CHAPTER: 01

INTRODUCTION AND HISTORY OF THE COMPANY

THIS CHAPTER COVERS

1. Mission Statement Of the Company

2. Vision Statement Of the Company

3. Company Information

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 Mission Statement

To provide quality products to customers

and explore new markets to promote/expand

sales of the Company through good governance

and foster a sound and dynamic team, so as to achieve

optimum prices of products of the Company

for sustainable and equitable growth

and prosperity of the Company.

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.

Vision Statement

To transform the Company into a modern and dynamic yarn,

cloth and processed cloth and finished product manufacturing

Company with highly professionals and fully equipped to

play a meaningful role on sustainable basis in the economy of

Pakistan.

To transform the Company into a modern and dynamic power

generating Company with highly professionals and fully

equipped to play a meaningful role on sustainable basis in the

economy of Pakistan.

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 COMPANY INFORMATION
BOARD OF DIRECTORS:

 Mian Umer Mansha Chairman/Chief Executive

 Mian Hassan Mansha

 Mr. Muhammad Nawaz Tishna (NIT)

 Mr. Khalid Qadeer Qureshi

 Mr. Muhammad Azam

 Rana Muhammad Mushtaq

 Ms. Nabiha Shahnawaz Cheema

AUDIT COMMITTEE:

 Mr. Khalid Qadeer Qureshi Chairman/Member

 Mr. Muhammad Azam Member

 Ms. Nabiha Shahnawaz Cheema Member

CHIEF FINANCIAL OFFICER:

 Mr. Badar-ul-Hassan

COMPANY SECRETARY:

 Mr. Khalid Mahmood Chohan

AUDITORS:

 Riaz Ahmad & Company Chartered Accountants

LEGAL ADVISOR:

 Mr. M. Aurangzeb Khan, Advocate,

 Chamber No. 6, District Court, Faisalabad.

MILLS:

 Nishatabad, Faisalabad (Spinning units and Power Plant)

 12 K.M. Faisalabad Road, (Weaving units & Power Plant)

 Sheikhupura. 21 K.M. Ferozepur Road, Lahore. (Stitching unit)

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  5 K.M. Nishat Avenue (Weaving, Dyeing & Finishing unit,

 Off 22 K.M. Ferozepur Road, Lahore. Processing unit, Stitching unit

and

Power Plant)

 20 K.M. Sheikhupura Faisalabad (Spinning unit)

Road, Feroze Watwan

REGISTERED OFFICE

 Nishat House,

SHARES DEPARTMENT

 53 - A, Lawrence Road, Lahore.

 Tel: 042-6367812-16, 042-111 113 333

 Fax: 042-6367414

HEAD OFFICE:

 7, Main Gulberg, Lahore.

 Tel: 042-5716351-9, 042-111 332 200

 Fax: 042-5716349-50

 E-mail: nishat@nishatmills.com

 Website: www.nishatmillsltd.com

LIAISON OFFICE:

 Ist Floor, Karachi Chambers,

 Hasrat Mohani Road, Karachi.

 Tel: 021-2414721-23

 Fax: 021-2412936

BANKS:

 JS Bank Limited

 KASB Bank Limited

 Meezan Bank Limited

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 National Bank of Pakistan

 NIB Bank Limited

 Standard Chartered Bank

 (Pakistan) Limited

 The Hong Kong & Shangai

 Banking Corporation Limited

 The Royal Bank of Scotland

 United Bank Limited

 BANKERS TO THE COMPANY: Albaraka Islamic Bank B.S.C

 Allied Bank Limited

 Askari Bank Limited

 Bank Alfalah Limited

 Bank Islami Pakistan Limited

 Citibank N.A.

 Crescent Commercial Bank Limited

 Deutsche Bank

 Faysal Bank Limited

 Habib Bank Limited

 Habib Metropolitan Bank Limited

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FINANCIAL ANALYSIS OF THE COMPANY

THIS CHAPTER COVERS: -

1. RATIO ANALYSIS

2. ADVANTAGES OF RATIO ANALYSIS

3. LIMITATION OF RATIO ANALYSIS

4. TYPES OF RATIO ANALYSIS

I. LIQUIDITY RATIO
II. TURNOVER RATIO
III. PROFITABILITY RATIO
IV. LEVERAGE RATIO
5. HORIZONTAL ANALYSIS OF PROFIT & LOSS ACCOUNT

6. HORIZONTAL ANALYSIS OF BALANCE SHEET

7. VERTICAL ANALYSIS OF PROFIT & LOSS ACCOUNT

8. VERTICAL ANALYSIS OF BALANCE SHEET

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RATIO ANALYSIS

The term "accounting ratios" is used to describe significant relationship between

figures shown on a balance sheet, in a profit and loss account, in a budgetary control
system or in any other part of accounting organization. Accounting ratios thus shows the
relationship between accounting data.

Ratio analysis is very important while measuring the performance of the business.
These ratios are carried out from the Income statement and balance sheet. Many parties
including management, investors and Government are interested in these ratios. The
purpose of analysis is to measure the performance of the company and financial health of
the organization.

Advantages of Ratios Analysis

Ratio analysis is an important and age-old technique of financial analysis. The

following are some of the advantages of ratio analysis:

Simplifies financial statements:

It simplifies the comprehension of financial statements. Ratios tell the whole story of
changes in the financial condition of the business

Facilitates inter-firm comparison:

It provides data for inter-firm comparison. Ratios highlight the factors associated
with successful and unsuccessful firm. They also reveal strong firms and weak firms,
overvalued and undervalued firms.

Helps in planning:

It helps in planning and forecasting. Ratios can assist management, in its basic
functions of forecasting for Planning, co-ordination, control and communications.

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 Makes inter-firm comparison possible:

Ratios analysis also makes possible comparison of the performance of different

divisions of the firm. The ratios are helpful in deciding about their efficiency or
otherwise in the past and likely performance in the future.

Help in investment decisions:

It helps in investment decisions in the case of investors and lending decisions in the
case of bankers etc.

Limitations of Ratios Analysis

The ratios analysis is one of the most powerful tools of financial management.
Though ratios are simple to calculate and easy to understand, they suffer from serious
limitations.

Limitations of financial statements: Ratios are based only on the information which
has been recorded in the financial statements. Financial statements themselves are
subject to several limitations. Thus ratios derived, there from, are also subject to those
limitations. For example; non-financial changes though important for the business are
not relevant by the financial statements. Financial statements are affected to a very great
extent by accounting conventions and concepts. Personal judgment plays a great part in
determining the figures for financial statements.

Comparative study required: Ratios are useful in judging the efficiency of the
business only when they are compared with past results of the business. However, such a
comparison only provide glimpse of the past performance and forecasts for future may
not prove correct since several other factors like market conditions, management
policies, etc. may affect the future operations.

Ratios alone are not adequate. Ratios are only indicators, they cannot be taken as
final regarding good or bad financial position of the business. Other things have also to
be seen.

Problems of price level changes: A change in price level can affect the validity of
ratios are calculated for different time periods. In such a case the ratio analysis may not

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clearly indicate the trend in solvency and profitability of the company. The financial
statements, therefore, be adjusted keeping in view the price level changes if a meaningful
comparison is to be made through accounting ratios.

Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There
are no well accepted standards or rule of thumb for all ratios which can be accepted as
norm. It renders interpretation of the ratios difficult.

Limited use of single ratios: A single ratio, usually, does not convey much of a sense.
To make a better interpretation, a number of ratios have to be calculated which is likely
to confuse the analyst than help him in making any good decision.

Personal bias: Ratios are only means of financial analysis and not an end in itself.
Ratios have to interpret and different people may interpret the same ratio in different
way.

Incomparable: Not only industries differ in their nature, but also the firms of the
similar business widely differ in their size and accounting procedures etc. It makes
comparison of ratios difficult and misleading.

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 Ratio Analysis

Ratio analysis involves the methods of calculating and interpreting financial ratios to
access the firm’s performance and status. The basic inputs to ratio analysis and firm’s
income statement and balance sheet for the periods to be examined.

TYPES OF RATIO ANALYSIS

Two types of Ratio Analysis are generally carried out,

1.Cross Sectional Approach, in this approach, the effectiveness of business is

compared with the competitors business of the same period.

2.Most companies use the Time Series Analysis in which the performance of
company over a period is measured.

Ratio Analysis categories:

A) Liquidity

B) Turnover

C) Profitability

D) Leverage

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 LIQUIDITY RATIOS:

Liquidity ratios are the ratios for testing short term solvency or financial position of a
business. These are designed to test the ability of the business to meet its short term
obligation promptly. A class of financial metrics that is used to determine a company's
ability to pay off its short-terms debts obligations. Generally, the higher the value of the
ratio, the larger the margin of safety that the company possesses to cover short-term
debts

Current Ratio:

Current ratio may be defined as the relationship between current assets and current
liabilities. This ratio is also known as "working capital ratio". It is a measure of general
liquidity and is most widely used to make the analysis for short term financial position or
liquidity of a firm. It is calculated by dividing the total of the current assets by total of
the current liabilities.

Components:

The two basic components of this ratio are current assets and current liabilities.
Current assets include cash and those assets which can be easily converted into cash
within a short period of time, generally, one year, such as marketable securities or readily
realizable investments, bills receivables, sundry debtors, (excluding bad debts or
provisions), inventories, work in progress, etc. Prepaid paid expenses should also be
included in current assets because they represent payments made in advance which will
not have to be paid in near future. Current liabilities are those obligations which are
payable within a short period of tie generally one year and include outstanding expenses,
bills payable, sundry creditors, bank overdraft, accrued expenses, short term advances,
income tax payable, dividend payable, etc. However, some times a controversy arises
that whether overdraft should be regarded as current liability or not. Often an
arrangement with a bank may be regarded as permanent and therefore, it may be treated
as long term liability. At the same time the fact remains that the overdraft facility may be
cancelled at any time. Accordingly, because of this reason and the need for conversion in
interpreting a situation, it seems advisable to include overdrafts in current liabilities.

Limitations of Current Ratio:

This ratio is measure of liquidity and should be used very carefully because it suffers
from many limitations. It is, therefore, suggested that it should not be used as the sole
index of short term solvency

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 1. It is crude ratio because it measure only the quantity and not the quality of the
current assets.
2. Even if the ratio is favorable, the firm may be in financial trouble, because of
more stock and work in process which is not easily convertible into cash, and,
therefore firm may have less cash to pay off current liabilities.
3. Valuation of current assets and window dressing is another problem. This ratio
can be very easily manipulated by overvaluing the current assets. An equal
increase in both current assets and current liabilities would decrease the ratio and
similarly equal decrease in current assets and current liabilities would increase
current ratio.

Significance

This ratio is a general and quick measure of liquidity of a firm. It represents the margin
of safety or cushion available to the creditors. It is an index of the firm’s

financial stability. It is also an index of technical solvency and an index of the

strength of working capital.

A relatively high current ratio is an indication that the firm is liquid and has the ability to
pay its current obligations in time and when they become due. On the other hand, a
relatively low current ratio represents that the liquidity position of the firm is not good
and the firm shall not be able to pay its current liabilities in time without facing
difficulties. An increase in the current ratio represents improvement in the liquidity
position of the firm while a decrease in the current ratio represents that there has been a
deterioration in the liquidity position of the firm. A ratio equal to or near 2 : 1 is
considered as a standard or normal or satisfactory. The idea of having double the current
assets as compared to current liabilities is to provide for the delays and losses in the
realization of current assets. However, the rule of 2 :1 should not be blindly used while
making interpretation of the ratio. Firms having less than 2 : 1 ratio may be having a
better liquidity than even firms having more than 2 : 1 ratio. This is because of the reason
that current ratio measures the quantity of the current assets and not the quality of the
current assets. If a firm's current assets include debtors which are not recoverable or
stocks which are slow-moving or obsolete, the current ratio may be high but it does not
represent a good liquidity position.

current ratio current assets/current liabilities

year 2008 2007 2006 2005 2004
1.3 1.
Nishat 1.19 1.74
8 24 0.37
1.1 1.
Azgard 9 1.08 1.51
4 09 1.25
1.2 1.
Sapphire 1.28 1.66
1 21 1.31

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Comments:

Current Ratio clears the extent to which the claim of short term creditors can be met
by assets that are to become cash within a year. The best standard ratio is 2:1 so, the
Azgard Nine has current ratio below standard. There is a mixed trend from 2004 to 2008.
Current Ratio of Sapphire is also like Azgard Nine and Nishat.

Current ratio shows that how many times current assets are available to meet its
current liabilities. Azgard Nine current ratio shows mixed trend and it has grater than 1:1
but only in 2007 it is higher than other years. Sapphire also shows mixed trend in current
ratio. Nishat current ratio shows increasing trend in 2004, 2005 and in 2006 and in 2007
but decreases 2008 which shows that it has less current assets or current liabilities
increases.

Liquidity or Acid Test or Quick Ratio:

Liquid ratio is also termed as "Liquidity Ratio”,” Acid Test Ratio" or "Quick Ratio".
It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability
of a firm to pay its short term obligations as and when they become due

Components:

The two components of liquid ratio (acid test ratio or quick ratio) are liquid assets
and liquid liabilities. Liquid assets normally include cash, bank, sundry debtors, bills
receivable and marketable securities or temporary investments. In other words they are
current assets minus inventories (stock) and prepaid expenses. Inventories cannot be
termed as liquid assets because it cannot be converted into cash immediately without a

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loss of value. In the same manner, prepaid expenses are also excluded from the list of
liquid assets because they are not expected to be converted into cash. Similarly, Liquid
liabilities means current liabilities i.e., sundry creditors, bills payable, outstanding
expenses, short term advances, income tax payable, dividends payable, and bank
overdraft (only if payable on demand). Some time bank overdraft is not included in
current liabilities, on the argument that bank overdraft is generally permanent way of
financing and is not subject to be called on demand. In such cases overdraft will be
excluded from current liabilities

Significance:

The quick ratio/acid test ratio is very useful in measuring the liquidity position of a
firm. It measures the firm's capacity to pay off current obligations immediately and is
more rigorous test of liquidity than the current ratio. It is used as a complementary ratio
to the current ratio. Liquid ratio is more rigorous test of liquidity than the current ratio
because it eliminates inventories and prepaid expenses as a part of current assets. Usually
a high liquid ratios an indication that the firm is liquid and has the ability to meet its
current or liquid liabilities in time and on the other hand a low liquidity ratio represents
that the firm's liquidity position is not good. As a convention, generally, a quick ratio of
"one to one" (1:1) is considered to be satisfactory.

