Automobile Parts & Accessories: DEWAN AUTOMOTIVE ENGINEERING LTD (Formerly Allied Motors Ltd) - Year Ended June 30 2004
The Annual Report of the company, under review, is the 22nd Annual Report. But it is the first report since the management of Dewan Automotive Engineering Ltd (formerly Allied Motors Ltd) was taken over by DMG (Dewan Mushtaq Group). The take-over of this closed entity was brokered by Arif Habib Securities Ltd. Hence the sagging price of its share at Rs 3 per share shot up to Rs 25 per share showing great confidence of investors in DMG.
It has been reported that in search of further diversity of interests the management is setting its sight at the entry in the tractor market, which is suitable for different train in the country. At the same time the management is also exploring the possibilities to use the company as vendor for automobile industry which will result in optimum utilisation of the idle capacity. DMG is in the business of automobile assembling for the last six years. Hence it is highly capable to handling the diversity.
Allied Motors Limited is a public limited company and quoted on stock exchanges in Karachi (Trading on defaulter counter) and Lahore. The company's business is the assembly-cum-progressive manufacture and sale of tractors and trading of parts related thereto.
The company was incorporated on May 6, 1982 and had commenced commercial operations in August, 1983. The company was taken over by Dewan Mushtaq Group who acquired 52.8% shares of the company in April 2004 as advertised in the Nation and Daily Nawa-e-Waqt. The remaining shares have been transferred subsequent to the date of the company's balance sheet under review.
It is baffling that the information about the take-over was not given in other newspapers and in the Daily Business Recorder who specially informs the readers of business finance, economies and commerce affairs.
The name of the company has been changed to Dewan Automotive Engineering Limited from August 16, 2004. This also is not understandable as to why the name of the company has been classified by Karachi Stock Exchange as a company in "automobile parts and accessories" sector instead of "automobile assembler" like other tractor manufacturers/assemblers.
Its main business in the past had been tractor assembling and in future also under the new management the entity will continue as a tractor assembler/manufacturer as learnt from the Annual Report of the company.
The trading of the company's share has been placed on the defaulters section under KSE listing regulation No 32 (1) (b) which stipulates that it failed to declare dividend/bonus for five years from the date of last declaration.
On 5th January 2005, the closing price of its share was recorded at Rs 15.80 which carries 58% premium over the par value. During the last one year the market value of the share trended upward within the price band of Rs 13.25 and Rs 17.75 per share.
The company carries large accumulated deficit and has not been able to declare dividend since the last several years. Even then the price of the share remained much above the par value.
The price of the share is most likely to go up further because of the new management of a giant conglomerate who is trying to change the shape of the company to improve its viability which includes high liquidity and profitability.
At present the plant's annual capacity has been rated at 6000 tractors against which the output was only 74 tractors as compared to 104 tractors in the previous financial year 2002-03.
Its present registered office is located where the Dewan Mushtaq Group is headquartered at Dewan Centre Beach Hotel Road Karachi. But this is industrial unit of Balochistan located adjacent to Karachi district at Hub Industrial Estate. District Lasbella.
During the year under review the company posted sales in the sum of Rs 31.29 million as against Rs 26.95 million posted in the preceding year registering 16.1% increase over the preceding year's.
Its gross loss has increased substantially and net loss after taxation at Rs 38.26 million is 21.14 percent of total assets. The weaker financial position is evident from the liquidity and solvency ratios.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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June 30
2004 2003
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Share Capital-Paid-up: 90.00 90.00
Reserves: 96.09 96.09
Accumulated (Loss): (245.74) (213.11)
Shareholders Equity: (59.65) (27.02)
Surplus on Revaluation of F/A: 52.15 57.78
L T Debts: 123.00 60.91
Deferred Liabilities: 0.81 0.64
Current Liabilities: 64.66 105.77
Fixed Assets-Tangible: 91.79 96.34
L T Deposits: 0.29 0.30
Current Assets: 88.89 101.44
Total Assets: 180.97 198.08
Sales, Profit & Pay Out
Sales-Net: 31.29 26.95
Gross (Loss): (16.47) (7.24)
Financial Charges: (5.70) (12.21)
Operating (Loss): (38.83) (38.35)
Other Income: 0.56 1.10
(Depreciation): (9.20) (3.53)
(Loss) Before Taxation: (38.26) (37.26)
(Loss) After Taxation: (38.26) (37.40)
(Loss) Per Share (Rs): (4.25) (4.16)
D-Share Price (Rs) Dated 05-01-05: 15.80 -
Financial Ratios:
Price/Earning Ratio: (-) -
Book Value Per Share: (6.63) (3.00)
Price/Book Value Ratio: (-) -
Debt/Equity Ratio: (-) 66:34
Current Ratio: 1.37 0.96
Assets Turn Over Ratio: 0.17 0.14
Days Receivables: 30 16
Days Inventory: 480 885
Gross Profit Margin (%): (52.63) (26.86)
Net Profit Margin (%): (122.28) (138.78)
R O A (%): (21.14) (18.88)
R O C E (%): (32.89) (40.52)
(A) Plant Capacity & Production (Tractors)
Sanctioned Plant Capacity: 6,000 6,000
Production (Actual): 74 104
Capacity Utilisation (%): 1.23 1.73
(B) The Production is low because
of less market demand of SH-500
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COMPANY INFORMATION: Chairman: Dewan Zia-ur-Rehman Farooqui; Chief Executive/M.D.: Dewan Mohammad Yousuf Farooqui; Director: Dewan Abdullah Ahmed; Company Secretary: Syed Moonis Abdullah Alvi; Chief Financial Officer: Farrukh V. Junaidy; Registered Office: Dewan Centre, 3-A Lala Zar Beach Hotel Road Karachi-74000; Web Address: Not Reported; Factory: Plot Nos. A1-A50 Hub Industrial Estate Hub, District Lasbela (Balochistan).
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