Ghani Glass Limited (GGL) is a public limited company incorporated in Pakistan under the Companies Ordinance, 1984. The company started its commercial production during June 1995. It claims to be one of the constituent members of Ghani Group - an interest-free corporate entity.
It has the honour of being the 1st ISO 9002 Certified Glass Plant of Pakistan. Its shares are quoted on Karachi and Lahore stock exchanges. The group's glass plants were the first ones to achieve ISO and GMP certifications.
The company is engaged in the business of manufacturing and sale of glass containers and sheet glass of different types. Main products include pharmaceuticals amber/clear glass bottles, food and beverages flint/green glass bottles, and flat glass/sheet glass/float glass.
Ghani Glass Limited is incorporated in Punjab having its registered and head offices and its marketing office also located in Lahore. However, its manufacturing facilities are diversified at two locations. GG Plant-I & Regional Marketing Office are located in Tehsil Haripur NWFP, GG Plant II H-15 Landhi Industrial Area Karachi.
During the FY06, the company has undergone a merger with the Ghani Float Glass Limited (GFGL) which is the first float glass plant in the country where commercial production has already started in July 2005. After this import substitute indigenous production line of float glass (which was previously 100% imported thereby inflating the annual import bill), imports of this product have almost stopped. This has been achieved without any incentive or reduction in duty for local float glass manufacturers.
In a short span of time, a whole range of clear float glass has been produced and GGL subsequently introduced the green float glass in the market. Also GFGL successfully entered in its exports horizon, yielding foreign exchange for the country.
The company has undergone a major BMR expansion. During the FY06, the company invested Rs 255 million on BMR and acquisition of new assets. Resultantly now all the furnaces of the company are new and working on full capacity. Total production in comparison with last year has increased by 105 percent as the new furnace has worked for full year.
Moreover, product range of the company is as follows:
Beverage Containers-flint, Beverage Containers-Green, Food Containers-Flint, Pharmaceutical Containers-Amber, Ghani Green, Ghani Clear, Ghani Reflective and Ghani Brown.
The company has three technical facilities:
GGL-I Hattar which is the container glass manufacturing plant.
GGL-II Landhi also glass container manufacturing plant.
GGL-III Sheikhupura which is floating glass manufacturing plant.
Recent results (3Q11)
Net sales increased to Rs 5.0 billion as compared to Rs 4.7 billion in the same period last year. A decline was witnessed in export sales, while an increase to Rs 5.2 billion from 4.8 in terms of gross sales was witnessed on the local front. Correspondingly COGS increased to Rs 3.44 billion as compared to Rs 3.36 billion in the same period last year. COGS increased mostly because of depreciation and salaries and wages. All operating expenses increased quite significantly, however other operating income also showed an increase, resulting in the operating profit being Rs 1.08 billion as compared to Rs 0.97 billion in the same period last year. PAT increased considerably due to lower finance charges and lower than last period loss of associate. Pat was at Rs 786 million as compared to Rs 675 million in the 9M'10. Moreover Ghani Glass reported an EPS of Rs 7.37 as compared to EPS of Rs 6.33 in the same period last year.
Economic overview
The economic meltdown has been very widespread and intense and did not spare any segment or region of the globe. Ghani Glass has been equally impacted by it like any other company. Therefore, the input costs of manufacturing increased to levels not seen in Pakistan before. Despite of these conditions, Ghani Glass Limited was able to make high profits and to improve the quality of its products.