Although liquidity ratio is more rigorous test of liquidity than the current ratio , yet it
should be used cautiously and 1:1 standard should not be used blindly. A liquid ratio of
1:1 does not necessarily mean satisfactory liquidity position of the firm if all the debtors
cannot be realized and cash is needed immediately to meet the current obligations. In the
same manner, a low liquid ratio does not necessarily mean a bad liquidity position as
inventories are not absolutely non-liquid. Hence, a firm having a high liquidity ratio may
not have a satisfactory liquidity position if it has slow-paying debtors. On the other hand,
A firm having a low liquid ratio may have a good liquidity position if it has a fast
moving inventories. Though this ratio is definitely an improvement over current ratio,
the interpretation of this ratio also suffers from the same limitations as of current ratio

quick ratio (current assets-stock)/current liabilities

year 2008 2007 2006 2005 2004
0.9 0.3
Nishat 0.84 1.33 0.78
6 7
0.8 0.7
Azgard 9 0.69 1.15 0.64
8 1
0.7 0.7
Sapphire 0.72 1.17 0.59
3 6

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 Comments:

The acid test ratio is also below standard due to heavy short term borrowings. Azgard
Nine acid test ratio decreased in year 2005 and in 2008. The quick ratio of Sapphire
shows that there is no sufficient liquid asset is available to discharge and settle its current
obligation except in year 2007. The rise in current liabilities is due to the expansion of
project and short and long term financing. Azgard Nine liquidity is less than standard
except in year 2007. Sapphire and Nishat liquidity is not on considerable point. Azgard
Nine liquid ratio is more than Sapphire and Nishat which shows that it has more
liquidity. Nishat liquidity position is not considerable because it is near to 1 in year 2006
and 2007 which shows that it has liquid assets to meet its current liabilities. Azgard Nine
position is not at considerable point. It shows decreasing trend in 2005 and in 2008 and
less than 1:1. But it has increasing position in 2004, 2006 and in 2007.

Turnover/ Activity ratios:

Activity ratios are measures of how well assets are used. Activity ratios -- which are,
for the most part, turnover ratios -- can be used to evaluate the benefits produced by
specific assets, such as inventory or accounts receivable. Or they can be use to evaluate
the benefits produced by all a company's assets collectively.

These measures help us gauge how effectively the company is at putting its
investment to work. A company will invest in assets – e.g., inventory or plant and
equipment – and then use these assets to generate revenues. The greater the turnover, the
more effectively the company is at producing a benefit from its investment in assets

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Inventory days.

The number of day’s inventory is also known as average inventory period and
inventory holding period. A high number of days inventory indicates that their is a lack
of demand for the product being sold. A low days inventory ratio (inventory holding
period) may indicate that the company is not keeping enough stock on hand to meet
demands. The number of days inventory and inventory turnover ratios are included in
the financial statement ratio analysis spreadsheets highlighted in the left column, which
provide formulas, definitions, calculation, charts and explanations of each ratio.

Inventory Days Inventory Days = Inventory / Cost of Sales*365

year 2008 2007 2006 2005 2004
80.0 114.4
Nishat 91.90 79.10 -
0 6
199.3 225.7 208.5
Azgard 9 221.08 177.42
4 6 7
96.7 143.4 64.3
Sapphire 138.85 89.36
4 6 2

Comments:

Azgard Nine inventory days increased in 2005 as compare to 2004 and decreased in
2006 and in 2007 and show increasing in 2008 which shows that management is not
efficient for managing inventory period.

The above diagram shows that in 2004 and 2005 Sapphire has high inventory days
required converting stock in sale which shows that Sapphire management is not efficient
but it decreases with the passage of times and increase in year 2008 and Nishat trend is
equal to Sapphire. They were show increase in 2005 and low in 2006 and in 2007 and it
increases in 2008.

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Debtors Turnover Ratio or Receivables Turnover Ratio:

Debtor’s turnover ratio indicates the velocity of debt collection of a firm. In simple
words it indicates the number of times average debtors (receivable) are turned over
during a year.

Significance of the Ratio:

This ratio indicates the number of times the debtors are turned over a year. The
higher the value of debtor’s turnover the more efficient is the management of debtors or
more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient
management of debtors or less liquid debtors. It is the reliable measure of the time of
cash flow from credit sales. There is no rule of thumb which may be used as a norm to
interpret the ratio as it may be different from firm to firm.

Debtor's day Trade debtors/Credit sales*365

year 2008 2007 2006 2005 2004
25. 22.8 28.1 56.2
Nishat 17.67
18 3 5 9
64. 84.7 83.6 109.3
Azgard 9 91.26
14 2 8 1
42. 54.1 66.7 56.2
Sapphire 51.08
30 3 5 9

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Comments:

Graph shows that Azgard Nine has not a good debtor management to receive the debt
or collect the receivables and shows positive trend and debtor’s collection period is
grater than creditor’s period. Sapphire position is also considerable but Nishat
management has more efficient to collect their receivables whish shows efficient debtor
management and in 2004 it is at highest point which indicates unfavorable situation
regarding to debtor collection period.

Creditors / Accounts Payable Turnover Ratio

This ratio is similar to the debtor’s turnover ratio. It compares creditors with the total
credit purchases. It signifies the credit period enjoyed by the firm in paying creditors.
Accounts payable include both sundry creditors and bills payable. Same as debtor’s
turnover ratio, creditor’s turnover ratio can be calculated in two forms, creditors’
turnover ratio and average payment period.

Significance of the Ratio:

The average payment period ratio represents the number of days by the firm to pay
its creditors. A high creditor’s turnover ratio or a lower credit period ratio signifies that
the creditors are being paid promptly. This situation enhances the credit worthiness of the
company. However a very favorable ratio to this effect also shows that the business is not
taking the full advantage of credit facilities allowed by the creditors.

Creditors days Trade Creditors/Credit Sales*365

year 2008 2007 2006 2005 2004
21. 21.3 26.0 45.3
Nishat 19.69
62 5 6 3
48. 92.8 65.3 80.0
Azgard 9 56.77
74 3 4 3
18. 30.5 39.3 24.7
Sapphire 14.83
38 8 3 5

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 Comments

Azgard Nine creditor’s days increase in 2004 to 2006 and decrease in 2005 to 2007
and in 2007 and 2008. Azgard Nine credit management is better than Nishat and
Sapphire it has 93 days for payment which shows it efficiency in 2006. If we compare
creditor’s days to debtors day than we can see that Azgard Nine and Nishat is going
better to manage its resources

Total Assets Turnover Ratio.

The total assets turnover ratio measures the use of all assets in terms of sales, by
comparing sales with net total assets. This interactive tutorial walks you through the
calculations as well as where on the financial statements to find the numbers.

Sales/ Total
Formula Assets
year 2008 2007 2006 2005 2004
0.5 0.4 0.5 0.5 1.4
Nishat
1 3 3 2 0
0.3 0.2 0.2 0.4 0.5
Azgard 9
7 8 1 2 0
0.7 0.8 0.8 0.7 1.2
Sapphire
9 2 6 3 9

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 Comments:

In the above graph we can see that total asset turnover ratio of Azgard Nine Company
showing mix trend in the year 2004 to year 2008. Total asset turnover ratio is at highest
level in year 2004 and as it compare it with Nishat and Sapphire it is not good even in the
last two year 2007, 2008 so we can say it is not using its assets for generating the
revenue in a better way than Sapphire and Nisaht cement in 2004 to 2008 and 2004
Sapphire total asset turnover ratio at top so they use much of it for generating revenue.

But Azgard Nine overall situation regarding to total asset turnover ratio is bad than
other two competitor.

Fixed Assets Turnover Ratio:

Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio
measures the efficiency and profit earning capacity of the concern. Higher the ratio,
greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of
fixed assets

Formula Cost of sales / Fixed Assets

year 2008 2007 2006 2005 2004
1.5 1.2 1.0 2.9
Nishat 1.35
3 9 1 2
0.8 0.4 1.0 0.8
Azgard 9 0.60
6 9 6 6
2.1 1.9 1.5 2.9
Sapphire 2.10
9 4 2 2

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 Comments:

It shows the utilization of fixed assets, Azgard Nine decreasing the utilization of its
fixed assets but it has lower times than Sapphire which has more utilization of fixed
assets and at highest level in 2004. Nishat shows the decreasing trend in year 2005 and
after it increasing trend still 2008. Nishat has less utilization than Sapphire and high
utilization then Azgard Nine.

Profitability Ratios:

Profitability ratios (also referred to as profit margin ratios) compare components of

income with sales. They give us an idea of what makes up a company's income and are
usually expressed as a portion of each dollar of sales. The profit margin ratios we discuss
here differ only by the numerator. It's in the numerator that we reflect and thus evaluate
performance for different aspects of the business: The gross profit margin is the ratio of
gross income or profit to sales. This ratio indicates how much of every dollar of sales is
left after costs of goods sold.

Gross Profit (GP) Ratio:

Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as a
percentage. It expresses the relationship between gross profit and sales.

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 Components:

The basic components of the calculation of gross profit ratio are gross profit and net
sales. Net sales mean those sales minus sales returns. Gross profit would be the
difference between net sales and cost of goods sold. Cost of goods sold in the case of a
trading concern would be equal to opening stock plus purchases, minus closing stock
plus all direct expenses relating to purchases. In the case of manufacturing concern, it
would be equal to the sum of the cost of raw materials, wages, direct expenses and all
manufacturing expenses. In other words, generally the expenses charged to profit and
loss account or operating expenses are excluded from the calculation of cost of goods
sold.

Significance

Gross profit ratio may be indicated to what extent the selling prices of goods per unit
may be reduced without incurring losses on operations. It reflects efficiency with which a
firm produces its products. As the gross profit is found by deducting cost of goods sold
from net sales, higher the gross profit better it is. There is no standard GP ratio for
evaluation. It may vary from business to business. However, the gross profit earned
should be sufficient to recover all operating expenses and to build up reserves after
paying all fixed interest charges and dividends.

Formula Gross profit/Sales*100

year 2008 2007 2006 2005 2004
15.4 16.5 18.7 4.9
Nishat 16.56
1 4 7 6
34.1 24.2 25.6 22.6
Azgard 9 30.28
5 6 3 6
11.5 9.6 11.3 4.9
Sapphire 13.02
7 0 2 6

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 Comments:

Gross profit of Azgard Nine company increasing in 2004 to 2005 and also in year
2007 and 2008 but decrease in 2006, Due to inflation and economic instability in
Pakistan and irregular power supply of WAPDA in 2007 and 2008. Gross Profit ratio of
three competitors show increasing trend in 2004 to 2005 due to good economic and
financial situation of world and good market situation in Pakistan. Sapphire position is
more considerable up to 2005 but shows decreasing trend in 2006, 2007 and 2008, and
Nishat situation for increase year 2007 but it decrease in all other years.

Operating Profit Ratio:

Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales.
It is generally expressed in percentage. It measures the cost of operations per dollar of
sales. This is closely related to the ratio of operating profit to net sales.

Components:

The two basic components for the calculation of operating ratio are operating cost
(cost of goods sold plus operating expenses) and net sales. Operating expenses normally
include (a) administrative and office expenses and (b) selling and distribution expenses.
Financial charges such as interest, provision for taxation etc. are generally excluded from
operating expenses.

Significance:

Operating ratio shows the operational efficiency of the business. Lower operating
ratio shows higher operating profit and vice versa. An operating ratio ranging between
75% and 80% is generally considered as standard for manufacturing concerns. This ratio
is considered to be a yardstick of operating efficiency but it should be used cautiously
because it may be affected by a number of uncontrollable factors beyond the control of
the firm. Moreover, in some firms, non-operating expenses from a substantial part of the
total expenses and in such cases operating ratio may give misleading results

Formula Operating Profit Margin = Operating profit /Sale*100

year 2008 2007 2006 2005 2004
12.1 17.5 7.5
Nishat 37.91 12.66
0 8 6
16.2 18.3 16.7
Azgard 9 28.18 23.72
6 8 9
8.6 10.4 5.3
Sapphire 14.42 8.60
8 3 5

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 Comments:

Azgard Nine company operating profit increasing in 2004 to 2005 and 2007 to 2008
and decreasing in 2006. Operating profit of all three organization show increasing trend
in 2004, 2005 and 2007 to 2008 but decreases in 2006 due to increase in operating
expenses.

Net Profit/ (Loss) after Tax:

Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as
percentage

Significance:

NP ratio is used to measure the overall profitability and hence it is very useful to
proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall not
be able to achieve a satisfactory return on its investment.

This ratio also indicates the firm's capacity to face adverse economic conditions such
as price competition, low demand, etc. Obviously, higher the ratio the better is the
profitability. But while interpreting the ratio it should be kept in mind that the
performance of profits also be seen in relation to investments or capital of the firm and
not only in relation to sales.

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 Formula Net profit before tax/Sales*100
year 2008 2007 2006 2005 2004
33.2 10.7 17.8 9.4
Nishat 7.89
0 1 8 5
9.8 25.7 17.9 12.5
Azgard 9 17.37
8 7 1 2
6.8 3.3 7.1 3.4
Sapphire 3.49
8 1 5 5

Comments:

The Net Profit margin tells us the ability of a company to generate the earning after
meeting all costs of business. There is an increase in net profit in 2006 as compare to
2004 to 2006. In year 2008 company suffered a minimum net profit. The ratio has
decreased as compare to previous year due to increase in cost and expansion of project
and finance cost. Sapphire shows the increasing trend in 2005 and in year 2007 to 2008 it
decrease in year 2006. Nishat top net profit is in year 2008.

