Paper & Board: PAKISTAN PAPERSACK CORPORATION LIMITED - Nine Months Ended March31, 2005
Pakistan Papersack Corporation Limited (PPCL) was incorporated in Pakistan in 1973. PPCL is one of the group companies of the House of Habib and is the pioneering company of the papersack industry in Pakistan. The company's shares are quoted on the Stock Exchanges of Karachi and Lahore at a premium. The principal business activities comprise manufacturing and marketing of paper sacks, formite sheets and laminates.
Both the factories are located at Hub Chowki, Balochistan. Noble Computer Services (Private) Limited is a subsidiary of PPCL. The overview hereunder is that of PPCL alone without consolidation with Noble Computer Services.
It has been stated in the notes to the financial statements under review that the detailed scheme of the proposed merger of the company and Khyber Papers (Private) Limited with Thal Limited is in progress.
The company mainly has two divisions, which operate in different segments of the Pakistan market. Stepped End Division caters to the packaging requirement of the cement & non-cement industries, including ISO 9000 certified and compliant companies.
Balochistan Laminates Division manufactures and distributes industrial and decorative plastic laminated sheets.
The Stepped End Division was formed in 1986 with an annual production capacity of 100 million paper bags on the "State-of-the-Art" German papersack manufacturing plant. The division has rapidly established a reputation in the domestic market for providing quality products and on time deliveries. In addition, the division is constantly exploring international markets, and currently exports to the Middle East and Bangladesh have commenced. During the nine months period under review 720,000 bags were exported as compared to 360,000 bags during the corresponding period last year. The Company is also engaged in catering to the packing demands of the Non-Cement industries like Guar Gum, Bonding Materials, Seeds, Feeds, Powder Chemicals, Talcum, Salt, Spices, etc and can cater to diverse customer requirement. Contribution of this Division to the performance of PPCL is presented below.
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(Rs in 000)
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Stepped end Division (Un-audited)
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Nine Months Ended March 31, 2005 2004
Net Sales: 232,200 255,845
Cost of Goods Sold: 186,246 199,981
Gross Profit: 45,954 55,864
Operating Profit: 11,487 26,912
Gross Margin: 20% 22%
Operating Margin: 5% 11%
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Balochistan Laminates, a division of PPCL, was established in 1980 as the first unit of its kind manufacturing high pressure decorative laminates in Pakistan under the brand name of Formite. Having achieved the basics, the company began integrating upstream and downstream facilities to improve the quality of its products. In 1982, first trial production of technical laminates was undertaken. In 1983, Melamite was launched. In 1983, BLD also produced the first laminated board using the high pressure press of the main production line. In 1985, the short-cycle press was commissioned. This state of the art press is capable of processing raw chipboard from selection to pressing and cleaning and stacking on under 90 seconds. During the nine months period under review the exports increased to Rs 51.898 million from Rs 40.408 million as compared to corresponding period of last year. This Division is making substantial contribution towards PPCL performance as is evident from the following data:
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(Rs in 000)
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Balochistan Laminates Division (Un-audited)
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Nine Months Ended March 31, 2005 2004
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Net Sales: 406,729 348,685
Cost of Goods Sold: 354,156 314,048
Gross Profit: 52,573 34,637
Operating Profit: 20,586 7,690
Gross Margin: 13% 10%
Operating Margin: 5% 2%
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PPCL enjoys satisfactory financial position- both short term and long term. As on March 31, 2005 Total Equity as compared to Total Assets was 71% (corresponding date last year 79%). Total Liabilities as compared to Total Assets were only 29 % (corresponding date last year 21%). Fixed assets as on March 31, 2005 were as compared to Total Assets only 8% (corresponding date last year 9%). Long term Investments as compared to Total Assets are 13% whereas Current Assets are 79% (corresponding date last year 78%). Besides the un-appropriated profit, PPCL as on March 31, 2005 has Revenue Reserves of Rs 345 million as against paid-up capital of Rs 68.99 million).
The company operations are profitable. Sales during the nine months period have increased 6% over the sales for the corresponding period last year. However, the increase in sales could not increase the net profit after tax which has nearly attained the previous level, largely due to competition. PPCL is trying to compete on the basis of quality of products and has the slogan: Quality ensures our future. Performance statistics of PPCL are given below.
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Performance Statistics (Million Rupees)
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Balance Sheet (Un-audited) March 31, June 30,
2005 2004
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Share Capital-Paid-up: 68,993 68,993
Revenue Reserves: 345,000 310,500
Un-appropriated Profit: 36,800 65,978
Equity: 450,793 445,471
Net unreal. Gain on Investments: 47,234 36,802
Shareholders Equity: 498,027 482,273
Deferred Liabilities: 5,200 5,200
Capitalization: 503,227 487,473
Current Liabilities: 194,818 123,048
Total Liabilities and Equity: 698,045 610,521
Tangible Fixed Assets: 55,768 53,288
LT Investments and Deposits: 91,111 80,932
Stock-in-Trade: 312,157 172,279
Trade Debts: 182,513 129,799
Current Assets: 551,166 476,301
Total Assets: 698,045 610,521
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Ratios
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Current Ratio: 2.83 3.87
Debt-Equity Ratio: 1:99 1:99
Book Val./share - Rs: 72.19 69.90
Quoted Price (1-6-05) Rs: 30.40 -
Price/Book Value Ratio: 0.42 -
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Income Statement (Un-audited) (Rs in 000)
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9 Months Ended Mar. 31 2005 2004
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Net Sales: 638,929 604,530
Gross Profit: 98,527 90,501
Operating Profit: 27,969 32,066
Profit Before Taxation: 47,395 47,888
Profit After Taxation: 36,369 36,959
Cash Dividends %: 45% 50%
Cash Dividend Amount: 31,058 34,163
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Ratios
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Gross Profit to Sales: 15% 15%
Operating Profit to Sales: 4% 5%
Profit After Tax to Sales: 6% 6%
Net Profit to Equity - %: 7% 8%
ROA: 5% 6%
ROCE: 7% 8%
Dividend Payout Ratio: 85% 92%
Earnings Per Share (Rs): 5.27 5.36
Inventory Turnover (Times): 2.05 3.51
Receivable Turnover (Times): 3.50 4.66
Price/Earning Ratio: 5.77 -
Asset Turnover (Times): 0.92 0.99
Days Inventory: 178 104
Days Receivable: 104 78
Debt Service Coverage (Times) Not applicable
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COMPANY INFORMATION: Chairman: Rafiq M. Habib; Chief Executive: S.Z. Kazmi;
Director: Ali S. Habib; CFO & Company Secretary: Raj Kanwar Batra; Auditors: Ford Rhodes Sidat Hyder & Co, Chartered Accountants; Factories: Hub Chowki, Balochistan; Registered Office: 5th Floor, Siddiqsons Tower, 3-Jinnah Cooperative Housing Society, Shahrea Faisal, Karachi; Web Address: Not available.
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