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SNAP SHOT
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CURRENT PRICE Rs 57
TICKER GHGL
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INCOME STATEMENT
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Rs in '000 2009 2010
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Net Sales 5,191,729,144 6,533,755,609
Gross profit 1,526,090,228 1,888,995,858
Operating profit 1,064,168,600 1,331,625,948
EBIT 1,143,042,115 1,368,906,449
Profit before taxation 993,284,692 1,278,003,734
Profit after taxation 712,761,212 947,195,600
Earnings per share - Basic and diluted 8.08 9.77
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BALANCE SHEET
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Rs in '000 2009 2010
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Total Non-current Assets 2,788,399,404 2,934,337,574
Total Current Assets 2,187,797,836 2,731,451,430
Total Assets 4,976,197,240 5,725,789,004
Total Equity 3,460,870,713 4,143,562,703
Total non-current liabilities 408,612,867 403,208,646
Total current liabilities 1,106,713,660 1,179,017,655
Total liabilities 1,515,326,527 1,582,226,301
Total Equity and Liabilities 4,976,197,240 5,725,789,004
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Net sales revenue increased to Rs 6.534 billion as compared to Rs 5.192 billion last year, 25.8% higher. The export sales also increased by 14.5% as compared to the export sales of 2009 despite poor economic conditions throughout the world. Ghani Glass earned a gross profit of Rs 1.889 billion against Rs 1.526 billion of the previous year and showed an upward trend of 23.8%. The net profit after tax has gone up to Rs 947 million as compared to Rs 713 million of the last year and is almost 33% higher and consequently, the EPS has gone up to Rs 9.77 as compared to Rs 8.08 of the last year.
The company plans to expand the facility of float gas by the end of 2010, which will increase the production capacity by 150,000 tons of glass per annum.
Net sales of the company have shown an increasing trend over the last 5 years. Net sales in FY10 increased by 26%, which is a little lesser than the rate of increase in 2009, taking to the sales to the level of Rs 6.533billion. The increasing trend is evident from the figure.
However, the cost of good sales have increased to Rs 4.6 billion in FY10 which is 26.7% higher as compared to FY09.
Thus Gross profit of the company was Rs 1.89 billion in FY10 which shows an increase of 24% whereas FY09, the gross profit was 31% higher than that of FY08.
The earning before interest and tax went up by 19.8% in FY10 amounting to Rs 1.37 billion. In contrast profit before taxation only amounted to Rs 1.3 billion showing an increase of 28.7% as compared to FY08. Profit after taxation increased by 33% in FY10 amounting to Rs 0.95 billion. During the same period taxation increase by 18% in FY10 with respect to FY09.
The graph shows contribution to national exchequer and trade debts allocation in terms of domestic and foreign customers. The major portion of the national exchequer consisted of import bill reduction and the amount contributed to 55%, which is almost the same as in the previous year. Whereas trade debt is concerned, 98% of trade debt consists of domestic customers.
During FY10, the cost of production increased due to increase in utilities and raw material costs. Due the gas load shedding, for six months, the company had to resort to furnace oil, which added a little to the cost of production. Despite these unfavorable factors, the company managed to achieve sales of Rs 6.53 billion showing an impressive growth of 26%.
The rising trend in sales regardless of hard conditions, can be attributed to its effective management, cost reduction strategies, increase in production efficiencies. A slight increase in profit margin in FY06 is due to a growth of 143% in net income Both ROA and ROE showed a decline in FY07. Profit margin increased a little in FY10 from 13.7% to 14.5%. The gross profit margin decreased slightly from 29.4% to 28.9% in FY10. Ghani Glass Limited was able to improve its return on equity and return on assets in FY10 to 22.9% and 16.5% respectively (FY09: ROE 20.59% and ROA 14.32%).
All the liquidity ratios of GGL have declined significantly in FY03, although they increased little in FY04 and FY06, the overall trend is that of decline. A modest increase in FY06 was due to smaller proportionate increase in current liabilities. FY07 was marked by a higher murabaha financing and creditors and accrued payables, translating into higher current liabilities which offset the increase in current assets resulting in lower current ratio. In FY10 current assets increased significantly by 27.6% after showing a decrease of 6% in FY09 and current liabilities increased by 6.53% after showing a decrease of 18% in 2009. This caused both, the quick ratio and current ratio, to increase in FY10. The increase in current liability resulted due to increase in deferred taxation, the increase in trade debt and other payables and most importantly the increase in short-term morabaha finance bills.
