Financial Position Of Nishat Mills Limited

CHAPTER: 01

INTRODUCTION AND HISTORY OF THE COMPANY

THIS CHAPTER COVERS

1. Mission Statement Of the Company 2. Vision Statement Of the Company 3. Company Information

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Mission Statement

To provide quality products to customers and explore new markets to promote/expand sales of the Company through good governance and foster a sound and dynamic team, so as to achieve optimum prices of products of the Company for sustainable and equitable growth and prosperity of the Company.

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.

Vision Statement

To transform the Company into a modern and dynamic yarn, cloth and processed cloth and finished product manufacturing Company with highly professionals and fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan. To transform the Company into a modern and dynamic power generating Company with highly professionals and fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan.

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COMPANY INFORMATION BOARD OF DIRECTORS:  Mian Umer Mansha Chairman/Chief Executive  Mian Hassan Mansha  Mr. Muhammad Nawaz Tishna (NIT)  Mr. Khalid Qadeer Qureshi  Mr. Muhammad Azam  Rana Muhammad Mushtaq  Ms. Nabiha Shahnawaz Cheema AUDIT COMMITTEE:  Mr. Khalid Qadeer Qureshi Chairman/Member  Mr. Muhammad Azam Member  Ms. Nabiha Shahnawaz Cheema Member CHIEF FINANCIAL OFFICER:  Mr. Badar-ul-Hassan COMPANY SECRETARY:  Mr. Khalid Mahmood Chohan AUDITORS:  Riaz Ahmad & Company Chartered Accountants LEGAL ADVISOR:  Mr. M. Aurangzeb Khan, Advocate,  Chamber No. 6, District Court, Faisalabad. MILLS:  Nishatabad, Faisalabad (Spinning units and Power Plant)  12 K.M. Faisalabad Road, (Weaving units & Power Plant)  Sheikhupura. 21 K.M. Ferozepur Road, Lahore. (Stitching unit)

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 5 K.M. Nishat Avenue (Weaving, Dyeing & Finishing unit,  Off 22 K.M. Ferozepur Road, Lahore. Processing unit, Stitching unit and Power Plant)  20 K.M. Sheikhupura Faisalabad (Spinning unit) Road, Feroze Watwan REGISTERED OFFICE  Nishat House, SHARES DEPARTMENT  53 - A, Lawrence Road, Lahore.  Tel: 042-6367812-16, 042-111 113 333  Fax: 042-6367414 HEAD OFFICE:  7, Main Gulberg, Lahore.  Tel: 042-5716351-9, 042-111 332 200  Fax: 042-5716349-50  E-mail: [email protected]  Website: www.nishatmillsltd.com LIAISON OFFICE:  Ist Floor, Karachi Chambers,  Hasrat Mohani Road, Karachi.  Tel: 021-2414721-23  Fax: 021-2412936 BANKS:  JS Bank Limited  KASB Bank Limited  Meezan Bank Limited

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 National Bank of Pakistan  NIB Bank Limited  Standard Chartered Bank  (Pakistan) Limited  The Hong Kong & Shangai  Banking Corporation Limited  The Royal Bank of Scotland  United Bank Limited  BANKERS TO THE COMPANY: Albaraka Islamic Bank B.S.C  Allied Bank Limited  Askari Bank Limited  Bank Alfalah Limited  Bank Islami Pakistan Limited  Citibank N.A.  Crescent Commercial Bank Limited  Deutsche Bank  Faysal Bank Limited  Habib Bank Limited  Habib Metropolitan Bank Limited

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FINANCIAL ANALYSIS OF THE COMPANY THIS CHAPTER COVERS: -

1. RATIO ANALYSIS 2. ADVANTAGES OF RATIO ANALYSIS 3. LIMITATION OF RATIO ANALYSIS 4. TYPES OF RATIO ANALYSIS I.

LIQUIDITY RATIO

II.

TURNOVER RATIO

III.

PROFITABILITY RATIO

IV.

LEVERAGE RATIO

5. HORIZONTAL ANALYSIS OF PROFIT & LOSS ACCOUNT 6. HORIZONTAL ANALYSIS OF BALANCE SHEET 7. VERTICAL ANALYSIS OF PROFIT & LOSS ACCOUNT 8. VERTICAL ANALYSIS OF BALANCE SHEET

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RATIO ANALYSIS The term "accounting ratios" is used to describe significant relationship between figures shown on a balance sheet, in a profit and loss account, in a budgetary control system or in any other part of accounting organization. Accounting ratios thus shows the relationship between accounting data. Ratio analysis is very important while measuring the performance of the business. These ratios are carried out from the Income statement and balance sheet. Many parties including management, investors and Government are interested in these ratios. The purpose of analysis is to measure the performance of the company and financial health of the organization.

Advantages of Ratios Analysis Ratio analysis is an important and age-old technique of financial analysis. The following are some of the advantages of ratio analysis: Simplifies financial statements: It simplifies the comprehension of financial statements. Ratios tell the whole story of changes in the financial condition of the business Facilitates inter-firm comparison: It provides data for inter-firm comparison. Ratios highlight the factors associated with successful and unsuccessful firm. They also reveal strong firms and weak firms, overvalued and undervalued firms. Helps in planning: It helps in planning and forecasting. Ratios can assist management, in its basic functions of forecasting for Planning, co-ordination, control and communications.

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Makes inter-firm comparison possible: Ratios analysis also makes possible comparison of the performance of different divisions of the firm. The ratios are helpful in deciding about their efficiency or otherwise in the past and likely performance in the future. Help in investment decisions: It helps in investment decisions in the case of investors and lending decisions in the case of bankers etc.

Limitations of Ratios Analysis The ratios analysis is one of the most powerful tools of financial management. Though ratios are simple to calculate and easy to understand, they suffer from serious limitations. Limitations of financial statements: Ratios are based only on the information which has been recorded in the financial statements. Financial statements themselves are subject to several limitations. Thus ratios derived, there from, are also subject to those limitations. For example; non-financial changes though important for the business are not relevant by the financial statements. Financial statements are affected to a very great extent by accounting conventions and concepts. Personal judgment plays a great part in determining the figures for financial statements. Comparative study required: Ratios are useful in judging the efficiency of the business only when they are compared with past results of the business. However, such a comparison only provide glimpse of the past performance and forecasts for future may not prove correct since several other factors like market conditions, management policies, etc. may affect the future operations. Ratios alone are not adequate. Ratios are only indicators, they cannot be taken as final regarding good or bad financial position of the business. Other things have also to be seen. Problems of price level changes: A change in price level can affect the validity of ratios are calculated for different time periods. In such a case the ratio analysis may not

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clearly indicate the trend in solvency and profitability of the company. The financial statements, therefore, be adjusted keeping in view the price level changes if a meaningful comparison is to be made through accounting ratios. Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There are no well accepted standards or rule of thumb for all ratios which can be accepted as norm. It renders interpretation of the ratios difficult. Limited use of single ratios: A single ratio, usually, does not convey much of a sense. To make a better interpretation, a number of ratios have to be calculated which is likely to confuse the analyst than help him in making any good decision. Personal bias: Ratios are only means of financial analysis and not an end in itself. Ratios have to interpret and different people may interpret the same ratio in different way. Incomparable: Not only industries differ in their nature, but also the firms of the similar business widely differ in their size and accounting procedures etc. It makes comparison of ratios difficult and misleading.

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Ratio Analysis Ratio analysis involves the methods of calculating and interpreting financial ratios to access the firm’s performance and status. The basic inputs to ratio analysis and firm’s income statement and balance sheet for the periods to be examined.

TYPES OF RATIO ANALYSIS Two types of Ratio Analysis are generally carried out,

1.Cross Sectional Approach, in this approach, the effectiveness of business is compared with the competitors business of the same period.

2.Most companies use the Time Series Analysis in which the performance of company over a period is measured. Ratio Analysis categories:

A) Liquidity B) Turnover C) Profitability D) Leverage

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LIQUIDITY RATIOS: Liquidity ratios are the ratios for testing short term solvency or financial position of a business. These are designed to test the ability of the business to meet its short term obligation promptly. A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher the value of the ratio, the larger the margin of safety that the company possesses to cover short-term debts

Current Ratio: Current ratio may be defined as the relationship between current assets and current liabilities. This ratio is also known as "working capital ratio". It is a measure of general liquidity and is most widely used to make the analysis for short term financial position or liquidity of a firm. It is calculated by dividing the total of the current assets by total of the current liabilities.

Components: The two basic components of this ratio are current assets and current liabilities. Current assets include cash and those assets which can be easily converted into cash within a short period of time, generally, one year, such as marketable securities or readily realizable investments, bills receivables, sundry debtors, (excluding bad debts or provisions), inventories, work in progress, etc. Prepaid paid expenses should also be included in current assets because they represent payments made in advance which will not have to be paid in near future. Current liabilities are those obligations which are payable within a short period of tie generally one year and include outstanding expenses, bills payable, sundry creditors, bank overdraft, accrued expenses, short term advances, income tax payable, dividend payable, etc. However, some times a controversy arises that whether overdraft should be regarded as current liability or not. Often an arrangement with a bank may be regarded as permanent and therefore, it may be treated as long term liability. At the same time the fact remains that the overdraft facility may be cancelled at any time. Accordingly, because of this reason and the need for conversion in interpreting a situation, it seems advisable to include overdrafts in current liabilities.

Limitations of Current Ratio: This ratio is measure of liquidity and should be used very carefully because it suffers from many limitations. It is, therefore, suggested that it should not be used as the sole index of short term solvency

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1. It is crude ratio because it measure only the quantity and not the quality of the current assets. 2. Even if the ratio is favorable, the firm may be in financial trouble, because of more stock and work in process which is not easily convertible into cash, and, therefore firm may have less cash to pay off current liabilities. 3. Valuation of current assets and window dressing is another problem. This ratio can be very easily manipulated by overvaluing the current assets. An equal increase in both current assets and current liabilities would decrease the ratio and similarly equal decrease in current assets and current liabilities would increase current ratio. Significance This ratio is a general and quick measure of liquidity of a firm. It represents the margin of safety or cushion available to the creditors. It is an index of the firm’s financial stability. It is also an index of technical solvency and an index of the strength of working capital. A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. An increase in the current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio represents that there has been a deterioration in the liquidity position of the firm. A ratio equal to or near 2 : 1 is considered as a standard or normal or satisfactory. The idea of having double the current assets as compared to current liabilities is to provide for the delays and losses in the realization of current assets. However, the rule of 2 :1 should not be blindly used while making interpretation of the ratio. Firms having less than 2 : 1 ratio may be having a better liquidity than even firms having more than 2 : 1 ratio. This is because of the reason that current ratio measures the quantity of the current assets and not the quality of the current assets. If a firm's current assets include debtors which are not recoverable or stocks which are slow-moving or obsolete, the current ratio may be high but it does not represent a good liquidity position. current ratio year Nishat Azgard 9 Sapphire

current assets/current liabilities 2008 2007 2006 2005 1.3 1. 1.19 1.74 8 24 1.1 1. 1.08 1.51 4 09 1.2 1. 1.28 1.66 1 21

2004 0.37 1.25 1.31

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Comments: Current Ratio clears the extent to which the claim of short term creditors can be met by assets that are to become cash within a year. The best standard ratio is 2:1 so, the Azgard Nine has current ratio below standard. There is a mixed trend from 2004 to 2008. Current Ratio of Sapphire is also like Azgard Nine and Nishat. Current ratio shows that how many times current assets are available to meet its current liabilities. Azgard Nine current ratio shows mixed trend and it has grater than 1:1 but only in 2007 it is higher than other years. Sapphire also shows mixed trend in current ratio. Nishat current ratio shows increasing trend in 2004, 2005 and in 2006 and in 2007 but decreases 2008 which shows that it has less current assets or current liabilities increases.

Liquidity or Acid Test or Quick Ratio: Liquid ratio is also termed as "Liquidity Ratio”,” Acid Test Ratio" or "Quick Ratio". It is the ratio of liquid assets to current liabilities. The true liquidity refers to the ability of a firm to pay its short term obligations as and when they become due

Components: The two components of liquid ratio (acid test ratio or quick ratio) are liquid assets and liquid liabilities. Liquid assets normally include cash, bank, sundry debtors, bills receivable and marketable securities or temporary investments. In other words they are current assets minus inventories (stock) and prepaid expenses. Inventories cannot be termed as liquid assets because it cannot be converted into cash immediately without a

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loss of value. In the same manner, prepaid expenses are also excluded from the list of liquid assets because they are not expected to be converted into cash. Similarly, Liquid liabilities means current liabilities i.e., sundry creditors, bills payable, outstanding expenses, short term advances, income tax payable, dividends payable, and bank overdraft (only if payable on demand). Some time bank overdraft is not included in current liabilities, on the argument that bank overdraft is generally permanent way of financing and is not subject to be called on demand. In such cases overdraft will be excluded from current liabilities

Significance: The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It measures the firm's capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio. It is used as a complementary ratio to the current ratio. Liquid ratio is more rigorous test of liquidity than the current ratio because it eliminates inventories and prepaid expenses as a part of current assets. Usually a high liquid ratios an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm's liquidity position is not good. As a convention, generally, a quick ratio of "one to one" (1:1) is considered to be satisfactory. Although liquidity ratio is more rigorous test of liquidity than the current ratio , yet it should be used cautiously and 1:1 standard should not be used blindly. A liquid ratio of 1:1 does not necessarily mean satisfactory liquidity position of the firm if all the debtors cannot be realized and cash is needed immediately to meet the current obligations. In the same manner, a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid. Hence, a firm having a high liquidity ratio may not have a satisfactory liquidity position if it has slow-paying debtors. On the other hand, A firm having a low liquid ratio may have a good liquidity position if it has a fast moving inventories. Though this ratio is definitely an improvement over current ratio, the interpretation of this ratio also suffers from the same limitations as of current ratio

quick ratio year Nishat Azgard 9 Sapphire

(current assets-stock)/current liabilities 2008 2007 2006 2005 0.9 0.84 1.33 0.78 6 0.8 0.69 1.15 0.64 8 0.7 0.72 1.17 0.59 3

2004 0.3 7 0.7 1 0.7 6

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Comments: The acid test ratio is also below standard due to heavy short term borrowings. Azgard Nine acid test ratio decreased in year 2005 and in 2008. The quick ratio of Sapphire shows that there is no sufficient liquid asset is available to discharge and settle its current obligation except in year 2007. The rise in current liabilities is due to the expansion of project and short and long term financing. Azgard Nine liquidity is less than standard except in year 2007. Sapphire and Nishat liquidity is not on considerable point. Azgard Nine liquid ratio is more than Sapphire and Nishat which shows that it has more liquidity. Nishat liquidity position is not considerable because it is near to 1 in year 2006 and 2007 which shows that it has liquid assets to meet its current liabilities. Azgard Nine position is not at considerable point. It shows decreasing trend in 2005 and in 2008 and less than 1:1. But it has increasing position in 2004, 2006 and in 2007.

