sameen hussain

8/2/2019 Sameen Hussain

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ANALYSIS OF FOOD SECTOR IN PAKISTAN

Submitted To:

Mam Humaira Shahid

Submitted By:

Aiman Ismail M08BBA037

Sameen Hussain M08BBA061

Hamna Ejaz M08BBA067

Iqra Shaqat M08BBA060

Zoobia Arshad M07BBA015


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ACKNOWLEDGMENT

First of all we offer our humblest sincerest thanks to Almighty Allah, the Gracious,

Compassionate, Beneficent and the Merciful Who bestowed us the ability to perceive and

pursue higher ideas of life. It is one of infinite blessing of God that bestowed us with the

potential and ability to complete the present project in time. We humble pay our respect and

praise the Holy Prophet (P B U H) who is the originator, source of knowledge and greatest social

reformer and put lesson for all humanity, those spiritual, ethical and moral guidelines

enlightened our soul.

It is a matter of great honor and pleasure for us to express our ineffable gratitude and

profound indebtedness to our honorable teacher Mam Humaira Shahid for her kind

supervision, valuable suggestions, humble guidance, and untiring help and in exhaustive energy

to steer forth us.


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TABLE OF CONTENTS

Rafhanmaize Co Limited 1-13

National Foods Limited 14-24

Murree Brewery Company Limited 25-33

Shezan International Limited 34-43

Mitchells Fruits Farm Limited 44-51

STATUS OF FOOD INDUSTRY IN PAKISTAN 52


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Sameen Hussain

M08BBA061


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RAFHAN MAIZE

Rafhan Maize is the pioneer in producing diversified type of sweeteners for multipleapplications in more than 50 types of industries. The Company processes thousands of tons of

corn every year to produce high quality food ingredients and industrial products.

VISION

To be the premier provider of refined agriculturally based products and ingredients in the

region.

MISSION STATEMENT

To grow business consistently through positive relationship with customers to attain full

customer satisfaction and to bring continual improvement by adopting only those business

practices which add value to our customers, employees and shareholders.

CORE VALUES

Safety

Integrity

ExcellenceRrespect

Quality


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OPERATING RESULTS

2010 2009

Net sales Rs.(million) 13913 11428

Income tax after tax Rs.(million) 1838 1297

Earnings per share Rupees 198.99 140.43

Company has made a steady progress in its financial performance and managed to improve it

net sales by 22% as compared to last year. The profit after tax improved to Rs. 1838 million

against Rs. 1297 million of last year. Company retained its strong position as the supplier of

choice by focusing on good management practices, commitments to quality and bettermarketing mix.

BUSINESS REVIEW

Company has engaged in long journey during the last several years to achieve excellence and

consistent growth in its business. A major key to success has been continuous development of

innovative ingredients to meet customers requirements while reducing their cost. Product

portfolio spans three major categories

Industrial

Food & animal nutritionHealth ingredients

INVESTMENT

Company has always followed its policy to invest into new technologies and product innovation

which is the core strength of its business. Company is well cognizant of market needs and

changing business dynamics to continuously enhance its competencies to meet customers

needs with higher product standards.

Management is determined to optimize its manufacturing capabilities and to maintain

companys position as one of the leading ingredient supplier. Over the years, the plant capacityhas gradually been increased and company now operates from two locations with sufficient

manufacturing capacity to meet market demand.

HORIZONTAL ANALYSIS OF PROFIT AND LOSS ACCOUNT


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2010

%

Sales Net 21.74

Cost of sales 18.04

Gross profit 35.41

Distribution cost 12.73

Administrative expenses 12.56

Operating profit 38.66

Other operating income 4.85

Finance cost 35.30

Other operating expenses 38.02

Profit before taxation 39.17

Taxation 34.59

Profit after taxation 41.69

Earnings per share Rs 41.70

COMMENTSSALES NET

The sales have increased 21.74% due to continuous development of innovative

ingredients.


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Both domestic and internationally demand of Cos products have increased as compared

to previous year.

An increase in sales is also due to lower trade commission.

This positive rate of change in sales indicates Cos effectiveness in managing unit sales

and market share.

COST OF SALES

There is 18.04% increase in cost of sales as compared to previous year mainly due to

increase in sales.

More raw materials are used to bring sales at higher level.

Co is continuously focus on product quality and brand loyalty, thats why cost has

increased due to purchase of superior raw material.

GROSS PROFIT

Gross profit showed an increase of 35.41% which is mainly due to higher sales.

Co has lowered its rent, rates, taxes, repair & maintenance cost.

There is proportionate change in the ratio of sales to cost of sales. Thats why gross

profit has shown an upward trend.

DISTRIBUTION COST

Distribution cost showed an increase of 12.73% which is mainly due to increase

advertisement and sale promotion.

Co is spending more money in market research & development which will enable the Co

to earn higher profit in future.

Co has shown upward trend in production and sales thats why salaries, wages and

other benefits of employees increased.

ADMINISTRATIVE EXPENSES

Administrative expenses also increased like distribution cost because the Co has

increased production so more labor has been employed and their benefits is increased

every year.

Co is investing considerable time and money on human resource development in the

fields of technology and business administration.


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Increase in administrative expenses is also due to higher electricity charges.

To cater the market, co is spending more money in IT, networking & data

communication.

OTHER OPERATING INCOME

There is an upward trend in other operating income mainly due to

Markup on staff loans and profit on bank deposits

Profit on sale of scrap

Profit on sale of pesticides and seeds

This shows better utilization of funds.

FINANCE COST

Finance cost has decreased 35.30% due to less mark up on short term running finance.Cost has decreased is also due to lower bank charges.

OTHER OPERATING EXPENSES

Other operating expenses has increased % due to

Workers profit participation fund

Workers welfare fund

PROFIT BEFORE TAX

There is an increasing trend in profit before tax because of an increase in operating

profit.

Lower finance cost also contributes in achieving higher profit after tax.

TAXATION

Tax has increased 34.59% mainly due to

Higher purchase of raw material

Increased sale volume

PROFIT AFTER TAX

There is higher increase of 41.70% in profit after tax due to higher profit before tax as

compared to tax.