Inventory Turnover (ITO) ratio shows how quickly the company is able to sell off its inventory. The ITO has shown continuous decline since FY08. In FY10, the ITO of GGL decreased by 10 days to 87days from 97 days in FY09.
Day sales outstanding (DSO) depicts how quickly the company is able to collect the dues from its debtors. It should be enough for the company to avoid risks of bad debts. DSO for GGL has been declining over the years under consideration (from 92 to 25 days) due to declining trade debts, showing efficiency on the part of the company in collecting back its dues. But in FY10, the DSO showed an increase to 35days. The operating cycle of GGL hence followed the same trend as that driven by ITO and DSO i.e. it continuously declined through the years and increased slightly in FY10.
Both TATO and sales/equity ratios of GGL have followed a similar pattern over the period, increasing continuously from FY05. However, they remained flat in FY07 due to a same percentage change in sales, TA and Equity, respectively. Total asset turnover and sales to equity ratio have both showed increasing trend due to considerable increase in sales.
As far as debt management is concerned, both D/A and D/E ratios of GGL show its increased reliance on equity financing rather than debt financing as all its D/A ratios are less than 50% maximum being 45% in FY05 when the company had resorted to various forms of long-term financing like Ijara, Morabaha, sponsor loans, etc This is further evident by the long-term debt to equity ratio, which emerged in 2004 through Ijara financing and later continued via other modes of Islamic borrowing. Debt to asset ratio further reduced in FY10 to 0.28. Debt to equity and long term debt to equity ratio have both reduced to 0.38 and 0.10 in FY10 due to decrease in debt in contrast to equity. There were no Ijara finances and diminishing musharika in FY10 and the amount of Short term morabaha financing also reduced considerably.
Both D/A and D/E ratios remained flat in FY07 on account of almost same percentage increase in debts, assets and liabilities. Long term debts/equity ratio declined due to lower Ijara financing and security deposits.
As stated earlier, GGL is one of the companies of the Ghani group which is an interest free corporate entity; hence it mostly resorts to Islamic modes of financing. The company had no finance cost at all till FY04. However, this charge emerged as GGL gave the profits on Ijara, Murabaha (both short and long term) and Musharika. The ratio however, increased in FY07 due to lower EBIT on the account of lower operating profit. Time interest earned almost remains same from FY07 to FY09. In FY10, the times interest earned rose significantly to 22.51 because of the decrease in finance cost by 35% and the corresponding increase in the profits.
The market value of GGL's share is the highest priced share in its Glass and Ceramics sector. On 6th December 2006, the year-end price of the share was quoted at Rs 82 per share, which is more than eight times of the par value. The other glass company - Tariq Glass share's market value is the second highest in its sector but not close to Ghani Glass. During the FY08, the market price declined from the high price of Rs 76.5 to Rs 50.07. In FY10, the market price of GGL's share stood at Rs 57.
The EPS on the other hand has been varying from 5.03 to 977. The 5.03 value was reached in FY07 due to relatively lower earnings coupled with increased no. of outstanding shares. EPS increased from Rs 6.11 to Rs 8.08 showing company is giving good return to its equity holders and then further to 9.77 in FY10.
The P/E ratio also followed a rising trend from FY05 to FY08 driven by the increases in market price of shares, reflecting the investor's confident in GGL and also due to lower EPS (in FY07). Moreover, P/E ratio of GGL is higher than average industry. But due to recent fall in prices to Rs 55.3 in FY09 from Rs 76.5 in FY07 has caused the P/E multiple to reduce to 6.84 in FY09, which was 15 in FY07. The price earning ratio decreased further to 5.83 in FY10.
