Term Paper Dgk Cement

8/6/2019 Term Paper Dgk Cement

http://slidepdf.com/reader/full/term-paper-dgk-cement 1/18

TABLE OF CONTENTS

CONTENTS PAGE

NO.

Introduction , Mission Statement, Vision Statement

1Capacity Addition, Environmental Management,INDUSTRY REVIEW, Classification of Ordinary Shares

by Categories

2

Sales 4

Comparison with Cement Industry 5

Production 6

Financial Ratios Analysis With Graphical Representation 7-12

Profitability Fiscal Year 2002 to 2009 , Ongoing Projects, 13

Future Outlook , DuPont Analysis 14

Recommendations 15



Annexure 16-17

INTRODUCTION: Nishat Group is one of the leading and most diversified business groups in South East

Asia. With assets over PRs.300 billion, it ranks amongst the top five business houses of Pakistan. The group has strong presence in three most important business sectors of theregion namely Textiles, Cement and Financial Services. In addition, the Group has alsointerest in Insurance, Power Generation, Paper products and Aviation. It also has thedistinction of being one of the largest players in each sector. The Group is considered at par with multinationals operating locally in terms of its quality of products & services andmanagement skills.D.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is the largestcement-manufacturing unit in Pakistan with a production capacity of 5,500 tons clinker per day. It has a countrywide distribution network and its products are preferred on projects of national repute both locally and internationally due to the unparallel and

consistent quality. It is list on all the Stock Exchanges of Pakistan.DGKCC was established under the management control of State Cement Corporation of

Pakistan Limited (SCCP) in 1978. DGKCC started its commercial production in April1986 with 2000 tons per day (TPD) clinker based on dry process technology. Plant &Machinery was supplied by UBE Industries of Japan.

MISSION STATEMENT

To provide quality products to customers and explore newmarkets 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.

VISION STATEMENT

To transform the Company into a modern and dynamic

cement manufacturing company with qualified professionalsand fully equipped to play a meaningful role on sustainable

basis in the economy of Pakistan.

ACQUISITION OF DGKCC BY NISHAT GROUP: Nishat Group acquired DGKCC in 1992 under the privatization initiative of thegovernment. Starting from the privatization, the focus of the management has been onincreasing capacity as well as utilization level of the plant. The company undertook theoptimization by raising the capacity immediately after the privatization by 200tpd to2200tpd in 1993

2



CAPACITY ADDITION:

To meet the increasing demand and to capitalize on its geographic location, the

management further expanded the capacity by adding another production line with acapacity of 3,300 tons per day in year 1998. Design of the new plant is based on latest dry process technology, energy efficient and environmental protection from particulate pollution according to the international standards. The plant and machinery was supplied by M/s F.L. Smidth of Denmark. As a result, DGKCC emerged as the largest cement production plant in Pakistan with annual production capacity of 1,650,000 M tons of clinker (1,732,000 Millions. Tons Cement) constituting about 10% shares of the totalcement production capacity of the country. The optimization plan is still underway toincrease the total capacity of the two units to 6700 TPD by mid of 2005 from 5500 TPD at present

ENVIRONMENTAL MANAGEMENT:DG Khan Cement Co. Ltd., production processes are environment friendly and complywith the World Bank’s environmental standards. It has been certified for “EnvironmentManagement System” ISO 14001 by Quality Assurance Services, Australia. Thecompany was also certified for ISO-9002 (Quality Management System) in 1998. Byachieving this landmark, DG Khan Cement became the first and only cement factory inPakistan certified for both ISO 9002 & ISO 14001...

INDUSTRY REVIEW:Poor economic indexes continue to flow on back of bleak security issues across thecountry, coupled with meager business activities. Waves of terrorist activities in all partsof the country seriously affected the investment climate in the country. Going forwardgrowing concern of power outage and gas management badly hit the wheels of thecountry. Almost no major developmental and infrastructural activity witnessed duringFISCAL YEAR 2010.GDP growth during the FISCAL YEAR 2010 expected to bearound 4.1% as announced in Federal Budget FISCAL YEAR 2011 and target set is 4.5%

