Food & Personal Care Products: ZULFEQAR INDUSTRIES LIMITED - Year Ended 30th June, 2005
During the year under review the company crossed one billion rupees threshold in gross sales. Its net sales and net profit were record highest figures. Sales improved because of a number of strategic decisions and re-launch of its flagship brand Capri (soap) in a new international seal pack.
The company successfully commissioned its fully automated finishing and packaging lines to provide better quality and value to its customers. The company has also taken IT (Information Technology) initiative by obtaining ERP (Enterprise Resource Planning) solutions towards achieving its strategic objectives that would be in place in the next financial year.
This would integrate the operations and enable real time access to information at all levels of operation and facilitate the management to take quick decisions that would improve the efficiency and effectiveness of the organisation as a whole. During the year the company has also conducted Strategic Review to assess the overall position of the company in the soap industry segment. This will enable the company to avail the opportunity to make it one of the top players in personal wash category.
Zulfeqar Industries Ltd was incorporated as a private limited company in February 1960 under the Companies Act 1913 (now the Companies Ordinance, 1984) and was subsequently converted into a public limited company in November 1986. Its shares are listed on the Karachi and Lahore Stock Exchanges. The principal activity of the company is the manufacture and sale of toilet and washing soaps.
The company is domiciled in Karachi and its manufacturing facilities are located at Link Hali Road Hyderabad (Sindh) where its one of the warehouses are also located. The other warehouses are located in Multan, Lahore and Islamabad.
One of its associated concern is Wazir Ali Industries Ltd the company has relatively small capital base of Rs 40 million comprising four million paid up shares of Rs 10 each. In the company's pattern of shareholding on June 30, 2005, the directors of the company and their family's aggregate shareholding works out to 42.5% of Zulfeqar Industries Ltd total shares. Its other two associated concerns International General Insurance Co of Pakistan Ltd and Treet Corporation own 21.2% of the company's stock. NBP Trustee Dept (NIT) holds 13% of the company's stock. Its 1176 individual investors (other than directors) own 17.04% of the company's stock. During FY 2003-04, the company had announced cash dividend @ 25%. In the year under review the directors have included in the Agenda of 55th AGM 35% cash dividend.
The other special business which has been included in the AGM is the new set of Articles of Association of the company which includes a number of items. For example, incorporation of provisions with respect to Central Depository Company, renaming Chief Executive Officer amendment in the definition of financial statements, replacement of Securities and Exchange Commission of Pakistan in place of Corporate Law Authority and etc.
The Zulfeqar Industries shares are being quoted at a very high market value. On October 6, 2005 the closing quotation of the day was recorded at Rs 132 per share which is more than 13 times of the par value. During the last one year the market value of the share ranged between a widespread of Rs 49.50 and Rs 151 per share.
During FY 2004-05, the year under review the company generated net sales at Rs 845.19 million (FY 2003-04: Rs 713.98 million) registering 18.4% growth and this was the record highest net sales figure. The directors emphasised that the company crossed the coveted benchmark figure of Rs one billion in gross sales. The company's brand include Capri, Palmy, Opal in personal care soaps. In Capri the company's brand include Capri Aloe Vera, Capri Sensitive. In laundry soap it has Swan brand.
The market review noted that all three brands in the personal wash category witnessed splendid growth.
It has been further elaborated that the company's achievement was the result of strategic decisions to combine sales and marketing functions for better co-ordination and focus and to make heavy investments in buying state-of-the-art machinery to give better quality to the consumers.
The other strategic decision was hiring of dedicated staff as against the previously shared staff with its associated concern Wazir Ali Industries Ltd However, this has increased administrative expenses.
Yet another significant step has been that the company successfully commissioned its fully automated finishing and packaging lines to provide better quality and value to its customers.
During the year under review, the company posted net profit after taxation at Rs 42.13 million (FY 2003-04: Rs 34.77 million) which is also the highest ever profit figure.
The financial backbone of the company remained robust as evidenced from solvency and liquidity ratios and break-up value of the share as can be seen from the following Performance Statistics.
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Performance Statistics (Million Rupees)
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30th June 2005 2004
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Share Capital-paid-up: 40.00 40.00
Reserves & Surplus: 109.57 74.17
Shareholders Equity: 149.57 114.17
Surplus on Revaluation of F/A: 50.48 53.75
L.T. Debts: 19.95 33.81
L.T. Deposits: 0.48 0.48
Deferred Liabilities: 58.61 47.17
Current Liabilities: 138.61 155.48
Fixed Assets: 175.65 161.05
Intangible Assets-Trade Mark: - 0.47
L.T. Investment: 15.79 30.97
L.T. Advance & Deposits: 8.91 8.32
Loans & Advances to Employees: 0.31 0.30
Current Assets: 217.04 203.75
Total Assets: 417.70 404.86
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Sales, Profit & Pay Out
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Sales-Net: 845.19 713.98
Gross Profit: 170.99 160.40
Other Operating Income-Net: 12.34 5.51
Operating Profit: 69.07 55.87
Finance (Cost): (5.17) (2.30)
(Depreciation): (15.49) (7.66)
Profit Before Taxation: 63.90 53.57
Profit After Taxation: 42.13 34.77
Earnings Per Share (Rs): 10.53 8.69
Dividend %: 35.00 25.00
Shares Price (Rs) on 06/10/05: 132.00 -
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Financial Ratios
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Price/Earning Ratio: 12.53 -
Book Value Per Share: 37.39 28.54
Price/Book Value Ratio: 3.53 -
Debt/Equity Ratio: 9:91 17:83
Current Ratio: 1.57 1.31
Asset Turnover Ratio: 2.02 1.76
Days Receivables: 3 3
Days Inventory: 69 63
Gross Profit Margin (%): 20.23 22.47
Net Profit Margin (%): 4.98 4.86
R.O.A (%): 10.09 8.59
R.O.C.E (%): 15.10 13.94
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Plant Capacity & Production Soap (Tons)
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Assessed/Rated Capacity: 9,500 9,500
Actual Production: 8,319 7,447
Capacity Utilisation (%): 87.57 78.39
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Due to growing competition and easy availability of foreign brand of soap, the plant capacity could not be fully utilised.
COMPANY INFORMATION: Chairman: Chairman: Syed Wajid Ali; Chief Executive Officer: Syeda Fariel R. Ali; Director: Shahid Nazir Ahmed; Company Secretary & Chief Financial Officer: Sadaqat Ali; Registered Office: 3rd Floor, Kandawala Building M.A. Jinnah Road, Karachi-74400; Web Address: Not Reported; Factory: Link Hali Road Hyderabad, 71000.
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