Sitara limited ratio analysis by saniah saleem rao

Analysis of Financial Statements

Sitara Chemical Industries COMPANY LIMITED

Submitted To:

Mr. Salman Majeed

Submitted By:

SaniahSaleem 09 (Q) 7th Semester

Department of Management Sciences

The Islamia University of Bahawalpur

Sub campus: Bahawalnagar

1

Table of Content

Executive summery

2

Sr No. Contents Page

No.1 Executive summery 3

2 History of Sitara Chemical Industry 4

3 Introduction of Sitara Chemical Company 5

4 Vision and mission 6

5 Product of Company 7

6 Analysis of Balance Sheet 8

8 Analysis of Income Statement 19

9 Ratio Analysis 26

10 Liquidity Analysis 27

11 Activity Analysis 31

12 Lon Term Analysis 34

13 Profitability Analysis 36

17 Qualitative Analysis 38

19 Conclusion and Suggestion 40

20 Annexure 41

Summery Sitara Chemical Industries Limited, Its product line includes Caustic Soda solid,

sodium hypochlorite, caustic soda liquid, hydrochloric acid, liquid chlorine, Specialty

Chemical, Fertilizer polyester Cotton.

This is manufacturing company, it’s private limited company, the division of the

company is chemical division. It’s a textile division, 343 employees are working

there. 17 major product the sub product is three.

We done the work to find the ratios Balance sheet ratio analysis, Income statement

ratio analysis, or complete ratio analysis in which have a major four ratio analysis.

We are analysis the SWOT analysis and analysis some major weakness and threat.

In the last we are done suggestion of the company.

3

History of Sitara Chemical Industry

HistorySitara chemical industry limited, a unit of Sitara group founded by Haji Abdul

Ghafoor (late) and Haji Bashir Ahmed, was established in 1981.

SCIL began producing caustic soda in 1985, initially at a rate of 30 MT per day. The

plant‘s production capacity was gradually increased over the years to current level of

400MT per day .SCIL produces caustic soda, liquid chlorine and allied products at a

chemical complex, situated at 32Km Faisalabad sheik hupura road, Faisalabad.

Sitara chemical industry limited is being headed by the honorable Mian Muhammad

Adrees as a Chief Executive Officer. SCIL believes in demonstrating its abilities to

consistently provide products that meet industrial and consumer requirements.

Sitara chemical industry being the largest producer of chlor-alkali products in

Pakistan is a reference in employing the world’s latest technology at all times.

Sitara Chemical Industries Limited (SCIL) is committed to continual improvement of

its environmental management system (EMS) by adoption of appropriate pollution

prevention measures and complying with all relevant environmental legislation/

regulations through training, team work and procedures as implemented from time to

time.

4

Introduction of Sitara Chemical CompanyIntroduction

Sitara Company Industry Limited was fused in 1981 and started delivering scathing

pop in 1985, at first at a rate of 30 metric tons Caustic a day. The plant's ability was

bit by bit expanded over the years to the current level of 610 metric tons a day. In

option, different by-item offices have been added and extended occasionally to adapt

to developing interest. The Organization went into Textile Spinning Business in 1995.

Its claim to fame chemicals and fare division was built up in 2001 and agriculture

chemicals division in 2003.

Sitara Chemical Industries Limited (SCIL) is focused on persistent change of its

natural administration framework (EMS) by the reception of suitable contamination

counteractive action measures and conforming to all important ecological

enactment/directions through preparing, cooperation and methodology as actualized

every once in a while.

5

Vision and mission

Vision

Strive to develop and employ innovative technological

Solutions to add value to businesses with a progressive and proactive approach.

Mission

Continuing growth and diversification for the bottom

Line results with risks well contained.

6

Product of Company

Products1. Basic Chemicals

2. Specialty Chemicals

3. Gases

Names of the products.

Basic Chemicals: Ammonium Chloride

Bleaching Powder

Caustic Soda Flakes

Caustic Soda Liquid (32-50 %)

Caustic Soda Solid

Hydrated Lime

Hydrochloric Acid

Liquid Chlorine

Sodium Hypochlorite

Specialty Chemicals:

Aluminium Sulphate

Calcium Chloride Dihydrate

Copper (I) Chloride

Ferric Chloride

Magnesium Carbonate

Nickel Chloride Hexahydrate

Calcium Chloride (Prills)

Gases Carbon Dioxide

7

BALANCE SHEET ANALYSIS

8

Sitara Chemical COMPANY LIMITED

ANALYSIS OF BALANCE SHEET

AS ON DECEMBER, 2011-2015

Current Assets:

Cash and Bank Balance:

Years 2011 2012 2013 2014 2015Cash and Bank Balance 140,776,990 7 9,861,668 279,534,490 436,767,468 256,977,410

Vertical Analysis 7% 3% 9% 12% 6%

Interpretation:

For past five years we can without much of a stretch watch that the adjust of money is

diminishing which demonstrates the organization's best administration of money

likewise convey that organization never held sit still money (better money

administration).

