INTRODUCTION: Ecopack Limited was incorporated as a private limited company in August 1991 to manufacture PET preforms and bottles for Pakistani carbonated beverage and mineral water markets. In 1992, EPL was converted into a public limited company and was successfully listed on the Karachi Stock Exchange in 1994.
EPL was set up with the active support and guidance of Pepsi International in Pakistan as a vendor of international standards for the supply of PET bottles to the carbonated soft drink industry. Ecopack has a capacity of over 280 million bottles per annum and is therefore the largest supplier of PET bottles in Pakistan.
PERFORMANCE SNAPSHOT The fiscal year 2011-12 was again a challenging year for Ecopack Limited, with reporting a continuous loss after tax of Rs 59.27 million. The positive highlight for the period under study was the decrease of 26 percent in company's loss after taxation.
The Company in terms of value had an increase in its sales of 13 percent for bottles and marginal three percent for reforms on account of both improved margins and higher PET resin prices in comparison to last year. The company's total sales were Rs 1921.54 million in 2012 in comparison to Rs 1784.75 million witnessed last year.
Other operating income decreased by 25 percent during the current year as compared to the last year, which was a result of decrease in the income received from the sale of scrap. During the period under review, the cost of sales of Company remained flat. With a slight increase in the consumption of raw-material, the cost of sales grew by six percent.
The Company reported a 32 percent increase in its gross profit from Rs 107.03 million in FY11 to Rs 141.53 million in FY12. However, the decrease in operating income and increase in finance cost resulted in a loss before tax of Rs 61.96 million.
The Company reported a 16 percent decrease in its share capital and reserves on account of decrease in surplus on revaluation of plant, property and equipment and increase in accumulated loss.
The financial charges increased from Rs 104.29 million in FY11 to Rs 124.21 million in FY12 due to expiry of State Bank of Pakistan circular No 11. This circular was issued for the economic rehabilitation of Khyber Pakhtunkhwa which capped financial charges at 7.5 percent per annum.
During the period under review, the Company witnessed a 39 percent increase in its long-term liabilities on account of increase in long-term loans and a 20 percent decrease in its current liabilities due to decrease in short-term borrowings and current portion of non-current liabilities.
The increase of 12 percent in electricity charges, eight percent in PET resin prices, 8.5 percent in cost of fuels and consequent truck freight charges increased by nine percent greatly affected the Company. The Pak rupee lost value over 10 percent against the rising US dollar impacted all import based and priced raw materials and cost components of the Company.
Ecopack Limited has rescheduled its long-term loans with respective banks, by increasing the tenor of the term loans by one to two years. This would provide a break to the company in order to plan and co-ordinate its supply chain and production functions for providing better results.
The Company is steady to improve its financial performance as new customers in the water and beverage sectors are growing, which is rapidly increasing the demand of Company's products. Furthermore, Company's capacity of immediate production of bottles in the peak summer month allows it to meet the flood of demand simultaneously for multiple pack sizes and beverages flavours targeting different segments of consumers, thereby making it a dependable Supply Chain partner to a fast developing industry. Loss Per Share (LPS) of Ecopack limited were Rs 2.58 in FY12 as against EPS of Rs 3.47 last year.
In terms of profitability and overall returns, for the period under review, the Return on Capital Employed (ROCE) showed a downward trend from -11.2 percent in FY11 to -7.5 percent in FY12. The Return on Equity (RoE) and Return on Assets (RoA) also decreased by 2.5 and 0.9 percent.
The liquidity position of Ecopack Limited remains worrying, with a continuous negative networking capital of Rs 376.89 million. The figures of current ratio increased from 0.46 times to 0.52 times, however, this increase was not sufficient enough to improve Company's liquidity.
FUTURE OUTLOOK The Company is expecting a prosperous outlook due to the positive growth of double-digit witnessed currently in the sales of beverage.
The Company has considered it important to boost its finances and working capital by a timely insertion of equity in order to position itself to take advantage of the growth trends in the market place. Exports of Preforms to close-by regions is a chief element of Company's strategy to alleviate the losses that are build up due to high fixed charges in the winter months on account of low utilisation of plant capacity.
=========================================================
ECOPACK LIMITED
=========================================================
(Rs mn) 2012 2011 2010
=========================================================
PROFITABILITY
---------------------------------------------------------
Gross profit margin % 7% 6% 11%
Operating profit margin % 3% 2% 6%
Net profit margin % -3% -4% -1%
ROCE % -8% -11% -2%
ROE % -19% -22% -5%
ROA % -4% -5% -1%
---------------------------------------------------------
LIQUIDITY
---------------------------------------------------------
Current ratio times 0.52 0.46 0.53
Quick ratio times 0.33 0.29 0.26
---------------------------------------------------------
ACTIVITY
---------------------------------------------------------
Fixed asset turnover times 1.65 1.43 1.41
Inventory turnover times 2.80 2.10 1.70
Total assets turnover times 1.22 1.05 1.04
---------------------------------------------------------
LEVERAGE
---------------------------------------------------------
Debt to Equity ratio times 4.10 3.61 3.48
Debt to Assets ratio times 0.80 0.78 0.78
Financial leverage times 5.10 4.61 4.48
=========================================================
Source: company accounts
Comments
Comments are closed.