2009 2010 2011 2012

0.08 0.07 0.12 0.11 0.06

INTERPRETATION

In 2008, the Cash Ratio of the company is 0.08 which represents the companys mostliquid assets to pay its current liabilities. The Cash Ratio of the company is not

considered as ideal as the value is too minimal.

In 2009, the Cash Ratio of the company has decreased as compared to the base year 2008

which shows that the companys ability to pay its currentliabilities has also decreased.

In 2010, the Cash Ratio of the company has increased as compared to the base year 2008which shows that the companys ability to pay its current liabilities has also increased.

In 2011, the Cash Ratio of the company has a slight increase as compared to the base year2008 which represents that the companys ability to pay its current liabilities is alsoincreased.

In 2012, the Cash Ratio of the company has decreased as compared to the base year 2008

which shows that the company is not able to pay for its current liabilities.

CONCLUSION

The Cash Ratio of the company has fluctuations which represents that during the five years

analysis the companys ability to pay for its current liabilities from its most liquid assets hasdecreased and the company is not ideally liquid to pay for its current liabilities. Therefore,

company should increase its cash by increasing sales and by selling and increasing outstandingnumber of shares.

0

0.05

0.1

0.15


CASH RATIO


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NET WORKING CAPITAL

2008 2009 2010 2011 2012

-173713 -443157 -215384 -40948 -145607

INTERPRETATION

In 2008, the Net Working Capital of the company is negative which represents that the

companys potential reservoir of cash is too low that the value has become negative after

meeting the companys current liabilities.

In 2009, the Net Working Capital of the company has decreased as compared to the baseyear 2008 and negativity has decreased to a large extent.

In 2010, the Net Working Capital of the company remains negative as compared to thebase year 2008 and the negativity has decreased to a great extent.In 2011, the Net Working Capital of the company remains negative as compared to the

base year 2008 but the negativity has further decreased to a great extent.

In 2012, the Net Working Capital of the company has remained negative as compared to

the base year 2008 but the negativity has increased to a great extent.

CONCLUSION

The Net Working Capital of the company has fluctuation over the period of five years analysis

but during this time the Net Working Capital of the company has remained negative. Therefore,

it is highly recommended that the company should increase its Net Working Capital byincreasing its current assets which can be increased by increase in sales, accounts receivables &selling and increasing outstanding number of shares.

-500000

-400000

-300000

-200000

-100000

0

2007.5 2008 2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5

NET WOKRING CAPITAL


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NET WORKING CAPITAL TO ASSETS

2008 2009 2010 2011 2012

0.059 -0.137 -0.072 -0.013 -0.049

INTERPRETATION

In 2008, the Net Working Capital to Assets is 0.059 which represents the companys

potential reservoir of cash with proportion to the asset. Therefore, companys cashreservoir is higher than its assets.

In 2009, the Net Working Capital to Assets has decreased to a great extent as compared

to the base year 2008 and it has become negative which shows that the companys cash

reservoir too negative that is not even backed by the companys total assets.In 2010, the Net Working Capital to Assets has decreased as compared to the base year

2008 and stays negative.

In 2011, the Net Working Capital to Assets has decreased in comparison with the baseyear 2008 which shows that it has become negative.

In 2012, the Net Working Capital to Assets has decreased to a great extent in comparison

with the base year 2008 and it has become negative. Therefore, companys cash reservoir

is not able to be backed by companys total assets.

CONCLUSION

The Net Working Capital to Assets of the company has fluctuations during the five yearsanalysis which was positive at the start and then remained negative for the following years.

However, it is highly recommended to increase the companys Current Assets by increasing its

accounts receivables & selling and increasing outstanding number of shares to make thecompanys cash reservoir positive so that the Net Working Capital can also be increased.

-0.15

-0.1

-0.05

0

0.05

0.1

2007.5 2008 2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5

NET WORKING CAPITAL TO ASSETS


22/32

22


EFFICIENCY RATIOS

TOTAL ASSET TURNOVER

2008 2009 2010 2011 2012

- - 3.78 3.92 4.48

INTERPRETATION

In 2010, the Total Asset Turnover is 3.78 which represent that how hard the companys

assets are being put to use. Therefore, its obvious that each dollar of asset has produced

3.78 dollars of sale and the company is working close to its capacity.