9

Trade Debts:

Years 2011 2012 2013 2014 2015

Trade Debts 512,397,911 796,202,867 936,929,485 1,262,557,632 1,187,078,233


Interpretation:

Exchange obligations are expanded in 2014 which implies our credit

deals is expanding yet next three years our exchange obligations were

abatement on the grounds that our normal gathering period is diminishing

and we fix our credit deal approach.

Deposits and Prepayment:

Years 2011 2012 2013 2014 2015Deposit & prepayment 7,036,816 6 ,680,502 9,612,725 8,567,010 7,777,958

Vertical Analysis 30% 0.2% 32% 24% 17%

Interpretation:

In the first year company paid the high amount to the supplier and stack holders in the

advances. In 2012 the least amount company paid to the supplier and stack holders in

the advanced. The last three year the average amount paid but the last yea company

will again start to maintain it.

Loans and Advances:

Years 2011 2012 2013 2014 2015Loans and Advances 311,576,542 4 37,603,208 255,915,080 413,258,969 1,658,999,79

10

1

Vertical Analysis 14% 16.1 8.5% 11.4% 37%

Interpretation:

Because of the better position of the organization from the year, 2015 and increment

in deal and net benefit organization can give here and now advance and advances to

the representatives and different providers.

Stock in Trade: Years 2011 2012 2013 2014 2015

Stock in Trade885,083,340 9 02,720,830 1,010,809,125 881,710,696 717,460,100


Interpretation:

Stock in public expos that its sum is expanded in 2011 because of completed great.

Organization can held vast sum as completed products yet in next two years 2012 and

2013 it is ordinary yet in 2015 organization held a slightest load of complete

merchandise.

11

Stores and Spares:

Years 2011 2012 2013 2014 2015

Stores and Spares279,947,941 3 66,962,117 336,360,277 401,165,384 380,378,519

Vertical Analysis 12% 13.5% 11% 11% 8.5%

Interpretation: Under this heading as expanding pattern demonstrates that organization holding free

instruments and day by day utilize oils and oils as creation expanded with the goal

that organization need to hold such things in adequate amount.

Others Receivables:

Years 2011 2012 2013 2014 2015

Others Receivables7,773,380 9 ,079,166 16,599,019 5,901,655 11,726,462

Vertical Analysis 0.3% 0.4% 0.6% 0.1% 0.3%

Interpretation:

From year 2011 and 2014 different receivables like receivables from providers and

workers was diminishing which indicates organization better gathering administration

however it again expanded in 2013 yet in the time of 2015 the receivables again

diminishing. From the year 2011-2015 the proportion is not up to 1%.

12

Total Current Assets:

Years 2011 2012 2013 2014 2015

Current Assets2,293,235,870 2 ,715,289,032 3,008,549,505 3,601,755,335 4,446,080,341

Vertical Analysis 58% 6.3% 73% 87% 1%

Interpretation:

The general position of the present resources demonstrates that there is having

diminished in 2012 and 2015 however again organization's aggregate streams

expanded from 2011 and 2013 because of consideration of Deposits and Prepayments,

Loans and Advances. Again 2014 will expanded in the high sum.

Non-current Assets:

Long Term Investments:

Years 2011 2012 2013 2014 2015

Long Term

Investments

96,480,134 67,607,937 63,431,202 63,431,202 99,192,142


Interpretation:

From past year the condition of company is going to the same level.

13

Long Term Deposits, Prepayments:

Years 2011 2012 2013 2014 2015

Long Term

Deposits.

108,128,850 110,296,726 110,432,287 110,432,287 110,433,287

Vertical Analysis 1.3% 10% 11% 12% 11%

Interpretation:

In first years 2011 organization put resources into long haul stores yet from 2012

organization changed its arrangement and began interests in here and now Deposits

and Prepayments.

Long Term Loans and Advances:

Years 2011 2012 2013 2014 2015

Long Term loan

and advances.

840,659,837 827,493,584 819,302,966 817,876,172 1,265,059,329

Vertical Analysis

11% 8% 8% 8% 13%

Interpretation:

The organization began giving long haul credits and advances to the providers and

workers because of that reason organization's long haul advances and Advances are

expanded with the progression of time particularly in 2015 there is diminishing from

the year 2012-2014. In any case, it's keep up they don't down additional.

Total Non- Current Assets:

Years 2011 2012 2013 2014 201514

Total Non-

Current Assets

8,001,028,528 10,165,371,942 9,950,437,686 9,784,655,301 9,997,843,214

Vertical Analysis

70% 79% 77% 73% 69%

Interpretation:

It the calculation of all above citation non- current assets. They are contributing in

making total assets. They are stable in last five years.

