Financial Statement Analysis JDW Sugar Mills

Presented to: Mawal Sara

Muhammad Bilal 11U0420 Section E BBA3
1

Executive Summar

!his "ro#ect was to assess the $inancial situation o$ %&' Su(ar Mill )rom the ear 2010 to 2012* %&' Su(ar Mill is a Pa+istan,-ased com"an en(a(ed in the "roduction and sale o$ cr stalline su(ar* %&' Su(ar Mills .imited /0the 1om"an 23 was incor"orated in Pa+istan on 31 Ma 1440 as a "rivate limited com"an under the 1om"anies 5rdinance6 1474 and was su-se8uentl converted into a "u-lic limited 1om"an on 24 Au(ust 1441* Shares o$ the 1om"an are listed on the 9arachi and .ahore Stoc+ Exchan(es* 1rushin( ca"acit o$ this Unit is 206:00 !1& and is located in &istrict ;ahim <ar 9han* !he "rinci"al activit o$ the 1om"an is "roduction and sale o$ cr stalline su(ar* =n this "ro#ect there has -een assessment made as to how the com"an has -een "er$ormin( over these 3 ears* =n certain ta-les that $ollow in the anal sis -elow6 the li8uidit 6 solvenc and "ro$ita-ilit o$ the com"an has -een anal >ed to a lar(e extent* Balance sheet and =ncome statements have -een thorou(hl re$erred and anal >ed to chec+ the "er$ormance o$ %&' alon( with how well or how "oor it is "er$ormin( as industr avera(es have -een ta+en into account* !his re"ort also $ocuses on how it can im"rove its "osition amon( ther com"etitors and (iants in the mar+et*

%&' Su(ar Mill =ncome Statement

2012 Rs ?ross sales )E&6 Sales tax6 SE& B others Cet sales 1ost o$ sales ?ross "ro$it Administrative ex"enses &istri-ution and mar+etin( ex"enses 5ther o"eratin( ex"enses 5ther o"eratin( income 5"eratin( "ro$it )inance cost Share o$ loss o$ associated com"anies Pro$it -e$ore taxation !axation Pro$it a$ter taxation Basic earnin(s "er share &iluted earnin(s "er share 24441@4:11@ /1A41A@440:3 22749880211 /2037A744:A@3 236198 63 /4@24:@2223 /22:74@373 /1142034@13 12@043:4A !478706224" 1883279411 /1334447A2:3 2011 Rs 2@4@A@2:@72 /1A371344A:3 24729491207 /20:137202@A3 421 670940 /4304722113 /1:13:2443 /323@40@713 @@43774A !702869289" 3 128016 1 /13330433033 2010 Rs 2137A@A0A1A /44:4@24243 20392207793 /1@A444@12A73 3647746 1 /34414:4113 /114:@0:A3 /2120:11:03 4AA24147 ! 20473420" 312727309 /11@7434:033 /@4:AA423 19 187 800 /A114A33443 1240402401 27*20 27*20

48280686 1374437@7 687274 4 11*:2 11*:0

2179708348 /73@:22:723 134318 766 24*42 24*17

)rom =ncome statement we can see that the trend o$ sales is showin( an increasin( trend exce"t $or the ear 2012 -ut a(ain the re(ain their "osition6 and cost o$ sales also decreased in 2012 -ut it did not increased as much as it was in 2011* !axes were 3 times hi(her in 2010 -ut were least in 2012* =ts 5"eratin( "ro$it has -een increasin( -ut a(ain $or 2012 it decreased* !heir "ro$it $or the ear has -een increasin( to 2011 -ut $ell a(ain in 2012* Earnin( "er share also (oes down in 2012* So this shows that 2012 was -ad ear $or %&' Su(ar Mill* !his could have -een due to rise in 1?S and alon( with it a rise in the o"eratin( costs* !here &istri-ution and mar+etin( ex"ense rose drasticall in 2012 consumin( most o$ the chun+ o$ the "ro$it

JDW Sugar Mill #alance S$eet

2012 !Rs" S%AR& 'A()*A+ A,D R&S&R-&S Share ca"ital ;eserves ,/, '0RR&,* +)A#)+)*)&S Su-ordinated loan $rom &irector , unsecured .on( term loans , secured .ia-ilities a(ainst assets su-#ect to $inance lease &e$erred taxation &e$erred income &e$erred lia-ilities '0RR&,* +)A#)+)*)&S Short term -orrowin(s , secured 1urrent "ortion o$ non current lia-ilities !rade and other "a a-les =nterest and mar+,u" accrued Provision $or taxation '/,*),1&,')&S A,D '/MM)*M&,*S 22. 80.640.202 19.244.044.908 12.16 .417. 27 2011 !Rs" 2010 !Rs"