Return on Assets:

Where asset turnover tells an investor the total sales for each $1 of assets, return on
assets [or ROA for short] tells an investor how much profit a company generated for each
$1 in assets. The return on assets figure is also a sure-fire way to gauge the asset intensity
of a business. Companies such as telecommunication providers, car manufacturers, and

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railroads are very asset-intensive, meaning they require big, expensive machinery or
equipment to generate a profit. Advertising agencies and software companies, on the
other hand, are generally very asset-light (in the case of a software companies, once a
program has been developed, employees simply copy it to a five-cent disk, throw an
instruction manual in the box, and mail it out to stores).

Formula Net Income / Total Assets*100

year 2008 2007 2006 2005 2004
5. 8.5 14.8
Nishat 16.19 3.06
24 2 1
4. 7.0 5.9
Azgard 9 3.28 4.57
94 3 6
1. 3.9 2.9
Sapphire 5.01 1.94
46 5 7

Comments:

This ratio measures the return of total investment of the business. Azgard Nine
company show mix trend and in 2005 it is at maximum point than others. Decreasing
trend from year 2006 to year 2008. Nishat company return on asset is much better than
Azgard Nine and Sapphire. it decreases in 2005 to 2007 and than increase in 2008, it is at
highest point in 2008, Sapphire also increase in 2004 to 2005 and than it little decrease in
2006 and at goes down in 2007 and becomes increase in 2008.

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 Return on Capital Employed (ROCE) Ratio:
Capital employed and operating profits are the main items. Capital employed may be
defined in a number of ways. However, two widely accepted definitions are "gross
capital employed" and "net capital employed". Gross capital employed usually means the
total assets, fixed as well as current, used in business, while net capital employed refers
to total assets minus liabilities. On the other hand, it refers to total of capital, capital
reserves, revenue reserves (including profit and loss account balance), debentures and
long term loans.

Formula Profit before interest and taxation / Capital Employed *100

year 2008 2007 2006 2005 2004
7. 12.9 (30.48
Nishat 24.42 4.25
29 8 )
8. 13.0
Azgard 9 5.87 6.60 10.73
27 0
5. 8.8
Sapphire 10.41 4.46 7.25
07 5

Comments:

Azgard Nine return on capital employed is high 2004 and it increase in 2005 but it
has decreased in 2006 to 2008. Sapphire return on capital employed increase in 2004 to
2005 and decreases in 2006 and in 2007 and then it go for increase in 2008. Nishat has
less return on capital employed is less than its competitors from 2004 to 2007. And at
begging Nishat is going to negative its return of capital employed. In 2008 due to

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economic crises Sapphire and Azgard Nine return on equity becomes higher then its
competitors.

RETURN ON EQUITY CAPITAL (ROE) RATIO:

In real sense, ordinarily shareholders are the real owners of the company. They
assume the highest risk in the company. (Preference share holders have a preference over
ordinary shareholders in the payment of dividend as well as capital. Preference share
holders get a fixed rate of dividend irrespective of the quantum of profits of the
company). The rate of dividends varies with the availability of profits in case of ordinary
shares only. Thus ordinary shareholders are more interested in the profitability of a
company and the performance of a company should be judged on the basis of return on
equity capital of the company. Return on equity capital which is the relationship between
profits of a company and its equity, can be calculated as follows.

Equity share capital should be the total called-up value of equity shares. As the profit
used for the calculations are the final profits available to equity shareholders as dividend,
therefore the preference dividend and taxes are deducted in order to arrive at such profits.

Significance:

This ratio is more meaningful to the equity shareholders who are interested to know
profits earned by the company and those profits which can be made available to pay
dividends to them. Interpretation of the ratio is similar to the interpretation of return on
shareholder's investments and higher the ratio better is.

[(Net profit after tax − Preference dividend) / Equity

Formula share capital] × 100
year 2008 2007 2006 2005 2004
7.7 14.5 2.6
Nishat 24.41 4.02
3 8 2
12.4 23.9 14.9
Azgard 9 8.86 11.11
8 7 5
3.4 10.3 7.4
Sapphire 11.08 3.59
5 2 0

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 Comments:

In 2005 Azgard Nine cement company return on equity ratio is at highest point and
better, in 2006 to 2008 it decreases. Sapphire Company also shows mixed trend. It is
going higher in 2005 and than decrease in 2006 to 2007 and it becomes higher in 2008.
Nishat company return on equity ratio has mix trend. In 2004 it is at lower side and than
it increase in 2005 and it decrease in 2006 and it goes down and become more down in
2007 and go to highest point in 2008. It is the highest point then competitors.

LEVERAGES RATIOS:
A company can finance its assets either with equity or debt. Financing through debt
involves risk because debt legally obligates the company to pay interest and to repay the
principal as promised. Equity financing does not obligate the company to pay anything --
dividends are paid at the discretion of the board of directors. There is always some risk,
which we refer to as business risk, inherent in any operating segment of a business. But
how a company chooses to finance its operations -- the particular mix of debt and equity
-- may add financial risk on top of business risk Financial risk is the extent that debt
financing is used relative to equity. Financial leverage ratios are used to assess how much
financial risk the company has taken on. There

are two types of financial leverage ratios: component percentages and coverage
ratios. Component percentages compare a company's debt with either its total capital
(debt plus equity) or its equity capital. Coverage ratios reflect a company's ability to
satisfy fixed obligations, such as interest, principal repayment, or lease payments.

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DEBT TO EQUITY RATIO:
Debt-to-Equity ratio indicates the relationship between the external equities or
outsiders funds and the internal equities or shareholders funds. It is also known as
external internal equity ratio. It is determined to ascertain soundness of the long term
financial policies of the company.

Formula Total Long Term Debts / Shareholders Funds

year 2008 2007 2006 2005 2004
0.0 0.1 0.2 0.0
Nishat 0.06
4 4 2 6
0.9 0.7 1.2 0.4
Azgard 9 1.02
1 9 7 1
0.0 0.2 0.4 0.4
Sapphire 0.13
9 5 7 4

Comments:

Nishat shows increasing trend from 2004 to 2005 which shows that they increasing
there debts for expansion of project and their short and long term debts increased and
decrese trand 2005 to 2008.Azgard Nine debt to equity ratio is lowest point in 2004 and
after that it has decrease its situation in next coming years and increases the ratio.

It shows that Azgard nine position in debt to equity is better then its competitors.

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DEBT SERVICE RATIO OR INTEREST COVERAGE RATIO:

Interest coverage ratio is also known as debt service ratio or debt service coverage
ratio. This ratio relates the fixed interest charges to the income earned by the business. It
indicates whether the business has earned sufficient profits to pay periodically the
interest charges.

Significance of debt service ratio:

The interest coverage ratio is very important from the lender's point of view. It
indicates the number of times interest is covered by the profits available to pay interest
charges.

Formula Net Profit Before Interest and Tax / Fixed Interest Charges
year 2008 2007 2006 2005 2004
2.3 4.9 5.5
Nishat 7.05 1.66
3 9 4
1.9 2.4 2.7
Azgard 9 0.40 1.08
2 3 3
0.3 1.6 1.3
Sapphire 0.84 0.46
1 5 5

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 Comments:

Interest Cover Ratio shows that how many times interest is earned by the company.
Azgard Nine company shows decreasing trend from 2004 to 2008 which indicates
negative sign for the company and it has unavailability the funds to pay interest expense.
Sapphire company is in equal position to Azgard Nine, In 2006 and 2007 Interest cover
ration of all the company is not very healthy and it shows that the financial costs are very
high and earnings are very low. Management must look into the matter and should
improve this ratio. In year 2008 Nishat company earned 7.05 times interest which is
higher among all year and easy to pay the interest expense.

INVESTMENTS / SHARE HOLDER RATIOS:

Relationship of gains from investments (including realized capital gains) resulting

from insurance operations to earned premiums.

EARNINGS PER SHARE (EPS) RATIO:

Earnings per share ratio (EPS Ratio) are a small variation of return on equity capital
ratio and are calculated by dividing the net profit after taxes less preference dividend by
the total number of equity shares.

Significance:

The earnings per share is a good measure of profitability and when compared with
EPS of similar companies, it gives a view of the comparative earnings or earnings power
of the firm. EPS ratio calculated for a number of years indicates whether or not the
earning power of the company has increased.

Formula Profit after tax/No. of shares

year 2008 2007 2006 2005 2004
38.4 10.2 12.8 5.1
Nishat 7.58
2 2 6 7
2.6 4.9 7.4 4.3
Azgard 9 3.26
5 7 2 1
30.7 6.7 14.3 8.5
Sapphire 10.77
6 0 7 8

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 Comments:

The earning per share of three companies shown mixed trend in above diagram,
earning per share of Azgard Nine company increase in 2005 as compare it to 2004 and it
is at highest point in this year and than it decrease in 2006, and it goes more down in
2007 and 2008 which mean there is no earning and it going down. Sapphire and Nishat
has also same trends but Nishat has better earning per share ratio as compare it to
Sapphire and Azgard Nine. It is at highest point in 2008. The earning per share has
increased as compared to the previous year. These companies should better mange its
financial position and improve its performance to get out this fall in earning per share.

EARNINGS YIELD.
The earnings per share for the most recent 12-month period divided by the current
market price per share. The earnings yield (which is the inverse of the P/E ratio) shows
the percentage of each dollar invested in the stock that was earned by the company.

Formula Earning Per Share / Market Price Per Share * 100

year 2008 2007 2006 2005 2004
9.7 16.9 9.7
Nishat 44.69 5.87
5 2 9
22.5 23.1 19.1
Azgard 9 4.30 6.26
4 9 6
9.5 15.9 12.2
Sapphire 42.46 11.64
7 7 6

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 Comments:

Earning Yield of Azgard Nine, Nishat and Sapphire was at lowest point in 2007 due
to economic crises. But it has very good condition in 2004 to 2006.Azgard Nine is at
lowest point in 2008 due to economic and financial crises and purchase a project of
fertilizers. Return on investment of Sapphire and Nishat were very high in 2008.of all
these competitors but Sapphire shows a good trend but Azgard nine is less than Sapphire
and Nishat.

Market Value of Share

year 2008 2007 2006 2005 2004
85. 129.2 104.8 76.0 52.8
Nishat
97 0 0 0 0
61. 52.1 22.0 32.0 22.5
Azgard 9
56 0 5 0 0
72. 92.5 70.0 90.0 70.0
Sapphire
45 0 0 0 0

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 Comments:

Graph shows that market value of share of Nishat company is high in 2006 to 2007
as compare to Azgard nine and Sapphire. In 2007 it is at highest point, market value of
Azgard Nine and Sapphire show mixed trend and Azgard Nine market value of share at
high point in 2008 and Sapphire high market value in 2007.

PRICE EARNING RATIO (P/E RATIO):

Price earning ratio (P/E ratio) is the ratio between market price per equity share and
earning per share. The ratio is calculated to make an estimate of appreciation in the value
of a share of a company and is widely used by investors to decide whether or not to buy
shares in a particular company.

Significance of Price Earning Ratio:

Price earnings ratio helps the investor in deciding whether to buy or not to buy the
shares of a particular company at a particular market price

Generally, higher the price earning ratio the better it is. If the P/E ratio falls, the
management should look into the causes that have resulted into the fall of this ratio.

Market price per equity share / Earnings per

Formula share
year 2008 2007 2006 2005 2004
10.2 5. 10.2
Nishat 2.24 17.04
5 91 1
4.4 4. 5.2
Azgard 9 23.23 15.98
4 31 2
10.4 6. 8.1
Sapphire 2.36 8.59
5 26 6

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 Comments:

Price earning ratio of Azgard Nine decreasing from 2004 to 2006 which is not
beneficial for the company also unfavorable for the investor and encourage the investors
to invest but increase in 2007 and 2008 and at very good position in 2007 and then
become better in 2008, Sapphire and Nishat shows mixed trend, Sapphire company
maximum price earning ratio in 2006 and lowest in 2008 and Nishat price earning ratio
never goes negative and it is at high point in 2007 which encourage the investor, it shows
that there is increase in market value of share and decrease in value of earning per share.

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 HORIZONTAL AND VERTICAL ANALYSIS

HORIZONTAL ANALYSIS

"In the base statement of previous year every item is given 100% and is subsequent
years these are changed to the related percentages as per base years.”

Importance

Comparative statement can be prepared for several years in a columnar form. The
changes from period to period can be reflected by establishing a base year and making it
100%. Thereafter all such changes are reflected in percentages. This analysis is
invaluable to management and other analysts because the absolute large data are
condensed into percentages. The purpose of horizontal analysis is to highlight the
changes.

Balance Sheet

The purpose o balance sheet is to reflect financial position of an entity on a particular

date. The balance sheet consists of assets, which are the property of the entity, the
liabilities, which are the debts payable to outside investors or suppliers of goods and
services, and the shareholder’s equity, which represents owners’ interest in the entity. At
any given date, assets must be equal to the contributions of the creditors and owners.

Profit And Loss Account

Profit and loss account is also named income statement or income statement or
income and expenditure account or statement of operations and encompasses all sources
of revenue, gain and losses and expenses for a particular period, grouped into various
headings as per charts of accounts of a company. In other words, it summarizes the
results of operations for an accounting period. The net income is closed by transfer to
balance sheet after paying the dividends and appropriations. Sometimes an appropriation
is made to general reserve and still some portion is left as retained earning. The
procedure of horizontal analysis of profit and loss account is same as of balance sheet.