Total Assets:

Years 2011 2012 2013 2014 2015

Total Assets

11,472,264,398 12,880,660,97

4

12,958,987,191 13,386,410,636 14,443,923,555


Interpretation:

Add up to resources are the total of current resources non-current resource and settled

resources. As we see that there is no expansion and diminishing in these heads so our

aggregate resources are steady amid most recent five years.

Liabilities and Owners Equity:

Current Liabilities:

15

Current portion of long term financing:

Years 2011 2012 2013 2014 2015

Current portion of

long term financing

954,033,710 862,779,540 657,250,376 690,278,947 280,357,144


Interpretation:

Organization developing its long haul obligations in initial four years and lessening its

liabilities in 2015. Organization again has a less add up to develop.

Trade and Other Payables:

Creditors:

Year 2011 2012 2013 2014 2015

Trade and Other

Payables

1,356,248,460 1,522,591,422 1,828,764,814 1,690,647,587 2,121,584,542


Interpretation:

In initial two years organization pay to the leasers however in 2013company has more

risk towards the banks yet in 2011-2012 organization paid its obligation and decreases

the adjust.

Total Current Liabilities:

Year 2011 2012 2013 2014 2015

16

Total Current

Liabilities

11,472,264,398 12,880,660,974 12,958,987,191 13,386,410,636 14,443,923,555


Interpretation:

The general position of current liabilities demonstrates that in 2011 and 2012

organization expanded its present obligation however in 2013-2014 it's a stable and in

2015 the liabilities lessened.

Total Current Liabilities:

Year 2011 2012 2013 2014 2015

Total Non- Current

Liabilities

2,824,812,215 2,732,005,569 2,047,311,132 1,776,277,772 1,952,385,658


Interpretation:

The aggregate non-current liabilities diminishes because of reduction in getting credit

and finances from pariahs and running business with claim capital. That is the reason

add up to non-current liabilities are diminishing.

Owner’s EQUITY:

Reserves:

Year 2011 2012 2013 2014 2015Reserves 1,332,211,601 1,338,984,262 1,382,095,241 1,410,102,556 1,363,581,652

17


Interpretation:

In first years reserves increases due to general reserve and after that it is decreased

due to use of specific reserve.

Total Owner’s Equity:

Year 2011 2012 2013 2014 2015

Total Owner’s

Equity

3,786,411,020 4,402,885,955 5,347,168,856 6,102,089,608 6,892,188,396

Vertical Analysis

33% 34% 41% 46% 48%

Interpretation:

The over-all position of liabilities and owner equity is stable over the years and the

liabilities and owner equity is continuously increased.

18

Income STATEMENT ANALYSIS

Sitara Chemical Indutries LIMITED

19

ANALYSIS OF INCOME STATEMENT

FOR THE YEAR ENDED

Net Sales:

Year 2011 2012 2013 2014 2015

Net Sales

6,216,879,954 7,463,926,517 8,099,794,812 8,807,482,117 8,722,879,814


Interpretation:

A deal speaks to income from merchandise or administrations sold to clients. The firm

procure income from the offers of essential items. Deals are re more often than not

demonstrated net of any markdown, returns, and remittances. They stables from the

past 5 years.

Cost of Manufacture:

Year 2011 2012 2013 2014 2015

Cost of Manufacture

4,883,737,562 5,233,665,895 5,681,733,225 6,487,777,545 7,165,278,592


Interpretation:

As raw material consumed, salaries and wages and fuel and power are increased cost

of goods manufactured because it is a function of all these items. So cost of goods

manufactured increased as sales increased.

Gross Profit:

2011 2012 2013 2014 2015

20

Year

Gross Profit

1,553,641,041 2,069,987,192 2,504,871,916 2,139,111,143 1,571,680,914


Interpretation:

In the start of the two year 2011-2012 the Gross profit is not increasing. Time to time

the Gross profit will be increase.

Administration Expenses:

Year 2011 2012 2013 2014 2015

Administration

Expenses

42,653,372 38,386,400 32,768,795 55,427,316 632,761,496


Interpretation:

Administrating expenses decreases because company focus on selling and after few

year Administrating expenses again increase.

Total Operating Expenses:

Year 2011 2012 2013 2014 2015Total Operating 42,088,096 88,450,365 98,157,980 97,891,659 82,637,992

21

Expenses

Vertical Analysis

0.64% 0.92% 1.15% 1.05% 0.94%

Interpretation:

As selling and administrating expenses is decrease in the start after passing the year in

2013-2014 they increase and again decrease.

Finance cost:

Year 2011 2012 2013 2014 2015

Finance Cost

1,078,065,020 1,124,322,227 1,161,649,775 1,048,725,239 1,091,999,443

Vertical Analysis

11% 9% 6% 5% 4%

Interpretation:

In the start 2011 the finance cost will increased after the time period they decreased

and 2015 they decrease more.

