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Spartan Internet consulting , Inc Review

Fri, 14 Nov 2008 20:59:08 EST

Spartan Internet consulting , Inc Review - by xpertwriter

The Spartan Internet consulting is the biggest Internet consulting and Web designing firm offering the Services of web Hosting , web designing programming and other services of the interest for all those who are in need of them or searching for the quality firms in the world .

If you are looking web design , web design templates , web consulting or web Development then Spartan internet is the First choice because we develop mind boggling website s with killer visual effects to attract you at sight .

Some of the developed website are given blow just visit them and experience t5he difference , professionalism and creativity of our team of developers who ready to put fingers over your project .

Besides this , Spartan Internet does Executive marketing to market your business to the help increases your clientele . The marketing plans are so affordable and effective that easily suit to your budget . The Internet has been the big place of marketing one’s products to around the world .Spartan Internet is the quality firm which both works as consultant and Web development firm to suit your needs of age . In today’s world when the internet has become the source of marketing and business then a website adds value to your business and maximized your revenue and income as on internet , every body knows about your company and its products . Spartan Internet consultants always come up with remarkable ideas to boost your e-business.

Pakistan Refinery Limited at A Glance

Fri, 24 Oct 2008 06:50:44 EST

Pakistan Refinery Limited at A Glance - by xpertwriter

Pakistan Refinery Limited was incorporated in 1960 in Karachi and is engaged in production and sales of petroleum energy products as well as MTT, its only non-energy product. Its operations encompass extensive installations in refinery premises at Korangi terminal, storage facilities at Keamari and pipeline network Korangi to Keamari. Its products are include liquefied petroleum gas, motor gasoline, kerosene, jet fuel, high-speed diesel, and furnace oil. It supplies its products to the domestic markets, Pakistan defence forces and the Railways. Pakistan has five refineries with a total refining capacity of less than 270,000 bbl/d or 13.5 million tons per year. The consumption of oil products in Pakistan is highly skewed, with nearly 85% in the form of high-speed diesel (HSD) and fuel oil (FO). The refineries produce a full range of products, including lube base oils and asphalt. However, 60% of their production is HSD and FO, resulting in a significant mismatch between refined product output and market profile. Pakistan exports surplus gasoline and naphtha, and is self-sufficient in other petroleum products, such as kerosene and aviation fuels. Furthermore, the refinery sector is one of the highly volatile sectors where small changes in international oil prices can cause large swings in the industry's profit margins. Pakistan's demand for the year 2008 was around 400,000 bbl/d or 20 million tons for the year and it is expected that the consumption of oil and gas liquid products will increase to 466,000 bbl/d by the end of 2012. The projected increase is around 4% per annum from 2008 to 2012. The import requirement would therefore be approximately 388,000 bbl/d by 2012. This year, world market witnessed unusual rising trend of petroleum prices. Towards the end of the period under review, price of benchmark crude oil and Pakistan Refinery's main intake Arab light crude surged to all time high of $140.22/bbl and $138.52/bbl respectively. The country registered a growth of 8.34% in POL consumption during 2007-08 as compared with last year. Consumption of motor gasoline and high speed diesel in overall POL consumption increased by 28.47% and 14.54% in 2008 on a year on year basis (YoY). During the period 2007-08, the refinery operated at a capacity of 5,955 MT/day, which represents an increase of 10% in comparison with the corresponding year during which planned suspension of refinery operations had taken place. The refinery processed 323,991 M.Tons of local crude that is 38% higher as compared to the last year. The financial year 2008 witnessed a phenomenal growth in the profitability of the company. The company earned a profit after tax of Rs 211074 million during the year ended June 30, 2008 as against a profit of Rs 250.81 million in the last year. The increase in PAT was around 741.56%. Gross profit increased by 458.25%, this unusual increase in profitability was mainly due to the massive rise in oil prices and healthy international refining margins. Return on assets was around 8.88% which represents an increase of more than 7% as against the last years ROA figure. Profitability of the company, in fact of whole industry, is directly associated with the international oil price. Fickle prices also give rise to erratic demand trend as businesses and consumers switch to cheaper alternatives. FY06 witnessed rising trend of petroleum prices internationally. As a result, the prices of nearly all the products went up significantly. Though the profit margins of PRL plunged, yet the company was still able to post a robust after tax profit. In the first half of FY07, the international prices of oil plunged while in the second half; it rose thereby impacting the margins of the industry as a whole. The cost of operations rose considerably depressing the bottom-line of the company. ROA and ROE depicted an increasing trend in FY05 but decreased in FY07 owing to the reasons mentioned above. Depressed demand for the petroleum products like that of motor gasoline owing to availability of cheaper substitute like CNG was also a contributing factor which affected the profitability of PRL. Liquidity deteriorated slightly during the FY08 as compared with FY07 because there was a tremendous increase in accrued interest/markup. The amount for accrued interest rose by a staggering 3799.3%. In 2007, accrued interest were just fewer than 2 million rupees though at the end of the FY08 the amount increased to 77.5 million rupees. On the current assets side trade debts increased by 117.71% whereas stock-in-trade rose by 78.20%. Overall the current ratio fell from 1.38 in FY07 to 1.34 in FY08. Liquidity position of PRL is fairly strong as evident from its current ratio trend. Throughout the years under discussion, the current ratio has remained consistently above 1. Decline in liquidity from FY06 and FY07 owes much to the very steep rise in the current liabilities. The operating cycle has increased during FY08 because of the increases in inventory turnover and day sales outstanding. DSO has increased because of the rise in trade debt from Rs 4.78 billion to 10.43 billion in FY08 on a YoY basis. Secondly Inventory turnover also rose from 16.74 days in 2007 to 17.58 days in 2008 because stock in trade increased from Rs 5.1 billion to Rs 9.1 billion in 2008 on a YoY basis. All in all the companies overall ability to manage its assets deteriorated as the found it difficult to get cash out of debtors and reduce stock in trade. Both sales/equity and total asset turnover improved during the FY08 because of higher sales and subsequent higher profits. Debt/equity ratio has increased from 2.06 in 2006-07 to 2.49 in 2007-08 because total liabilities increased by some 71.52% in FY08 on a YoY basis. Long-term debt to equity increased to 0.7% in FY08. Such a low long-term debt to equity figure represents a fact that most of the financing of assets in done through short-term debt. The debt/asset ratio rose from 67.28% in FY07 to 71.37% in FY08. The major increase is in the short-term debt of the company. This is also a reason for the increase in finance costs by 209.66%. Even though financial costs rose but TIE (times interest earned) increased from 7.09 to 13.76 in FY08 on a YoY basis due to an increase in the income. The major chunk of the financing for PRL comes through debt and more specifically short-term debt as indicated by elevated figures of debt to asset and debt to equity ratios and extremely low long-term debt to equity ratio. This has been consistently reflected over the years under consideration from FY04-07. As a result, the company's long term debt obligations are at a very lower side. Moreover, the interest paying ability of PRL has been mitigated by the temporary loss that the company is going through in the wake of rising oil prices and depressed demand. Too much of debt financing gave rise to higher financial charges, which eroded the debt paying ability of the company by a large extent. Otherwise the company is relatively on a stronger position than its competitors in terms of debt management and enjoys a high level of leverage The market outlook of PRL is very strong against other industry players because of its strong fundaments. The earnings per share have improved remarkably from Rs 7.17 in FY07 to Rs 60.31 in FY08. The price earnings ratio doesn't give a good indication though it is not worrisome in the long-run because Pakistan faced difficult economic conditions during 2008. The economy faced many crises and challenges both at the international and domestic level. Security and political concerns reduced the investment numbers causing a sharp decline in the stock market during many periods of the year. FUTURE OUTLOOKThe government continued to revisit the policy and tariff structure for past many years and has now amended the tariff structure by reducing the custom/deemed duty on HSD from 10% to 7.5%, withdrawing it completely from JP-8 and has also revised the MS formula. The change in the pricing formula of MS has no economic logic; consequently the price of MS has become cheaper than its raw material. There would be severe blow to the refinery's profitability and would hurt the investor confidence as the up-gradation project expects an investment of around $400 million. Oil prices surged to all time highs in FY08 this led to the phenomenal rise in profits of oil refining companies worldwide. An important implication in the next two years for oil refinery companies is that a worldwide economic recession is expected especially in the US and the developed European country. Economic slowdown has begun in the US, as it was evident from the weak manufacturing and job numbers of the US economy in September. We expect oil prices to stay above $60 a barrel based on the statement by the Opec countries earlier this year which said that "Oil prices would not go below the $60-70 mark as those days are gone when oil could trade below$50 a barrel." In such a scenario we expect the international refinery margins to fall sharply next year and than stay stable than onwards for the further two years. This prediction is based on the assumption that the US will go through a painful recession because it is facing a financial crisis and a falling business cycle. So both of these forces combined will impact all major exporters and industries of the World, which in turn will hurt the oil refining sector as economic growth is a major driver of this sector.

Pakistan Refinery Limited at A Glance

Fri, 24 Oct 2008 06:45:27 EST

National Bank of Pakistan Limited At a Glance

Sat, 11 Oct 2008 16:49:36 EST

National Bank of Pakistan Limited At a Glance - by xpertwriter

National Bank of Pakistan is the largest commercial bank of Pakistan. The bank handles treasury transactions for the Government of Pakistan as agent to the State Bank of Pakistan. The bank has a branch network of 1,232 branches in Pakistan and 18 overseas branches including the Export Processing Zone Branch. It also provides services as trustee to National Investment Trust including the safe custody of securities on behalf of NIT.

National Bank of Pakistan was established on November 9, 1949 under the National Bank of Pakistan Ordinance, 1949 in order to cope with the crisis conditions which were developed after trade deadlock with India and devaluation of Indian rupee in 1949. Initially, the bank was established with the objective to extend credit to the agriculture sector. The normal procedure of establishing a banking company under the Companies Law was set aside and the bank was established through the promulgation of an ordinance due to the crisis situation that had developed with regard to financing of jute trade.

It commenced its operations from November 20, 1949 at six important jute centres in the then East Pakistan and directed its resources in financing of jute crop. Its Karachi and Lahore offices were opened in December 1949. The nature of responsibilities of the bank is different and unique from other banks and financial institutions. The bank acts as an agent to the State Bank of Pakistan for handling the provincial and federal government receipts and payments on their behalf. The bank has also played an important role in financing the country's growing trade, which has expanded through the years as diversification took place.