Turnover/ Activity ratios: Activity ratios are measures of how well assets are used. Activity ratios -- which are, for the most part, turnover ratios -- can be used to evaluate the benefits produced by specific assets, such as inventory or accounts receivable. Or they can be use to evaluate the benefits produced by all a company's assets collectively. These measures help us gauge how effectively the company is at putting its investment to work. A company will invest in assets – e.g., inventory or plant and equipment – and then use these assets to generate revenues. The greater the turnover, the more effectively the company is at producing a benefit from its investment in assets

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Inventory days. The number of day’s inventory is also known as average inventory period and inventory holding period. A high number of days inventory indicates that their is a lack of demand for the product being sold. A low days inventory ratio (inventory holding period) may indicate that the company is not keeping enough stock on hand to meet demands. The number of days inventory and inventory turnover ratios are included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio. Inventory Days Inventory Days = Inventory / Cost of Sales*365 year 2008 2007 2006 2005 2004 80.0 114.4 Nishat 91.90 79.10 0 6 199.3 225.7 208.5 Azgard 9 221.08 177.42 4 6 7 96.7 143.4 64.3 Sapphire 138.85 89.36 4 6 2

Comments: Azgard Nine inventory days increased in 2005 as compare to 2004 and decreased in 2006 and in 2007 and show increasing in 2008 which shows that management is not efficient for managing inventory period. The above diagram shows that in 2004 and 2005 Sapphire has high inventory days required converting stock in sale which shows that Sapphire management is not efficient but it decreases with the passage of times and increase in year 2008 and Nishat trend is equal to Sapphire. They were show increase in 2005 and low in 2006 and in 2007 and it increases in 2008.

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Debtors Turnover Ratio or Receivables Turnover Ratio: Debtor’s turnover ratio indicates the velocity of debt collection of a firm. In simple words it indicates the number of times average debtors (receivable) are turned over during a year.

Significance of the Ratio:

This ratio indicates the number of times the debtors are turned over a year. The higher the value of debtor’s turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It is the reliable measure of the time of cash flow from credit sales. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm. Debtor's day Trade debtors/Credit sales*365 year 2008 2007 2006 2005 25. 22.8 28.1 Nishat 17.67 18 3 5 64. 84.7 83.6 Azgard 9 91.26 14 2 8 42. 54.1 66.7 Sapphire 51.08 30 3 5

2004 56.2 9 109.3 1 56.2 9

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Comments: Graph shows that Azgard Nine has not a good debtor management to receive the debt or collect the receivables and shows positive trend and debtor’s collection period is grater than creditor’s period. Sapphire position is also considerable but Nishat management has more efficient to collect their receivables whish shows efficient debtor management and in 2004 it is at highest point which indicates unfavorable situation regarding to debtor collection period.

Creditors / Accounts Payable Turnover Ratio This ratio is similar to the debtor’s turnover ratio. It compares creditors with the total credit purchases. It signifies the credit period enjoyed by the firm in paying creditors. Accounts payable include both sundry creditors and bills payable. Same as debtor’s turnover ratio, creditor’s turnover ratio can be calculated in two forms, creditors’ turnover ratio and average payment period.

Significance of the Ratio: The average payment period ratio represents the number of days by the firm to pay its creditors. A high creditor’s turnover ratio or a lower credit period ratio signifies that the creditors are being paid promptly. This situation enhances the credit worthiness of the company. However a very favorable ratio to this effect also shows that the business is not taking the full advantage of credit facilities allowed by the creditors.

Creditors days Trade Creditors/Credit Sales*365 year 2008 2007 2006 2005 21. 21.3 26.0 Nishat 19.69 62 5 6 48. 92.8 65.3 Azgard 9 56.77 74 3 4 18. 30.5 39.3 Sapphire 14.83 38 8 3

2004 45.3 3 80.0 3 24.7 5

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Comments Azgard Nine creditor’s days increase in 2004 to 2006 and decrease in 2005 to 2007 and in 2007 and 2008. Azgard Nine credit management is better than Nishat and Sapphire it has 93 days for payment which shows it efficiency in 2006. If we compare creditor’s days to debtors day than we can see that Azgard Nine and Nishat is going better to manage its resources

Total Assets Turnover Ratio. The total assets turnover ratio measures the use of all assets in terms of sales, by comparing sales with net total assets. This interactive tutorial walks you through the calculations as well as where on the financial statements to find the numbers.

Formula year Nishat Azgard 9 Sapphire

Sales/ Total Assets 2008 0.5 1 0.3 7 0.7 9

2007 0.4 3 0.2 8 0.8 2

2006 0.5 3

2005 0.5 2

0.2 1

0 0.4

2 0.8

6

2004 1.4 0.5 0

0.7 3

1.2 9

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Comments: In the above graph we can see that total asset turnover ratio of Azgard Nine Company showing mix trend in the year 2004 to year 2008. Total asset turnover ratio is at highest level in year 2004 and as it compare it with Nishat and Sapphire it is not good even in the last two year 2007, 2008 so we can say it is not using its assets for generating the revenue in a better way than Sapphire and Nisaht cement in 2004 to 2008 and 2004 Sapphire total asset turnover ratio at top so they use much of it for generating revenue. But Azgard Nine overall situation regarding to total asset turnover ratio is bad than other two competitor.

Fixed Assets Turnover Ratio: Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets Formula year Nishat Azgard 9 Sapphire

Cost of sales / Fixed Assets 2008 2007 2006 1.5 1.2 1.35 3 9 0.8 0.4 0.60 6 9 2.1 1.9 2.10 9 4

2005 1.0 1

2004 2.9 2

1.0 6

0.8 6

1.5 2

2.9 2

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Comments: It shows the utilization of fixed assets, Azgard Nine decreasing the utilization of its fixed assets but it has lower times than Sapphire which has more utilization of fixed assets and at highest level in 2004. Nishat shows the decreasing trend in year 2005 and after it increasing trend still 2008. Nishat has less utilization than Sapphire and high utilization then Azgard Nine.

Profitability Ratios: Profitability ratios (also referred to as profit margin ratios) compare components of income with sales. They give us an idea of what makes up a company's income and are usually expressed as a portion of each dollar of sales. The profit margin ratios we discuss here differ only by the numerator. It's in the numerator that we reflect and thus evaluate performance for different aspects of the business: The gross profit margin is the ratio of gross income or profit to sales. This ratio indicates how much of every dollar of sales is left after costs of goods sold.

Gross Profit (GP) Ratio: Gross profit ratio (GP ratio) is the ratio of gross profit to net sales expressed as a percentage. It expresses the relationship between gross profit and sales.

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Components: The basic components of the calculation of gross profit ratio are gross profit and net sales. Net sales mean those sales minus sales returns. Gross profit would be the difference between net sales and cost of goods sold. Cost of goods sold in the case of a trading concern would be equal to opening stock plus purchases, minus closing stock plus all direct expenses relating to purchases. In the case of manufacturing concern, it would be equal to the sum of the cost of raw materials, wages, direct expenses and all manufacturing expenses. In other words, generally the expenses charged to profit and loss account or operating expenses are excluded from the calculation of cost of goods sold.

Significance Gross profit ratio may be indicated to what extent the selling prices of goods per unit may be reduced without incurring losses on operations. It reflects efficiency with which a firm produces its products. As the gross profit is found by deducting cost of goods sold from net sales, higher the gross profit better it is. There is no standard GP ratio for evaluation. It may vary from business to business. However, the gross profit earned should be sufficient to recover all operating expenses and to build up reserves after paying all fixed interest charges and dividends. Formula year Nishat Azgard 9 Sapphire

Gross profit/Sales*100 2008 2007 15.4 16.56 1 34.1 30.28 5 11.5 13.02 7

2006 16.5 4

2005 18.7 7

24.2 6

6 25.6

3 9.6

0

2004 4.9 22.6 6

11.3 2

4.9 6

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Comments: Gross profit of Azgard Nine company increasing in 2004 to 2005 and also in year 2007 and 2008 but decrease in 2006, Due to inflation and economic instability in Pakistan and irregular power supply of WAPDA in 2007 and 2008. Gross Profit ratio of three competitors show increasing trend in 2004 to 2005 due to good economic and financial situation of world and good market situation in Pakistan. Sapphire position is more considerable up to 2005 but shows decreasing trend in 2006, 2007 and 2008, and Nishat situation for increase year 2007 but it decrease in all other years.

Operating Profit Ratio: Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is generally expressed in percentage. It measures the cost of operations per dollar of sales. This is closely related to the ratio of operating profit to net sales. Components: The two basic components for the calculation of operating ratio are operating cost (cost of goods sold plus operating expenses) and net sales. Operating expenses normally include (a) administrative and office expenses and (b) selling and distribution expenses. Financial charges such as interest, provision for taxation etc. are generally excluded from operating expenses.

Significance: Operating ratio shows the operational efficiency of the business. Lower operating ratio shows higher operating profit and vice versa. An operating ratio ranging between 75% and 80% is generally considered as standard for manufacturing concerns. This ratio is considered to be a yardstick of operating efficiency but it should be used cautiously because it may be affected by a number of uncontrollable factors beyond the control of the firm. Moreover, in some firms, non-operating expenses from a substantial part of the total expenses and in such cases operating ratio may give misleading results Formula

year Nishat Azgard 9 Sapphire

Operating Profit Margin = Operating profit /Sale*100 2008 2007 2006 2005 2004 12.1 17.5 7.5 37.91 12.66 0 8 6 16.2 18.3 16.7 28.18 23.72 6 8 9 8.6 10.4 5.3 14.42 8.60 8 3 5

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Comments:

Azgard Nine company operating profit increasing in 2004 to 2005 and 2007 to 2008 and decreasing in 2006. Operating profit of all three organization show increasing trend in 2004, 2005 and 2007 to 2008 but decreases in 2006 due to increase in operating expenses.

Net Profit/ (Loss) after Tax: Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage

Significance: NP ratio is used to measure the overall profitability and hence it is very useful to proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall not be able to achieve a satisfactory return on its investment.

This ratio also indicates the firm's capacity to face adverse economic conditions such as price competition, low demand, etc. Obviously, higher the ratio the better is the profitability. But while interpreting the ratio it should be kept in mind that the performance of profits also be seen in relation to investments or capital of the firm and not only in relation to sales.

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Formula year Nishat Azgard 9 Sapphire

Net profit before tax/Sales*100 2008 2007 2006 33.2 10.7 7.89 0 1 9.8 25.7 17.37 8 7 6.8 3.3 3.49 8 1

2005 17.8 8

2004 9.4 5

17.9 1

12.5 2

7.1 5

3.4 5

Comments: The Net Profit margin tells us the ability of a company to generate the earning after meeting all costs of business. There is an increase in net profit in 2006 as compare to 2004 to 2006. In year 2008 company suffered a minimum net profit. The ratio has decreased as compare to previous year due to increase in cost and expansion of project and finance cost. Sapphire shows the increasing trend in 2005 and in year 2007 to 2008 it decrease in year 2006. Nishat top net profit is in year 2008.

Return on Assets: Where asset turnover tells an investor the total sales for each $1 of assets, return on assets [or ROA for short] tells an investor how much profit a company generated for each $1 in assets. The return on assets figure is also a sure-fire way to gauge the asset intensity of a business. Companies such as telecommunication providers, car manufacturers, and

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railroads are very asset-intensive, meaning they require big, expensive machinery or equipment to generate a profit. Advertising agencies and software companies, on the other hand, are generally very asset-light (in the case of a software companies, once a program has been developed, employees simply copy it to a five-cent disk, throw an instruction manual in the box, and mail it out to stores).

Formula year Nishat Azgard 9 Sapphire

Net Income / Total Assets*100 2008 2007 2006 5. 16.19 3.06 24 4. 3.28 4.57 94 1. 5.01 1.94 46

2005 8.5 2

2004 14.8 1

7.0 3

5.9 6

3.9 5

2.9 7

Comments:

This ratio measures the return of total investment of the business. Azgard Nine company show mix trend and in 2005 it is at maximum point than others. Decreasing trend from year 2006 to year 2008. Nishat company return on asset is much better than Azgard Nine and Sapphire. it decreases in 2005 to 2007 and than increase in 2008, it is at highest point in 2008, Sapphire also increase in 2004 to 2005 and than it little decrease in 2006 and at goes down in 2007 and becomes increase in 2008.

