It is an associated company of Gharibwal Cement Ltd which has 18.5 percent stake in the company's equity. During the year under review the company posted profit after taxation from ordinary activities in the sum of Rs 56.83 million as against loss of Rs 112.8 million in the previous year.
The company's Earning Per Share (EPS) works out to Rs 1.12 which is paisas three higher than preceding year's EPS of Rs 1.09. The company generated net sales at Rs 1.087 billion, which is 34% higher than the net sales of Rs 0.812 billion of the previous financial year.
It has been reasoned by the directors of the company that the impressive improvement in net sales revenue, gross profit and profit after taxation are mainly attributable to the continued price stability marked by normal and healthy market conditions and continued robust demand of cement, both for local consumption as well as for exports.
During the financial year under review the cement sector registered a growth of 19.69%. The directors foresee that the cement industry shall continue its impressive growth.
Dandot Cement Company Ltd (DCCL) is a public limited company incorporated in the province of Punjab. Its shares are quoted on Karachi and Lahore Stock Exchanges. It was listed on Karachi Stock Exchange in 1989 but it had started commercial production much earlier on March 1, 1983. It is primarily engaged in production and marketing of cement.
As regards ownership of its equity, the company's directors, their spouses, minor children hold 58.9% and its associated companies and related parties own 18.5% of its total 67.84 million shares of Rs 10 each. Shareholders from local general public own 14.8% of the company's stock.
The DCCL shares are at present quoted in the defaulter companies list of Karachi Stock Exchange under listing rule No 32(1)(b). The rule stipulates that the company failing to declare dividend/bonus for five years from the date of last declaration is to the considered as defaulter company.
Ironically, for the year ended June 30, 2005 the company declared dividend at 5%. In this context the sponsoring directors waived their right to receive dividend.
The manufacturing facilities of DCCL are located at Dandot R.S. Distt Jhelum. The installed capacity of the plant has been rated at 504 thousand metric tonnes p.a. of ordinary portland cement.
During FY 2004-05, the year under review the company's actual production increased to 367.5 thousand metric tonnes up by 24.4% over preceding year's cement output of 295.4 thousand metric tonnes.
This is commendable increase rate as this enabled the company to attain 73% utilised capacity as compared to 59% in the preceding year. However there remains substantial idle capacity for which the Annual Report of the company clarified that the shortfall in production was due to market constraints and plant stoppages for repair.
It has been also reported that the company's management has planned to increase the production capacity from 1600 m. tonnes/day clinker production to 3,500 m. tonne/day by expanding the existing infrastructure and plant for which initial study and discussions with engineering consultants has already been mobilised.
During the year, the company had made additions in the operating fixed assets at the capital outlay of Rs 9.1 million (2003-04: Rs 176.40 million). But during the year under review we see higher amount of Rs 69.6 million booked in the account of capital work in progress out of which Rs 68.3 million were earmarked for plant and machinery.
In order to improve the profitability the company must improve its sales which would require expansion in the manufacturing facilities. The company must exploit the opportunity of rising cement demand. This will enable it to minimise its accumulated deficit and restore its impaired equity base and liquidity ratio.
The directors referred about the auditors observations and comments on the going concern assumption etc. In this connection the directors resolved to work towards alleviating the observations of the auditors.
There is one special item in the notice for AGM as the directors proposed to enhance the loan to its associated company Gharibwal Cement Ltd (GCL) from existing limit of Rs 30 million to Rs 70 million being the maximum sum that may be aggregated at any one time.
The DCCL balance sheet shows sponsors and associates loans amounting to Rs 616.8 million (2004: Rs 558.0 million). According to the note No 5.1 annexed to the account, out of this amount sums of Rs 372.00 million and Rs 121.6 million represent loans extended by sponsoring Directors and their foreign associate by encashment of Stand-By Letters of Credit for repayment of Pak Rupees Loans from Financial Institutions. These are repatriable in original currency.
Remaining amount of Rs 123.2 million is interest free local currency loan obtained from sponsoring directors of the company and their associates as mentioned in Note No 5.2.
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Performance Statistics (Million Rupees)
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30th June 2005 2004
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Share Capital-Paid-up: 678.40 678.40
Share Premium Reserve: 31.80 31.80
Accumulated (Loss): (1,157.95) (1,287.35)
Shareholders Equity: (447.75) (577.15)
Surplus on Revaluation of
Fixed Assets: 943.53 997.24
Sponsors & Associates Loans: 616.77 558.34
Other L.T. Debts: 448.69 577.32
Deferred Liabilities: 222.05 346.12
L.T. Advances & Deposits: 6.95 3.83
Current Liabilities: 497.27 475.14
Fixed Assets: 1,882.33 1,971.73
L.T. Loans & Deposits: 11.54 11.67
Deferred Cost: 148.38 188.38
Current Assets: 245.26 209.06
Total Assets: 2,287.51 2,380.84
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Sales, Profit & Pay Out
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Sales (Net): 1,087.16 812.21
Gross Profit/(Loss): 66.68 (6.95)
Operating Profit/(Loss): 3.78 (41.82)
Other Income/(Charges): 2.80 (21.74)
Financial (Charges): (68.35) (59.56)
(Depreciation): (107.54) (114.76)
(Loss) Before Taxation
From Ordinary Items: (61.76) (123.13)
Net Profit/(Loss) After Taxation
From Ordinary Activities: 56.83 (112.83)
Extraordinary/Items: 18.86 158.70
Net Profit For the Year: 75.69 45.87
Earnings Per Share (Rs): 1.12 1.09
Dividend Cash (%): 5.00 -
Share Price (Rs) on 24/03/06: 12.00 -
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Financial Ratios
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Price/Earning Ratio: 10.71 -
Book Value Per Share: (6.60) (8.51)
Price/Book Value Ratio: (-) -
Debt/Equity Ratio: 29:71 37:63
Current Ratio: 0.49 0.42
Asset Turn Over Ratio: 0.47 0.34
Days Receivables: 1 1
Days Inventory: 14 4
Gross Profit Margin (%): 6.13 (0.85)
Net Profit Margin (%): 6.96 5.64
R.O.A. (%): 3.31 1.92
R.O.C.E (%): 4.22 2.41
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Plant Capacity & Actual Production (Cement 000 M Tonnes)
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Installed Capacity: 504.00 504.00
Actual Production: 367.49 295.41
Capacity Utilization (%): 72.91 58.61
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COMPANY INFORMATION: Chairman: Abdur Rafique Khan; Chief Executive: Shaffi Uddin Peracha; Director: A. Shoeb Peracha; Company Secretary: Abdul Khabir; Registered Address: 3-A/3 Gulberg-III, Lahore; Web Address: Not Reported; Factory: Dandot R.S. Distt Jhelum.
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