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Profit increased due to targeted advertising, promotion, innovation & effective supply

chain strategies.

EARNINGS PER SHARE

EPS has increased from previous year.Its a good sign because market value of share is increased.

HORIZONTAL ANALYSIS OF BALANCE SHEET

2010

%

NON CURRENT ASSETS

Property, plant and equipment 23.15

Intangible assets -

Capital work in progress 1.44

CURRENT ASSETS

Stores and spares 11.70

Stock in trade 168.04

Trade debts 19.51

Loans and advances 9.55

Trade deposits and short term prepayments 14.82

Other receivables 90.99

Cash and bank balances 94.09

CURRENT LIABILITIES


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Trade and other payables 50.98

Markup accrued on shortterm running finance 3.52

Short term running finance secured -

Provision for taxation 13.61

NONCURRENT LIABILITIES

Deferred taxation 35.12

Share Capital And Reserves

Share capital 0

Reserves 24.16

COMMENTS

PROPERTY, PLANT & EQUIPMENT

Property, plant & equipment showed an increase of % due to Cos more investment for

bright future.Cos volume of production has increased due to high demand of quality products.

INTANGIBLE ASSETS

In 2009, Co did not have intangible assets.


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SAP, software represents financial accounting software which has been acquired during

the year.

STORES AND SPARES

Stores and spares showed a growth of 11.70% due to increase plant & machinery.Stores and spares enable the Cos production on continuous basis.

STOCK IN TRADE

There is 168.04% growth in stock in trade as compared to last year.

The increase is mainly due to increase in

Raw material corn & cobs

Work in process

Finished goods

This positive change is mainly due to increase in raw material. It will save the Co against

future price fluctuations in corn & cobs.

TRADE DEBTS

Trade debts have increased 19.51% due to increase unsecured considered goods to

customers.

It shows Cos trust in their customers.

LOANS AND ADVANCES

Advances increased in 2010 due to increase advances to employees and suppliers of

goods & services.

Increasing trend in current year is also due to loans to employees.

No advances were given to executives and directors of the Co during the year.

TRADE DEPOSITS & SHORT TERM PREPAYMENTS

There is an increasing trend of 14.82% in year 2010 mainly due to increase in securitydeposits and L/C margin.

RECEIVABLES

Receivables have increased 90.99% due to increase in

Receivables considered goods


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Receivables from related parties

CASH AND BANK BALANCES

Cash and bank balance decreased 94.09% due to decrease in

Cash at bank

On current A/C

On PLS A/C

Cash in hand

Trade and other payables

There is an increase of 50.98% due to increase in

Advances from customers

Creditors

Security deposits from dealers & contractors


Employees provident fund

Sales tax payable

Special excise duty payable

Unclaimed dividend

RATIO ANALYSIS

LIQUIDITY RATIOS

Current ratio 2.05 times

Quick ratio 0.30 times

ACTIVITY RATIOS

Inventory turnover ratio 3.09 times

DEBT RATIO

PROFITABILITY RATIOS

Operating profit margin 21.23%


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Net profit margin 13.21%


Return on assets 25.32%

CURRENT RATIO

Cos current ratio for the year 2010 is 2.05:1.

It means Co has improved its liquidity.

QUICK RATIO

Cos quick ratio is 0.30:1; it means Cos current assets are 0.30. i.e., if banks give loan tothat Co it will receive 0.30 current assets in return of its loan.

INVENTORY TURNOVER RATIO

Cos inventory turnover ratio is 3 for current year that shows Cos improved efficiency.

OPERATING PROFIT MARGIN

There is an increase in this ratio mainly due to

Increase in gross profit

Higher sales

Increase in operating profit

NET PROFIT MARGIN

An increase in this ration is due to

Increase in pretax profit

Higher sales

Higher net profit

Earnings per share

Return on assets

EARNINGS PER SHARE

EPS has increased from previous year which in Rs198.99 now.


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Its a good sign because market value of share is increased.

BUSINESS RISKS, CHALANGES AND FUTURE PROSPECTS

The economic outlook for 2011 remains problematic. Some of the major challenges are

Low growth

High inflation

Rising unemployment

Continued fiscal indisciplineSurging food and energy prices

Expensive credit to private sector

Low foreign investment

In view of the prevalent market circumstances, the performance of consuming segments may

remain depressed which may impact overall demand for Cos products especially pressure on

the cost of maize, utilities and other overhead will continue, however, it may be difficult to

include the total impact of cost increases in the price of Cos products.

The management of the company is fully aware of the challenges y adopting market drivenstrategies, optimizing manufacturing capabilities, striving for continued differentiation of Cos

products and services and continuing our operational excellence and prudent use of resources.

It seems that Cos journey on the track of progress will continue and Co will continue to create

value for all stake holders.


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AIMAN ISMAIL

M08BBA037


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NATIONAL FOODS LIMITED

National foods limited (NFL), founded in 1970, and are Pakistans leading multi-category Food

Company today with over 250 different products in 12 categories. NFL holds ISO 9001, ISO22000, and HACCP certifications along with SAP business technology to drive the companys

strong commitment to quality and management excellence.

NFL is an international brand sold in over 35 countries and it aims to be a Rs. 50 billion company

under its Vision 20/20 plan. NFL is dedicated to improving the well-being of society through

continuous development of innovative food products and through a wide-ranging corporate

social responsibility program.

VISION & MISSION STATEMENTOur vision is to be a Rs. 50 billion food company by the year 2020 in the convenience food

segment by launching products and services in the domestic and international markets that

enhance lifestyle and create value for our customers through management excellence at all

levels.

CORE VALUES

Passion

Ethics

LeadershipCustomer

focus

Teamwork


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0VER VIEW OF COMPANYS PERFORMANCE

National foods limited have scaled new heights of success and our strong top line growth of

22.96%; with a handsome market share gain; is a testimony that its consolidation phase has

borne fruitful results and it has emerged as clear winners in market place.