RECENT FINANCIAL PERFORMANCE H1FY08

NBP realized an income of Rs 7.88 billion in H1FY08 which is 13% lower than H1FY07 of Rs 9.01 billion. On comparing the half-year results (YoY), the net mark-up income augmented by 16% mainly due to the growth in volumes. The increase in net interest income was offset by manifold increase in provision for NPLs, which resulted in 17% decrease in net mark-up income after provisions. The NPLs rose due to removal of the FSV benefit which was done in the third quarter of FY07 and its effects were apparent on profitability by an amount of Rs 3.1 billion therefore this factor has to be taken into account to compare quarter-wise profitability as this benefit is not there in H1FY08.

The non-mark-up income rose by 84% owing to the increase in fee and commission (23% over H1FY07), dealing in foreign exchanges (326% over H1FY07) and gain on sale of securities (106% over H1FY07) which combined with only 28% increase in non-mark-up expenses positively contributed to total profits. The increase in "other income" was mainly due to Rs 987.610 million of compensation for delayed refunds from income tax. (Note No 12)

Despite the 13% decrease in PAT the total profits for appropriation rose by 30% due to accumulated profits of previous years. The sliding profitability trend is in line with banking industry's performance. The rising interest rates have led to increased NPLs and slowdown in advances, specially in the consumer segment. The diluted earnings per share for the half year fell to Rs 8.79 to Rs 10.05 due to lesser PAT in H1FY08 and also because the earnings per share have been adjusted for the bonus share issue for the period.

The total assets grew by 4% to Rs 795.85 billion in H1FY08 which was collectively contributed by a growth in cash and balances with other treasury banks (32% over FY07), cash with other banks (18% over December 30 '07) and advances (10% over FY07). The advances included Rs 45,935 million NPLs which were up by 20% from Rs 38,318 million (December FY07) the increase is way more than industry average of 7.8%. Consequently, the NPLs/advances ratio also stood at 12% which is higher than industry average of 8%.

The investments in line with the industry trend, fell to Rs 172.67 billion which is 18% lower than Dec'07, mainly due to a reduction of Rs 41.17 billion in market Treasury Bills. The entire impact of T-bills was not apparent as investments also included Rs 8 billion Term Finance Certificates issued in this half maturing in FY13. Total liabilities augmented by 6% in H1FY08 due to increases in bills payable (75% over FY07), borrowings (35% over FY07) and deposits (5% over FY07). There was barely any growth in Savings deposits and in fact a 2% decrease in fixed deposits. However, the non-remunerative accounts, such as current deposits grew by 9% providing the bank low cost funds.

During the first half the bank issued a 10% bonus shares with a value of Rs 815,432 Million and a cash dividend of Rs 7.5 per share. The average share price in H1FY08 remained near Rs 220 per share which could have been better if the stock market hasn't been into turmoil. The ROA of NBP was 1.01%, which is exactly in line with industry average. Whereas the ROE is only 6.86% in comparison to 10% of the industry which implies that NBP raised capital through equity which is most preferred form of fund in Pakistan. ADR of NBP (60%) is below the industry average (65%).

In FY07, NBP posted a PAT of Rs 9 billion which is 12% higher than FY06. If we look at the quarter wise profitability it was on a rise till 3QFY07, but in the last quarter, the State Bank of Pakistan removed the benefit of FSV, which approximately affected the profits of NBP by Rs 3 billion. Therefore, total provisioning of the bank showed massive increase of 99% during the year and reached at Rs 4.7b as against Rs 2.3b in FY06.

The total assets stood at Rs 762.12 billion as on December 31, 2007, which is 20% higher than FY06. The driving factors of assets growth were 51% increase in investments, 163% increase in operating assets and 8% increase in advances. Advances mainly concentrated on consumer finance and agriculture, which has been grossly around Rs 32 billion disbursement during the period FY06-07. On the other hand, the NPLs also showed considerable growth of 6.2% to an amount of Rs 37 billion which can be a threat to future profitability.

The deposits grew to Rs 591 billion in FY07, which is a phenomenal growth of 18% over FY06. The increase in deposits has been in the low cost deposits, such as current accounts (41% growth since FY06). The growth in deposits was mainly due to higher cash inflows into economy and more liquidity in the market.

The ADR ratio has been on the rise in previous few years which shows improving liquidity of the bank. However, in FY07 ADR declined 57.6% from 63.0% due to a strong growth in deposits over the advances. NBP has posted an ever-increasing profitability over the last few years. In FY07, the pre-tax profit increased to Rs 28.06 billion, an increase of 6.6% over the last year. Earning per share jumped by over 11.7% from Rs 20.88 in 2006 to Rs 23.34 in 2007.

An increase in pre-tax profit was achieved through strong growth in core banking income. Net interest income increased by Rs 3.5 billion (11.5%) due to better yields and volume driven growth spurred by increase in consumer loan portfolio. Dividend income and capital gains also made a healthy contribution as it increased by Rs 371 million and Rs 1,145 million over 2006 respectively mainly owing to higher dividends from NIT Units as well as capital gains recorded on sell of 10% NIT Units.

If we look at the previous years of the bank, there was a major jump in profitability in CY05, when its profits after tax nearly doubled. This was in fact caused by a more than 100% increase in interest income, when the interest earned on loans and advances to customers and institutions increased from Rs 10 billion to over Rs 21 billion.

This phenomenal growth in CY05 in fact eclipses the otherwise spectacular growth that occurred in other years. Profits rose by almost 50% in CY04, and by almost a third in CY06. This growth in profits is also not reflected that well in earnings ratios because assets, and equity also showed a steep upward trend during these years.

The advance to deposit ratio (ADR) for NBP has declined over the past few years, signifying a decrease in the bank's liquidity position. This has been a trend exhibited by the banking sector as a whole, and is caused by the fact that while deposits have shown a healthy increase over the years, advances by banks have grown at an ever greater rate, overcoming the rise in deposits. Industry ADR stood at 70.3% in CY06 as compared to 66.5% in CY05 and 61.5% in CY04.

The major upward trend in deposits throughout the industry has been the result of the heavy economic activity during recent years fuelling the demand of consumers and the private sector for credit. These increases have occurred across all categories, over both short and long terms and in both local and foreign currencies.

The industry has also shown a trend towards increasing deposits in banks, a major cause of which is, of course, the booming economic activity, apart from higher foreign inflows in the form of worker remittances and FDI, as well as expanding branch networks, product innovation and better efforts at marketing.

In fact, the growth in deposits in the top five banks, including NBP, has actually been less than that in the next five banks. The deposit growth in public sector commercial banks is second highest in the industry, behind local private banks.

Growth in NBP's deposits has been fluctuating over the years. These increased by 9% in CY03 and 18% in CY04, but decreased by half-a-percent in CY05. However, deposits showed a resurgence in CY06, showing an increase of 8.3%, thus standing at over Rs 500 billion.

This irregular trend is mostly caused by institutional deposits, which decreased in CY05 but then showed healthy growth in CY06. Customer deposits have shown a steady increase over the years. They increased by Rs 8 billion in CY05, and a significant Rs 31 billion in CY06. Within customer deposits, fixed deposits have posted higher growth than savings deposits.

NBP has maintained a pretty steady proportion of earning assets to total assets, earning assets growing at a slightly higher rate than total assets. Within earning assets, investments actually decreased by about 10% in CY04 and in CY06, while on the other hand advances have maintained a healthy growth rate of 37%, 22% and 18% in CY04, CY05 and CY06 respectively.

The result has been that advances have increased from 58% of earning assets in CY04 to 61% in CY05 and 66% in CY06, of course leading to a corresponding decrease in the proportion of earning assets constituted by investments. Industry figures substantiate this trend, where in CY06 advances increased to 55.8% of total assets from 54.4% in CY05, while investment portfolio decreased from 21.9% of assets to 19.2% in the same period.

In addition, 60% of the growth in banking assets in CY06 was accounted for by growth in advances. Apart from consumer and private sector credit, NBP also lends extensively to the agriculture sector and is the largest lender to this sector.

The earning assets have shown both increasing returns and increasing costs. As discussed earlier, NBP has increased the ratio of advances to investments within its earning assets, which has also increased the bank's risk-weighted assets. This trend can be interpreted as a trend towards improving the yield on earning assets on the back of leverage provided by the higher capital adequacy ratio. The yield on earning assets improved from 8.2% in CY05 to 9.5% in CY06. Cost of earning assets increased from 1.62% in CY04 to 2.28% in CY05 to 2.75% in CY06.

Non performing loans (NPLs) of the bank showed a downward trend till CY2005, decreasing from Rs 39.77 billion in CY03 to Rs 36.10 billion in CY04, to Rs 33.74 billion in CY05. This followed an industry-wide trend, where NPLs decreased to Rs 177 billion in CY05 from Rs 211 billion in CY03. Thus, NBP in particular and the industry in general has been able to contain credit risk despite aggressive growth in advances to consumer and private sectors. This is also shown by the downward trend in NPLs as a percentage of advances.

There was an increase in NPLs, however, in CY06. However, this cannot be attributed to relatively less monitored and regulated loans issued, since interest rates showed a significant increase in the period, while the high levels of indebtedness affected the ability of the market to absorb loans. Industry figures show that the downward trend of NPLs slowed down during this period. Industry NPLs stood at Rs 175 billion at the end of CY06.

Disaggregated industry analysis revealed that there were plenty of fresh NPLs incurred during this period. However, extensive write-offs and recoveries managed to reduce the overall level of NPLs. NBP has Special Assets Management Group dedicated towards the monitoring and recovery of NPLs. NBP has shown strong market performance in the period under review.

Listed on the KSE-100 and KSE-30 indexes, the shares of the bank have shown significant turnover. However, since FY07, the share prices have started falling in line with the decelerating profitability of the banking sector along with economic turmoil that the country is facing.