Profit before taxation:

Year 2011 2012 2013 2014 2015

Profit before taxation 518,229,393 984,051,365 1,375,990,936 1,145,813,220 1,112,442,967

Vertical Analysis

22

4% 13% 17% 13% 13%

Interpretation:

Profit Before Taxation in the starting year 2011 they will decrease because they

paying the more tax after the year they stable and start increasing from the year 2013

they then again reduced but they stable.

Provision for taxation:

Year 2011 2012 2013 2014 2015

Provision for

taxation

90,238,072 295,569,418 338,867,640 284,639,086 126,011,653


Interpretation:

Provision for taxation in the start they decrease because most of the fund are paid.

After the time spend these duties and fund will stable, the time which they stable from

the year 2012-2014 after the ended year 2014 they decrease.

Profit for the year:

Year 2011 2012 2013 2014 2015

Profit for the year

427,991,321 688,481,947 1,037,123,296 861,174,134 986,431,314


Interpretation:

23

RATIO ANALYSIS

In the start of the year 2011, this is the starting year that’s why profit is not more.

After the passage of the time they profit of the year is increase.

24

Ratio Analysis

Ratio AnalysisRatio analysis is a widely used tool of financial analysis. It is defined as the

systematic use of ratio to interpret the financial statements so that the strengths and

weaknesses of a firm, as well as its historical performance and current financial

condition, can be determined.

A single ratio in itself is meaningless because it does not furnish a complete picture. A

ratio becomes meaning full when compared with other standard and the ratio of the

other years. So the ratios of Packages limited have been calculated by me and I

compared it with the standards and the ratio of other years.

Purpose:

The purpose of ratio analysis depends upon the event for which the analysis is made.

The following paragraph briefly explains the purpose of ratio analysis:

‘Management’ would like to know the operational efficiency and would think of such

ratios as return on investment, turnover of fixed assets, net profit to sales etc.

While ‘Creditors’ would like to know the ability of the company to meet it current

obligations and, therefore, would think of current and liquid ratios, turnover of

receivables, coverage of interest by the level of earnings, etc. and on the other side,

‘Investors’ will be interested in such ratios as earnings per share, book value per share

and dividends per share etc.

Classification of Ratios:

Ratios may be classified in a number of ways keeping in view the particular purpose.

To achieve the above purposes effectively, ratios may be classified as;

Liquidity ratio.

Activity ratio

Long term analysis

Profitability ratio.

25

Liquidity ratios

Liquidity ratiosThe liquidity of a business firm is measured by its ability to satisfy its short-term

obligations as they come due. Liquidity refers to the solvency of the firm’s over all

financial position the case with which it can pay its bills.

Current Ratios

“Current ratio shows the liquidity position of the company. It shows how well the

company can meet its liquidity requirements and fulfills the cash demands of its

creditors”

PRs. (000)

Current Ratio = Current Assets / Current Liabilities

2011 2012 2013 2014 2015

Current Assets 2293235 2715289 3008550 3601755 4446080

Current liabilities 3940420 4279703 4135006 4160634 4293654

Current ratio 0.58 0.63 0.73 0.87 1.04

Interpretation:

It shows a firm’s ability to cover its current liabilities with its current assets. The

current ratio of the Company is low according to the standard. It should be 2: 1 for a

medium size business. So management should take steps to improve the current ratio.

26

Quick Ratio:

“This ratio concentrates on the more liquid current assets-Cash, Marketable

Securities, and receivables- in relation to the current liabilities/ current obligations and

shows immediate solvency of the company.”

PRs. (000)

Quick Ratio = (Cash+MS+AR) / Current Liabilities

2011 2012 2013 2014 2015

(Cash+MS+AR) 297193 205120 458922 634496 469768

Current Liabilities 3940420 4279703 4135006 4160634 4293654

Quick Ratio 0.08 0.05 0.11 0.15 0.11

Interpretation:

It shows a firm’s ability to cover its current liabilities with its quick assets. The

current ratio of Industries is low according to the standard. It should be 1: 1 for a

medium size business. So management should take steps to improve the quick ratio.

Cash Ratio

PRs. (000)

Cash Ratio = Cash +MS / Current Liabilities

2011 2012 2013 2014 2015

Cash + MS 289420 196041 442323 628594 458042


Cash Ratio 0.07 0.05 0.11 0.15 0.11

27

Cash Flow from Operating Ratio

PRs. (000)

Cash flow from operating ratio = Cash flow from operation / Current

Liabilities

2011 2012 2013 2014 2015

Cash flow from

operation

1,695,99

7

2,149,53

9

2,524,41

3

2,098,40

7

1,383,16

9


Cash flow from

operating ratio 0.76 0.75 0.67 0.47 0.26

Operating Cycle

PRs. (000)

Operating Cycle = AR in days + Inventory in days

2011 2012 2013 2014 2015

AR in days 29.67 38.40 41.64 51.61 48.99

Inventory in days 68.33 60.25 65.04 47.60 36.12

Operating Cycle 98.00 98.65 106.68 99.21 85.11

Cash Cycle

PRs. (000)