:4A6A@@6@10 4632:627A6474 4.923.0 4.099

:426A@@6@10 4622461346342 4.816.90 .9 2

47467746AA0 2642160:16A4: 3.410.941. 1

361146@11611: 4146A476@7@

460@760006001 :406:1@64A4

26:A167776740 :276@@:6147

16:426:2@6:0A .126.886.308 761116@@@6A33 1644467A26@:7 26:2@6:@063@: 4426@006034 12. 30.699.79

1644A641:6433 6.106.431.908 :6:3:64:1631: 1611:644A6:40 1600763:@63@4 201640461A4 4:76:4A6@:0 8.320.707.048

1624:6@@26A4A 4.396.216.88 2627:624064A1 16013647264@4 @@:634064@A 13@612464A4 2:A64@:624@ 4.3 8.2 9.127

,/, '0RR&,* ASS&*S Pro"ert 6 "lant and e8ui"ment 5"eratin( $ixed assets 1a"ital wor+ in "ro(ress =nvestment "ro"ert =nvestments ?oodwill .on( term de"osits

7,856,588,719 369,984,770 8,226,573,489 685,973,260 1,810,250,000 608,310,693 105,637,735

A6::4601:6434 1146A7762:: 7.668.804.189 :2A6240614: 7:16:006000 @0763106@43 10:6A@4634@

@674364046143 4@60@26:A0 6.939.471.713 41463476133 A4A6:A26:@4 @0763106@43 7464076@47

5

Advances to related "arties '0RR&,* ASS&*S Stores6 s"ares and loose tools Stoc+ in trade D $inished (oods Advances6 de"osits6 "re"a ments and other receiva-les Advance income tax !ax re$unds $rom ?overnment 1ash and -an+ -alances

2,027,500,000 5,237,671,688 590,954,610 3,731,551,031

264AA61A7673A .070.049.071 :4064106:14 1642260:A6304

1.909.640.043 34161446441 20@6@726011

4,157,065,058 256,136,742 11,382,760 9,116,395,025 22,580,640,202

360@@6A4A67A1

26A0A63446004

11:6A326A@4 6. 0 .191.648 19.244.044.908

1064416704 3.316.30 .771 12.16 .417. 27

.ia-ilit "ortion o$ %&' shows a decreasin( trend $rom 2010 to 2012* !he onl rise or alarmin( value is o$ short term -orrowin( and trade "a a-les* %&' mi(ht have a si(ni$icant Account Pa a-les in their accounts* 5ther than this the .ia-ilit section is sta-le and does not alter much* .oo+in( into the trend o$ non,current assets6 we o-serve that there we can see that there has -een an increase in trend and has almost dou-led the amount then in 2012* And all o$ the com"onents in the non,current assets have a shown an increasin( !rend* !his mean the have invested more in $ixed assets and ma have ac8uired "lants or lands to increase or ex"and* 1urrent Assets have shown that it is increasin( over time -ut it was low in 2010 com"ared to successive ear* &ue to this increase in current and Con 1urrent assets the total assets has increased over time which shows that the will +ee" on increasin(* !he increase in the current assets can -e ex"lained - the com"onents such as Advances6 de"osits6 "re"a ments and other receiva-les6 and 1ash and -an+ -alances* Cow comin( to the E8uit "ortion o$ -alance sheet the Share ca"ital increased $rom 2010 to 2011 -ut level o$$ a$ter that till 2012* Con current lia-ilities have -een $luctuatin( and current lia-ilities are increasin( over time* !he current lia-ilities are increasin( over time and the are ver hi(h than current assets* !his is a reason wh ca"ital increases $rom 2010 to 2011 (reatl *

Cash Flow Statement

6

2010 1ASE ?ECE;A!E& );5M 5PE;A!=C? A1!=F=!=ES 1ash (enerated $rom o"erations 46320600:621A )inance cost "aid 'or+ersG "ro$it "artici"ation $und "aid 'or+ersG wel$are $und "aid =ncome tax "aid Sta$$ retirement -ene$its "aid Cet cash (enerated $rom H /used in3 o"erations ,161:4610@6:24 ,::64:36770 ,24603A60A7 ,4A614A6::3 ,2262AA6444 ,163:760236034 2.961.982.183