In 2011, the Total Asset Turnover has increased as compared to the base year 2010 whichshows that the company has worked closer to its capacity.

In 2012, the Total Asset Turnover has increased as compared to the base year 2010 whichshows that the company has more utilized its assets for sales.

CONCLUSION

The Total Asset Turnover of the company has been analyzed for three years which shows that

the companys Total Asset Turnover was low in the beginning but it increased during its

following years. In order to further increase of Total Asset Turnover, the company shouldincrease its sales.

3

3.5

4

4.5

year 2010 year 2011 year 2012

TOTAL ASSET TURNOVER


23/32

23


AVERAGE COLLECTION PERIOD

2008 2009 2010 2011 2012

- 25.73 days 9.71 days 5.28 days 3.71 days

INTERPRETATION

In 2009, the Average Collection Period is 25.73 days which shows that the company

recovers its receivables from its credit customers in about 25.73 days. This collectionperiod is not efficient because the value is not too minimal.

In 2010, the Average Collection Period has decreased as compared to the base year 2009

which shows that the company efficiently recovers its receivables from its credit

customers.In 2011, the Average Collection Period has again decreased as compared to the base year

2009 which shows that the company recovers its receivables from its credit customers

more efficiently.In 2012, the Average Collection Period has decreased to a great extent as compared to the

base year 2009 which represents that the company recovers its receivables efficiently.

CONCLUSION

The Average Collection Period of the company has been analyzed for four years which showsthat the good performance with decrease in Average Collection Period with the passage of time.

Therefore, to recover the receivables more efficiently the company can increase its sales whichwill increase its receivables and thus the Average Collection Period will also be increased.

0

5

10

15

20

25

30

year 2009 year 2010 year 2011 year 2012

AVERAGE COLLECTION PERIOD


24/32

24


INVENTORY TURNOVER

2008 2009 2010 2011 2012

- 3 3.5 3.2 4.1

INTERPRETATION

In 2009, the Inventory Turnover of the company is 3 which represent the rate at which

the company is turning over its inventories.In 2010, the Inventory Turnover of the company has increased as compared to the base

year 2009 which shows they companys ability for turning over its inventory has

increased.

In 2011, the Inventory Turnover of the company has a slight increased as compared to thebase year 2009 which represents that the companys ability for turningover its inventory

has again increased.

In 2012, the Inventory Turnover of the company has increased to a large extent as

compared to the base year 2009 which shows that the companys ability for turning over

its inventory has increased to a large extent.

CONCLUSION

The Inventory Turnover of the company has minor fluctuations during the analysis of four years

which shows that the inventory turnover has increased which is a good remark. Therefore,

company should increase its sales volume which will increase its cost of goods sold which willlead to the increase in its Inventory Turnover.

0

1

2

3

4

5


INVENTORY TURNOVER


25/32

25


DAYS SALES IN INVENTORIES

2008 2009 2010 2011 2012

- 125.30 days 140.06 days 133.17 days 117.09 days

INTERPRETATION

In 2009, the Days Sales in Inventories is 125.30which represents that on average thecompany has sufficient inventory to maintain sales for 125.30 days.

In 2010, the Days Sales in Inventories was increased as compared to the base year 2009

which represents that the company had more inventories to maintain its sales.In 2011, the Days Sales in Inventorieswas increased as compared to the base year 2009

which shows that the company had more inventories to maintain its sales.In 2012, the Days Sales in Inventories has decreased as compared to the base year 2009

which shows that the inventory has decreased but still has sufficient to maintain its sales.

CONCLUSION

The Days Sales in Inventories has been analyzed for four years which shows that throughout the

analyzed period the company had sufficient inventories to meet its daily sales.

100

110

120

130

140

150


DAYS' SALES IN INVENTORIES


26/32

26


PROFITABILITY RATIOS

OPERATING PROFIT MARGIN

2008 2009 2010 2011 2012

-3.16% 2.82% 1.38% 2% 3%

INTERPRETATION

In 2008, the Operation Profit Margin of the company is -3.16% which represents that the

companys revenue (inclusive of debt) throughout the year is -3.16% which determinesthat the company didnt earn revenue and the company incurred loss during the year.