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Return on Capital Employed (ROCE) Ratio: Capital employed and operating profits are the main items. Capital employed may be defined in a number of ways. However, two widely accepted definitions are "gross capital employed" and "net capital employed". Gross capital employed usually means the total assets, fixed as well as current, used in business, while net capital employed refers to total assets minus liabilities. On the other hand, it refers to total of capital, capital reserves, revenue reserves (including profit and loss account balance), debentures and long term loans.

Formula year Nishat Azgard 9 Sapphire

Profit before interest and taxation / Capital Employed *100 2008 2007 2006 2005 2004 7. 12.9 (30.48 24.42 4.25 29 8 ) 8. 13.0 5.87 6.60 10.73 27 0 5. 8.8 10.41 4.46 7.25 07 5

Comments:

Azgard Nine return on capital employed is high 2004 and it increase in 2005 but it has decreased in 2006 to 2008. Sapphire return on capital employed increase in 2004 to 2005 and decreases in 2006 and in 2007 and then it go for increase in 2008. Nishat has less return on capital employed is less than its competitors from 2004 to 2007. And at begging Nishat is going to negative its return of capital employed. In 2008 due to

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economic crises Sapphire and Azgard Nine return on equity becomes higher then its competitors.

RETURN ON EQUITY CAPITAL (ROE) RATIO:

In real sense, ordinarily shareholders are the real owners of the company. They assume the highest risk in the company. (Preference share holders have a preference over ordinary shareholders in the payment of dividend as well as capital. Preference share holders get a fixed rate of dividend irrespective of the quantum of profits of the company). The rate of dividends varies with the availability of profits in case of ordinary shares only. Thus ordinary shareholders are more interested in the profitability of a company and the performance of a company should be judged on the basis of return on equity capital of the company. Return on equity capital which is the relationship between profits of a company and its equity, can be calculated as follows. Equity share capital should be the total called-up value of equity shares. As the profit used for the calculations are the final profits available to equity shareholders as dividend, therefore the preference dividend and taxes are deducted in order to arrive at such profits.

Significance:

This ratio is more meaningful to the equity shareholders who are interested to know profits earned by the company and those profits which can be made available to pay dividends to them. Interpretation of the ratio is similar to the interpretation of return on shareholder's investments and higher the ratio better is.

Formula year Nishat Azgard 9 Sapphire

[(Net profit after tax − Preference dividend) / Equity share capital] × 100 2008 2007 2006 2005 2004 7.7 14.5 2.6 24.41 4.02 3 8 2 12.4 23.9 14.9 8.86 11.11 8 7 5 3.4 10.3 7.4 11.08 3.59 5 2 0

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Comments:

In 2005 Azgard Nine cement company return on equity ratio is at highest point and better, in 2006 to 2008 it decreases. Sapphire Company also shows mixed trend. It is going higher in 2005 and than decrease in 2006 to 2007 and it becomes higher in 2008. Nishat company return on equity ratio has mix trend. In 2004 it is at lower side and than it increase in 2005 and it decrease in 2006 and it goes down and become more down in 2007 and go to highest point in 2008. It is the highest point then competitors.

LEVERAGES RATIOS: A company can finance its assets either with equity or debt. Financing through debt involves risk because debt legally obligates the company to pay interest and to repay the principal as promised. Equity financing does not obligate the company to pay anything -dividends are paid at the discretion of the board of directors. There is always some risk, which we refer to as business risk, inherent in any operating segment of a business. But how a company chooses to finance its operations -- the particular mix of debt and equity -- may add financial risk on top of business risk Financial risk is the extent that debt financing is used relative to equity. Financial leverage ratios are used to assess how much financial risk the company has taken on. There are two types of financial leverage ratios: component percentages and coverage ratios. Component percentages compare a company's debt with either its total capital (debt plus equity) or its equity capital. Coverage ratios reflect a company's ability to satisfy fixed obligations, such as interest, principal repayment, or lease payments.

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DEBT TO EQUITY RATIO: Debt-to-Equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. It is also known as external internal equity ratio. It is determined to ascertain soundness of the long term financial policies of the company.

Formula year Nishat Azgard 9 Sapphire

Total Long Term Debts / Shareholders Funds 2008 2007 2006 2005 0.0 0.1 0.2 0.06 4 4 2 0.9 0.7 1.2 1.02 1 9 7 0.0 0.2 0.4 0.13 9 5 7

2004 0.0 6 0.4 1 0.4 4

Comments: Nishat shows increasing trend from 2004 to 2005 which shows that they increasing there debts for expansion of project and their short and long term debts increased and decrese trand 2005 to 2008.Azgard Nine debt to equity ratio is lowest point in 2004 and after that it has decrease its situation in next coming years and increases the ratio. It shows that Azgard nine position in debt to equity is better then its competitors.

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DEBT SERVICE RATIO OR INTEREST COVERAGE RATIO:

Interest coverage ratio is also known as debt service ratio or debt service coverage ratio. This ratio relates the fixed interest charges to the income earned by the business. It indicates whether the business has earned sufficient profits to pay periodically the interest charges.

Significance of debt service ratio: The interest coverage ratio is very important from the lender's point of view. It indicates the number of times interest is covered by the profits available to pay interest charges. Formula year Nishat Azgard 9 Sapphire

Net Profit Before Interest and Tax / Fixed Interest Charges 2008 2007 2006 2005 2004 2.3 4.9 5.5 7.05 1.66 3 9 4 1.9 2.4 2.7 0.40 1.08 2 3 3 0.3 1.6 1.3 0.84 0.46 1 5 5

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Comments: Interest Cover Ratio shows that how many times interest is earned by the company. Azgard Nine company shows decreasing trend from 2004 to 2008 which indicates negative sign for the company and it has unavailability the funds to pay interest expense. Sapphire company is in equal position to Azgard Nine, In 2006 and 2007 Interest cover ration of all the company is not very healthy and it shows that the financial costs are very high and earnings are very low. Management must look into the matter and should improve this ratio. In year 2008 Nishat company earned 7.05 times interest which is higher among all year and easy to pay the interest expense.

INVESTMENTS / SHARE HOLDER RATIOS: Relationship of gains from investments (including realized capital gains) resulting from insurance operations to earned premiums.

EARNINGS PER SHARE (EPS) RATIO: Earnings per share ratio (EPS Ratio) are a small variation of return on equity capital ratio and are calculated by dividing the net profit after taxes less preference dividend by the total number of equity shares. Significance: The earnings per share is a good measure of profitability and when compared with EPS of similar companies, it gives a view of the comparative earnings or earnings power of the firm. EPS ratio calculated for a number of years indicates whether or not the earning power of the company has increased.

Formula year Nishat Azgard 9 Sapphire

Profit after tax/No. of shares 2008 2007 2006 38.4 10.2 7.58 2 2 2.6 4.9 3.26 5 7 30.7 6.7 10.77 6 0

2005 12.8 6

2004 5.1 7

7.4 2

4.3 1

14.3 7

8.5 8

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Comments: The earning per share of three companies shown mixed trend in above diagram, earning per share of Azgard Nine company increase in 2005 as compare it to 2004 and it is at highest point in this year and than it decrease in 2006, and it goes more down in 2007 and 2008 which mean there is no earning and it going down. Sapphire and Nishat has also same trends but Nishat has better earning per share ratio as compare it to Sapphire and Azgard Nine. It is at highest point in 2008. The earning per share has increased as compared to the previous year. These companies should better mange its financial position and improve its performance to get out this fall in earning per share.

EARNINGS YIELD. The earnings per share for the most recent 12-month period divided by the current market price per share. The earnings yield (which is the inverse of the P/E ratio) shows the percentage of each dollar invested in the stock that was earned by the company. Formula year Nishat Azgard 9 Sapphire

Earning Per Share / Market Price Per Share * 100 2008 2007 2006 2005 9.7 16.9 44.69 5.87 5 2 22.5 23.1 4.30 6.26 4 9 9.5 15.9 42.46 11.64 7 7

2004 9.7 9 19.1 6 12.2 6

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Comments: Earning Yield of Azgard Nine, Nishat and Sapphire was at lowest point in 2007 due to economic crises. But it has very good condition in 2004 to 2006.Azgard Nine is at lowest point in 2008 due to economic and financial crises and purchase a project of fertilizers. Return on investment of Sapphire and Nishat were very high in 2008.of all these competitors but Sapphire shows a good trend but Azgard nine is less than Sapphire and Nishat. Market Value of Share year 2008 2007 85. 129.2 Nishat 97 0 61. 52.1 Azgard 9 56 0 72. 92.5 Sapphire 45 0

2006 104.8 0 22.0 5 70.0 0

2005 76.0 0

2004 52.8 0

32.0 0

22.5 0

90.0 0

70.0 0

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Comments: Graph shows that market value of share of Nishat company is high in 2006 to 2007 as compare to Azgard nine and Sapphire. In 2007 it is at highest point, market value of Azgard Nine and Sapphire show mixed trend and Azgard Nine market value of share at high point in 2008 and Sapphire high market value in 2007.

PRICE EARNING RATIO (P/E RATIO): Price earning ratio (P/E ratio) is the ratio between market price per equity share and earning per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company. Significance of Price Earning Ratio: Price earnings ratio helps the investor in deciding whether to buy or not to buy the shares of a particular company at a particular market price Generally, higher the price earning ratio the better it is. If the P/E ratio falls, the management should look into the causes that have resulted into the fall of this ratio. Formula year Nishat Azgard 9 Sapphire

Market price per equity share / Earnings per share 2008 2007 2006 2005 10.2 5. 2.24 17.04 5 91 4.4 4. 23.23 15.98 4 31 10.4 6. 2.36 8.59 5 26

2004 10.2 1 5.2 2 8.1 6

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Comments: Price earning ratio of Azgard Nine decreasing from 2004 to 2006 which is not beneficial for the company also unfavorable for the investor and encourage the investors to invest but increase in 2007 and 2008 and at very good position in 2007 and then become better in 2008, Sapphire and Nishat shows mixed trend, Sapphire company maximum price earning ratio in 2006 and lowest in 2008 and Nishat price earning ratio never goes negative and it is at high point in 2007 which encourage the investor, it shows that there is increase in market value of share and decrease in value of earning per share.

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HORIZONTAL AND VERTICAL ANALYSIS

HORIZONTAL ANALYSIS "In the base statement of previous year every item is given 100% and is subsequent years these are changed to the related percentages as per base years.” Importance Comparative statement can be prepared for several years in a columnar form. The changes from period to period can be reflected by establishing a base year and making it 100%. Thereafter all such changes are reflected in percentages. This analysis is invaluable to management and other analysts because the absolute large data are condensed into percentages. The purpose of horizontal analysis is to highlight the changes. Balance Sheet The purpose o balance sheet is to reflect financial position of an entity on a particular date. The balance sheet consists of assets, which are the property of the entity, the liabilities, which are the debts payable to outside investors or suppliers of goods and services, and the shareholder’s equity, which represents owners’ interest in the entity. At any given date, assets must be equal to the contributions of the creditors and owners. Profit And Loss Account Profit and loss account is also named income statement or income statement or income and expenditure account or statement of operations and encompasses all sources of revenue, gain and losses and expenses for a particular period, grouped into various headings as per charts of accounts of a company. In other words, it summarizes the results of operations for an accounting period. The net income is closed by transfer to balance sheet after paying the dividends and appropriations. Sometimes an appropriation is made to general reserve and still some portion is left as retained earning. The procedure of horizontal analysis of profit and loss account is same as of balance sheet.