The company remains well entrenched as a socially responsible corporate citizen caring for its workforce and making value addition in the investments of prime stakeholders - its shareholders. It has a robust financial backbone, which is evident from its liquidity and solvency ratios as well as high premium carrying break up value of share depending on its shareholding pattern. The other evidence of its being socially responsible enterprise is its regular and attractive dividend distributions to its prime stakeholders - shareholders. As evident from the six-year trend, the company did not skip dividend during the six years. DPS peaked at Rs 5.5 per share while the lowest DPS was Re 1.0 per share in FY07. Dividends in FY08 and FY09 were Rs 2 and Rs 3 respectively. For the FY10, the directors have announced a dividend per share of Rs 2.5 amounting to Rs 242.46 million and issuance of bonus shares at 10%. This confirms that the company is retaining most of its profits for growth plans in future.
Future outlook
GGL's International business division is currently working diligently to explore untapped markets and boost its export sales. For this purpose, the company actively participates in local and international EXPO's, holds dealers and customers conferences and also introduces incentive packages.
In addition to this, GGL is also proposing to setup a high tech glass plant (state-of-the-art technology used worldwide for glass container production) in Middle East in collaboration with foreign investors, for glass markets in Middle East, EU and USA. This decision can move the company to the list of MNCs and turn more opportunities for GGL's growth in the coming years.
The company plans not only to expand internationally but also nationally. The CEO of Ghani Group signed a contract for setting up its second Float Line at Sheikhupura, which will be capable of float glass production capacity of 500 tons per day (180,000 tons per annum). The overall production will increase to 850 tons per day after this project. This new plant will be counted amongst the latest glass plans with advanced machinery and equipments. The new plant will not only fulfil the local demand of glass within the country but it also will be exported (70% of production) and will help Pakistan earn foreign exchange.
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GHANI GLASS LIMITED (GHGL) - FINANCIALS
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Balance Sheet in Rs '000 2004 2005 2006 2007 2008 2009 2010
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Operating fixed assets 378,884,764 595,436,050 1,834,371,906 1,809,540,518 2,261,022,359 2,501,292,267 2,504,072,892
Capital work in progress 92,427,587 1,238,723,110 58,105,013 143,854,523 - 135,228,659 203,945,308
Long term investment 50,000,000 6,592,000 6,592,000 90,220,317 60,118,298
Long term deposits 4,845,782 16,111,964 9,719,491 12,757,921 17,166,163 18,378,563 19,238,230
Total non-current assets 416,082,799 1,860,118,659 1,879,850,993 2,032,072,962 2,344,108,522 2,788,399,404 2,934,337,574
Stores and spares 121,419,810 242,957,055 357,224,113 528,523,964 767,460,286 611,632,769 697,690,503
Stock in trade 246,906,342 317,872,224 491,997,911 550,752,621 658,120,782 792,308,879 888,199,679
Trade debts 180,191,187 248,438,136 419,644,127 379,694,925 427,309,558 349,488,847 634,559,273
Advances, deposits,
prepayments, other receivables 75,001,517 226,849,550 254,498,352 347,016,479 438,952,522 397,056,723 434,165,906
Cash and bank balances 56,746,102 12,463,470 5,185,000 133,178,905 44,133,089 34,482,368 136,836,069
Total current assets 680,264,958 1,048,580,435 1,561,090,116 1,943,407,294 2,336,499,737 2,187,797,836 2,791,451,430
