professional project

1

Executive Summary

2

EXECUTIVE SUMMARY

In this professional project analysis of Shabbir tiles and Ceramics Limited is done in very

detail to check out current position, performance and progress of the company. To measure

these activities balance sheet (trend analysis), balance sheet (vertical analysis), income

statement (trend analysis), income statement (vertical analysis), ratio analysis, Du Pont

analysis, SWOT analysis and PEST analysis are performed that has explored the real picture.

At the end conclusion is made on the basis of these analysis. Then future recommendations

are made to improve company in every aspect

3

Chapter No. 1

Introduction

4

1.1 COMPANY PROFILE

Name of Company:

Shabbir Tiles and Ceramics Limited

Nature of Business:

Construction and material

Board of Directors:

Rafiq M.Habib( Chairman)

Alireza M. Alladin(Chief Executive)

Ali S. Habib

AbdilHai M. Bhaimia

Kersi D. Kapadia

Mansoor G. Habib

Nazim F. Haji

Audit Committee:

Mansoor G. Habib

Kesri D. Kapadia

Nazim F. Haji

Company Secretary:

Aziz Ahmed

Auditors:

Ford RohdesSidatHyder& co.

Charted Accountants

Legal Advisor:

M. AkramZubair& co.

Advocate Supreme Court

5

Bankers:

Habib Metropolitan Bank Limited

Royal Bank of Scotland

National Bank of Pakistan

Bank Al-Habib Limited

Habib Bank Limited

Registered Office:

15th

Milestone, National Highway, Landhi, Karachi-75120

Phones: 021-350152024-25, 35014044-45, Fax: 021-350155545

Karachi Display and Center and Sales Office:

Makro Cash and Carry, CAA

Near Star Gate, Main Shahrah-e-Faisal, Karachi

Phone: +92-21-34601372-74, Fax:+92-31-3461375

Lahore Sales Office:

17-A, Tariq, Block New Garden Town Lahore,

Phone: +92-42-5914771, Fax: +92-42-5858163

Islamabad Sales Office:

9th

and 10th

Lower Ground Floor, Aries Tower,

Shamsabad, Muree Road, Rawalpindi.

Phone: +92-51-4575315-18, Fax: +92-51-4575319

Peshawar Sales office:

UG-46 & UG-47, Groung Floor, Dean trade Center &

Hotel Towers Islamia Road, Peshawar Cantt.

6

Phone: +92-91-5522522, Fax: +92-91-5253161

Multan Sales Office:

17-A, First floor, Aslam Acrade, Shah Kreem Land,

Near Multan Hospital, Multan.

Phone: +92-61-4783097, Fax: +92-4646439

Faisalabad Sales Office:

P-2 / 2B, 213 Mian Susan Road, Faisalabad.

Phone: +92-41-8548243, Fax: +92-41-8548244

Registrar and Shares Transfer Office:

Nobel Computer Services (Pvt.) Limited.,

Mezzanine Floor, House of Habib Building,

Main Sharah-e-Faisal Karachi.

Phone: +92-21-34325482-87

Facrory: Unit-1

15th

milestome, National Highway Landhi Karachi-75120.

Phone: +92-21-35015024-25

Unit-2

Deh Khanto, Tappoo Landhi, Distirict

Mailer Bin Qasim Town Karachi.

7

1.2 HISTORY

Founded by the House of Habib www.hoh.net in 1978 with strategic and technical

collaboration with Agrob Anlagenbau GmbH of West Germany, SHABBIR TILES &

CERAMICS LTD was the first private sector enterprise in the Ceramic field in Pakistan.

The Company is listed at Karachi, Lahore and Islamabad Stock Exchanges and is also

member of Karachi Chamber of Commerce & Industry, Pakistan Ceramics & Sanitary

Manufacturer?s Association, Pakistan Sanitary Merchants Association and Landhi

Association of Trade & Industry.

The Company Brand STILE enjoys leading position in the Ceramic Tiles industry in

Pakistan, as its products are of international quality standards and it believes in constant

product development. It offers wide range of sizes, colors, and designs in ceramic tiles and

other allied products, conforming to high quality standards of durability and aesthetic values.

The Company has successfully diversified into some allied building material products and it

has achieved considerable success in marketing DIY (DO IT YOURSELF) products of a

renowned company from U.S.A. namely Laticrete International Inc., which has appointed the

company as an Exclusive Licensee for Pakistan. It is also marketing latest designs of High

Quality Ceramic and Porcelain Floor Tiles, Sanitary Fittings and Bathroom Accessories

under its popular Brand name of STILE in association with International Partners.

The Company has strong dealers and distribution network, spread all over Pakistan and

maintains it's Sales Offices at Karachi, Lahore, Multan, Faisalabad, Islamabad and Peshawar.

To provide maximum services to Stile Consumers under one roof, the Company has opened

company operated outlets through Pakistan named as THE STILE EMPORIUM

The Company is utilizing its full production capacity to manufacture ceramic tiles of

international quality in different sizes and colors, employing the latest technology and state-

of-the-art machinery imported from Italy. It has plans for further expansion in its production

capacity.

8

Shabbir Tiles has obtained latest version of Certification of Quality Management System

under ISO 9001:2000 from Lloyd Quality Assurance. The Company was amongst the top 25

Companies in Pakistan who was awarded Trophy and Shield by Karachi Stock Exchange in

recognition of its performance. Management Association of Pakistan awarded prestigious

Certificate of Corporate Excellence for two consecutive years.

The STCL plant, based in Karachi, incorporates the latest European technologies &

techniques to manufacture high gloss tiles that conform to European standards. Enjoying

brand leadership and the largest network of dealers and outlets in Pakistan SHABBIR TILES

& CERAMICS LTD through a concerted, conscious effort is a professionally managed

company today.

Shabbir Tiles is now a one stop shop providing Wall tiles, Floor tiles, Installation Material,

Skirtings, Aqua jet, flooring and Designer Seat Covers all under the brand name of Stile to

ensure comfort and satisfaction of the customer.

With Stile as its corporate identity, the company looks to newer areas for growth.

9

1.3 VISION STATEMENT

10

1.4 MISSION STATEMENT

11

Chapter No. 2

Business Description

12

2.1 PRODUCTS

Wall Tiles

Floor Tiles

Floor Waste

Flush Tanks

Laminated Wood Flooring

Aquajet Patterns

2.2 INDUSTRY

This company belongs to Ceramic tiles industry which is sub division of construction and

material industry in Pakistan.

2.2.1 Ceramic

The word ceramic is derived from the Greek word (keramikos). The term covers non-metallic

materials whose formation is due to the action of heat. Up until the 1950s or so, the most

important of these were the traditional clays, made into pottery, bricks, tiles and are like,

along with cements and glass.

2.2.2 History of Tiles Industry In World

The Latin word „tegula‟ and its French derivative „tuile‟mean quite precisely a roof tile of

baked clay. the English „tile‟ is less precise, for it can in addition be used of any kind of

earthenware slab applied to any surface of a building. the word „ceramic‟ comes from the

Greek word „keramos‟ meaning pottery, it is related to an old sanskrit root meaning to burn‟

but was primarily used to mean „burnt stuff‟.

Origin

historically, man has desired to create living spaces which were beautiful, durable, and user

friendly. With that in mind, ceramic tile has been made by

man for 4000 years. Beautiful tiled surfaces have been found in the oldest

pyramids, the ruins of Babylon, and ancient ruins of Greek cities. decorative tile work was

invented in the near east, where it has enjoyed a longer popularity and

http://www.stile.com.pk/products/walltiles.php

http://www.stile.com.pk/products/floortiles.php

http://www.stile.com.pk/products/floorwaste.php

http://www.stile.com.pk/products/flushtanks.php

http://www.stile.com.pk/products/laminated.php

http://www.stile.com.pk/products/aquajet.php

13

assumed a greater variety of design than anywhere in the world. During the Islamic period,

all methods of tile decoration were brought to perfection in persia. In Europe decorated tiles

did not come into general use outside Moorish Spain until the second half of the 12th century.

the tile mosaics of Spain and Portugal, the maiolica floor tiles of renaissance Italy, the

faiences of Antwerp, the development of tile iconography in England and in the Netherlands,

and the ceramic tiles of Germany are all prominent landmarks in the history of ceramic tile.

Body technique

The technique of tile and its secrets of trade were safely guarded and orally handed from

father to son and master to student; thus rarely have designs, patterns and details of technique

been documented and few complete treatises exist on the art of tile work in the past. Each tile

was hand-formed and hand-painted, thus each was a work of art in its own right.

Simply defined, ceramic tile is tile made of clay. Tiles were made by hand, in early days clay

bricks- made by flattening the clay and cutting pieces into shape - were dried beneath the sun

or baked. Later the only mechanical aid was a wooden mould carved in relief, which indented

a pattern on the clay slab. The slab was dried and the impression filed with clay, which after

further drying was shaved flat. After the formation of the tile body, ceramic tiles go through a

firing process in a kiln under very high heat to harden the tile body and to create the surface

glaze. Historically, unglazed tile was fired once. Glazed tile was fired twice. the first firing

formed a tile body called a „bisque‟. The biscuit firing had the highest temperature at

1060 C that fixed the tiles for size and shape. After glazing the tiles were gloss fired at about

1020 - 1240 C. on glaze decoration was fired at 750 C,just before the glaze began to melt.

The modern tile industry was advanced by reviving the lost art of encaustic tile-making. The

industry was further revolutionized in the 1840s by the „dust-pressing‟ method which

consisted of compressing nearly dry clay between two metal dies. Dust-pressing replaced tile-

making by hand with wet clay, and facilitated mechanization of the tile-making industry.

Decorative techniques

UNGLAZED:

The color range in unglazed tiles are limited to the natural colors of the clay, ranging from a

light sand to a red brick.

PLAIN GLAZES:

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White lead, flint, china stone and china clay were ground to form a glaze. a clear glaze

brought out the natural body colour and might be applied over any coloured decoration.

Glazed tiles are decorated with natural and artificially colors. Palette of colors consists of

glaze and under glaze colors. The first glazes were blue in color and were made from

copper. Also turquoise and light green glaze were popular colors. ground metal oxides could

be added to give different colours.

ENCAUSTIC OR INLAID:

This method was to fill the matrix of a stamped tile with white pipe clay before it was glazed

and fired. The two sections fusing during firing.

MOSAIC:

Tiles in such colors as yellow, blue, brown, black, turquoise, green and white were cut and

carved into small pieces according to a previously prepared pattern. These pieces were

placed close together and liquid plaster poured over to fill in all the opening and gaps. After

the plaster dried and hardened, a large single piece tile panel had been created, which was

then plastered onto the required wall of the building.

HANDPAINTING:

The artist painted freely onto a plain surface tile. The glaze was one centimeter thick,

with hand-painted decorations of flowers, plants, geometric designs, birds and human beings.

A design could also be copied from an original sketch by 'pouncing'. alternatively a tile could

be transfer printed and coloured by hand.

CARVED AND MODELLED TILES:

Each piece is individually carved in relief or modelled in clay, the pattern could be engraved

in outline on the surface of the tile or the design carved in relief or counter-relief on a wood-

block which was then pressed into the tile. Sometimes painted to emphasise the three-

dimensional appearance of the work.

SGRAFFITO:

An early form of decoration, the tile body is covered with coats of slip that is scratched off to

15

produce the design.

LUSTRE PAINTING

The metallic lustre of glazed ceramics is a very special type of decoration. it can be red,

brown, ochre yellow or green in scattered light and shows, in specular reflection,

coloured metallic reflections (blue, yellow, orange, rose…). metallic copper and silver

colloids suspensed in glazes compose lustre decoration.

TUBE LINING:

Slip is trailed onto the surface of the tile to make raised lines separating the areas where

different colour is wanted. coloured glazes were then applied. this technique was used for art

nouveau tiles.

