This papersack manufacturing unit of Gadoon Amazai Industrial Estate belongs to Ghulam Faruque Group Companies which have diversified interest in cement and sugar etc.
The group owes its name to the illustrious industrial icon Ghulam Faruque who had pioneered industrialisation of in the country.
Cherat Papersack Limited is a public limited company, incorporated in NWFP. It was established in 1989 and began commercial production in December 1991. According to the last year's annual report the installed capacity of its plant was rated at 35 millions bags p.a. based on single shift working for 320 days.
Last year actual production was 55.48 millions bags which shows substantial increase not only over the rate capacity but also on prior year's (2002) production at 46.62 millions bags. This production was second higher after 7 years peak production of 59.87 millions bags.
Then the enhanced production was due to rise in demand derived from enhanced capacity utilisation cement industry.
The company's Q3 2003-04 report shows that the combined nine months (2003-04) production reached 41.41 millions bags as against 42.15 millions bags produced in the same period last year.
It would appear from the productions record that the demand is stagnating as products marginally declined. But paradoxically expansion in cement demand has accelerated because of various government initiatives in construction and building and many companies commissioned coal fired system, reduced financial charges and availed better retention price. So if the days are good for cement industry then the demand for papersack should also expand.
The bottleneck appears is in the supply side economics as there is increased supply of imported bags coupled with more stiff competition. Inevitably, dispatches were scaled down. Additionally the company had to adjust its selling prices downward during the period under review (9M 2003-04).
But future prospects are better as mentioned by Chairman Mohammed Faruque. The demand for cement is rising he projected relatively higher quantity dispatches.
The nine months sales of the company amounted to Rs 416.69 millions (9M 2002-03: Rs 446.96 millions) showing 6.8% decline. It is apparent why there is value sales decline if compared with volume despatches which showed less decline rate by only 2.6%.
Obviously the reduced selling price caused decline in total sales revenue. This also clarifies why gross margin severely eroded.
The decline in selling price has severely dented the profitability growth. Profit After Tax (PAT) receded to Rs 33.30 millions which is only 59% of the PAT figure of 9M 2002-03. At this rate of decline in PAT, it appears that the annual 2003-04 profit, may be around Rs 45 millions as against actual PAT of full last year at Rs 75.22 millions.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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March 31 June 30
2004 2003
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Share Capital-Paid-up: 786.00 786.00
Share Capital Paid-up: 40.80 40.80
Reserve & Profit: 236.27 215.20
Shareholder Equity: 277.07 256.00
L.T Debts: 0.15 0.26
Deferred Liabilities Taxation: 6.25 2.45
Current Liabilities: 106.68 74.55
Tangible Fixed Assets: 55.53 54.56
L.T Investments: 26.13 23.51
L.T Advances & Deposits: 0.84 0.69
Current Assets: 307.65 254.50
Total Assets: 390.15 333.26
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Profit & Loss A/c For the
Nine Months Ended March 31 2004 2003
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Sales-Net: 416.69 446.96
Gross Profit: 62.93 105.59
Operating Profit: 46.56 91.06
Other Income: 6.36 7.33
Financial (Charges): (0.28) (0.30)
Profit Before Taxation: 49.10 91.12
Profit After Taxation: 33.30 56.12
Interim (Dividend)& Rs 3/-
(Dec 2002:Rs 5/-) Per Share: (12.24) (20.40)
Earning Per Share (Rs): 8.1 6 13.75
Share Price (Rs) on 2/08/04: 88.00 -
Price Earning Ratio: 10.78 -
Book Value of Share (Rs): 67.91 62.75
Debt/Equity Ratio: 0:100 0:100
Current Ratio: 2.88 3.41
Gross Profit Margin (%): 15.10 23.62
Net Profit Margin (%): 7.99 12.55
R.O.A (%): 8.53 16.83
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