2011 167476::76773 , ,12460A767@4 ,46410614: ,4:3642:6:73 ,2062:16441 ,@026@@@6:37 1.29 .892.34

2012 26402602:610 3 , ,14@6422643: , ,:@@62@063@0 ,:06@3:6147 ,A@367176443 2.138.206.66 0

1ASE ).5' );5M =CFES!=C? A1!=F=!=ES Advances to related "arties .on( term advances =nvestments made durin( the ear =nvestment "ro"ert Pro"ert 6 "lant and e8ui"ment Proceeds reali>ed $rom sale o$ investment Advances to related "arties $or "urchase o$ shares Proceeds reali>ed $rom sale and lease transactions Proceeds reali>ed $rom sale o$ "lant and e8ui"ment Stores held $or ca"ital ex"enditure .on( term de"osits Cet cash used in investin( activities

D D ,41060006000 ,3A6A:@6342 ,17:6:106::A 1:06000 D 4627A6443 D ,3:6:3163A3 26 9.360.329

,26104621467A: D ,4@60006000 ,1076::36@32 ,41467A064@@ 260006000 ,1614163416@27 , 26@4@6000 , ,2163@06A47 24.336.7 0.349

, 161A767A0642 4 D D ,13:61036444 , 160@7647364A 0 3060006000 , , ::60306430 , 1316@@1 2 2.297.294.79 7

1ASE ).5' );5M )=CAC1=C? A1!=F=!=ES .on( term loans ,:0462226221 Proceeds $rom issuance o$ term $inance D certi$icates Proceeds $rom isuance o$ shares under D em"lo esG stoc+ Short term -orrowin(s ,1647061116AA0

2630060006000 D D 362:06@@06344

1146:006000 D 1167046:00 26:A:6A1:641 7

)inance cost "aid .on( term loans re"aid durin( the ear .ease rentals Proceeds $rom issuance o$ ri(ht shares &ividend Cet cash /used in3 H (enerated $rom $inancin( activities Cet increase H /decrease3 in cash and cash e8uivalents 1ash and cash e8uivalents at the -e(innin( o$ the ear 1ash and cash e8uivalents at the end o$ the ear

D D ,2326@4467:2 4264046300 ,1A461736027 22.298.2 7. 71 4.364.283 6. 77. 21 10.941.804

,1620A6:306@A4 ,70367776774 ,42@67726402 3AA621:6040 ,3436423644: 3.14 .648.969 104.790.96 10.941.804 11 .732.769

,4:A62076243 ,A036777677@ ,4:46:@A6774 , ,:316@216A2A 4.738.128 2104.3 0.009 11 .732.769 11.382.760

1ash )low Statement shows that net cash (enerated $rom o"erations are increasin( over time drasticall 6 thatGs -ecause the have not "aid $inance cost $or the last three ears* !he net cash (enerated $rom $inancin( activities is ne(ative* !he cash $low is ne(ative in investin( activities as the tend to de"osit lon( term and hi(h investments* =n $inancin( activities the cash $low is ne(ative due to short term -orrowin(s which increased (reatl * At the end o$ the ear we can sa that 2011 was a (ood ear $or the cash $low -ut -oth 2010 and 2012 were wea+ *

'3mm3n2Si4e )nc3me Statements

Cet sales 1ost o$ sales ?ross "ro$it Administrative ex"enses &istri-ution and mar+etin( ex"enses 5ther o"eratin( ex"enses 5ther o"eratin( income 5"eratin( "ro$it )inance cost Share o$ loss o$ associated com"anies Pro$it -e$ore taxation !axation Pro$it a$ter taxation 2012 100*00 I ,70*12I 14*77I ,1*40I ,1*22I ,0*44I 0*@4I ,3*4@I 1@*42I ,4*04I 0*00I A*32I ,1*@4I :*@4I 2011 100*00 I ,A4*77I 2:*12I ,2*3:I ,0*20I ,1*3@I 0*31I ,3*@0I 21*:3I ,11*44I 0*00I 10*03I ,3*40I @*@3I 2010 100*00I ,72*11I 1A*74I ,1*@4I ,0*0@I ,1*04I 0*23I ,2*::I 1:*34I ,:*A3I ,0*03I 4*:AI ,3*44I @*07I

