20000127

Brief recordings

BY SCANNER

Chemical & Pharmaceutical

Dyno Pakistan Limited

Year Ended June 30, 1999

Overview

Dyno Pakistan's subsidiary company has contributed nearly 74% of its pre-tax profit. The company's turnover declined but profitability substantially improved. Operating efficiency is manifested in the reduction of the inventory level, lower balance in the receivables account and higher utilisation of the production capacity. Excellent social responsiveness of the leadership in the company is evident from the regular and high dividend payouts and quick retirement of long term debts. The Chairman's review about future prospect is punctuated with optimism as the Chairman foresees early revival in the economy due to the change in the government. The company is justifiably worried about the unrealistically low price of the imported product from China. The company posted EPS at Rs 1.57 per 5 Rupee share paid cash dividend at 27.5%. The share in the company is trading at Rs 8.50 at substantial premium.

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Eighteen years ago the company was incorporated in the province of Sindh. Dyno Pakistan Limited is engaged in the manufacture of urea/melamine formaldehyde and aminoplast compound.

Its manufacturing facilities are located in the province of Balochistan at Lasbella Industrial Estate, Hub Chowki. During the year under review the unit attained higher output except for "special aminoplast compound."

The annual production capacity of urea/melamine formaldehyde was designated at 18,000 tonnes. Production of these products registered 28.43% growth to 15,130 tonnes from 11,781 tonnes in the previous financial year 1997-98. So the unit attained higher capacity utilisation in this product at 84.05% as compared to 65.45% in the previous year.

In the department of FORMALDEHYDE, against the annual designated production capacity of 19,500 capacity utilisation reached 87.72% as against 79.95% in the preceding year. Because production increased by 9.71% to 17,107 tonnes over last year's figure of 15,592 tonnes.

These two products i.e. (1) urea/melamine formaldehyde (2) formaldehyde are in the company's Resin Division. In its Aminoplast Division there are two products i.e. (1) Aminoplast Compound and (2) Special Aminoplast Compound.

The production of aminoplast compound shotup by 291.69% to 948 tonnes from 325 tonnes in the previous year. So the company attained higher capacity utilisation of 63.20% as compared to only 21.67% in the preceding year.

However the production of special aminoplast recorded decline by 19.09% to 1,717 tonnes from 2,122 tonnes produced in the preceding year. Inevitably, the capacity utilisation skidded to 114.47% from 141.46% in the preceding year. But the capacity utilisation remained higher than its designated annual capacity.

Reasons for shortfall in the production in the Resin Division was ascribed to lower demand of products from customers. In the Aminoplast Division the reason for underutilisation of the capacity was the unfair competition generated due to imports from China.

The company has substantial progress as compared to last years in terms of profitability.

Turnover at Rs 306.71 million (FY 1997-98: Rs 354.30 million), although registered 13.5% decline, but the company posted 27.28% rise in the gross profit and 33.35% increase in the operating profit.

The company posted net profit at Rs 22.84 million which registered 128.4% rise over previous year's Rs 10 million. Net profit figure is the highest as compared to last two years'.

The company announced cash dividend at 27.5% which is higher than previous year's payout rate of 12.5%. It has excellent track record of regular profit distribution as the company has paid dividend regularly. Since 1989 it paid dividend except for in the financial year 1996-97.

The Chairman of the company Dag Schjerven while reviewing the operating performance and giving his comments about future prospects, spoke about improved efficiency and revival of business in future.

"During last year, there was some improvement in the economic conditions in the country which is reflected in the improved revenue and profitability of the company.

Imports of moulding compound at unrealistically low prices from China has continued but our case for anti-dumping measures is at an advanced stage and we expect positive results in the near future.

We have improved our working efficiency and are working with lower rate material and finished goods stocks as well as lower trade debtors. This, and the removal of the condition of keeping cash margin on L/Cs has improved our liquidity and has resulted in lower financial costs in the third and fourth quarters.

Due to recent changes in the country, we are expecting early revival of the economy. Your company will play its due role which will benefit the country as well as the shareholders."

The balance sheet of the company remained formidable as depicted by the improved break-up value of the share, no long term debts and excellent current ratio.

The company has relatively large long term investment portfolio at Rs 40.04 million. This investment is in the 100% equity of the subsidiary company Visionite (Private) Limited which produces aminoplast moulding compound.

This subsidiary company has equity base of Rs 84.32 million, balance sheet size of Rs 141.68 million and total turnover of Rs 234.8 million. The subsidiary company posted net profit of Rs 30.77 million and declared dividend at Rs 2.50 per 5 rupee share. The subsidiary company contributed Rs 20.02 million to the holding company by way of dividend payout. This contribution comprises 74% of the holding company's total pre-tax profit.

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Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 72.59 72.59

Reserves: 77.27 74.39

Shareholders' Equity: 149.86 146.98

L.T. Debts: Ñ 6.67

Deferred Taxation: 8.51 7.67

Current Liabilities: 153.44 169.24

AssetsÉÉÉ

Fixed Assets Ñ Tangible: 67.28 71.27

L.T. Investments: 40.04 40.04

L.T. Loans & Deposits: 3.20 2.86

Current Assets: 201.29 216.39

Total Assets: 311.81 330.56

Sales, Profit & PayoutÉÉÉ

Turnover: 306.71 354.50

Gross Profit: 46.38 36.44

Operating Profit: 23.11 17.33

Other Income: 2.00 2.65

Depreciation: 6.20 6.53

Financial Charges: 15.90 15.94

Dividend Income from Subsidiary Company: 20.02 10.01

Profit Before Taxation: 27.22 11.40

Profit After Taxation: 22.84 10.00

Dividend Cash 27.5% (1998: 12.5%): 19.96 9.07

Financial RatiosÉÉÉ

Share Price (Rs) 20/1/2000: 8.50 Ñ

Book Value Per Share (Rs): 10.32 10.12

Price/Book Value Ratio: 0.82 Ñ

Debt/Equity Ratio: 0:100 4:96

Current Ratio: 1.31 1.28

Asset Turnover Ratio: 0.98 1.07

Gross Profit Margin (%): 15.12 10.28

Operating Margin (%): 7.53 4.89

Net Profit Margin (%): 7.45 2.82

EPS (Rs): 1.57 0.69

Price/Earning Ratio: 5.41 Ñ

R.O.E. (%): 15.24 6.80

R.O.A. (%): 7.32 3.02

R.O.C.E. (%): 14.42 6.21

Capacity & Production (Tonnes)ÉÉÉ

A. Urea/Melamine FormaldehydeÉÉÉ

Capacity: 18,000 18,000

Production: 15,130 11,781

Capacity Utilisation (%): 84.05 65.45

B. FormaldehydeÉÉÉ

Capacity: 19,500 19,500

Production: 17,107 15,592

Capacity Utilisation (%): 87.72 79.95

C. Aminoplast CompoundÉÉÉ

Capacity: 1,500 1,500

Production: 948 325

Capacity Utilisation (%): 63.20 21.67

D. Special Aminoplast CompoundÉÉÉ

Capacity: 1,500 1,500

Production: 1,717 2,122

Capacity Utilisation (%): 114.47 141.46

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Company information: Chairman: Dag Schjerven. Vice Chairman: Syed Ali. Chief Executive: Sarosh R. Dubash. Directors: Asadullah Khawaja (ICP Nominee), Ather Saeed Khan (Director Technical), Abdul Karim Lodhi (NIT). Company Secretary: Shahid Ali Khan. Registered Office: Al-Hannan Centre , Shahrah-e-Faisal, Karachi. Factory: Lasbella Industrial Estate, Hub Chowki (Balochistan).