Companys Cost Control & Cost management program has been a great succes s. It has paid

the company attractive dividends and considerable savings in these high inflationary times. The

management is very focused in driving out unnecessary costs. During the year many cost saving

projects were identified and successfully implemented. The newly cost trackers enable the

employees in managing costs efficiently. Company has focused significantly in modernizing itsbusiness and building world class processes, which will help it to serve its customers &

consumers better in future. Sales& Operational Planning enables the company to plan and

make goods more efficiently so that it is able to timely service its customers needs. The

integration of key functions of Sales, Marketing, Supply Chain and Finance under one platform

has helped the company in deriving synergies.

The speed at which the company takes decisions and monitors its performance has increased

manifold. It has turned around its exports business and believes that there is great potential for

NFL to tap in international markets. It has launched several new brands in these markets to

meet consumer needs and is up to date with its customer requirements. It has exciting plans for

next year to improve its servicing capabilities. Company believes that its customers are its asset

and therefore it continues to invest and develop this talent. Duo to changing needs, it has re-

organized and modernized the organizational structure, adding new positions to the mix.

Company has a strong, competitive team with good fusion of fresh talent and its own people,

giving it a leading edge in the market place. JCR-VIS has rated National Foods credit quality

unchanged for the fifth year in arrow, and they maintained its short term rating as A2 and

long term rating as A+.


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BRANDS

It has following brands in market:

National Tomato Ketchup

National Iodized Salt National Pickles

National Basmati Rice

National Jams

National Fruitily Instant Drink Mix

National Jellies

National Desserts

National Spices

BUSINESS RISKS FUTURE OUTLOOK

The effect of global recession and the tough domestic economy has put considerable pressure

on all walks of life. While some of these issues are short term, the lingering effects on

consumers and customers represent a fundamental shift in value expectations, which will

present challenges and opportunities to the foods industry. Elevated consumer and customer

value expectations will be a catalyst for the industry to become more efficient in its operations.

It has an enviable position of being market leaders, with leading brands, unparallel

manufacturing and distribution systems and an outstanding team of employees. With these

assets and its commitment to build a stronger company. It has well-positioned for future long

term growth.

2012 will continue to be a challenging year, but company believes that its business is uniquely

positioned to deliver as per plan. The economic environment and volatile security situation

present challenges, but it will continue to consolidate its portfolio and with careful

management of the value equation and appropriate cost reductions measures, accelerate

growth further.


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2011

%

Sales 22.96

Cost of sales 24.79

Gross profit 18.61

Distribution cost (2.64)


Operating profit 88.53


Finance cost 27.27



Taxation 79.45


Earnings per share Rs.5.56


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COMMENTS

SALES


ingredients.

Both domestic and internationally demand of Cos products have increased as compared

to previous year.


and market share.

COST OF SALES

There is 24.79% increase in cost of sales as compared to previous year mainly due to

increase in sales.


Co is continuously focus on product quality and brand loyalty, thats why cost has

increased due to purchase of superior raw material.

GROSS PROFIT




DISTRIBUTION COST

Distribution cost showed a decrease of 2.64% which is mainly due to decrease in

salaries, wages and other benefits provided to marketing staff.


Administrative expenses increased because the Co has increased production so

more labor has been employed and their benefits are increased every year.

Increase in administrative expenses is also due to higher printing and stationery

charges.

This increase is also due to an increase in provision for doubtful

advances and other.


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There is an downward trend in other operating income mainly due to

Decrease in exchange gain-net.

Decrease in return on late payments by trade debtors

100% decrease in insurance claim liabilities.

FINANCE COST

Finance cost has increased 27.27% due to

More mark up on long term running finance

More mark up on export re-finance

More mark up on short term loan

OTHER OPERATING EXPENSES

Other operating expenses has increased 94.12% due to

Workers profit participation fund


PROFIT BEFORE TAX

There is an increasing trend in profit before tax because of an increase in operating

profit.

Lower distribution cost also contributes in achieving higher profit after tax.

TAXATION

Tax has increased 79.45 % mainly due to

Higher purchase of raw material

Increased sale volume

PROFIT AFTER TAX

There is higher increase of 164.37% in profit after tax due to higher profit

before tax as compared to tax.Profit increased due to targeted advertising, promotion, innovation &

effective supply chain strategies.

EARNINGS PER SHARE

Increased which is a good sign because market value of share is increased.


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2011

%

NON CURRENT ASSETS

Property, plant and equipment (2.56)

Intangible assets (65.1)

Long term deposits (2.86)

CURRENT ASSETS

Stores, spares and loose tools (2.74)


Trade debts 13.70

Advances (68.70)

Trade deposits and prepayments 29.6

Other receivables (96.9)


SHARE CAPITAL AND RESERVES

Issued, subscribed and paid up capital 0

Unappropraited profit 55.22

NON-CURRENT LIABILITIES

Long term financing 748.75


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COMMENTS


Property, plant & equipment showed a decrease of 2.56% due to decrease in capital

work in progress. It means Co. is finishing its work in progress and moving towards

finished goods which are a good sign for bright future.

INTANGIBLE ASSETS

Cos intangible assets decreased due to decline in opening net book value of computer

software.

Liabilities against assets subject to finance lease (100)

Deferred tax 9

Retirement benefits obligations (56.7)

CURRENT LIABILITIES


Accrued interest/ mark up (9.18)

Short term borrowings (25.37)

Current maturity of:

Long term financing

Liabilities against assets subject to finance lease (77.11)

Taxation-provision less payments 289

Due to government (14.50)


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LONG TERM DEPOSITS

They have shown a decreasing trend and it can be for the reason that Co is withdrawing

its deposits

STORES AND SPARES

Stores and spares showed a fall of 2.74% due to decrease in capital work in progress

STOCK IN TRADE



Work in process

Finished goods

This positive change is mainly due to increase in provision for obsolescence.

TRADE DEBTS

Trade debts have increased 13.70% due to increase in debts considered goods to

foreign parties.


