20000218

Brief recordings

BY SCANNER

Miscellaneous

Hashimi Can Company Limited

Year Ended June 30, 1999

Overview

The company has diversified its business activities to can manufacturing as well as food canning. The Food Processing Division of the company is reported to be moderately functioning and presently, it is solely dependent on the tender business to DGPA and Navy. About the future outlook, the directors reported, that food cans are well accepted by Pakistani Army and Airforce. The directors hope to also launch these products both in the domestic and export markets. However, according to them a realistic future business projection is not possible under the present circumstances. Then there are other constrains such as fiscal anomalies, for example, excessive Custom Duty on tinplate and Excise Duty on finished products. Sales tax previously allowed on food cans has also been withdrawn. The company has suffered sharp drop in sales, massive loss and laid off substantial number of staff in the dormant sector of the business. The directors recommended sale of surplus property to reduce debts and to tide over liquidity problems and to augment working capital finance for smooth business.

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The main business of Hashimi Can Company is to under-take manufacture of tin containers and processing of canned food. The company was incorporated as a public limited company in the province of Sindh. The share in the company was listed at Karachi Stock Exchange in 1962.

At present the share is trading at Rs 12 per share carrying 20% premium over its par value of Rs 10. During the last 6 years' highest price of its share was quoted in 1997 at Rs 28 per share.

It appears that the present market value of its share is the lowest since 1994. The share is over valued relative to the book value of the share.

The company has excellent track record of profit distribution. Since 1995, except for the financial year under review, the company has ensured cash dividend payout every year. The profit distribution rate since 1995 was invariably at 40% except for the last financial year 1997-98 when the cash dividend was declared at 20%. During the period under review the Board of Directors of the company did not declare dividend because the operation turned substantial loss.

In addition to the sponsors of the company, National Investment Trust's nominee is also sitting on its Board of Directors. In the categories of the shareholders of the company, the combination of individual/institutional investors is in the proportion of 52:48. Among the institutional investors, 5 joint stock companies and three financial institutions held stock of the company to the extent of 22.68% and 22.02% respectively. In addition, 6 insurance companies held 5.08% of the company's stock.

It has been reported by the Managing Director, Munawar A. Malik:

"As mentioned in our previous report, your Company finally got the permission from the Labour Court to close down dormant part of the Company and terminate the services of surplus employees which has been done and we have accordingly restructured our manpower requirements which has been reduced to 150 workers and staff in all. This was painful exercise which we had to undertake after 13 months."

For the 49th AGM of the shareholders of the company, high on its agenda is a special business "to consider and approve sale of surplus land of the company and construction thereon, and to authorise the Directors of the Company to negotiate and finalise the sales, after completing necessary formalities of SITE and any other agencies."

The AGM has been scheduled on 29th February, 2000 at the registered of the company at SITE Karachi. The relative statement u/s 160(B) clarifies that the proposed layout plan demarcating surplus premises has been placed at the registered office for inspection. The statement also clarifies that proceeds of the sale of land will be partially utilised for the repayment of bank borrowing and partly to augment the working capital requirement of the company. This strategic decision has been made with the main objective to reduce the debt burden of the operation to become cost effective and to reduce constrains of liquidity and to facilitate smooth operation.

During the period under review, in the FY 1998-99 the company has turned relatively large loss at Rs 21.19 million replacing the preceding year's net profit of Rs 3.26 million. The loss has busted its equity base. Resultantly, reduced the break-up value of the share in the company to Rs 6.01 from Rs 18.99 per 10 rupee share in the preceding year.

The liquidity position has been substantially impaired as reflected in the current ratio at 0.67. Fortunately there is no long term debt and the Company has surplus land Ñ a prime valuable property in SITE Karachi which should give substantial sale proceed to tide over the Company's liquidity problem and reduce the debt burden.

The company has sanctioned limit of Rs 20 million for running finance from Allied Bank but the outstanding has gone up to Rs 34.31 million (FY 1997-98: Rs 24.59 million) because of mainly mark-up debited by the bank. The bank borrowing carries mark-up at 18% p.a. The facility has been secured by the bank against first charge on the Fixed Assets of the Company and by way of hypothecation of stocks, stores and trade debtors.

During the year sales sharply declined by 42.4% to Rs 94.09 million from Rs 163.38 million posted in the previous year. But stocks-in-trade increased by Rs 1.06 million.

The period for inventory increased to 71 days from 45 days in the previous year. The period for receivables also increased to 43 days from 28 days in the previous year.

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Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 16.33 16.33

Reserves: 1.67 14.67

Unapp. (Loss)/Profit: (8.17) 0.01

Shareholders' Equity: 9.83 31.01

Surplus Revaluation F/A: 40.00 40.00

Current Liabilities: 72.44 57.46

AssetsÉÉÉ

Fixed Assets Ñ Tangible: 71.83 63.21

L.T. Deposits: 0.73 0.73

Current Assets: 49.71 64.53

Total Assets: 122.27 128.47

Sales, Profit & PayoutÉÉÉ

Sales: 94.09 163.38

Gross Profit: 1.48 25.16

Operating Profit/(Loss): (20.97) 1.63

Other Income: 0.72 2.57

Depreciation: 3.99 3.80

Financial Charges: 5.31 2.99

Profit/(Loss) Before Taxation: (20.25) 3.99

Profit/(Loss) After Taxation: (21.19) 3.26

Dividend Cash nil (1998: 20%): Ñ 3.27

Financial RatiosÉÉÉ

Share Price (Rs) 9/2/2000: 12.00 Ñ

Book Value Per Share (Rs): 6.01 18.99

Price/Book Value Ratio: 2.83 Ñ

Debt/Equity Ratio: 0:100 0:100

Current Ratio: 0.67 1.12

Asset Turnover Ratio: 0.77 1.27

Days Receivables: 43 28

Days Inventory: 71 45

Gross Profit Margin (%): 1.57 15.40

Operating Margin (%): (22.29) 1.0

Net Profit Margin (%): (22.52) 1.99

EPS/(LPS) (Rs): (12.98) 2.00

Price/Earning Ratio: (Ñ) Ñ

R.O.E. (%): (Ñ) 10.51

R.O.A. (%): (Ñ) 2.53

R.O.C.E. (%): (Ñ) 4.59

Plant Capacity & Production: NA NA

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Company information: Chairman: Mian Aftab A. Sheikh. Chief Executive: Mrs. Nasreen Aftab. Managing Director: Munawar A. Malik. Director (Nominee NIT): Shamshuddin Khan. Company Secretary: Asif A. Mufti. Registered Office: B/24 Sindh Industrial Trading Estate, Textile Avenue, Karachi.