Glass and Ceramics: TARIQ GLASS INDUSTRIES LIMITED - Year Ended 30 June, 2006
During FY06, the period under review, the company crossed rupees one billion mark in net sales and achieved highest ever volume of tableware export in its history.
Profit before taxation at Rs 62.24 million (FY05: Rs 40.03 million) and profit after taxation at Rs 49.11 million (FY05: Rs 34.26 million) registered impressive increase by 55.5% and 43.3% respectively YoY.
According to the directors the financial results would have been much better had there been no increase in the prices of basic raw materials, specially the prices of soda ash, natural gas and POL products. The increase in input cost was not passed on to the consumer.
Production efficiency suffered during the last quarter of the financial year as the machines had to be stopped or operated at lower speed during installation of air compressors.
To compete with the smuggled tableware products from Iran, China and the Far East, the company had to enhance the distributors' margins by offering trade discounts which had an impact on the profit margins.
To avail economies of scale the directors have decided to embark on further expansion in the production facilities by erecting third furnace.
The company is trying to improve glass quality which could be matched with any imported quality glass. It hopes to achieve better results by 3rd quarter of FY07.
Tariq Glass Industries Limited was incorporated in the province of Punjab in 1978 and was converted into a public limited company in the year 1980. The company is primarily engaged in the manufacture and sale of glass containers and tableware.
Its registered office is situated at 128-J, Model Town Lahore and manufacturing facilities are located at 33 Kilometre Lahore Sheikhupura Road.
Tariq Glass shares are listed on the Karachi and Lahore Stock Exchanges. These shares carry quite high market value. During the last one year market price of the share ranged between Rs 30.15 and Rs 45 per share. On January 22, 2007 the closing market price of the share was quoted at Rs 32.50 per share which is more than three times of the par value. In the eleven member glass/ceramics this market price of the company's share has been ranked 2nd highest after Ghani Glass share which has been priced at Rs 67.90 per share.
As regards ownership of its equity, the company directors and members of their family hold 19.3% and one associated company Omer Glass Industries Ltd own 11.2% of the company's total 11 million shares of Rs 10 each. One foreign company, Industrial Product Investment Limited owns 29.9% of the company's stock. One shareholder Aqeel Karim Dedhi owns 13.43% of the company's stock. Remaining shares of the company are owned by other individual and institutional investors.
The company maintains satisfactory profit distribution record as the published statistics in the company's Annual Report and Karachi Stock Exchange Daily Quotations show that the company has not skipped dividend since the year 2001. For the year under review (FY06) the company announced cash dividend at 10% and bonus shares at 5% which aggregates to 15% which is quite attractive payout compared to the prevalent returns on investment on bank deposits or on fixed income securities. Last year (FY05) the company had declared aggregate dividend also at 15% (cash dividend at 5% plus stock dividend at 10%).
The steady dividend payout policy demonstrate the inherent financial strength of the company. The company has remained profitable since the year 2001. Moreover its financial health is robust as evidenced from the liquidity and debt to equity ratios in both the years under review. Its paid capital has increased due to bonus stock dividend.
Furthermore, the directors have injected fund in the shape of directors' loan which is unsecured, mark-up free repayable in 20 quarterly instalments commencing from June 30, 2007.
According to the operating assets statement the company made additions in the fixed assets in FY06 at the capital outlay of Rs 108.25 million (FY05: Rs 121.08 million). This demonstrates company's strategy to continuously upgrade its manufacturing facilities. It is reported that the company's new compressors were installed and were operating successfully.
During FY06, the company's net sales crossed rupees one billion threshold. Net sales amounted to Rs 1.011 billion (FY05: Rs 0.80 billion) registering 26.37% increase YoY.
The Chairman of the Company's Board of Directors emphasised that the company achieved highest ever volume of tableware export. During the year under review, the company posted profit after taxation at Rs 49.11 million as against Rs 34.26 million in the preceding year, showing commendable increase by 43% over the preceding year's.
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Performance Statistics (Million Rupees)
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30 June 2006 2005
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Share Capital Paid-Up: 110.80 100.00
Un-appropriated profit: 135.74 101.63
Shareholders Equity: 245.74 201.63
L.T. Debts: 186.02 168.21
L.T Security Deposits: 5.17 5.21
Deferred Liabilities: 34.93 26.22
Current Liabilities: 300.39 247.45
Tangible Fixed Assets: 446.86 392.98
L.T. Security Deposits: 7.47 3.31
Current Assets: 317.92 252.42
Total Assets: 772.25 648.72
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SALES, PROFIT & PAY OUT
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Sales: 1,010.88 799.74
Gross Profit: 176.18 120.30
Operating Profit: 88.14 59.02
Finance (charges): (25.46) (18.98)
Other Income: 3.04 2.10
(Depreciation): (52.88) (60.06)
Profit Before Taxation: 62.24 40.03
Profit After Taxation: 49.11 34.26
Earning Per Share (Rs): 4.46 3.11
Dividend Cash Rs share: 1.00 0.50
Bonus Share (%): 5.00 10.00
Market Price of Share 32.50 -
(Rs) on 22/01/07:
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Financial Ratios:
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Price/Earning Ratio: 7.29 -
Book Value per Share: 22.18 20.16
Price/Book Value Ratio: 1.47 -
Debt/Equity Ratio: 43:57 45:55
Current Ratio: 1.05 1.02
Assets Turn Over Ratio: 1.31 1.23
Days Receivables: 3 3
Days Inventory: 34 39
Gross Profit Margin (%): 17.43 15.04
Net Profit Margin (%): 4.86 4.28
R.O.A. (%): 6.36 5.28
R.O.C.E. (%): 10.41 8.53
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Capacity & Production (000' Metric Tons)
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A) Furnaces Capacity-Container 21.18 21.18
Production: 16.03 16.39
Capacity Utilization (%): 75.68 77.38
B) Furnace Capacity-Tableware: 35.17 35.17
Production: 22.49 19.77
Capacity Utilization (%): 63.95 56.22
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NOTEthe under-utilization during the year is mainly because the company concentrated more on the production of tablewares, instead of containers.
COMPANY INFORMATION: Chairman & Managing Director: Tariq Baig; Director: Omer Baig; Secretary: Waqar Ullah, FCA; Registered Office: 128-J Model Town Lahore; Website: Not Reported; Factory 33-km Lahore-Sheikhupura Road.
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