TRANSFER PRINTING:

A copper plate was engraved with a design, this would be covered in colour, the excess

removed leaving the colour only in the engraved parts. a tissue paper was pressed onto the

plate, and placed colour side down onto the tile. then removed, and the colour transferred to

the tile. This method was quicker, and therefore cheaper than hand painting.

Scheme of decoration

TILE PICTURES

Square tiles were placed together and necessary design was painted in glazed colors on them.

each tile was fired. Then all were placed again next to each other to create the main large

illustration.

PATTERNS

Mathematically-minded people elaborated geometric designs, providing a continous

decoration. most designs required four tiles to complete a pattern,

some required as many as sixteen. a „wallpaper‟ pattern is one that has translation symmetry

in two directions (such as left/right and up/down). a frieze pattern is one that has translation

16

symmetry in one direction. a rosette pattern is one that has no translation symmetry, just

reflection and/or rotation symmetry.

2.2.3 Hihtory of Ceramic Tiles Industry In Pakistan

At the time of creation of Pakistan in 1947, there was no ceramic industry at all.

There were certain pockets where the concentration of such units formed a cluster.

The government of Pakistan provided technical and financial assistance through

Ceramic Service Center at Gujrat and Pottery Development Center at Shahadra

near Lahore.

The pottery industry developed into a ceramic industry and better manufacturing

techniques were introduced.

Thus in late fifties some big ceramics units like Dada Bhoy China Karachi,

Pakpore Ceramics Lalamusa (Gujrat) were established to produce high

temperature porcelain tableware of good quality using imported machinery.

In late sixties refractory manufacturing units were established, namely General

Ceramics and Marshall Ceramics at Gujranwala, and General Refractory at

Karachi.

In seventies, the production of sanitary wares was started in an organized manner

and big units like International Ceramics, Karam Ceramics, Frontier Ceramics,

Swat Ceramics, Trust Ceramics etc. were established and started their production

to their capacities. In mid seventies, a few organized units for the production of

ceramic wall and floor tiles were established on European imported technology.

The more prominent units among them were Shabir tiles, Swat Ceramics, Karam

Ceramics, Emco Industries etc. Later on more units like National Tiles, Master

Tiles, Frontier Ceramics etc. were established.

17

2.2.4 Key Players

2.2.5 Importance

Before late 1980‟s use of tiles was mainly concentrated with the elite of the society,

The elite and general public used “Ceramic Tiles” in their toilets as well as in

flooring, which were considered as a sign of prominence.

The enduring beauty of ceramics is part of Pakistan‟s historical and architectural

heritage from the time of the mughal era.

Due to the durability in all weather & extreme climatic conditions, ceramic tiles are

used for exterior finishes.

Their totally water resistant & acid immunity properties make these tiles for

laboratories, kitchens & bathrooms.

2.2.6 Benefits

Good shape and design

Company Products

Emco Industries Wall, floor tiles & insulators

Frontier Ceramics Sanitaryware tiles & wall tiles

Karam Ceramics Wall tiles & Sanitaryware

Master Tiles Wall tiles & Sanitary fittings

Shabbir Tiles Wall tiles

Marshal Tiles Wall facing & flooring tiles

National Tiles Floor and face tiles

Swat Ceramics Wall tiles & Sanitaryware

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Available in different colors than marble

Less of bacterial growth

Cheaper than marble

2.2.7 World Export Trends

Products 1999-00 2000-01 2001-02 2002-03

Tiles 5,406 5,484 5,660 5,692

Tableware 2,204 2,164 2,048 2,072

Sanitary Ware 1,620 1,608 1,760 1,806

Refractories 956 928 972 960

Insulators 438 426 482 494

Total 10,624 10,610 10,922 11,024

2.2.7 Pakistan Vs China

Pakistan have 6 companies, whereas China have 2500.

10,000 m/day production is considered to be the largest producer in Pakistan ,

whereas in China 50,000 m/day is considered to be larger.

2.2.8 WTO Impact

Duties are low, decrease from 60 to 20%.

Due to WTO, import is high in Pakistan, specially from China and Iran, because

they give subsidies to their exporters.

19

Chapter No. 3

SWOT Analysis

20

3.1 INTERNAL ANALYSIS

Strengths

Abundance of low cost labor

Extensive supplier industry

Strong linkages with other key regional clusters

Financial strength of the business

Stile encourages its employees and it has resulted in shape of motivated and loual

employees.

Weaknesses

Non availability of processed raw materials

High cost of utilities (gas & electricity)

Low R&D for product innovation

Use of traditional techniques & technology

Reduced consumer purchasing power

High Price

3.2 EXTERNAL ANALYSIS

Opportunities

Rising domestic demand

Large export potential in Middle East, Africa and Central Asia

Facilitate supply chain collaboration

Advertising and promotional activities of Stile may create a more demand of the

innovative product

21

Threats

Low priced import from China

Changing consumer preferences

Large surplus capacities in the international markets

Increasing regulatory pressures

Smuggling from China and Iran

Political instability in Pakistan

Inflation in rationale and real income of Pakistani

Uncertainty in economic condition in Pakistan

22

Chapter No.4

PEST Analysis

23

4 PEST ANALYSIS

PEST Analysis is a simple, useful and widely-used tool that helps you understand the "big

picture" of your Political, Economic, Socio-Cultural and Technological environment. As

such, it is used by business leaders worldwide to build their vision of the future.

It is important for these reasons:

First, by making effective use of PEST Analysis, you ensure that what you are doing

is aligned positively with the powerful forces of change that are affecting our world.

By taking advantage of change, you are much more likely to be successful than if

your activities oppose it;

Second, good use of PEST Analysis helps you avoid taking action that is doomed to

failure from the outset, for reasons beyond your control; and

Third, PEST is useful when you start operating in a new country or region. Use of

PEST helps you break free of unconscious assumptions, and helps you quickly adapt

to the realities of the new environment.

Political Environment:

Some positive and negative political facts that Stile has to face are:

Unstable government

Strikes and road blocks

Print and electronic media has freedom to talk and print.

Corrupt bureaucracy.

Government now focuses on Privatization of public companies.

There is no enough support from government to protect local production, free trade

agreement between China and Pakistan provide help to Chinese companies to take the

big market share.

Economic Environment:

Inflation rate of Pakistan for the current fiscal year has grown to 7 percent. This

thing is really hurting the purchasing power of Pakistani consumers.

24

Current foreign reserves of 2009-10 are US Dollar 16950 million.

GDP of 2009-10 is Rs.5670768 million, growth rate is 2.7%.

Boom in stock market

IT sector Development

Situational Analysis:

Pakistani market has shown good movement towards all types of positive indicators. Now

interest rates are low, saving schemes are giving less profits, consumers banking is at

peaking, new jobs are being created by Government as well as foreign investment. All these

situations are calling for new and new opportunities and investors.

Technological Analysis:

Pakistan is considered as developing country. Although it is nuclear power yet it lacks

behind in other technologies. Now it has made good progress in digital revolution but still it

has to import heavy machinery from developed countries.

25

Chapter No.5

BCG MATRIX

26

5 BCG MATRIX

The four segments of the BCG Matrix

Placing products in the BCG matrix provides 4 categories in a portfolio of a company:

Stars (high growth, high market share)

Stars are using large amounts of cash. Stars are leaders in the business.

Therefore they should also generate large amounts of cash.

Stars are frequently roughly in balance on net cash flow. However if

needed any attempt should be made to hold your market share in Stars,

because the rewards will be Cash Cows if market share is kept.

Cash Cows (low growth, high market share)

Profits and cash generation should be high. Because of the low growth,

investments which are needed should be low.

27

Cash Cows are often the stars of yesterday and they are the foundation of a

company.

Dogs (low growth, low market share)

Avoid and minimize the number of Dogs in a company.

Watch out for expensive „rescue plans‟.

Dogs must deliver cash, otherwise they must be liquidated.

Question Marks (high growth, low market share)

Question Marks have the worst cash characteristics of all, because they have

high cash demands and generate low returns, because of their low market

share.

If the market share remains unchanged, Question Marks will simply absorb

great amounts of cash.

Either invests heavily, or sells off, or invests nothing and generates any cash

that you can. Increase market share or deliver cash.

Where Stile Lie in BCG?

It is a part of House of Habib and have very good financial position.

It is the 5th

largest company according to market share.

According to this information Stile is a star.

28

Chapter No.6

Financial Analysis

29

6.1 SUMMARIZED FINANCIAL STATEMENTS

SHABBIR TILES AND CERAMICS LIMITED SUMMAIRZED BALANCE SHEET

AS ON JUNE, 30

2005 2006 2007 2008 2009

AMOUNT IN Rs. "000"

ASSETSNON-CURRENT ASSETS

Property, Plant and Equipment 475,850 594,628 730,863 1,527,610 4,116,866 Owned

Leasehold Land - - - 264,241 264,559

Freehold Land 553 553 553 553 553

Building on Freehold Land 35,445 31,959 31,997 38,824 63,836

Building onLeasehold Land 631,121

Plant and Machinery 198,878 172,404 227,976 192,832 2,826,013

Furniture and Fixture 5,233 4,577 3,473 3,428 23,205

Office Equipment 2,538 2,438 2,757 3,269 6,865

Computer and acceries 2,218 1,976 716 919 2,381

Vehicles 3,473 3,412 4,995 7,336 12,611

Leased

Building on Freehold Land 10,580 19,984 32,580 31,301 23,794

Plant and Machinery 198,593 337,885 403,926 380,444 249,764

Computer and acceries 287 147 1 1 -

Vehicles 18,052 19,293 17,405 18,151 12,164

Capital-Work-In-Progress

Plant and Macxhinery - - 4,484 154,280 -

Civil Work - - - 287,205 -

Advances to suppliers and Contractors - - - 80,179 -

Borrowing Cost - - - 27,577 -

Unallocated overheads - - - 37,070 -

Investment Property 1,027 926 825 724 623 Freehold Land 3 3 3 3 3

Building on freehold Land 1,024 923 822 721 620

Long Term Loans and advances 2,033 1,901 1,057 900 4,047 Loans 132 501 609 900 293

advances 1,901 1,400 448 - 3,754

Long term deposits 18,366 23,012 22,747 17,877 11,470 Security deposits on leases 14,360 18,971 18,406 11,967 2,277

Utiilities 3,064 3,064 3,064 3,064 2,959

Rent - - - - 5,664

Others 942 977 1,277 2,846 570

Total Non-Current Assets 497,276 620,467 755,492 1,547,111 4,133,006

30

CURRENT ASSETS

Stores ans spares 21,537 26,645 39,153 64,535 112,843 stores 5,924 7,689 15,889 23,195 26,939

Spares

In hand 11,259 11,680 21,268 36,817 73,978

In transit and bonded warehouse 4,354 7,276 1,996 4,523 11,926

Stock-in-trade 144,891 153,251 165,419 276,533 646,498 Raw and packing material

In hand 28,026 62,669 79,867 130,836 314,842

In transit and bonded warehouse 15,202 1,116 10,193 23,772 21,102

Work-in-process 22,909 18,365 19,978 18,898 39,788

Finished Goods

In hand 69,833 70,971 53,171 100,152 267,741

In transit 8,921 130 2,210 2,875 3,025

Trade debts 316,909 307,916 309,816 311,780 565,391

Loans, advancs, deposits, prepayments and other recievables11,444 16,595 20,951 153,108 49,567 Loans

