Foods & Personal Care-products: NATIONAL FOODS LIMITED - Year Ended 30-06-2005

During the last three decades the company has grown from small spice company to a food company of national stature with various brands of preferred choice of households. The company has also developed its profile as caring corporate-citizens showing concern for illiteracy, by actively getting involved in Adult Literacy Programme.
It is also contributing scholarships and gold medals to deserving students. It has constructed commerce wing in a prominent ladies college and renovated jogging track for ladies in a city sports complex.
On the other hand it keeps on sponsoring lively events such as cooking classes and cooking fiesta. The company has generated record sales as well as embarked a gigantic expansion programme.
The free trade era is knocking at the doors of internal market and it is feared that global brands will compete. The company is taking long term strategic decisions to address these challenges. During the year under review, the company posted net profit at Rs 30.65 million showing 33.8% decline as compared to the preceding year's net profit at Rs 46.30 million.
National Foods Limited corporate logo bears its name website and shows the year of incorporation as 1970 when it was established as a private limited company. Subsequently it was converted in a public limited company in 1988 and it was listed at Karachi Stock Exchange in the following year 1989.
National Foods share's market value carries very high premium as current price of the share has been recorded at Rs 120 per 10-rupee share. During the last one year the market value of the share peaked at Rs 178 per share.
Apart from high market value of its share the company's reputation also owes to the reputation to Waqar Hasan who has taken the company to prominence as his is a great name in the Cricket's annuls.
National Foods Limited is principally engaged in the manufacture and sale of spices pickles, ketchup, jams, sauces, cooking pastes and salt. Its shares are quoted on all stock exchanges of the country ie Islamabad, Lahore and Karachi.
During the year under review, the company generated sales at Rs 1.534 billion registering 205% growth in sales as compared to the preceding year's sales amounting to Rs 1.273 billion. The sales figure is highest in its history.
The Chief Executive of the company expressed that National Foods has been consistent in growth. In the last three decades, it has grown from a small spice company to an organisation which is now considered to be a major food company in Pakistan. However he foresees greater challenges ahead as implementation of free trade agreement would unleash competition in greater scope and intensity. This will pave the way for global brands making inroads in the local market.
The directors are preparing to meet these challenges and they have initiated a turnaround programme at National Foods titled "Winning for the future." Through this initiative, greater emphasis will be placed on meticulous planning, improving the operational efficiencies enhancing controls and utilizing best technological options to make their brands cost competitive.
During the year under review the company continued its ambitious expansion programme. It made additions in the fixed assets amounting to Rs 35.88 million (2004: Rs 27 million). In addition it booked Rs 43.89 million in the account of capital-work-in-progress.
According to the Directors Report development of the Bin Qasim expansion is being carried out at a fast pace and ahead of schedule and they are confident that the project will be completed as per plan.
The company's gross profit margin has come under pressure as can be seen from the Gross margin percentage shown in the performance statistics appended with this column.
Administrative, selling and operating expenses shot up to Rs 344.94 million as compared to the preceding year showing escalation of Rs 69.23 million over the previous year's figure of Rs 275.71 million.
It has been reasoned that the continued rise in oil prices and interest rate adjustments has put negative impact on all material costs and freight which has resulted in lower profits for the financial year under review. It is feared that the trend is expected to continue as oil prices have gone up further in the international market.

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Performance Statistics                (Million Rupees)

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30th June                            2005         2004

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Share Capital-Paid-up:              42.50        42.50

Reserves & Surplus:                140.60       126.95

Shareholders Equity:               183.10       169.45

L.T. Debts:                         78.23        21.00

Deferred Tax:                       11.81        12.50

Current Liabilities:               435.49       361.82

Fixed Assets:                      226.57       177.87

Intangible Assets:                   4.29         5.07

L.T. Deposits:                       2.14         1.94

Current Assets:                    475.73       379.89

Total Assets:                      708.73       564.77

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Sales, Profit & Payout

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Sales:                           1,533.88     1,273.03

Gross Profit:                      397.15       353.75

Other Operating Income:              4.50         1.96

Profit From Operations:             56.71        79.99

Finance (Costs):                   (14.44)     (11.64)

(Depreciation):                    (23.12)     (23.69)

Profit Before Taxation:             42.27        68.35

Profit After Taxation:              30.65        46.30

Earnings Per Share (Rs):             7.21        10.89

Dividend Cash Per Share (Rs):        1.50         4.00

Share Price (Rs) on 7-12-05:       120.00            -

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Financial Ratios

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Price/Earning Ratio:                16.64            -

Book Value Per Share:               43.08        39.87

Price/Book Value Ratio:              2.78            -

Debt/Equity Ratio:                  30:70        11:89

Current Ratio:                       1.09         1.05

Asset Turnover Ratio:                2.16         2.25

Days Receivables:                      19           16

Days Inventory:                       114          109

Gross Profit Margin (%):            25.89        27.78

Net Profit Margin (%):               2.00         3.63

R.O.A. (%):                          4.32         8.20

R.O.C.E (%):                        11.22        22.81

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Plant Capacity

 & Production             Installed  Utilized Capacity

(Thousand Metric Tons)  Annual Capacity   2005    2004

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Spices:                     4.532        3.614   3.968

Pickles:                    5.256        5.020   4.383

Pastes:                     6.920        4.362   3.542

Salt:                      21.078       17.031  18.620

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