20000125

Brief recordings

BY SCANNER

Glass & Ceramics

Ghani Glass Limited

Year Ended June 30, 1999

Overview

The company has made improvement on almost all counts. Shareholders' equity expanded to Rs 218 million from previous year's Rs 118.24 million so break-up value of the share increased to Rs 14.58 from Rs 7.94 per 10-rupee share. The size of the balance sheet expanded to Rs 270 million from Rs 177 million from previous year's. There is no problem of long term debt coverage as the long term debt to equity ratio is 0:100. Liquidity position is comfortable as depicted by current ratio at almost three times of the minimum ratio of "ONE." The balance sheet was awash with cash and bank balance of Rs 70 million sales increased to Rs 354 million by 78% and net profit rose to Rs 129.58 million by 1381%. The company announced dividend at 20%. It attained ISO 9002 certification from a world renowned German company.

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Ghani Glass Limited is one of the constituent members of Ghani Group. The Annual Report 1999 of Ghani Glass Limited carries the stamp of "First ISO 9002 Certified Glass Company of Pakistan." The page with the list of contents bears the sentence in Urdu with nearest translation in English as "struggling for interest free business."

The Agenda for the ensuing 7th AGM of the company's shareholders contains two special businesses. The AGM is scheduled on 29th January 2000 and the special businesses are:

"6 Ñ to add and insert an additional clause No. 14A after clause 14 of Memorandum of Association of the Company.

7 Ñ to approve the investment in Ka'as Ul Musaf'fa (Pvt) Ltd., an associated company." About ISO 9002 Certification, Chief Executive Imtiaz Ahmed Khan announced, "Change in ISO 9002 Certification Agency Ñ the Company got the status of 1st ISO 9002 Certified Glass Company of Pakistan during October 1998. Thrust to improve quality management system and quality of products of the company to entire satisfaction of customers remain the policy of the management. For further improvement of external audit Ñ quality of management system of the Company, the management preferred to transfer the ISO 9002 certificate to a world-wide renowned certification agency based in Germany in the name of TUV CERT. We hope that through this change quality management system of the company will further improve."

The ISO ceremony was held in Bhurban in June 1999. These rejoicing moments were shared by senior executives of pharmaceutical industry, suppliers, contractors and well wishers who congratulated the company by participating in special newspaper supplement. The Chief Executive of the company reflected on this important events, "at this moment I cannot forget the remarks of Senior Executives of pharmaceutical industry for quality products, policies, and strategies of the management and sure these remarks are intangible assets of your Company."

During the year under review, (FY 1998-99), the company made improvement on almost all counts. Sales in terms of value registered phenomenal growth of 78% to Rs 353.77 million over the figure of Rs 198.75 million recorded on the last date of the last year.

The increase in sales was attributed to increase in sales volume and adjustment in prices to the level of prices prevailed in the market before commencing of production.

The company made further penetration in the market by bringing new customers who were previously using "washed or semi automatic bottles."

The company planned further increase in production, to meet the expected growth in the market and increase in demand due to customers' preferences to buy their major or all requirement from the company, by increasing speed and efficiency and installation of "vertiflow" system on all product lines.

During the year under review, production in terms of volume increased to 15,755 tonnes by 35.75% over the preceding year's 11,606 tonnes. However capacity utilisation remained low at 49%.

The future outlook as shared by the company's Chief Executive is considered to be full of challenges. First closed glass plants in the provinces of Sindh and Balochistan are to re-start production which will enhance the surplus capacity. Inevitably, the selling price is likely to come under pressure.

Second, recent increase in the prices of petroleum products specially in furnace oil and further expected escalation in the cost of other inputs are likely to erode profitability.

Third, sales tax will be applicable to products of the company from July 2000. Due to exemption of sales tax on the Company's product, the Company has to absorb the input sales tax on purchases.

Fourth, despite strong demand for the company's products from the customers in the pharmaceutical industry, the pricing of product is relatively uncontrollable factor because their customers have not been allowed price increase in their pharma products.

The company's gross profit at Rs 157.01 million (FY 1997-98: Rs 25.52 million), operating profit at Rs 138.87 million (FY 1997-98: Rs 15.02 million) and pre-tax profit at Rs 129.58 million (FY 1997-98: Rs 8.75 million) recorded increase Rs 515%, 824%, 1381% respectively over the preceding year's. Selling expenses remained constant. While financial charges diminished but administrative expenses increased due to increase in salaries. The company made repayment of all lease finances and other borrowings. The balance sheet is awash with cash and bank balances.

The company posted earning per share at Rs 8.67 per share and announced dividend at Rs 2 per share. At the ruling price of the share in the company at Rs 13, the PER is placed at 1.5x.

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Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 149.50 149.50

Unapp. Profit (Loss): 68.42 31.26

Equity: 217.92 118.24

L.T. Debts: Ñ 36.48

Current Liabilities: 52.03 22.18

AssetsÉÉÉ

Fixed Assets: 117.72 119.92

L.T. Deposits: 1.97 4.29

Deferred Cost: Ñ 2.45

Current Assets: 155.26 50.24

Total Assets: 269.95 176.90

Sales, Profit & PayoutÉÉÉ

Sales: 353.77 198.75

Gross Profit: 157.01 25.52

Operating Profit: 138.87 15.02

Other Income: 0.37 0.11

Depreciation: 23.72 19.66

Financial Charges: 2.83 5.93

Net Profit Before Taxation: 129.58 8.75

Net Profit After Taxation: 129.58 8.75

Dividend Cash 20% (1998: Nil): 29.90 Ñ

Unapp. (Loss) B/F: (31.26) (40.01)

Financial RatiosÉÉÉ

Share Price (Rs) 20/1/2000: 13.00 Ñ

Book Value Per Share (Rs): 14.58 7.94

Price/Book Value Ratio: 0.89 Ñ

Debt/Equity Ratio: 0:100 7:93

Current Ratio: 2.98 2.27

Asset Turn Over Ratio: 1.31 1.12

Days Receivables: 63 56

Days Inventory: 13 11

Gross Profit Margin (%): 44.38 12.84

Operating Margin (%): 39.25 7.55

Net Profit Margin (%): 36.63 4.40

EPS (Rs): 8.67 0.59

Price/Earning Ratio: 1.50 Ñ

R.O.E. (%): 59.46 7.40

R.O.A. (%): 48.00 4.94

R.O.C.E. (%): 59.46 5.65

Production Capacity (Tonnes)ÉÉÉ

Overall Capacity: 32,120 32,120

Production: 15,755 11,606

Capacity Utilisation (%): 49.05 36.13

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Company information: Chairman: Aitazaz Ahmad Khan. Chief Executive: Imtiaz Ahmad Khan. Director: Mohammad Ahmad. Company Secretary: Ferzand Ali. Registered Office: Ghani Complex, 49-Shadman 01, Lahore-54000. Website www ghanigroup.com. Factory: 22 km, Haripur Taxila Road, (from Haripur) Teh. & Distt. Haripur (NWFP).