Current portion of long term loans 818 693 1,099 3,563 3,640

Employees interest free 1,149 1,236 1,512 - -

Advances

Employees 322 114 317 223 370

Supplier and contractor 2067 3,534 10,265 10,748 3,420

Collector of custom 2086 1,488 1,191 1,736 -

Current maturity of advance to Sui Southern Gas co. Ltd - - 519 486 1,444

Others 108 143 324 1,096 238

Deposits

Lease 292 4,778 746 7,780 9,253

Container Charges - - 1,285 375 1,725

Others 614 469 4 3 -

Prepayments

Rent 1,880 2,216 2,070 6,428 18,920

Income tax - - - 3,573 79

Others 360 70 100 320 115

Other Recievables

Esciose duty 1,355 1,355 1,355 1,355 -

Sales tax - - - 12,077 9,908

Insurance claims 168 296 15 348 60

Net unrealised tax gainon revaluation of foreign exchange contracts - - - 101,891 -

Others 225 203 149 1,106 395

Taxation - Net 3,393 1,542 9,736 - 43,316

Cash and Bank balance 16,293 82,322 67,694 135,230 147,860 In Hand

Local currency 5,541 7,578 861 1,905 1,722

For eign currency 333 103 79 12 14

At Bank

Current Account 9,615 62,075 51,867 100,805 81,132

Deposit Account 804 12,566 14,887 32,508 64,992

Total Current Assets 514,467 588,271 612,769 941,186 1,565,475

TOTAL ASSETS 1,011,743 1,208,738 1,368,261 2,488,297 5,698,481

31

EQUITY AND LIABILITIESLIABILITIES

Non-Current Liabilities

Long Term Finance - Secured 33,750 6,750 - 791,743 2,769,983

Term Finance 60,750 33,750 - 791,743 2,769,983

Less: Current Portion (27,000) (27,000) - - -

Liabilities against assets subject to finance lease 139,428 213,823 264,745 163,385 69,474

Not later than one year 74,722 122,914 155,201 162,129 108,908

Later than one year but not later than five years 152,272 235,285 297,757 185,737 75,530

Less: Financial charges allocable to future periods (25,566) (51,740) (67,592) (53,081) (21,781)

Less: Current portion (62,000) (92,636) (120,621) (131,400) (93,183)

Deferrd tax liability 37,794 47,428 66,202 128,451 105,259

Accelerated tax depreciation 91770 128,915 48,850 43,363 685,619

Assets subject to finance lease (52,875) (80,303) 18,758 43,296 42,124

Fair value of forward exchange Contract - - - 43,997 -

Provisions (1,101) (1,184) (1,406) (2,205) (3,010)

Tax loss - - - - (619,474)

Deferred Income 1,610 1,190 350 - -

Total Non-current Liabilities 212,582 269,191 331,297 1,083,579 2,944,716

Current Liabilities

Trade and other payable 84,951 136,553 153,494 189,176 529,126

Trade craditors 17,995 53,321 61,798 63,336 199,303

Excise dury payable 4,706 8,495 9,976 12,077 -

Security Deposits 13,092 8,687 6,691 2,371 2,787

Accured expenses 37,643 54,143 61,378 80,591 253,798

Worker's profit participation fund 6,060 6,709 6,774 7,775 3,950

worker's welfare fund 2,604 1,512 2,567 5,521 4,853

Tax deducted at source 57 715 276 274 615

Unclaimed dividend 2,794 2,971 3,000 3,038 2,974

current maturity of deferred income - - 420 350 -

payable to provident fund - - 614 740 858

advance from customers - - - 13,103 28,235

Infracture cess payable - - - - 31,599

Others - - - - 154

Mark-up accured 2,512 4,031 4,578 30,726 227069

Short term borrowing 173,655 169,281 178,188 298,976 626,766

Term finances 99,286 103,278 127,012 8,965 106,945

Running Financing 74,369 66,003 51,176 290,011 519,821

Current portion of long term loan 27000 27000 - - -

Current portion of Liabilities against assets subject to finance lease62000 92,636 120621 131,400 93,183

Taxation net - - - 185 -

Sales tax payable 3861 7,469 12,701 9,177 9,816

Total Current Liabilities 353,979 436,970 469,582 659,640 1,485,960

Total Liabilities 566,561 706,161 800,879 1,743,219 4,430,676

32

SHARE CAPITAL AND RESERVEAuthorized Capital 100,000 300,000 300,000 600,000 600,000

Issued, subscribed and paid-up-capital 94,865 113,838 136,605 163,926 360,638

Fully Paid-up in Cash 34,316 34,316 34,315 34,315 198,241

Issued for consideration other than cash 5,750 5,750 5,750 5,750 5,750

Issued as fully paid bonus shares 54,799 73,772 96,540 123,861 156,647

Share Premium - - - - 389,764

Reserves 350,317 388,739 430,777 581,152 514,403

Total Equity 445,182 502,577 567,382 745,078 875,041

TOTAL EQUITY AND LIABILITIES 1,011,743 1,208,738 1,368,261 2,488,297 5,695,481

33

SHABBIR TILES AND CERAMICS LIMITED SUMMAIRZED INCOME STATEMENT

AS ON JUNE, 30

2005 2006 2007 2008 2009

AMOUNT IN Rs. "000"

Net Sales 1,158,168 1,583,682 1,699,745 2,035,165 2,853,257

Local 1,396,829 1,881,331 1,980,990 2,339,241 3,277,365

Less: Sales Tax (178,975) (241,412) (252,737) (300,849) (474,046)

Trade discount,commission,etc (81,032) (74,601) (43,336) (27,264) (10,555)

Export 21,346 18,364 14,828 24,037 60,493

Less: cost of Sales 845,887 1,151,429 1,258,834 1,501,515 2,068,445

Local Products

Raw material and packing Material consumed: 270,338 374,509 446,677 600,087 1,051,676

Opening stock 23,812 28,026 62,669 79,867 130,836

Purchases 274,552 409,152 463,875 651,056 1,256,784

Closing stock (28,026) (62,669) (79,867) (130,836) (335,944)

Manufacturing Expenses: 329,370 452,216 546,601 739,210 1,150,594

Salaries, wagws and benefits 68,807 83,525 106,732 135,829 211,330

Fuel and power 128,713 184,620 235,718 318,376 453,363

stores and spares consumed 40,262 43,659 39,704 68,772 134,514

Depreciation 39,524 74,931 83,725 110,287 186,057

Reparis and maintenance 26,500 32,337 36,967 51,160 68,195

tiles packing and other related charges 5,420 8,477 12,654 16,521 26,978

Insurance 4,081 4,702 4,221 6,305 10,441

Vehicle running expenses 3,971 4,187 5,186 5,634 11,985

Travelling and conveyance 3,227 5,281 6,656 3,477 17,125

Rawmaterial mixing charges 2,675 3,817 6,383 9,307 11,567

Printing and stationary 1,555 1,419 2,020 1,727 5,962

Operating lease rental 1,051 588 267 - -

Communication 523 723 1,206 1,712 2,916

Rent, rate and taxes 585 581 577 1,640 1,703

Research cost 458 497 618 496 858

Cartage and handling charges 344 562 392 1,307 1,201

Legal anfd professional charges 135 177 210 937 467

Entertainment 93 193 318 432 1,020

Others 1,446 1,940 3,047 5,291 4,912

Work-in-process (6,893) 4,544 (1,613) 1,080 (20,890)

Opening stock 16,016 22,909 18,365 19,978 18,898

Closing stock (22,909) (18,365) (19,978) (18,898) (39,788)

Finished Goods 20,232 (6,316) 6,336 (10,255) (209,866)

Opening stock 31,250 11,018 17,334 10,498 20,753

Closing stock (11,018) (17,334) (10,998) (20,753) (230,619)

Imported Products

Cost of Sales 232,840 326,476 260,833 171,393 96,931

Opening stock 36,275 58,815 53,637 42,673 79,399

Purchases 255,380 321,298 252,079 208,119 54,654

Closing stock (58,815) (53,637) (44,883) (79,399) (37,122)

Gross Profit 312281 432253 440911 533650 784812

34

Distribution cost: 149,330 218,775 219,688 276,118 383,930

Salaries,, wages and benefits 11,346 15,421 16,512 21,497 28,874

Freight 79,864 135,071 128,954 175,093 240,087

Sales promotion 12,538 15,848 20,135 17,485 30,972

Advertisment and pubilicity 9,992 8,307 8,440 11,391 7,200

teavelling and conveyance 8,823 10,726 10,030 11,689 15,482

rent, rates and taxes 7,101 9,515 13,910 16,221 29,897

communication 3,727 3,293 3,135 3,083 4,929

Insurance 2,824 4,043 2,782 1,607 1,962

Depreciation 2,616 3,172 3,596 4,430 5,319

Vehicle running expenses 2,540 3,522 3,998 4,928 6,856

Repairs and maintenance 2,376 2,545 1,234 1,153 2,440

Utilities 1,630 2,030 1,868 1,228 2,571

Printing Stationary 1,589 2,349 1,707 1,367 1,557

Entertainemnt 1,190 1,347 1,229 1,029 1,557

Legal and professional charges 559 296 245 982 -

security charges - - 232 - -

Subscription - - 205 - -

Others 615 1,290 1,476 2,935 4,227

Adminstrative Expenses 23093 29876 34835 37020 56794

Salaries,, wages and benefits 10210 13518 16,764 17974 28281

Travelling and conveyance 1915 2162 2,393 2501 2625

printing and stationary 1728 2319 2,372 2829 8235

Legal and professional charges 1701 3254 4,142 3926 4296

Depreciation

on operating fixed assets 1614 1883 2,217 2579 3385

on investment property 54 101 101 101 101

Vehicles running expenses 1176 1650 2,078 1805 2274

Communication 823 775 801 1186 1696

Utilities 666 633 658 654 193

Auditor's remuneration 610 486 610 961 1447

Subscription 506 936 621 551 668

Insurance 437 664 840 610 1053

Advertisment 462 486 448 - -

Operating and lease rentals 329 - - - -

Repairs and maintenance 304 158 75 - -

Rent, rates and Txes 102 104 - - -

Entertainment 45 159 307 - -

others 411 588 408 1343 2540

Total Operating Expenses: 172,423 248,651 254,523 313,138 440,724

Operating Profit 139858 183602 186388 220512 344088

35

Add: Other operating Income: 927 2,248 1,734 1,151 2,492

Rental income from investment property 420 420 420 420 427

Profit on bank deposits 92 370 248 289 1,206

Liabilities written back 384 13 - -

Gain on sale of fixed asset - 1,279 161 79 854

Exchange Gain - - 437 - -

Others 31 166 468 363 5

Less: Finance cost 19,591 49,496 51,813 62,065 266,836

Mark up on:

long term finance 3,040 1,879 722 - 198,840

Finance Lease 9,362 22,592 25,748 38,010 30,036

Short term borrowing 5,497 17,258 23,549 21,792 34,526

worker's profit participation fund 23 39 37 87 19

Exchange loss - - - - -

Bank charges, commission 348 5,680 - - -

1,321 2,048 1,757 2,176 3,415

Less: Other charges 8,586 10,350 9,666 14,833 6,196

worker's profit participation fund 6,060 6,709 6,755 7,775 3,950

worker's welfare fund 1140 1,369 2203 2954 1501

Loss on disposal of fixed assets 874 - 708 393 620

Donations 512 2,272 - 3711 125

28,177 59,846 61,479 76,898 273,032

111681 123756 124909 143614 71056

Profit before Taxartion 112608 126004 126643 144765 73548

Less: Taxation (@ 35%) 36,316 54,380 44,262 48,779 25,801

Current 43,000 44,747 25,487 30,528 4,998

Deffered (6,684) 9,633 18,775 18,251 20,803

Profit After Tax 76292 71624 82381 95986 47747

Earning Per share 4.02 3.14 3.00 2.92 0.71

36

6.2 RATIO ANALYSIS

The information in the four basic financial statement is of major siginifance to a variety of

interested parties who regularly nedd to have relative measures of the conpany‟s opreating

effeciency . Relative is the key word here, because the analysis of the financial statements is

based on the used of ratios or relative values. Ratio analysis involve methods of calculating

and interpreting financial ratios to analyze and monitor the firms performance. The basic

input to ratio analysis are the firm‟s incomestatement and balance sheet.