Cash Cycle= Operating Cycle - AP in days

2011 2012 2013 2014 201528

Operating Cycle 98.00 98.65 106.68 99.21 85.11

AP in days 273.48 344.58 399.01 315.95 462.58

Cash Cycle -175.48 -245.93 -292.33 -216.75 -377.47

Work in Capital

PRs. (000)

Work in Capital = Current Assets - Current Liabilities

2011 2012 2013 2014 2015

Current Assets 2293236 2715289 3008550 3601755 4446080


Work in Capital -1647184 -1564414 -1126456 -558879 152426

Activity Analysis

Activity AnalysisActivity ratios can be used to assess the speed with which current accounts, inventory,

accounts receivable and accounts payable are converted into sales or cash.

Account Receivable Turnover

29

PRs. (000)

AR Turnover = Net Sales / Avg. Trade (AR)

2011 2012 2013 2014 2015

Net Sales 6216880 7463927 8099795 8807482 8722880

Avg. Trade (AR) 512398 796203 936929 1262558 1187078

AR Turnover 12.13 9.37 8.65 6.98 7.35

Account Receivable in Days

PRs. (000)

AR in days = 360 / AR Turnover

2011 2012 2013 2014 2015

360 360 360 360 360 360

AR Turnover 12.13 9.37 8.65 6.98 7.35

AR in days 29.67 38.40 41.64 51.61 48.99

Inventory TurnoverThis ratio establishes relationship between cost of sold during a given period and the

average amount of inventory held during that period. This ratio reveals the number of

times finished stock is turned over during a given accounting period.

In general, a high inventory turnover ratio is better than a low ratio. A high ratio

implies good inventory management.

30

PRs. (000)

Inventory Turnover = CGS / Avg. Inventory

2011 2012 2013 2014 2015

CGS 4663239 5393939 5594923 6668371 7151199

Avg. Inventory 885083 902721 1010809 881711 717460

Inventory Turnover 5.27 5.98 5.54 7.56 9.97

Interpre tat ion:

This ratio tells us how many days, on average, before inventory is turned in to

accounts receivable through sales. Transforming the industry’s median inventory

turnover is 9.97.

Inventory Turnover in days

PRs. (000)

Inventory Turnover in days = 360 / Inventory Turnover

2011 2012 2013 2014 2015

360 360 360 360 360 360

Inventory Turnover 5.27 5.98 5.54 7.56 9.97

Inventory Turnover in days 68.33 60.25 65.04 47.60 36.12

Working Capital Turnover

PRs. (000)

Working Capital Turnover = Net Sales / Working Capital

2011 2012 2013 2014 2015

Net Sales 6216880 7463927 8099795 8807482 8722880

Working capital

-

1647184

-

1564414

-

1126456 -558879 152426

31

Working Capital

Turnover -3.77 -4.77 -7.19 -15.76 57.23

Account Payables Turnover

PRs. (000)

AP Turnover = Purchases / Avg. AP

2011 2012 2013 2014 2015

Purchases 1785310 1590729 1649965 1926346 1651110

Avg. AP 1356248 1522591 1828765 1690648 2121585

AP Turnover 1.32 1.04 0.90 1.14 0.78

Account Payables Turnover in Days

PRs. (000)

AP Turnover in Days = 360 / AP Turnover

2011 2012 2013 2014 2015

360 360 360 360 360 360

AP Turnover 1.32 1.04 0.90 1.14 0.78

AP Turnover in Days 273.48 344.58 399.01 315.95 462.58

Long term analysis

Long term analysisTo cheek the firm long term debt paying capacity

Income / Cash generating Point of view

Going concern point of view

Liquidity point of view

Income / Cash generating Point of view Whether the project is able to liquidate the debt or self-liquidate.

Time Interest Earned Ratio

32

The time interest earned ratio measures the ability to make contractual interest

payments

PRs. (000)

Time Interest Earned Ratio = EBIT / Interest Expense

2011 2012 2013 2014 2015

EBIT 1221723 1666922 1862820 1550765 1445685

Interest Expense 703494 682871 486829 404952 333242

Time Interest Earned Ratio 1.74 2.44 3.83 3.83 4.34

Interpre tat ion:

The higher the value of this ratio, the better able the firm is fulfill its interest

obligations.

Going Concern point of view

Debt RatioThe debt ratio measures the proportion of total assets financed by the firm’s creditors.

PRs. (000)

Debt Ratio = Total Liabilities / Total Assets

2011 2012 2013 2014 2015

Total Liabilities 6765232 7011709 6182317 5936912 6246040

Total Assets 11472264 12880661 12958987 13386411 14443924

33

Debt Ratio 0.59 0.54 0.48 0.44 0.43

Interpre tat ion:

This indicates the firm this year has financed 43 % of its assets with debts. The higher

this ratio, the more financial leverage the firm has.

