20000129

Brief recordings

BY SCANNER

Miscellaneous

Diamond Industries Limited

Year Ended June 30, 1999

Overview

This Gadoon Amazai project has incurred consecutive losses for the second year and foam production has stopped. The losses would have been higher, had the "dividend income" on its relatively large investment portfolio not been posted. "The financial year started under the shadow of economic sanctions and fear of imminent default on financial commitments. Large part of the year was spent by economic managers in encountering these developments. Even till this date (20-11-1999), the situation is not clear as to how future out look should be considered" Ñ the directors reported. However the company's balance sheet remained formidable as depicted by the current ratio of 2.76 and debt to equity ratio of 0:100. The interrelated ratio of Asset Turn Over has deteriorated because of negligible sales relative to told asset base.

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The principal activity of Diamond Industries Limited is the manufacture and sale of foam, foam products and various industrial chemical/chemical binders used in textile, leather and wood industries.

The company was incorporated in 1989 as a private limited company and converted into public limited company in August 1994. The shares in the company are quoted on Lahore, Karachi and Islamabad stock exchanges.

The manufacturing facilities of the company are located in NWFP at Gadoon Amazi Industrial Estate District Swabi.

The company is entitled to tax exemption for a period of 10 years by virtue of clause 122-C of the second schedule of the Income Tax Ordinance 1979. However, provision for taxation has been made on the basis of turnover under section 80-D of Income Tax Ordinance 1979.

At the close of the financial year under review (FY 1998-99), there was no production of foam against the annual installed production capacity of 12,000 tonnes. Against this capacity, the company had produced 80 thousand tonnes of foam in the preceding financial year 1997-98.

The company has also manufacturing facilities for PVA. During the year, the company's output for this product was recorded at 206 tonnes against the annual production of capacity of 1,560 tonnes.

In this product, there was no installed capacity in the previous year.

During FY 1998-99, the company's sales in terms of value amounted to Rs 12.49 million and roughly 61% of the total sales, was accounted for foam sales while remaining 39% of total sales was recorded for PVA sales.

Total sales of the company increased by 49.4% over preceding year's figure of Rs 8.36 million. Foam sales increased by 20% to Rs 7.63 million over preceding year's Rs 6.36 million.

PVA sales was recorded at Rs 4.86 million, during the year under review. But there was no PVA sale in the preceding year.

Cost of goods sold in the Foam Department was recorded at Rs 11.26 million. Cost of sales was higher than sales so the company turned gross loss at Rs 3.63 million. On top of it there was administrative expense in the sum of Rs 6.47 million. But there was no selling expense. Hence operating loss reached Rs 10.10 million in the Foam Department.

In the PVA Department the company recorded gross profit but turned operating loss.

The overall result of the company was that the company turned gross loss at Rs 2.53 million, during the year under review. Last year also the company had recorded gross loss.

During the year under review the company's operating loss reached 11.54 million as compared to the previous year's figure of Rs 11.61 million.

Financial charges were a little lower at Rs 5.23 million as compared to previous year's figure of Rs 6.25 million.

The company posted "other income" at Rs 11.66 million as compared to "other loss" at Rs 3.89 million in the previous year. Other income comprised dividend income at Rs 12.30 million, disposal of fixed assets at Rs 0.72 million and capital loss of Rs 1.36 million.

During the year under review dividend income posted 277% rise over previous year's Rs 3.26 million. But capital loss was 81% lower as compared to previous year's Rs 7.20 million.

The balance sheet comprised relatively large investment portfolio both on long term and short term basis.

Long Term Investment has increased by 180% to Rs 31.12 million over preceding year's Rs 11.12 million.

Long term investment portfolio comprised Rs 8 million investment in the 53.3% equity of its subsidiary company Diamond Polymers (Pvt) Ltd. and Rs 23.77 million investment in the 31.28% equity of its quoted associated company Shaffi Chemical Industries Ltd.

The short term investment portfolio in the securities of the quoted companies amounted to Rs 99.82 million at cost which was accounted for at market value at Rs 61.75 million on the date of the balance sheet under review. These shares are under Bank's lien against guarantees issued on behalf of the company. During the year under review, the size of this short term investment portfolio has diminished to Rs 99.82 million from the previous year's Rs 141.82 million.

The company turned net loss at Rs 5.79 million as compared to net loss at Rs 21.76 million in the previous year. However shareholders equity base remained formidable due to large unappropriated accumulated profit.

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Performance Statistics (Million Rupees)

June 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 90.00 90.00

Unappropriated Profit: 103.15 108.85

Sharehoders' Equity: 193.15 198.85

Surplus on Revaluation of F/A: 50.16 50.16

Current Liabilities: 67.23 46.65

AssetsÉÉÉ

Fixed Assets: 92.40 95.33

L.T. Investments: 31.77 11.12

Deferred Cost: 0.53 1.05

Current Assets: 185.84 188.16

Total Assets: 310.54 295.66

Sales, Profit & PayoutÉÉÉ

Sales: 12.49 8.36

Gross Profit/(Loss): (2.53) (2.61)

Operating Profit/(Loss): (11.54) (11.61)

Other Income/(Loss): 11.66 (3.89)

Depreciation: 2.92 9.22

Financial Charges: 5.23 6.25

(Loss) Before Taxation: (5.11) (21.76)

(Loss) After Taxation: (5.79) (21.76)

Financial RatiosÉÉÉ

Share Price (Rs) 20/1/2000: 6.00 Ñ

Book Value Per Share: 21.46 22.05

Price Book Value Ratio: 0.28 Ñ

Debt/Equity Ratio: 0:100 0:100

Current Ratio: 2.76 4.03

Asset Turn Over Ratio: 0.04 0.03

Gross (Loss) to Sales %: (20.25) (31.22)

Operating (Loss) to Sales (%): (92.39) 138.87

Net (Loss) to Sales (%): (46.35) (262.17)

(Loss) per Share: (0.64) 2.42

Price/Earning Ratio: (Ñ) Ñ

R.O.E. (%): (Ñ) (Ñ)

R.O.A. (%): (Ñ) (Ñ)

R.O.C.E. (%): (Ñ) (Ñ)

Plant Capacity & Production (Tonnes)ÉÉÉ

A. FoamÉÉÉ

Installed Capacity: 12,000 12,000

Production: Ñ 80

Capacity Utilisation (%): Nil 0.66

B. PVAÉÉÉ

Installed Capacity: 1,560 Ñ

production: 206 Ñ

Capacity Utilisation (%): 13.20 Ñ

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Company information: Chairman/Chief Executive: Iftikhar A. Shaffi. Director: Mohammad Saeed. Company Secretary: Ch. Mohammad Tufail. Factory & Registered Office: Plot No. 25, Gadoon Amazai, Industrial Estate, Swabi (NWFP). Factory Phone 0938-70297. Shares Department: Malik Bagh, Baradari Road, Shahdara Lahore.