ADVANCES

Advances decreased in 2011 mainly due to decrease in advances to employees against

salary and expenses.


There is an increasing trend of 29.6% in year 2011

Due to increase in deposits that are considered good

Due to increase in prepayments

OTHER RECEIVABLES

Receivables have decreased 96.9% due to decrease in Receivablesin workers participation fund

Receivables from related parties


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Cash and bank balance increased 0.87% due to increase in

Cash at bank in foreign currency account

LONG TERM FINANCING

This has increased due to advances taken up by the Co. from different banks against

mortgage of property of company.

DEFERRED TAX

It showed an increasing trend because of accelerated tax depreciation/amortization.

TRADE AND OTHER PAYABLES

They have increased due to increase

In Creditors

In Workers participation fund

In Workers welfare fund

In Advances from customers

ACCRUED INTEREST/MARK UP

It has decreased by 9.18% due to decrease in mark up both on short term and long term

borrowings.

SHORT TERM BORROWINGS

They have shown a decreasing trend due to decrease

In Murabaha loan

In Running finance

DUE TO GOVERNMENT

It has decreased by 14.50% due to decrease in sales tax


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RATIO ANALYSIS2011

LIQUIDITY RATIOS

Current ratio 1.23 times

Quick ratio 0.20 times

ACTIVITY RATIOS

Operating cycle 138.56 days

No. of days in inventory 149.57timesReceivables turnover 20.42 times

Payable turnover 12.63 times

Inventory turnover ratio 2.44 times

DEBT RATIO

Debt to equity ratio 18.39%


Gross profit margin 28.51%




Return on equity 27.70%

INVESTMENT/ MARKET RATIOS

Earnings per share Rs. 5.56

Price earning ratio 13.48 times

Dividend payout ratio 44.93%


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COMMENTS

CURRENT RATIO



QUICK RATIO

Cos quick ratio is 0.20:1; it means Cos current assets are 0.20. i.e., if banks give loan to

that Co it will receive 0.20 current assets in return of its loan.


Cosinventory turnover ratio is 2.44 for current year that shows Cos improved

efficiency.

GROSS PROFIT MARGIN

Has increased because sales have increased in proportion to cost of sales.


There is an increase in this ratio mainly due to


Higher sales


NET PROFIT MARGIN

An increase in this ratio is due to

Increase in pre-tax profit

Higher sales

Higher net profit

Earnings per share

Return on assets

EARNINGS PER SHARE




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MURREE BREWERY

HAMNA EJAZ

M08BBA067


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MURREE BREWERY

INTRODUCTION OF THE COMPANY

Murree Brewery Company Limited was established in 1860 and is based in Rawalpindi. It

manufactures and sells alcoholic and non-alcoholic products in Pakistan and internationally. It is

composed of three divisions known as liquor, glass and tops division amongst which liquor is

the most profit making division. The Murree Brewery produces a wide variety of Beer's, Liquor's

and non alcoholic products. Our Premium products include Murree's Millennium Beer,

Murree's Classic Beer, Lite Export Pils, Eight and Twelve years old Single Malt Whiskies, Vintage

with a blend of a Scotch Grain Whisky, Silver Top Gin, Bolskaya Vodka and Doctor's Brandy.

VISION

Our office is in market

MISSION STATEMENT

We the people of Murree Brewery co. make personal commitments to first understand

our customers requirement then to meet & exceed their expectations, by performing

the correct task on time.

Continuous improvement.

Alignment of our mission & goals.

Responsibility and respect of our jobs and each other.

Educate one another.

PRODUCTS OF MURREE BREWERY

Alcoholic products

Non-alcoholic products

Tetra pack juices

Glass production


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MURREE BREWERY COMPANY LIMITED

Profit & loss (2009-2010)

Horizontal analysis

Name 2010 2009 %

TURNOVER 3,242,649 3,714,896 14.56

DUTIES AND TAXES 1,021,934 1,136,363 11.20

NET TURNOVER 2,220,715 2,578,533 16.11

COST OF SALES 1,591,385 1,777,770 11.71

GROSS PROFIT 629,330 800,763 27.24

Distribution cost 159,907 177,976 11.30

Administrative expenses 112,989 119,877 6.10

Other operating income 15,197 61,839 306.92

Other expenses 26,311 37,661 43.14

EBIT 345,320 527,088 52.64

FINANCE COST 4,466 2,507 -43.86

PROFIT BEFORE TAXATION 340,854 524,581 53.90

PROVISION FOR TAXATION 125,022 209,252 67.37

NET PROFIT 215,832 315,329 46.10

EPS 16.45 21.85 32.83


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COMMENTS ON THE ANALYSIS OF PROFIT & LOSS ACCOUNT

The company showed a 16% increase in net turnover, from Rs 3.242 million in FY09to Rs 3.714 million in FY10.

However, the sales trend shows that 16% sales increase over FY09-10 was less than

30% increase over previous years.

The company did not perform significantly well in FY10 showing deficiencies in

distribution system as well as impact of overall economic downturn.

The cost of sales increased by 11% from Rs 1.591 million in FY09 to Rs 1.777 million

in FY10, indicating strong COGS management.

The gross profit consequently increased from Rs 629 million in FY09 to Rs 800

million in FY10, registering a 27% increase.

Distribution cost and administrative expenses increased by 11% and 6%

respectively.

Other income increased 307% causing EBIT to increase by 53% from Rs 345 million

in FY09 to Rs 527 million in FY10.

Finance cost decreased by 44% due to retirement of short term running finance

and consequent mark-up savings.

However, taxation increased by 67% due to increase in current taxation, leading to

an overall 46% increase in net profit from Rs 215 million in FY09 to Rs 315 million in

FY10.

This was reflected in 33% increase in EPS, from Rs 16.45 per share in FY09 to Rs

21.85 per share in FY10.