Debt / Equity RatioThe debt equity ratio indicates the relationship between the long-term funds provided

by creditors and those provided by the firm’s owners

PRs. (000)

Debt / Equity Ratio = Log term Debt / Capitalization

2011 2012 2013 2014 2015

Long Term Debt 1334776 734475 566071 858001

Capitalization 5596654 5737662 6081644 6668161 7750189

Debt / Equity Ratio 0.00 0.23 0.12 0.08 0.11

Interpre tat ion:

The standard debt equity ratio is 60:40. The lower debt equity ratio is preferable.

34

Profitability Analysis

Profitability Analysis A firm’s profitability can be assessed relative to sales, assets, and equity or share

value.

Gross Profit MarginThe gross profit margin measures the percentage of each sales dollar remaining after

the firm has paid for its goods. The higher the gross profit margin the better and the

lower the relative cost of merchandising sold and vice versa.

PRs. (000)

Gross Profit Margin =Gross Profit / Sale

2011 2012 2013 2014 2015

Gross Profit 1553641 2069987 2504872 2139111 1571681

Sale 6216880 7463927 8099795 8807482 8722880

Gross Profit Margin 24.99 27.73 30.93 24.29 18.02

Interpretation:

The CGS has decreased due to more efficient use of RM, less wastage of material.

Operating Profit MarginIt measures the percentage earned on each sales dollar before interest and taxes.

PRs. (000)

Operating Profit Margin = Operating Profit / Sale

2011 2012 2013 2014 2015

Operating Profit 1221723 1666922 1862820 1550765 1445685

Sale 6216880 7463927 8099795 8807482 8722880

Operating Profit Margin 19.65 22.33 23.00 17.61 16.57

35

Net Profit MarginIt measures the percentage of each sales dollar remaining after all expenses, including

taxes, have deducted.

PRs. (000)

Net Profit Margin = Net Profit / Sale

2011 2012 2013 2014 2015

Net Profit 427991 688482 1037123 861174 986431

Sale 6216880 7463927 8099795 8807482 8722880

Net Profit Margin 6.88 9.22 12.80 9.78 11.31

Interpretat ion:

In 2011 the company earn profit 6.8 % and 2015 the company earns profit 11.31%,

which is high.

36

SWOT Analysis

SWOT Analysis

37

Strength: Largest manufacture caustic soda.

Largest Shareholder of the company

Use the advance technology

The good and efficient plant infrastructure

Strong Management of the industry

The strong brand name and strong image.

Great financially sound

Weakness: Need Considerable Market to Sustain

Lack of Operations in Abroad

Relying on Permanent Customers

Opportunity:

Increase Production Capacity

Increase Product Line

Taking Advantage of Geographic position

Provide Online Customer Service Ordering System

Thereat: Strong competitors and new strategies of competitors.

Economic Environment and new polices of every year and every five year.

Energy Crises

Threat of Stakeholders

Unstable Law & Order Situation

Conclusion and Suggestion

Suggestion

38

For the Market Development, it is opportunity for them to export their product

in new markets.

Sitara Chemical Industry must involve employees in decision making.

Increase the Basic salary of its employees to increases their motivations.

Avoid more credit Purchases.

Control the Cost of product with the use of Advance Technology.

Conclusion: After the completion of ratio analysis, we have concluded that the Industry has

good will in market but this year some profitability ratios decreased and some

increased as compare to previous year plus E P S. It’s means that the company

has to take measures to maintain its position

But still there is some room for improvement in compensation system, and

employment Planning.

Annexure

Sitara Chemical Industries LimitedBalance Sheet

39

As on june 30, 2011-2015Rs. (000)