!he cost o$ sales has remained a ver hi(h "ercenta(e o$ sales throu(hout these three earsJ the lowest -ein( in 2004* As a result (ross "ro$it has decreased over time* * Ex"enses were -ro+en down into distri-ution costs6 administrative ex"enses and other o"eratin( ex"enses* 5ther o"eratin( income is )luctuatin(* 5"eratin( "ro$it has decreased overtime and "ro$it a$ter !axation has also decreased due to increase in cost o$ sales* Another chan(e is the $all in tax rates as we can see this $rom 2012 column* 'e see a $all in o"eratin( "ro$it and other than that distri-ution and mar+etin( ex"enses also increased*

'3mm3n2Si4e #alance S$eets

'3mm3n Si4e #alance S$eet 2012 2011 2010 S%AR& 'A()*A+ A,D R&S&R-&S Share ca"ital ;eserves ,/, '0RR&,* +)A#)+)*)&S Su-ordinated loan $rom &irector , unsecured .on( term loans , secured .ia-ilities a(ainst assets su-#ect to $inance lease &e$erred taxation &e$erred income &e$erred lia-ilities '0RR&,* +)A#)+)*)&S Short term -orrowin(s , secured 1urrent "ortion o$ non current lia-ilities !rade and other "a a-les =nterest and mar+,u" accrued Provision $or taxation '/,*),1&,')&S A,D '/MM)*M&,*S 100*00 I 100*00 I 100*00I

2*@:I 14*1:I 21*70I 0*00I 0*00I 13*72I 1*74I 0*00I 0*00I A*0:I 22*A0I 0*00I 3:*42I @*42I 11*14I 1*4@I 0*00I ::*44I

3*07I 21*4:I 2:*03I 0*00I 0*00I 21*14I 2*71I 0*00I 0*00I A*A7I 31*A3I 0*00I 27*AAI :*70I :*24I 1*0:I 2*37I 43*24I

4*03I 24*01I 27*04I 0*00I 0*00I 21*14I 4*3:I 0*00I 0*00I 10*@:I 3@*14I 0*00I 17*A4I 7*33I :*4AI 1*12I 2*12I 3:*72I

,/, '0RR&,* ASS&*S Pro"ert 6 "lant and e8ui"ment 5"eratin( $ixed assets 1a"ital wor+ in "ro(ress =nvestment "ro"ert =nvestments ?oodwill .on( term de"osits Advances to related "arties

34*A4I 1*@4I 3@*43I 3*04I 7*02I 2*@4I 0*4AI 7*47I

34*2:I 0*@0I 34*7:I 2*A4I 4*42I 3*1@I 0*::I 1:*4AI

:@*@@I 0*37I :A*04I 3*4:I @*:@I :*00I 0*@4I 0*00I

10

23*20I '0RR&,* ASS&*S Stores6 s"ares and loose tools Stoc+ in trade D $inished (oods !rade de-ts D unsecured6 considered (ood Advances6 de"osits6 "re"a ments and other receiva-les Advance income tax !ax re$unds $rom ?overnment 1ash and -an+ -alances 2*@2I 1@*:3I 1*@4I 0*00I 17*41I 0*00I 1*13I 0*0:I 40*3AI 100*00 I

2@*3:I 2*71I 4*44I 4*4AI 0*00I 1:*44I 0*00I 0*00I 0*@0I 33*70I 100*00 I

1:*A0I 3*22I 1*A0I 0*00I 0*00I 22*2:I 0*00I 0*00I 0*04I 2A*2@I 100*00I

=n e8uit "ortion the shared ca"ital was hi(hest in 2010 in "ercenta(e terms -ut decreased a$ter that and same is the case with reserves which were hi(h in 2010 -ut decreased $rom 2010 to 2013* !hese two values ma+e shareholders e8uit hi(h in 2010* )or this com"an lon( term )inancin( does matter thatGs wh the are hi(h "ercenta(e each ear* !he com"an does not -elieve in lon(,term $inancin( as it is not a hi(h "ercenta(e o$ the non,current lia-ilities* !he lon( term $inancin( had $ell in the course o$ the 3 ears* !he non,current lia-ilities had shown a decreasin( trend and it could -e "rimaril ex"lained - the $all in the lon( term lia-ilities* 1ontrar to this6 lar(er "ercenta(e was o$ current lia-ilities that shows an increasin( trend and was hi(hest in 2012* 'ith the decrease in e8uit and increase in lia-ilities we can sa that com"an is movin( $rom e8uit $inancin( to de-t )inancin(* !owards the assets side6 the non, current assets were o$ a hi(her "ercenta(e than the current assets* Advances6 de"osits6 "re"a ments and other receiva-les was a ma#or com"onent o$ current assets in "ercenta(e terms6 whereas "ro"ert 6 "lant and e8ui"ment $ormed a ma#or "ercenta(e in non,current assets* Both current and non,current assets show a minor $luctuatin( trend throu(hout* !he ma#or "oint to -e noted here is a(ain the short term -orrowin( which drasticall rose in 2012* 5ther than this itGs a sta-le situation over all in the -alance sheet*