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TREND ANALYSIS OF

MURREE BWERRYBALANCE SHEET

(2009-2010)

ASSET SIDE OF BALANCE SHEET

Names 2010 2009 %

Assets

Plant & machinery 2997.183 2946.626 1.715

Investment in

property

96,405 78207 23.2

Long term advances 1,546 631 145

Long term deposits 3481 2704 28.6

Current assets

Stores spare parts 72,384 102,474 -29.36

Stock in trade 595,396 503415 18.2

Trade debt 38885 88697 -56.15

Advances 18936 15035 25.9

Short terms

pre payment

5545 4295 29.10


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Interest accrued 2087 50 4074

Other receivable 3787 2749 37.75

Investments 74704 69083 8.1

Advance income tax - 25744

Cash and balances 552986 22240 2386

LAIBILITY SIDE OF BALANCE SHEET

Names 2010 2009 %

SHARES CAPITAL &

RESERVES

Capital reserves 144,334 131213 9.9

Unappropiated profit 916729 668588 2.4

Surplus on

revaluation ofproperty plant &

equipment

2346692 2358832 -5.0

NONCURRENT

LIABILITIES

Liabilities against

finance lease

1633 1072 52.3

Deferred staff 23713 15769 50

Deferred taxation 150156 137529 91

CURRENTLIABILITIES

Current proportion

of liabilities of assets

finance lease

1050 2222 52

Trade and other

payments

464485 367596 116


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Tax provision 35544 - -

Net profit after

taxation

315329 215837 46.09

COMMENTS ON THE ANALYSIS OF BALANCE SHEET OF THE

MURREE BWERRY There is an increase in the plant and machinery by in 2010 by 1% because company has

acquired new assets that are increasing the company volume of production.

There is increase in the investment because the company is making investment

Long term investment has increased due to the high interest of 11%and are repayable

in the period of three years

Long term deposits have increased it is +ve sign for the company

There is downfall in the spare tools because company have disposed off the spare parts

of the old machinery

The stock in trade has decreased because company has acquired more raw materials to

increase its volume of production by selling its finished goods.

Trade in debt is decreased because the money is not being recovered and the company

has to create a provision for doubtful goods.

There is an increase in advances held for trading because company has increased some

funds to invest in market.

Cash and bank balances have increased it is positive impact on the company due to large

rate of interest on the accounts maintained in the foreign currency with the bank.

Other receivables have increased due to the increase in pension fund of the company.

There is an increase in the reserves it is a +ve sign for the company because the shares

are being traded actively. Shareholder have confidence in the company

Unappropiated profit have increase because the depreciation is value is added to it

Thats why there is a decrease is the surplus of revaluation of asset.

Liabilities have increased because company is paying lease for the assets it has acquired

to increase its business

Deferred staff liabilities have increased because company employees are contributing

towards the fund of retirement. Company has made a provision for it too.

Trade and other payable have increased due to the increase in accrued liabilities and

advances from customers.

In 2010 the company has made provision for the taxation.

NPAT have increased because the company has earned profit on the sales it is a+ ve for

the company.


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RATIO ANALYSIS OF MURREE BREWERY OF 2010 AND 2009

Name of ratio 2010 2009Gross Profit Margin 31.05% 28.34%

Operating Profit Margin 9.72% 12.23%

Pretax Profit To Sales 14.12 10.5%

After Tax Profit To Sales 8.4% 6.6%

Return On Equity 8.33% 6.10%

Current Ratio 2.72% 2.79%

Debit Equity Ratio 0.18% 0.15 %

Asset Turnover Ratio 0.58 0.55

Days Of InventoryMaintained 120.57 Days 114.23days

Days A/C Receivable 5.43 Days 11.760days

Reasons for the Ration Analysis

The gross profit margin increased from 28.34% in FY09 to 31.05% in FY10 indicating the

efficient management of cost of goods sold.

Operating profit margin increased from 9.72% to 12.23% over the same period.

The increase in pre tax profit shows that there is increase in the other operating income.

It is positive sign for the company.

After tax profit has also increased due to the increase in massive increase in the sales,

volume of production in all three division have also increased. Major increase in liquor

production.

The profitability ratio shows that company is in profit and have increased volume of

sale. The company is generating profit and have a sound position in market.

Return on equity has increased due to the increase in NPAT, it is also positive sign for

the company, shareholders have interest in the equity of the company because it share

are maintain its value in the market.

The current ratio fell slightly from 2.79 in FY09 to 2.72 in FY10. Due to the increase in

liabilities of the company as compared to the previous years. Liabilities have majorly

increased because of the increase in trade in other payables and this year provision for

tax is also created.


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The liquidity position of company remains strong.

Debit equity ratio have also increased because slightly because the company have taken

long term loans for the creation of asset. It is the positive sign and the company is

having the faith of its creditors. The solvency position is good.

Assets turnover ratio increase shows increase it is + ve for the company.

Inventory turnover increased from 114.23 days in FY09 to 120.57 days in FY10.

This indicates that FY10 was an inefficient year with respect to inventory management.

The day sales outstanding decreased from 11.76 days in FY09 to 5.43 days in FY10,

signifying stronger receivables management in FY10.

These ratios show that the company is generating sufficient sales, given in the investment in

total assets and the shareholders' equity put into the company.

CONCLUSION ON MURREE BREWERY

o Though there is decrease in the liquidity ratio of the company but they have faith of

their shareholder.

o The market value of share of the company has improved it can be seen that the

company is earning profit.

o Company has also declared a cash dividend of @50% and 20% bonus shares on the

existing capital which shows that company is performing very well.

o They have also maintained their exports and earned profit.

o

In the end it can be said that company has consistently improving and have a better

outlook in future.

RISKS TO THE COMPANY

The company being a liquor producing co. in Pakistan has to bear some fundamentalist

view of the Muslims.

The ups and down in the political sector

Export barriers

The ups and downs in the economy

High inflation trend prevailing in the country.

Inefficient trade policy.

The company has to control his costs

Has to bulid new promotion a strategy for the juice because of its competitors.