3



for the next year which looks very ambitious especially in the aftermath of devastatingflood across Pakistan. Last year bothFederal and provincial Govt. slashed developmental expenditure on the wake of financialcrunch and diverted the funds to other important areas, which affected the infrastructureand development projects. During the period under report the cement sales in the country

witnessed a growth of around 15% despite unfavorable economic conditions. The growthwas seen on account of historic low prices of cement in the country ensued from pricewar among cement manufacturers. Total cement sales in the country stood over 23million tons against about 20 million tons during the corresponding period. Some newcapacities also came online during the period under view which created further over.supply of cement in the country. Export of cement remained flat during the year andmarginally declined compared with the previous year. Total export of cement and clinker during the period was over 10 million tons. Average capacity utilization of the industrywas 76% during the period under report whereas your company managed to sellremarkably good at 118% of its rated capacity. During the year your company focusedmore on domestic demand on account of less attractive cement prices in the exportmarkets and its market share was about 17% in local sales, largest in the cement industry..

Installed Capacity and Industry vs DGK Utilization

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

2005 2006 2007 2008 2009 2010

Years

M s T o n s

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

C a p a c i t y U t i l i z a t i o n

Ms Tons

Industry

DGK

4



Clinker Production & Capacity Utilization

SALES:During the period under report cement prices in the country were highly volatile andwitnessed a steep decline to ever lowest. In addition, cement prices in internationalmarket were also not very much attractive compared with prices in local market. Your company focused more on domestic market due to better net retention sales prices. Totalsales in the local market witnessed a growth of about 45% compared to corresponding

period. Whereas export of cement plunged by nearly 20% from the last year. Overallincrease in sales of cement is about 28% from the last year.

Sales revenue during period under review declined by nearly 10% despite volumetricgrowth of about 28% compared with corresponding year. The decline in sale revenueattributed to sluggish cement prices in the country. Stiff competition emanated in the first

5



quarter of FISCAL YEAR 2010 and later turned into a price war. Cement manufacturersin an attempt to capture market share from others lowered cement prices which bodesnegatively on revenues. Gross profit declined significantly due to looming sales prices.During the period under review the cost of production was on the rise. Coal prices after touching the lowest, started increasing and crossed US$ 115/ton, which badly affected the

fuel costs.Series of hikes in electricity and gas tariff during the year also put pressure on the cost of production. In addition, cost of packing material also increased significantly and affectedthe profitability. Selling & distribution costs declined significantly compared with lastyear due to less freight charges as export of cement and clinker declined during periodunder review compared with last year. Finance Cost for the period declined by nearly27% mainly on account of repayment of long term loans and efficient management of funds. Your company is making all out efforts to lessen the financial costs by optingdifferent financial management techniques. Other incomes include dividend income andgain on sales of share of Rs. 766.4 million and 79.2 million respectively comparedwith Rs. 707.2 million and 5.0 million last year. Divided income is a great stimulus to theearnings of your company and always hatch much needed funds to finance operations andcapital expenditures. Your company earned a net profit of Rs. 233.022 million after charging of depreciation of Rs. 1,392.564 million, finance cost of Rs. 1,902.760 millionand net tax of Rs. 125.381 (including a deferred tax of Rs. 24.383 million).

DG K HAN CEMENT IN COMPARISON WITH THE CEMENT INDUSTRY :

Three additional cement plants with installed capacity of over 2.1 million tons arein the final stage of completion despite the available excess capacity in this sector. Thefollowing table shows installation of new cement factories and expansion of the existingfacilities during the current decade.The industry is divided into two broad regions, the northern region and the southernregion. The northern region has over 87 percent share in total cement dispatches while the

units based in the southern region contributes 13 percent to the annual cement sales.

Name of

Company

New/ Expansion Year of

Commencement

Capacity

Created

Northern

Region

Askari Cement Expansion 1964 945,000

Askari cement New 1996 630,000

Bestway cement New 1988 1,039,500

D.G Khancement

Expansion 1988 1,039,500

Fauji cement New 1997 945,000

Lucky cement New 1996 1,260,000

6



Maple Leaf cement

Expansion 1998 1,039,500

Pioneer cement New 1994 630,000

Sub-Total 7,528,500

Southern

Region

Essa cement Expansion 1988 315,000

Total 7,843,500

The cement sales in the company witnessed a growth of 15% in FISCAL YEAR10whereas DGKC witnessed a growth of 27% of sales volume. It also comprised of a 17%

market share in local sales. DGKC has a gross margin and profit margin which is almostsimilar compared to the industry average of 15. 15% and 1. 4% respectively. However,its current ratio is 1. 19:1 whereas the industry average is of 0. 71:1. This means thatDGKC is in a good position to meet its short-term debt. The current liabilities decreasedmainly as the provision of taxation reduced as profits fell and also export sales fell.Current assets increased mainly due to increase in short-term investments.

