Engineering: CRESCENT STEEL & ALLIED PRODUCTS LIMITED - Half Year Ended December 31, 2003

The company was incorporated on August 1, 1983 as a public limited company and is quoted on the stock exchanges in Karachi, Lahore, and Islamabad. It is one of the down stream industries of Pakistan Steel Mills, manufacturing large diameter spiral arc welded steel line pipes at Nooriabad (District Dadu).
The company has a quoting facility capable of applying three layer high density polyethylene coating on steel line pipes. The coating plant commenced commercial production from 16 November 1992.
The company acquired a running spinning unit of 14,400 spindles at Jaranwala (District Faisalabad) on 30 June 2000 from Crescent Jute Products Limited. The capacity was enhanced to 19,680 spindles in the year 2003.
The cotton spinning activity is carried out by the company under the name and title of "Crescent Cotton Products a division of Crescent Steel and Allied Products Limited." A basic sale and purchase agreement in respect of unit has been entered into, however, the transfer of legal title of land is in the process of being completed.
During the half year (HY 2003-04) under review the company posted net sales at Rs 461.87 million as against Rs 1,174.36 million posted in the same period last year (SPLY).
The drastic decline was due lower revenue generated by its steel division whereas its Textile Division posted higher sales as compared to the figures posted in SPLY.
The company was preoccupied in the WOPP (While Oil Pipeline Project) in the first two quarters of the current fiscal, therefore the company was unable to partake in other tenders which were floated during the period, which directly affected the bottom line.
As the material for WOPP was provided by the client the revenue (of steel division), reflecting only conversion cost, at Rs 133.8 million posted a decline from Rs 922.9 million of HY 2002-03.
However the Gross Profit Margin of the Steel Division improved from 24.36% of the last year to 27.67% this HY 2003-04.
The company posted net profit at Rs 132.65 million as against Rs 188.85 million in the SPLY exhibiting 29.7% decline as compared to the preceding year's corresponding period.
Pre-tax Profit for the company for the HY 2003-04 amounted to Rs 143.49 million but the Textile Division booked loss at Rs 1.05 million HY 2003-04 witnessed an unprecedented increase in cotton prices touching their highest levels of Rs 3,700 per mound.
This is turn was unaccompanied by corresponding increase in yarn thus reducing the margin for the entire spinning sector.
The Board decided to declare interim dividend of 10% ie Rs 1 per share based on overall profit (mainly contributed by investments) market perception and shareholders expectation. JCR-VIS Credit Rating Company enhanced its credit rating.
Its systems upgrade initiative is continuing and an ERP solution is in the process of implementation.
The directors are looking forward for a healthy order book. Both transmission companies have ambitious infrastructure development plans.

======================================================

Performance Statistics                (Million Rupees)

======================================================

Balance Sheet                                  -As At-

------------------------------------------------------

                              December 31      June 30

                                     2003         2003

======================================================

Share Capital-Paid-up:             220.93       200.85

Reserves & Surplus:              1,088.65       961.23

Shareholders Equity:             1,309.58     1,162.08

L T Debts:                          37.48        38.02

Deferred Income:                     1.15         0.45

Deferred Tax:                        1.10            -

Current Liabilities:               597.04       260.34

Fixed Capital Expenditure:         476.19       410.49

Intangible Assets:                   0.57         0.41

L T Investments:                   117.68        70.33

L T Deposits:                        5.81         5.29

Staff Retirement Benefits:           5.96         6.37

Deferred Tax:                         -           1.08

Current Assets:                  1,340.14       966.92

Total Assets:                    1,946.35     1,460.89

------------------------------------------------------

Profit & Loss A/c For the

------------------------------------------------------

Half Year Ended December 31          2003         2002

------------------------------------------------------

Sales:                             461.87     1,174.36

Gross Profit:                       50.35       239.45

Financial (Charges):                (7.17)      (8.67)

Other Income:                      139.05        82.29

Profit Before Taxation:            143.49       260.71

Profit After Taxation:             132.65       188.85

Earning Per Share (Rs):              6.00         8.55

Share Price (Rs) Dated 29.03.2004:  75.00            -

Price/Earning Ratio:                12.50            -

Book Value Per Share:               59.27        57.86

Debt/Equity Ratio:                   3:97         3:97

Current Ratio:                       2.24         3.71

Gross Profit Margin (%):            10.90        20.39

Net Profit Margin (%):              28.72        16.08

======================================================