2011 2012 2013 2014 2015ASSETScurrent assetsStores, spare parts and loose tools

279,947,941

3 66,962,1

17

336,360,27

7

401,165,384

380,378,519

stock in trade

885,083,34

0

9 02,720,830

1,010,809,1

25

881,710,69

6

717,460,10

0Trade debts

512,397,911

7 96,202,8

67

936,929,48

5

1,262,557,63

2

1,187,078,23

3Loans and advances

311,576,542

4 37,603,2

08

255,915,08

0

413,258,969

1,658,999,79

1Trade deposits and prepayments

7,036,81

6

6 ,680,50

29,612,

725

8,567,01

0

7,777,95

8Other receivables

7,773,38

0

9 ,079,16

616,599,019

5,901,65

5

11,726,4

62Other financial asset

148,642,950

1 16,178,6

74

162,789,30

4

191,826,521

201,064,597

40

sCash and bank balances

140,776,990

7 9,861,66

8

279,534,49

0

436,767,468

256,977,410

Advance sales tax 0 0 0 0

24,617,2

71Total Current Assets

2,293,235,87

0

2 ,715,289,032

3,008,549,50

5

3,601,755,33

5

4,446,080,34

1

Non-current assetsProperty, plant and equipment

5,378,904,08

6

6,339,937,33

5

6,068,941,93

1

5,765,295,50

2

5,790,535,77

5Investment property

1,576,855,62

1

2,820,036,36

0

2,868,379,30

0

3,004,815,37

8

2,716,463,18

1Long term investments

96,480,134

67,607,937

63,431,202

63,431,202

99,192,142

Long term loans and advances

840,659,837

827,493,584

819,302,966

817,876,172

1,265,059,32

9Long term deposits

108,128,850

110,296,726

110,432,287

110,432,287

110,433,287

41

Intangible Assests 0 0

19,950,000

17,955,000

16,159,500

Total NON-Current Assets

8,001,028,52

8

10,165,371,9

42

9,950,437,68

6

9,784,655,30

1

9,997,843,21

4Non-current assets classified as held for sale

1,178,000,00

0 0 0 0 03,471,235,87

00 0 0 0

Total Assets

11,472,264,3

98

12,880,660,9

74

12,958,987,1

91

13,386,410,6

36

14,443,923,5

55

EQUITY AND LIABILITIESEquityShare capital

214,294,070

214,294,070

214,294,070

214,294,070

214,294,070

Reserves

1,332,211,60

1

1,338,984,26

2

1,382,095,24

1

1,410,102,55

6

1,363,581,65

2Un-appropriated profits

2,239,905,34

9

2,849,607,62

3

3,750,779,54

5

1,410,102,55

6

5,314,312,67

43,786,411,02

0

4,402,885,95

5

5,347,168,85

6

6,102,089,60

8

6,892,188,39

642

surplus

revaluation

of proper

ty, plan &

Equipment

920,621,624

1,466,066,47

3

1,429,500,93

7

1,347,409,60

8

1,305,695,73

0

Current liabilitiesTrade and other payables

1,356,248,4

60

1,522,591,4

22

1,828,764,8

14

1,690,647,5

87

2,121,584,5

42Profit / financial charges payable

120,376,568

92,938,164

70,245,987

1,690,647,58

7

55,225,614

Short term borrowings

1,269,000,00

0

1,544,904,21

4

1,529,449,75

5

1,682,644,32

3

1,836,486,4

71Current portion of long term financing

954,033,710

862,779,540

657,250,376

690,278,947

280,357,144

Provision for taxation

218,292,60

9

240,420,88

116,870,962 0 0

43

Sales tax payable

22,468,192

16,068,756

32,424,372

36,596,986 0

3,940,419,5

39

4,279,702,9

77

4,135,006,2

66

4,160,633,6

48

4,293,653,7

71

Non-current liabilitiesLong term financing

1,810,242,78

6

1,334,775,74

6

734,474,873

566,070,926

858,000,824

Long term deposits

10,518,6

51

1 2,199,95

3

7,946,05

5

6,385,85

9

9,920,55

3Deferred liabilities

1,004,050,77

8

1 ,385,029,87

0

1,304,890,20

4

1,203,820,98

7

1,084,464,28

12,824,812,21

5

2,732,005,56

9

2,047,311,13

2

1,776,277,77

2

1,952,385,65

824.62

296995

21.2101349

15.7983884

2

13.2692610

5

13.5170035

4Contingencies and commitments

Total equity and liabilities

11,472,264,

398

12,880,660,

974

12,958,987,

191

13,386,410,

636

14,443,923,

555

44

Sitara Chemical Industries LimitedIncome Statement

As on june 30, 2011-2015Rs(000)