The company is reasonably leveraged with a Debt to Asset ratio of 44% compared to theindustry average of 50%. This can be owed to its repayment of long-term loans TheReturn on Assets of 0. 5% is marginally lower than the industry average of 1% mainlydue to a reduced sales revenue. Owing to such factors, its Earning per Share is also Rs

0. 72 as compared to an average of Rs 2 which results in lower investor confidence.PRODUCTION:During FISCAL YEAR 09, the demand for DG Khan Cement and clinker had fallen fromFISCAL YEAR 08 by 8% and 7% respectively due to the economic recession plus lowdevelopmental expenditure by the government. However due to increased spending in the private sector and higher agricultural support prices provided by the government to therural sector the overall capacity utilization of the cement plants increased to 76% inFISCAL YEAR 10 from 74% in FISCAL YEAR 09. This led to an increase of 27% inDG Khan Cement s production from FISCAL YEAR 09 to FISCAL YEAR 10 as4,908,593 million tons.

FINANCIAL RATIOS ANALYSIS WITH GRAPHICAL

PRESENTATION

7



LIQUIDITY POSITION:

2010 2009 2008 2007 2006 2005

Current

Ratio

1.19 0.84 1.54 2.60 1.65 1.37

Acid Test

Ratio

0.44 0.27 1.22 2.33 1.45 0.96

Cash

Ratio

0.09 0.072 1.18 2.31 1.43 0.94

0

0.5

1

1.5

2

2.5

3

2010 2009 2008 2007 2006 2005

Current Ratio

Acid Test ratio

Cash Ratio

Graph of Liquidity Position of Company

The liquidity position of DGKC improved in FISCAL YEAR 10 due to a 24% increase incurrent assets and a 13% decrease in current liabilities of the company causing a currentratio of 1. 19:1. The current liabilities of the company decreased mainly due to 55%decrease in provision for taxation as the profit before tax had reduced in FISCAL YEAR 10 plus exports also fell and a 35% decrease in outstanding finances. On the other hand,current assets of the company increased due to 20% increase in advances and other receivables and 38% increase in short-term investments as they were revaluated, from Rs7 billion at the end of FISCAL YEAR 09 to Rs 10 billion at the end of FISCAL YEAR

8



10. Thus, decrease in current assets and a corresponding increase in current liabilitiesresulted in a less favorable liquidity position as compared to that in FISCAL YEAR 08.

DGKC s liquidity stance had been strengthening since FISCAL YEAR 04 and in FISCALYEAR 07 its liquidity position was the most favorable. The increase in current assets had

brought about this change. There was a 98% increase in short term investments.Furthermore, the cash and bank balances had also risen considerably. In FISCAL YEAR 08 the current assets of the company declined slightly but a 63% rise in current liabilitiescaused a decrease in the liquidity of the company. Investments constitute nearly 79% of the company s total current assets and they declined by 11% in FISCAL YEAR 08. Theinvestments decreased further from Rs 15 billion at year end FISCAL YEAR 08 to Rs 7 billion by end of FISCAL YEAR 09

ASSET MANAGEMENT R ATIOS:

2010 2009 2008 2007 2006 2005

Days Sales

Outstanding

6.72 days 10.26days

10.59days

8.20 days 3.40 days 5.27 days

Inventory

Turnover

Days

69 times 55.86times

40.76times

46.79times

100.79times

80.7 times

Operating

Cycle

96.41days

86.81days

89.99days

108.55days

51.43days

82.66days

9



0

20

40

60

80

100

120

2010 2009 2008 2007 2006 2005

DSO

Inventory Turnover Days

Operating Cycle

Graph of Asset Management Ratios

The performance of DGKC in terms of asset management was weak during FISCALYEAR 2007. During the year, the inventory turnover (days) of the company more thandoubled compared to FISCAL YEAR 2006 when the management of inventory seemedmost efficient (evident from the lowest inventory turnover in days). The increase ininventory turnover in days and Days sales outstanding (DSO) prolonged the operatingcycle of the company in FISCAL YEAR 2007. In FISCAL YEAR 2008 the days toconvert inventory into sales became 79. Although the days to convert sales into cash(DSO) increased slightly, the substantial decrease in ITO (days) led to the shortening of the operating cycle in FISCAL YEAR 08.