Why Financial Analysis:

Lenders‟ need it for carrying out the following

Technical Appraisal

Commercial Appraisal

Financial Appraisal

Economic Appraisal

Management Appraisal

Goals of Ratio Analysis:

It‟s a tool which enables the banker or lender to arrive at the following factors :

Liquidity position

Profitability

Solvency

Financial Stability

Quality of the Management

Safety & Security of the loans & advances to be or already been provided

37

6.2.1 Short Term Debt Paying Ability

Liquidity:

“A firm‟s ability to satisfy its short-term obligations”.

Liquidity refers to the solvency of the firm‟s overall financial position, the ease with which it

can pay its bills. Because a common precursor to financial distress and bankruptcy is low or

declining liquidity, these ratios can provide early sign of cash flow problems and

implementing business failures. The two basic measures of liquidity are current and quick

ratios.

Liquid ratio lies in balance sheet ration. Most commonly used liquid ratios are:

Current Ratio

Quick Ratio

Net Working Capital

1- Current Ratio:

The Current ratio, one of the most commonly cited financial ratios, measures the firm‟s

ability to meet its short term obligation. It is expressed as follows:

Current Ratio

Generally the higher the current ratio, the firm is considered to be more liquid. A current

ratio of 2 is occasionally cited as acceptable, but a value‟s acceptability depends on the

industry in which the firm operates.

= Current Assets

Current Liabilities

38

Calculations:

Graphical Representation:

Interpretation:

Above graph shows decreasing trend in the liquidity of the firm. Firm may experience

problems to finance its short term obligation. The current liabilities are increases in the last

five years. But in 2008 the firm shows improvement in its liquid ratio because in 2008 the

liabilities are much less then its current assets, but firm fail‟s to maintain the improvement

that had made in 2008 and in fiscal year 2009 come to the lowest value of current ratio, that

means its ability to meet short term debts is lowest in fiscal year 2009.

2005 2006 2007 2008 2009

514467 588271 612769 941186 1565475

353979 436970 469582 659640 1485960

1.45 1.35 1.30 1.43 1.05

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

2005 2006 2007 2008 2009

Current Ratio

Current RatioRat

ios

39

2-Quick Ratio:

The quick ratio is similar to the current ratio except that it exclude inventory, which is

generally the least liquid current asset. The generally low liquidity of inventory results from

two primary factors: (1) many types of inventory can not be easily sold because they are

partially completed and (2) inventory is typically sold on credit, which means that it

becomes an account receivable before being converted into cash.

The quick ratio is calculated as:

Quick Ratio

Calculations:

2005 2006 2007 2008 2009

369576 435020 447350 664653 918977

353979 436970 469582 659640 1485960

1.04 1.00 0.95 1.01 0.62


Interpretation:

Quick ratio shows that the ability of firm to meet its short term debts is decreases in the last

five years. The firm ability quick ratio is continuously decrease from fiscal year 2005 to 2009

but in fiscal year 2008 it shows improvement , because its liabilities are decreases in fiscal

year 2008. In fiscal year 2009 the firm again disappoint because its acid test ratio shows

figures that are lowest in the last five years.

= Current Assets - inventory

Current Liabilities

0.00

0.50

1.00

1.50

2005 2006 2007 2008 2009

Quick Ratio

Quick RatioRat

i

40

3-Net Working Capital:

This is worked out as surplus of Long Term Sources over Long Tern Uses, alternatively it is

the difference of Current Assets and Current Liabilities.

NWC = Current Assets – Current Liabilities

Calculation:

2005 2006 2007 2008 2009

514467 588271 612769 941186 1565475

(353979) (436970) (469582) (659640) (1485960)

160488 151301 143187 281546 79515


Interpretation:

Net working capital of the firm decreases from 2005 to 2009, that shoes the liquidity of the

firm decreases in the last five years, but in 2008 firm net working capital shows a tremendous

up word change, in fiscal year the net working capital is almost doubled from the previous

fiscal year 2007. But after 2008 the in fiscal year 2009 the net working capital is dramatically

decreases to a dangerous level, the management must review the situation and find out its

causes and takes corrective actions according to that.

0

50000

100000

150000

200000

250000

300000

2005 2006 2007 2008 2009

Net working Capital

Net working Capital

41

6.2.2 Activity Ratios

Activity ratios measure the speed with which various accounts are converted into sales or

cash inflows or outflows. With regard to account, measures of liquidity are generally

inadequate because difference in the composition of a firm‟s current assets and current

liabilities can significantly affects its “true” liquidity. It is therefore important to look beyond

measures of overall liquidity and to assess the activity of specific current accounts. A number

of ratios are available for measuring the activity of the most important current accounts,

which includes inventory, accounts receivables, and accounts payables. The efficiency with

which total assets are used can also be assed.

Ratios that I have used in this project are:

Inventory Turnover

Inventory Turnover in Days

Accounts Receivable Turnover

Accounts Receivable Turnover in Days

Working Capital Turnover Ratio

Fixed asset Turnover

Total Asset Turnover

1-Inventory Turnover:

Inventory turnover commonly measures the activity, otr liquidity, of a firm‟s inventory.

It is calculated as:

Invntory Turnover

= Cost of goods Sold

Inventory

42

Calculations:

2005 2006 2007 2008 2009

845887 1151429 1258834 1501515 2068445

144891 153251 165419 276533 646498

5.84 7.51 7.61 5.43 3.20


Interpretation:

Firm‟s Inventory turnover is increase from fiscal year 2005 to fiscal year 2007, that shows the

liquidity of the inventory is decreases and it require more time to converted into cash. From

2007 to fiscal year 2009 the inventory turnover is decreases that shows liquidity of the firm

the inventory is increases, that shows good management or effectiveness of management has

increases.

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2005 2006 2007 2008 2009

Inventory Turmover

Inventory Turmover

43

2-Inventory Turnover in Days:

Inventory turnover can be easily converted into days by dividing 360 with inventory.

Inventory turnover in days

Calculations:

2005 2006 2007 2008 2009

360 360 360 360 360

5.84 7.51 7.61 5.43 3.20

61.66 47.91 47.31 66.30 112.52


Interpretation:

Days of sales are increases in 2009 because in 2009 the inventory turnover ratio is less.

Above graph shows a mixed picture about management of the firm‟s assets.

= 360

Inventory turnover

0.00

20.00

40.00

60.00

80.00

100.00

120.00

2005 2006 2007 2008 2009

Inventory turnover in days

Inventory turnover indaysD

ays

44

3-Accounts Receivables Turnover:

Accounts Receivable turnover

Calculations:


Interpretation:

Account receivable turnover is very poor in fiscal year 2005, but the above graph shows that

it become better and better in coming years. The management policies becoming better and

better from year to year and tremendous in fiscal year 2008.

= Net Sales Average Accounts Receivable

2005 2006 2007 2008 2009

1158168 1583682 1699745 2035165 2853257

11444 16595 20951 153108 49567

101.20 95.43 81.13 13.29 57.56

0.00

20.00

40.00

60.00

80.00

100.00

120.00

2005 2006 2007 2008 2009

Accounts receivable turnover

Accounts receivableturnover

45

4-Accounts Receivable Turnover in Days:

Accounts receivable turnover in Days

Calculations:

2005 2006 2007 2008 2009

360 360 360 360 360

101.20 95.43 81.13 13.29 57.56

3.56 3.77 4.44 27.08 6.25

Graphical representation:

Interpretation:

Accounts receivable turnover in days is almost constant in fiscal year 2005,2006,2007,2009

but in fiscal year 2008 it is very good, that mean extra ordinary management.

= 360 Accounts Receivable Turnover

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2005 2006 2007 2008 2009

Accounts recievable tirnover in days

Accounts recievabletirnover in daysD

ays

46

5- Working Capital Turnover:

Working Capital Turnover

Calculatios:

2005 2006 2007 2008 2009

1,158,168 1,583,682 1,699,745 2,035,165 2,853,257

160488 151301 143187 281546 79515

7.22 10.47 11.87 7.23 35.88


Interpretation:

The higher the working capital turnover the more the firm taking risk. Above ratio shows that

in fiscal year 2009 company han teken a greater risk the its previous years. Figures from 2005

to 2006 shows favorable position rather then 2009.

= Net Sales

Working Capital

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

2005 2006 2007 2008 2009

Working Capital Turnover ratio

Working CapitalTurnover ratioR

atio

47

6-Fixd Asset Turnover:

Fixed Asset Turnover

Calculations:

2005 2006 2007 2008 2009

1,158,168 1,583,682 1,699,745 2,035,165 2,853,257

475850 594628 730863 1527610 4116866

2.43 2.66 2.33 1.33 0.69


Interpretation:

Fiscal year 2005,2006,2007 shows that asset are effectively utlized for the generation of the

revenue for the company. But 2008,2009 shows that asset had not rffeciently used for the

generation of the revenues, generally the higher the the fixrd asses turnover ratio the more

effeciently the fixed assed had used.

= Net Sales

Net Fixed Assets

0.00

0.50

1.00

1.50

2.00

2.50

3.00

2005 2006 2007 2008 2009

Fixed Asset turnover

Fixed Asset turnover

Rat

io

48

7- Total asset Turnover:

Total asset turnover shows indicates the the efficiencywith which the firm uses its assets to

generate sales.

Total assest turnover

Calculations:


Interpretation:

Fiscal year 2005,2006,2007 shows that asset are effectively utlized for the generation of the

revenue for the company. But 2008,2009 shows that asset had not rffeciently used for the

generation of the revenues, generally the higher the the fixrd asses turnover ratio the more

effeciently the fixed assed had used.

= Net Sales

Total Assets

2005 2006 2007 2008 2009

1,158,168 1,583,682 1,699,745 2,035,165 2,853,257

1011743 1208738 1368261 2488297 5698481

1.14 1.31 1.24 0.82 0.50

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

2005 2006 2007 2008 2009

Total Asset Turnover

Total Asset…Rat

io

49

6.2.3-Debt Ratios

Debt position of a firm indicates the amount of other people‟s money used to generate profits. In

general, the financial analyst most concern with long term debts, because these commit the firm to a

stream of contractual payment over the long run. The more debt a firm has, the greater its risk to meet

its contractual debts payments and becoming bankrupt. Because creditors clail‟s must be satisfied

before the earning can be distridute to shareholders.

It includes the following Ratios:

Debt Ratio

Debt to Equity Ratio

Fixed Asset coverage Ratio

1-Debt Ratio:

“Measures the proportion of the total assets finance by the creditors”.

Debt ratio

Calculations:

= Total Liabilities

Total Assets

2005 2006 2007 2008 2009

566561 706161 800879 1743219 4430676

1011743 1208738 1368261 2488297 5698481

0.56 0.58 0.59 0.70 0.78

50


Interpretation:

Above calculation shows that from fiscal year 2005 to 2007 the company‟s debt paying

ability is constant and higher, but in 2008 and 2009 its debt ratio is increases that means its

ability to pay its long term debts is decreases. So the figures of previous three years are

favorable then the 2008 and 2009.

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

2005 2006 2007 2008 2009

Debt Ratio

Debt RatioRat

io

51

2-Debt Equity Ratio:

Debt to Equity Ratio

Calculations:


Interpretation:

Fiscal year 2005 to 2007 shows the favorable values, but in 2008 and 2009 its debt is

increases may be due to investment in the long-term projects. But risk of company is also

increases, in previous years it is almost risk avers but figures of 2008 and 2009 shows that

managers are now interested in higher risk investments for higher revenues.

