The year under review posted highest ever sales and profit for the company. The company expanded production facility of ceramic tiles and discontinued production of sanitary ware. It envisioned to further expand production facility of tiles to broaden the product mix and product range.
There is pressure on selling price of the company's products as reported by the directors report. At the same time they report that improved sales in terms of value is also due to improved selling price apart from increase in sales volume. The financial backbone of the company remained robust as evidenced by solvency and liquidity ratios.
The improvement in the financial position is visible at a glance despite relatively large capital expenditure. The competitive pressure has resulted in the discontinuation of sanitary ware products and thus it is a single product company exposed to single product enterprise.
The company posted sales at Rs 612 million (2004: Rs 569 million), net profit after taxation at Rs 35.1 million (2004: Rs 20.9 million showing increase by 27% and 68% respectively. It announced dividend at 15% (2004: 15%).
Karam Ceramics Limited is a public limited company incorporated in April 1979 in the province of Sindh having its registered office located in Clifton Karachi.
The company is listed on Karachi Stock Exchange. On December 15, 2005, the market price of the share was recorded at Rs 18.25 per share for the closing quotation. This quotation carries 82.5% premium over the par value. During the last one year its market value peaked at Rs 26.20 per share.
The principal activity of the company is to manufacture ceramics tiles. The designed production capacity of the plant is rated at Rs 1.76 million square meters of tiles per annum. For FY 2004-05 the year under review, production of tiles was recorded at 2.763 million square meters (FY 2003-04 2.241 million square meters) registering 23.3% increase over previous year's and reaching impressive rate of capacity utilisation at 157%. Its manufacturing facilities are located at Deh Halkani at Hub Dam Road Karachi.
The location of factory in Karachi gives ample advantage to the expanding metropolis Karachi's demand. Karam Ceramics product enjoy preferred choice of consumers despite fierce competition from the domestic unorganised sector's and imported products. Its market wide range of tiles of eight different size from 15cmx15cm to 40cmx40cm. These are coloured, "decorate/effect" glazed wall tiles.
According to the Directors' Report the company management envisions continued increase in the demand for ceramic tiles in the country due to upturn in the construction industry particularly in the housing sector. At the same time competition is likely to continue put pressure on the selling prices of company's products.
The directors reported that the company is committed to increase sales volume, by changing products mix, introducing designs/colours and continuous aggressive marketing.
During the year under review the company made additions in the fixed assets to the extent of Rs 176.1 million (2004: Rs 14.2 million). The company has also planned for further expansion in the production capacity of ceramic tiles by importing new tiles manufacturing plant.
The new plant would be installed in the place where sanitary ware plant was situated. The sanitary business has been discontinued and some of the machinery for sanitary ware has been disposed off.
As regards the ownership of the company's equity, the majority shareholding is with the directors of the company. According to the table "categories of shareholders" dated June 30, 2005, the seven directors of the company owned 59.6 percent of Karam Ceramics Ltd's total 10.91 million shares of Rs 10 each.
The Chief Executive/Director alone held 25.08 percent of the company's stock. Its 181 individual shareholders aggregate shareholding works out to 30.3 percent of the company's stock. Four financial institutions owned 8.1% of the company's small shareholders, holding maximum lots of 10,000 shares held 2.8% of the company's stock.
From the company's capital structure and categories of shareholders it emerges that it is a relatively small industrial/business entity owned and managed by limited group of people. The small shareholders even financial institutions would not have much benefits from or much say in the enterprise. In the event of fierce competition after dismantling of tariff barriers on account of WTO the small enterprises are likely to face tremendous odds and are vulnerable to competition of large enterprises with elaborate marketing and Information Technology structure or mobilization of financial resources or technological innovation.
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Performance Statistics (Million Rupees)
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30th June 2005 2004
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Share Capital-Paid-up: 109.12 109.12
Un-appropriated Profit: 62.24 43.49
Shareholders Equity: 171.36 152.61
Surplus on Revaluation of F/A: 65.90 -
L.T. Debts: 221.72 214.20
Staff Retirement Benefit-Gratuity: 42.04 37.59
Deferred Taxation: 102.10 46.33
Deferred Income: 1.03 2.39
Current Liabilities: 103.96 115.83
Fixed Assets: 595.97 451.43
L.T. Deposits: 0.88 0.90
Current Assets: 111.26 116.62
Total Assets: 708.11 568.95
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Sales, Profit & Pay Out
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Sales-Net: 612.67 482.09
Gross Profit: 137.18 95.91
Other Operating Income: 1.47 2.48
Operating Profit: 81.70 50.91
Finance (Cost): (12.71) (16.43)
Depreciation: 56.09 43.03
Profit Before Taxation: 68.99 34.48
Profit After Taxation: 35.12 20.89
Earnings Per Share (Rs): 3.22 1.91
Dividend Cash (%): 15.00 15.00
Share Price (Rs) on 15-12-2005: 18.25 -
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Financial Ratios
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Price/Earning Ratio: 5.67 -
Book Value Per Share: 15.70 13.99
Price/Book Value Ratio: 1.16 -
Debt/Equity Ratio: 48:52 58:42
Current Ratio: 1.07 1.01
Asset Turnover Ratio: 0.86 0.84
Days Receivables: 15 22
Days Inventory: 39 52
Gross Profit Margin (%): 22.39 19.89
Net Profit Margin (%): 5.73 4.33
R.O.A. (%): 4.96 3.67
R.O.C.E. (%): 5.18 4.61
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Capacity & Production
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A) Tiles (Million Sq. Meters)
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Installed Capacity: 1.760 1.760
Production: 2.763 2.241
Capacity Utilisation (%): 156.99 127.33
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B) Sanitary Wares (Tonnes)
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Installed Capacity: - 3,000
Production: 35 80
Capacity Utilisation (%): - 2.67
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COMPANY INFORMATION: Chairman: Shaban Ali G. Kassim; Vice Chairman: Munawar Ali S. Kassim; Chief Executive: Irshad Ali S. Kassim; Company Secretary: Aziz Anwerali; Registered Office: B-C-6, Block-5, Scheme-5 Kehkashan, Clifton Karachi; Web Address: Not Reported; Factory: 295/311-Deh Halkani, Hub Dam Road, Karachi.
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