11

*ren5 )n5e6 Analysis

2012 #alance S$eet 2011 2010

!rade de-ts D unsecured6 considered (ood 1ash and -an+ -alances Stoc+ in trade D $inished (oods !otal 1urrent Assets !otal 1urrent .ia-ilities Pro"ert 6 "lant and e8ui"ment 5"eratin( $ixed assets =nvestments /non,current asset3 .on( !erm .ia-ilities !otal .ia-ilities !otal E8uit 'or+in( 1a"ital

2:7334*@1I 104*03I 170:*4@I 2A4*40I 27A*:2I 144*33I 113*4AI 22@*4AI 11@*@2I 201*A0I 144*33I 32A*@7I

@013@4*07I 10:A*A1I 424*4@I 14@*1@I 140*42I 141*22I 104*:7I 10@*A@I 137*40I 1@4*70I 141*22I 1A4*24I

1424:@*00 10441704*00 20@@72011*00 331@30:AA1*00 43:72:412A*00 3410441:1:*00 @743404143*00 A4A:A2:@4*00 434@21@77:*00 7A:44A@012*00 3641064416:1: /10414:33:@*003

)nc3me Statement Cet sales 1ost o$ sales ?ross "ro$it !otal 5"eratin( Ex"enses EB=! )inance cost Pro$it a$ter taxation/C=3 111*:@I 121*A@I @4*A:I 10@*43I @0*3@I 114*2:I ::*41I 121*2AI 2034220AA43*00 122*:1I /1@A444@12A7*003 11:*:AI 3@4AA4@:1:*00 13:*34I /:@7202@17*003 112*:7I 312031:303*00 114*04I /11@7434:03*003 107*24I 1240402401*00

Ban+ -alances showed a hu(e increase in the ear 2010 and it was hi(hest in 2011* Accounts receiva-les shows a &rastic chan(e in 2011 which is ver hi(h* !otal current lia-ilities6 total assets and other "a a-les had increased* 'or+in( 1a"ital has also increased over time -ut slows down in 2013* !his is -ecause current lia-ilities are increasin( over time* As discussed earlier lon( term $inancin( values are ver hi(h* Net Income has doubled from 2009 2010 and ke t !ncreas!n" t!ll 2011#So the whole "icture de"icted - this ta-le shows that the main contri-utors o$ a com"an Gs (rowth are risin( vividl with hu(e #um"s which means that the com"an is (rowin(* 'e also see a $all in o"eratin( ex"enses while on the other hand "ro$it a$ter taxation was also a$$ected*

12

(er S$are Analysis

2012 7er s$are 303*331A3@1 4*1@3@@0A2 Boo+ Falue @:*@40A2132 2011 7er s$are 324*A2@:444 1A*404143:: @4*22:412@4 2010 7er s$are 2A1*74@1034 1@*:37@47@7 4:*4A42202

Sales "er share showed $luctuationsJ where the increased till 2011 and then $ell in 2012* Cet income has increased initiall -ut starts decreasin( a$ter 2010* !here were dividends that showed $luctuatin( results -ut the were ver hi(h in the 2012* Boo+ value has -een increasin( till 2011 -ut $ell down which ma -e the result o$ decrease in e8uit * Cum-ers o$ shares outstandin( have -een constant in last 2 ears*

+i8ui5ity Measures9
2012 , 3641463046AA 0 0*A3 0*04I 0*12I 0*03 3A*02 4*A2 A*21 44*41 44*@1 :4*@4 @6322631:61: 7 2011 , 1671:6:1:640 0 0*A7 1*34I 1*A7I 0*12 :A*:2 @*2@ 14*2A 17*@7 1A*A0 24*44 :637161026:1 : 2010 , 1604164:363: @ 0*A@ 0*2:I 0*33I 0*00 A:*2: 4*A7 71*02 4*44 14*31 4*23 26@3464A3600 0 JDW (Average) 2,090,591,175 0 757 0 58! 0 74! 0 050 56 598 6 922 35 834 24 346 25 538 31 268 4,781,130,224 Industry Average 26430837 9 5 8 65 5 03 6 20 5 94 469 87 46 27 113 66 56 18 60 57 104 1 -6 98