In FISCAL YEAR 09, the inventory turnover days remained same around 77 days butthey increased in FISCAL YEAR 10 to 90 days indicating a lower inventory turn over ratio. This was due to a 118% of capacity utilization of their plant; hence higher production and extreme price competition within cement sellers. The DSO decreased astrade debt reduced by 41% during FISCAL YEAR 10 as against sales. Yet the operatingcycle increased from 87 days to 97 days. Hence the asset management of DGKCworsened as the company earned sales revenue less in proportion to the increase ininventory.Besides this the sales to equity and total asset turnover of the company which had a risingtrend till FISCAL YEAR 09 decreased in FISCAL YEAR 10. From FISCAL YEAR07 to

FISCAL YEAR09, the sales to equity ratio increased due to increase in sales revenuefrom exports sales but it declined in FISCAL YEAR10 due to increase in the paid upcapital but a decrease in sales revenue due to lesser selling price. Total asset turnover alsodeteriorated in FISCAL YEAR10 because of the decrease in sales revenue but increasingasset base.

DEBT MANAGEMENT R ATIOS:

10



2010 2009 2008 2007 2006 2005

Debt to

Net

Worth

40 45 77 52 78 93

Debt To

Equity

Ratio

39 37 81 79 92 93

Debt

Ratio

43 51 43 34 44 48

0

10

20

30

40

50

60

70

80

90

100

2010 2009 2008 2007 2006 2005

Debt to Net Worth

Debt to Equity

Ratio

Debt Ratio

Graph of Debt Management Ratios

Due to the increasing trend of the cost of finance being evident in the economy DG Khancement took a bold decision to shift to the short-term borrowings rather than long-termloans from the banks. The cross-country analysis reveals that this policy was adopted byalmost of all the companies in the cement sector except Attock Cement which almostrelies on equity rather than debt for its financing purposes.

11



These loans were repaid by either taking the short-term loans which resulted in the14.83% increase in the current liabilities or by issuing more amounts of common shareswhich were increased by 20%. The debt management ratios of DGKC rose from FISCALYEAR07 to FISCAL YEAR09. During FISCAL YEAR08 the debt ratios of the companyrose because the total debt increased in FISCAL YEAR08 mainly due to a 63% increase

in the current liabilities however long term debt decreased. The long term debt to equityincreased because of a decline in the equity base due to fall in reserves. However inFISCAL YEAR10, the debt to equity ratio fell from 104% to 77% and debt to asset ratiofell from 51% to 44% as total debt reduced by 6% mainly due to payment of long termdebt and the reduction of 55% in provision for taxation. The TIE ratio fell in FISCALYEAR10 from 1. 3 to 1. 19 as although finance charges reduced in the period by 27%,

operating income in FISCAL YEAR10 decreased by 33%.Due to reduced sales revenue and in turn the profitability, DGKC experienced a decreasein its Earning Per Share (EPS) and Price to Earning (P/E) Ratio. EPS fell from Rs 1. 63 inFISCAL YEAR09 to Rs 0. 72 in FISCAL YEAR10. The averaged share price fell fromRs 39. 97 in FISCAL YEAR09 to Rs 37. This shows that the lower profits of thecompany have started reflecting in the low investor confidence and falling share price.The management did not recommend any dividend for FISCAL YEAR10 due to reduced profitability situation in the period.

PROFITABILITY R ATIO:

2010 2009 2008 2007 2006 2005

Gross

Profit

Margin

16.62 31.4 15 32 49 37

Operating

Profit

Margin

2.21 4.3 12 34 49 46

Net Profit

Margin

1.43 2.91 7.84 25 31 31

12



0

10

20

30

40

50

60

2010 2009 2008 2007 2006 2005

Gross ProfitMargin

Operating ProfitMargin

Net Profit Margin

Graph of Profitability Ratios

After experiencing declining profitability during FISCAL YEAR08, the cementsector came back strongly to post a growth of 167% in earnings during first quarter (July-September) of fiscal year 2009. The cement sector posted profit after taxation of Rs 1.3

billion in first quarter of FISCAL YEAR09 as compared to Rs 500 million in thecorresponding period of a year earlier. But it declined again in FISCAL YEAR 2010strongly and destroying company’s past records. The company faced an all time lowsituation in the year 2010 which was due to the energy crisis and the deterioratingsituation of law and order.