In 2009, the Operating Profit Margin of the company increased as compared to the baseyear 2008 which shows that the companys revenue (inclusive of debt) increased that it isno more negative.

In 2010, the Operating Profit Margin of the company has increased as compared to the

base year 2008 which shows that the companys revenue (inclusive of debt) has alsoincreased.

In 2011, the Operating Profit Margin of the company has a slight increase as compared to

the base year 2008 which represents that the companysrevenue (inclusive of debt) has aslight increase in it.

In 2012, the Operating Profit Margin of the company increased as compared to the base

year 2008 which shows that the companys revenue (inclusive of debt) has also increased.

CONCLUSION

The Operating Profit Margin of the Company has been analyzed for five years which shows

extreme fluctuations. Therefore, company should increase its Net Income by becoming more costefficient & selling and increasing outstanding number of shares.

-4.00%

-3.00%

-2.00%

-1.00%0.00%

1.00%

2.00%

3.00%

4.00%

2007.5 2008 2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5

OPERATING PROFIT MARGIN


27/32

27


GROSS PROFIT MARGIN

2008 2009 2010 2011 2012

19.32% 23.30% 23.27% 20.73% 19.70%

INTERPRETATION

In 2008, the Gross Profit Margin of the company is 19.32% which represents the gross

profit earned by the company. This margin is not too ideal because the value is too

minimal.

In 2009, the Gross Profit Margin of the company has increased as compared to the baseyear 2008 which represents that the gross profit earned by the company has increased.

In 2010, the Gross Profit Margin of the company has increased as compared to the baseyear 2008 which represents that the gross profit earned by the company has increased.

In 2011, the Gross Profit Margin of the company has increased as compared to the base

year 2008 which represents that the gross profit earned by the company has increased.

In 2012, the Gross Profit Margin of the company has slightly increased as compared to

the base year 2008 which represents that the gross profit earned by the company has

slightly increased.

CONCLUSION

The Gross Profit Margin of the company has been analyzed for five years and minor

fluctuations have been seen in it. Although, the company has earned its gross profit margin butno intense increase has been seen in it.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%


GROSS PROFIT MARGIN


28/32

28


NET PROFIT MARGIN

2008 2009 2010 2011 2012

-5.58% 0.75% -3.45% -2% -3%

INTERPRETATION

In 2008, the Net Profit Margin of the company is -5.58% which represents that the

revenue earned by the company is5.58% which indicates loss in it.

In 2009, the Net Profit Margin of the company has increased as compared to the baseyear 2008 but it has become positive but the value is too minimal to be ideal.

In 2010, the Net Profit Margin of the company has increased as compared to the base

year 2008 but has still remained negative.In 2011, the Net Profit Margin of the company has increased as compared to the base

year 2008 but still it is negative.

In 2012, the Net Profit Margin of the company has increased as compared to the base

year 2008 but it remains negative.

CONCLUSION

The Net Profit Margin of the company has been analyzed for five years which shows that the

companys net profit was negative in the beginning butthen it increased in its following years

but yet remained negative. Therefore, it is highly recommended that the company should

increase its Net Income by becoming more cost efficient & selling and increasing outstandingnumber of shares.

-6.00%

-5.00%

-4.00%

-3.00%

-2.00%

-1.00%

0.00%

1.00%

2.00%

2007.5 2008 2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5

NET PROFIT MARGIN


29/32

29


RETURN ON ASSETS

2008 2009 2010 2011 2012

-0.01 0.09 0.03 0.09 0.07

INTERPRETATION

In 2008, the Return on Assets of the company is -0.01 which represents the return on

companys assets is -0.01%. This return in not considered as ideal because the value is

negative and the assets are not utilized.

In 2009, the Return on Assets of the company has increased to a great extent that it is nomore negative as compared to the base year 2008 which shows that the assets are more

utilized in this year.In 2010, the Return on Assets of the company has increased to be the positive ascompared to the base year 2008 which shows that the assets are utilized in this year.