Attock Cement Pakistan Limited (ACPL) Reviewp

Sat, 11 Oct 2008 16:33:11 EST

Attock Cement Pakistan Limited (ACPL) Reviewp - by xpertwriter

Attock Cement Pakistan Limited (ACPL) was incorporated in 1981 as a public limited company. The project was a Pak-Saudi venture. The project was completed and the plant started commercial production on June 1, 1988. ACPL is part of the Pharaon Group as the Pharaon Commercial Investment Company Limited has a total stake of 84.06% in ACPL. It has been listed on the Karachi Stock Exchange since June 2002 and the general public holds 15.94% shares of the company.

Attock Cement introduced the pre-calcination/pre-heating dry process technology in Pakistan. ACPL manufactures three types of cement: Ordinary Portland Cement which is used in general construction, Sulphate Resistant Cement which is suitable for construction in sea or near coastal areas and Portland Blast Furnace Slag Cement for massive constructions eg dams and canals.

The company also produces specially formulated mixes of cement to meet the different customer requirements. ACPL markets its cement under the brand name 'Falcon Cement.' ACPL focuses to meet the Pakistani and international quality standards and in 2002, it achieved the ISO 9001-2000 certification from Lloyds Register Quality Assurance.

The company sells cement locally and internationally. It has been involved in numerous projects such as Gwadar Port Housing Project and Pearl Continental in Gwadar; KWSB Project III in Pipri and Gharo; Forty-Man Water Park, Super Highway, KPT Project OP-II, Karachi and Creek City Housing Project, Karachi. ACPL was the first to export clinker to the UAE and Qatar and cement exports to Iraq. The cement sector of Pakistan witnessed a strong growth of 24.3% in total cement dispatches in FY08, which was 30.11m tons as compared to 24.22m tons in FY07. In FY08, the exports formed 25% while local dispatches were 75% of the total sales.

Pakistan's cement sector has benefited from the boom in the domestic construction industry and huge cement shortage in the regional countries. There was a rising cement demand from the housing and government sponsored development projects in Pakistan resulting in a 6.5% growth in the local dispatches.

However, the impressive growth of 142% in cement exports in FY08 was the main contributor of growth in overall cement dispatches. The construction activities in Afghanistan and UAE, as well as exports to other regional markets like Iraq, Kuwait and Sri Lanka increased the cement demand. The overall capacity utilisation improved to 85.8% in FY08 from 83.2% in FY07.

There was a 12% growth in the cement dispatches of Attock Cement Pakistan Limited during the first 9 months of FY08. The growth in sales was restricted due to certain production constraints. The production and commercial activities had to be ceased on many occasions due to electric pylon damages in the area of Hub. Local cement dispatches were 94% while exports formed 6% of the total cement dispatches of ACPL during the 9 months of FY08. During the same period in FY07, local dispatches were 97% and exports were 3%.

PROFITABILITY

Despite an impressive growth in cement dispatches, the profitability of the cement sector fell by 73.6% to Rs 562 million during 9 months of FY08 from Rs 2,133 million in the corresponding period of FY07 due to reduced prices. The average cement price during Jul-Mar FY08 was Rs 128.3 per bag as compared to Rs 133.6 per bag in the same period of FY07.

Another reason for the fall in the cement sector's profitability was the 44.8% rise in the finance charges faced by companies. Finance charges rose due to higher interest rates. Higher input costs, increased coal prices and higher depreciation also hampered the cement sector's profitability.

The profitability of ACPL also fell during Jul-Mar FY'08 due to similar reasons. The company had earned profit before taxation of Rs 613 million during Jul-Mar FY07 while during the same period in FY08 ACPL posted a 43% lower profit of Rs 349 million.

The net sales for the period Jul-Mar 2008 was only 3.5% higher than the net sales generated during the corresponding period of FY07. Certain production constraints restricted the growth of sales volume during the period under review.

There has been an excess supply situation in the domestic market, which put a downward pressure on cement prices and the overall net retention reduced by Rs 171 during Jul-Mar FY08. Reduced prices and higher sales tax and excise duty affected the net sales of the company.

Cost of goods sold was also 27% higher during Jul-Mar FY08 vis-a-vis Jul-Mar FY07. This was because of higher depreciation charges and input costs especially due to increased coal prices. Increased royalty rates by provincial government also increased the expenses for the company. The gross profit of the ACPL during Jul-Mar FY08 was 35% lower as compared to the same period last year.

Other operating income, including income from its financial and real assets, increased by 83% over the period Jul-Mar FY08 as compared to the same period in FY07. Despite the operating profit of the company was Rs 413.5 million lower than that earned during the same period in FY07.

Distribution costs and administration expenses increased by 6% and 15.8% respectively during the Jul-Mar FY08 compared to the same period in FY07. Finance costs of the company increased substantially by 41% due to higher interest charges. However, other operating expenses, which include Workers' Profits Participation Fund and Workers' Welfare Fund, reduced by 47%.

LIQUIDITY

The liquidity position of the ACPL improved further during the first nine months of FY08. This is because the current assets increased more in proportion to current liabilities. Current assets increased by 27% while current liabilities of the company increased by 19% during Jul-Mar FY08. Current assets increased mainly due to substantial increases in the company's trade debts and deposits and short term prepayments of the company were 7 times higher compared to Jun-FY07.

Also, 69% increase in stores, spares and loose tools and 44% increase in the stocks led to a rise in current assets. However, there was only a 2% increase in the most liquid asset - cash and bank balances of the company during the time period under review.

The current liabilities of the company either decreased or increased only slightly. However, there was an addition in the total current liabilities of Rs 197 million in the form of short term borrowings for murabaha and running finance of the company. This could have been the reason for the higher finance costs for the current period.

ASSET MANAGEMENT

The average length of time took ACPL to convert its sales into cash reduced since FY03. However, the days sales outstanding increased to 9 days during Jul-Mar FY08 from 2 days in FY07. The reason that it took longer for ACPL to collect its receivables could be attributed to a substantial increase (319%) in the company's trade debt (receivables) from Rs 19 million in FY07 to Rs 83 million in Jul-Mar FY08.

Inventory forms a large part of the current assets of ACPL (60% during Jul-Mar FY08). The liquidity of inventory improved continuously since FY04 as the inventory turnover rate improved. The average number of days to sell inventory fell ie it took ACPL lesser time to sell its stocks. In FY07, the average number of days to sell inventory, decreased to 96 days.

However, during the first nine months of FY08 the liquidity of inventory went down considerably as the average number of days to sell inventory went up to 133 days. It took longer for ACPL to sell its stocks during Jul-Mar FY08. Likewise, the operating cycle of ACPL also became longer, from 98 days in FY07 to 142 days in Jul-Mar FY08. Thus the quality of the company's liquid assets went down during the period under review.

DEBT MANAGEMENTThe debt to assets ratio depicts how ACPL is financed. Each year the company has been using more debt (long term debt and current liabilities) to finance its activities. This is reflected in the rising trend of the debt to asset ratio. During the first nine months of FY08, ACPL's total debt increased by 10% whereas its assets increased by 5%.

The rising debt to equity ratio indicates that ACPL has been financing its growth increasingly by debt. In FY04 the debt to equity rose drastically and during the same fiscal year the profit before tax of the company also surged. Earnings have increased more than the cost of debt (interest) and the shareholders seem to have benefited from this. However, the finance charges increased immensely during FY07 and it contributed partly in the decline in the profits that fiscal year. The economy has been experiencing rising interest rates and this could affect the finance costs and future earnings of ACPL.

MARKET VALUEThe book value of the company has been increasing as the net assets underlying each share increased. The market/book ratio has also increased over the years indicating that investors regarded ACPL favorably. However, the market/book ratio fell during Jul-Mar FY08 because of a fall in the average share price.

FUTURE OUTLOOKCement dispatches of the sector are expected to continue growing in future as demand for the cement may increase in response to construction activities in the private sector. In the budget FY09, the government has announced that Rs 550 billion will be allocated to the PSDP. Thus the local sales of cement are expected to increase in future.

In the budget FY09 the central excise duty on cement was increased to Rs 900 per ton from current Rs 750 per ton. On each bag the CED increased by Rs 7.50 per bag (from Rs 37.5 per bag to Rs 45 per bag). But this increase is not expected to impact the profits of the cement sector because this increment in CED will be passed on to the consumers. However, the rise in the GST by 1% will increase the local cement prices and may dampen the demand for cement.

Expenses are expected to increase for cement manufacturers due to the hike in coal prices and higher interest rates in our economy. This will negatively impact the gross margins of the cement sector. During the past, our cement manufacturers shifted production from oil to coal or gas. Pakistan has huge reserves of coal but manufacturers need to import coal due to high sulphur content.

Coal prices more than doubled during FY08 with average coal prices being around US $176/ton during the fiscal year. Rising coal prices coupled with a depreciating rupee will increase the cost of production for the cement companies and hit their gross margins hard.

From a wider perspective, the cement consumption in the domestic market is expected to fall because of the deplorable economic situation in the country. The declining GDP and volatile economic situation may restrict the construction activities in the country and may hit the demand for cement.

However, there is hope for cement sector on the international front. Presently, Pakistan is exporting to Afghanistan and India. Regional shortage of cement has presented a favorable opportunity for our cement manufacturers. Cement demand in Afghanistan is expected to be 1.5m-2.0m tons per annum for the next five years.

Cement manufacturers have growing opportunities in Middle East and African countries. New export markets like Russia and European countries have been identified. Growth in export sales may boost the margins of the industry and reduce the negative impact of rising costs on its profitability.

Attock Cemet Pakistan Limited will focus on achieving 100% capacity utilization and improved efficiency. This will lower wastages and reduce its operational costs, essential to increasing its profitability. This will also prevent any production constraints in the future. ACPL will also expand its exports by focusing on new and emerging international markets.

SNGPL Rating AA , A1+

Sat, 11 Oct 2008 16:19:08 EST

SNGPL Rating AA , A1+ - by xpertwriter

The Pakistan credit rating agency (Pacra) has maintained the long-term and short-term entity ratings of Sui Northern Gas Pipelines limited (SNGPL) at AA (Double A), and A1+ (A One Plus) respectively. The ratings denote a very low expectation of credit risk and a very strong capacity for timely payment of financial commitments.

The ratings reflect SNGPL's low business risk emanating from its monopolist position in its area of franchise (Punjab and NWFP), catering to majority of the country's population.