'or+in( 1a"ital 1urrent ;atio /1ashKshort term investment3H1*. /1ashKshort term investment3H1*A Acid !est Asset receiva-le turn over 1ollection "eriod =nventor turnover &a s sales in =nventor !urnover &a s "urchase in assets turnover 1oversion "eriod Cet trade c cle

13

1urrent ratio is less than 1 throu(hout those 3 ears which means current assets are less than current lia-ilities* !he overall current ratio $or the com"an is less than the industr avera(e which means that this com"an has less li8uidit * !his means it cannot convert its assets into cash ver 8uic+l which at times is "ro-lematic* Acid test ratio has -een $luctuatin( -ut its avera(e is less than industr avera(e* =t is also $luctuated near to industr avera(e so im"l in( that all the com"anies have same 8uic+ assets* Account receiva-le turnover has shown a $luctuatin( trend -ut overall it is less than the industr this shows that the com"an is not e$$icient in collectin( -ac+ its receiva-les* !he inventor turnover has also shown a $luctuatin( trend and it is also more than the industr avera(e so this shows that the com"an is not usin( its stoc+ e$$icientl as the inventor is turned u" 8uic+l * &a sG sales in receiva-les +e"t on declinin( a$ter 2011 -ut its avera(e is less than industr avera(e showin( that the are mana(in( their receiva-les im"ressivel throu(hout the ear* &a sG sales in inventor have shown increasin( trend a$ter 2010 and its avera(e is less than industr showin( that it ta+e the least num-er o$ da s to turn inventor into sales* A""roximate conversion "eriod shows that it is increasin( a$ter 2010 and its avera(e is less than =ndustr avera(e so this "roves that the com"an has (ood collection "olicies* !he cash to current assets ratio also $luctuated6 where the lar(est num-er o$ current assets was converted into cash in 2011*1ash to current lia-ilities ratio also showed $luctuations throu(hout6 with the hi(hest lia-ilities -ein( converted into cash in 2011 a(ain**'or+in( ca"ital was decreasin( throu(hout exce"t 20106 whereas ver much lower than the industr avera(e also im"l in( that this com"an is not "er$ormin( well* &a sG "urchase in accounts "a a-les were $luctuatin( around A =t is also lesser than the industr avera(e throu(hout the ears which im"l in( that this com"an is "a in( o$$ their creditors more 8uic+l than other com"anies in the industr * !he trade c cle $or the com"an has shown a $luctuatin( trend and it is also low com"arin( with the industr this com"an is "er$ormin( well as the net trade c cle is low* 1ash "rovided - o"erations to avera(e current lia-ilities has also shown a $luctuatin( trend -ut it is lower than the industr avera(e so it shows that com"an does not have su$$icient mone availa-le to "a o$ its lia-ilities usin( its o"erations as com"ared to the industr *

14

'3mm3n2Si4e Analysis 3: 'urrent Assets an5 'urrent +ia;ilities

'hen it comes to the current assets o$ this com"an 6 there are two im"ortant com"onents that are noteworth * )irstl 6 Advances6 de"osits6 "re"a ments and other receiva-les constituted the lar(est "art o$ the current assets as com"ared to other com"onents* !he were lar(est in 2010* Secondl 6 the trade de-ts were also a ma#or contri-utor to current assets -ein( lowest in 20106 meanin( a (ood thin( $or the com"an * So de-tors were "a in( o$$ 8uic+er which could im"rove li8uidit * Eowever6 -oth these com"onents are not de"ictin( a sin(le trend6 rather a $luctuatin( one over the ears* =n current lia-ilities6 short term runnin( $inances were si(ni$icant in all ears showin( decreasin( trend6 so this means that lia-ilities were decreasin( as the were -ein( "aid o$$*

