The year July-June 2003-04, proved to be an exceptional year for the company. The company not only established a new production record of 801,563 tonnes but also achieve sales volume of 789,437 tonnes during the year. There was also impressive increase in the after tax profitability of the company which soared to Rs 425.70 million from Rs 9.74 million, posted in the preceding year. The company's EPS telescoped to Rs 8 from EPS of merely paisas 18 in the preceding year.
Most importantly, it enriched its shareholders by declaring highest ever cash dividend of Rs 213 million (Rs 4/share).
In addition it proposed bonus stock dividend and appropriated Rs 133 for the same which is at 25%. The buoyant stock market, the highly rewarding cement industry, the inherent strong fundamentals of company and its leadership drawn from renowned Ghulam Faruque Group together boosted its share price to Rs 87 per share which is nearly nine times of par value.
Cherat Cement Company Ltd was incorporated in the province of Sindh as a public limited company in the year 1981. Its main activity is manufacturing selling and marketing of cement. Cherat Cement Company had started commercial production in May 1985 and is listed on Karachi, Lahore and Islamabad Stock Exchanges.
The manufacturing facilities of the company are located in Village Lakrai Nowshera NWFP whereas its sales office is situated at First Floor, Betani Arcade Jamrud Road Peshawar.
The financial position of the company remained robust. Total assets increased by Rs 286 million from Rs 1,896 million in the previous year 2002-03, to Rs 2,182 million. The shareholders equity increased to Rs 1,219.7 million from Rs 1,007 million in the preceding year. The paid-up capital of the company is Rs 531.92 million against the authorised capital of Rs 800 million.
During the year the company proposed bonus stock dividend in the sum of Rs 132.98 million which will enlarge the capital base to Rs 665 million. The expansion in the capital base seems to be a continuous feature as the company is increasing its authorised capital to Rs 1,500 million.
Its long term debts have been drastically reduced from 297 million in the previous year to Rs 194 million during the year under review. Long term debts decreased by Rs 103 million or by 35% as compared to the preceding year.
However the debts are likely to increase in the forthcoming year for financing production capacity of the plant by 800 tonnes per day. Financing of the project has been arranged and letters of credit for the import of equipment have already been established. Expansion work is likely to be completed by the second half of the year 2005.
At present the long term debts have adequate coverage as evidenced from long term debt to equity ratio.
The company has easy liquidity position as its cash and bank balances have swelled to Rs 386.4 million in the year under review from Rs 128.66 million. For future it has also unavailed credit facility of Rs 320 million which provides comfort against any unforeseen liquidity crunch. The easy liquidity position can be seen from current ratio.
During the year under review the company recorded highest ever production and sales volume. Production of cement increased by 16% to 801,563 tonnes over previous year's output of Rs 692,788. The utilised production capacity exceeded the installed capacity by 3%.
Hence it reached the stage where maximum economies of scale are availed which results into lower overhead per unit and leads to further technical, marketing and risk-bearing economies.
The company has already succeeded in controlling costs, with cost of sales remaining almost the same as last year. Moreover, the company could also make strategic decision to make forward bookings of coal to offset the increased international prices.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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June 30
2004 2003
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Share Capital-Paid-up: 531.92 531.92
Reserves: 687.73 474.80
Shareholders Equity: 1,219.65 1,006.72
L T Debts: 194.31 296.46
L T Deposits: 15.17 15.37
Deferred Taxation: 170.33 170.76
Current Liabilities: 582.61 406.68
Fixed Assets-Tangible: 1,251.71 1,276.04
L T Investments: 9.89 10.48
L T Loans: 6.59 5.02
L T Security Deposits: 3.06 3.68
Current Assets: 910.82 600.77
Total Assets: 2,182.07 1,895.99
Sales, Profit & Pay Out:
Sales-Net: 2,084.96 1,507.66
Gross Profit: 715.17 150.15
Operating Profit: 620.82 59.00
Other Income: 12.71 33.33
Financial (Charges): (19.08) (29.62)
(Depreciation): (139.37) (152.41)
Profit Before Taxation: 573.67 25.22
Profit After Taxation: 425.70 9.74
Earnings Per Share (Rs): 8.00 0.18
Dividend Cash @ Rs 4/Share
(2003: @ Rs 1.25/Share): 212.77 66.49
Proposed Bonus Issue 25%
(2003:Nil): 132.98 -
Share Price (Rs) Dated 14/02/05: 87.00 -
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Financial Ratios:
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Price/Earning Ratio: 10.87 -
Book Value Per Share: 22.92 18.93
Price/Book Value Ratio: 3.80 -
Debt/Equity Ratio: 14:86 23:77
Current Ratio: 1.56 1.48
Asset Turn Over Ratio: 0.96 0.80
Days Receivables: - -
Days Inventory: 22 13
Gross Profit Margin (%): 34.30 9.96
Net Profit Margin (%): 20.41 0.65
R O A (%): 19.51 0.51
R O C E (%): 26.61 0.65
Plant Capacity & Production-Clinker (000' Metric Tons)
Installed Capacity: 750.00 750.00
Production: 774.00 656.42
Utilization Capacity (%): 103.20 87.52
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