Total Assets 1,096,347,757 2,908,699,094 3,440,941,109 3,975,480,256 4,680,608,259 4,976,197,240 5,725,789,004
Total non-current liabilities 49,200,000 544,048,941 446,213,723 213,319,195 415,182,095 408,612,867 403,208,646
Total current liabilities 234,542,163 752,243,433 796,130,526 1,225,161,433 1,349,377,863 1,106,713,660 1,179,017,655
Total liabilities 283,742,163 1,296,292,374 1,242,344,249 1,438,480,628 1,764,559,958 1,515,326,527 1,582,226,301
Total Equity 812,605,594 1,612,406,720 2,198,596,860 2,536,999,628 2,916,048,301 3,460,870,713 4,143,562,703
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Income Statement in Rs'000 2004 2005 2006 2007 2008 2009 2010
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Sales - net 817,742,007 1,389,107,019 2,680,055,508 3,124,633,248 3,972,223,649 5,191,729,144 6,533,755,609
Cost of goods sold (537,461,155) (998,707,893) (1,970,577,878) (2,347,494,327) (2,788,951,340) (3,665,638,916) (4,644,759,751)
Gross profit 280,280,852 2,387,814,912 709,477,630 777,138,921 1,183,272,309 1,526,090,228 1,888,995,858
Profit from operations / EBIT 243,206,668 319,897,864 632,507,598 570,605,753 878,761,303 1,143,042,115 1,368,906,449
Finance cost - (12,856,504) (62,520,373) (45,938,375) (70,959,910) (93,097,740) (60,800,696)
Profit before taxation 231,046,335 292,920,782 558,404,559 475,617,945 807,801,393 993,284,692 1,278,003,734
Taxation 31,708,932 (93,119,656) (73,360,779) 73,238,491 (268,811,006) (280,523,480) (330,808,134)
Profit after taxation 199,337,403 199,801,126 485,043,780 402,379,454 538,990,387 712,761,212 947,195,600
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PROFITABILITY RATIOS 2004 2005 2006 2007 2008 2009 2010
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Profit Margin 24.38% 14.38% 18.10% 12.88% 13.57% 13.73% 14.50%
Gross profit margin 34.27% 28.10% 26.47% 24.87% 29.79% 29.39% 28.91%
Return on Assets 18.18% 6.87% 14.10% 10.12% 11.52% 14.32% 16.54%
Return on Equity 24.53% 12.39% 22.06% 15.86% 18.48% 20.59% 22.86%
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LIQUIDITY RATIOS 2004 2005 2006 2007 2008 2009 2010
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Quick Ratio 1.33 0.65 0.89 0.71 0.68 0.71 1.02
Current Ratio 2.90 1.39 1.96 1.59 1.73 1.98 2.37
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ASSET MANAGEMENT RATIOS 2004 2005 2006 2007 2008 2009 2010
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Inventory Turnover(Days) 162.15 145.34 114.07 124.35 129.20 97.35 87.38
Day Sales Outstanding (Days) 79.33 64.39 56.37 43.75 38.73 24.23 34.96
Operating cycle (Days) 241.48 209.73 170.44 168.09 167.93 121.58 122.34
Total Asset Turnover 0.75 0.48 0.78 0.79 0.85 1.04 1.14
Sales/Equity 1.01 0.86 1.22 1.23 1.36 1.50 1.58
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DEBT MANAGEMENT RATIOS 2004 2005 2006 2007 2008 2009 2010
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Debt to Asset 0.26 0.44 0.36 0.36 0.38 0.30 0.28
Debt to Equity Ratio 0.35 0.79 0.57 0.57 0.61 0.44 0.38
Long Term Debt to Equity(%) 0.06 0.32 0.20 0.08 0.14 0.12 0.10
Times Interest Earned N/A 23.33 10.12 12.42 12.38 12.28 22.51
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MARKET RATIOS 2004 2005 2006 2007 2008 2009 2010
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Earning per share 9.09 6.30 6.07 5.03 6.11 8.08 9.77
Price/Earnings Ratio 8.14 12.06 13.51 15.21 8.19 6.84 5.83
Dividend per share 3.50 3.00 5.50 1.00 2.00 3.00 2.50
Book value per share 33.63 53.38 34.37 31.72 34.73 39.25 42.72
No. of Shares issued (in thousands) 24166564 30208205 63976686 79970857 83969400 88167870 96984657
Market prices(Year End) 74.00 76.00 82.00 76.50 50.07 55.30 57.00
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