This cement company of District Khushab has shown excellent performance in terms of financial and operating results. It has substantially exceeded its production compared to its installed capacity as well as output of last year. Both sales and pretax profit registered impressive growth and even export sales were on much higher side.
Its accumulated deficit has been wiped off making the breakup value of the share more than its par value as compared to previous year's breakup value at 42.9% discount. The Annual Report under review in its page of Seven Years Glance mentions a lot of data but the data about dividends are not mentioned. So it is not possible to ascertain the company's contribution to its prime stakeholders.
The company is engaged in the completion of gigantic expansion programme of its facilities for enhancing its capacity. Its new plant would have the capacity to produce 4,300 tonnes of clinker per day and is expected to go on stream by the end of this calendar year. This mega expansion project would result in trebling its capacity to two million tonnes.
Pioneer Cement Ltd was incorporated in Pakistan as a public limited company on February 9, 1986. Its shares are quoted on all stock exchanges in Pakistan. The registered office of the company is situated at 1st Floor, Al Falah Building, Shahrah-e-Quaid-e-Azam, Lahore.
The principal activity of the company is manufacturing and sale of cement. At present, the company is in the process of expanding its cement production capacity at the same location of existing plant as it is installing new production line. This would increase the production capacity of the company by 4,300 tonnes clinker per day.
The existing plant's annual installed capacity is 600 thousand tonnes of clinker. During the year under review, the actual production of clinker was recorded at 690.5 thousand tonnes (FY 2003-04: 458.5 thousand tonnes) showing 51.6% increase over the preceding year's. This is the record high output.
Moreover, its capacity utilisation exceeded the installed capacity by 15% which is commendable. Pursuant to output increase, the company's sales in terms of volume registered 49% increase in cement sales over the previous year's.
During the year under review, the company exported 166.49 thousand tonnes of cement which works out to 23.1% of total sales.
The cement industry is undergoing tremendous expansion in production capacity as domestic demand has expanded by 18% (FY 2003-04 14%) and a growth of 140% have been recorded in the export to Afghanistan. The industry has also been able to export, cement of small quantities to other countries. The optimistic projection in demand for cement is backed by the government's Public Sector Development Programme (PSDP).
Therefore, most of the companies have embarked on giant expansion programme assuming that the expansion in demand will continue at the current price. The chairman of the company Manzoor Hayat Noon visualise that surplus of 15 million tonnes could occur after two to three years and hopes that the surplus quantity could be gainfully deployed by exporting to Afghanistan and Gulf states. He also emphasised that the ports authorities should make "bulk handling facilities" available to enable the cement industry compete in the international market.
He foresees great potential of earning foreign exchange around a billion US dollars if proper infrastructure is made available at the ports. There has been talks of the import of cement for sometime. But he discounted this threat to industry by reasoning that after accounting for the transportation charges CED and sales tax it will be unfeasible to the importers even at the zero duty rate.
During the year under review Pioneer Cement Ltd registered net turnover in terms of value at Rs 2.045 billion as against Rs 1.323 billion posted in the preceding year showing 54.6% growth. Gross profit increased by 74.08% due to increase in sales coupled with improvement in gross margins. The company's profit before taxation increased by Rs 155.7 million but profit after taxation declined by Rs 92.18 million because of favourable adjustment of provision for tax at Rs 186.05 million
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Performance Statistics (Million Rupees)
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30th June 2005 2004
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Share Capital-paid-up: 1,547.47 954.37
Reserves/(Accumulated Loss): 73.64 (409.13)
Shareholders Equity: 1,621.11 545.24
Surplus on Revaluation of
Fixed Assets: 629.31 -
L.T. Debts: 2,469.20 2,107.12
L.T. Deposits: 6.65 2.32
Deferred Liabilities: 975.49 1,236.85
Deferred Tax Liability: 196.62 -
Current Liabilities: 989.53 383.12
Fixed Assets: 6,381.73 3,657.28
L.T. Loans: 6.72 5.96
L.T. Deposits: 36.78 23.66
Deferred Tax Assets: - 192.74
Current Assets: 462.68 395.01
Total Assets: 6,887.91 4,274.65
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Sales, Profit & Pay Out
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Net Turnover: 2,045.13 1,322.73
Gross Profit: 673.12 386.66
Operating Profit: 539.42 300.43
Other Operating Income-Net: 27.19 78.52
Finance (Cost): (120.75) (117.42)
(Depreciation): (233.34) (184.35)
Profit Before Taxation: 393.92 238.22
Profit After Taxation: 332.09 424.27
Earning Per Share (Rs): 2.46 3.72
Dividend Share Price (Rs) on 10/11/05: 45.50 -
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Financial Ratios:
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Price/Earning Ratio: 18.49 -
Book Value Per Share: 10.47 5.71
Price/Book Value Ratio: 4.35 -
Debt/Equity Ratio: 52:48 79:21
Current Ratio: 0.47 1.03
Asset Turn Over Ratio: 0.30 0.31
Days Receivables: 3 7
Days Inventory: 15 20
Gross Profit Margin (%): 32.91 29.23
Net Profit Margin (%): 16.23 32.08
R.O.A (%): 4.82 9.92
R.O.C.E (%): 5.63 10.90
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Plant Capacity & Production (Clinker 000' M. Tons)
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Installed Based on 300 Days: 600.00 600.00
Actual Production: 690.529 458.545
Capacity Utilisation (%): 115.09 76.42
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COMPANY INFORMATION: Chairman: Manzoor Hayat Noon; Managing Director & CEO: Javed Ali Khan; Chief Financial Officer: Badruddin Fakhri; Company Secretary: Syed Anwar Ali; Registered Office/Marketing Office: Alfalah Building Shahrah-e-Quaid-e-Azam Lahore (Punjab); Web Address: www.pioneercement.com Head Office: 7th Floor, Lakson Square Building No 3 Sarwar Shaheed Road Karachi (Sindh); Factory: Chenki, District Khushab Punjab.
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