The Government of Pakistan guaranteed return on SNGPL's increasing average net operating assets, providing incentive for future expansion, is also a key-rating factor. Moreover, the ratings also incorporate the company's very strong financial profile, stemming from a low leveraged capital structure, robust cash flows and healthy liquidity

Pervez Ahmed Securities Limited

Sat, 30 Aug 2008 22:55:21 EST

Pervez Ahmed Securities Limited - by xpertwriter

Pervez Ahmed Securities was incorporated on June 8, 2005 as a single member company and was listed on Karachi and Lahore stock exchanges on June 21, 2007. The principal activities include shares brokerage and trading, consultancy services, equity investments, corporate finance and underwriting. Recently the company has acquired 100% holding, 8.5 million shares of Pervez Ahmed Capital (Pvt) Limited.

RECENT PERFORMANCE Q3, FY08 During the period under consideration, July FY07 to March FY08, the company has shown phenomenal growth in terms of profitability. The operating revenue rose by more than 17 times from Rs 20 million (Mar-07) to Rs 349 million (Mar-08), mainly contributed by net gain on sale of investments and dividend income. Interestingly, the administration expenses didn't show any proportionate increase as these rose by only 216% as compared to humongous increase in revenue. Operating profit rose from Rs 12 million to Rs 349 million.

The operating expenses increased proportionately because the company increased its authorised share capital, so as the statutory fee also increased along with auditors' remuneration. The difference of fair value of a security and the carrying value, also known surplus on re-measurement of investments at fair value, has been Rs 156 million in the first three quarters under review. These revaluation gains added a major chunk to earnings after tax thus resulting in PAT of Rs 490.24 million.

The balance sheet size grew by 45% ie the net assets grew to Rs 1.058bn in Mar-08 as compared to Rs 41 million in June-07. Non-current assets grew by 261% mainly supported by 400% increase in property and equipment and a newly created account of long-term investment in subsidiary. Pervez Ahmed Securities Limited acquired 100% shares (8.5 million shares) of Pervez Ahmed Capital (Pvt) Limited, for total consideration of Rs 106m, which was formerly known as Mashriq Securities. The principal activity of the company includes shares brokerage, underwriting and investments.

Current assets grew by 148% this is chiefly due to 15 times growth in advances and refundable tax and short term investments (175% growth in 3 months ending Mar-08). Current liabilities augmented by 481% due to Rs 260m short term borrowings and Rs 1.11bn trade and other payables. Short term borrowings were from Arif Habib Bank Ltd and Dawood Islamic Bank Ltd Rs 160m and Rs 100m respectively. In the capital part of balance sheet, after a bonus issue of 10%, the paid up capital of the company amplified to Rs 659m on Mar-08.

FINANCIAL PERFORMANCE FY06-FY07 For FY06-07, ending in June, the country's economy progressed pretty well with a real GDP growth of 7%. In this fiscal year, strong expansion in real fixed investment of 20.6% was seen which was the highest in the preceding four years. Several sectors including manufacturing, transport and communication, finance and trade witnessed double-digit growth in private investment therefore contributing to overall GDP growth. In the same year, investments further supported by GDRs as well as mergers and acquisitions. All in all, the market had abundant liquidity from investments of US $5.1bn which facilitated the stock market growth.

The KSE-100 index surged to 13,772 points which is a 37.9% increase from 9,989 points. Aggregate market capitalisation also increased from Rs 2,801 billion to Rs 3,700 billion. During FY07 the profit after tax rose to Rs 135.92 million from Rs 5.2 million in FY06. The remarkable performance in FY07 is backed by gain on sale of investments, which contributed almost Rs 118 million to overall profits whereas in FY06 there was a loss on sale of investments which diminished the overall profitability.

This loss on sale of investments resulted in operating revenue of Rs (16.2m) in FY06. Despite of this huge operating loss in FY06, the company reported a profit after tax of Rs 5.2m due to positive flows of Rs 27.97m from 'surplus on re-measurements of investments at fair value'. It is important to keep in mind that the profits in FY06 were generated from an 8-month operation.

The operating revenue took quantum leap and it stood at Rs 125.38m in FY07. The operating revenue was matched by proportional increase in expenses like administrative expenses and financial charges. The Rs 135.92 million PAT translated into Rs 4.3 earnings per share on the basis of weighted average number of shares but there was no dividend given out in the year 2007 as the company was relatively new on LSE and KSE and it also needs to maintain liquidity.

is apparent from the pie charts that in pursuit of higher and stable gains, the company diversified into other sectors listed on the stock market. Aggressive portfolio change can be witnessed in FY07 over FY06. Major change is observed in textile investments from 74% (FY06) of total investments to 28% in FY07, this is a fall due to the negative outlook of the textile sector in the last fiscal year. In spite of strict regulations on banks, the banking sector has shown tremendous profitability and stability in earnings. Commercial banks constituted up to 27% of the total portfolio in FY07 as compared to 11% in FY06.

Profit and Gross profit margins were negative in FY06 due to a loss on sale of investments, which is apparent in negative operating revenue. Though the same ratios increased drastically and painted a more impressive picture of company's performance in FY07. ROA and ROE have shown a positive trend from 2% to 14% and 19% due to increase in profitability of the company. The ratios are not comparable on a head on basis with those in industry because the company is relatively new and has a smaller area of operations.

The D/E and D/A ratios slightly reduced in the following year. This change is attributable to shares issue of worth Rs 399.13 million issued for consideration other than cash against membership card and room. The average stock price hovered at Rs 27.20 throughout the year 2007, which doubled to Rs 57.20 in the first three months of 2008. The current ratio is also showed some slight improvements from 3.12 times to 3.9 times. This shows an improving liquidity picture of the company.

FUTURE OUTLOOK The continued bullish trend for last five years is beginning to lose its pace. The current bearish trend in stock market will result in loss of investors' confidence which is worsened by the unstable political scenario of the country. The macroeconomic indicators are also not favourable of the economy, the out comings of tight monetary policy and high inflation is apparent in the slow equity market growth. Moreover, net outflow from the SCRA accounts also dampen the investor spirit. Therefore, new diversified products that reach even more number of people are the need of the hour. The company is also looking forward to develop new business ventures to maximize its profits.

Netsol Technologies Limited Financial Review

Sat, 30 Aug 2008 22:50:28 EST

Netsol Technologies Limited Financial Review - by xpertwriter

NetSol Technologies Limited is a majority owned subsidiary of NetSol Technologies Inc, USA. It is a multinational provider of enterprise software and IT services to the financial industry. NetSol became the first software company in Pakistan to list its securities on the Karachi Stock Exchange in FY05.

The company's IPO was oversubscribed by 1.1 times and was the most successful IPO of the year. It offers a wide range of Information Technology solutions, consulting services and customized application softwares. Some of its products include Technology Outsourcing, Systems Integration, Application Development, Processes Consulting, Business Intelligence Consulting and Information Security Consulting. NetSol's most popular product, LeaseSoft, has boosted its position in the leasing and assets hire purchase management vertical.

NetSol caters to different sectors such as leasing and finance, insurance, banking, government, defence, manufacturing, health, education and IT. The company has a stronghold in the Pakistani market and a growing presence in other parts of the world. It has off-shore IT operation facilities and exports to Asia Pacific region, Australia, Europe, USA and Middle East.

NetSol became ISO 9001:2000 certified in 1998. In August 2006, NetSol was awarded the highest quality standard for software development, Capability Maturity Model Integration (CMMI) Level 5. The company then aimed to achieve the ISO 27001 certification, an internationally recognized standard for Information Security Management and recently NetSol's Asia-Pacific division's Lahore based IT campus "NetSol Village," has achieved ISO 27001 certification. NetSol has been successful in generating higher revenues every year. The company's main sources of income are software licencing, software development and maintenance services. The company's operations in Pakistan contribute 20% while exports constitute a major 80% of the its total revenue earned every year.

NetSol has witnessed a rising trend in its revenue due to high generation of income from local operations and exports. NetSol's local revenue increased (by 288%) from Rs 46 million in FY05 to Rs 179 million in FY07. The company's export revenues stood at around Rs 390 million in FY05 and increased to Rs 748.5 million in FY07, with a major boost of an 89% during the FY07. Due to this substantial growth in NetSol's exports it received the 'FPCCI Best Export Performance Award' in 2005-06. NetSol is expected to maintain its rising trend of revenue in the future as well because the revenue earned during the period July-07-March-08 (first 3Q of FY08) is Rs 893 million vis-a-vis Rs 637 million earned during the same period in the last fiscal year.

PROFITABILITY

The overall profitability picture of NetSol has been promising, showing that the company's operations have been effective over the years. The gross profit and net profit margins of the company fell slightly in FY05 and then dipped further to a great extent in FY06. NetSol's cost of sales increased by 65% in FY06 whereas the revenue earned was only 16% higher as compared to FY05. Lower growth in revenue in FY06 can be attributed to the fact that NetSol's exports which constitute around 80% of the total revenue grew by only 1.2% and although local revenue increased by 138%, it formed only 20% of the revenue. Because of the lower margins on local revenue, the gross profit was 11% lower and this translated into a 42% lower net profit for FY06. Thus the return on assets (ROA) and return on equity (ROE) ratios were also impacted and decreased in FY06.

The profitability ratios recovered in FY07. Higher revenue due to an 89% increase in exports and a 63% in local revenue along with controlled increase in cost of sales resulted in higher gross profit margin in FY07. The net profit increased mainly due to higher value licence sales and effective control over costs. It was further boosted by increase in other income such as rental income and gain on foreign currency translations. ROA increased which showing that the company was able to earn a higher return with the assets under its control in FY07.

The profitability situation is expected to improve in FY08 as NetSol has already posted a higher gross profit and net profit during the first 3QFY08 compared to the GP and NP in FY07. The gross profit for 3QFY08 is around Rs 26 million higher than the gross profit of FY07. Net profit during July-March-08 was around Rs 452 million, already 28% higher than the total net profit of FY07 (Rs 352 million). ROA and ROE have both fallen slightly during July-07- March-08 due to higher increase in assets (32%) and equity (35%) with respect to the growth in net profit (28%).

