During the year under review, the company's net sales in terms of value made double digit growth because of modest increase in selling price as well as 8% growth in papersack despatches.
The growth in sales revenue, however, did not trickle down to gross profit as it was offset by even greater rise in cost of production due to substantial increase in the cost of imported Kraft paper.
During the year the company successfully completed its expansion project. While it increased its capacity to meet future rising demand naturally its fixed assets base also expanded which pushed the depreciation charges much higher. These factors drastically reduced the gross profit.
Further, increase in the financial charges also contributed to higher over all cost of production compared to last year's.
After taking into consideration various expenses and government taxes, the company was able to earn after tax profit of Rs 8.31 million as against Rs 32.70 million in the preceding year.
Cherat Papersack Limited was incorporated in Pakistan as a public limited company by share in the year 1989. Its main business activity is manufacturing, selling and marketing of paper bags and sacks. The company started commercial production on December 15, 1991 and is listed on Karachi and Lahore Stock Exchanges. The registered office of the company is situated at 1st Floor Betani Arcade, Jamrud Road Peshawar. It is controlled from its head office situated at Modern Motor House, Beaumont Road Karachi-75530 and supported by its regional office at 3, Sunder Road, Lahore and Islamabad office at Mezzanine Floor, Razia Sharif Plaza 91-Blue Area Islamabad. Its manufacturing facilities are located at Gadoon Amazai, Industrial Estate NWFP.
The company is one of the constituent members of Ghulam Faruque Group founded by the icon of Pakistani industry and bureaucracy, Khan Bahadur Ghulam Faruque Khan (1899-1992). The Group has diversified interests in cement, sugar, construction, paper, engineering and shipping. The Group is recognised for entrepreneurial skills and valuable contributions to the economy.
The market value of Cherat Papersack Cement share has remained invariably high. During the last 52 weeks the market price of its share remained between Rs 40 and 73.50 per share. On November 14, 2006 the average price of the share was Rs 44.10 per share at the small turnover of 16,800 shares at the trading value of Rs 739,405 shares. From November 1 to November 14, 2006 the shares were trading every working day showing the keen interests of the investors in the company.
One of the main reasons of the confidence of investors in the company is its gratifying record of steady streams of dividends payouts, according to the seven years statistics published in the Annual Report 2006 of the company. For the year under review, its directors recommended cash dividend at 15% whereas for the previous year 2004-05, they had announced cash dividend @40% and bonus stock dividend @20%.
As regards ownership of its equity, the company directors and the members of their family own 5.3% and associated companies hold 27.9% of the company's stock. Remaining shares are held by other individual as well as institutional investors.
During the year under review, the company posted net sales in terms of value at Rs 795.58 million as compared to net sales of Rs 713.78 million generated in the previous year showing 11.5% increase.
The directors attributed the increase in sales to modest improvement in the average selling price of cement bags coupled with 8% rise in sales volume. The increase in sales volume has been matched by commensurate production.
During the year, the company produced 92.15 million bags as compared to 85.02 million bags registering 8.4% to increase over preceding year's. During the year the company been able to increase its capacity to 150 million bags from 100 million bags in the previous year. Due to increase in the annual installed capacity, and not commensurate rise in demand there has been shortfall in capacity utilisation by almost 39%.
In this connection, the note annexed to the account clarified that the company's production was according to the market demand.
However the enhanced production capacity will enable the company to meet the rising demand for paper bags and improve its efficiency. The year saw successfully installation and commissioning of its new tuber and bottomer plant.
According to the statement of operating assets, the company made additions in the fixed assets at the capital outlay of Rs 122.26 million. As the demand in papersack industry is derived from the demand for cement while demand for cement is having constant increase, therefore the company's capacity will be fully utilised soon.
========================================================
Performance Statistics (Million Rupees)
========================================================
30th June 2006 2005
========================================================
Share Capital-Paid-up: 58.75 48.96
Reserves: 245.09 247.95
Shareholders Equity: 303.84 296.91
L.T. Debts: 75.00 100.00
Deferred Taxation: 3.75 6.13
Current Liabilities: 316.81 184.74
Tangible Fixed Assets: 165.46 172.16
L.T. Investments: 44.43 31.14
L.T. Loans: 0.74 0.72
L.T. Deposits: 0.18 0.07
Current Assets: 488.59 383.69
Total Assets: 699.40 587.78
--------------------------------------------------------
Sales, Profit & Pay Out
--------------------------------------------------------
Turnover-Net: 795.58 713.87
Gross Profit: 39.59 75.98
Other Operating Income: 7.15 7.67
Operating Profit: 25.11 49.01
Finance (Cost): (15.20) (1.17)
(Depreciation): (13.59) (7.03)
Profit Before Taxation: 9.91 47.84
Profit After Taxation: 8.31 32.70
Earnings Per Share (Rs): 1.41 5.57
Dividend Cash (%): 15.00 40.00
Dividend Bonus Stock: - 20.00
Share Price (Rs) on 14-11-2006: 44.00 -
--------------------------------------------------------
Financial Ratios
--------------------------------------------------------
Price/Earning Ratio: 31.21 -
Book Value Per Share: 51.72 60.64
Price/Book Value Ratio: 0.85 -
Debt/Equity Ratio: 20:80 25:75
Current Ratio: 1.54 2.08
Asset Turn Over Ratio: 1.14 1.21
Days Receivables: 54 48
Days Inventory: 143 113
Gross Profit Margin (%): 4.98 10.64
Net Profit Margin (%): 1.04 4.58
R.O.A. (%): 1.19 5.56
R.O.C.E. (%): 2.17 8.11
--------------------------------------------------------
Capacity & Production (000' Bags)
--------------------------------------------------------
Annual Installed Capacity: 150.00 100.00
Actual Production: 92.15 85.02
Capacity Utilization (%): 61.43 85.02
========================================================
Note: The company's production was according to the market demand.
COMPANY INFORMATION: Chairman: Mohammad Faruque; Chief Executive: Amer Faruque; Director: Iqbal Faruque; Company Secretary: Abid A. Vazir; Registered Office: 1st Floor, Betani Arcade, Jamrud Road Peshawar; Head Office: Modern Motor House, Beaumont Road, Karachi 75530; Website: not reported; Factory: Plot No 26 Gadoon Amazai Industrial Estate District Swabi NWFP; Regional Office: 3, Sunder Das Road, Lahore; Islamabad Office: Mezzanine Floor, Razia Sharif Plaza 91-Blue Area Islamabad.
Comments
Comments are closed.