MIRA
INFORM REPORT
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Report Date : |
06.03.2008 |
IDENTIFICATION
DETAILS
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Name : |
D.G. KHAN CEMENT COMPANY LIMITED |
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Registered Office : |
Nishat House, 53-A, Lawrence Road, Lahore |
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Country : |
Pakistan |
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Financials (as on) : |
30.07.2007 |
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Date of Incorporation : |
1978 |
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Com. Reg. No.: |
0006469 |
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Legal Form : |
Public Limited Company. Listed on Karachi, Lahore and
Islamabad Stock Exchanges. |
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Line of Business : |
Engaged in production and sale of Ordinary Portland and
Sulphate Resistant Cement |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Satisfactory |
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Payment Behaviour : |
No Complaints |
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Litigation : |
Clear |
Business Name
D.G. KHAN CEMENT COMPANY LIMITED
Full Address
Registered Address
Nishat House, 53-A, Lawrence Road, Lahore, Pakistan
Tel 92 (42) 6367812 - 20 (8 Lines)
Fax 92 (42) 6367414
Email www.dgcement.com
Short Description Of Business
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Nature of Business |
Engaged in production and sale of Ordinary Portland and Sulphate Resistant Cement |
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Year Established |
1978 |
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Registration # |
0006469 |
Factories Location
(1) Khofli Sattai, Distt. Dera Ghazi Khan-Pakistan
Phone: 92 (641) 460025-7
Fax: 92 (641) 462392
Email: dgsite@dgcement.com
(2) 12, K.M.
Choa Saidan Shah Road,
Khairpur, Tehsil Kallar Kahar,
Distt. Chakwal-Pakistan
Phone: 92 (543) 650215-8
Fax: 92 (543) 650231
Branches
In Lahore, Karachi, &
Rawalpindi
Auditors
KPMG Taseer Hadi & Co.
(Chartered
Accountants)
Legal Status
Subject
Company is a public limited company incorporated in Pakistan and is listed on
Karachi, Lahore and Islamabad Stock Exchanges.
Details of Directors
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Names |
Designation |
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Mrs. Naz Mansha Mian Raza Mansha Mr. Manzar Mushtaq Mr. Khalid Qadeer Qureshi Mr. Zaka-ud-Din Mr. Muhammad Azam Mr. Inayat Ullah Niazi |
Chairperson Chief Executive Director Director Director Director Director |
Categories of Shareholders
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Name |
No. of Shares |
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Individuals Investment Companies Insurance Companies Joint Stock Companies Financial Institutions Modaraba Companies Foreign Investors Others |
23.53 1.41 2.65 41.34 5.29 0.20 15.57 10.01 |
Associates
A. Subsidiary
None
B. Associated Companies
(1) Mansha Brothers (Pvt) Limited, Pakistan.
(2) Nishat Chunian Limited, Pakistan.
(3) Umer Fabrics Limited, Pakistan.
(4) MCB Bank Limited, Pakistan.
(5) Fidelity Investment Bank, Pakistan.
(6) Genertech Pakistan Limited, Pakistan
(7) Fidelity Leasing, Pakistan.
(8) Nishat Finishing Mills, Pakistan.
(9) Nishat Capital Management, Pakistan.
(10) Trust Management Services, Pakistan
(11) Chunian Fibre, Pakistan.
(12) Newbery Mansha, Pakistan
(13) D.G. Khan Electric Company, Pakistan
(14) Gulf Nishat Apparel Limited. (New Company)
(15) Nishat Shuaiba Paper Products Co. Limited. (New Company)
Products
Engaged in production and sale of Ordinary Portland and
Sulphate Resistant Cement
Number of Employees
More than 800
Plant capacity and actual
production
Capacity Actual production
2007 2006 2007 2006
Clinker (M. Tons) 2,036,800 1,957,500 2,288,170 2,193,687
Annual Sales Volume (Last Two
Years)
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Years |
In Pak Rupees |
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2006 2007 |
7,955,665 6,419,625 |
Customers
Various local & International including Construction Companies, Buying Agencies, Distributors etc
Bankers
ABN AMRO Bank, Pakistan.
Allied Bank Limited, Pakistan.
Askari Bank Limited, Pakistan.
Bank Alfalah Limited, Pakistan.
Citibank N.A., Pakistan.
Habib Bank Limited, Pakistan.
MCB Bank Limited, Pakistan.