15

'3mm3n si4e 3: ca7ital Structure

2012 SHARE CAPI A! A"# RESER$ES $hare ca !tal &eser'es 2#65% 19#15 % 21#80 % "%" C&RRE" !IA'I!I IES $ubord!nated loan from (!rector ) unsecured *on" term loans ) secured *!ab!l!t!es a"a!nst assets sub+ect to f!nance lease (eferred ta,at!on (eferred !ncome (eferred l!ab!l!t!es 0#00% 13#82 % 1#84% 0#00% 0#00% 7#05% 22#70 % C&RRE" !IA'I!I IES $hort term borro-!n"s ) secured .urrent ort!on of noncurrent l!ab!l!t!es /rade and other a0ables Interest and mark)u accrued 1ro'!s!on for ta,at!on 0#00% 35#92 % 6#42% 11#19 % 1#96% 0#00% 55#49 % 0#00% 21#14 % 2#81% 0#00% 0#00% 7#78% 31#73 % 0#00% 28#77 % 5#80% 5#24% 1#05% 2#38% 43#24 % 0#00% 21#14% 4#35% 0#00% 0#00% 10#65% 36#14% 0#00% 18#79% 8#33% 5#47% 1#12% 2#12% 35#82% 3#08% 21#95 % 25#03 % 4#03% 24#01% 28#04% 2011 2010

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'a7ital Structure an5 S3l<ency Rati3s

/otal debt to e2u!t0 /otal debt rat!o lon")term debt to 32u!t0 32u!t0 to total debt 4!,ed assets to e2u!t0 current l!ab!l!t!es to total l!ab!l!t!es 2010 2#57 0#72 1#29 0#39 0#56 0#36 2011 3#06 0#75 1#28 0#33 1#07 0#44 2012 3#59 0#78 1#04 0#28 1#06 0#55 In()st*+ 28#95 6#84 3#72 8#4 27#7 29#0

!he de-t to e8uit ratio has -een decreasin( throu(hout the "eriod exce"t it increased in ear 2012*it has alwa s -een a-ove the industr avera(e* !he 3 ear avera(e is a-ove the industr avera(e meanin( that %&' su(ar Mill "re$ers de-t $inancin( whereas other com"anies "re$er e8uit $inancin(* !he total de-t ratio and the lon(,term de-t to e8uit ratio also su""ort this as the 3, ear avera(e $or %&' is a-ove that o$ the industr whereas the e8uit to total de-t is lower6 meanin( that %&' li+es to $inance throu(h de-t as com"ared to e8uit * )ixed asset to e8uit is lower than industr avera(e till 2012 meanin( that $ixed assets are less than e8uit * 1urrent lia-ilities to total lia-ilities ratio is lower the industr avera(e* =t is also lower meanin( that current lia-ilities are lower than total lia-ilities* Earnin( to $ixed ratio increase tremendousl till 2011 and also the avera(e is a-ove the industr "rovin( the $act that the com"an has enou(h earnin(s to "a o$ its $inance cost and other char(es* 1ash $low to $ixed char(es +e"t $luctuatin( and was ne(ative indicatin( that there was not enou(h cash (enerated to "a $ixed char(es such as interest* Both earnin(s and cash $low to $ixed char(es are wa a-ove industr avera(es showin( that our com"an has su$$icient earnin(s and cash to meet their $ixed char(es*

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R/)

2012 R"%A R%CE Ret)*n on ! #e.t E/)0t+ 1*owth Rate #0sa22*e2at0on R"%A 9,2713,9613,0510,427,11-

2011 18,4927,8819,4425,1413,05-

2010 21,5936,3725,0736,3519,68-

JDWAvera ge 16.45% 26.07% 19.19% 23.97% 13.28%

Industr0 5'era"e 445#39% 389#70% 705#33% 540#18% 242#68%

!his ta-le clearl shows ;C5A is $allin( in 2012 alone with ;51E* !he return on common e8uit was hi(h in "revious 2 ears -ut $ell in 2012 which is alarmin( $or %&'* E8uit (rowth rate also slowed down in 2012* !he com"an is (rowin( unli+e other com"anies in the industr * !he industr avera(es are hi(h -ut %&' is also on the s"ot and will ca"itali>e i$ it tends to im"rove its its de-ts and e8uit * ;C5A is a $inancial ratio that measures a com"an Ls "ro$ita-ilit and the e$$icienc with which its ca"ital is em"lo ed* ;eturn on 1a"ital Em"lo ed /;51E3 is calculated as: ;51E M Earnin(s Be$ore =nterest and !ax /EB=!3 H 1a"ital Em"lo ed* 1a"ital Em"lo ed as shown in the denominator is the sum o$ shareholdersL e8uit and de-t lia-ilitiesJ it can -e sim"li$ied as /!otal Assets D 1urrent .ia-ilities3* =nstead o$ usin( ca"ital em"lo ed at an ar-itrar "oint in time6 anal sts and investors o$ten calculate ;51E -ased on Avera(e 1a"ital Em"lo ed6 which ta+es the avera(e o$ o"enin( and closin( ca"ital em"lo ed $or the time "eriod* A hi(her ;51E indicates more e$$icient use o$ ca"ital* ;51E should -e hi(her than the com"an Gs ca"ital costJ otherwise it indicates that the com"an is not em"lo in( its ca"ital e$$ectivel and is not (eneratin( shareholder value*