38/58

ZUBIA ARSHAD

M07BBA015


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SHEZAN INTERNATIONAL LIMITED

The Shezan International Limited was incorporated on May 30, 1964 as a Private Limited

Company. Shezan International Limited was conceived as a joint venture by the Shahnawaz

Group,PakistanandAlliance Industrial Development Corporation,U.S.A.in 1964. Shezan is the

largest food processing unit having developed and installed the capacity to meet the country'slocal as well as export needs. In 1971,Shahnawaz grouppurchased all the shares of Alliance

Industrial Development Corporation with the permission of the Government of Pakistan. In

1980-81 a separate unit was installed in Karachi. Shezan International's Head Office is Located

in Lahore

VISION

To be known as leader of quality products in the region. Dedication to quality is

a w a y o f l i fe a t ou r c omp a n y. I n i t s a c t iv i t ies t h e c omp a n y w i l l p u rsu e

goals a imed at the achievement of prof itable bus iness . these results wi l l beder ive d fro m the ded ica ted eff ort s of eac h emp loy ee in conjunction with

supportive participation from management at all levels of the company.

MISSION STATEMENT

Our mission is to provide the highest quality fruit and vegetables related juices and products to

retail and food service customers.

We want to be the recognized industry leader in quality and service, providing more than

expected for our customers, employees and stakeholders.

We will accomplish this by maintaining a tradition of pride in our products, growth through

innovation, integrity in the management of our business, and commitment to Team

Management and Quality Improvement Process.
http://en.wikipedia.org/w/index.php?title=Shahnawaz_Group&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Shahnawaz_Group&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Shahnawaz_Group&action=edit&redlink=1http://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/w/index.php?title=Alliance_Industrial_Development_Corporation&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Alliance_Industrial_Development_Corporation&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Alliance_Industrial_Development_Corporation&action=edit&redlink=1http://en.wikipedia.org/wiki/U.S.A.http://en.wikipedia.org/wiki/U.S.A.http://en.wikipedia.org/wiki/U.S.A.http://en.wikipedia.org/wiki/1971http://en.wikipedia.org/wiki/1971http://en.wikipedia.org/wiki/1971http://en.wikipedia.org/w/index.php?title=Shahnawaz_group&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Shahnawaz_group&action=edit&redlink=1http://en.wikipedia.org/wiki/Government_of_Pakistanhttp://en.wikipedia.org/wiki/Government_of_Pakistanhttp://en.wikipedia.org/wiki/Government_of_Pakistanhttp://en.wikipedia.org/w/index.php?title=Shahnawaz_group&action=edit&redlink=1http://en.wikipedia.org/wiki/1971http://en.wikipedia.org/wiki/U.S.A.http://en.wikipedia.org/w/index.php?title=Alliance_Industrial_Development_Corporation&action=edit&redlink=1http://en.wikipedia.org/wiki/Pakistanhttp://en.wikipedia.org/w/index.php?title=Shahnawaz_Group&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Shahnawaz_Group&action=edit&redlink=1


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2011%

Sales 16.40

Cost of sales 17.20

Gross profit 14.11

Distribution cost 7.81


Operating profit 27

Other operating income (32.46)

Finance cost 55.51



Taxation 16.40


Earnings per share Rs 24


41/58

COMMENTS

SALES


ingredients.Increase in sales shows the increased demand of Cos products Both domestic and

internationally compared to previous year.


and market share.

COST OF SALES

There is 17.20% increase in cost of sales which is mainly due to increase in sales.


Co is continuously focusing on product quality and brand loyalty, thats why cost hasincreased due to purchase of superior raw material.

GROSS PROFIT




DISTRIBUTION COST

Distribution cost showed an increase in value to 7.81% which is mainly due to increasein salaries, wages and other benefits provided to marketing staff.


Administrative expenses increased 13% because the Co has increased production so

more labor has been employed and their benefits are increased every year.

Increase in administrative expenses is also due to higher printing and stationery charges.

This increase is also due to an increase in provision for doubtful advances and other.


There is an downward trend in other operating income (32.46) mainly due to

Decrease in exchange gain-net.

Decrease in return on late payments by trade debtors

100% decrease in insurance claim liabilities.


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2011

%

NON CURRENT ASSETS


Investment in associates

Investment available for sale

(0.20)

40.50

Long term deposits (11.80)

CURRENT ASSETS



Trade debts 18.31

Advances 13.62

Trade deposits and prepayments (23.83)

Accrued financial payments

Income tax recoverable

(36.73)

(3.83)

Cash and bank balances (20.42)

Total current Assets 21.11

SHARE CAPITAL AND RESERVES

Issued, subscribed and paid up capital 0

Reserves 9.7

Unappropraited profit 20.32

NON-CURRENT LIABILITIES

Liabilities against assets subject to finance lease (175)


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Deferred tax 6.8

CURRENT LIABILITIES


Accrued interest/ mark up 55.21

Short term borrowings 55.45

Current position of liabilities against

Assets subject to lease 12.88

Taxation-provision less payments 7.23

Total Liabilities 22.22

COMMENTS


Property, plant & equipment showed an increase of 1.40% due to increase in capital

work in progress.

INTANGIBLE ASSETS

Cos intangible assets decreased due to decline in opening net book value of computer

software.

LONG TERM DEPOSITS

They have shown a decreasing trend and it can be for the reason that Co is withdrawing

its deposits

STORES AND SPARES

Stores and spares showed a fall of 15% due to decrease in capital work in progress

STOCK IN TRADE



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Work in process

Finished goods

This positive change is mainly due to increase in provision for obsolescence.

TRADE DEBTS

Trade debts have increased 18% due to increase in debts considered goods to foreign

parties.


ADVANCES

Advances increased in 2011 mainly due to increase in advances to employees against

salary and expenses.


There is an decreasing trend of 23.8% in year 2011

Due to decrease in deposits that are considered good

Due to decrease in prepayments

ACCRUED FINANCIAL INCOME

Accrued financial income have decreased 36.7% due to

INCOME TAX RECOVERABLE

Income tax recoverable has decreased to 3.8% in 2011.