National Bank of Pakistan, Pakistan.
Standard Chartered Bank (Pakistan) Limited, Pakistan.
The Bank of Punjab, Pakistan.
United Bank Limited, Pakistan.
Exporting Countries
Mainly to Afghanistan & India
Financial Overview
Net sale revenue during the period declined by over 19% compared with last year despite the surge in sale volume. The decline in revenue is mainly ensued from decrease in cement prices in the country. On an average the net sale prices declined by over 37% from corresponding period. Main reason being that due to new capacities having come on stream there was an over supply position which put a pressure on prices. Sale revenue mentioned above includes only 4 days of commercial operations of new cement plant at Khairpur. Rising inflation is a threat to cost of production. Energy and fuel prices are steadily rising in both international and local markets. During the period under review the coal and furnace oil price increased significantly thereby put burden on the cost of production. On the other hand rate of kraft paper has shown continuous rise and on average paper bag cost witnessed an increase of 16%. Due to rising coal rates in international market and hike in inland freight due to increase in petroleum prices in the country, management decided to use gas for heating the kiln. To start with gas firing equipment for plant 2 at D.G. Khan has been procured and about 60% of the coal has been replaced with gas. This change is expected to reduce energy cost during FY 2008. After accounting for all charges including depreciation /amortization of Rs. 494.205 million, financial charges of Rs. 468.173 million and Rs. 98.0 million for provision for taxation (including deferred tax Rs. 65.0 million) etc. your company earned a net profit of Rs. 1,622.471 million.
Expansion (Cement Grinding)
Work in the new vertical cement grinding mill at D.G. Khan site is in progress. The shipments from plant supplier have begun and cement grinding mill is expected to start its operation in the last quarter of FY 2008. After the start of vertical grinding mill the excess clinker produced at D.G. Khan site would be ground and sold.
Future Outlook
Mammoth Public Sector Development Plan (PSDP) of Rs. 520bn. was announced in the Federal budget FY 2008 against Rs. 435bn. last year. This year the increase in PSDP is 20% which is less than last year’s increase of 35%, but this year the PSDP is largely infrastructural centric and about 50% of the total outlay has been fixed for construction related development projects. Work on different water reservoirs is in progress and funds have been allocated for big dams like Basha diamer. In addition, raising of Mangla Dam is also in progress which entails large quantity of cement. Going forward, Govt. has also announced construction of 250K low cost housing units for Govt. employees in the next five years. In addition, Pakistan is short of housing projects compared with regional neighboring, hence construction activities especially in housing sector are booming. We anticipate sizable cement demand in the coming years due to these factors. Cement industry of Pakistan has been demanding a cut in central excise duty (CED) which is higher compared with regional countries and one of the major reasons for higher cement prices. Govt. reduced the CED couple of years back and promised to slash CED further gradually, but no announcement was made in the budget FY 2008. On the contrary in budget FY 2008 special excise duty @ 1% has also been imposed on manufacturing activities, which will adversely affect the profitability of the sector. Timely decision of expansion undertook by Pakistani entrepreneurs put the Pakistani cement industry in a position to export sizable cement to regional countries which are short of cement. But the incentive announced in trade policy of FY 2006-07 for the construction of bulk handling and storage facilities of cement and clinker has not materialized, which is a serious impediment in smooth export activities. In addition, cement industry is also pleading to allow export of cement by land route to India which is short of cement by about 10 million tons. If the Govt. allows export of cement by land route it will be best suited to your company, as its new cement plant at Khairpur Dist. Chakwal is at a short distance from Wagha Border, Lahore. Export of cement from northern border has also started from Khairpur plant.
Memberships
Federation Pakistan Chamber of Commerce & Industry.
Foreign Exchange Rates
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Currency |
Unit |
Pakistani Rupee |
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US Dollar |
1 |
Rs. 61.05 |
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UK Pound |
1 |
Rs.121.90 |
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Euro |
1 |
Rs. 89.50 |
Comments
Mansha Group enjoys excellent credibility in Pakistan as well as in abroad. Directors of the Company are reported as qualified, experienced and resourceful businessmen. Payments are usually correct and as per commitments. The Company can be considered good for normal business dealings at usual trade terms and conditions.