LIQUIDITY

NetSol's liquidity position improved from FY04 to FY06 because the current assets increased more in proportion to current liabilities. In FY07 the current ratio decreased because the current assets grew by 56% while the current liabilities increased by 138%. Short term financing of the company increased in FY07, due to high export refinance and addition of running finance, resulting in the substantial increase in current liabilities for the period. Some of the current liabilities (amounting to around Rs 137 million are interest/markup bearing liabilities) such as short term financing and lease liabilities maturing within one year.

The working capital of NetSol has been continuously increasing, showing the company's ability to meet its short-term debt and operational expenses quite comfortably. Cash and bank balances constitute 7% of the total current assets in FY07. Accounts receivables form a major part of the current assets and as NetSol's volume of business is increasing the amount of accounts receivable is also increasing such as accounts receivable in FY07 grew to Rs 319 million as against Rs 151 million in FY06. These receivables are unsecured; however, the management expects to recover them. Moreover, the company follows an effective cash management and planning policy to ensure timely availability of funds and takes appropriate actions when new requirements occur.

ASSET MANAGEMENT RATIOS

The total asset turnover ratio of the company was the highest in FY05 when the revenue had increased substantially. It came down from its level of 0.65 in FY05 to 0.48 in FY06 because the revenue in FY06 grew by only 16% while the asset base increased at a higher pace (53%). However, in FY07 the revenue growth rate improved and thus total assets turnover ratio of the company improved. The revenue/equity ratio has experienced a similar pattern as the total assets turnover ratio. We can deduce that overall NetSol has been able to generate a sufficient volume of business on its total asset investment.

The debtors' turnover ratio of the company has been declining except for a rise in FY06 when there was only a slight increase in the accounts receivable of the company. The overall declining trend of debtors' turnover ratio shows that it is taking longer for the company to recover its receivables and convert them into cash. Likewise, the average collection period is also increasing. In FY06, the average collection period was 109 days, which increased to 126 days in FY07 and during the 3QFY08, it took 171 days to recover the receivables.

The accounts receivable are increasing as the total revenue of the company is increasing. However, the management appears to be confident about recovering its unsecured receivables from its customers. NetSol applies credit risks to its customers, monitors credit exposure towards the customers and makes adequate provisions against doubtful debts. The total debt to asset ratio describes how NetSol has been financed over the years. The companies' reliance on debt or credit was higher during FY04 and FY07.

However, overall, NetSol is not a highly leveraged company. Lease payments (for assets such as vehicles and computers) and short term financing form a major portion of the liabilities of the company. Although the growth of assets has been slowing down over the years, they have been increasing more in proportion to the liabilities, except in FY07 when the liabilities grew by 164% while assets grew by 51%. The liabilities grew to such an extent because of more short term financing, higher credit transactions and credit taken from related parties such as the parent company NetSol Technologies Inc and the subsidiary TiG NetSol (Pvt) Limited.

The companies operating fixed assets and intangible assets (which include in house developed and underdeveloped software) increased considerably. NetSol has made long term investments in a subsidiary company. The debt to equity ratio has followed the pattern of debt to equity because the growth in equity has outpaced the increase in liabilities. Till March-08 the company's share capital stood at Rs 497.8 million as 172,648 ordinary shares of Rs 10 each were issued as fully paid bonus shares.

The earning per share ratio of the company fell drastically in FY06 due to a decline in profitability. As the profits picked up in FY07 and July-March-08 the EPS also rose. However, the effect of this fall in EPS in FY06 seemed to have reflected in the price of NetSol's shares in FY07 when the average stock price fell. The average price of NetSol's stock in FY06 was Rs 40.4/share, which dropped to Rs 36.6 in FY07. During July-March-08 the stock price increased impressively to Rs 110.7 as investors' expectations increased with the rising profitability of the company.

The P/E ratio was relatively higher in FY06 showing that the investors expected the company's earnings to rise in FY05 but since the earnings fell the investors' expectations dampened and reflected in a falling P/E ratio in FY07. As the earnings stabilized stock price rose during the second half of FY07 and has continued to improve till 3rd Quarter FY08. The book value per share has been increasing consistently. Despite the price fluctuations the share price has been higher than the book value, showing that investors have had confidence in the company's management and believe that the management has created a business worth more than the resources it has.

FUTURE OUTLOOK

NetSol's performance is expected to improve in terms of the revenue growth and profitability. In the local market, NetSol has built goodwill in the government as well as the private sector. NetSol's local revenue has been increasing and is expected to improve in the future. NetSol's performance during the initial quarters of FY08 has been very impressive. It experienced growth in its services, licence sales and maintenance fees. Its IT consulting services business also grew as the company expanded its range of vertical market expertise and entered the fast growing market for hospital management systems (HMS). It has a new contract with a major public sector hospital. The company's operating efficiency has also being improved.

It has recently signed a contract with a leading bank to assess and assist it in the process of conforming to the framework of the Basel II capital accord as per SBP regulations. It will help the bank in adopting the Internal Ratings Based (IRB) approach of the Basel accord for credit risk. The company has been quick to realize that after SBP's directions for banks to implement Basel II, Pakistan has become a growing niche market for Basel II advisory services and this offers great opportunities for NetSol in the future.

Export revenue forms a major part of NetSol's total earnings and thus it is making the efforts to increase its exports. NetSol's main product, LeaseSoft has been very popular in China and other countries of the Asia Pacific region. Now, NetSol is all set to take it to North America and European markets. These new markets offer higher value for IT products and services and NetSol expects to generate more business by entering these lucrative markets. At the same time NetSol is making efforts to further penetrate the Asian Pacific market and for this purpose it aimed to open an office in Thailand. Outsourcing is an area of focus now for NetSol.

It is focusing on outsourcing activities using its current facilities in San Francisco and London. Recently, NetSol has achieved a huge contract with the North American captive finance division of a major Asian-based automobile manufacturer. According to the agreement NetSol will be providing product licencing, software customization, system implementation, ongoing maintenance and support services from NetSol's financial solutions. With this contract, NetSol can expect high revenues in the future and a commanding position in the software market.

Bank of Punjab First Half Results

Sat, 30 Aug 2008 22:48:14 EST

Bank of Punjab First Half Results - by xpertwriter

The board of directors of the Bank of Punjab (BoP) approved half-yearly accounts of the Bank for the half year ended June 30, 2008. According to a press release issued by the Bank of Punjab here on Thursday, during the second quarter of the year 2008, BoP's operational income has registered an increase of 37 percent over first quarter of the current year.

Accordingly, the profit before provisions and taxes for the second half of year stood at Rs 976 million with a rise of 53 percent over operational profit of the first quarter of the year. After registering an after-tax profit of Rs 466 million for the second quarter of 2008 with an EPS of Rs 0.88, the LPS of Rs 5.85 for first half of the year has now been reduced to Rs 4.97.

The Net Interest Margin (NIM) for the second quarter registered a rise of Rs 353 million over the figure of first quarter while overall NIM for the first half of the current year remained higher by Rs 68 million over first half of 2007. Similarly, Non-Interest Mark-up Income (NIMI) for the current half year also registered a rise of Rs 361 million ie 22 percent over second half of 2007.

Based on these significant shifts in income stream, during the half year ended June 30, 2008, the BoP earned a pre-provision and pre-tax profit of Rs 2,713 million as against Rs 2,515 million for the half year ended June 30, 2007, registering a rise of 8 percent. At the end of half year, equity of the BoP stood at Rs 12,485 million while the deposits and advances remained at Rs 180,824 million and Rs 142,849 million, respectively

Dawood Hercules Chemicals limited

Sat, 30 Aug 2008 22:44:58 EST

Dawood Hercules Chemicals limited - by xpertwriter

DHCL was incorporated on 17 April 1968 as a joint venture between Dawood Group of Industries and Hercules Inc USA. It is a public limited company. At the time of its inception, it was the largest ammonia/urea plant in the country. DHCL manufactures and markets urea under the brand name of 'Bubber Sher'.

Moreover, it also provides Anhydrous Ammonia for the manufacture of soda ash, fructose and other miscellaneous chemicals. Its major customers are ICI Pakistan, Sitara Chemicals, Olympia Chemicals and Kamal International.

Total countrywide sales of Urea for the first six months stood at 2,689kt as against 2,036kt for the same period last year (SPLY). Urea industry grew by 33 percent because of its increased demand due to very high DAP prices. Conversely, the DAP off-take demand decreased by 70 percent due to high international prices. Total imports for the period stood at 137kt of urea as against 55kt in the SPLY. On the other hand, costs rose owing to 5.5 percent hike in gas prices. In addition, the fuel price increase and high inflation pushed up the distribution and administrative expenses.

Inventory of Urea in the country as of 30th June 2008 was only 54kt as against 548kt in the SPLY. The reduction is mainly because of significant increase in the off-take of urea, which is 32 percent higher than the SPLY. Trading Corporation of Pakistan (TCP) imported 136kt to bridge the widening gap of demand and supply, as the local industry was able to perform 7 percent higher in terms of production. Recently, the urea and DAP prices are being witnessed an upward trend. The DAP due to high international prices which are a result of accelerating demand in face of stagnant or slow moving supply, while urea prices have increased due to an increase in gas prices plus hoarding pressures in the market which are threatening availability of the urea in the market.

H1'08 RESULTS During the first half of the current fiscal year, the company sold a record 237,110mt of urea, which is 49 percent higher as against 159,040mt in the SPLY. Subsequently, the company's market share has improved to 9 percent against 8 percent in the SPLY. The company's total sales in the first half, stood at Rs 3,115 million, showing an impressive 112 percent growth as compared to SPLY sales of Rs 1,471 million. Cost of goods sold, showed a similar growth of 120 percent in the period under review compared to the SPLY. Higher sales were translated into higher PAT for the company. PAT for the first half of FY08 (Rs 1,214 million) recorded 143 percent growth as compared to SPLY PAT of Rs 500 million. DHCL's growth in profitability has surpassed the industry trend due to a tremendous increase in other income and income from associates.

Overall, the industry sales remained on the higher side with higher gross margins due to increased prices of urea as well as DAP. Inventory gains on DAP were also enjoyed to some extent by the industry on the previous stock of DAP.

During the first half of FY08, the production plant remained closed for 30 days mainly due to gas curtailment and annual turnaround. Despite this, efficient plant operations helped produce 230,286mt of urea as against 235,993mt in the SPLY. Similarly, plant capacity utilization was about 103 percent as against 106 percent last period. Earnings per share for H1'08, along with associate's income stood at Rs 12.21 as compared to Rs 5.03 for the SPLY.