= Total Long term Debt

Total Long term Funds

2005 2006 2007 2008 2009

212582 269191 331297 1083579 2944716

657764 771768 898679 1828657 3819757

0.32 0.35 0.37 0.59 0.77

0.00

0.20

0.40

0.60

0.80

2005 2006 2007 2008 2009

Debt Equity Ratio

Debt Equity…Rat

io

52

3- Fixed Asset Coverage Ratio:

Calculations:


Interpretation:

Higher the value of fixed asset coverage ratio more the company has stable. Figures from

2005 to 2007 shows more favorable values then coming years, in these years the ability of

assets to satisfy long term debts was higher then coming years.

= Net Fixed Assets

Long term Debt

2005 2006 2007 2008 2009

475850 594628 730863 1527610 4116866

212582 269191 331297 1083579 2854115

2.24 2.21 2.21 1.41 1.44

0.00

0.50

1.00

1.50

2.00

2.50

2005 2006 2007 2008 2009

Fixed Asset Coverage Ratio

Fixed AssetCoverage RatioR

atio

53

6.2.4- Profitability

There are many measures of profitability. As a group, these measures enable the analyst to

evaluate the firm‟s profit with respect to a given level of sales, a certain level of assets, or the

owner‟s investment. Without profit, a firm could not be attracting outside capital. Owners,

creditors and management pay close attention to boosting profits because of the great

importance placed on earning in the market place.

Profitability ratios show the combined effects of liquidity, asset management and debt on

operating results. These ratios examine the profit made by the firm and compare these figures

with the size of the firm, the assets employed by the firm or its level of sale.

Profitability ratios that I have analyzed in this project are:

Gross Profit Margin

Operating Profit Margin

Profit before tax Margin

Net Profit Margin

Return on assets

Return on Investment

Return on Equity

Sales to Fixed Assets

Dupont Analysis

1-Gross Profit Margin:

“Measures the percentage of each dollar remaining after the firm has paid for its goods”.

Gross profit

Net Sales = ( ) *100

54

Calculations:

2005 2006 2007 2008 2009

312281 432253 440911 533650 784812

1158168 1583682 1699745 2035165 2853257

26.96% 27.29% 25.94% 26.22% 27.51%


Interpretation:

In fiscal year 2006 and 2009 figures shows that company had earn large profits. Gross profit

of 2005 also shows favorable values but in fiscal year 2007 and 2008 the gross profit figures

are not satisfactory because this is the profit calculated by just deducting its cost for goods, a

lower gross profit may fail to cover its operating and non operating expenses and it may lead

to financial loss in that period.

The gross profit figures show a mixed picture of company‟s profitability. It seems like that

firm‟s performance toward profits in inconsistence, which is not good because it the main

goal of a profit making firm to earn consistent inflows.

25.00%

25.50%

26.00%

26.50%

27.00%

27.50%

28.00%

2005 2006 2007 2008 2009

Gross Profit Margin

Gross Profit Margin

55

2-Opreating Profit Margin:

“Measures the percentage of each sales dollar remaining after all costs and expenses other

than interest, taxes and preferred stock dividend are deducted; the “pure profit” earned on

each sales dollar”

Calculations:

2005 2006 2007 2008 2009

139858 183602 186388 220512 344088

1158168 1583682 1699745 2035165 2853257

12.08% 11.59% 10.97% 10.84% 12.06%


Interpretation:

Operating profit shows clear picture of the firm instead of gross profit. Above figures shows

firm had very profitable in fiscal year 2005 and 2009, in 2006 it also had satisfactory profits,

but in fiscal year 2007 and 2008 it earned few profits that were unfavorable. Another

important fact that should be consider is that its profit are continuously decreases from year

to year, but it shows some positive signs in fiscal year 2009.

Opreating profit

Net Sales = ( ) *100

10.00%

10.50%

11.00%

11.50%

12.00%

12.50%

2005 2006 2007 2008 2009

Operating Profit Margin

Operating ProfitMargin

56

3-Profit before Tax Margin:

Calculations:

2005 2006 2007 2008 2009

112608 126004 126643 144765 73548

1158168 1583682 1699745 2035165 2853257

9.72% 7.96% 7.45% 7.11% 2.58%


Interpretation:

Firm earn a grater profit in fiscal year 2005, its profit before tax is also satisfactory in year

from 2006 to 2008 but in 2009 its profit is decreases to a danger level, that is not good for the

company.

Another important fact is that its profit continuously decreasing from year to year that highly

unfavorable and corrective actions have to be taken.

Profit before Tax

Net Sales = ( )*100

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

2005 2006 2007 2008 2009

Profit Margin before Tax

Profit Margin beforeTax

57

4-Net Profit Margin:

“Measures the each sales dollar remaining after all costs and expenses, including interest,

taxes and preferred stock dividends, have been deducted”.

Calculations:

2005 2006 2007 2008 2009

76292 71624 82381 95986 47747

1158168 1583682 1699745 2035165 2853257

6.59% 4.52% 4.85% 4.72% 1.67%


Interpretation:

Net Profit shows clear and end result of operationn of the firm. In last five years company

had prifitable but its profit in 2005 is greater then coming years. Profit shows desreasimfg

trends. The profit of 2009 is marginaly low as compare to other which is not good.

Net Profit

Net Sales = ( )*100

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

2005 2006 2007 2008 2009

Net Profit Margin

Net Profit Margin

58

5-Return on Assets:

Measures the overall effectiveness of management in generating profits with its available

assets; also called the retirn on investment.

Calculations:

2005 2006 2007 2008 2009

76292 71624 82381 95986 47747

1011743 1208738 1368261 2488297 5698481

7.54% 5.93% 6.02% 3.86% 0.84%


Interpretation:

Higher the return on total assets the better the effectiveness on management on the firm.

Fiscal year 2005 shows handsome returns on investment. But the returns are decreases from

year to year that shows that the effectiveness of management of assets decreases or policies

of management not works for the company. In year return come to ganger or almost dead

level.

Net Profit

Total Assets = ( )*100

0.00%

2.00%

4.00%

6.00%

8.00%

2005 2006 2007 2008 2009

Return on Assets

Return on Assets

59

6- Return on Investment:

Calculations:

2005 2006 2007 2008 2009

112608 126004 126643 144765 73548

657764 771768 898679 1828657 3819757

17.12% 16.33% 14.09% 7.92% 1.93%


Interpretation:

Higher the return on investment the better the effectiveness on management on the firm.

Fiscal year 2005 shows handsome returns on investment. But the returns are decreases from

year to year that shows that the effectiveness of management of assets decreases or policies

of management not works for the company.

EBIT

Capital Employed = ( )*100

0.00%

5.00%

10.00%

15.00%

20.00%

2005 2006 2007 2008 2009



60

7-Return on Equity:

“Measures the returns earned on common stockholders‟ investment in the firm”.

Calculations:

2005 2006 2007 2008 2009

76292 71624 82381 95986 47747

445182 502577 567382 745078 875041

17.14% 14.25% 14.52% 12.88% 5.46%


Interpretation:

Higher the return better the owners are. In fiscal year 2005 the returns are good but they are

decreasing over the time, it may cause decrease in investment because the owners are invest

in company for good returns, if company fails to provides good returns then thre is no reasin

for investment in that company.

Net Profit

Total Equity = ( )*100

0.00%

5.00%

10.00%

15.00%

20.00%

2005 2006 2007 2008 2009

Return on Equity

Return on Equity

61

8-Sales to fixed Assets:

Calculations:

2005 2006 2007 2008 2009

1158168 1583682 1699745 2035165 2853257

452941 576263 710885 1508712 4077078

255.70% 274.82% 239.10% 134.89% 69.98%


Interpretation:

In fiscal years 2005,2006 and 2007 fixed assets had good part to generate sales but in 2008

and 2009 their parts decreases that shows the effectiveness of management is decreases in

these years.

Net Sales

Fixed assets - Work in Process = ( )*100

0.00%

50.00%

100.00%

150.00%

200.00%

250.00%

300.00%

2005 2006 2007 2008 2009

Sales to Fixed Assests

Sales to Fixed Assests

62

6.2.5-Investors Analysis

1-Earning Per Share:

=

Earning available for common stockholder

No. of shares outstanding

Calculations:

2005 2006 2007 2008 2009

76292 71624 82381 95986 47747

18973 22768 27321 32785 72128

4.02 3.15 3.02 2.93 0.66


Interpretation:

EPS of 2005 is very good and attractive. With passage of time EPS decreases and its

effectiveness is also decreases. EPS of 2009 is very low to attract new shareholders.

0.00

1.00

2.00

3.00

4.00

5.00

2005 2006 2007 2008 2009

Earning Per Share

Earning Per Share

63

2-Dividend Payout Ratio:

Calculations:

2005 2006 2007 2008 2009

0.75 0.75 0 0 0

4.02 3.15 3.02 2.93 0.66

0.19 0.24 0.00 0.00 0.00


Interpretation:

In fiscal year 2005 and 2006 only company had paid dividend to shareholders, because in

coming years company‟s financial become weaker and weaker and has unable to pay

dividend to shareholder, we can say in these years company‟s financial position is very weak.

Dividend Per Share

Earning Per Share =

0.00

0.05

0.10

0.15

0.20

0.25

2005 2006 2007 2008 2009

Dividend Payout Ratio

Dividend PayoutRatio

64

6.2.6-Dupont System of Analysis

“System used to discuss the firm‟s financial statements and assess its financial condition”.

Net Profit Margin * Total Asset turnover

Calculations:

2005 2006 2007 2008 2009

6.59% 4.52% 4.85% 4.72% 1.67%

1.14 1.31 1.24 0.82 0.50

5.75% 3.45% 3.90% 5.77% 3.34%


Interpretation:

Return on assets is good in 2005 and 2008 but lower in other fiscal years. So the above

figures so mixed figured, the thing that increases worry is that there is no consistency of

management.

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

2005 2006 2007 2008 2009

Dupont Analysis

Dupont Analysis

65

6.3 TREND ANALYSIS

6.3.1 Trend Balance Sheet analysis

2005 Fixed Base Method

SHABIR TILES AND CERAMICS LIMITED 2005 FIXED BASE BALANCE SHEET

AS ON JUNE, 30

2005 2006 2007 2008 2009

AMOUNT IN Rs. "000"


Property, Plant and Equipment 100.00% 124.96% 153.59% 321.03% 865.16%

Owned - - - - -

Leasehold Land - - - - -

Freehold Land 100.00% 100.00% 100.00% 100.00% 100.00%

Building on Freehold Land 100.00% 90.17% 90.27% 109.53% 180.10%

Building onLeasehold Land - - - - -

Plant and Machinery 100.00% 86.69% 114.63% 96.96% 1420.98%

Furniture and Fixture 100.00% 87.46% 66.37% 65.51% 443.44%

Office Equipment 100.00% 96.06% 108.63% 128.80% 270.49%

Computer and acceries 100.00% 89.09% 32.28% 41.43% 107.35%

Vehicles 100.00% 98.24% 143.82% 211.23% 363.12%

Leased - - - - -



Computer and acceries 100.00% 51.22% 0.35% 0.35% -

Vehicles 100.00% 106.87% 96.42% 100.55% 67.38%

Capital-Work-In-Progress - - - - -

Plant and Macxhinery - - - - -

Civil Work - - - - -

Advances to suppliers and Contractors - - - - -

Borrowing Cost - - - - -

Unallocated overheads - - - - -

- - - - -

Investment Property 100.00% 90.17% 80.33% 70.50% 60.66%

Freehold Land 100.00% 100.00% 100.00% 100.00% 100.00%

Building on freehold Land 100.00% 90.14% 80.27% 70.41% 60.55%

Long Term Loans and advances 100.00% 93.51% 51.99% 44.27% 199.07%

Loans 100.00% 379.55% 461.36% 681.82% 221.97%

advances 100.00% 73.65% 23.57% - 197.48%

Long term deposits 100.00% 125.30% 123.85% 97.34% 62.45%

Security deposits on leases 100.00% 132.11% 128.18% 83.34% 15.86%

Utiilities 100.00% 100.00% 100.00% 100.00% 96.57%

Rent - - - - -

Others 100.00% 103.72% 135.56% 302.12% 60.51%

Total Non-Current Assets 100.00% 124.77% 151.93% 311.12% 831.13%

66

CURRENT ASSETS

Stores ans spares 100.00% 123.72% 181.79% 299.65% 523.95%

stores 100.00% 129.79% 268.21% 391.54% 454.74%

Spares - - - - -

In hand 100.00% 103.74% 188.90% 327.00% 657.06%

In transit and bonded warehouse 100.00% 167.11% 45.84% 103.88% 273.91%

Stock-in-trade 100.00% 105.77% 114.17% 190.86% 446.20%

Raw and packing material - - - - -

In hand 100.00% 223.61% 284.97% 466.84% 1123.39%


Work-in-process 100.00% 80.17% 87.21% 82.49% 173.68%

Finished Goods - - - - -

In hand 100.00% 101.63% 76.14% 143.42% 383.40%

In transit 100.00% 1.46% 24.77% 32.23% 33.91%

- - - - -

Trade debts 100.00% 97.16% 97.76% 98.38% 178.41%

Loans, advancs, deposits, prepayments and other recievables100.00% 145.01% 183.07% 1337.89% 433.13%