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NISHAT COMPANY LIMITED
HORIZENTAL BALANCE SHEET
2008 2007 2006 2008 2007
EQUITY AND LIABILITIES

CAPITAL AND RESERVES

1,597,857, 1,597,857
Share Capital 000 ,000 1,452,597,000 0% 10%
23,549,323, 28,566,041
Reserves 000 ,000 19,659,812,000 -18% 45%

Accumulated profit - - -
25,147,180, 30,163,898
Total Equity 000 ,000 21,112,409,000 -17% 43%
SHAREHOLDERS EQUITY
NON CURRENT LIABILITIES
1,047,794, 1,773,820
Loan term finances 000 ,000 2,982,353,000 -41% -41%
liabilities against assets subject to
finance lease - - 33,031,000 0% -100%
1,047,794, 1,773,820
000 ,000 3,015,384,000 -41% -41%

CURRENT LIABILITIES
1,141,227, 926,593
Trade and other payables 000 ,000 960,436,000 23% -4%
201,847, 131,744
Interest/ mark up on loans 000 ,000 151,236,000 53% -13%
9,175,518, 5,018,664
short term borrowings 000 ,000 4,315,708,000 83% 16%
926,025, 1,341,565
Current portion of long term liabilities 000 ,000 1,342,771,000 -31% 0%
276,988, 230,807
Provision for income tax 000 ,000 281,382,000 20% -18%
11,721,605, 7,649,373
000 ,000 7,051,533,000 53% 8%
CONTIGENCY AND
COMMETMENTS - - -

TOTAL EQUITY AND 37,916,579, 39,587,091

LIABILITIES 000 ,000 31,179,326,000 -4% 27%

ASSETS 2008 2007 2006 0% 0%

NON-CURRENT ASSETS
10,647,310, 10,586,159
Property, Plant and Equipment 000 ,000 10,611,353,000 1% 0%
13,321,088, 15,672,980
Capital Work in progress 000 ,000 10,793,026,000 -15% 45%
8,122, 9,523
Loan term loans-secured and deposits 000 ,000 6,377,000 -15% 49%
10,541, 9,342
Loan term loans-secured and deposits 000 ,000 10,130,000 13% -8%
23,987,061, 26,278,004
000 ,000 21,420,886,000 -9% 23%
CURRENT ASSETS
490,229, 422,428
stores, spares parts and loose tools 000 ,000 471,520,000 16% -10%
4,103,648, 3,106,436
stock in trade 000 ,000 3,003,174,000 32% 3%
1,329,027, 831,653
Trade Debts 000 ,000 1,026,884,000 60% -19%
7,129,154, 8,118,459
Short term investments 000 ,000 4,350,146,000 -12% 87%

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 403,295, 411,270
loans and advances 000 ,000 418,794,000 -2% -2%
30,400, 26,395
Short term deposit and prepayments 000 ,000 30,525,000 15% -14%
370,013, 322,839
others receivables 000 ,000 407,147,000 15% -21%
73,752, 69,607
Cash and bank balances 000 ,000 50,250,000 6% 39%
13,929,518, 13,309,087
000 ,000 9,758,440,000 5% 36%

37,916,579, 39,587,091
TOTAL ASSETS 000 ,000 31,179,326,000 -4% 27%

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Non-Current Assets

As we can see from the horizontal balance sheet analysis of two years, the total non-
current assets have shown increasing trend. In 2007 it increases0% from 2006 and it
increases in 2008 by 1% as compare to 2007. This shows investment in fixed assets by
the management.

Capital work in process decreased by 45% in year 2007, increased by -15% in year 2008
respectively. Lon-term loans and advances has shown an increasing trend in 2007 by
49%in 2007 and decreased by -15%. Its long term deposits increased in 2007 by -8% and
increases in 2008 by 13%

Current Assets

Store, spare and tools has shown decreased in 2007 as compare to 2006 by -10% and
increased in 2008 by 16%, which shows that company is in good position as liquidity
point of view. Stock in trade shows increasing trend and increased in 2007 by 3% and in
2008 increased by 32%. This average stock of inventory is indication of good inventory
management. Trade debts has shown decreasing trend in 2007 as compare to 2006 by
-19% and it increased by 60% in 2008.Receivable management is inefficient in 2008 by
showing increasing trend. Loans and advances showed an decreasing trend it increased in
2007 by -2% and in 2008 it decreases -2%. Cash and cash in bank has also shown
decreasing trend in 2007 and increasing trend in 2008.

Equity and Liabilities

Share capital show a changing trend in 2007 by 10% and 0% increasing trend in 2008.
Reserves have increased in year 2007 by 45% and decreased by -18% in 2008, which
shows that company, has utilized all its reserves for expansion of project.

Non-Current Liabilities

Non-current liabilities have also shown an decreasing trend in 2007 and decreasing trend
in 2008. There is a sharp decrease in year 2007 and also decrease in year 2008. Long
term security deposits and retention money also decreases in 2007 by -41% and
decreased in 2008 by-41% as compare to 2006 and 2007 respectively. Liabilities against
assets decreases in 2007 by -100% and in 2008 by 0% as compare to 2006 and 2008
respectively.

Current Liabilities

Total current liabilities have also shown a increasing trend in 2007 and also increasing
trend in 2008. This is also inline with decrease and increase in current assets of the
company. Short term financing is taken to meet the working capital requirements.
Company is meeting its obligation on regular basis.

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Trade payables decreased in 2007 by -04% but increased in 2008 by 23%. Markup on
secured loans also decreased in 2007 by 13% in 2007and increased 53% in 2008. Short
term borrowing also increased by 16% in 2007 and 83% in 2008 as compare to 2006 and
2007 respectively.

Finally, size of the company has increased during the last five years. More investment is
made in capital assets. Company is in expansion phase since the base year. Investment in
new expansion project and technology is being made in order to keep pace with changing
business environment.

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NISHAT COMPANY LIMITED
HORIZENTAL PROFIT AND LOSS
2
2008 2007 2006 008 2007

19,267,633,00
SALES 0 17,180,192,000 16,417,358,000 12% 5%
(16,298,857,00
COST OF SALES 0) (14,335,254,000) (13,701,626,000) 14% 5%
2,968,776,00
GROSS PROFIT 0 2,844,938,000 2,715,732,000 4% 5%
(961,711,00
DISTRIBUTION COST 0) (928,778,000) (663,671,000) 4% 40%
(398,757,00
ADMINISTRATIVE EXPENSES 0) (320,202,000) (264,807,000) 25% 21%
(110,781,00
OTHER OPERATING 0) (91,758,000) (78,689,000) 21% 17%
5,806,873,00
OTHER OPERATING INCOME 0 671,275,000 277,961,000 765% 141%
4,335,624,00
0 (669,463,000) (729,206,000) -748% -8%
7,304,400,00
OPERATING PROFIT 0 2,175,475,000 1,986,526,000 236% 10%
(907,432,00
FINANCE COST 0) (819,267,000) (755,054,000) 11% 9%
share of profit in associated
companies - - 527,394,000 0% -100%
(907,432,00
0) (819,267,000) (227,660,000) 11% 260%
6,396,968,00
PROFIT BEFORE TAXATION 0 1,356,208,000 1,758,866,000 372% -23%
(258,000,00
TAXATION 0) (145,000,000) (126,000,000) 78% 15%
6,138,968,00
PROFIT AFTER TAXATION 0 1,211,208,000 1,632,866,000 407% -26%

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ANALYTICAL REVIEW OF PROFIT & LOSS ACCOUNT

Sales of the Company has shown a increasing trend and has increased up to 5% in 2007
and 12% in 2008 as compare to 2006 and 2007 respectively.

Cost of sales has also shown an increasing trend. In last two years the cost has increased,
it has increased in 2007 by 5% and in 2008 14% as compare to 2006 and 2007
respectively. This increase is more than the increase in sales which is not good for the
company.

Gross profit of the company has also shown a increasing trend during the last two years,
because company cost of sale decreases and sale increase, in 2007 gross profit increases
5% and it was 4% in 2008.Selling and distribution expenses also increases in 2007 and
2008 as 40% and 4% This increase in gross profit was due to the decrease in cost of
goods sold.

Finance cot increased in 2007 as 9% and increased in 2008 as 11% which used for
expansion of new plants of fertilizers. This increase in 2008 which cause the
advertisement of the company. Profit before tax show decreasing trend in 2007 year and
increase in 2008. It had decreased in 2007 as -23% and in 2008 it was 372%. Profit after
tax decreased in 2007 by -26% and it was decrease by 407% in 2008.

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Vertical Analysis

“An analysis of percentage financial statements where all balance sheet items are divided
by total assets and all income statement items are divided by net sales or revenue”

The expression of individual financial statement item as percentages of total helps the
analyst spot trends with respect to the relative importance of these items over time.

Balance Sheet

Vertical analysis is also called common size analysis. The common size balance sheet is
also called 100% balance sheet. The total of assets is the base figures representing 100%.
Every item of the balance sheet is related vertically to reflect the vertical mix against the
total. The analysis represents internal composition of assets and liabilities. The common
size balance sheet analysis reveals the sources of capital and all other sources and the
application of sources to assets of the company.

Profit And Loss Account

Similar method as applied for balance sheet is also applicable to profit and loss account.
The various items of profit and loss account are related as percentage to sales. For
example, items like, cost of goods sold. Operating expenses, gross profit, taxation etc.
are reduced to percentages by treating the sales as 100 %. These ratios are also called
vertical ratios and mix percentages.

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NISHAT COMPANY LIMITED
VERITCAL PROFIT AND LOSS ACC.
2
2008 2007 2006 2008 2007 006
19,267,633,00
SALES 0 17,180,192,000 16,417,358,000 314% 1418% 1005%
(16,298,857,000
COST OF SALES ) (14,335,254,000) (13,701,626,000) -265% -1184% -839%
2,968,776,00
GROSS PROFIT 0 2,844,938,000 2,715,732,000 48% 235% 166%
(961,711,000
DISTRIBUTION COST ) (928,778,000) (663,671,000) -16% -77% -41%
ADMINISTRATIVE (398,757,000
EXPENSES ) (320,202,000) (264,807,000) -6% -26% -16%
(110,781,000
OTHER OPERATING ) (91,758,000) (78,689,000) -2% -8% -5%
OTHER OPERATING 5,806,873,00
INCOME 0 671,275,000 277,961,000 95% 55% 17%
4,335,624,00
0 (669,463,000) (729,206,000) 71% -55% -45%
7,304,400,00
OPERATING PROFIT 0 2,175,475,000 1,986,526,000 119% 180% 122%
(907,432,000
FINANCE COST ) (819,267,000) (755,054,000) -15% -68% -46%
share of profit in associated
companies - - 527,394,000 0% 0% 32%
(907,432,000
) (819,267,000) (227,660,000) -15% -68% -14%
PROFIT BEFORE 6,396,968,00
TAXATION 0 1,356,208,000 1,758,866,000 104% 112% 108%
(258,000,000
TAXATION ) (145,000,000) (126,000,000) -4% -12% -8%
PROFIT AFTER 6,138,968,00
TAXATION 0 1,211,208,000 1,632,866,000 100% 100% 100%

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ANALYTICAL REVIEW OF VERTICLE PROFIT & LOSS ACCOUNT

As we can see from the vertical profit and loss account the sales revenue increased in
2007 by1418% and in 2008 Increased by 314%. Cost of sales also decreased in 2007 by
-1184% and it decreased by -265% in 2008, gross profit increased in 2008 by 48% as
compared to 2007 and in 2007 it had increased by 235% as compared to 2006.

Selling and distribution expenses had decreased in 2008 by -16% and decreased in 2007
as compared to 2006 which was -77%. Financial charges showed decreasing trend in
relation to sales with a decreased in 2008 as compare to 2007 and 2006 Other operating
income had increased in 2007 and also increased in 2008 which is Greater then increase
in 2007.Profit before taxation has increased in year 2006 and year 2007 and also in year
2008. In year 2008 the profit/loss before taxation was 104% and in 2007 the profit
increase by 112% .

Finally the company is improving with the passage of time. Although the profits are not
very adequate but the management is very confident that they are working hard and the
company will prosper in coming years as most of the capital work has been completed.

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NISHAT COMPANY LIMITED
VERITCAL BALANCE SHEET
2 2 2
2008 2007 2006 008 007 006
EQUITY AND LIABILITIES

CAPITAL AND RESERVES

1,597,857,0 1,597,857,0 1,452,597,00
Share Capital 00 00 0 4% 4% 4%
23,549,323,0 28,566,041,0 19,659,812,00
Reserves 00 00 0 62% 75% 52%

Accumulated profit - - -
25,147,180,0 30,163,898,0
Total Equity 00 00 21,112,409,000 66% 80% 56%
SHAREHOLDERS EQUITY
NON CURRENT LIABILITIES
1,047,794,0 1,773,820,0 2,982,353,00
Loan term finances 00 00 0 3% 5% 8%
liabilities against assets subject 33,031,00
to finance lease - - 0 0% 0% 0%
1,047,794,0 1,773,820,0 3,015,384,00
00 00 0 3% 5% 8%

CURRENT LIABILITIES
1,141,227,0 926,593,0 960,436,00
Trade and other payables 00 00 0 3% 2% 3%
201,847,0 131,744,0 151,236,00
Interest/ mark up on loans 00 00 0 1% 0% 0%
9,175,518,0 5,018,664,0 4,315,708,00
short term borrowings 00 00 0 24% 13% 11%
Current portion of long term 926,025,0 1,341,565,0 1,342,771,00
liabilities 00 00 0 2% 4% 4%
276,988,0 230,807,0 281,382,00
Provision for income tax 00 00 0 1% 1% 1%
11,721,605,00 7,649,373,0 7,051,533,00
0 00 0 31% 20% 19%
CONTIGENCY AND
COMMETMENTS - - -

TOTAL EQUITY AND 37,916,579,0 39,587,091,0 31,179,326,00

LIABILITIES 00 00 0 100% 104% 82%

ASSETS 2008 2007 2006 2008 2007 2006

NON-CURRENT ASSETS
10,647,310,0 10,586,159,0 10,611,353,00
Property, Plant and Equipment 00 00 0 28% 28% 28%
13,321,088,0 15,672,980,0 10,793,026,00
Capital Work in progress 00 00 0 35% 41% 28%
Loan term loans-secured and 8,122,0 9,523,0 6,377,00
deposits 00 00 0 0% 0% 0%
Loan term loans-secured and 10,541,0 9,342,0 10,130,00
deposits 00 00 0 0% 0% 0%
23,987,061,0 26,278,004,0 21,420,886,00
00 00 0 63% 69% 56%
CURRENT ASSETS

48/87
stores, spares parts and loose 490,229,0 422,428,0 471,520,00
tools 00 00 0 1% 1% 1%
4,103,648,0 3,106,436,0 3,003,174,00
stock in trade 00 00 0 11% 8% 8%
1,329,027,0 831,653,0 1,026,884,00
Trade Debts 00 00 0 4% 2% 3%
7,129,154,0 8,118,459,00 4,350,146,00
Short term investments 00 0 0 19% 21% 11%
403,295,0 411,270,00 418,794,00
loans and advances 00 0 0 1% 1% 1%
Short term deposit and 30,400,0 26,395,0 30,525,00
prepayments 00 00 0 0% 0% 0%
370,013,0 322,839,0 407,147,00
others receivables 00 00 0 1% 1% 1%
73,752,0 69,607,0 50,250,00
Cash and bank balances 00 00 0 0% 0% 0%
13,929,518,0 13,309,087,0 9,758,440,00
00 00 0 37% 35% 26%

37,916,579,0 39,587,091,0 31,179,326,00

TOTAL ASSETS 00 00 0 100% 104% 82%

49/87
ANALYTICAL REVIEW OF VERTICLE ANALYSIS OF BALANCE SHEET

ASSETS

Non-Current Assets

As we can see from the vertical balance sheet of the company total fixed assets are
constant in relation to total assets with little variations. The management is more
focusing on working capital management than on fixed asset in last three years as shown
by the vertical balance sheet.