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NISHAT COMPANY LIMITED HORIZENTAL BALANCE SHEET 2008

2007

2006

2008

2007

EQUITY AND LIABILITIES

CAPITAL AND RESERVES 1,597,857, Share Capital

000

1,597,857 ,000

23,549,323, Reserves

000

Accumulated profit

-

,000

0%

10%

19,659,812,000

-18%

45%

21,112,409,000

-17%

43%

2,982,353,000

-41%

-41%

33,031,000

0%

-100%

3,015,384,000

-41%

-41%

960,436,000

23%

-4%

151,236,000

53%

-13%

4,315,708,000

83%

16%

1,342,771,000

-31%

0%

281,382,000

20%

-18%

7,051,533,000

53%

8%

-4%

27%

0%

0%

10,611,353,000

1%

0%

10,793,026,000

-15%

45%

6,377,000

-15%

49%

10,130,000

13%

-8%

21,420,886,000

-9%

23%

471,520,000

16%

-10%

3,003,174,000

32%

3%

1,026,884,000

60%

-19%

4,350,146,000

-12%

87%

25,147,180,

Total Equity

1,452,597,000 28,566,041

000

30,163,898

,000

SHAREHOLDERS EQUITY NON CURRENT LIABILITIES 1,047,794, Loan term finances liabilities against assets subject to finance lease

000

1,773,820 ,000

-

1,047,794,

000

1,773,820 ,000

CURRENT LIABILITIES 1,141,227, Trade and other payables

000

926,593 ,000

201,847, Interest/ mark up on loans

000

131,744 ,000

9,175,518, short term borrowings

000

5,018,664 ,000

926,025, Current portion of long term liabilities

000

1,341,565 ,000

276,988, Provision for income tax

000

230,807 ,000

11,721,605,

7,649,373

000

,000

CONTIGENCY AND COMMETMENTS

-

-

TOTAL EQUITY AND LIABILITIES

000

37,916,579,

ASSETS

39,587,091

,000

2008

31,179,326,000

2007

2006

NON-CURRENT ASSETS 10,647,310, 000 13,321,088, 000 8,122,

Property, Plant and Equipment Capital Work in progress Loan term loans-secured and deposits

000

10,586,159 ,000 15,672,980 ,000 9,523 ,000

10,541, Loan term loans-secured and deposits

000

9,342 ,000

23,987,061, 000

26,278,004 ,000

CURRENT ASSETS 490,229, stores, spares parts and loose tools

000

422,428 ,000

4,103,648, stock in trade

000

3,106,436 ,000

1,329,027, Trade Debts

000

831,653 ,000

7,129,154, Short term investments

000

8,118,459 ,000

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403,295, loans and advances

000

411,270 ,000

30,400, Short term deposit and prepayments

000

,000 370,013,

others receivables

000

,000

000

,000

000

30,525,000

15%

-14%

407,147,000

15%

-21%

50,250,000

6%

39%

9,758,440,000

5%

36%

31,179,326,000

-4%

27%

13,309,087 ,000

37,916,579, TOTAL ASSETS

-2%

69,607

13,929,518, 000

-2%

322,839

73,752, Cash and bank balances

418,794,000 26,395

39,587,091 ,000

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Non-Current Assets As we can see from the horizontal balance sheet analysis of two years, the total noncurrent assets have shown increasing trend. In 2007 it increases0% from 2006 and it increases in 2008 by 1% as compare to 2007. This shows investment in fixed assets by the management. Capital work in process decreased by 45% in year 2007, increased by -15% in year 2008 respectively. Lon-term loans and advances has shown an increasing trend in 2007 by 49%in 2007 and decreased by -15%. Its long term deposits increased in 2007 by -8% and increases in 2008 by 13% Current Assets Store, spare and tools has shown decreased in 2007 as compare to 2006 by -10% and increased in 2008 by 16%, which shows that company is in good position as liquidity point of view. Stock in trade shows increasing trend and increased in 2007 by 3% and in 2008 increased by 32%. This average stock of inventory is indication of good inventory management. Trade debts has shown decreasing trend in 2007 as compare to 2006 by -19% and it increased by 60% in 2008.Receivable management is inefficient in 2008 by showing increasing trend. Loans and advances showed an decreasing trend it increased in 2007 by -2% and in 2008 it decreases -2%. Cash and cash in bank has also shown decreasing trend in 2007 and increasing trend in 2008. Equity and Liabilities Share capital show a changing trend in 2007 by 10% and 0% increasing trend in 2008. Reserves have increased in year 2007 by 45% and decreased by -18% in 2008, which shows that company, has utilized all its reserves for expansion of project. Non-Current Liabilities Non-current liabilities have also shown an decreasing trend in 2007 and decreasing trend in 2008. There is a sharp decrease in year 2007 and also decrease in year 2008. Long term security deposits and retention money also decreases in 2007 by -41% and decreased in 2008 by-41% as compare to 2006 and 2007 respectively. Liabilities against assets decreases in 2007 by -100% and in 2008 by 0% as compare to 2006 and 2008 respectively. Current Liabilities Total current liabilities have also shown a increasing trend in 2007 and also increasing trend in 2008. This is also inline with decrease and increase in current assets of the company. Short term financing is taken to meet the working capital requirements. Company is meeting its obligation on regular basis.

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Trade payables decreased in 2007 by -04% but increased in 2008 by 23%. Markup on secured loans also decreased in 2007 by 13% in 2007and increased 53% in 2008. Short term borrowing also increased by 16% in 2007 and 83% in 2008 as compare to 2006 and 2007 respectively. Finally, size of the company has increased during the last five years. More investment is made in capital assets. Company is in expansion phase since the base year. Investment in new expansion project and technology is being made in order to keep pace with changing business environment.

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NISHAT COMPANY LIMITED HORIZENTAL PROFIT AND LOSS 2008

2007

2006

2 008

17,180,192,000

16,417,358,000

12%

5%

(14,335,254,000)

(13,701,626,000)

14%

5%

2,844,938,000

2,715,732,000

4%

5%

(928,778,000)

(663,671,000)

4%

40%

(320,202,000)

(264,807,000)

25%

21%

(91,758,000)

(78,689,000)

21%

17%

671,275,000

277,961,000

765%

141%

(669,463,000)

(729,206,000)

-748%

-8%

2,175,475,000

1,986,526,000

236%

10%

(819,267,000)

(755,054,000)

11%

9%

527,394,000

0%

-100%

(819,267,000)

(227,660,000)

11%

260%

1,356,208,000

1,758,866,000

372%

-23%

(145,000,000)

(126,000,000)

78%

15%

1,211,208,000

1,632,866,000

407%

-26%

2007

19,267,633,00 SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING OTHER OPERATING INCOME

OPERATING PROFIT FINANCE COST share of profit in associated companies

0 (16,298,857,00 0) 2,968,776,00 0 (961,711,00 0) (398,757,00 0) (110,781,00 0) 5,806,873,00 0 4,335,624,00 0 7,304,400,00 0 (907,432,00 0) (907,432,00 0)

-

6,396,968,00 PROFIT BEFORE TAXATION

0 (258,000,00

TAXATION

0) 6,138,968,00

PROFIT AFTER TAXATION

0

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ANALYTICAL REVIEW OF PROFIT & LOSS ACCOUNT Sales of the Company has shown a increasing trend and has increased up to 5% in 2007 and 12% in 2008 as compare to 2006 and 2007 respectively. Cost of sales has also shown an increasing trend. In last two years the cost has increased, it has increased in 2007 by 5% and in 2008 14% as compare to 2006 and 2007 respectively. This increase is more than the increase in sales which is not good for the company.

Gross profit of the company has also shown a increasing trend during the last two years, because company cost of sale decreases and sale increase, in 2007 gross profit increases 5% and it was 4% in 2008.Selling and distribution expenses also increases in 2007 and 2008 as 40% and 4% This increase in gross profit was due to the decrease in cost of goods sold.

Finance cot increased in 2007 as 9% and increased in 2008 as 11% which used for expansion of new plants of fertilizers. This increase in 2008 which cause the advertisement of the company. Profit before tax show decreasing trend in 2007 year and increase in 2008. It had decreased in 2007 as -23% and in 2008 it was 372%. Profit after tax decreased in 2007 by -26% and it was decrease by 407% in 2008.

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Vertical Analysis

“An analysis of percentage financial statements where all balance sheet items are divided

by total assets and all income statement items are divided by net sales or revenue” The expression of individual financial statement item as percentages of total helps the analyst spot trends with respect to the relative importance of these items over time. Balance Sheet

Vertical analysis is also called common size analysis. The common size balance sheet is also called 100% balance sheet. The total of assets is the base figures representing 100%. Every item of the balance sheet is related vertically to reflect the vertical mix against the total. The analysis represents internal composition of assets and liabilities. The common size balance sheet analysis reveals the sources of capital and all other sources and the application of sources to assets of the company. Profit And Loss Account

Similar method as applied for balance sheet is also applicable to profit and loss account. The various items of profit and loss account are related as percentage to sales. For example, items like, cost of goods sold. Operating expenses, gross profit, taxation etc. are reduced to percentages by treating the sales as 100 %. These ratios are also called vertical ratios and mix percentages.

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NISHAT COMPANY LIMITED VERITCAL PROFIT AND LOSS ACC. 2008 SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING OTHER OPERATING INCOME

2007

2006

2008

2007

2 006

17,180,192,000

16,417,358,000

314%

1418%

1005%

(14,335,254,000)

(13,701,626,000)

-265%

-1184%

-839%

2,844,938,000

2,715,732,000

48%

235%

166%

(928,778,000)

(663,671,000)

-16%

-77%

-41%

(320,202,000)

(264,807,000)

-6%

-26%

-16%

(91,758,000)

(78,689,000)

-2%

-8%

-5%

671,275,000

277,961,000

95%

55%

17%

(669,463,000)

(729,206,000)

71%

-55%

-45%

2,175,475,000

1,986,526,000

119%

180%

122%

(819,267,000)

(755,054,000)

-15%

-68%

-46%

527,394,000

0%

0%

32%

(819,267,000)

(227,660,000)

-15%

-68%

-14%

1,356,208,000

1,758,866,000

104%

112%

108%

(145,000,000)

(126,000,000)

-4%

-12%

-8%

1,211,208,000

1,632,866,000

100%

100%

100%

19,267,633,00 0 (16,298,857,000 ) 2,968,776,00 0 (961,711,000 ) (398,757,000 ) (110,781,000 ) 5,806,873,00 0 4,335,624,00 0

OPERATING PROFIT FINANCE COST share of profit in associated companies

7,304,400,00 0 (907,432,000 ) (907,432,000 )

PROFIT BEFORE TAXATION TAXATION PROFIT AFTER TAXATION

-

6,396,968,00 0 (258,000,000 ) 6,138,968,00 0

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ANALYTICAL REVIEW OF VERTICLE PROFIT & LOSS ACCOUNT As we can see from the vertical profit and loss account the sales revenue increased in 2007 by1418% and in 2008 Increased by 314%. Cost of sales also decreased in 2007 by -1184% and it decreased by -265% in 2008, gross profit increased in 2008 by 48% as compared to 2007 and in 2007 it had increased by 235% as compared to 2006. Selling and distribution expenses had decreased in 2008 by -16% and decreased in 2007 as compared to 2006 which was -77%. Financial charges showed decreasing trend in relation to sales with a decreased in 2008 as compare to 2007 and 2006 Other operating income had increased in 2007 and also increased in 2008 which is Greater then increase in 2007.Profit before taxation has increased in year 2006 and year 2007 and also in year 2008. In year 2008 the profit/loss before taxation was 104% and in 2007 the profit increase by 112% .

Finally the company is improving with the passage of time. Although the profits are not very adequate but the management is very confident that they are working hard and the company will prosper in coming years as most of the capital work has been completed.

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NISHAT COMPANY LIMITED VERITCAL BALANCE SHEET 2008

2007

Reserves

1,597,857,0 00 23,549,323,0 00

1,597,857,0 00 28,566,041,0 00

Accumulated profit

-

-

25,147,180,0 00

30,163,898,0 00

2 008

2006

2 007

2 006

EQUITY AND LIABILITIES CAPITAL AND RESERVES Share Capital

Total Equity SHAREHOLDERS EQUITY NON CURRENT LIABILITIES Loan term finances liabilities against assets subject to finance lease

1,452,597,00 0

4%

4%

4%

62%

75%

52%

66%

80%

56%

3%

5%

8%

0%

0%

0%

3%

5%

8%

3%

2%

3%

1%

0%

0%

24%

13%

11%

2%

4%

4%

1%

1%

1%

31%

20%

19%

100%

104%

82%

2008

2007

19,659,812,00 0

1,047,794,0

21,112,409,000

1,773,820,0

2,982,353,00

00

00

0

-

-

0

33,031,00 1,047,794,0 00

1,773,820,0 00

3,015,384,00 0

CURRENT LIABILITIES Trade and other payables Interest/ mark up on loans short term borrowings Current portion of long term liabilities Provision for income tax

1,141,227,0 00

926,593,0 00

201,847,0 00

131,744,0 00 5,018,664,0 00 1,341,565,0 00 230,807,0

00 11,721,605,00 0

00

CONTIGENCY AND COMMETMENTS

-

-

TOTAL EQUITY AND LIABILITIES

37,916,579,0 00

39,587,091,0 00

2008

2007

10,647,310,0 00 13,321,088,0 00

Property, Plant and Equipment Capital Work in progress Loan term loans-secured and deposits Loan term loans-secured and deposits

1,342,771,00 0

276,988,0

ASSETS NON-CURRENT ASSETS

4,315,708,00 0

926,025,0 00

151,236,00 0

9,175,518,0 00

960,436,00 0

281,382,00 0

7,649,373,0 00

0 -

10,586,159,0 00 15,672,980,0 00

8,122,0

7,051,533,00

31,179,326,00 0

2006 10,611,353,00 0

00

10,541,0 00 23,987,061,0 00

9,342,0 00 26,278,004,0 00

28%

28%

28%

35%

41%

28%

0%

0%

0%

0%

0%

0%

63%

69%

56%

10,793,026,00 0

9,523,0

00

2006

6,377,00 0 10,130,00 0 21,420,886,00 0

CURRENT ASSETS

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stores, spares parts and loose tools stock in trade Trade Debts Short term investments loans and advances Short term deposit and prepayments others receivables Cash and bank balances

TOTAL ASSETS

490,229,0 00

422,428,0 00

4,103,648,0 00

3,106,436,0 00 831,653,0 00

00

8,118,459,00 0

403,295,0 00 30,400,0 00

0

26,395,0

370,013,0 00

322,839,0 00

00 13,929,518,0 00

00 13,309,087,0 00

37,916,579,0 00

39,587,091,0 00

8%

4%

2%

3%

19%

21%

11%

1%

1%

1%

0%

0%

0%

1%

1%

1%

0%

0%

0%

37%

35%

26%

100%

104%

82%

407,147,00 0

69,607,0

8%

30,525,00 0

73,752,0

11%

418,794,00 0

00

1%

4,350,146,00

411,270,00 0

1%

1,026,884,00 0

7,129,154,0

1% 3,003,174,00

0

1,329,027,0 00

471,520,00 0

50,250,00 0 9,758,440,00 0 31,179,326,00 0

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ANALYTICAL REVIEW OF VERTICLE ANALYSIS OF BALANCE SHEET

ASSETS Non-Current Assets As we can see from the vertical balance sheet of the company total fixed assets are constant in relation to total assets with little variations. The management is more focusing on working capital management than on fixed asset in last three years as shown by the vertical balance sheet. Property, plant and equipment have shown a same trend in year 2006 which was 28% and in 2007 also which was 28% and after that improvement in last year 2008 that was 28% Capital work in progress was increased in 2007 as compare to 2006, Store spare held for capital expenditures increase in 2007 and 2008. Long-term deposits remains the same by 0% in 2006 and 0% and 0% increased in 2007 and 2008. Current Assets Total current assets have shown an increasing trend over the last three year period. Stores and spares declined in year 2007 after that it has shown an increasing trend. In 2006 it increased by 1%, n 2007 1% and in 2008 it was 1%. Stock in trade has shown an increasing trend. Stock in trade is about 8% of the total current assets in 2006 and it was 8% of total assets in 2007 and11% in 2008. Stores and spares have the largest portion among all current assets. Receivable had 1% o total assets in 2006 and they were 1% in 2007 and 1% in 2008. Trade debtors were 3% in 2006, 2% in 2007 and 4% in 2008. Cash and cash equivalent were 0% in 2006, 0% in 2007 and 0% n 2008. EQUITY AND LIABILITIES Share capital and reserves have shown increasing trend. appropriated profit has shown increasing trend and company had gain in 2008. Issued, subscribed and paid up capital was 4% of total liabilities in 2006 same 4% in 2007 and it was also 4% in 2008. Reserves were increased were 52%, 75% and 62% in 2006,2007 and 2008 respectively. Non-Current Liabilities Total long-term liabilities of the company have shown increasing trend in relation to total liabilities except marginally increase in year 2008. The company is focusing on equity financing than debts due to the higher financing costs. Liabilities against assets have shown a mix trend over the last three year period.