2011 2012 2013 2014 2015

Sales - net6,216,87

9,9547,463,92

6,5178,099,79

4,8128,807,48

2,1178,722,87

9,814Cost of good salesRaw material consumed

1,673,402,252

1,428,802,063

1,679,007,002

2,034,133,644

1,827,288,040

Fuel & Power

2,260,610,837

2,791,620,301

2,880,940,664

3,242,839,816

4,049,773,197

Salaries & wages

235,839,946

237,042,045

227,037,227

265,572,219

300,541,064

stores & spare

138,385,614

156,410,519

279,109,746

283,001,429

400,615,765

Repair & maintenace

70,736,851

48,923,184

27,425,710

47,344,556

44,256,132

vehicle running & maintaines

25,856,606

33,890,232 568,157

1,761,274

2,152,230

Travelling & conveyance

19,096,172

26,794,940

25,083,301

26,717,274

25,095,007

Insurance18,165,0

2820,009,1

1915,621,6

8617,462,4

3317,328,7

49Depreciation

487,173,415

456,041,466

547,485,385

524,397,446

490,438,744

others4,691,12

2 7,602.651,226,16

94,075,19

63,841,79

3Amortization 0 0

1,050,000

1,995,000

1,795,500

4,933,957,843

5,207,136,521

5,684,555,047

6,449,300,287

7,163,126,221

work in process

45

opening stock

22,218,508

72,438,789

45,909,415

48,731,237

10,253,979

closing stock

-72,438,7

89

-45,909,4

15

-48,731,2

37

-10,253,9

79

-8,101,60

8-

50,220,281

26,529,374

-2,821,82

238,477,2

582,152,37

1

cost of goods manufacture

4,883,737,562

5,233,665,895

5,681,733,225

6,487,777,545

7,165,278,592

Finished stockopening stock

211,499,589

432,161,824

314,400,855

448,708,708

465,874,798

finished goods purchased 0

42,512,461

47,497,524

197,759,519 0

closing stock

-432,161,

824

-314,400,

855

-448,708,

708

-465,874,

798

-479,954,

490-

220,662,235

160,273,430

-86,810,3

29180,593,

429

-14,079,6

924,663,07

5,3275,393,93

9,3255,594,92

2,8966,668,37

0,9747,151,19

8,900163,586 0 0 0 0

cost of good sale

4,663,238,913

5,393,939,325

5,594,922,896

6,668,370,974

7,151,198,900

Gross profit

1,553,641,041

2,069,987,192

2,504,871,916

2,139,111,143

1,571,680,914

Other operating income income from financial assests

22,402,525

19,863,717

21,407,860

27,869,276

69,528,324

income from other then financial assests

20,250,847

18,522,683

11,360,935

27,558,040

563,233,172

42,653,372

38,386,400

32,768,795

55,427,316

632,761,496

46

1,596,294,413

2,108,373,592

2,537,640,711

2,194,538,459

2,204,442,410

Distribution cost

123,094,460

127,286,617

173,756,328

199,674,650

230,737,924

Administration expenses

204,698,273

211,178,234

369,283,193

320,139,556

406,766,534

Depriciation

12,714,635

11,503,567.00

30,406,685

29,643,610

29,929,070

depriciation on investment property 544,010 489,609 440,648

3,330,090

6,114,502

Total administration expense

217,956,918

223,171,410

400,130,526

353,114,075

442,810,106

Other operating expenses

40,079,316

69,353,698

93,310,486

93,353,444

82,637,992

Impairment loss on investment in associated company

2,008,780

7,072,302 0 0 0

loss on disposal of property, plant & equipment 0

12,024,365

4,847,494

4,538,215 0

total operating expense

42,088,096

88,450,365

98,157,980

97,891,659

82,637,992

Finance costlong term financing

475,459,347

327,196,027

210,132,741

123,150,472

102,281,614

short term borrowing

226,360,914

348,422,678

272,543,267

278,730,129

228,928,647

Bank charge & commission

1,673,322

7,252,565

4,152,520

3,070,970

2,032,066

total financing cost

703,493,583

682,871,270

486,828,528

404,951,571

333,242,327

Share of - 2,542,56 2,776,41 - 2,571,09

47

loss/ (profit) of associates - net of tax

8,568,037 5 3 6,906,71

6 4

1,078,065,020

1,124,322,227

1,161,649,775

1,048,725,239

1,091,999,443

Profit before taxation

518,229,393

984,051,365

1,375,990,936

1,145,813,220

1,112,442,967


90,238,072

295,569,418

338,867,640

284,639,086

126,011,653

Profit for the year

427,991,321

688,481,947

1,037,123,296

861,174,134

986,431,314

Sitara Chemical Industries LimitedIncome Statement

As on june 30, 2011-2015Rs(000)

2011 2012 2013 2014 2015Sales - net 100 100 100 100 100Cost of sales

75.00931251

72.26677959

69.07487197

75.71256899

81.98208679

Gross profit

24.99068749

27.73322041

30.92512803

24.28743101

18.01791321

Other income

0.686089684

0.514292309

0.404563273

0.62932079

7.254043498

25.67677717

28.24751272

31.32969131

24.9167518

25.2719567

Distribution cost

1.980003811

1.705357317

2.145194194

2.267102531

2.645203521

Administrative expenses

3.505889121

2.990000096

4.940008177

4.009251115

5.076421038

Other operating expenses

0.644685377

0.929185166

1.152010491

1.059933393

0.947370522

Finance cost

11.31586243

9.148954889

6.010380995

4.59781315

3.820324642

Share of (profit) / loss of associates - net of tax

-0.1378189

230.0340647

110.0342775

72

-0.0784187

340.0294752

8917.584259

6614.807562

1814.281871

4312.012518

9212.518795

01

48

Profit before taxation

8.335843652

13.18409771

16.98797276

13.00954353

12.75316169


1.451500957

3.959972239

4.183657091

3.231787272

1.444610675

Profit for the year

6.884342695

9.224125471

12.80431567

9.77775626

11.30855102

49

Sitara limited ratio analysis by saniah saleem rao

Business

Transcript of Sitara limited ratio analysis by saniah saleem rao