Vanaspati & Allied Industries: ASSOCIATED INDUSTRIES LIMITED - Year Ended 30-06-2005 & 9 Months Ended 31-03-2006

The current financial year's (2005-06) 3rd Quarterly Report has been downloaded from its website www.ailshama.com and this covers the updated financials. During the nine months ended March 31, 2006 (9M 2005-06), the company generated sales in the sum of Rs 1.958 billion as against Rs 1.817 billion in the same period last year (SPLY) showing 7.7% increase.
Gross profit amounted to Rs 184.49 million which was 22.5% higher than the amount of Rs 150.58 million posted in the SPLY. Higher growth rate in gross profit as compared to sales growth shows stable selling price. The volume of sales for nine months was recorded at 38,936 metric tonnes of ghee and oil as against 37,682 metric tonnes registering 3.3% increase.
For the nine months ended March 31, 2006, the company made a profit before taxation at Rs 65.46 million as compared to Rs 76.14 million for the same period last year showing 14% decline against same period last year. After the review of 9M 2005-06, the last year's (FY 2004-05) review and performance statistics of FY 2004-05 has been given.
Associated Industries Ltd is public limited company engaged in the manufacture and sale of vegetable ghee, cooking oil and laundry soap. It was incorporated on January 26, 1960 and its shares are quoted on Karachi and Lahore Stock Exchanges.
The company had applied for buy back of shares and delisting of the company on July 29, 2005 as mentioned in the note annexed with the accounts for the year ended June 30, 2005.
But the share is still listed on the stock exchange and on July 28, 2006 the market value of the share was quoted at Rs 110 per share which is eleven times of the par value. During the last one year marker value of the share remained between Rs 62 and Rs 110.25 per share.
According to the nine years key financial data published with the Annual Report 2005, the company announced annual dividends in three years out of past nine years. For the last financial year 2004-05, the directors said that in view of accumulated loss amounting to Rs 304.818 million they did not recommend dividend.
The company is marketing its product under the brand name of "Shama." The directors claim that right from the inception of production in 1963, the brand "Shama" became instant hit and market leader. The subsequent period witnessed the continuous lead with continued growth in production. The directors informed that they have been also making efforts on increasing soap production capacity.
As regards production of cooking oil and vegetable ghee, the production capacity of the plant has been rated at 70 thousand tonnes per annum. During last year 2004-05 the company's actual production was recorded at 50,647 metric tonnes as against 39,963 tonnes produced in the preceding year 2003-04 showing 26.7% increase.
Its capacity utilisation substantially increased to 72% as compared to 57% in the preceding year. During the last year 2004-05 the company generated net sales at Rs 2.484 billion (FY: 2003-04: Rs 1.969 billion) registering 26.1% increase over the preceding year's. The sales figure of the year under review depicts robust growth as well as scales new height as the sales figure is the highest in its history.
The directors have candidly provided an insight in the future prospects of the ghee industry. They confirm that ghee industry has promising potential prospects due to increase in domestic consumption and opening of export market to Afghanistan. But Afghanistan market during the year was held by Malaysian/Indonesian/Singaporean manufacturers.
They also point out that a lot would depend on Pakistan Government policies protecting the interest of genuine ghee units and checking undue advantage of PATA/FATA, refund of income tax on export and ensuring of hygienic production by unorganised units.
During last year the company's gross profit at Rs 217.45 million and operating profit at Rs 98.69 million exhibited 39.6% and 17.06% growth respectively.
Financial expenses were down by 25% which is commendable in the backdrop of rising mark-up rates. Other income was also up by nearly Rs 6 million.
The company's net profit at Rs 48 million was much higher than preceding year's Rs 21.5 million. This has given abundant opportunity to scale down accumulated deficit.

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Performance Statistics                     (Million Rupees)

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30 June                                   2005         2004

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Share Capital-Paid-up:                    9.68         9.68

Revenue Reserves:                       103.68       103.68

Accumulated (Loss):                    (304.81)    (360.99)

Shareholders Equity:                   (191.45)    (247.63)

Surplus on Rev. F/Assets:               271.04       280.19

L.T. Loan from Director:                 22.54        19.54

Other L.T. Debts:                        68.49        77.00

L.T. Deposits:                            9.13         9.44

Current Liabilities:                    535.38       578.23

Fixed Assets:                           309.37       308.74

L.T. Deposits:                            1.20            -

Current Assets:                         404.56       408.03

Total Assets:                           715.13       716.77

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Sales, Profit & Pay Out

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Sales-Net:                            2,484.17     1,969.37

Gross Profit:                           217.45       155.77

Operating Profit:                        98.69        84.30

Other Income:                            19.00        13.27

Financial (Expenses):                   (31.62)     (42.22)

(Depreciation):                         (11.32)     (11.15)

Profit Before Taxation:                  81.77        52.58

Profit After Taxation & Prior

 Year Adjustment:                        48.00        21.49

Earning Per Share (Rs):                  49.59        22.20

Share Price (Rs) on 28/07/06:           110.00            -

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Financial Ratios

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Price/Earning Ratio:                      2.20            -

Book Value Per Share (Rs):             (197.76)    (255.79)

Price/Book Value Ratio:                     (-)           -

Debt/Equity Ratio:                       40:60        60:40

Current Ratio:                            0.76         0.71

Asset Turn Over Ratio:                    3.47         2.75

Days Receivables:                            9            6

Days Inventory:                             18           26

Gross Profit Margin (%):                  8.75         7.90

Net Profit Margin (%):                    1.93         1.09

R.O.A. (%):                               6.71         3.00

R.O.C.E. (%):                            26.70        15.51

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Plant Capacity & Production (000' Metric Tons)

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Capacity:                                70.00        70.00

Actual Production:                       50.65        39.96

Capacity Utilization (%):                72.36        57.08

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