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Long term financing was 8% in 2006, 5% in 2007 and 3% in 2008 to all of its liabilities. Current Liabilities Short term liabilities have shown an increasing trend during the last three years as shown in the vertical balance sheet of the company. Trade and other payables have shown an increasing trend with a marginal increase in last year. Trade an other payables increased in 2007 and 2008, in 2006 they were 3%, 2%in 2007 and 3% in 2008. Short term financing increased, it was 11% in 2006, 13% in 2007 and 24% in 2008.

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CHAPTER # 03

1) Company Analysis 2) Company Life Cycle

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COMPANY ANALYSIS: Directors are pleased to present the 60th annual report and audited accounts for the year ended June 30, 2008 Nishat Mills has earned profit after tax Rs 6,138.968 Million for the year ended June 30, 2008. The profit increased by 406.85% as compared to Rs. 1,211.208 Million for the pervious period. this increase in profit is mainly due to capital gain of Rs. 5,060.413 million resulting from mark to market transaction of our investment in MCB Bank shares, and increase in dividend income by Rs. 230.765 million. resulting from mark to market transaction of our 4.35 % respectively as compared to the previous Period. Percentage increase in gross profit does not commensurate with that of sales due to the facts that there was an increase of 22.62 % in local cotton rates (2008: Rs. 3,047/mound, 2007: Rs. 2,485/mound) and an increase of 7.65 % in imported cotton rate (2008: Rs. 3,714/mound, 2007: Rs. 3,450/mound). Finance cost increase by 10.76 % mainly due to increase in average borrowing by 5%. The Board of Directors of the company has recommended 25% cash dividend (2007: 25% cash dividend) and recommends transferring Rs. 4,870 Million (2007: Rs. 1,244 Million) to general reserve.

General market scenario & future prospects In fiscal year ended june 2008 observed some major changes in world economics in general and for textile sector in particular. This year witnessed crude oil touching the record high of $140 per barrel, substitution of food crops to biofuel crops, rising capital and commodity price indexes and galloping inflation in all major economies of the world. Overall there was a major shift in fuel, labor and operating costs of all business activities. For textile sector, matters were further complicated by an unprecedented rise in cotton prices in September and October 2007, with no signs of stability by the year end. Additional factors were energy crises at domestic level, low yield of cotton in Pakistan and a very weak demand from US and European and credit crunch for general consumers. Although softening of Pak Rupee against US dollar helped to cover a small factor of this accumulated cost pressure, the overall picture for domestic textiles industry was that of inflating costs and a deflating product demand. Forecasting future is intricate in the present scenario of the country and capricious market. It mainly depends upon cotton market for the coming season, which seems bullish. As per estimate of experts, Pakistani cotton production is short by approximately 30 to 35 % as compared to

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the demand. We need our government to chalk out a proper and long term textile policy for the survival of industry. On our part, we need to increase customers profile and explore new markets to increase business volumes. Our strategy to drive our marketing activities would be the timely adoption of innovative products, finishes and production technique.

Spinning Section The year 2008 mainly started with difficulties in the shape of the bullish and uncertain cotton market. Ever highest cotton prices were seen this year in Pakistan. Cotton prices started with Rs. 2,900/maund and went up to Rs. 4,000/ maund during this year. Most of the Spinning mills remained in a serious cotton crisis through out the year. We have, however, by passed these crises by following our one time cotton buying policy and same has also helped us to maintain steady quality results. Demand of 100% grey cotton yarn remained steady and we tried to uphold the prices along with market and to keep over all spinning in profits. by the end of year, far east market. showed good response in terms of demand and prices of carded & combed yarn. Far East remained our main selling market of cotton yarn. USA had some steady demand during this year, where as in Europe demand of cotton yarn was reduced more. Development in terms of machinery is in progress for better quality of yarn. Installation of state of art ring frames is under way at one ofour spinning units.

Weaving Section During the year under review, we have observed highest ever yarn prices which made the job more difficult. The increases in the yarn price was not absorbed by the fabric prices. We faced a lot of difficulties to win the business in international market because of high raw material prices. Moreover, political instability, law and order situation and energy crisis (Oil, Gas and Power shortage), increased our cost of production and held our product uncompetitive in international market. It is becoming difficult to maintain our performance in the present scenario. Fareast market showed difficult on ground of price. Business in South America reduced by 80% in comparison with previous period because of the bullish yarn market and cheaper prices from competitors. Our wider width looms / home textiles greige capacity continued facing decline in prices. Our strategy in this competition was to diversify ourselves customer wise, market wise and product wise. This was the only way to survive in such uncertain market. Another strategy was to cut

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costs by bringing innovative technologies. We continued to replace our old looms with the new state of the art looms and got new looms in different widths to meet the varying requirements of all our customers. This is the first time that Nishat has looms with 90” width. By having these looms, we will be more competitive and can supply all types of greige fabric in varying widths. We hope that after getting these new looms, we would not lose any business because of the width problem, especially stretch articles. Moreover, we are planning for PFD plant in our weaving to give PFD fabrics to our customers, as many customers in Europe are asking for PFD fabrics instead of weaved fabric. In this way, we will be much competitive product wise and quality wise. It would increase our customer profit in Europe. We are also trying to reduce our production lead times by bringing state of the art looms. Customer services, keeping stocks for special fulfillment, yarns and fibers, are our major tools for a better lead time. We have added new European customers and started to increase business in France, Denmark, turkey and Poland markets to fulfill the gap of the Fareast and South American markets. Our business in the special and technical fabric (Antistatic, Fire retardant, and military fabrics) has also increased with continuation of orders. We have increased the sales volumes to Nishat Dyeing and Finishing with a better product mix. We have launched several new products like Viscose Lycra, Cotton/Kapok/Lycra, Bamboo Lycra and Linen based items etc. in the Fairs/ Exhibitions and developed the same in different markets.

Processing and Stitching Section The year 2008 was a difficult year for fabric processing mills as in addition to the domestic challenging scenario, recession of American market further slowed down the entire business cycle. Retailers were stuck up with high inventory levels, which hindered new ventures. Unanticipated bankruptcy of some major textile businesses including, Dan River, Linen & Things, Goody’s Family Inc also gave unprecedented setback to an already fading market. This situation did not allow suppliers to increase any prices to overcome excessive overhead costs and ease out the worsening condition. Even though all major concerns were facing a perpendicular decline in the revenues, our company was able to sustain its sales in step with the plant efficiency. A particular focus was conferred upon enhancing production

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efficiency are drawing more production in less number of hours and with optimum workforce. With reference to this cost cutting strategy, an important step was taken by shifting the Faisalabad stitching unit to Lahore, adjacent to the processing plant. This adaptation is expected to play an extra ordinary role in improving the supply, operations’ management and reduction in transportation costs. It will overcome unnecessary operational delays and costs. Moreover, this stitching unit is being upgraded with the latest machinery and a state of the art switch-track system that will enhance the working efficiency enormously along with the product quality. We are installing caustic soda recovery plant to have further value addition, cost reduction and diversification in production resources. We have installed new gerbur cutting equipment in our sewing operation. For exports, European market remained our main bread & butter earner during the period due to its economic and currency strength. Devaluation of rupee provided an auxiliary edge to European customers to shop more on our existing prices, which consequently increased our production & sales. We are exploring more opportunities to enhance our strong presence in European market. Furthermore, a lot of developmental works are underway for American market for regular and branded items. With escalating value of Chinese currency, Pakistani market is once again expected to attract US importers. Coupled with Nishat’s capabilities and competencies, our vertically integrated production facilities that can turn raw cotton in final finished consumer. product, always attract attention of US clients. We are very positive to materialize currentdevelopments into tangible sales in near future.

Nishat Dyeing & Finishing – (NDF) Given the circumstances of textile industry and all challenges, NDF managed to perform quite well. NDF not only managed to retain all its major customers despite the cut throat price competition, but also increased its customer base both in US as well as in Europe. Thereby the low demand by existing customers due to poor retail was covered well by addition of this new business. This increase in customer base was both due to the complete verticality offered to customer for fabric till finished garments. as well as to the increased marketing activities on tapping new customers. The overall picture is not expected to improve Much in the next fiscal year as in the market still remains highly unstable. All the factors contribution to the current inflationary pressures and weak demand are still present and far from being settled. As much as it is hard to establish a

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firm marketing strategy in such a volatile market, NDF has formulated the key principles follow in the next fiscal year. These revolve around a further expansion in its customer base, retaining the current major customers, increasing marketing efforts in the still profitable European market and concentrated effort towards specialized finished over regular run-of-the-mill products to fetch better margins.

Power Generation Nishat has 80 MW of self power generation facilities at different sites. We have always concentrated on installation of most modern and efficiency to power generation machine to get more with less fuel consumption. Out of the total generation capacity, 46 MW generation is done through most modern and highly efficiency gas fired generators and their design is based on “tri-generation” concept i.e. besides generating power these plants are producing steam for use in processing, for further power generation and hot water for process use or air conditioning. This concept makes it possible to use the precious energy to to maximize profitability of the company and help reduce environmental pollution. Keeping in view the current power shortage in the country, Nishat has responded to beckon of the Government and sold its excessive power from different locations to the local distribution companies.

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Company Life Cycle

Last Five Years Sales of the Company

Comments:

In the above graph you can see in the year 2008 sale of the company at highest point and it is showing increasing trend from 2004 so company sale is at increasing side in the year of 2004 to 2008 there is no much difference between the sale this increasing trend due to expansion of plant and due to the consumption and the demand in the market so we can say that Nishat Mills product’s demand is increasing in the local market and international market.

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CHAPTER # 04

1. Five Years Review 2. Recommendation 3. Conclusion 4. Bibliography

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FIVE YEARS REVIEW

Explanation:

In the above chat we can see the profit position of the company during the year 2004 to 2008 in these five years company profitability position is better in 2008 as compare it with other years, so we can say that company was in much better position in 2008.

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RECOMMENDATIONS o The Company should design effective internal control system, which not only increase the efficiency but also reduce the pressure exists on accounts and finance department. o The Company should arrange training and orientation programs for its employees on regular basis so that they can equip themselves with the latest developments in the field of finance and accounts. o Monthly accounts should be prepared on regular basis so that it will help the management to make better and timely decisions. o Calculations of mark-up should be made by the Company to reconcile and check the mark-up charged by the banks to keep a good control on the financial charges charged by the banks. o

Trade debtors and creditors balances reconciliations should be made on monthly basis along with keeping the balances updated by sending balance confirmations letters to the parties’ The selection criteria should also be improved. The company should select the educated and experienced employees and along with there should be a proper training system for them

Conclusion Directors are pleased to present the 60th annual report and audited accounts for the year ended June 30, 2008 Nishat Mills has earned profit after tax Rs 6,138.968 Million for the year ended June 30, 2008. The profit increased by 406.85% as compared to Rs. 1,211.208 Million for the pervious period. this increase in profit is mainly due to capital gain of Rs. 5,060.413 million resulting from mark to market transaction of our investment in MCB Bank shares, and increase in dividend income by Rs. 230.765 million. resulting from mark to market transaction of our 4.35 % respectively as compared to the previous Prriod. Percentage increase in gross profit does not commensurate with that of sales due to the facts that there was an increase of 22.62 % in local cotton rates (2008: Rs. 3,047/maund, 2007: Rs. 2,485/maund) and an increase of 7.65 % in imported cotton rate (2008: Rs. 3,714/maund, 2007: Rs. 3,450/maund). Finance cost increase by 10.76 % mainly due to increase in average borrowing by 5%. The Board of Directors of the company has recommended 25% cash dividend (2007: 25% cash dividend) and recommends transferring Rs. 4,870 Million (2007: Rs. 1,244 Million) to general reserve.