Cash and bank balance decreased 20.4% due to decrease in

Cash at bank in foreign currency account

TRADE AND OTHER PAYABLES

They have increased 18.9% due to increase

In Creditors

In Workers participation fund

In Workers welfare fund

In Advances from customers


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ACCRUED INTEREST/MARK UP

It has decreased by 55.2% due to decrease in mark up both on short term and long term

borrowings.

SHORT TERM BORROWINGS

They have shown a increasing trend due to increase

In Murabaha loan

In Running finance

PROVISION FOR TAXATION

It has shown an increasing trend up to 7.2%

RATIO ANALYSIS

LIQUIDITY RATIOS

Current ratio 1.64

Quick ratio 0.36

ACTIVITY RATIOS

Inventory turnover ratio

Days Account Receivables 0.03

DEBT RATIO 0.51







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CURRENT RATIO



QUICK RATIO

Cos quick ratio is 0.36:1; it means Cos current assets are 0.36. i.e., if banks give loan to

that Co it will receive 0.36 current assets in return of its loan.


Cos inventory turnover ratio is . for current year that shows Cos improved

efficiency.


There is an increase of 5.9% in this ratio mainly due to


Higher sales


NET PROFIT MARGIN

An increase of 3.33% in this ratio is due to

Increase in pre-tax profit

Higher sales

Higher net profit

Earnings per share

Return on assets

EARNINGS PER SHARE




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BUSINESS RISKS, CHALANGES AND FUTURE PROSPECTS

The economic outlook for 2011 remains problematic. Some of the major challenges are

Low growth

High inflationRising unemployment

Continued fiscal indiscipline

Surging food and energy prices

Expensive credit to private sector

Low foreign investment

In view of the prevalent market circumstances, the performance of consuming segments may

remain depressed which may impact overall demand for Cos products especially pressure on

the cost of maize, utilities and other overhead will continue, however, it may be difficult to

include the total impact of cost increases in the price of Cos products.

The management of the company is fully aware of the challenges y adopting market driven

strategies, optimizing manufacturing capabilities, striving for continued differentiation of Cos

products and services and continuing our operational excellence and prudent use of resources.

It seems that Cos journey on the track of progress will continue and Co will continue to create

value for all stake holders.


49/58

IQRA SHOUKAT

M08BBA060


50/58

MITCHELLS FRUITS FARM LIMITED

Mitchells is the oldest food company in Pakistan. It was established in 1933 by Francis J.

Mitchell under the name of Indian Mildura Fruit Farms Ltd. After the country gained

independence in 1947, the company's name was changed to "MITCHELLS Fruit Farms Ltd." with

the brand name of "MITCHELLS".

Mitchells is the only major food company in Pakistan today with fully integrated operations

having its own growing and processing facilities at one location. Modern high-volume industries

equipment, professional management and a trained workforce all combine to ensure that

Mitchells continues its dominance as the innovator, market leader and trend setter. In this

regard a major step was taken in 1998, when Mitchells became the first food company in

Pakistan to achieve ISO 9001 accreditation, thus becoming more competitive on the

international stage also.

Countrywide sales are managed by fully computerized and inter-linked regional sales offices

ensuring a smooth distribution system with nationwide coverage. Highly qualified executives,

using modern management tools, handle marketing, commercial, financial and accounting

functions from the Head Office in Lahore.

. VISION & MISSION STATEMENT

To be competitive in the growing market as the quality managed company. To be a Leader in

the markets we serve by providing quality products and efficient services to our consumers

while learning from their feedback to set even higher standards for our products. To be a

Company that continuously enhances its superior technological competence to provideinnovative solutions and superior products as per requirement of the market place. To be a

Company that attracts and retains outstanding people by creating a culture that fosters

openness and innovation, promotes individual growth, and rewards initiative and performance.

OVERVIEW OF COMPANYS CURRENT POSITION:

Modern trade results in boost u of exports by 8%. There is an increase in operating profit

margin. There is less increase in financial charges due to sound management and improve

supply chain. After tax profit for the year is increased. After discounting some growth of the

non-performing products of the companys sales growth for the year end is almost 30%, thetransactions between the related parties are made at arms length prices.

As a matter of economic and social problems, company is facing a countries poor economic

condition. As a result the manufacturing operations with frequent electricity and gas outages

admit low economic growth together with high inflation remained an ending challenge.


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COMMENTS

SALES:

Sales have increase for 2011 due to increase in selling price.

People have confidence over the company.

Brand loyalty is present

Exports of the companys product for the year have increase.

COST OF SALES:

Due to inflation rises of raw material has increased.

As sales volume increase, cost of production also increased.

Superior products demand.

GROSS PROFIT:

As the size of sales increased the gross profit for the company also rises.

2011

%sales 30.3

Cost of sales 30.42

Gross profit 29.9

Administration expenses 9.4

Distribution expenses 34.8



Profit from operations 37.15

Finance cost 1.98

Profit before tax 56.26

Taxation 52.68

Profit for the year 58.01

Earnings per share 58.02


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There is proportionate change in the ratio of sales to cost of sales. Thats why gross rofit

has shown an upward trend.

ADMINISTRATIVE EXPENSES:

Administrationexpenses increased because the Co has increased production so morelabor has been employed and their benefits are increased every year.

Employees wages also increased due to inflation.

DISTRIBUTION EXPENSES:

As the sales of every single product has increased due to inflation. The marketing

expenses of the company raise so much. Company should take measure in order to

cover these expenses.

OTHER OERATING INCOMES:

Exchange gain has increase in 2011.

There is an increase in scrap sales of the company.

Others sources of companys also shows an upward trend.

OTHER OPERATING EXPENSES:

Workers profit participation funds have increased.

Workers welfare fund has also increased.

While the donation by the company decreases for current year.

FINANCE COST:

There is an increase of almost 2%.

Markup on short term finance reduces.

There is an increase in workers participation fund.

There is an increased in bank and other charges of the company.

TAXATION:

Taxation of the company has increased by 52%.

Majorly the current portion of the company increased by many times.

As the sales volume and prices of raw material increases due to which the amount of tax

also increased.


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PROFIT BEFORE TAX

There is an increasing trend in profit before tax because of an increase in

operating profit.