Production in 2007

- Total production increased by 12 percent to 497,940 million tons (2006=446.7mt)

-- Total capacity utilization 112 percent.

-- Urea sales up by 16 percent to 508,540 tons (2006=437.73mt)

-- Sales up by 29 percent to Rs 5,011 million (2006=Rs 3,882 million)

-- Operating profit up by 46 percent to Rs 1,572 million

-- The company's investment portfolio comprises mainly of a 38 percent ownership of Engro Chemicals Pakistan Limited and 19 percent ownership in SNGPL.

-- The second BMR (Balancing, Modernization and Replacement) of 2006 began manifesting results in 2007. This BMR was aimed at providing future capacity enhancement, critical equipment replacement and installation of the latest Distribution Control System and energy conservation. The increased production of 53,000 tons in 2007 over the capacity production of 445,000 metric tons was the outcome of timely decisions regarding the 2006 BMR.

The local market remained suppressed during the first six months of 2007 as a result of which the national urea inventory burgeoned to 800,000kt by the fifth month as compared to 215,000kt in May 2006. This excess supply situation posed a great challenge to the industry in view of the factors in play. DHCL, however, adopted an aggressive marketing strategy, which resulted in surpassing its 2006 record with a growth rate of 16 percent. Urea uptake in the year 2007, stood at 4.90mt depicting a decline of 6.1 percent (2006=5.20mt). This is mainly due to the subsidy offered by GoP on DAP making its use attractive to the farmers. This on the other hand soared DAP's Rabi season sales by 52 percent. Encouraged by this, DHCL imported 42,988kt of DAP in last fall.

In 2007, the company recorded sales of Rs 5,011 million as compared to Rs 3,088 million in 2006. Gross profit for the period under review stood at Rs 1,862 million as against Rs 1,312 million of in 2006. The operating profit showed a healthy increase of 46.2% for the year under review and climbed to Rs 1,572 million as compared to Rs 1,075 million in 2006. The profit before tax and share from associate jumped to Rs 9,795 million from Rs 1,497 million in 2006.

The major source of increase in pre-tax profit is the capital gain of Rs 8,661 million, slightly offset by the increase in financial expenses to Rs 756 million from Rs 555 million in last year. The profit before taxation, including the share from associate, jumped to Rs 11,126 million (LY Rs 2,590 million). The year's profit after taxation including the share of associate has been reported at Rs 10,134 million (LY Rs 2,054 million).

The company's current ratio declined from FY03 to FY06. This is mainly due to higher rate of growth witnessed in current liabilities as compared to current assets. In the FY07, current liabilities decreased by 46 percent mainly due to 61 percent decline in short term running finance. This showed a positive impact on the company's liquidity position such that current ratio jumped to 3.15 in FY07 (LY 1.28).

The company's inventory turnover in days continued its upward trend in FY07 against a declining trend experienced by the rest of the industry. This further widened the gap between an average inventory turnover of the industry and DHCL's inventory turnover so that its inventory turnover now lingers much higher above its competitors.

DHCL has traditionally maintained a very low level of debtors. The FY07 also saw the lowest level of closing debtors over the period under review. This low level of debtors and against the higher sales revenue is reflected in the lowest DSO over the period. However, operating cycle has posted an increasing trend, racing upwards tremendously with a correspondence rise in the inventory turnover (days).

This decline in total asset turnover ratio may then be attributed to an increase in total assets as a result of the BMR activities during the period. The sales to equity increased in FY06 but decreased in FY07. However, this increase in FY06 was partly due to a decline in the fair value reserve on short-term investments and not entirely due to an increase in sales. In FY07, sales/equity ratio declined sharply as the equity growth outpaced the sales growth. In the upcoming months, however, the assets of Dawood Hercules and other fertiliser companies are also expected to increase through expansion and BMR activities. The FY08 is expected to witness a significant increase in the company and industry's assets.

In the FY06, DHCL acquired a significant additional short-term financing resulting in an increased in the debt to assets and debt to equity. The decrease in debt to equity during 2007 is mainly due to higher capital gains realized on the sales on investment in associate amounting to Rs 8,669,697 million, improved profitability and higher sales volume resulting in significant increase in equity.

Similarly, during the year the company changed its approach to capital management by financing its activities through long-term financing rather than short term financing arrangements

This is reflecting in the long-term to assets ratios of the FY07, which increased drastically due to long-term financing by issuing Islamic Sukuk Certificates worth Rs 6,500 million under diminishing musharaka arrangements. It was taken for the purchase of plant and machinery. The Times Interest Earned for DHCL had been better than the industry averages up to FY03 after which it weakened and continued to decline till FY06. The FY07 witnessed an increase in its TIE mainly due to decline witnesses in the short term financing.

At the close of the financial year 07, the market capitalization was Rs 32,633 million, with a market value of Rs 393.80 per share and break-up value of Rs 227.95 per share. The strong performance depicts the market confidence for the company. There was a significant gain in net worth during the year 2007 amounting to Rs 9,616 million which was a rise of 104% over the last year and therefore increased the per share book value from Rs 111.90 to Rs 227.95.

The share of the company outperformed the KSE-100 Index by a considerable margin. During the year, the KSE-100 Index increased by 25% whereas the stock of the company improved by 37% outperforming the benchmark on the yearly basis.

EPS after declining in 2006 to 24.79 jumped up to 122.3 in FY07. This is mainly due to a very high profitability in the FY07 as compared to FY06. Higher EPS effect was witnessed in the dividend payout ratio, which stood at 2.45 in 2007 compared to 32.27 in 2006. In the year 2007, the company declared an interim dividend of Rs 1.50 per share (15%) at the end of the second quarter.

Recent data released by National Fertiliser Development Centre showed that Urea off-take during the seven months (January-July) of FY08 stood at 3.2 million tons, reflecting an increase of 18 percent on year on year basis. While DAP sales, depicting a decline of 77 percent y-o-y and stood at 33k tons and a decline of 71.3 percent YTD to 175k.

Main factor contributing to higher Urea sales is high DAP prices, which increased by 147 percent year on year basis. This has actually encouraged the farmers to shift from DAP to Urea and possible stocking up of urea by the dealers in order to gain from the inventory gains. Similarly, the uncertainty regarding the subsidy to be given on DAP purchase is further discouraging the farmers to purchase DAP. The existing Urea inventory for the industry is very low which indicates a very tight urea demand/supply situation and thus necessitating greater urea imports in the near future.

FUTURE OUTLOOK

A key driver in fertiliser sector performance is the health of the agri sector. Currently, the macro and the agricultural indicators are doing well with increasing credit disbursement to the farmers which has resulted in strong purchasing power of the farmer, better water availability and rising support prices of wheat. Wheat accounts for 50% and 35% of Pakistan consumption of DAP and urea.

Fertiliser manufacturers are likely to have strong pricing power due to widening demand-supply gap, a large domestic and international price differential and continued government focus to improving productivity. This bodes well for future profitability. This tight supply situation is expected to continue in 2008 as well, despite DHCL, Engro, FFC and FFBL output at above 100% of nameplate capacity. Total domestic urea supply is expected to increase to 7.1m tons by 2010.

Even if one keeps the urea consumption constant, domestic production of around 2400kt during the 2nd half of 2008 will fall short of corresponding demand by 500kt. This is mainly because the country wide urea inventory on 30th June 2008 was as low as 50 KT, about 500kt less than that of last year. The government of Pakistan should immediately undertake measures to meet this shortfall through import programmes. This situation will further aggravate, if the domestic production declines due to any factor like curtailment of gas supply to the fertiliser plants.

On the other hand, 31 percent increase in the gas prices from 1st July 2008 may further push up the cost of production. Additionally, the increased fuel prices and very high inflation rates will further push up the administrative and distribution costs.

Kot Addu Power Company Limited Profits

Sat, 30 Aug 2008 22:37:16 EST

Kot Addu Power Company Limited Profits - by xpertwriter

The profit after tax of Kot Addu Power Company Limited (Kapco) increased to Rs 7.966 billion for the year ended on June 30, 2008 as compared to Rs 4.991 billion of 2007. The company's earning per share surged to Rs 9.05 against Rs 5.67. The board of directors of the company in its meeting held on Thursday recommended a final cash dividend at Rs 2.20 per share ie 22 percent.

This is in addition to the interim cash dividend already paid at Rs 3.25 per share ie 32.5 percent. According to the financial results, the company's sales increased to Rs 55.947 billion in this period against Rs 37.086 while cost of sales also increased to Rs 46.600 billion against Rs 28.343 billion. The company's profit before tax was recorded at Rs 8.059 billion against Rs 7.583 billion.

Cathay Pacific Airways Profits multiply

Thu, 14 Aug 2008 09:49:20 EST

Cathay Pacific Airways Profits multiply - by xpertwriter

Cathay Pacific Airways today released combined Cathay Pacific and Dragonair traffic figures for July 2008 that show nearly a double digit growth in the number of passengers carried by the two airlines compared to the same month in 2007, along with a rise in cargo tonnage.

In July the two airlines carried a total of 2,308,738 passengers an increase of 9.7 percent over the same month last year. The month's load factor was down 0.5 percentage points to 84.1 percent, while capacity, measured in available seat kilometres (ASKs), increased by 16.3 percent on the previous year. For the year to date, the passenger total is up 13.1 percent compared to a capacity rise of 14.6 percent.

Cathay Pacific and Dragonair between them carried 142,770 tonnes of cargo and mail in July, up 5.0 percent on July 2007. Capacity for the month, measured in available cargo/mail tonne kilometres, grew by 2.4 percent while the cargo and mail load factor dipped by 0.1 percentage points to 66.0 percent. For the year to date, the 6.6 percent rise in cargo tonnage compares to a 6.2 percent capacity climb

Abbott Labortories Pakistan Limited

Wed, 13 Aug 2008 13:14:50 EST

Abbott Labortories Pakistan Limited - by xpertwriter

Abbott Laboratories is a highly diversified global healthcare company devoted to the discovery, development, manufacture and marketing of pharmaceutical, nutritional and medical products, including devices and diagnostics.