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D.G. KHAN CEMENT
COMPANY LIMITED |
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BALANCE SHEET AS
AT JUNE 30, 2007 |
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Note |
2007 |
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2006 |
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EQUITY AND
LIABILITIES |
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(Rupees in
thousand) |
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CAPITAL AND
RESERVES |
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- 950,000,000 (2006: 250,000,000) ordinary
shares of Rs 10 each |
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9,500,000 |
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2,500,000 |
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- 50,000,000 (2006: 50,000,000) preference
shares of Rs 10 each |
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500,000 |
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500,000 |
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10,000,000 |
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3,000,000 |
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Issued, subscribed and paid up capital |
5 |
2,535,412 |
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1,843,937 |
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Share deposit money |
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- |
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8,351 |
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Reserves |
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6 |
29,630,084 |
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15,085,354 |
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Un-appropriated profit |
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1,757,689 |
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2,330,558 |
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33,923,185 |
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19,268,200 |
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NON-CURRENT
LIABILITIES |
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Long term finances |
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7 |
8,686,447 |
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7,372,468 |
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Liabilities against assets subject to
finance lease |
8 |
1,141 |
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28,886 |
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Long term deposits |
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9 |
79,467 |
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33,814 |
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Retirement and other benefits |
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10 |
39,862 |
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26,572 |
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Deferred taxation |
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11 |
1,624,000 |
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1,559,000 |
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10,430,917 |
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9,020,740 |
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CURRENT
LIABILITIES |
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Trade and other payables |
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12 |
1,027,274 |
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1,406,869 |
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Accrued markup |
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13 |
342,612 |
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340,757 |
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Short term borrowing - secured |
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14 |
3,942,972 |
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2,613,695 |
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Current portion of non-current liabilities |
15 |
2,042,281 |
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1,619,025 |
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Provision for taxation |
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35,090 |
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35,090 |
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7,390,229 |
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6,015,436 |
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CONTINGENCIES
AND COMMITMENTS |
16 |
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51,744,331 |
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34,304,376 |
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Note |
2007 |
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2006 |
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ASSETS |
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(Rupees in
thousand) |
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NON-CURRENT
ASSETS |
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Property, plant and equipment |
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17 |
22,117,551 |
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7,521,723 |
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Asset subject to finance lease |
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18 |
133,376 |
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295,058 |
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Capital work in progress |
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19 |
1,907,063 |
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11,759,677 |
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Investments |
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20 |
8,174,474 |
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4,482,213 |
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Long term loans, advances and deposits |
21 |
196,913 |
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335,810 |
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32,529,377 |
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24,394,481 |
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CURRENT ASSETS |
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Stores, spares and loose tools |
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22 |
1,496,291 |
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836,049 |
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Stock-in-trade |
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23 |
295,140 |
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226,286 |
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Trade debts |
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24 |
144,245 |
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74,165 |
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Investments |
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25 |
16,933,790 |
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8,543,763 |
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Advances, deposits, prepayments and other |
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receivables |
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26 |
229,315 |
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152,465 |
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Cash and bank balances |
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27 |
116,173 |
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77,167 |
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19,214,954 |
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9,909,895 |
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51,744,331 |
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34,304,376 |
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D.G. KHAN CEMENT COMPANY LIMITED |
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PROFIT & LOSS ACCOUNT |
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FOR THE YEAR ENDED JUNE 30, 2007 |
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2007 |
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2006 |
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(Rupees in
thousand) |
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Sales - net |
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6,419,625 |
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7,955,665 |
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Cost of sales |
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4,387,640 |
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3,992,822 |
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Gross profit |
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2,031,985 |
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3,962,843 |
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Administrative expenses |
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104,169 |
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121,953 |
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Selling and distribution expenses |
65,122 |
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34,352 |
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Other operating expenses |
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139,307 |
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191,850 |
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1,723,387 |
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3,614,688 |
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Other operating income |
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479,420 |
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294,114 |
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Profit from operations |
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2,202,807 |
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3,908,802 |
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Finance cost |
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468,173 |
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450,696 |
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Share of loss of associated companies |
14,163 |
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9,573 |
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Profit before tax |
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1,720,471 |
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3,448,533 |
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Taxation |
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98,000 |
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1,030,078 |
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Profit for the year |
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1,622,471 |
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2,418,455 |
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Basic earnings per share - Rupees |
6.43 |
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10.37 |
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Diluted earnings per share - Rupees |
6.43 |
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9.14 |
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RATING
EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit consideration.
Capability to overcome financial difficulties seems comparatively below
average. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)