Lower distribution cost also contributes in achieving higher profit after tax.

EARNINGS PER SHARE

EPS has increased from previous year.

Its a good sign because market value of share is increased


2011

%

NON CURRENT ASSET


Intangible assets 51.5

Long term loans and deposits ------

Biological assets 3.74

CURRENT ASSETS



Trade debts 55.3

Advances, deposits, repayments and other receivables (33.58)


Capital and reserves

Reserves -------

Un appropriated profit 21.6

NON CURRENT LIABILITIES

Deferred liabilities 5.1

CURRENT LIABILITIES

Short term running finances-secured (7.09)

Credits, accrued and other liabilities 62.22

Accrued finance cost on short term running finances (35.3)

Contingencies and commitments 18.53

Total equity and liabilities 16.45


54/58

COMMENTS

UN APPROPRIATED PROFIT:

There is an increase of 21.6%.

Its only because of increase in fund for the employees by the company.

DEFERRED LIABILITIES:

Deferred taxation for the 2011 has been decrease.

Retirement and other benefits for the employees have been increased.

CREDITS ACCURRED AND OTHER LIBILITIES:

There is an increase in credit liability because of

o Increase in trade creditors.

o There is an increase in advances from customers.

o Workers profit participation fund also increased.

o Workers welfare funds also increases.

SHORT TERM RUNNING FINANCES-SECURED:

There is a decrease in short term liabilities of the company.

Its good sign that company is paying off its current liabilities.

PROPERTY, PLANT AND EQUIPMENT:

There is an increase in capital work in progress.

Operating fixed assets have also been increase.

INTANGIBLE ASSETS:

There is an increase in intangible assets due to increase in administration expenses.

Net book value of the assets has been increased.

LONG TERM LOANS AND DEPOSITS:

There is no long term loans and deposits of the company in 2011.

Its a good sign, as company is efficient in recovering its long term assets.


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BIOLOGICAL ASSETS:

There is an increase in biological assets of the company.

As lives stocks and no of trees have been increased.

STORES, SPARES AND LOOSE TOOLS:

There is a decrease in the value of stores, spares and loose tools.

Large provision of obsolete items is deducted.

STOCK IN TRADE:

There is an increase in stock in trade due to

o Increase in raw material amount.

o Increase in packing material.

o

There is also an increase in finished goods.

TRADE DEBTS:

There is an increase in trade debts.

As considerable doubtful has been increased.

ADVANCES, DEPOSITS AND PRE PAYMENTS:

There is a decrease in advances of the company.

Opening charges have also been reduced.

CASH AND BANK BALANCES:

There is an increase in cash and bank balance of the company.

There is an increase of balances in current account in 2011.


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RATIO ANALYSIS:

COMMENTS:

OPERATING PROFIT MARGIN:

There is an increase in operating profit margin.

The gross profit margin plus income from other sources also been increased.

There is a proper management and low administration expenses as compare to other

companies.

NET PROFIT MARGIN:

Taxation amount increase due to increase in sales.

The profit margin also increases by 58%.

EARNING PER SHARE:

There is an increase in earnings per share.

As the profit of the company increases for the year, the earning per share of the

company rises by 58%

2011

%

2010

%

Profitability ratioOperating margin profit 8.16 7.75

Net profit margin 4.09 3.37

Earning per share 14.57 9.22

Return on asset 9.6 7.07

Liquidity ratio

Current ratio 1.33 times 1.27 times

Quick ratio 0.34 times 0.36 times

Debt equity ratio 24.6 24.91

Activity ratio

Asset turnover ratio 2.34 times 2.09 timesDays inventory maintained 6.79 2.50

Days a/c receivable 12.8 10.8


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RETURN ON ASSETS:

For the year 2011 the return on assets increased from 7 to 9.6%.

Earnings for the common share holder increased greater as compare to the increase in

fixed assets.

CURRENT RATIO:

There is an increase in current ratio of the company.

There is an increase in current assets as compare to the current liabilities.

QUICK RATIO:

There is a decrease in quick ratio of the company.

Small decrease in quick ratio, due to decrease in the value of inventories.

Decrease in the value of inventories is a good sign for the company.

RETURN ON EQUITY:

A very positive increase in the ratio of return on equity.

It will gain the confidence of investors.

DEBT EQUITY RATIO:

There is a decrease in debt equity ratio.

Its a good point for the company, as its long term debts reduces by 0.31%.

FINANCIAL RISK MANAGEMENT:

The companys activities expose it to a variety of financial risk, market risk, credit risk and

liquidity risk. The companys overall risk management programmed focuses on the

unpredictability of financial markets and seeks to minimize potential adverse effects on the

financial performance. Currently the company foreign exchange risk expose is restricted to the

amounts receivable/ payable from/ to the foreign entities. The company has no significant long

term interest bearing assets. The company interest rate risk arises from short term borrowing.Borrowings obtained at variable rates expose the company to cash flow interest rate risk. The

company manages liquidity risk by managing sufficient cash and the availability of finding

through adequate amount of committed credit facilities. Companys credit risk for last year has

been decrease.


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STATUS OF FOOD INDUSTRY IN PAKISTAN

According to the Census of Manufacturing Industries there were 822 units engaged in the

manufacture of Food and Beverages. According to the UNIDO (United Nations Industrial

Development Organization) it is the largest manufacturing industries of the country. Value ofproduction stood at Rs.46.170 billion. Food processing is a relatively capital intensive industry.

The share of food in the manufacturing industry is declining. It was 32.66 per cent in 2009-

2010.

The growth rate in the food industry has been estimated at 7.46 per cent per annum. The most

rapidly growing items are dairy products fish processed, bakery items, sugar, biscuits and

confectioneries, fruit juices and other soft beverages. Rapid export growth has characterized

fish preparation, fruit preserves, dry fruits, some beverages and sugar, and honey preparation.

Food products (except rice) do not however, make up a significant proportion of Pakistani

exports and there is a considerable potential for expanding such exports, specially to Europe

and the Gulf region.

sameen hussain

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