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In fiscal year ended june 2008 observed some major changes in world economics in general and for textile sector in particular. This year witnessed crude oil touching the record high of $140 per barrel, substitution of food crops to biofuel crops, rising capital and commodity price indexes and galloping inflation in all major economies of the world. Overall there was a major shift in fuel, labor and operating costs of all business activities. For textile sector, matters were further complicated by an unprecedented rise in cotton prices in September and October 2007, with no signs of stability by the year end. Additional factors were energy crises at domestic level, low yield of cotton in Pakistan and a very weak demand from US and European and credit crunch for general consumers. Although softening of Pak Rupee against US dollar helped to cover a small factor of this accumulated cost pressure, the overall picture for domestic textiles industry was that of inflating costs and a deflating product demand. Forecasting future is intricate in the present scenario of the country and capricious market. It mainly depends upon cotton market for the coming season, which seems bullish. As per estimate of experts, Pakistani cotton production is short by approximately 30 to 35 % as compared to the demand. We need our government to chalk out a proper and long term textile policy for the survival of industry. On our part, we need to increase customers profile and explore new markets to increase business volumes. Our strategy to drive our marketing activities would be the timely adoption of innovative products, finishes and production technique. The year 2008 mainly started with difficulties in the shape of the bullish and uncertain cotton market. Ever highest cotton prices were seen this year in Pakistan. Cotton prices started with Rs. 2,900/mound and went up to Rs. 4,000/ mound during this year. Most of the Spinning mills remained in a serious cotton crisis through out the year. We have, however, by passed these crises by following our one time cotton buying policy and same has also helped us to maintain steady quality results. Demand of 100% grey cotton yarn remained steady and we tried to uphold the prices along with market and to keep over all spinning in profits. by the end of year, far east market. showed good response in terms of demand and prices of carded & combed yarn. Far East remained our main selling market of cotton yarn. USA had some steady demand during this year, where as in Europe demand of cotton yarn was reduced more. Development in terms of

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machinery is in progress for better quality of yarn. Installation of state of art ring frames is under way at one of our spinning units. During the year under review, we have observed highest ever yarn prices which made the job more difficult. The increases in the yarn price was not absorbed by the fabric prices. We faced a lot of difficulties to win the business in international market because of high raw material prices. Moreover, political instability, law and order situation and energy crisis (Oil, Gas and Power shortage), increased our cost of production and held our product uncompetitive in international market. It is becoming difficult to maintain our performance in the present scenario. Fareast market showed difficult on ground of price. Business in South America reduced by 80% in comparison with previous period because of the bullish yarn market and cheaper prices from competitors. Our wider width looms / home textiles greige capacity continued facing decline in prices. Our strategy in this competition was to diversify ourselves customer wise, market wise and product wise. This was the only way to survive in such uncertain market. Another strategy was to cut costs by bringing innovative technologies. We continued to replace our old looms with the new state of the art looms and got new looms in different widths to meet the varying requirements of all our customers. This is the first time that Nishat has looms with 90” width. By having these looms, we will be more competitive and can supply all types of grieve fabric in varying widths. We hope that after getting these new looms, we would not lose any business because of the width problem, especially stretch articles. Moreover, we are planning for PFD plant in our weaving to give PFD fabrics to our customers, as many customers in Europe are asking for PFD fabrics instead of weaved fabric. In this way, we will be much competitive product wise and quality wise. It would increase our customer profit in Europe. We are also trying to reduce our production lead times by bringing state of the art looms. Customer services, keeping stocks for special fulfillment, yarns and fibers, are our major tools for a better lead time. We have added new European customers and started to increase business in France, Denmark, turkey and Poland markets to fulfill the gap of the Fareast and South American markets. Our business in the special and technical fabric (Antistatic, Fire retardant, and military fabrics) has also increased with continuation of orders. We have increased the sales volumes to Nishat Dyeing and Finishing with a better product mix. We have launched several new products like Viscose Lycra, Cotton/Kapok/Lycra, Bamboo Lycra and Linen based items etc. in the Fairs/ Exhibitions and developed the same in different markets.

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The year 2008 was a difficult year for fabric processing mills as in addition to the domestic challenging scenario, recession of American market further slowed down the entire business cycle. Retailers were stuck up with high inventory levels, which hindered new ventures. Unanticipated bankruptcy of some major textile businesses including, Dan River, Linen & Things, Goody’s Family Inc also gave unprecedented setback to an already fading market. This situation did not allow suppliers to increase any prices to overcome excessive overhead costs and ease out the worsening condition. Even though all major concerns were facing a perpendicular decline in the revenues, our company was able to sustain its sales in step with the plant efficiency. A particular focus was conferred upon enhancing production efficiency are drawing more production in less number of hours and with optimum workforce. With reference to this cost cutting strategy, an important step was taken by shifting the Faisalabad stitching unit to Lahore, adjacent to the processing plant. This adaptation is expected to play an extra ordinary role in improving the supply, operations’ management and reduction in transportation costs. It will overcome unnecessary operational delays and costs. Moreover, this stitching unit is being upgraded with the latest machinery and a state of the art switch-track system that will enhance the working efficiency enormously along with the product quality. We are installing caustic soda recovery plant to have further value addition, cost reduction and diversification in production resources. We have installed new Gerber cutting equipment in our sewing operation. For exports, European market remained our main bread & butter earner during the period due to its economic and currency strength. Devaluation of rupee provided an auxiliary edge to European customers to shop more on our existing prices, which consequently increased our production & sales. We are exploring more opportunities to enhance our strong presence in European market. Furthermore, a lot of developmental works are underway for American market for regular and branded items. With escalating value of Chinese currency, Pakistani market is once again expected to attract US importers. Coupled with Nishat’s capabilities and competencies, our vertically integrated production facilities that can turn raw cotton in final finished consumer. product, always attract attention of US clients. We are very positive to materialize current developments into tangible sales in near future. Given the circumstances of textile industry and all challenges, NDF managed to perform quite well. NDF not only managed to retain all its major customers despite the

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cut throat price competition, but also increased its customer base both in US as well as in Europe. Thereby the low demand by existing customers due to poor retail was covered well by addition of this new business. This increase in customer base was both due to the complete verticality offered to customer for fabric till finished garments. as well as to the increased marketing activities on tapping new customers. The overall picture is not expected to improve Much in the next fiscal year as in the market still remains highly unstable. All the factors contribution to the current inflationary pressures and weak demand are still present and far from being settled. As much as it is hard to establish a firm marketing strategy in such a volatile market, NDF has formulated the key principles follow in the next fiscal year. These revolve around a further expansion in its customer base, retaining the current major customers, increasing marketing efforts in the still profitable European market and concentrated effort towards specialized finished over regular run-of-the-mill products to fetch better margins. Nishat has 80 MW of self power generation facilities at different sites. We have always concentrated on installation of most modern and efficiency to power generation machine to get more with less fuel consumption. Out of the total generation capacity, 46 MW generation is done through most modern and highly efficiency gas fired generators and their design is based on “tri-generation” concept i.e. besides generating power these plants are producing steam for use in processing, for further power generation and hot water for process use or air conditioning. This concept makes it possible to use the precious energy to maximize profitability of the company and help reduce environmental pollution. Keeping in view the current power shortage in the country, Nishat has responded to beckon of the Government and sold its excessive power from different locations to the local distribution companies.

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Bibliography REFERENCE & SOURCES USED 1) http://www.nishatmillsltd.com/nishat/invest.html 2) http://www.nonprofitsassistancefund.org/files/MNAF/ToolsTempla tes/NonprofitFinancialRatios.pdf 3) http://www.azgard9.com/html/financialinfo/2008/Security%20Analys_g%20-%20Q1.pdf 4) http://www.azgard9.com/html/financialinfo/2008/Consolidated%20ANL.pdf 5) http://www.azgard9.com/html/financialinfo/2008/Azgard%209%20AR07%20Consolidati%20(2).pdf 6) http://www.azgard9.com/html/financialinfo/2007/ANNUAL%20REPORT2006%20PAGE%2021%20TO%20110.pdf 7) http://www.azgard9.com/html/financial-information.htm 8) http://www.sapphire.com.pk/cstmaccounts.htm 9) http://www.sapphire.com.pk/home.htm

References Special Thanks to Mr. Muhammad Zeshan Raza

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CHAPTER # 05

Annexure:

1) Five Years Balance Sheet of Nishat Mills limited Company 2) Five Years Profit and Loss account of Nishat Mills limited Company 3) Five Years Balance Sheet of Azgard Nine Pvt limited Company 4) Five Years Profit and Loss account of Azgard Nine Pvt limited Company 5) Five Years Balance Sheet of Sapphire Mills limited Company 6) Five Years Profit and Loss account of Sapphire Mills limited Company 7) Ratio Working of Nishat, Sapphire and Azgard Nine Company

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NISHAT PVT. LIMITED BALANCE SHEET FOR THE YEAR ENDED 2008 2008 EQUITY AND LIABILITIES

2007

2006

2005

2004

CAPITAL AND RESERVES Reserves

1,59 7,857,000 23,549 ,323,000

1,59 7,857,000 28,56 6,041,000

1,452 ,597,000 19,659, 812,000

1,45 2,597,000 11,35 3,517,000

1,59 7,857,000 28,56 6,041,000

Accumulated profit

-

-

-

25,147,1 80,000

30,163,8 98,000

9,000

1,04 7,794,000

1,77 3,820,000

,353,000

-

-

1,000

Share Capital

Total Equity SHAREHOLDERS EQUITY NON CURRENT LIABILITIES Loan term finances liabilities against assets subject to finance lease

-

-

21,112,40

12,806,1 14,000

30,163,8 98,000

2,982

2,79 6,512,000

1,77 3,820,000

33,03 1,047,7 94,000

1,773,8 20,000

61,6 43,000

3,015,38 4,000

2,858,1

55,000

1,773,8 20,000

CURRENT LIABILITIES Trade and other 1,14 payables 1,227,000 Interest/ mark up on 20 loans 1,847,000

26,593,000

short term borrowings Current portion of long term liabilities Provision for income tax

1 31,744,000 5,01 8,664,000

15 1,236,000 4,315 ,708,000

92

1,34 1,565,000

,771,000

27 6,988,000 11,721,6 05,000

2 30,807,000 7,649,3 73,000

28 1,382,000 7,051,53 3,000

3 56,689,000 6,253,3 33,000

23 0,807,000 7,649,3 73,000

CONTIGENCY AND COMMETMENTS

-

-

-

-

-

TOTAL EQUITY AND LIABILITIES

37,916,5 79,000

39,587,0 91,000

6,000

21,917,6 02,000

39,587,0 91,000

9,17 5,518,000 6,025,000

ASSETS NON-CURRENT ASSETS Property, Plant and Equipment Capital Work in progress Loan term loans-

2008 10,647,3 10,000 13,321,0 88,000

9

2007

0,436,000

96

1,342

31,179,32

2006

12,216,000

8

88,449,000 4,28 4,815,000 11,164,000

7

6,593,000

92

13 1,744,000 5,01 8,664,000 1,34 1,565,000

2005

2004

10,58 6,159,000

10,611, 353,000

9,15 1,096,000

2,42 9,954,944

15,67 2,980,000

10,793, 026,000

5,00 3,177,000

57,608,750

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secured and deposits Loan term loanssecured and deposits CURRENT ASSETS stores, spares parts and loose tools stock in trade Trade Debts Short term investments loans and advances Short term deposit and prepayments others receivables Cash and bank balances

TOTAL ASSETS

8,122,000

9,523,000

6,377,000

4,890,000

10,541,000 23,987,0 61,000

9,342,000 26,278,0 04,000

1 0,130,000 21,420,88 6,000

12,022,000 14,171,1 85,000

23,820,007 2,511,3 83,701

49 0,229,000 4,10 3,648,000 1,32 9,027,000

4 22,428,000 3,10 6,436,000 8 31,653,000

47 1,520,000 3,003 ,174,000 1,026 ,884,000

4 24,827,000 2,89 7,392,000 8 77,358,000

1,24 9,572,742

7,12 9,154,000 40 3,295,000

8,11 8,459,000 4 11,270,000

4,350

2,17 3,530,000 4 24,533,000

30,400,000

26,395,000

0,013,000

37

22,839,000

3

,146,000

8,794,000 0,525,000 7,147,000

41 3 40

39,180,000 88,598,000

3

1,15 0,579,738 9,138,820 5,255,091

10 24

13,497,444 -

73,752,000 13,929,5 18,000

69,607,000 13,309,0 87,000

5 0,250,000 9,758,44 0,000

5 20,999,000 7,746,4 17,000

56,528,131 2,824,5 71,966

37,916,5 79,000

39,587,0 91,000

31,179,32 6,000

21,917,6 02,000

55,667

5,335,9

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NISHAT PVT. LIMITED PROFIT & LOSS A/C FOR THE YEAR ENDED 2008 2008

2007

2006

SALES COST OF SALES

2005

2004

(14,33 5,254,000)

    16,417,3 58,000    (13,701,6 26,000)

  11,374,6 30,000    (9,239,7 31,000)

2,9 68,776,000

2,84 4,938,000

2,7 15,732,000

2,1 34,899,000

(9 61,711,000)

(9 28,778,000)

(3 98,757,000)

(3 20,202,000)

(1 10,781,000)

91,758,000)

5,8 06,873,000 4,335, 624,000

6 71,275,000 (669,4 63,000)

       (663, 671,000)        (264, 807,000)          (78, 689,000)          277, 961,000  (729, 206,000)

     (510,2 46,000)      (175,0 40,000)        (70,9 78,000)        621,5 69,000  (134,6 95,000)

7,3 04,400,000

2,17 5,475,000

1,9 86,526,000

2,0 00,204,000

(9 07,432,000)

(8 19,267,000)

-

-

     (407,6 96,000)        440, 846,000 

(9 07,432,000)

(8 19,267,000)

       (755, 054,000)          527, 394,000  ( 227,660,000)

33,150,000

0,805,144

19,26 7,633,000

17,18 0,192,000

(16,29 8,857,000)

7,46 1,055,757 7,09 1,114,328

GROSS PROFIT 14,55 2,170,085

DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING OTHER OPERATING INCOME

(

54,689,456 27,986,950 11 1,644,873 194,3 21,279

OPERATING PROFIT 14,74 6,491,364

FINANCE COST share of profit in associated companies

7,260,241

12

13,544,903 14

PROFIT BEFORE TAXATION 1,758,

968,000

6,396, 08,000

1,356,2 866,000

2,033, 354,000

14,887,2 96,508

(2 58,000,000)

(1 45,000,000)

( 126,000,000)

(1 66,000,000)

85,046,149

6,138,

1,211,2

1,632,

TAXATION PROFIT AFTER TAXATION 968,000

08,000

866,000

1,867, 354,000

14,972,3 42,657

70/87

AZGARD NINE PVT LIMITED BALANCE SHEET AS AT 31 DECEMBER 2008 2 008 EQUITY AND LIABILITIES

Rs.

