Engineering: BOLAN CASTINGS LIMITED - Year Ended 30-06-05 & 9 Months Ended 31-03-06
The latest update of the company's financials have been published in its 3rd Quarterly Report for current financial year 2005-06, which has been downloaded from its active website for review. After this review the last financial year 2004-05 review has also been dovetailed with its performance statistics.
During the nine months of current financial year (9M 2005-06) the company posted net sales at Rs 623.54 million as against Rs 474.88 million posted in the same period last year (SPLY) registering impressive growth of 31.3%.
The directors foresee optimistic prospects in the future as they see continued strong demand for Bolan Casting's product range.
They also reported that the expansion plan of the company is in progress and was expected to be completed during the financial year ending June 2006. It will be observed in subsequent review of last year about its diminishing profitability.
But during the nine months of current year the company has reversed the declining trend. Gross profit at Rs 95.3 million operating profit at Rs 79.14 million and net profit at Rs 49 million showed improvement by 149%, 193% and 196% respectively over SPLY. The profitability improved due to higher volume of sales and better selling prices of the company's main products.
Bolan Castings Ltd (BCL) was incorporated on July 15, 1982 as a public limited company by Pakistan Automobile Corporation Ltd (PACO) Govt of Pakistan. Its commercial production was started in July, 1986. On June 13, 1993 the company was privatised and handed over to a group of management under joint collaboration of Millat Tractors Ltd and the Employees of Bolan Castings Ltd Its main business is to under take castings of tractors and automobile parts.
Its registered office and production facilities are situated in the province of Balochistan at Hub Chowki which is adjacent to Karachi, the industrial and commercial hub of the country.
Its plant is designed to produce 6,000 tonnes of tractor and automotive castings in grey and ductile iron like engine blocks, cylinder heads, gearboxes, axle housing hubs and brake drums etc.
The directors reported that so far 180 different types of castings have been successfully developed and supplied to various customers. During the last financial year ended June 30, 2005 (FY 2004-05), the actual production was recorded at 12,300 metric tonnes as against previous year's (FY 2003-04) 10,532 metric tonnes achieving 216% capacity utilization which is a laudable feat.
Net sales in terms of volume increased to 11,783 metric tonnes as compared to previous year's sales of 9,550 metric tonnes.
BCL foundry was first of its kind to obtain ISO 9002 certificate in April 1999. The company achieved, during last financial year ISO 9001-2000 version of Quality Management System.
It has a long list of prestigious customers including Millat Tractors, Al-Ghazi Tractors, Hino Pak Motors, Ghandhara Nissan, Fiat Tractors, Pakistan Synthetic, HMA Stainless Steel Pumps, Balochistan Engineering Works, Isuzu/buses Hino Trucks/buses, Bedford Trucks Honda/Cuore, Adam Car etc.
The company is listed on the Karachi Stock Exchange and the market value of BCL shares carry very high premium. Currently its 10-rupee share is trading at Rs 102.90 per share. Since 1998, when its share's peak price was only Rs 6, the company's share price steeply trended upward. During the last one year its price went up to Rs 102.90 per share. The company has been classified as engineering sector entity and total engineering sector's market capitalisation has reached 11.755 billion. In this sector there are 14 companies and the market value of BCL share at present is second highest after International Industries Ltd (Rs 159.70). The paid-up capital of the company is Rs 55.23 million but at the current market value of its share its market capitalisation has soared to Rs 569 million.
This exhibits robust financials position of the company which is also evidenced from the company's current ratio and long term debt to equity ratio.
Apart from financial its muscle, its forward looking profit distribution policy is also a cogent reason for the high pricing of its share. According to the financial data of a decade published in the Annual Report 2005, the company has not skipped annual dividend since the last seven years. It is gratifying record that its average annual dividend payout has been at 54% per annum since the last five years. For the year 2005 and 2004 the payout ratios have been at 50% per year.
During FY 2004-05 the company's net sales amounted to Rs 695.08 million (FY 2003-04: Rs 538.77 million) showing 29% growth which is also highest amount in the company's history. Despite commendable growth in sales its profitability is much lower mainly because of unprecedented escalation in cost of raw material. Hence its earning per share was down at Rs 7.72 from Rs 10.55 per share in the previous year.
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Performance Statistics (Million Rupees)
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30th June 2005 2004
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Share Capital-Paid-up: 55.25 55.25
Revenue: 241.34 225.98
Shareholders Equity: 296.59 281.23
Deferred Liabilities: 11.70 10.34
Current Liabilities: 92.45 41.50
Fixed Assets: 92.74 87.17
L.T. Investment: 8.83 8.50
L.T. Loans: 0.52 0.51
L.T. Deposits: 1.32 1.34
Deferred Tax: 3.02 4.13
Current Assets: 294.31 231.42
Total Assets: 400.74 333.07
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Sales, Profit & Pay Out
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Sales-Net: 695.08 538.77
Gross Profit: 83.37 105.38
Operating Profit: 63.14 82.45
Other Operating Income: 3.62 1.54
Finance (Cost): (1.42) (0.62)
(Depreciation): (11.53) (11.18)
Profit Before Taxation: 65.35 83.38
Profit After Taxation: 42.67 58.12
Earnings Per Share (Rs): 7.72 10.52
Dividend (%): 50 50
Share Price (Rs) 28/07/06: 102.90 -
Net Sales Volume (M.T.): 11,783 9,550
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Financial Ratios
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Price/Earning Ratio: 13.32 -
Book Value Per Share: 53.68 50.90
Price/Book Value Ratio: 1.92 -
Debt/Equity Ratio: 0:100 0:100
Current Ratio (Time): 3.18 5.58
Asset Turn Over Ratio: 1.73 1.62
Days Receivables: 43 35
Days Inventory: 59 85
Gross Profit Margin (%): 11.99 19.56
Net Profit Margin (%): 6.14 10.79
R.O.E. (%): 14.39 20.66
R.O.A. (%): 10.65 17.45
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Capacity Castings
-- Installed Capacity 5,700 M.T. Double Shift Per Annum
-- Actual Production 12,300 M.T. (2004: 10,532 M.T.)
-- Capacity Utilization (%) 216% Approx. (2004: 185% Approx)
COMPANY INFORMATION: Chairman: Sikandar M. Khan; Chief Executive: Javaid Ashraf; Company Secretary & Chief Financial Officer: M. Mushtaq Akhtar; Registered Office & Factory: Main RCD Highway Hub Chowki; District Lasbela, Balochistan; Website URL: www.bolancastings.com
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