Property, plant and equipment have shown a same trend in year 2006 which was 28%
and in 2007 also which was 28% and after that improvement in last year 2008 that was
28% Capital work in progress was increased in 2007 as compare to 2006, Store spare
held for capital expenditures increase in 2007 and 2008. Long-term deposits remains the
same by 0% in 2006 and 0% and 0% increased in 2007 and 2008.

Current Assets

Total current assets have shown an increasing trend over the last three year period. Stores
and spares declined in year 2007 after that it has shown an increasing trend. In 2006 it
increased by 1%, n 2007 1% and in 2008 it was 1%.

Stock in trade has shown an increasing trend. Stock in trade is about 8% of the total
current assets in 2006 and it was 8% of total assets in 2007 and11% in 2008. Stores and
spares have the largest portion

among all current assets. Receivable had 1% o total assets in 2006 and they were 1% in
2007 and 1% in 2008. Trade debtors were 3% in 2006, 2% in 2007 and 4% in 2008. Cash
and cash equivalent were 0% in 2006, 0% in 2007 and 0% n 2008.

EQUITY AND LIABILITIES

Share capital and reserves have shown increasing trend. appropriated profit has shown
increasing trend and company had gain in 2008. Issued, subscribed and paid up capital
was 4% of total liabilities in 2006 same 4% in 2007 and it was also 4% in 2008. Reserves
were increased were 52%, 75% and 62% in 2006,2007 and 2008 respectively.

Non-Current Liabilities

Total long-term liabilities of the company have shown increasing trend in relation to total
liabilities except marginally increase in year 2008. The company is focusing on equity
financing than debts due to the higher financing costs. Liabilities against assets have
shown a mix trend over the last three year period.

50/87
Long term financing was 8% in 2006, 5% in 2007 and 3% in 2008 to all of its liabilities.

Current Liabilities

Short term liabilities have shown an increasing trend during the last three years as shown
in the vertical balance sheet of the company. Trade and other payables have shown an
increasing trend with a marginal increase in last year. Trade an other payables increased
in 2007 and 2008, in 2006 they were 3%, 2%in 2007 and 3% in 2008. Short term
financing increased, it was 11% in 2006, 13% in 2007 and 24% in 2008.

51/87
CHAPTER # 03

1) Company Analysis

2) Company Life Cycle

52/87
COMPANY ANALYSIS:

Directors are pleased to present the 60th annual report and audited accounts for the year
ended June 30, 2008 Nishat Mills has earned profit after tax Rs 6,138.968 Million for
the year ended June 30, 2008. The profit increased by 406.85% as compared to Rs.
1,211.208 Million for the pervious period. this increase in profit is mainly due to capital
gain of Rs. 5,060.413 million resulting from mark to market transaction of our
investment in MCB Bank shares, and increase in dividend income by Rs. 230.765
million. resulting from mark to market transaction of our 4.35 % respectively as
compared to the previous Period. Percentage increase in gross profit does not
commensurate with that of sales due to the facts that there was an increase of 22.62 % in
local cotton rates (2008: Rs. 3,047/mound, 2007: Rs. 2,485/mound) and an increase of
7.65 % in imported cotton rate (2008: Rs. 3,714/mound, 2007: Rs. 3,450/mound).
Finance cost increase by 10.76 % mainly due to increase in average borrowing by 5%.

The Board of Directors of the company has recommended 25% cash dividend (2007:
25% cash dividend) and recommends transferring Rs. 4,870 Million (2007: Rs. 1,244
Million) to general reserve.

General market scenario & future prospects

In fiscal year ended june 2008 observed some major changes in world economics in
general and for textile sector in particular. This year witnessed crude oil touching the
record high of $140 per barrel, substitution of food crops to biofuel crops, rising capital
and commodity price indexes and galloping inflation in all major economies of the
world. Overall there was a major shift in fuel, labor and operating costs of all business
activities. For textile sector, matters were further complicated by an unprecedented rise
in cotton prices in September and October 2007, with no signs of stability by the year
end. Additional factors were energy crises at domestic level, low yield of cotton in
Pakistan and a very weak demand from US and European and credit crunch for general
consumers. Although softening of Pak Rupee against US dollar helped to cover a small
factor of this accumulated cost pressure, the overall picture for domestic textiles industry
was that of inflating costs and a deflating product demand. Forecasting future is
intricate in the present scenario of the country and capricious market. It mainly depends
upon cotton market for the coming season, which seems bullish. As per estimate of
experts, Pakistani cotton production is short by approximately 30 to 35 % as compared to

53/87
the demand. We need our government to chalk out a proper and long term textile policy
for the survival of industry. On our part, we need to increase customers profile and
explore new markets to increase business volumes. Our strategy to drive our marketing
activities would be the timely adoption of innovative products, finishes and production
technique.

Spinning Section

The year 2008 mainly started with difficulties in the shape of the bullish and uncertain
cotton market. Ever highest cotton prices were seen this year in Pakistan. Cotton prices
started with Rs. 2,900/maund and went up to Rs. 4,000/ maund during this year. Most of
the Spinning mills remained in a serious cotton crisis through out the year.
We have, however, by passed these crises by following our one time cotton buying
policy and same has also helped us to maintain steady quality results. Demand of 100%
grey cotton yarn remained steady and we tried to uphold the prices along with market
and to keep over all spinning in profits. by the end of year, far east market. showed good
response in terms of demand and prices of carded & combed yarn. Far East remained our
main selling market of cotton yarn. USA had some steady demand during this year,
where as in Europe demand of cotton yarn was reduced more. Development in terms of
machinery is in progress for better quality of yarn. Installation of state of art ring frames
is under way at one ofour spinning units.

Weaving Section

During the year under review, we have observed highest ever yarn prices which made the
job more difficult. The increases in the yarn price was not absorbed by the fabric prices.
We faced a lot of difficulties to win the business in international market because of high
raw material prices. Moreover, political instability, law and order situation and energy
crisis (Oil, Gas and Power shortage), increased our cost of production and held our
product uncompetitive in international market. It is becoming difficult to maintain our
performance in the present scenario. Fareast market showed difficult on ground of price.
Business in South America reduced by 80% in comparison with previous period because
of the bullish yarn market and cheaper prices from competitors. Our wider width looms /
home textiles greige capacity continued facing decline in prices. Our strategy in this
competition was to diversify ourselves customer wise, market wise and product wise.
This was the only way to survive in such uncertain market. Another strategy was to cut

54/87
costs by bringing innovative technologies. We continued to replace our old looms with
the new state of the art looms and got new looms in different widths to meet the varying
requirements of all our customers. This is the first time that Nishat has looms with 90”
width. By having these looms, we will be more competitive and can supply all types of
greige fabric in varying widths. We hope that after getting these new looms, we would
not lose any business because of the width problem, especially stretch articles. Moreover,
we are planning for PFD plant in our weaving to give PFD fabrics to our customers, as
many customers in Europe are asking for PFD fabrics instead of weaved fabric. In this
way, we will be much competitive product wise and quality wise. It would increase our
customer profit in Europe. We are also trying to reduce our production lead times by
bringing state of the art looms. Customer services, keeping stocks for special fulfillment,
yarns and fibers, are our major tools for a better lead time. We have added new European
customers and started to increase business in France, Denmark, turkey and Poland
markets to fulfill the gap of the Fareast and South American markets. Our business in the
special and technical fabric (Antistatic, Fire retardant, and military fabrics) has also
increased with continuation of orders. We have increased the sales volumes to Nishat
Dyeing and Finishing with a better product mix. We have launched several new products
like Viscose Lycra, Cotton/Kapok/Lycra, Bamboo Lycra and Linen based items etc. in
the Fairs/ Exhibitions and developed the same in different
markets.

Processing and Stitching Section

The year 2008 was a difficult year for fabric processing mills as in addition to the
domestic challenging scenario, recession of American market further slowed down the
entire business
cycle. Retailers were stuck up with high inventory levels, which hindered new ventures.
Unanticipated bankruptcy of some major textile businesses including, Dan River, Linen
& Things, Goody’s Family Inc also gave unprecedented setback to an already fading
market. This
situation did not allow suppliers to increase any prices to overcome excessive overhead
costs
and ease out the worsening condition. Even though all major concerns were facing
a perpendicular decline in the revenues, our company was able to sustain its sales in step
with the plant efficiency. A particular focus was conferred upon enhancing production

55/87
efficiency are drawing more production in less number of hours and with optimum
workforce. With reference to this cost cutting strategy, an important step was taken by
shifting the Faisalabad stitching unit to Lahore, adjacent to the processing plant. This
adaptation is
expected to play an extra ordinary role in improving the supply, operations’ management
and reduction in transportation costs. It will overcome unnecessary operational delays
and costs. Moreover, this stitching unit is being upgraded with the latest machinery and a
state of the art switch-track system that will enhance the working efficiency enormously
along with the product quality. We are installing caustic soda recovery plant to have
further value addition, cost reduction and diversification in production resources. We
have installed new gerbur cutting
equipment in our sewing operation. For exports, European market remained our main
bread & butter earner during the period due to its economic and currency strength.
Devaluation of rupee provided an auxiliary edge to European customers to shop more on
our existing prices, which consequently increased our production & sales. We are
exploring more
opportunities to enhance our strong presence in European market. Furthermore, a lot of
developmental works are underway for American market for regular and branded items.
With escalating value of Chinese currency, Pakistani market is once again expected to
attract US importers. Coupled with Nishat’s capabilities and competencies, our vertically
integrated production facilities that can turn raw cotton in final finished consumer.
product, always attract attention of US clients. We are very positive to materialize
currentdevelopments into tangible sales in near future.

Nishat Dyeing & Finishing – (NDF)

Given the circumstances of textile industry and all challenges, NDF managed to perform
quite well. NDF not only managed to retain all its major customers despite the cut throat
price competition, but also increased its customer base both in US as well as in Europe.
Thereby the low demand by existing customers due to poor retail was covered well by
addition of this new business. This increase in customer base was both due to the
complete verticality offered to customer for fabric till finished garments. as well as to the
increased marketing activities on tapping new customers. The overall picture is not
expected to improve Much in the next fiscal year as in the market still remains highly
unstable. All the factors contribution to the current inflationary pressures and weak
demand are still present and far from being settled. As much as it is hard to establish a

56/87
firm marketing strategy in such a volatile market, NDF has formulated the key principles
follow in the next fiscal year.
These revolve around a further expansion in its customer base, retaining the current
major customers, increasing marketing efforts in the still profitable European market and
concentrated
effort towards specialized finished over regular run-of-the-mill products to fetch better
margins.

Power Generation
Nishat has 80 MW of self power generation facilities at different sites. We have always
concentrated on installation of most modern and efficiency to power generation machine
to get
more with less fuel consumption. Out of the total generation capacity, 46 MW generation
is done through most modern and highly efficiency gas fired generators and their design
is based on “tri-generation” concept i.e. besides generating power these plants are
producing steam for use in processing, for further power generation and hot water for
process use or air conditioning. This concept makes it possible to use the precious energy
to to maximize profitability of the company and help reduce environmental pollution.
Keeping in view the current power shortage in the country, Nishat has responded to
beckon of the Government and sold its excessive power
from different locations to the local distribution companies.

57/87
 Company Life Cycle

Last Five Years Sales of the Company

Comments:

In the above graph you can see in the year 2008 sale of the company at highest point
and it is showing increasing trend from 2004 so company sale is at increasing side in the
year of 2004 to 2008 there is no much difference between the sale this increasing trend
due to expansion of plant and due to the consumption and the demand in the market so
we can say that Nishat Mills product’s demand is increasing in the local market and
international market.

58/87
CHAPTER # 04

1. Five Years Review

2. Recommendation

3. Conclusion

4. Bibliography

59/87
 FIVE YEARS REVIEW

Explanation:

In the above chat we can see the profit position of the company during the year 2004
to 2008 in these five years company profitability position is better in 2008 as compare it
with other years, so we can say that company was in much better position in 2008.

60/87
RECOMMENDATIONS

o The Company should design effective internal control system, which not only
increase the efficiency but also reduce the pressure exists on accounts and finance
department.
o The Company should arrange training and orientation programs for its employees
on regular basis so that they can equip themselves with the latest developments in
the field of finance and accounts.
o Monthly accounts should be prepared on regular basis so that it will help the
management to make better and timely decisions.
o Calculations of mark-up should be made by the Company to reconcile and check
the mark-up charged by the banks to keep a good control on the financial charges
charged by the banks.
o Trade debtors and creditors balances reconciliations should be made on monthly
basis along with keeping the balances updated by sending balance confirmations
letters to the parties’ The selection criteria should also be improved. The company
should select the educated and experienced employees and along with there
should be a proper training system for them

Conclusion

Directors are pleased to present the 60th annual report and audited accounts for the
year ended June 30, 2008 Nishat Mills has earned profit after tax Rs 6,138.968 Million
for the year ended June 30, 2008. The profit increased by 406.85% as compared to Rs.
1,211.208 Million for the pervious period. this increase in profit is mainly due to capital
gain of Rs. 5,060.413 million resulting from mark to market transaction of our
investment in MCB Bank shares, and increase in dividend income by Rs. 230.765
million. resulting from mark to market transaction of our 4.35 % respectively as
compared to the previous Prriod. Percentage increase in gross profit does not
commensurate with that of sales due to the facts that there was an increase of 22.62 % in
local cotton rates (2008: Rs. 3,047/maund, 2007: Rs. 2,485/maund) and an increase of
7.65 % in imported cotton rate (2008: Rs. 3,714/maund, 2007: Rs. 3,450/maund).
Finance cost increase by 10.76 % mainly due to increase in average borrowing by 5%.