In 2011, the Return on Assets of the company has increased to a large extent as compared

to the base year 2008 which shows that the assets are more utilized in this year.In 2012, the Return on Assets of the company has increased as compared to the base year

2008 which shows that the assets are utilized in this year.

CONCLUSION

The Return on Assets of the company has been analyzed for five years and it has been found that

the company earned return on its assets but the return was too minimal to be considered as ideal.However, the companys assets are not fully utilized. Therefore, company should increase its NetIncome by becoming more cost efficient & selling and increasing outstanding number of shares.

-0.02

0

0.02

0.04

0.06

0.08

0.1

2007.5 2008 2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5

RETURN ON ASSETS


30/32

30


RETURN ON EQUITY

2008 2009 2010 2011 2012

- 0.08 0.09 -0.17 -0.02

INTERPRETATION

In 2009, the Return on Equity of the company is 0.08 which represents that the return on

shareholders equity throughout the year.In 2010, the Return on Equity of the company has a slight increase which shows that the

return on shareholders equity has also slightly increased as compared to the base year

2009.

In 2011, the Return on Equity of the company has decreased to a great extent whichshows that the return on shareholders equity has become negative as compared to the

base year 2009. This return is not considered as ideal as the return is in negative.

In 2012, the Return on Equity of the company has decreased to a large extent ascompared to the base year 2009 which shows that the return on shareholders equity has

decreased and is slightly negative.

CONCLUSION

The Return on Equity of the company has been analyzed for four years and it has been concluded

that the company equity has decreased during the period of time. Therefore it is highly

recommended that the company should increase its Return on Equity by increasing its NetIncome which can be increased by being more cost efficient & selling and increasing outstanding

number of shares.

-0.2

-0.15

-0.1

-0.05

0

0.05

0.1

0.15

2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5

RETURN ON EQUITY


31/32

31


EARNING PER SHARE

2008 2009 2010 2011 2012

-25.1 2.22 -8.9 -3.87 -0.57

INTERPRETATION

In 2008, the Earning per Share of the company is -25.1 which represents that the

companys earning with proportion to its shares in -25.1. This is not an ideal condition

because the value is in negative.

In 2009, the Earning per Share of the company has increased and is no more negative ascompared to the base year 2008 which represents that that companys earnings with

proportion to its shares has also slightly increased.In 2010, the Earning per Share of the company has increased as compared to the baseyear 2008 but it remains negative.

In 2011, the Earning per Share of the company has increased as compared to the base

year 2008 but the companys earnings with proportion to its shares have not increased

because the value is in negative.In 2012, the Earning per Share of the company has increased as compared to the base

year 2008 but the companys earnings with proportion to its shares have not increased

because the value is in negative.

CONCLUSION

The Earning per Share of the company is analyzed for five years and it has been found that thecompanys earning with proportion to its shares has fluctuations but still it has remained negative

for the period of time. Therefore, it is recommended for the company to increase its Net Income

to increase its Earnings per Share by being more cost efficient and increasing its sales.

-30

-25

-20

-15

-10

-5

0

5

2007.5 2008 2008.5 2009 2009.5 2010 2010.5 2011 2011.5 2012 2012.5

EARNING PER SHARE


32/32


OTHER FACTORS AFFECTING COMPANY

The factors affecting companys performance except companys ratio analysis are:

RELIANCE ON DEBT FINANCING: The Company has become reliant on debtfinancing due to which the companys liquid position has become insecure.

POLITICAL UNCERTAINTY: Political Uncertainty has caused the progress of realestate and construction business due to which companys business is at disadvantage.

POWER CRISIS: The shortage and increasing power (electricity) prices and caused thecompany to a great extent.

LAW AND ORDER SITUATION:In Central and Northern Region of the country, lawand order situation is not stable due to which business is negatively affected.

RAW MATERIAL AND PACKAGING: The raw material used for production hasbecome more expensive due to which operating expenses of the company have increased.

ADVERTISING COST: Advertisement has become more costly due to which operatingexpenses of the company are increased.

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