The company is principally engaged in manufacturing, import and marketing of research based pharmaceutical, nutritional, diagnostic, hospital and consumer products and providing the toll manufacturing services.

With over 70,000 employees worldwide and a global presence in more than 130 countries, Abbott is committed to improving people's lives by providing cost effective health care products and services that consistently meet the needs of its customers. Abbott Pakistan is part of the global healthcare corporation of Abbott Laboratories Chicago, USA.

Abbott started operations in Pakistan as a marketing affiliate in 1948. The company has steadily expanded to comprise a workforce of over 1500 employees. Its shares are quoted on all the three stock exchanges of Pakistan. It has the honour of being the first pharmaceutical company in Pakistan to achieve Class-A certification by a world-renowned organization M/s Oliver Wight. The company has also pioneered the concept of disease specific nutrition in Pakistan through introduction of specific products.

Abbott Pakistan has a leadership in the field of pain management, anesthesia, medical nutrition, anti-infectives and diagnostics. Its wide range of products is managed and marketed through four marketing arms. The diagnostic division operates from its office located at Korangi, Karachi. With leading products in several key areas of the diagnostic market, sales and support staff are available all the major cities of the country.

A continuous process of innovation, research and development at Abbott's worldwide facilities enables Abbott Pakistan to offer effective solutions for various healthcare challenges, with products and services that are well focused, within the customer's reach and contribute to improved health care of the people of Pakistan. Currently, the two manufacturing facilities located at Landhi and Korangi in Karachi continue to use innovative technology to produce top quality pharmaceutical products.

RECENT RESULTS 1H'08

For the half year ending May 31, 2008 the pharmaceutical segment, representing 78% of the companies business witnessed a growth rate of 11%, while nutrition and other segments registered a growth of 23%. Prices remained stagnant while the inflationary pressures and currency devaluation led to a decline in gross margins. Gross margins declined to 37% from 42% in the same period last year.

Sales revenue for the half year ending May 31, 2008 increased by 4.7% to Rs 3,254 million, with the domestic sales contributing to the increase while export sales witnessing a decline of 50.5%. Cost of goods sold increased by 7.8%, resulting a marginal decline in the gross profit. However, the administrative expenses and selling and distribution expenses increased by 23% and 11.9% respectively pulling down the PBT by 15.7% to Rs 626 million. PAT has shown a decline of 11.5% to stand at Rs 441 million with an EPS of Rs 4.51.

The market conditions generally remained favourable throughout the FY07 and consequently the company witnessed a double-digit sales growth in its all segments. Pharmaceutical sales increased due to improved field force productivity and an overall strong demand for company's products. Antibiotics and cough cold sales also registered an increase compared to last year. Vitamins and pain management product sales continued its double-digit sales growth as the company maintained its leadership position in these sections of the pharmaceutical market. The company, despite the competition from low-priced generic products, achieved a robust sales growth without a price hike.

Over the last few years, the company's profitability has been on a constant rise till 2007 (except in 2006), indicating that the costs are under control, as the net income has been increasing by a greater proportion than the sales.

However, net sales for FY06 increased by only 13% as compared to last year. The pharmaceutical segment (representing almost 85% of the company's business) is starting to get adversely affected by the lack of price increase for registered products by the government. With almost a double-digit inflation and the rupee depreciation particularly against the major European currencies, the cost pressures are beginning to hurt the company's profitability. Consequently its gross profit and net profit margins both declined in FY06, despite an improvement in both sales mix and plant efficiencies. The profit margin increased by 32% between 2003 and 2004, while the gross profit increased by around 40% in 2007, the largest increase witnessed in the 8 years under observation.

Despite all this, Abbott has been doing better than the average pharmaceutical company over the 8 years under review. In 2001, Abbott performed much better than the industry average, an 84% difference in profit margin in favour of Abbot. After 2001, the industry's rate of change of profit margin was greater than that of Abbott, bring the two to closer to each other. However in 2003, the difference began to increase again and still it operates above the average.

ROA trend (how effectively assets are being utilized in generating the net income, after interest and taxes) shows a constant increase right until 2005, with the sharpest increase between 2003 and 2004. This was due to the 42% increase in the net income. The increase in total assets was a much smaller proportion of 14%.

However, FY06 has witnessed a major decline because of the greater proportionate increase in assets compared to an increase in net income. The net income increase was lower because of higher selling, administrative and distribution expenses driven mainly by increased promotional expenses relating to consumerization of selective nutritional products and higher pension charge. Slight increase in financial costs combined with inflation and Rupee depreciation caused the net income to increase only slightly compared to total assets increase. However, the situation improved in FY07 showing an increase in ROA.

Furthermore, Abbott's ROA has been greater than the average pharmaceutical company in all the 8 years under review. This has been mainly due to the greater net income the Abbott has been able to generate, due to its greater basic earning power and lower reliance on debt financing, resulting in lesser interest charges.

The ROE follows a similar trend to that of ROA with the exception of 2003, where the ratio fell from 23.19% to 22.63%. This was because of the greater proportionate change in common equity (23%), attributable to 31% increase in revenue reserves, as compared to 20% increase in net income. FY06 has seen a major drop in this ratio, due to less proportionate increase in net income than total equity, on account of aforementioned reasons. However, like ROA, the ROE ratio improved again in FY07 due to higher net income.

ROE has been relatively volatile compared to the industry, on the other hand, the average pharmaceutical company has enjoyed an increasing tendency. The company's rate of increase was quite high in the first 2 years, compared to the industry but declined in the following 2 years. It again rose in 2004 and continues to be above industry average to date.

All the liquidity ratios indicate that the company has expanded over the 8 years. The current ratio has increased from 1.83 in 2000 to 4.76 in 2006. However, it declined in FY07 again due to combined effects of lower CA and higher CL. Abbott's current ratio trend has been in line with the increasing industry trend, with the exception of the year 2005, where the current ratio fell from 4.26 to 4.18, a result of the higher proportionate increase in current liabilities, including creditors, accrued and other liabilities (25% compared to 23%). But this decline is quite meager.

The current assets have been increasing constantly till 2006, however the rate of increase has been very variable, ranging from 68% between 2000 and 2001, from 0.4% between 2001 and 2002 and ultimately declining in FY07.

On the other hand, current liabilities have experienced a very fluctuating trend, ranging from a 45% increase between 2000 and 2001, to a 15% decrease over the next year. The current ratio rose sharply between 2002 and 2004 because the current assets increased by 37%, mainly due to an increase in cash balances and recoverable taxation, while the current liabilities decreased by 20%, because a decline in the short-term finances and proposed dividends.

In fact, current liabilities fell from 2001 to 2003. While in 2000, the ratio of 0.61:1 showed that the company might become insolvent, it further implied that its stock-in-trade was above the industry average. In subsequent periods it improved its liquidity position with respect to this particular ratio. The company's movement is similar to that of the industry, with the exception of 2005. The drop can be attributed to the 33% increase in inventory that year.

Although, the increased current ratio over the six years reflects an increase in Abbott's ability to pay off its short-term obligations, it also indicates an excess of nonproductive assets such as cash and inventory.

Quick ratio followed a similar trend to that of current ratios, being on a constant rise till 2004, while suffering a fall in the consequent periods. The rise for the first four periods can be attributed to the proportionate increase in current assets, excluding inventory, being higher than the proportionate increase liabilities. Inventory turnover (ITO) ratio depicts how quickly the company is able to sell off its inventory. For Abbott, this has always been greater than that of the industry's average as its undergoing a capital expansion program over past few years.

ITO has been declining until 2004, after which it started rising. The decline is to be explained by the proportionate increase in net sales being higher than the increase in average inventory kept by the company. For instance during 2002, net sales rose by 15% while average inventory rose by a lower 13%. This is a good sign because a decline in inventory turnover indicates that the company efficiently selling off its inventory and hence is not facing a risk of obsolescence of inventory further showing that demand is high. However the increase in ratio from 2004 onwards is because the net sales are not increasing by a high percentage while inventory increases. This can be attributed to company's plant expansion and up-gradation project that has been commissioned in phases till 2007. Now, in FY07 the ITO ratio has improved considerably and has been at a level even below that of 2003 (around 52 days).

Days sales outstanding (DSO) shows how quickly the company is able to collect the dues from its debtors. It should be high enough for the company to avoid risks of bad debts. The trend line indicates a decline in this ratio for the first two years due to the proportionate increase in net sales being higher than that in trade debts indicating that the company is facing higher risk of debt evasion and it needs to reformulate its credit policy. In 2001, trade debts actually fell by 1%. Then there were some fluctuations after which this ratio experienced a rapid rise in 2005 and 2006 due to 67% and 43% rise in trade debts (credit sales) with only modest increase of 13% and 14% in net sales respectively. The operating cycle of Abbot hence showed an increase in FY05 and 06 due to a rise in ITO and DSO in the respective years. However, DSO declined again in FY07 like ITO thus lowering the overall operating cycle, which is a good sign.

Moreover, it must be noted that Abbott's DSO is far below the industry average, depicting its healthy status. It can use this advantage over the average pharmaceutical company, as it receives cash much earlier than the others. This cash can be used for further investment in more assets, such as inventory, as well as for further expansion. TATO, a reflector of the company's assets' revenue generation capability, decreased in 2001 only to increase in 2002 but after that the ratio shows a negative trend, though by a low proportion. The reason for this decline can be the percentage increases in net sales of 7%, 8%, 13% and 14% being lower than the percentage increases in total assets of 13.67%, 13.88%, 23% and 22% in 2003, 2004, 2005 and 2006 respectively.

This decline is due to the fact that the company has been investing in its fixed assets, mainly in plant, machinery and infrastructure up gradation. Capital expenditure of Rs 365 million was made to improve compliance with the latest GMP and EHS requirements. The sales/equity ratio also follows the exactly same pattern as that of TATO. This is showing a declining trend from 2002 onwards because of increasing equity base of the company both due to increasing reserves and paid-up capital over the years. However, the situation reversed and both TATO and sales/equity ratios improved in FY07 on account of a much higher increase in sales.