Loans - - - - -

Current portion of long term loans 100.00% 84.72% 134.35% 435.57% 444.99%

Employees interest free 100.00% 107.57% 131.59% - -

Advances - - - - -

Employees 100.00% 35.40% 98.45% 69.25% 114.91%

Supplier and contractor 100.00% 170.97% 496.61% 519.98% 165.46%

Collector of custom 100.00% 71.33% 57.09% 83.22% -

Current maturity of advance to Sui Southern Gas co. Ltd - - - - -

Others 100.00% 132.41% 300.00% 1014.81% 220.37%

Deposits - - - - -

Lease 100.00% 1636.30% 255.48% 2664.38% 3168.84%

Container Charges - - - - -

Others 100.00% 76.38% 0.65% 0.49% -

Prepayments - - - - -

Rent 100.00% 117.87% 110.11% 341.91% 1006.38%

Income tax - - - - -

Others 100.00% 19.44% 27.78% 88.89% 31.94%

Other Recievables - - - - -

Esciose duty 100.00% 100.00% 100.00% 100.00% #VALUE!

Sales tax - - - - -

Insurance claims 100.00% 176.19% 8.93% 207.14% 35.71%

Net unrealised tax gainon revaluation of foreign exchange contracts - - - - -

Others 100.00% 90.22% 66.22% 491.56% 175.56%

Taxation - Net 100.00% 45.45% 286.94% - 1276.63%

Cash and Bank balance 100.00% 505.26% 415.48% 829.99% 907.51%

In Hand - - - - -

Local currency 100.00% 136.76% 15.54% 34.38% 31.08%

For eign currency 100.00% 30.93% 23.72% 3.60% 4.20%

At Bank - - - - -

Current Account 100.00% 645.61% 539.44% 1048.41% 843.81%

Deposit Account 100.00% 1562.94% 1851.62% 4043.28% 8083.58%

Total Current Assets 100.00% 114.35% 119.11% 182.94% 304.29%

TOTAL ASSETS 100.00% 119.47% 135.24% 245.94% 563.23%

67



Long Term Finance - Secured 100.00% 20.00% 0.00% 2345.91% 8207.36%

Term Finance 100.00% 55.56% - 1303.28% 4559.64%

Less: Current Portion 100.00% 100.00% - - -

Liabilities against assets subject to finance lease 100.00% 153.36% 189.88% 117.18% 49.83%

Not later than one year 100.00% 164.50% 207.70% 216.98% 145.75%

Later than one year but not later than five years 100.00% 154.52% 195.54% 121.98% 49.60%

Less: Financial charges allocable to future periods 100.00% 202.38% 264.38% 207.62% 85.20%

Less: Current portion 100.00% 149.41% 194.55% 211.94% 150.30%

Deferrd tax liability 100.00% 125.49% 175.17% 339.87% 278.51%

Accelerated tax depreciation 100.00% 140.48% 53.23% 47.25% 747.11%

Assets subject to finance lease 100.00% 151.87% -35.48% -81.88% -79.67%

Fair value of forward exchange Contract - - - - -

Provisions 100.00% 107.54% 127.70% 200.27% 273.39%

Tax loss - - - - -

Deferred Income 100.00% 73.91% 21.74% - -

Total Non-current Liabilities 100.00% 126.63% 155.84% 509.72% 1385.21%

Current Liabilities

Trade and other payable 100.00% 160.74% 180.69% 222.69% 622.86%

Trade craditors 100.00% 296.31% 343.42% 351.96% 1107.55%

Excise dury payable 100.00% 180.51% 211.98% 256.63% -

Security Deposits 100.00% 66.35% 51.11% 18.11% 21.29%

Accured expenses 100.00% 143.83% 163.05% 214.09% 674.22%

Worker's profit participation fund 100.00% 110.71% 111.78% 128.30% 65.18%

worker's welfare fund 100.00% 58.06% 98.58% 212.02% 186.37%

Tax deducted at source 100.00% 1254.39% 484.21% 480.70% 1078.95%

Unclaimed dividend 100.00% 106.34% 107.37% 108.73% 106.44%

current maturity of deferred income - - - - -

payable to provident fund - - - - -

advance from customers - - - - -

Infracture cess payable - - - - -

Others - - - - -

Mark-up accured 100.00% 160.47% 182.25% 1223.17% 9039.37%

Short term borrowing 100.00% 97.48% 102.61% 172.17% 360.93%

Term finances 100.00% 104.02% 127.93% 9.03% 107.71%

Running Financing 100.00% 88.75% 68.81% 389.96% 698.98%

Current portion of long term loan 100.00% 100.00% - - -

Current portion of Liabilities against assets subject to finance lease100.00% 149.41% 194.55% 211.94% 150.30%

Taxation net - - - - -

Sales tax payable 100.00% 193.45% 328.96% 237.68% 254.23%

Total Current Liabilities 100.00% 123.45% 132.66% 186.35% 419.79%

Total Liabilities 100.00% 124.64% 141.36% 307.68% 782.03%

68

Summarized Form:

Balance Sheet’s 2005 Fixed Base Analysis

2005 2006 2007 2008 2009


Total Current-Assets 100.00% 114.35% 119.11% 182.94% 304.29%

Total Assets 100.00% 119.47% 135.24% 245.94% 563.23%

Total non-current liabilities 100.00% 126.63% 155.84% 509.72% 1385.21%


Total Liabilities And Equity 100.00% 119.47% 135.24% 245.94% 562.94%

Interpretation:

Noncurrent assets with respect to base year are showing increasing trend. All assets showing

increasing trends from base year that mean firm performance is better in coming year or with

respect to base year.

Liabilities also show increase in trend with respect to base year, that vanish the effect of

increase in assets.

SHARE CAPITAL AND RESERVEAuthorized Capital 100.00% 300.00% 300.00% 600.00% 600.00%

Issued, subscribed and paid-up-capital 100.00% 120.00% 144.00% 172.80% 380.16%

Fully Paid-up in Cash 100.00% 100.00% 100.00% 100.00% 577.69%

Issued for consideration other than cash 100.00% 100.00% 100.00% 100.00% 100.00%

Issued as fully paid bonus shares 100.00% 134.62% 176.17% 226.03% 285.86%

Share Premium - - - - -

Reserves 100.00% 110.97% 122.97% 165.89% 146.84%

Total Equity 100.00% 112.89% 127.45% 167.36% 196.56%

TOTAL EQUITY AND LIABILITIES 100.00% 119.47% 135.24% 245.94% 562.94%

69

6.3.2 Trend Income Statement Analysis:

Fixed Base Method

SHABIR TILES AND CERAMICS LIMITED SUMMAIRZED INCOME STATEMENT

AS ON JUNE, 30

2005 2006 2007 2008 2009

AMOUNT IN Rs. "000"

Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%

Local 120.61% 118.79% 116.55% 114.94% 114.86%

Less: Sales Tax -15.45% -15.24% -14.87% -14.78% -16.61%

Trade discount,commission,etc -7.00% -4.71% -2.55% -1.34% -0.37%

Export 1.84% 1.16% 0.87% 1.18% 2.12%

Less: cost of Sales 73.04% 72.71% 74.06% 73.78% 72.49%

Local Products

Raw material and packing Material consumed: 23.34% 23.65% 26.28% 29.49% 36.86%

Opening stock 2.06% 1.77% 3.69% 3.92% 4.59%

Purchases 23.71% 25.84% 27.29% 31.99% 44.05%

Closing stock -2.42% -3.96% -4.70% -6.43% -11.77%

Manufacturing Expenses: 28.44% 28.55% 32.16% 36.32% 40.33%

Salaries, wagws and benefits 5.94% 5.27% 6.28% 6.67% 7.41%

Fuel and power 11.11% 11.66% 13.87% 15.64% 15.89%

stores and spares consumed 3.48% 2.76% 2.34% 3.38% 4.71%

Depreciation 3.41% 4.73% 4.93% 5.42% 6.52%

Reparis and maintenance 2.29% 2.04% 2.17% 2.51% 2.39%

tiles packing and other related charges 0.47% 0.54% 0.74% 0.81% 0.95%

Insurance 0.35% 0.30% 0.25% 0.31% 0.37%

Vehicle running expenses 0.34% 0.26% 0.31% 0.28% 0.42%

Travelling and conveyance 0.28% 0.33% 0.39% 0.17% 0.60%

Rawmaterial mixing charges 0.23% 0.24% 0.38% 0.46% 0.41%

Printing and stationary 0.13% 0.09% 0.12% 0.08% 0.21%

Operating lease rental 0.09% 0.04% 0.02% - -

Communication 0.05% 0.05% 0.07% 0.08% 0.10%

Rent, rate and taxes 0.05% 0.04% 0.03% 0.08% 0.06%

Research cost 0.04% 0.03% 0.04% 0.02% 0.03%

Cartage and handling charges 0.03% 0.04% 0.02% 0.06% 0.04%

Legal anfd professional charges 0.01% 0.01% 0.01% 0.05% 0.02%

Entertainment 0.01% 0.01% 0.02% 0.02% 0.04%

Others 0 0 0 0 0

Work-in-process -0.60% 0.29% -0.09% 0.05% -0.73%

Opening stock 1.38% 1.45% 1.08% 0.98% 0.66%

Closing stock -1.98% -1.16% -1.18% -0.93% -1.39%

Finished Goods 1.75% -0.40% 0.37% -0.50% -7.36%

Opening stock 2.70% 0.70% 1.02% 0.52% 0.73%

Closing stock -0.95% -1.09% -0.65% -1.02% -8.08%

70

Imported Products

Cost of Sales 20.10% 20.61% 15.35% 8.42% 3.40%

Opening stock 3.13% 3.71% 3.16% 2.10% 2.78%

Purchases 22.05% 20.29% 14.83% 10.23% 1.92%

Closing stock

Gross Profit 26.96% 27.29% 25.94% 26.22% 27.51%

Distribution cost: 12.89% 13.81% 12.92% 13.57% 13.46%

Salaries,, wages and benefits 0.01 0.01 0.01 0.01 0.01

Freight 6.90% 8.53% 7.59% 8.60% 8.41%

Sales promotion 1.08% 1.00% 1.18% 0.86% 1.09%

Advertisment and pubilicity 0.86% 0.52% 0.50% 0.56% 0.25%

teavelling and conveyance 0.76% 0.68% 0.59% 0.57% 0.54%

rent, rates and taxes 0.61% 0.60% 0.82% 0.80% 1.05%

communication 0.32% 0.21% 0.18% 0.15% 0.17%

Insurance 0.24% 0.26% 0.16% 0.08% 0.07%

Depreciation 0.23% 0.20% 0.21% 0.22% 0.19%


Repairs and maintenance 0.21% 0.16% 0.07% 0.06% 0.09%

Utilities 0.14% 0.13% 0.11% 0.06% 0.09%

Printing Stationary 0.14% 0.15% 0.10% 0.07% 0.05%

Entertainemnt 0.10% 0.09% 0.07% 0.05% 0.05%

Legal and professional charges 0.05% 0.02% 0.01% 0.05% -



Others 0.05% 0.08% 0.09% 0.14% 0.15%

Adminstrative Expenses 1.99% 1.89% 2.05% 1.82% 1.99%

Salaries,, wages and benefits 0.88% 0.85% 0.99% 0.88% 0.99%


printing and stationary 0.15% 0.15% 0.14% 0.14% 0.29%

Legal and professional charges 0.15% 0.21% 0.24% 0.19% 0.15%

Depreciation 0.00% 0.00% 0.00% 0.00% 0.00%

on operating fixed assets 0.14% 0.12% 0.13% 0.13% 0.12%

on investment property 0.00% 0.01% 0.01% 0.00% 0.00%

Vehicles running expenses 0.10% 0.10% 0.12% 0.09% 0.08%

Communication 0.07% 0.05% 0.05% 0.06% 0.06%

Utilities 0.06% 0.04% 0.04% 0.03% 0.01%

Auditor's remuneration 0.05% 0.03% 0.04% 0.05% 0.05%

Subscription 0.04% 0.06% 0.04% 0.03% 0.02%

Insurance 0.04% 0.04% 0.05% 0.03% 0.04%

Advertisment 0.36% 0.26% 0.19% - -

Operating and lease rentals 0.03% - - - -

Repairs and maintenance 0.03% 0.01% 0.00% - -

Rent, rates and Txes 0.01% 0.01% - - -

Entertainment 0.00% 0.01% 0.02% - -

others 0.04% 0.04% 0.02% 0.07% 0.09%

Total Operating Expenses: 14.89% 15.70% 14.97% 15.39% 15.45%

Operating Profit 12.08% 11.59% 10.97% 10.84% 12.06%

71

Calculations:

Income Statement’s 2005 Fixed Base Analysis

2005 2006 2007 2008 2009

Sales 100.00% 136.74% 146.76% 175.72% 246.36%

CGS 100.00% 136.12% 148.82% 177.51% 244.53%

GP 100.00% 138.42% 141.19% 170.89% 251.32%

Total Expenses 100.00% 144.21% 147.62% 181.61% 255.61%

Profit after taxation 100.00% 78.11% 74.63% 72.64% 17.66%

Interpretation:

Sales shows increasing trend from the base year. CGS, Goss profit and expenses also show

increase in trends. Profit after taxation shows decrease from the base year, and continuously

decreases. In 2009 its profit is only 17.66% with respect to the base year.

Add: Other operating Income: 0.47% 1.30% 0.76% 0.60% 0.09%

Rental income from investment property 0.04% 0.03% 0.02% 0.02% 0.01%

Profit on bank deposits 0.01% 0.02% 0.01% 0.01% 0.04%

Liabilities written back 0.03% 0.00% 0.00% - -

Gain on sale of fixed asset - 0 0 0 0

Exchange Gain - - 0.000257 - -

Others 0.00% 0.01% 0.03% 0.02% 0.00%

Less: Finance cost 1.69% 3.13% 3.05% 3.05% 9.35%

Mark up on:

long term finance 0.26% 0.12% 0.04% #VALUE! 6.97%

Finance Lease 0.81% 1.43% 1.51% 1.87% 1.05%


worker's profit participation fund 0.00% 0.00% 0.00% 0.00% 0.00%


Bank charges, commission 0.03% 0.36% - - -

Less: Other charges 0.74% 0.65% 0.57% 0.73% 0.22%



Loss on disposal of fixed assets 0.08% - 0.04% 0.02% 0.02%

Donations 0.04% 0.14% - 0.18% 0.00%

Profit before Taxartion 9.72% 7.96% 7.45% 7.11% 2.58%

Less: Taxation (@ 35%) 3.14% 3.43% 2.60% 2.40% 0.90%

Current 3.71% 2.83% 1.50% 1.50% 0.18%

Deffered -0.58% 0.61% 1.10% 0.90% 0.73%

Profit After Tax 6.59% 4.52% 4.85% 4.72% 1.67%

72

6.4 VERTICAL ANALYSIS

6.4.1 Vertical Balance Sheet Analysis:

SHABIR TILES AND CERAMICS LIMITED VERTICAL ANALYSIS BALANCE SHEET

AS ON JUNE, 30

2005 2006 2007 2008 2009

AMOUNT IN Rs. "000"


Property, Plant and Equipment 47.03% 49.19% 53.42% 61.39% 72.24%

Owned

Leasehold Land - - - 10.62% 4.64%

Freehold Land 0.05% 0.05% 0.04% 0.02% 0.01%


Building onLeasehold Land 0.00% 0.00% 0.00% 0.00% 11.08%


Furniture and Fixture 0.52% 0.38% 0.25% 0.14% 0.41%

Office Equipment 0.25% 0.20% 0.20% 0.13% 0.12%

Computer and acceries 0.22% 0.16% 0.05% 0.04% 0.04%

Vehicles 0.34% 0.28% 0.37% 0.29% 0.22%

Leased



Computer and acceries 0.03% 0.01% 0.00% 0.00% -

Vehicles 1.78% 1.60% 1.27% 0.73% 0.21%

Capital-Work-In-Progress

Plant and Macxhinery - - 0.33% 6.20% -

Civil Work - - - 11.54% -

Advances to suppliers and Contractors - - - 3.22% -

Borrowing Cost - - - 1.11% -

Unallocated overheads - - - 1.49% -

Investment Property 0.10% 0.08% 0.06% 0.03% 0.01%

Freehold Land 0.00% 0.00% 0.00% 0.00% 0.00%

Building on freehold Land 0.10% 0.08% 0.06% 0.03% 0.01%

Long Term Loans and advances 0.20% 0.16% 0.08% 0.04% 0.07%

Loans 0.01% 0.04% 0.04% 0.04% 0.01%

advances 0.19% 0.12% 0.03% - 0.07%

Long term deposits 1.82% 1.90% 1.66% 0.72% 0.20%

Security deposits on leases 1.42% 1.57% 1.35% 0.48% 0.04%

Utiilities 0.30% 0.25% 0.22% 0.12% 0.05%

Rent - - - - 0.10%

Others 0.09% 0.08% 0.09% 0.11% 0.01%


73

CURRENT ASSETS

Stores ans spares 2.13% 2.20% 2.86% 2.59% 1.98%

stores 0.59% 0.64% 1.16% 0.93% 0.47%

Spares

In hand 1.11% 0.97% 1.55% 1.48% 1.30%


Stock-in-trade 14.32% 12.68% 12.09% 11.11% 11.35%

Raw and packing material

In hand 2.77% 5.18% 5.84% 5.26% 5.53%


Work-in-process 2.26% 1.52% 1.46% 0.76% 0.70%

Finished Goods

In hand 6.90% 5.87% 3.89% 4.02% 4.70%

In transit 0.88% 0.01% 0.16% 0.12% 0.05%

Trade debts 31.32% 25.47% 22.64% 12.53% 9.92%

Loans, advancs, deposits, prepayments and other recievables1.13% 1.37% 1.53% 6.15% 0.87%

Loans

Current portion of long term loans 0.08% 0.06% 0.08% 0.14% 0.06%

Employees interest free 0.11% 0.10% 0.11% - -

Advances

Employees 0.03% 0.01% 0.02% 0.01% 0.01%

Supplier and contractor 0.20% 0.29% 0.75% 0.43% 0.06%

Collector of custom 0.21% 0.12% 0.09% 0.07% -

Current maturity of advance to Sui Southern Gas co. Ltd - - 0.04% 0.02% 0.03%

Others 0.01% 0.01% 0.02% 0.04% 0.00%

Deposits

Lease 0.03% 0.40% 0.05% 0.31% 0.16%

Container Charges - - 0.09% 0.02% 0.03%

Others 0.06% 0.04% 0.00% 0.00% -

Prepayments

Rent 0.19% 0.18% 0.15% 0.26% 0.33%

Income tax - - - 0.14% 0.00%

Others 0.04% 0.01% 0.01% 0.01% 0.00%

Other Recievables

Esciose duty 0.13% 0.11% 0.10% 0.05% -

Sales tax - - - 0.49% 0.17%

Insurance claims 0.02% 0.02% 0.00% 0.01% 0.00%

Net unrealised tax gainon revaluation of foreign exchange contracts - - - 4.09% -

Others 0.02% 0.02% 0.01% 0.04% 0.01%

Taxation - Net 0.34% 0.13% 0.71% - 0.76%

Cash and Bank balance 1.61% 6.81% 4.95% 5.43% 2.59%

In Hand

Local currency 0.55% 0.63% 0.06% 0.08% 0.03%

For eign currency 0.03% 0.01% 0.01% 0.00% 0.00%

At Bank

Current Account 0.95% 5.14% 3.79% 4.05% 1.42%

Deposit Account 0.08% 1.04% 1.09% 1.31% 1.14%

Total Current Assets 50.85% 48.67% 44.78% 37.82% 27.47%

TOTAL ASSETS 100.00% 100.00% 100.00% 100.00% 100.00%

74



Long Term Finance - Secured 3.34% 0.56% 0.00% 31.82% 48.63%

Term Finance 6.00% 2.79% - 31.82% 48.63%

Less: Current Portion -2.67% -2.23% - - -

Liabilities against assets subject to finance lease 13.78% 17.69% 19.35% 6.57% 1.22%

Not later than one year 7.39% 10.17% 11.34% 6.52% 1.91%

Later than one year but not later than five years 15.05% 19.47% 21.76% 7.46% 1.33%

Less: Financial charges allocable to future periods -2.53% -4.28% -4.94% -2.13% -0.38%

Less: Current portion -6.13% -7.66% -8.82% -5.28% -1.64%

Deferrd tax liability 3.74% 3.92% 4.84% 5.16% 1.85%

Accelerated tax depreciation 9.07% 10.67% 3.57% 1.74% 12.04%

Assets subject to finance lease -5.23% -6.64% 1.37% 1.74% 0.74%

Fair value of forward exchange Contract - - - 1.77% -

Provisions -0.11% -0.10% -0.10% -0.09% -0.05%

Tax loss - - - - -10.88%

Deferred Income 0.16% 0.10% 0.03% - -

Total Non-current Liabilities 21.01% 22.27% 24.21% 43.55% 51.70%

Current Liabilities

Trade and other payable 8.40% 11.30% 11.22% 7.60% 9.29%

Trade craditors 1.78% 4.41% 4.52% 2.55% 3.50%

Excise dury payable 0.47% 0.70% 0.73% 0.49% -

Security Deposits 1.29% 0.72% 0.49% 0.10% 0.05%

Accured expenses 3.72% 4.48% 4.49% 3.24% 4.46%

Worker's profit participation fund 0.60% 0.56% 0.50% 0.31% 0.07%


Tax deducted at source 0.01% 0.06% 0.02% 0.01% 0.01%

Unclaimed dividend 0.28% 0.25% 0.22% 0.12% 0.05%

current maturity of deferred income - - 0.03% 0.01% -

payable to provident fund - - 0.04% 0.03% 0.02%

advance from customers - - - - 0.53%

Infracture cess payable - - - - 0.55%

Others - - - - 0.00%

Mark-up accured 0.25% 0.33% 0.33% 1.23% 3.99%


Term finances 9.81% 8.54% 9.28% 0.36% 1.88%

Running Financing 7.35% 5.46% 3.74% 11.65% 9.13%

Current portion of long term loan 2.67% 2.23% - - -

Current portion of Liabilities against assets subject to finance lease6.13% 7.66% 8.82% 5.28% 1.64%

Taxation net - - - 0.01% -

Sales tax payable 0.38% 0.62% 0.93% 0.37% 0.17%


Total Liabilities 56.00% 58.42% 58.53% 70.06% 77.79%

75

Calculation:

Balance Sheet’s Vertical Base Analysis

2005 2006 2007 2008 2009


Total Current-Assets 50.85% 48.67% 44.78% 37.82% 27.47%

Total non-current liabilities 21.01% 22.27% 24.21% 43.55% 51.70%


Interpretation:

Vertical analysis shows increases trend from 2005 to 2009. Current asset shows a slow

decrease in trend from 2005 to 2007 and fast decrease in trend in last two years.