This growth was mainly due to higher local retention prices and depreciation of

the rupee against the dollar that resulted in an increase of rupee-based export sales. Thenet sales of the cement sector in the period July-March FISCAL YEAR09 was 58%

higher than the net sales generated during the corresponding period of FISCAL YEAR08.It is believed that the profits of cement companies increased due to an arrangementamong them to keep prices high in the local market. However, higher sales revenue couldnot be translated into an increase in profits during the period. Increased costs of sales,operating expenses and finance expenses caused the profitability of DGKC to remain lowduring July-March FISCAL YEAR09. The cost of sales of the company increased by30% during the period and resulted in a gross profit of Rs 3,733 million.

The furnace oil/coal costs for the period July-March FISCAL YEAR09 was Rs

5,258.6 million as compared to Rs 3,095.7 million during the corresponding period of FISCAL YEAR08. The electricity and gas costs were lower, however, the cost of rawmaterial and packing material consumed increased by 12%. The administration expensesincreased by 31% while the selling & distribution expenses increased drastically by456% (from Rs 246 million in July-March FISCAL YEAR08 to Rs 1,370 million inJuly-March FISCAL YEAR09). Selling expenses may have increased due to higher transportation costs involved with exports and higher fuel costs. Also, the finance costsincreased substantially by 77% as interest rates rose owing to tight monetary policy and

13



liquidity crunch in the market. These rising costs greatly hampered the profitability of thecompany and resulted in a profit after taxation of Rs 321 million in the period July-March FISCAL YEAR09, which is 34% lower than the profit (Rs 487 million) duringJuly-March FISCAL YEAR08. Therefore, the earning per share (EPS) of the companydeclined from Rs 1.92 in July-March FISCAL YEAR08 to Rs 1.27.

PROFITABILITY- FISCAL YEAR 2002 TO 2009:The profitability ratios of the company have shown a declining trend since after FISCALYEAR 05. The gross profit margin increased in FISCAL YEAR 06 only to fall inFISCAL YEAR 07 and FISCAL YEAR 08. The profit margin of the company hasdecreased continuously along with return on assets (ROA) and return on equity (ROE).The profit after taxation had declined by 33% in FISCAL YEAR 07 due to lower netretention prices caused by a supply overhang in the overall industry. Also the problem of rising input costs had begun in FISCAL YEAR 07. This rise in cost of production andraw material had continued into FISCAL YEAR 08. However in FISCAL YEAR 09, the boost in export sales lead to an increase in the PAT and the profit margin was 2. 91%.

The operating expenses had also increased due to higher selling and distribution expenses but the increased sales revenue contributed to an increase in PAT.Increased production facilitated higher sales volume which in turn translated into almostdoubling of sales revenue in FISCAL YEAR 08. The company had earned the highestsales revenue of Rs 12. 445 billion in FISCAL YEAR 08. However, despite this, thegross profit of DGKC in FISCAL YEAR 08 (amounting to Rs 1. 9 billion) was around6% lower than the gross profit posted in FISCAL YEAR 07 (Rs 2. 0 billion). The reasonfor lower gross profit was a 140% increase in the cost of sales during the fiscal year.However in FISCAL YEAR 09, major distribution costs increased when exportsincreased. Also finance charges rose due to higher interest rates and increased long-term borrowing. But the sales revenue had increased by 45% improving the profitability of

DGKC and resulted in a profit after taxation of Rs 525. 581 million in FISCAL YEAR 09against a loss after taxation of Rs 53. 23 million in FISCAL YEAR 08.

ONGOING PROJECTS:Waste Heat recovery project has started generating electricity. After some start up andteething issues the project has successfully started commercial operations from June2010. Consequently the dependence on electricity from WAPDA has been reducedsignificantly. The project is generating electricity which is virtually free of cost except for some maintenance costs. This will off course help mitigate the impact of rising cost of production. In addition, it has favorable impact on environment and save huge amount of foreign currency spent on import of fossil fuels. After the successful start up of the Waste

Heat Recovery project at DG Khan Site your company has signed a memorandumof understanding with M/s. F.L. Smith Denmark for power generation from Waste Heat atKhairpur cement plant. M/s. F.L.Smith will design and provide necessary machinery andequipments for the project. The project is expected to generate about10MW power whichwill eventually minimize dependence on WAPDA. This will also reduce the productioncost substantially. The project is expected to be completed in 24 months.