The Board of Directors of the company has recommended 25% cash dividend
(2007: 25% cash dividend) and recommends transferring Rs. 4,870 Million (2007: Rs.
1,244 Million) to general reserve.

61/87
 In fiscal year ended june 2008 observed some major changes in world economics in
general and for textile sector in particular. This year witnessed crude oil touching the
record high of $140 per barrel, substitution of food crops to biofuel crops, rising capital
and commodity price indexes and galloping inflation in all major economies of the
world. Overall there was a major shift in fuel, labor and operating costs of all business
activities. For textile sector, matters were further complicated by an unprecedented rise
in cotton prices in September and October 2007, with no signs of stability by the year
end. Additional factors were energy crises at domestic level, low yield of cotton in
Pakistan and a very weak demand from US and European and credit crunch for general
consumers. Although softening of Pak Rupee against US dollar helped to cover a small
factor of this accumulated cost pressure, the overall picture for domestic textiles industry
was that of inflating costs and a deflating product demand. Forecasting future is
intricate in the present scenario of the country and capricious market. It mainly depends
upon cotton market for the coming season, which seems bullish. As per estimate of
experts, Pakistani cotton production is short by approximately 30 to 35 % as compared to
the demand. We need our government to chalk out a proper and long term textile policy
for the survival of industry. On our part, we need to increase customers profile and
explore new markets to increase business volumes. Our strategy to drive our marketing
activities would be the timely adoption of innovative products, finishes and production
technique.

The year 2008 mainly started with difficulties in the shape of the bullish and
uncertain cotton market. Ever highest cotton prices were seen this year in Pakistan.
Cotton prices started with Rs. 2,900/mound and went up to Rs. 4,000/ mound during this
year. Most of the Spinning mills remained in a serious cotton crisis through out the year.
We have, however, by passed these crises by following our one time cotton buying
policy and same has also helped us to maintain steady quality results. Demand of 100%
grey cotton yarn remained steady and we tried to uphold the prices along with market
and to keep over all spinning in profits. by the end of year, far east market. showed good
response in terms of demand and prices of carded & combed yarn. Far East remained our
main selling market of cotton yarn. USA had some steady demand during this year,
where as in Europe demand of cotton yarn was reduced more. Development in terms of

62/87
machinery is in progress for better quality of yarn. Installation of state of art ring frames
is under way at one of our spinning units.
During the year under review, we have observed highest ever yarn prices which
made the job more difficult. The increases in the yarn price was not absorbed by the
fabric prices. We faced a lot of difficulties to win the business in international market
because of high raw material prices. Moreover, political instability, law and order
situation and energy crisis (Oil, Gas and Power shortage), increased our cost of
production and held our product uncompetitive in international market. It is becoming
difficult to maintain our performance in the present scenario. Fareast market showed
difficult on ground of price. Business in South America reduced by 80% in comparison
with previous period because of the bullish yarn market and cheaper prices from
competitors. Our wider width looms / home textiles greige capacity continued facing
decline in prices. Our strategy in this competition was to diversify ourselves customer
wise, market wise and product wise. This was the only way to survive in such uncertain
market. Another strategy was to cut costs by bringing innovative technologies. We
continued to replace our old looms with the new state of the art looms and got new looms
in different widths to meet the varying requirements of all our customers. This is the
first time that Nishat has looms with 90” width. By having these looms, we will be more
competitive and can supply all types of grieve fabric in varying widths. We hope that
after getting these new looms, we would not lose any business because of the width
problem, especially stretch articles. Moreover, we are planning for PFD plant in our
weaving to give PFD fabrics to our customers, as many customers in Europe are asking
for PFD fabrics instead of weaved fabric. In this way, we will be much competitive
product wise and quality wise. It would increase our customer profit in Europe. We are
also trying to reduce our production lead times by bringing state of the art looms.
Customer services, keeping stocks for special fulfillment, yarns and fibers, are our major
tools for a better lead time. We have added new European customers and started to
increase business in France, Denmark, turkey and Poland markets to fulfill the gap of the
Fareast and South American markets. Our business in the special and technical fabric
(Antistatic, Fire retardant, and military fabrics) has also increased with continuation of
orders. We have increased the sales volumes to Nishat Dyeing and Finishing with a
better product mix. We have launched several new products like Viscose Lycra,
Cotton/Kapok/Lycra, Bamboo Lycra and Linen based items etc. in the Fairs/ Exhibitions
and developed the same in different markets.

63/87
 The year 2008 was a difficult year for fabric processing mills as in addition to the
domestic challenging scenario, recession of American market further slowed down the
entire business cycle. Retailers were stuck up with high inventory levels, which hindered
new ventures. Unanticipated bankruptcy of some major textile businesses including, Dan
River, Linen & Things, Goody’s Family Inc also gave unprecedented setback to an
already fading market. This situation did not allow suppliers to increase any prices to
overcome excessive overhead costs and ease out the worsening condition. Even though
all major concerns were facing
a perpendicular decline in the revenues, our company was able to sustain its sales
in step with the plant efficiency. A particular focus was conferred upon enhancing
production efficiency are drawing more production in less number of hours and with
optimum workforce. With reference to this cost cutting strategy, an important step was
taken by shifting the Faisalabad stitching unit to Lahore, adjacent to the processing plant.
This adaptation is expected to play an extra ordinary role in improving the supply,
operations’ management and reduction in transportation costs. It will overcome
unnecessary operational delays and costs. Moreover, this stitching unit is being upgraded
with the latest machinery and a state of the art switch-track system that will enhance the
working efficiency enormously along with the product quality. We are installing caustic
soda recovery plant to have further value addition, cost reduction and diversification in
production resources. We have installed new Gerber cutting equipment in our sewing
operation. For exports, European market remained our main bread & butter earner during
the period due to its economic and currency strength. Devaluation of rupee provided an
auxiliary edge to European customers to shop more on our existing prices, which
consequently increased our production & sales. We are exploring more opportunities to
enhance our strong presence in European market. Furthermore, a lot of developmental
works are underway for American market for regular and branded items. With escalating
value of Chinese currency, Pakistani market is once again expected to attract US
importers. Coupled with Nishat’s capabilities and competencies, our vertically integrated
production facilities that can turn raw cotton in final finished consumer. product, always
attract attention of US clients. We are very positive to materialize current developments
into tangible sales in near future.
Given the circumstances of textile industry and all challenges, NDF managed to
perform quite well. NDF not only managed to retain all its major customers despite the

64/87
cut throat price competition, but also increased its customer base both in US as well as in
Europe. Thereby the low demand by existing customers due to poor retail was covered
well by addition of this new business. This increase in customer base was both due to the
complete verticality offered to customer for fabric till finished garments. as well as to the
increased marketing activities on tapping new customers. The overall picture is not
expected to improve Much in the next fiscal year as in the market still remains highly
unstable. All the factors contribution to the current inflationary pressures and weak
demand are still present and far from being settled. As much as it is hard to establish a
firm marketing strategy in such a volatile market, NDF has formulated the key principles
follow in the next fiscal year.
These revolve around a further expansion in its customer base, retaining the current
major customers, increasing marketing efforts in the still profitable European market and
concentrated effort towards specialized finished over regular run-of-the-mill products to
fetch better margins.
Nishat has 80 MW of self power generation facilities at different sites. We have
always concentrated on installation of most modern and efficiency to power generation
machine to get more with less fuel consumption. Out of the total generation capacity, 46
MW generation is done through most modern and highly efficiency gas fired generators
and their design is based on “tri-generation” concept i.e. besides generating power these
plants are producing steam for use in processing, for further power generation and hot
water for process use or air conditioning. This concept makes it possible to use the
precious energy to maximize profitability of the company and help reduce environmental
pollution. Keeping in view the current power shortage in the country, Nishat has
responded to beckon of the Government and sold its excessive power from different
locations to the local distribution companies.

65/87
Bibliography

REFERENCE & SOURCES USED

1) http://www.nishatmillsltd.com/nishat/invest.html

2) http://www.nonprofitsassistancefund.org/files/MNAF/ToolsTempla
tes/NonprofitFinancialRatios.pdf

3) http://www.azgard9.com/html/financial-
info/2008/Security%20Analys_g%20-%20Q1.pdf

4) http://www.azgard9.com/html/financial-
info/2008/Consolidated%20ANL.pdf

5) http://www.azgard9.com/html/financial-
info/2008/Azgard%209%20AR07%20Consolidati%20(2).pdf

6) http://www.azgard9.com/html/financial-
info/2007/ANNUAL%20REPORT-
2006%20PAGE%2021%20TO%20110.pdf

7) http://www.azgard9.com/html/financial-information.htm

8) http://www.sapphire.com.pk/cstmaccounts.htm

9) http://www.sapphire.com.pk/home.htm

References

Special Thanks to

Mr. Muhammad Zeshan Raza

66/87
CHAPTER # 05

Annexure:

1) Five Years Balance Sheet of Nishat Mills limited Company

2) Five Years Profit and Loss account of Nishat Mills limited Company

3) Five Years Balance Sheet of Azgard Nine Pvt limited Company

4) Five Years Profit and Loss account of Azgard Nine Pvt limited Company

5) Five Years Balance Sheet of Sapphire Mills limited Company

6) Five Years Profit and Loss account of Sapphire Mills limited Company

7) Ratio Working of Nishat, Sapphire and Azgard Nine Company

67/87
NISHAT PVT. LIMITED
BALANCE SHEET
FOR THE YEAR ENDED 2008
2008 2007 2006 2005 2004
EQUITY AND LIABILITIES

CAPITAL AND RESERVES

1,59 1,59 1,452 1,45 1,59
Share Capital 7,857,000 7,857,000 ,597,000 2,597,000 7,857,000
23,549 28,56 19,659, 11,35 28,56
Reserves ,323,000 6,041,000 812,000 3,517,000 6,041,000

Accumulated profit - - - - -
25,147,1 30,163,8 21,112,40 12,806,1 30,163,8
Total Equity 80,000 98,000 9,000 14,000 98,000
SHAREHOLDERS EQUITY
NON CURRENT LIABILITIES
1,04 1,77 2,982 2,79 1,77
Loan term finances 7,794,000 3,820,000 ,353,000 6,512,000 3,820,000
liabilities against
assets subject to 33,03 61,6
finance lease - - 1,000 43,000 -
1,047,7 1,773,8 3,015,38 2,858,1 1,773,8
94,000 20,000 4,000 55,000 20,000

CURRENT LIABILITIES
Trade and other 1,14 9 96 8 92
payables 1,227,000 26,593,000 0,436,000 12,216,000 6,593,000
Interest/ mark up on 20 1 15 13
loans 1,847,000 31,744,000 1,236,000 88,449,000 1,744,000
9,17 5,01 4,315 4,28 5,01
short term borrowings 5,518,000 8,664,000 ,708,000 4,815,000 8,664,000
Current portion of 92 1,34 1,342 7 1,34
long term liabilities 6,025,000 1,565,000 ,771,000 11,164,000 1,565,000
Provision for income 27 2 28 3 23
tax 6,988,000 30,807,000 1,382,000 56,689,000 0,807,000
11,721,6 7,649,3 7,051,53 6,253,3 7,649,3
05,000 73,000 3,000 33,000 73,000
CONTIGENCY AND
COMMETMENTS - - - - -

TOTAL EQUITY 37,916,5 39,587,0 31,179,32 21,917,6 39,587,0

AND LIABILITIES 79,000 91,000 6,000 02,000 91,000

ASSETS 2008 2007 2006 2005 2004

NON-CURRENT ASSETS
Property, Plant and 10,647,3
10,000 10,58 10,611, 9,15 2,42
Equipment 6,159,000 353,000 1,096,000 9,954,944
Capital Work in 13,321,0
88,000 15,67 10,793, 5,00
progress 2,980,000 026,000 3,177,000 57,608,750
Loan term loans-

68/87
secured and deposits 8,122,000 9,523,000 6,377,000 4,890,000
Loan term loans- 1
secured and deposits 10,541,000 9,342,000 0,130,000 12,022,000 23,820,007
23,987,0 26,278,0 21,420,88 14,171,1 2,511,3
61,000 04,000 6,000 85,000 83,701
CURRENT ASSETS
stores, spares parts and 49 4 47 4 1,24
loose tools 0,229,000 22,428,000 1,520,000 24,827,000 9,572,742
4,10 3,10 3,003 2,89
stock in trade 3,648,000 6,436,000 ,174,000 7,392,000
1,32 8 1,026 8 1,15
Trade Debts 9,027,000 31,653,000 ,884,000 77,358,000 0,579,738
Short term 7,12 8,11 4,350 2,17 10
investments 9,154,000 8,459,000 ,146,000 3,530,000 9,138,820
40 4 41 4 24
loans and advances 3,295,000 11,270,000 8,794,000 24,533,000 5,255,091
Short term deposit and 3
prepayments 30,400,000 26,395,000 0,525,000 39,180,000 13,497,444
37 3 40 3
others receivables 0,013,000 22,839,000 7,147,000 88,598,000 -
Cash and bank 5 5
balances 73,752,000 69,607,000 0,250,000 20,999,000 56,528,131
13,929,5 13,309,0 9,758,44 7,746,4 2,824,5
18,000 87,000 0,000 17,000 71,966