Noncurrent liabilities show slow increase in first three years and fast increase in the last two

years. Current liabilities shows mix trend in all last five years, some time increases and some

time decreases. There is uncertain situation.

SHARE CAPITAL AND RESERVEAuthorized Capital 9.88% 24.82% 21.93% 24.11% 10.53%

Issued, subscribed and paid-up-capital 9.38% 9.42% 9.98% 6.59% 6.33%

Fully Paid-up in Cash 3.39% 2.84% 2.51% 1.38% 3.48%

Issued for consideration other than cash 0.57% 0.48% 0.42% 0.23% 0.10%

Issued as fully paid bonus shares 5.42% 6.10% 7.06% 4.98% 2.75%

Share Premium - - - - 6.84%

Reserves 34.63% 32.16% 31.48% 23.36% 9.03%

Total Equity 44.00% 41.58% 41.47% 29.94% 15.36%

TOTAL EQUITY AND LIABILITIES 100.00% 100.00% 100.00% 100.00% 100.00%

76

6.4.2 Vertical Income Statement Analysis:

SHABIR TILES AND CERAMICS LIMITED VERTICAL ANALYSIS INCOME STATEMENT

AS ON JUNE, 30

2005 2006 2007 2008 2009

AMOUNT IN Rs. "000"

Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%

Local 120.61% 118.79% 116.55% 114.94% 114.86%

Less: Sales Tax -15.45% -15.24% -14.87% -14.78% -16.61%

Trade discount,commission,etc -7.00% -4.71% -2.55% -1.34% -0.37%

Export 1.84% 1.16% 0.87% 1.18% 2.12%

Less: cost of Sales 73.04% 72.71% 74.06% 73.78% 72.49%

Local Products

Raw material and packing Material consumed: 23.34% 23.65% 26.28% 29.49% 36.86%

Opening stock 2.06% 1.77% 3.69% 3.92% 4.59%

Purchases 23.71% 25.84% 27.29% 31.99% 44.05%

Closing stock -2.42% -3.96% -4.70% -6.43% -11.77%

Manufacturing Expenses: 28.44% 28.55% 32.16% 36.32% 40.33%

Salaries, wagws and benefits 5.94% 5.27% 6.28% 6.67% 7.41%

Fuel and power 11.11% 11.66% 13.87% 15.64% 15.89%

stores and spares consumed 3.48% 2.76% 2.34% 3.38% 4.71%

Depreciation 3.41% 4.73% 4.93% 5.42% 6.52%

Reparis and maintenance 2.29% 2.04% 2.17% 2.51% 2.39%

tiles packing and other related charges 0.47% 0.54% 0.74% 0.81% 0.95%

Insurance 0.35% 0.30% 0.25% 0.31% 0.37%



Rawmaterial mixing charges 0.23% 0.24% 0.38% 0.46% 0.41%

Printing and stationary 0.13% 0.09% 0.12% 0.08% 0.21%

Operating lease rental 0.09% 0.04% 0.02% - -

Communication 0.05% 0.05% 0.07% 0.08% 0.10%

Rent, rate and taxes 0.05% 0.04% 0.03% 0.08% 0.06%

Research cost 0.04% 0.03% 0.04% 0.02% 0.03%

Cartage and handling charges 0.03% 0.04% 0.02% 0.06% 0.04%

Legal anfd professional charges 0.01% 0.01% 0.01% 0.05% 0.02%

Entertainment 0.01% 0.01% 0.02% 0.02% 0.04%

Others 0 0 0 0 0

Work-in-process -0.60% 0.29% -0.09% 0.05% -0.73%

Opening stock 1.38% 1.45% 1.08% 0.98% 0.66%

Closing stock -1.98% -1.16% -1.18% -0.93% -1.39%

Finished Goods 1.75% -0.40% 0.37% -0.50% -7.36%

Opening stock 2.70% 0.70% 1.02% 0.52% 0.73%

Closing stock -0.95% -1.09% -0.65% -1.02% -8.08%

Imported Products

Cost of Sales 20.10% 20.61% 15.35% 8.42% 3.40%

Opening stock 3.13% 3.71% 3.16% 2.10% 2.78%

Purchases 22.05% 20.29% 14.83% 10.23% 1.92%

Closing stock

Gross Profit 26.96% 27.29% 25.94% 26.22% 27.51%

77

Distribution cost: 12.89% 13.81% 12.92% 13.57% 13.46%

Salaries,, wages and benefits 0.01 0.01 0.01 0.01 0.01

Freight 6.90% 8.53% 7.59% 8.60% 8.41%

Sales promotion 1.08% 1.00% 1.18% 0.86% 1.09%

Advertisment and pubilicity 0.86% 0.52% 0.50% 0.56% 0.25%

teavelling and conveyance 0.76% 0.68% 0.59% 0.57% 0.54%

rent, rates and taxes 0.61% 0.60% 0.82% 0.80% 1.05%

communication 0.32% 0.21% 0.18% 0.15% 0.17%

Insurance 0.24% 0.26% 0.16% 0.08% 0.07%

Depreciation 0.23% 0.20% 0.21% 0.22% 0.19%


Repairs and maintenance 0.21% 0.16% 0.07% 0.06% 0.09%

Utilities 0.14% 0.13% 0.11% 0.06% 0.09%

Printing Stationary 0.14% 0.15% 0.10% 0.07% 0.05%

Entertainemnt 0.10% 0.09% 0.07% 0.05% 0.05%

Legal and professional charges 0.05% 0.02% 0.01% 0.05% -



Others 0.05% 0.08% 0.09% 0.14% 0.15%

Adminstrative Expenses 1.99% 1.89% 2.05% 1.82% 1.99%

Salaries,, wages and benefits 0.88% 0.85% 0.99% 0.88% 0.99%


printing and stationary 0.15% 0.15% 0.14% 0.14% 0.29%

Legal and professional charges 0.15% 0.21% 0.24% 0.19% 0.15%

Depreciation 0.00% 0.00% 0.00% 0.00% 0.00%

on operating fixed assets 0.14% 0.12% 0.13% 0.13% 0.12%

on investment property 0.00% 0.01% 0.01% 0.00% 0.00%

Vehicles running expenses 0.10% 0.10% 0.12% 0.09% 0.08%

Communication 0.07% 0.05% 0.05% 0.06% 0.06%

Utilities 0.06% 0.04% 0.04% 0.03% 0.01%

Auditor's remuneration 0.05% 0.03% 0.04% 0.05% 0.05%

Subscription 0.04% 0.06% 0.04% 0.03% 0.02%

Insurance 0.04% 0.04% 0.05% 0.03% 0.04%

Advertisment 0.36% 0.26% 0.19% - -

Operating and lease rentals 0.03% - - - -

Repairs and maintenance 0.03% 0.01% 0.00% - -

Rent, rates and Txes 0.01% 0.01% - - -

Entertainment 0.00% 0.01% 0.02% - -

others 0.04% 0.04% 0.02% 0.07% 0.09%

Total Operating Expenses: 14.89% 15.70% 14.97% 15.39% 15.45%

Operating Profit 12.08% 11.59% 10.97% 10.84% 12.06%

78

Calculations:

Interpretation:

CGS shows mix trend in last five years. Gross profit increases in first two years then in 2007

decreases and in last two tears again increases. Expenses shows trend similar to gross profit.

Profit after taxation decreases in first two years, in 2007 increases and in last two years

marginally decreases.

Income Statement’s Vertical Base Analysis

2005 2006 2007 2008 2009

Sales 100.00% 100.00% 100.00% 100.00% 100.00%

CGS 73.04% 72.71% 74.06% 73.78% 72.49%

GP 26.96% 27.29% 25.94% 26.22% 27.51%

Total Expenses 14.89% 15.70% 14.97% 15.39% 15.45%

Profit after taxation 6.59% 4.52% 4.85% 4.72% 1.67%

Add: Other operating Income: 0.47% 1.30% 0.76% 0.60% 0.09%

Rental income from investment property 0.04% 0.03% 0.02% 0.02% 0.01%

Profit on bank deposits 0.01% 0.02% 0.01% 0.01% 0.04%

Liabilities written back 0.03% 0.00% 0.00% - -

Gain on sale of fixed asset - 0 0 0 0

Exchange Gain - - 0.000257 - -

Others 0.00% 0.01% 0.03% 0.02% 0.00%

Less: Finance cost 1.69% 3.13% 3.05% 3.05% 9.35%

Mark up on:

long term finance 0.26% 0.12% 0.04% #VALUE! 6.97%

Finance Lease 0.81% 1.43% 1.51% 1.87% 1.05%




Bank charges, commission 0.03% 0.36% - - -

Less: Other charges 0.74% 0.65% 0.57% 0.73% 0.22%



Loss on disposal of fixed assets 0.08% - 0.04% 0.02% 0.02%

Donations 0.04% 0.14% - 0.18% 0.00%

Profit before Taxartion 9.72% 7.96% 7.45% 7.11% 2.58%

Less: Taxation (@ 35%) 3.14% 3.43% 2.60% 2.40% 0.90%

Current 3.71% 2.83% 1.50% 1.50% 0.18%

Deffered -0.58% 0.61% 1.10% 0.90% 0.73%

Profit After Tax 6.59% 4.52% 4.85% 4.72% 1.67%

79

Conclusion

80

CONCLUSION

The over all performance of the company in last few years is good. It is generating profits.

Company has also maintained its suitable liquidity and its debt paying ability.

If we look by considering lenders‟ perspective, they have good opportunity to get benefit by

financing short term financial needs because the company has very good short term debt

paying ability, the also have good long term debt paying ability but not so good as short term.

If we look from investor point of view, it not good for investors to invest in this company in

current situation because company is not providing appropriate returns on investments, even

in last three years no dividend has been paid.

81

.

Future

Recommendations

82

FUTURE RECOMMENDATIONS

Facilitate supply chain collaboration

Advertising and promotional activities of Stile may create a more demand of the

innovative product

Upgrade plant with latest technology

Large export potential in Middle East, Africa and Central Asia get benefit from this.

Have a close look on their competitors and having flexible strategies.

Don‟t compromise with quality

Launch new products in shape of introducing new designs and sizes of tiles.

In Pakistan people have low purchasing power so maintain the cost and price

according to that fact

83

References

84

Annual Raports:

1. Annual report of Shabbir Tiles and Ceramics limited 2005





Internet:

1. www.stile.com.pk

2. www.kse.com.pk

3. www.sbp.org.pk

4. www.slideshare.net

5. www.scribd.com

Books:

1. Principles of Managerial Finance (11th

Edition)

By: Lawrence J. Gitman

2. Fundamentals of Financial Management (12th

Edition)

By: James C. Van Horne &

Jhone M. Wachowicz, JR

http://www.stile.com.pk/

http://www.kse.com.pk/

http://www.sbp.org.pk/

http://www.slideshare.net/

http://www.scribd.com/

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