As far as debt management is concerned, Abbot followed a very similar trend to that of the industry. The trend line of D/A ratio shows that the ratio has gone through a major decline over the years (except in FY07) owing to proportionate increase in liabilities being less than the proportionate increase in the assets. This shows that the company's reliance on debt financing is falling over the years and being replaced by equity financing. For instance, the 44% increase in liabilities in 2002 is less than the 57% increase in total assets. Besides, it has always been below 50% throughout the period, showing that equity financing has always been the primary source of financing.

Debt to equity ratio, which simply compares the two modes of financing, has also been falling over the years as shown by the trend. This is due to the proportionate changes in shareholders' equity being higher than the proportionate changes in total liabilities and further confirms that there's a change in financing policies, shifting from debt financing to equity financing. This ratio has increased in FY07 on account of lower equity base compared to a higher deferred taxation.

The long term debt to equity ratio has been volatile over the 8-year period, however, showing that long term debts still remains very insignificant portion of equity (maximum being 0.02 in 2000 only). In 2006, the doubling of long term debts, was offset by a considerable increase in equity base (increase in paid-up capital and reserves), hence the long term debt to equity ratio remained around 1.04% which is very meager. However, a sharp increase in the ratio in FY07 can be witnesses due to higher deferred taxation.

Looking at Abbot's TIE ratio we see it rose from 2000 to 2003 and then fell in 2004 and again rose sharply in 2004 which was due to the fact that interest charges fell by 81%. This increase continued till 2005 due to a higher EBIT and lower finance costs compared to previous years. This shows that the company's ability to pay interest improved till 2005. However TIE again declined slightly in 2006 due to a 21% increase in interest expense compared to a very small 5% increase in EBIT. But it recovered immensely in FY07 on account of higher other income compared to interest expense.

The (P/E) ratio shows how much investors are willing to pay per rupee of the reported profits, depends on the company's price per share and its the earnings per share (EPS). Abbot's EPS has been on a constant rise from 2000 right until 2006. This drastic increase can be attributed to a higher increase in net sales, while the number of shares remained either constant or increased slightly. In FY06, the EPS declined to a greater number of shares issued. Consequently, the P/E ratio also followed a rising trend due to a higher increase (or smaller decline in case of FY06) in market price than the proportionate increase (or decline in FY06) in EPS.

Till 2005 the shares of Abbot have outperformed the 100 index but later the trend has been volatile as evident from the price chart. Initially investors were willing to pay relatively little for a dollar of Abbot's book value however 2001 onwards, the company has turned into a financially strong setup. A major factor of the increase in this book value per share is the continuous increase in its equity base. The ratio declines in FY06 and FY07 due to greater number of issued shares than increase in overall equity base (which declined on the account of lower revenue capital).

The dividend per share was the highest in 2001 but showed a negative trend then onwards. This shows that currently the company is expanding and is reinvesting its profits in the business rather than giving return to its shareholders in the form of dividends. It is hoped that with continued focus on improving cost effectiveness via expansion; the company would enhance its overall efficiency and productivity in the near future, hence promising a good return to its investors.

FUTURE OUTLOOK

The FY08 is likely to be demanding, in particular for the pharmaceutical industry of Pakistan. The industry has immense growth potential, however it can only be tapped if the provided regulatory environment balances the interests of the research-based industry, with the need for affordable healthcare. Almost 85% of Abbot's business depends on the sale of pharmaceutical products, price of which have been static since December, 2001 and there has been no offset made by the government to account for an adverse impact of rising inflation (particularly in the energy and the fuel costs), raw and packaging material costs, construction costs and rupee devaluation, particularly against the major European currencies.

The business improvement initiatives mainly on upgrading and expanding manufacturing facilities, undertaken in past few years by Abbot, have contributed towards its the enhanced operational efficiencies and cost savings. However, this beneficial impact is eroding and will continue to do so unless the Government implements an appropriate and consistent mechanism for determining prices of new products. Furthermore, an increase in price of registered products is also demanded so as to offset inflation and devaluation. This is essential to encourage quality manufacturers to invest in the industry, which can then sustain itself for future.

Abbot furthermore, urges the government to take stringent action against the menace of counterfeit and spurious drugs that have infiltrated the local market. In the past few years, Pakistan has made some progress in updating its Intellectual Property Rights (IPR) laws to the levels required by global conventions. Practically, much more needs to be done to discourage both piracy and counterfeiting. Its effective implementation will not only protect the consumers, but also the industry and result in quality and research oriented culture. It is hoped that the government would effectively implement the recent directive of the Supreme Court to stop the unlicensed sale of drugs.

Pakistan state Oil Profts Multiply

Wed, 13 Aug 2008 13:09:21 EST

Pakistan state Oil Profts Multiply - by xpertwriter

Pakistan State Oil Company Limited (PSO), the leading oil marketing company in the country, has earned a record Rs 14.053 billion profit after tax in the fiscal year ended June 30, 2008 as compared to Rs 4.689 billion earned in the corresponding period in FY07.

The company's earning per share surged to Rs 81.94 in the period under review against Rs 27.34 in the same period a year back. The board of management of PSO in its meeting held here on Tuesday reviewed the performance of the company for the financial year ended June 30, 2008 and approved the audited financial statements for the year. Sardar Muhammad Yasin Malik, Chairman, BoM, presided over the meeting.

The board recommended a final cash dividend for the financial year at the rate of Rs 12.5 per share, equivalent to 125 percent. This is in addition to already paid first interim dividend at Rs 5 per share ie 50 percent and second interim dividend at Rs 6 per share ie 60 percent.

In a statement issued by PSO, it said the board observed that during financial year 2008 the company achieved impressive performance with a turnover touching Rs 583 billion (8.5 billion dollars) compared with Rs 411 billion a year ago, an increase of 42 percent. Profit before tax recorded at Rs 21.4 billion against Rs 7.1 billion last year and profit after tax at Rs 14.1 billion against Rs 4.7 billion registered in previous financial year.

PSO made record earnings during 2008 mainly due to one time inventory gain. Last year the company had an inventory loss. Subsequent to the year-end 2008, the international oil prices have shown a downward trend which, if it maintains a similar trend may cause corresponding inventory loss for the period.

Excluding the one time large inventory gain, the 2008 operating profit increased by about 40 percent in line with the massive growth in both regulated and non-regulated business delivered by the company during the year.

The company's income tax payments during 2008 at Rs 7.3 billion in this period against Rs 2.4 billion last year showed an increase of 200 percent mainly due to 35 percent tax on inventory gain recorded in 2008 accounts. During FY08, PSO sales volume recorded healthy growth of 11 percent against overall industry growth of 8 percent.

The company outperformed its competitors by recording 18 percent increase in White Oil sales volume against industry growth of 13 percent, whereas Black Oil sales increased by 4 percent against industry growth of 1 percent. In furnace oil, the company maintained its leadership with 83 percent market share and registered impressive growth of 4 percent against industry growth of 2 percent.

PSO diesel sales during FY08 were 19.6 percent higher than last year and substantially higher than the industry growth of 13.2 percent. During FY 08, PSO achieved sales volume of 5.3 million MTs for diesel and 0.72 million MTs for mogas against previous year's figures of 4.4 million MTs for diesel and 0.54 million MTs for mogas respectively. These figures depict company's impressive growth of approximately 20 percent in diesel and 33 percent in Mogas sales during FY 08.

During the twelve months ending June 2008, the diesel sales in Pakistan showed an overall volume growth of 0.97 million MTs out of which 0.87 million MTs (89 percent of the total industry growth) was contributed by PSO. It is worth mentioning here that during the crunch month of June 08 when some market players restricted their supplies of diesel due to heavy build-up of subsidy, PSO supplied 30,000 MTs additional diesel to meet the market demand.

During FY 08, PSO continued to play a vital role in importing deficit products in the country and fulfilled 80 percent of country's total import requirements. Besides 3.4 million tons of diesel, 3.5 million tons of furnace oil and 0.44 million tons of LSFO was also imported to ensure uninterrupted supply to the power generation sector.

PSO continued its leadership in providing CNG fuel facilities and added 30 more stations to its network, bringing the total to 240 which is more than any other OMC in the country. In this fuel category the company registered an impressive growth of 30 percent against the industry growth of 24 percent. PSO's CNG earnings during FY08 showed a corresponding increase.

FY2008 witnessed an unprecedented rise in oil prices. US brent crude oil price hit 143 dollars a barrel on 30th June 2008. A major reason underlying soaring oil prices has been weakening of US dollar due to which it is believed that certain investors may have used oil as a hedge against US dollar devaluation due to rising international prices. Throughout the review period the government of Pakistan continued to provide huge subsidy on diesel, which touched highest ever level at Rs 37.07 per litre in June 2008. Throughout FY08 the company continued to face liquidity problems due to ever-increasing receivables from the government on account of Price Differential Claim (PDC) resulting in galloping financial cost.

The board of directors of the company were highly concerned that Pepco, Hubco and PIA substantially delayed payments to PSO specially in the second half of the year thereby seriously aggravating company's liquidity position. As of June 30, 2008, receivables from these entities stood at Rs 27 billion adding to company's cash flow problems.

Being fully aware of the global trend in development of alternative and renewable energy resources, the company is in an advance stage of research and development work on bio-diesel and tests are being carried out to blend it with conventional diesel

Shell Pakistan At a Glance

Wed, 13 Aug 2008 13:06:13 EST

Shell Pakistan At a Glance - by xpertwriter

The profit after tax of Shell Pakistan Limited has significantly increased to Rs 5,137.094 million in the FY08 as compared to Rs 706.659 million earned in the same period in FY07. The company's earning per share increased to Rs 93.76 in the period under review against Rs 12.90 in the same period a year back.

The board of directors of the company, in its meeting held here recommended a final cash dividend for the year at the rate of Rs 40 per share, ie. 400 percent. This is in addition to the interim dividend already paid at the rate of Rs 10 per share ie. 100 percent

The board also recommended to issue bonus shares in the proportion of one share for every four shares held ie. 25 percent. The said bonus share shall not be eligible for the dividend declared for the year ended June 30, 2008. According to the financial results, the company's sales increased to Rs 157.626 billion in the fiscal year FY08 as compared to Rs 130.129 billion in the same period in FY07.

On the other hand, the cost of products sold increased to Rs 124.694 billion in the period under review against Rs 108.664 billion in the same period a year back. The company's profit before tax was recorded at Rs 7,723.340 million in FY08 against Rs 378.736 million in FY07.