37,916,5 39,587,0 31,179,32 21,917,6 5,335,9

TOTAL ASSETS 79,000 91,000 6,000 02,000 55,667

69/87
NISHAT PVT. LIMITED
PROFIT & LOSS A/C
FOR THE YEAR ENDED 2008
2008 2007 2006 2005 2004
SALES
19,26 17,18     16,417,3   11,374,6 7,46
COST OF SALES 7,633,000 0,192,000 58,000  30,000  1,055,757
(16,29 (14,33   (13,701,6   (9,239,7 7,09
8,857,000) 5,254,000) 26,000) 31,000) 1,114,328
GROSS PROFIT
2,9 2,84 2,7 2,1 14,55
68,776,000 4,938,000 15,732,000 34,899,000 2,170,085
DISTRIBUTION COST
ADMINISTRATIVE (9 (9        (663,      (510,2
EXPENSES 61,711,000) 28,778,000) 671,000) 46,000) -
(3 (3        (264,      (175,0
OTHER OPERATING 98,757,000) 20,202,000) 807,000) 40,000) 54,689,456
OTHER OPERATING (1 (          (78,        (70,9
INCOME 10,781,000) 91,758,000) 689,000) 78,000) 27,986,950
5,8 6          277,        621,5 11
06,873,000 71,275,000 961,000  69,000  1,644,873
4,335, (669,4 (729, (134,6 194,3
624,000 63,000) 206,000) 95,000) 21,279
OPERATING PROFIT
7,3 2,17 1,9 2,0 14,74
04,400,000 5,475,000 86,526,000 00,204,000 6,491,364
FINANCE COST
share of profit in (9 (8        (755,      (407,6 12
associated companies 07,432,000) 19,267,000) 054,000) 96,000) 7,260,241
         527,        440,
- - 394,000  846,000  13,544,903
(9 (8 ( 14
07,432,000) 19,267,000) 227,660,000) 33,150,000 0,805,144
PROFIT BEFORE TAXATION
6,396, 1,356,2 1,758, 2,033, 14,887,2
968,000 08,000 866,000 354,000 96,508
TAXATION
(2 (1 ( (1
58,000,000) 45,000,000) 126,000,000) 66,000,000) 85,046,149
PROFIT AFTER
TAXATION
6,138, 1,211,2 1,632, 1,867, 14,972,3
968,000 08,000 866,000 354,000 42,657

70/87
AZGARD NINE PVT
LIMITED
BALANCE
SHEET
AS AT 31 DECEMBER
2008
2 2 2 2
2007
008 006 005 004
EQUITY AND
Rs. Rs. Rs. Rs. Rs.
LIABILITIES
SHARE CAPITAL
AND RESERVES
ISSUED,
3,78
SUBSCRIBED AND 3,827,118,54
8,822,900
3,788,838,9 1,737,308,6 1,737,308,6
0 00 80 80
PAID UP CAPITAL
3,53
RESERVES 3,532,469,00
0,626,122
3,578,262,1 403,331,46
362,142,241
2 82 9
Inappropriate 2,764,494,95
2,40
1,807,067,0 952,462,49
Profit 9
0,605,174
52 0
410,657,982

10 9,72
9,174,168,1 3,093,102,6 2,510,108,9
,124,082,501 0,054,196
34 39 03
Surplus on
revaluation of 2
257,360,86 278,943,67
property, Plant 219,356,257 39,073,077 306,564,511
7 1
and equipment
Non current
liabilities
Redeemable 3,962,461,56
4,49
2,268,598,9 2,333,220,1
capital Secured 1
1,185,372
53 75
1,147,729

Long term 2,686,842,50

2,97
3,519,216,9 347,920,00
finance secured 0
3,551,252
88 0
750,000,000

Liabilities against
assets subject to 25,210,944 14,357,005 9,622,618 40,173,972 116,503,819
finance lease
7,47
6,674,515,00 5,797,438,5 2,721,314,1
9,093,629 867,651,548
5 59 47
Current
Liabilities
Current Portion of
9
non current 1,470,921,49
81,049,256
450,047,12 433,780,77
363,081,881
3 5 4
liabilities
Short term 6,574,080,30
3,82
6,006,117,6 3,142,402,3 1,492,909,8
Borrowings 4
0,688,516
30 24 92
derivative
financial liabilities 50,536,909 34,369,582 32,021,607 - -

Trade and other 1,350,500,11

1,03
1,243,588,0 791,641,17
payables 5
0,875,769
67 2
691,981,192

71/87
 Due to related
parties- 426,768,193 - - - -
unsecured
Markup accrued 3
195,249,01
on borrowings 466,226,443 17,690,929 79,679,935 64,824,871
7
Unclaimed
dividend 14,686,046 9,694,014 22,312,061 362,062 95,414

10 6,19
7,949,335,5 4,447,866,2 2,612,893,2
,353,719,503 4,368,066
07 67 50
Contingencies
and commitments - - - - -

27 23,632
23,178,303, 10,541,226, 6,297,218,2
,371,673,266 ,588,968
067 724 12

2
ASSETS
008 2,007 2,006 2,005 2,004
Non-current
Rs. Rs. Rs. Rs. Rs.
assets
Property, Plant 7,734,950,54
7,64
7,601,895,8 3,113,043,0 2,847,936,4
and equipment 3,649,558
7 66 32 02
Capital work in 1
150,650,47 2,459,655,9
progress 918,670,893 67,987,854 84,292,338
7 06

intangible assets 33,536,216 51,142,669 60,544,809 73,937,276 88,375,589

Long term 7,521,644,05

6,39
6,303,488,9
investments 1
1,905,201
06
4,670,138 2,666,296

Long term
deposits 19,777,502 20,239,502 19,906,757 29,745,135 18,517,830

16 14,274
14,136,486, 5,681,051,4 3,041,788,4
,228,579,209 ,924,784
815 87 55

Current assets
Stores spares 1
101,762,48
and loose tools 201,693,270 25,468,877 87,790,355 72,608,693
6
2,24
Stock in trade 4,034,103,11
6,132,173
2,022,510,9 2,034,180,5 1,394,729,3
9 24 50 30
1,65
Trade receivable 1,777,232,61
7,196,735
1,134,897,1 1,013,883,5
945,111,856
2 49 84
Derivative 3
555,680,24
financial assets 175,673,993 88,993,278 13,458,916 -
4
Advances,
deposits, 1,00
857,744,30 895,807,87
prepayments and 789,515,062 4,944,292
4 9
712,923,170
other receivables
Current Taxation 63,948,605 51,050,683 - - -

Short Term 4,018,853,58

3,83
3,788,315,5 769,411,59
investment 6
8,444,830
21 5
109,148,931

Cash and Bank 580,905,62

Balances 82,073,810 45,433,316
4
45,642,358 20,907,777

72/87
 11 9,35
9,041,816,2 4,860,175,2 3,255,429,7
,143,094,057 7,664,184
52 37 57

27 23,632
23,178,303, 10,541,226, 6,297,218,2
,371,673,266 ,588,968
067 724 12

Profit and Loss

Account
for the year
ended 31-12-208
2
008 2,007 2,006 2,005 2,004
Rs. Rs. Rs. Rs. Rs.

1
4, 4,
Sales - Net 0,113,499,3 6,628,341,9
889,681,966 422,472,357
3,155,912,4
51 26 27
(3, (3,2
Cost of Sales (6,660,223, (4,620,988,
703,361,406) 88,786,063)
(2,440,779,
767) 950) 273)
1, 1,
Gross Profit 3,453,275,5 2,007,352,9
186,320,560 133,686,294 715,133,154
84 76
Administrative
(
and selling (603,529,74 (435,185,07
(391,290,338) 320,622,883)
(185,112,54
3) 3) 8)
expenses
Operating 2,849,745,8 1,572,167,9
Profit 795,030,222 813,063,411 530,020,606
41 03
Other income 1,
- Net 620,148,589 641,224,883 122,601,656 305,447,731 9,864,791

(
Finance cost (2,470,391, (1,061,933,
(657,548,074) 326,374,206)
(144,623,06
655) 212) 2)
Profit before 1,151,459,5
1,
Taxation 999,502,775 260,083,804 792,136,936 395,262,335
74

taxation (102,218,85 (72,007,073

(115,569,082) (50,843,271)
(20,000,000
2) ) )
Profit after 1,079,452,5
1,
Taxation 897,283,923 144,514,722 741,293,665 375,262,335
01

73/87
SHAPPHIRE (PVT).
LIMITED
BALANCE SHEET
FOR THE YEAR ENDED
2008
ASSETS 2008 2007 2006 2005 2004

NON-CURRENT ASSETS

Property, Plant and 3,936,

357,164 3,793,62 3,721,36 3,124,15 2,429,95
Equipment 1,479 8,562 2,756 4,944

136, 309,35 202,11 166,67 57,60

Capital Work in progress 665,017 7,308 9,669 4,519 8,750

1, 1,86 2,69 3,51

Intangible Assets 035,155 3,283 1,411 9,539

140, 333,58
Investment Property 660,297 - - - 1,557

550, 400,08 404,68 359,68

Long term Investment 455,739 7,567 7,567 7,567 -

Loan term loans- 18, 27,88 24,22 26,17 23,82

secured and deposits 609,945 6,920 4,793 9,194 0,007

4,78 4,532,8 4,355,0 3,680,2 2,844,96

3,783,317 16,557 92,002 13,575 5,258

CURRENT ASSETS
3,278, 1,949,14 1,908,73 1,860,86 1,249,57
Inventories 652,891 6,494 4,607 3,775 2,742

1,129, 1,280,85 1,181,49 976,38 1,150,57

Trade Debts 634,217 2,424 1,096 2,566 9,738

61, 115,67 41,51 31,16 109,13

Loan and advances 803,031 7,608 6,776 5,687 8,820

245,25
Investments - - - - 5,091

Advance/ refundable 96, 36,98 51,61 176,04 131,02

income tax 288,064 5,119 3,256 1,185 1,514

Trade deposits and short 7, 5,25 3,30 1,22

term prepayments 173,454 3,941 0,053 8,857 -

78, 119,31 121,59 47,12 13,49

Other receivables 562,147 6,598 8,423 5,900 7,444

Short term investments 2,821, 3,032,18 1,521,73 503,64

74/87
 493,005 0,857 2,569 4,001 -

66, 53,77 33,31 41,25 56,52

Cash and bank balances 874,980 4,469 2,085 6,301 8,131

7,54 6,593,1 4,863,2 3,637,7 2,955,59

0,481,789 87,510 98,865 08,272 3,480

12,32 11,126,0 9,218,3 7,317,9 5,800,55

TOTAL ASSETS 4,265,106 04,067 90,867 21,847 8,738

EQUITY AND
LIABILITIES

CAPITAL AND
RESERVES
200, 200,83 200,83 200,83 200,83
Share Capital 831,400 1,400 1,400 1,400 1,400

4,758, 5,601,77 3,558,56 2,307,51 1,954,79

Reserves 930,127 4,092 1,976 0,163 5,027

617, 216,26 134,53 288,77 172,30

Accumulated profit 730,082 2,838 5,088 3,074 7,002

5,57 6,018,8 3,893,9 2,797,1 2,327,93

Total Equity 7,491,609 68,330 28,464 14,637 3,429

SHAREHOLDERS
EQUITY

NON CURRENT
LIABILITIES

Redeemable Capital - - - - -

469, 734,94 934,38 1,188,01 940,30

Loan term finances 501,210 6,877 0,957 7,068 4,765

18 18 18 18
Custom duty payable - 8,878 8,878 8,878 8,878

39 407,3 366,27 326,71 279,46

Deferred liabilities 6,649,544 55,062 8,699 0,352 2,992

86 1,142,4 1,300,8 1,514,9 1,219,95

6,150,754 90,817 48,534 16,298 6,635

CURRENT LIABILITIES

75/87
 490, 371,95 667,34 575,33 505,96
Trade and other payables 810,513 2,583 9,055 0,266 1,833

Interest/ mark up on 82, 71,19 58,95 45,08

loans 211,756 6,500 4,600 1,569 -

4,923, 3,109,23 2,611,40 1,933,61 1,540,81

short term borrowings 882,728 2,345 2,600 0,996 9,433

Current portion of long 322, 347,06 603,23 352,34 147,89

term liabilities 903,996 3,492 6,109 3,252 6,239

Current portion of 24,07

gratuity fund - - 8,287 - -

60, 65,20 58,27 99,13 57,62

Provision for income tax 813,750 0,000 9,967 3,295 9,936

31 39 36
Dividend payable - - 3,251 1,534 1,233

CONTIGENCY AND 5,88 3,964,6 4,023,6 3,005,8 2,252,66

COMMETMENTS 0,622,743 44,920 13,869 90,912 8,674

TOTAL EQUITY AND 12,32 11,126,0 9,218,3 7,317,9 5,800,55

LIABILITIES 4,265,106 04,067 90,867 21,847 8,738

76/87
SHAPPHIRE (PVT). LIMITED
PROFIT & LOSS A/C
FOR THE YEAR ENDED 2008

2008 2007 2006 2005 2004

9,746, 9,152, 7,966, 5,338, 7,461,05
SALES 607,946 455,933 281,051 810,168 5,757
8,618, 7,961, 7,201, 4,734, 7,091,11
COST OF SALES 580,605 253,425 536,030 528,479 4,328
1,128, 1,191, 764, 604, 369,94
GROSS PROFIT 027,341 202,508 745,021 281,689 1,429

442, 391, 41, 29,

DISTRIBUTION COST 316,060 366,747 676,645 575,561 -
ADMINISTRATIVE 115,0 91, 77, 49, 54,68
EXPENSES 86,239 860,697 811,031 747,754 9,456
16, 13, 20, 27,98
OTHER OPERATING 500,000 367,023 866,302 088,074 6,950
OTHER OPERATING 835, 95, 59, 51, 111,64
INCOME 158,563 620,045 902,250 726,587 4,873
277, 403, 73, 47, 28,96
256,264 974,422 451,728 684,802 8,467

1,405, 787, 691, 556, 398,90

OPERATING PROFIT 283,605 228,086 293,293 596,887 9,896

RE-MEASUREMENT OF
HELD FOR TRADING 75
INVESTMENTS - - - - 1,601
734, 467, 427, 174, 127,26
FINANCE COST 683,187 520,225 833,551 923,488 0,241
13,54
OTHER CHARGES - - - - 4,903
734, 467, 427, 174, 141,55
683,187 520,225 833,551 923,488 6,745