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Asset 0tili4ati3n Rati3s Sales to 1ash and e8uivalents Sales to ;eceiva-les Sales to inventories Sales to wor+in( 1a"ital Sales to )ixed assets Sales to other assets Sales to total assets Sales to Short term lia-ilities 2012 1998#6 61#6 6#1 )6#7 2#8 4#3 1#0 1#8 2011 213#7 28#8 12#9 )12#9 3#2 4#9 1#3 2#9 2010 1862#6 66#1 98#6 )19#6 2#9 10#7 1#7 4#7

!he sales to cash and e8uivalent showed a $luctuatin( trend throu(hout the "eriod* !his means that the cash and e8uivalents were not translated into enou(h sales there$ore it is hi(her than the industr meanin( that the com"an is -etter at convertin( sales in cash* !he sales to receiva-les ratio showed a $luctuatin( trend over ears* %&' is success$ul at turnin( receiva-les into sales com"ared to other com"anies* !he sales to inventor ratio $luctuatin( throu(hout and it was reall hi(h in 2010 showin( that com"an sold a lot o$ inventor in that ear also the avera(e is much is much hi(her* %&' is e$$icient in turnin( inventories into sales* !he sale to wor+in( ca"ital ratio is lower $or %&' throu(hout the 3 ears exce"t $or ear 2004 and 2011 meanin( that %&' is less e$$icient at $inancin( additional sales* Sales to $ixed assets ratio showed a $luctuatin( trend -ut avera(e meanin( that $ixed assets are -ein( utili>ed e$$icientl to (enerate sales* Sales to other assets were lower $or this com"an in all ears es"eciall in 2004 meanin( that com"an was doin( -ad in case o$ usin( its other assets to (enerate sales* Both sales to total assets and sales to short,term lia-ilities were increasin( $rom 2004 to 2012 *!his means total assets are not -een utili>ed "ro"erl to (enerate sales earnin(s and sales to short term im"lies that our short term lia-ilities are converted into sales in a lower ratio than the industr *

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Analysis 3: (r3:it Margin Rati3s

P*o30t 4a*20ns 1*oss P*o30t 4a*20n %5e*at0n2 P*o30t 4a*20n "et P*o30t 4a*20n

2012 10#38 % 8#28% 3#02%

2011 17#05% 14#20% 5#43%

2010 17#84% 15#34% 6#11%

?ross "ro$it mar(in $or %&' was showin( a constant decreasin( trend meanin( that it was lowest in recent ear6 either %&' sales were ver low or cost o$ (oods sold was hi(h resultin( in lower (ross "ro$it* .ower (ross "ro$it com"ared to industr means that other com"anies had hi(her sales or lower cost o$ (oods sold com"ared to %&'* 5"eratin( "ro$it mar(in is decreasin( in all ears exce"t it mar(inall increased in recent ear -ut the o"eratin( "ro$it mar(in is low* .astl the net "ro$it mar(ins are increasin( -ut still are low than the industr avera(e* !he net "ro$it mar(ins is also showin( a decreasin( trend -ut still the ratio is low* 5ur com"an is not mana(in( their $inance costs and taxes -etter*

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'3nclusi3n an5 Rec3mmen5ati3n

!r to im"rove "ro$ita-ilit 1a"itali>e more on sales ;educe o"eratin( costs ;educe distri-ution and mar+etin( costs =m"rove "ro$it mar(ins /?P and 5P3 =m"rove receiva-les turnover !r to reduce short term -orrowin( =ncrease sales ;educe 1?S Mana(e taxes -etter Mana(e )inance 1osts 1ash and e8uivalents were not translated into enou(h sales 'ea+ cash $low !oo much investment 'ea+ account "a a-les

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