Food & Personal Care-Products: RAFHAN MAIZE PRODUCTS CO LTD - Year Ended 31-12-2004

The year under review has been another successful year. During the year under review the company posted highest growth in sales revenue greatly supported by volume sales. The expanding textile, paper and board, confectionery sectors accelerated the demand for its specialised products - starches, food ingredients and pharmaceutical ingredients. Its financial backbone remained robust. In the field of information technology it uses its own ERP system. The transactions generated under the various modules of ERP become the source of real-time management information for effective business decisions.
The company posted net profit after taxation at Rs 669.73 million and declared dividend pay out at 360%. Both these figures are highest in its career. The company continuously makes capital expenditure and for the year the amount of Rs 448 million is also the highest deployment of fund for capital expenditure. The company has invested in a new plant "Cornwala Plant" near Jaranwala. The first phase of construction of this plant has been completed. This will provide enhanced export capabilities.
Rafhan Maize Products Ltd is incorporated in the province of Sindh having its registered office located in Finlay House I.I. Chundrigar Road Karachi. Corn products International Inc Chicago USA holds 70.31% of its total 9.236 million shares of Rs 10 each.
The company uses maize as the basic raw material to manufacture a number of industrial products, principal ones being industrial starches, liquid glucose, dextrose, dextrin, and gluten meals.
During 2004, the year under review the company posted sales at Rs 4,509.99 million as compared to Rs 4,031.20 million sales generated in the preceding year. The company achieved 11.9% growth in sales and the figure was record highest in its history. Export sales comprised 2.1% of gross sales while export sales increased by 21.7% to Rs 106.6 million from Rs 87.6 million in the preceding year.
Volume growth, remained major contributor behind the growth. The company has taken a number of marketing strategies to enforce its market position. These are broad based product offering, customer orientation on product application and identification of customer needs.
The most important customer for its products (starches) is the textile industry which is continuously increasing the intakes of its starches. The industry is not only operating on almost full capacity but BMR and expansion has expanded its capacity further which has in turn increased the demand for specialised starches.
The textile industry has nearly graduated into high value added product industry in terms of quality yarn and high speed weaving having increased complexity in basic fibre from natural to man made fibre. The company's starches cater for all kinds of textile product. Hence the demand for its starches have rapidly expanded.
The other sector which provided impetus in the sales of its starches, is Paper & Board Sector. The local production of paper and board has increased substantially because of rising demand for text books, food product cartons etc. On the other hand cement paper bags demand also increased rapidly due to construction boom and enhanced rehabilitation work in Afghanistan.
The company is one of the major producer of corn based, functional and nutritional food ingredients. Its food grade starches are used in food applications ranging from sauces and gravies to soups dairy products, breads snacks and beyond. The company has invested in new production facilities. "Cornwala Plant" to met the rising demand in this area.
Confectionery, the largest consumer of its food ingredients, which include liquid glucose, starches and dextrose monohydrate has shown remarkable growth.
It has specialised products for animal nutrition and health ingredients. Its pharmaceutical ingredients enjoy confidence of leading multinational pharmaceutical companies.

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Performance Statistics                (Million Rupees)

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Balance sheet                                  -As At-

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                              December 31

                                     2004         2003

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Share Capital-Paid-up:              92.36        92.36

Reserves:                        2,161.25     1,639.31

Shareholders Equity:             2,253.61     1,731.67

Deferred Taxation:                 153.91        30.80

Current Liabilities:               714.03       741.75

Tangible Fixed Assets:           1,547.06     1,215.83

L T. Loans:                          2.71         2.90

Deferred Cost:                          -         0.35

Current Assets:                  1,571.78     1,285.14

Total Assets:                    3,121.55     2,504.22

Sales, Profit & Pay Out

Sales:                           4,509.99     4,031.20

Gross Profit:                    1,250.71     1,029.95

Operating Profit:                1,101.14       893.03

Other Income:                       31.97        29.54

Financial (Charges):                (5.12)      (7.05)

(Depreciation):                   (116.99)    (102.64)

Profit Before Taxation:          1,049.84       848.00

Profit After Taxation:             669.73       521.19

Dividend Cash @360% (2003: 280%): (332.51)    (258.62)

Earnings Per Share (Rs):            72.51        56.43

Share Price (Rs) on 14-3-2005:     660.00            -

Financial Ratios

Price/Earning Ratio:                 9.10            -

Book Value Per Share:              244.00       187.49

Price/Book Value Ratio:              2.70            -

Debt/Equity Ratio:                  0:100        0:100

Current Ratio:                       2.20         1.73

Asset Turnover Ratio:                1.45         1.61

Days Receivables:                      13           12

Days Inventory:                       133          122

Gross Profit Margin (%):            27.73        25.55

Net Profit Margin (%):              14.84        12.93

R.O.A. (%):                         21.45        20.81

R.O.C.E (%):                        27.82        29.57

Plant Capacity & Production (000' Metric Tonnes)

Grind Capacity For

 350 Working Days:                 295.05       267.75

Actual Grind:                      287.09       261.49

Capacity Utilisation (%):           97.30        97.66

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