2007 Rs.

2 006 Rs.

2 005

2 004

Rs.

Rs.

SHARE CAPITAL AND RESERVES ISSUED, SUBSCRIBED AND PAID UP CAPITAL RESERVES Inappropriate Profit

3,827,118,54 0 3,532,469,00 2 2,764,494,95 9 10 ,124,082,501

Surplus on revaluation of property, Plant and equipment Non current liabilities Redeemable capital Secured Long term finance secured Liabilities against assets subject to finance lease

219,356,257

3,962,461,56 1 2,686,842,50 0 25,210,944 6,674,515,00 5

Current Liabilities Current Portion of non current liabilities Short term Borrowings derivative financial liabilities Trade and other payables

1,470,921,49 3 6,574,080,30 4 50,536,909 1,350,500,11 5

3,78 8,822,900 3,53 0,626,122 2,40 0,605,174 9,72 0,054,196

2 39,073,077

4,49 1,185,372 2,97 3,551,252

14,357,005 7,47 9,093,629

9 81,049,256 3,82 0,688,516 34,369,582 1,03 0,875,769

3,788,838,9 00

1,737,308,6 80

1,737,308,6 80

3,578,262,1 82

403,331,46 9

362,142,241

1,807,067,0 52

952,462,49 0

410,657,982

9,174,168,1 34

3,093,102,6 39

2,510,108,9 03

257,360,86 7

278,943,67 1

306,564,511

2,268,598,9 53

2,333,220,1 75

1,147,729

3,519,216,9 88

347,920,00 0

750,000,000

9,622,618

40,173,972

116,503,819

5,797,438,5 59

2,721,314,1 47

867,651,548

450,047,12 5

433,780,77 4

363,081,881

6,006,117,6 30

3,142,402,3 24

1,492,909,8 92

32,021,607 1,243,588,0 67

791,641,17 2

691,981,192

71/87

Due to related partiesunsecured Markup accrued on borrowings Unclaimed dividend

426,768,193

466,226,443 14,686,046 10 ,353,719,503

Contingencies and commitments

Non-current assets Property, Plant and equipment Capital work in progress intangible assets Long term investments Long term deposits

3 17,690,929 9,694,014 6,19 4,368,066

27 ,371,673,266

ASSETS

-

2 008 Rs. 7,734,950,54 7 918,670,893 33,536,216 7,521,644,05 1 19,777,502 16 ,228,579,209

23,632 ,588,968

-

195,249,01 7 22,312,061 7,949,335,5 07 -

-

-

79,679,935

64,824,871

362,062

95,414

4,447,866,2 67

2,612,893,2 50

-

-

23,178,303, 067

10,541,226, 724

2,007

2,006

2,005

2,004

Rs.

Rs.

Rs.

Rs.

7,64 3,649,558 1 67,987,854 51,142,669 6,39 1,905,201 20,239,502 14,274 ,924,784

6,297,218,2 12

7,601,895,8 66

3,113,043,0 32

2,847,936,4 02

150,650,47 7

2,459,655,9 06

84,292,338

73,937,276

88,375,589

4,670,138

2,666,296

19,906,757

29,745,135

18,517,830

14,136,486, 815

5,681,051,4 87

3,041,788,4 55

101,762,48 6

87,790,355

72,608,693

2,022,510,9 24

2,034,180,5 50

1,394,729,3 30

1,134,897,1 49

1,013,883,5 84

945,111,856

555,680,24 4

13,458,916

60,544,809 6,303,488,9 06

Current assets Stores spares and loose tools

201,693,270

Stock in trade

4,034,103,11 9

Trade receivable

1,777,232,61 2

Derivative financial assets Advances, deposits, prepayments and other receivables Current Taxation Short Term investment Cash and Bank Balances

1 25,468,877 2,24 6,132,173 1,65 7,196,735

175,673,993

3 88,993,278

789,515,062

1,00 4,944,292

63,948,605 4,018,853,58 6 82,073,810

51,050,683 3,83 8,444,830 45,433,316

857,744,30 4

3,788,315,5 21 580,905,62 4

895,807,87 9

-

712,923,170

769,411,59 5 45,642,358

109,148,931 20,907,777

72/87

11 ,143,094,057

9,35 7,664,184

27 ,371,673,266

Profit and Loss Account for the year ended 31-12-208 2 008 Rs.

23,632 ,588,968

Rs.

Rs.

Rs.

Rs.

(4,620,988, 950)

Gross Profit

3,453,275,5 84

2,007,352,9 76

(603,529,74 3)

taxation Profit after Taxation

6,297,218,2 12

2,004

(6,660,223, 767)

Profit before Taxation

10,541,226, 724

2,005

Cost of Sales

Finance cost

23,178,303, 067

3,255,429,7 57

2,006

6,628,341,9 26

Administrative and selling expenses Operating Profit Other income - Net

4,860,175,2 37

2,007

1 0,113,499,3 51

Sales - Net

9,041,816,2 52

4, 889,681,966

4, 422,472,357

(3, 703,361,406)

(3,2 88,786,063)

1, 186,320,560

1, 133,686,294

(435,185,07 3)

(391,290,338)

( 320,622,883)

2,849,745,8 41

1,572,167,9 03

795,030,222

813,063,411

620,148,589

641,224,883

1, 122,601,656

305,447,731

(2,470,391, 655)

(1,061,933, 212)

(657,548,074)

( 326,374,206)

999,502,775

1,151,459,5 74

1, 260,083,804

792,136,936

395,262,335

(102,218,85 2)

(72,007,073 )

(115,569,082)

(50,843,271)

(20,000,000 )

897,283,923

1,079,452,5 01

1, 144,514,722

741,293,665

375,262,335

3,155,912,4 27 (2,440,779, 273) 715,133,154 (185,112,54 8) 530,020,606 9,864,791 (144,623,06 2)

73/87

SHAPPHIRE (PVT). LIMITED BALANCE SHEET FOR THE YEAR ENDED 2008 ASSETS

2008

2007

2006

2005

2004

NON-CURRENT ASSETS Property, Plant and Equipment

3,936, 3,793,62 3,721,36 3,124,15 2,429,95 357,164 1,479 8,562 2,756 4,944

Capital Work in progress

136, 665,017 7,308 1,

Intangible Assets

035,155

Investment Property

660,297

Long term Investment

455,739

Loan term loanssecured and deposits

609,945

309,35

202,11 9,669

1,86

166,67 4,519

2,69

57,60 8,750

3,51

3,283

1,411

9,539

-

-

-

140,

333,58

550,

400,08 7,567

18,

404,68 7,567

27,88 6,920

1,557 359,68

7,567 24,22

4,793

26,17

9,194

23,82 0,007

4,78 4,532,8 4,355,0 3,680,2 2,844,96 3,783,317 16,557 92,002 13,575 5,258

CURRENT ASSETS Inventories

3,278, 1,949,14 1,908,73 1,860,86 1,249,57 652,891 6,494 4,607 3,775 2,742

Trade Debts

1,129, 1,280,85 1,181,49 976,38 1,150,57 634,217 2,424 1,096 2,566 9,738

Loan and advances

803,031

7,608

6,776

5,687

8,820

Investments

-

-

-

-

5,091

Advance/ refundable income tax

288,064

Trade deposits and short term prepayments

173,454

Other receivables

562,147

Short term investments

61,

115,67

41,51

31,16

109,13

245,25

96,

36,98 5,119

7,

5,25 3,941

78,

2,821,

51,61 3,256 3,30 0,053

119,31 6,598

1,22

121,59

47,12

5,900 1,521,73

131,02 1,514

8,857

8,423 3,032,18

176,04 1,185

13,49 7,444

503,64

74/87

493,005

Cash and bank balances

0,857 66,

874,980

2,569 53,77

4,469

4,001 33,31

2,085

41,25

6,301

56,52 8,131

7,54 6,593,1 4,863,2 3,637,7 2,955,59 0,481,789 87,510 98,865 08,272 3,480

TOTAL ASSETS

12,32 11,126,0 9,218,3 7,317,9 5,800,55 4,265,106 04,067 90,867 21,847 8,738

EQUITY AND LIABILITIES

CAPITAL AND RESERVES 200,

200,83

200,83

200,83

200,83

Share Capital

831,400

Reserves

4,758, 5,601,77 3,558,56 2,307,51 1,954,79 930,127 4,092 1,976 0,163 5,027

Accumulated profit

730,082

Total Equity

5,57 6,018,8 3,893,9 2,797,1 2,327,93 7,491,609 68,330 28,464 14,637 3,429

1,400

617,

1,400

216,26 2,838

1,400

134,53 5,088

1,400

288,77 3,074

172,30 7,002

SHAREHOLDERS EQUITY NON CURRENT LIABILITIES Redeemable Capital

-

Loan term finances

501,210

6,877

Custom duty payable

-

8,878

Deferred liabilities

39 407,3 366,27 326,71 279,46 6,649,544 55,062 8,699 0,352 2,992

469,

734,94

934,38

0,957 18

1,188,01 7,068

18 8,878

940,30 4,765 18

8,878

18 8,878

86 1,142,4 1,300,8 1,514,9 1,219,95 6,150,754 90,817 48,534 16,298 6,635

CURRENT LIABILITIES

75/87

490,

371,95

667,34

575,33

505,96

Trade and other payables

810,513

Interest/ mark up on loans

211,756

short term borrowings

4,923, 3,109,23 2,611,40 1,933,61 1,540,81 882,728 2,345 2,600 0,996 9,433

Current portion of long term liabilities

903,996

3,492

6,109

Current portion of gratuity fund

-

-

8,287

Provision for income tax

813,750

0,000

9,967

Dividend payable

-

-

3,251

CONTIGENCY AND COMMETMENTS

5,88 3,964,6 4,023,6 3,005,8 2,252,66 0,622,743 44,920 13,869 90,912 8,674

TOTAL EQUITY AND LIABILITIES

12,32 11,126,0 9,218,3 7,317,9 5,800,55 4,265,106 04,067 90,867 21,847 8,738

2,583 82,

9,055 71,19

6,500

322,

0,266 58,95

4,600

347,06

1,833 45,08

1,569

603,23

-

352,34

147,89

3,252

6,239

-

-

24,07

60,

65,20

58,27

99,13 3,295

31

57,62 9,936

39 1,534

36 1,233

76/87

SHAPPHIRE (PVT). LIMITED PROFIT & LOSS A/C FOR THE YEAR ENDED 2008

SALES COST OF SALES GROSS PROFIT DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER OPERATING OTHER OPERATING INCOME

2008 9,746, 607,946 8,618, 580,605 1,128, 027,341

2007 9,152, 455,933 7,961, 253,425 1,191, 202,508

442, 316,060

2006 7,966, 281,051 7,201, 536,030 764, 745,021

391, 366,747

115,0

41, 676,645

91,

86,239

860,697

500,000

367,023

77,

835, 277,

54,68

20,

59,

403,

27,98 6,950

51,

111,64

726,587 73,

451,728

369,94 1,429

9,456

088,074

902,250

7,091,11 4,328

49,

13,

95, 620,045

5,757

-

747,754

866,302

2004 7,461,05

29, 575,561

811,031 16,

158,563

2005 5,338, 810,168 4,734, 528,479 604, 281,689

4,873 47,

974,422

OPERATING PROFIT

1,405, 283,605

228,086

293,293

596,887

9,896

RE-MEASUREMENT OF HELD FOR TRADING INVESTMENTS

-

-

-

-

1,601

FINANCE COST

683,187

520,225

833,551

923,488

0,241

OTHER CHARGES

-

-

-

-

4,903

787,

684,802

28,96

256,264

691,

8,467 556,

398,90

75 734,

467,

427,

174,

127,26 13,54

734, 683,187

PROFIT BEFORE TAXATION

600,418

TAXATION

870,336

PROFIT AFTER TAXATION

730,082

467, 520,225

670,

427, 833,551

319, 707,861

52,

263, 459,742

103, 445,023

617,

381,

128,

257,35 3,151

92,

85,04

900,325

134, 535,088

141,55 6,745

673,399

924,654

216, 262,838

174, 923,488

6,149

288, 773,074

172,30 7,002

77/87

Ratio analysis current ratio year

current assets/current liabilites 2008 2007 2006

2005

2004

Nishat

(13929518000/ 11721605000)