PROFIT BEFORE 670, 319, 263, 381, 257,35

TAXATION 600,418 707,861 459,742 673,399 3,151

52, 103, 128, 92, 85,04

TAXATION 870,336 445,023 924,654 900,325 6,149

PROFIT AFTER 617, 216, 134, 288, 172,30

TAXATION 730,082 262,838 535,088 773,074 7,002

77/87
Ratio analysis
current ratio current assets/current liabilites
year 2008 2007 2006 2005 2004
(13929518000/ 13309087000/ (9758440000)/ (7746417000 (2824571966)/
Nishat
11721605000) 7649373000 7051533000 )/6253333000 7649373000

Azgard (11143094057/ (9357664184/ (9041816252/ (4860175237 (3255429757/

9 10353719503) 6194368066) 7949335507) /4447866267) 2612893250)

Sapphir (7540481789/5 (6593187510/ (4863298865/ (3637708272 (2955593480/

e 880622743) 3964644920) 4023613869) /3005890912) 2252668674)

quick ratio
quick
ratio (current assets-stock)/current liabilites
year 2008 2007 2006 2005 2004

(13309087000 (7746417000
(13929518000- (9758440000-
- - (2824571966-
Nishat 4103648000)/1 3003174000)/7
3106436000)/7 2897392000)/ 0)/7649373000
1721605000 051533000
649373000 6253333000

(4860175237
(11143094057- (9357664184- (9041816252- (3255429757-
Azgard -
4034103119)/1 2246132173)/6 2022510924)/7 1394729330)/2
9 2034180550)/
0353719503 194368066 949335507 612893250
4447866267
(3637708272
(7540481789- (6593187510- (4863298865- (2955593480-
Sapphir -
3278652891)/5 1949146494)/3 1908734607)/4 1249572742)/2
e 1860863775)/
880622743 964644920 023613869 252668674
3005890912

78/87
inventory day
Inventory Days Inventory Days = Inventory / Cost of Sales*365
year 2008 2007 2006 2005 2004

(4103648000/1 (3106436000/ (3003174000/ (2897392000

(0/7091114328
Nishat 6298857000)*3 14335254000) 13701626000) /9239731000)
)*365
65 *365 *365 *365

(4034103119/6 (2246132173/ (2022510924/ (2034180550 (1394729330/

Azgard
660223767)*36 4620988950)* 3703361406)* /3288786063) 2440779273)*
9
5 365 365 *365 365

(3278652891/8 (1949146494/ (1908734607/ (1860863775 (1249572742/

Sapphir
618580605)*36 7961253425)* 7201536030)* /4734528479) 7091114328)*3
e
5 365 365 *365 65

Debtor's day
Debtor's day Trade debtors/Credit sales*365
year 2008 2007 2006 2005 2004

(1329027000/1 (831653000/1 (1026884000/ (877358000/1 (1150579738/

Nishat 9267633000)*3 7180192000)* 16417358000) 1374630000)* 7461055757)*
65 365 *365 365 365

(1777232612/1 (1657196735/ (1134897149/ (1013883584 (945111856/31

Azgard
0113499351)*3 6628341926)* 4889681966)* /4422472357) 55912427)*36
9
65 365 365 *365 5

(1129634217/9 (1280852424/ (1181491096/ (976382566/ (1150579738/

Sapphir
746607946)*36 9152455933)* 7966281051)* 5338810168)* 7461055757)*
e
5 365 365 365 365

79/87
Creditors days
Creditors days Trade Creditors/Credit Sales*365
year 2008 2007 2006 2005 2004

(1350500115/1 (1030875769/ (1243588067/ (791641172/4 (691981192/3

Azgard
0113499351)*3 6628341926)* 4889681966)* 422472357)*3 155912427)*3
9
65 365 365 65 65

(371952583/9 (667349055/7 (575330266/ (505961833/7

Sapphir (490810513/97
152455933)*3 966281051)*3 5338810168)* 461055757)*3
e 46607946)*365
65 65 365 65

(1141227000/1 (926593000/1 (960436000/1 (812216000/1 (926593000/7

Nishat 9267633000)*3 7180192000)* 6417358000)* 1374630000)* 461055757)*3
65 365 365 365 65

Total Asset Turnover

Formula Sales/ Total Assets
year 2008 2007 2006 2005 2004

(1137463000
(19267633000/ (17180192000 (16417358000 (7461055757/
Nishat 0/2191760200
37916579000) /39587091000) /31179326000) 5335955667)
0)

(4422472357
Azgard (10113499351/ (6628341926/ (4889681966/ (3155912427/
/10541226724
9 27371673266) 23632588968) 23178303067) 6297218212)
)

Sapphir (9746607946/1 (9152455933/ (7966281051/ (5338810168 (7461055757/

e 2324265106) 11126004067) 9218390867) /7317921847) 5800558738)

80/87
Fixed Asset Turnover Ratio
Formula Cost of sales / Fixed Assets
year 2008 2007 2006 2005 2004

(16298857000/ (14335254000 (13701626000 (9239731000 (7091114328/2

Nishat
10647310000) /10586159000) /10611353000) /9151096000) 429954944)

Azgard (6660223767/7 (4620988950/ (3703361406/ (3288786063 (2440779273/

9 734950547) 7643649558) 7601895866) /3113043032) 2847936402)

Sapphir (8618580605/3 (7961253425/ (7201536030/ (4734528479 (7091114328/2

e 936357164) 3793621479) 3721368562) /3124152756) 429954944)

Gross profit to Sales

Formula Gross profit/Sales*100
year 2008 2007 2006 2005 2004

(3453275584/1 (2007352976/ (1186320560/ (1133686294/ (715133154/3

Azgard
0113499351)*1 6628341926)* 4889681966)* 4422472357)* 155912427)*1
9
00 100 100 100 00

(1128027341/9 (1191202508/ (764745021/7 (604281689/ (369941429/7

Sapphir
746607946)*10 9152455933)* 966281051)*1 5338810168)* 461055757)*1
e
0 100 00 100 00

(2968776000/1 (2844938000/ (2715732000/ (2134899000 (369941429/7

Nishat 9267633000)*1 17180192000) 16417358000) /11374630000 461055757)*1
00 *100 *100 )*100 00

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Operating Profit Margin
Formula Operating Profit Margin = Operating profit /Sale*100
year 2008 2007 2006 2005 2004

(7304400000/1 (2175475000/ (1986526000/ (2000204000 (564262708/7

Nishat 9267633000)*1 17180192000) 16417358000) /11374630000 461055757)*1
00 *100 *100 )*100 00

(2849745841/1 (1572167903/ (795030222/4 (813063411/4 (530020606/3

Azgard
0113499351)*1 6628341926)* 889681966)*1 422472357)*1 155912427)*1
9
00 100 00 00 00

(1405283605/9 (787228086/9 (691293293/7 (556596887/ (398909896/7

Sapphir
746607946)*10 152455933)*1 966281051)*1 5338810168)* 461055757)*1
e
0 00 00 100 00

Net Profit/ (Loss) Before Tax

Formula Net profit before tax/Sales*100
year 2008 2007 2006 2005 2004

(6396968000/1 (1356208000/ (1758866000/ (2033354000 (705067852/7

Nishat 9267633000)*1 17180192000) 16417358000) /11374630000 461055757)*1
00 *100 *100 )*100 00

(999502775/10 (1151459574/ (1260083804/ (792136936/ (395262335/3

Azgard
113499351)*10 6628341926)* 4889681966)* 4422472357)* 155912427)*1
9
0 100 100 100 00

(319707861/9 (263459742/7 (381673399/ (257353151/7

Sapphir (670600418/97
152455933)*1 966281051)*1 5338810168)* 461055757)*1
e 46607946)*100
00 00 100 00

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Net Profit/ (Loss) after interest and Tax
Formula Net profit after tax/Sales*365
year 2008 2007 2006 2005 2004

(6138968000/1 (1211208000/ (1632866000/ (1867354000 (790114001/7

Nishat 9267633000)*1 17180192000) 16417358000) /11374630000 461055757)*1
00 *100 *100 )*100 00

(897283923/10 (1079452501/ (1144514722/ (741293665/ (375262335/3

Azgard
113499351)*10 6628341926)* 4889681966)* 4422472357)* 155912427)*1
9
0 100 100 100 00

(216262838/9 (134535088/7 (288773074/ (172307002/7

Sapphir (617730082/97
152455933)*1 966281051)*1 5338810168)* 461055757)*1
e 46607946)*100
00 00 100 00

Return on Assets
Formula Net Income / Total Assets*100
year 2008 2007 2006 2005 2004

(6138968000/3 (1211208000/ (1632866000/ (1867354000 (790114001/5

Nishat 7916579000)*1 39587091000) 31179326000) /21917602000 335955667)*1
00 *100 *100 )*100 00

(897283923/27 (1079452501/ (1144514722/ (741293665/ (375262335/6

Azgard
371673266)*10 23632588968) 23178303067) 10541226724) 297218212)*1
9
0 *100 *100 *100 00

(617730082/12 (216262838/1 (134535088/9 (288773074/ (172307002/5

Sapphir
324265106)*10 1126004067)* 218390867)*1 7317921847)* 800558738)*1
e
0 100 00 100 00

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Return on Capital employed
Formula Profit before interest and taxation / Capital Employed *100
year 2008 2007 2006 2005 2004

(6396968000/2 (1356208000/ (1758866000/ (2033354000 (705067852/-

Nishat 6194974000)*1 31937718000) 24127793000) /15664269000 2313417333)*
00 *100 *100 )*100 100

(999502775/17 (1151459574/ (1260083804/ (792136936/ (395262335/3

Azgard
017953763)*10 17438220902) 15228967560) 6093360457)* 684324962)*1
9
0 *100 *100 100 00

(319707861/7 (263459742/5 (381673399/ (257353151/3

Sapphir (670600418/64
161359147)*1 194776998)*1 4312030935)* 547890064)*1
e 43642363)*100
00 00 100 00

Return on equity Ratio (ROE)

Formula [(Net profit after tax − Preference dividend) / Equity share capital] × 100
2008 2007 2006 2005 2004

((1632866000 ((186735400
((6138968000- ((1211208000- ((790114001-
- 0-
Nishat 0)/2514718000 0)/3016389800 0)/3016389800
0)/2111240900 0)/128061140
0)*100 0)*100 0)*100
0)*100 00)*100

((1079452501
((897283923- ((1144514722- ((741293665- ((375262335-
Azgard -
0)/1012408250 0)/9174168134 0)/309310263 0)/2510108903
9 0)/9720054196
1)*100 )*100 9)*100 )*100
)*100
((617730082- ((216262838- ((134535088- ((288773074- ((172307002-
Sapphir
0)/5577491609) 0)/6018868330 0)/3893928464 0)/279711463 0)/2327933429
e
*100 )*100 )*100 7)*100 )*100

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Debt to Equity Ratio
Formula Total Long Term Debts / Shareholders Funds
2008 2007 2006 2005 2004

(2858155000
(1047794000/2 (1773820000/ (3015384000/ (1773820000/
Nishat /12806114000
5147180000) 30163898000) 21112409000) 30163898000)
)

Azgard (6674515005/7 (7479093629/ (5797438559/ (2721314147 (867651548/2

9 359587542) 7319449022) 7367101082) /2140640149) 099450921)

Sapphir (469501210/49 (734946877/5 (934380957/3 (1188017068/ (940304765/2

e 59761527) 802605492) 759393376) 2508341563) 155626427)

Interest Coverage Ratio

Formula Net Profit Before Interest and Tax / Fixed Interest Charges]
2008 2007 2006 2005 2004
(6396968000/9 (1356208000/ (1758866000/ (2033354000 (705067852/1
Nishat
07432000) 819267000) 755054000) /407696000) 27260241)

Azgard (999502775/24 (1151459574/ (1260083804/ (792136936/ (395262335/1

9 70391655) 1061933212) 657548074) 326374206) 44623062)

Sapphir (617730082/73 (216262838/4 (134535088/4 (288773074/ (172307002/1

e 4683187) 67520225) 27833551) 174923488) 27260241)

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Earning Per Share
Formula Profit after tax/No. of shares
2008 2007 2006 2005 2004
(6138968000/1 (1211208000/ (1632866000/ (1867354000 (790114001/1
Nishat
59785736) 159789974) 159771625) /145206376) 52826693)

Azgard (897283923/33 (1079452501/ (1144514722/ (741293665/ (375262335/8

9 8597707) 331120399) 230284652) 99904807) 7067827)

Sapphir (617730082/20 (216262838/2 (134535088/2 (288773074/ (172307002/2

e 082252) 0080115) 0079864) 20095551) 0082401)

Earning Yield
Formula Earning Per Share / Market Price Per Share * 100
2008 2007 2006 2005 2004
(38.42/85.97)*1 (7.58/129.2)*1 (10.22/104.8)* (12.86/76)*10 (5.17/52.8)*10
Nishat
00 00 100 0 0
Azgard (2.65/61.56)*10 (3.26/52.1)*10 (4.97/22.05)*1 (4.31/22.5)*10
(7.42/32)*100
9 0 0 00 0
Sapphir (30.76/72.45)*1 (10.77/92.5)*1 (14.37/90)*10
(6.7/70)*100 (8.58/70)*100
e 00 00 0

Market Value of Share

2008 2007 2006 2005 2004
Nishat 85.97 129.20 104.80 76.00 52.80
Azgard
61.56 52.10 22.05 32.00 22.50
9
Sapphir
72.45 92.50 70.00 90.00 70.00
e

Price Earning Ratio

Formula Market price per equity share / Earnings per share
2008 2007 2006 2005 2004
Nishat (85.97/38.42) (129.2/7.58) (104.8/10.22) (76/12.86) (52.8/5.17)
Azgard
(61.56/2.65) (52.1/3.26) (22.05/4.97) (32/7.42) (22.5/4.31)
9
Sapphir
(72.45/30.76) (92.5/10.77) (70/6.7) (90/14.37) (70/8.58)
e

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87/87