13309087000/ 7649373000

(9758440000)/ 7051533000

(7746417000 )/6253333000

(2824571966)/ 7649373000

Azgard 9

(11143094057/ 10353719503)

(9357664184/ 6194368066)

(9041816252/ 7949335507)

(4860175237 /4447866267)

(3255429757/ 2612893250)

Sapphir e

(7540481789/5 880622743)

(6593187510/ 3964644920)

(4863298865/ 4023613869)

(3637708272 /3005890912)

(2955593480/ 2252668674)

quick ratio quick ratio year

(current assets-stock)/current liabilites 2008 2007 2006

2005

2004

Nishat

(13309087000 (139295180004103648000)/1 3106436000)/7 1721605000 649373000

(97584400003003174000)/7 051533000

(7746417000 2897392000)/ 6253333000

(28245719660)/7649373000

Azgard 9

(111430940574034103119)/1 0353719503

(93576641842246132173)/6 194368066

(90418162522022510924)/7 949335507

(4860175237 2034180550)/ 4447866267

(32554297571394729330)/2 612893250

Sapphir e

(75404817893278652891)/5 880622743

(65931875101949146494)/3 964644920

(48632988651908734607)/4 023613869

(3637708272 1860863775)/ 3005890912

(29555934801249572742)/2 252668674

78/87

inventory day Inventory Days year

Inventory Days = Inventory / Cost of Sales*365 2008 2007 2006 2005

2004

Nishat

(4103648000/1 6298857000)*3 65

(3106436000/ 14335254000) *365

(3003174000/ 13701626000) *365

(2897392000 /9239731000) *365

(0/7091114328 )*365

Azgard 9

(4034103119/6 660223767)*36 5

(2246132173/ 4620988950)* 365

(2022510924/ 3703361406)* 365

(2034180550 /3288786063) *365

(1394729330/ 2440779273)* 365

Sapphir e

(3278652891/8 618580605)*36 5

(1949146494/ 7961253425)* 365

(1908734607/ 7201536030)* 365

(1860863775 /4734528479) *365

(1249572742/ 7091114328)*3 65

Trade debtors/Credit sales*365 2008 2007 2006

2005

2004

Debtor's day Debtor's day year Nishat

(1329027000/1 9267633000)*3 65

(831653000/1 7180192000)* 365

(1026884000/ 16417358000) *365

(877358000/1 1374630000)* 365

(1150579738/ 7461055757)* 365

Azgard 9

(1777232612/1 0113499351)*3 65

(1657196735/ 6628341926)* 365

(1134897149/ 4889681966)* 365

(1013883584 /4422472357) *365

(945111856/31 55912427)*36 5

Sapphir e

(1129634217/9 746607946)*36 5

(1280852424/ 9152455933)* 365

(1181491096/ 7966281051)* 365

(976382566/ 5338810168)* 365

(1150579738/ 7461055757)* 365

79/87

Creditors days Creditors days year

Trade Creditors/Credit Sales*365 2008 2007 2006

2005

2004

Azgard 9

(1350500115/1 0113499351)*3 65

(1030875769/ 6628341926)* 365

(1243588067/ 4889681966)* 365

(791641172/4 422472357)*3 65

(691981192/3 155912427)*3 65

Sapphir e

(490810513/97 46607946)*365

(371952583/9 152455933)*3 65

(667349055/7 966281051)*3 65

(575330266/ 5338810168)* 365

(505961833/7 461055757)*3 65

Nishat

(1141227000/1 9267633000)*3 65

(926593000/1 7180192000)* 365

(960436000/1 6417358000)* 365

(812216000/1 1374630000)* 365

(926593000/7 461055757)*3 65

2007

2006

2005

2004

Nishat

(19267633000/ 37916579000)

(17180192000 /39587091000)

(16417358000 /31179326000)

(1137463000 0/2191760200 0)

(7461055757/ 5335955667)

Azgard 9

(10113499351/ 27371673266)

(6628341926/ 23632588968)

(4889681966/ 23178303067)

(4422472357 /10541226724 )

(3155912427/ 6297218212)

Sapphir e

(9746607946/1 2324265106)

(9152455933/ 11126004067)

(7966281051/ 9218390867)

(5338810168 /7317921847)

(7461055757/ 5800558738)

Total Asset Turnover Formula year

Sales/ Total Assets 2008

80/87

Fixed Asset Turnover Ratio Formula year

Cost of sales / Fixed Assets 2008 2007

2006

2005

2004

Nishat

(16298857000/ 10647310000)

(14335254000 /10586159000)

(13701626000 /10611353000)

(9239731000 /9151096000)

(7091114328/2 429954944)

Azgard 9

(6660223767/7 734950547)

(4620988950/ 7643649558)

(3703361406/ 7601895866)

(3288786063 /3113043032)

(2440779273/ 2847936402)

Sapphir e

(8618580605/3 936357164)

(7961253425/ 3793621479)

(7201536030/ 3721368562)

(4734528479 /3124152756)

(7091114328/2 429954944)

2007

2006

2005

2004

Gross profit to Sales Formula year

Gross profit/Sales*100 2008

Azgard 9

(3453275584/1 0113499351)*1 00

(2007352976/ 6628341926)* 100

(1186320560/ 4889681966)* 100

(1133686294/ 4422472357)* 100

(715133154/3 155912427)*1 00

Sapphir e

(1128027341/9 746607946)*10 0

(1191202508/ 9152455933)* 100

(764745021/7 966281051)*1 00

(604281689/ 5338810168)* 100

(369941429/7 461055757)*1 00

Nishat

(2968776000/1 9267633000)*1 00

(2844938000/ 17180192000) *100

(2715732000/ 16417358000) *100

(2134899000 /11374630000 )*100

(369941429/7 461055757)*1 00

81/87

Operating Profit Margin Formula

year

Operating Profit Margin = Operating profit /Sale*100 2008 2007 2006

2005

2004

Nishat

(7304400000/1 9267633000)*1 00

(2175475000/ 17180192000) *100

(1986526000/ 16417358000) *100

(2000204000 /11374630000 )*100

(564262708/7 461055757)*1 00

Azgard 9

(2849745841/1 0113499351)*1 00

(1572167903/ 6628341926)* 100

(795030222/4 889681966)*1 00

(813063411/4 422472357)*1 00

(530020606/3 155912427)*1 00

Sapphir e

(1405283605/9 746607946)*10 0

(787228086/9 152455933)*1 00

(691293293/7 966281051)*1 00

(556596887/ 5338810168)* 100

(398909896/7 461055757)*1 00

2006

2005

2004

Net Profit/ (Loss) Before Tax Formula year

Net profit before tax/Sales*100 2008 2007

Nishat

(6396968000/1 9267633000)*1 00

(1356208000/ 17180192000) *100

(1758866000/ 16417358000) *100

(2033354000 /11374630000 )*100

(705067852/7 461055757)*1 00

Azgard 9

(999502775/10 113499351)*10 0

(1151459574/ 6628341926)* 100

(1260083804/ 4889681966)* 100

(792136936/ 4422472357)* 100

(395262335/3 155912427)*1 00

Sapphir e

(670600418/97 46607946)*100

(319707861/9 152455933)*1 00

(263459742/7 966281051)*1 00

(381673399/ 5338810168)* 100

(257353151/7 461055757)*1 00

82/87

Net Profit/ (Loss) after interest and Tax Formula year

Net profit after tax/Sales*365 2008 2007

2006

2005

2004

Nishat

(6138968000/1 9267633000)*1 00

(1211208000/ 17180192000) *100

(1632866000/ 16417358000) *100

(1867354000 /11374630000 )*100

(790114001/7 461055757)*1 00

Azgard 9

(897283923/10 113499351)*10 0

(1079452501/ 6628341926)* 100

(1144514722/ 4889681966)* 100

(741293665/ 4422472357)* 100

(375262335/3 155912427)*1 00

Sapphir e

(617730082/97 46607946)*100

(216262838/9 152455933)*1 00

(134535088/7 966281051)*1 00

(288773074/ 5338810168)* 100

(172307002/7 461055757)*1 00

Net Income / Total Assets*100 2008 2007

2006

2005

2004

Return on Assets Formula year Nishat

(6138968000/3 7916579000)*1 00

(1211208000/ 39587091000) *100

(1632866000/ 31179326000) *100

(1867354000 /21917602000 )*100

(790114001/5 335955667)*1 00

Azgard 9

(897283923/27 371673266)*10 0

(1079452501/ 23632588968) *100

(1144514722/ 23178303067) *100

(741293665/ 10541226724) *100

(375262335/6 297218212)*1 00

Sapphir e

(617730082/12 324265106)*10 0

(216262838/1 1126004067)* 100

(134535088/9 218390867)*1 00

(288773074/ 7317921847)* 100

(172307002/5 800558738)*1 00

83/87

Return on Capital employed Formula year

Profit before interest and taxation / Capital Employed *100 2008 2007 2006

2005

2004

Nishat

(6396968000/2 6194974000)*1 00

(1356208000/ 31937718000) *100

(1758866000/ 24127793000) *100

(2033354000 /15664269000 )*100

(705067852/2313417333)* 100

Azgard 9

(999502775/17 017953763)*10 0

(1151459574/ 17438220902) *100

(1260083804/ 15228967560) *100

(792136936/ 6093360457)* 100

(395262335/3 684324962)*1 00

Sapphir e

(670600418/64 43642363)*100

(319707861/7 161359147)*1 00

(263459742/5 194776998)*1 00

(381673399/ 4312030935)* 100

(257353151/3 547890064)*1 00

Return on equity Ratio (ROE) Formula

[(Net profit after tax − Preference dividend) / Equity share capital] × 100 2008 2007 2006 2005

2004

Nishat

((61389680000)/2514718000 0)*100

((12112080000)/3016389800 0)*100

((1632866000 0)/2111240900 0)*100

((186735400 00)/128061140 00)*100

((7901140010)/3016389800 0)*100

Azgard 9

((8972839230)/1012408250 1)*100

((1079452501 0)/9720054196 )*100

((11445147220)/9174168134 )*100

((7412936650)/309310263 9)*100

((3752623350)/2510108903 )*100

Sapphir e

((617730082((2162628380)/5577491609) 0)/6018868330 *100 )*100

((1345350880)/3893928464 )*100

((2887730740)/279711463 7)*100

((1723070020)/2327933429 )*100

84/87

Debt to Equity Ratio Formula

Total Long Term Debts / Shareholders Funds 2008 2007 2006

2005

2004

Nishat

(1047794000/2 5147180000)

(1773820000/ 30163898000)

(3015384000/ 21112409000)

(2858155000 /12806114000 )

(1773820000/ 30163898000)

Azgard 9

(6674515005/7 359587542)

(7479093629/ 7319449022)

(5797438559/ 7367101082)

(2721314147 /2140640149)

(867651548/2 099450921)

Sapphir e

(469501210/49 59761527)

(734946877/5 802605492)

(934380957/3 759393376)

(1188017068/ 2508341563)

(940304765/2 155626427)

Interest Coverage Ratio Formula

Net Profit Before Interest and Tax / Fixed Interest Charges] 2008 2007 2006

2005

2004

Nishat

(6396968000/9 07432000)

(1356208000/ 819267000)

(1758866000/ 755054000)

(2033354000 /407696000)

(705067852/1 27260241)

Azgard 9

(999502775/24 70391655)

(1151459574/ 1061933212)

(1260083804/ 657548074)

(792136936/ 326374206)

(395262335/1 44623062)

Sapphir e

(617730082/73 4683187)

(216262838/4 67520225)

(134535088/4 27833551)

(288773074/ 174923488)

(172307002/1 27260241)

85/87

Earning Per Share Formula

Profit after tax/No. of shares 2008 2007

2006

2005

2004

Nishat

(6138968000/1 59785736)

(1211208000/ 159789974)

(1632866000/ 159771625)

(1867354000 /145206376)

(790114001/1 52826693)

Azgard 9

(897283923/33 8597707)

(1079452501/ 331120399)

(1144514722/ 230284652)

(741293665/ 99904807)

(375262335/8 7067827)

Sapphir e

(617730082/20 082252)

(216262838/2 0080115)

(134535088/2 0079864)

(288773074/ 20095551)

(172307002/2 0082401)

Earning Per Share / Market Price Per Share * 100 2008 2007 2006 (38.42/85.97)*1 (7.58/129.2)*1 (10.22/104.8)* 00 00 100

2005 (12.86/76)*10 0

2004 (5.17/52.8)*10 0

(4.97/22.05)*1 00

(7.42/32)*100

(4.31/22.5)*10 0

(6.7/70)*100

(14.37/90)*10 0

(8.58/70)*100

Earning Yield Formula Nishat Azgard 9 Sapphir e

(2.65/61.56)*10 0 (30.76/72.45)*1 00

(3.26/52.1)*10 0 (10.77/92.5)*1 00

Market Value of Share Nishat Azgard 9 Sapphir e

2008 85.97

2007 129.20

2006 104.80

2005 76.00

2004 52.80

61.56

52.10

22.05

32.00

22.50

72.45

92.50

70.00

90.00

70.00

Price Earning Ratio Formula Nishat Azgard 9 Sapphir e

Market price per equity share / Earnings per share 2008 2007 2006 (85.97/38.42) (129.2/7.58) (104.8/10.22)

2005 (76/12.86)

2004 (52.8/5.17)

(61.56/2.65)

(52.1/3.26)

(22.05/4.97)

(32/7.42)

(22.5/4.31)

(72.45/30.76)

(92.5/10.77)

(70/6.7)

(90/14.37)

(70/8.58)

86/87

87/87