FUTURE OUTLOOK:

14



Ever biggest flood in the history of Pakistan has crushed almost everything that came inits way. The flood emerged from the northern areas of the country due to record level of Rains and melting of glaciers. Most parts of the Khyber Puktunkhwa province have been badly affected causing a huge loss of property, standing crops and infrastructure. Floodwater founds its way and moved through Punjab province and ended up with devastating

damage in Sindh province. Huge loss caused to agriculture, housing, infrastructure andindustrial set ups. Although correct damage assessment is underway but estimates are thatlosses would be in billions of Dollars. This huge and wide spread damage is expected toaffect the economy of the country in years to come. Federal Govt. along with provincialGovt. has given indications of substantial reduction in annual developmental expenditure.This will off course hit badly the economic indicators of the country. Although thisnatural disaster may turn into a great opportunity to build the infrastructure andresidential of the masses which will provide demand stimulus for the cement industry.It is anticipated that reconstruction of road networks and infrastructure across the countrywill generate a new wave of economic activities for next few years. It is also expected togenerate a lot of new job opportunities and number of industries will getDemand stimulus for next couple of years. Govt.’s announcement to finance every housethat was either affected fully or partially would yield multi layer demand of goods andservices which will bring a new life to economic and business activities.Reconstruction activities will bring sizeable demand of cement in medium to long term period which is good for the cement industry.

DUPONT ANALYSIS

Year Calculations in (Rupees000)

Net Profit Margin*Total Assets Turnover

DuPont Return On

Assets

2010 1.43*0.34 0.4862

2009 2.91*0.422 1.23

2008 7.84*0.24 1.88

2007 0.25*0.15 3.75

2006 0.31*0.74 22.94

2005 0.31*0.35 10.85

DuPont return on Assets has a decreasing trend. In 2010 net profit of co decrease due to

high cost of goods sold. Company has not been utilizing its assets since 2010. In 2007trend of this ratio is good. But in last 3 years it has decreasing trend.

15



RECOMMENDATIONS

To The Company:

I would like to conclude this report by ranking overall sector as “Neutral”. Weremain neutral on the sector because on hand expansion is the need of hour. Due toexpected growth in demand, current capacity appears inadequate. On the other hand,expansion plans set up by the various players of cement sector to grab demand expansionmight cause sector to overflow. Along with risk of being oversupplied, unanticipatedincrease in interest rates or less than expected demand growth might create severe crisesfor the sector couple of years forward. Weighing risks and rewards, we remain“NEUTRAL” on the sector. To break-up cement manufacturers cartel the CompetitionCommission of Pakistan raided offices of Association of Cement Manufacturers of Pakistan and confiscated official record. The association condemned this action and saidit is against business norms. They accused Commission for blaming cementmanufacturers for making a cartel for the last 10 years but could not able to prove it.

The capital structure of cement companies may change, as most of the expansionsduring last two to three years have been debt financed and companies are expected toretire these debts rapidly during next three to five years. Moreover, the slow down ineconomy may occur due to political uncertainty, which might result in reducing cementdemand in future. However, in case of construction of hydro-powered dams, there will bea sudden jump in the local sales of those companies located near these dams.

Consolidation is needed for industry stability because of following observations.

Cartels are unstable by their nature.

Industry needs one or two dominant players for long-term sustainability in pricesand profits.

Top four players command 35% of market share in the industry that will beIncreased to 46% in FISCAL YEAR 2008.

World norm is that top four players have more than 60% market share

Consolidation process will be needed to increase market share of larger playersrather than going for capacity expansions

We may see acquisitions in the industry as the industry goes throughOvercapacity cycle.

16



ANNEXURE

COMPARATIVE INCOME STATEMENT OF DGKCC

2010 2009 2008 2007 2006 2005

Sales 16,275,354 18,038,209 12,445,996 6,419,625

7,955,665

5279560

CGS (13,569,9

94)

(12,358,4

79)

-10,530,723

4,387,640

3,992,822

3,330,769

Gross

Profit

2,705,360 5,679,730 1,915,273 2,031,985 3,962,843 1,948,791

Admin

Expenses

(172,436) (141,852) (111,658) (104,169) (121,953) (76,480)

Selling &

Distribution

Expenses

(994,418) (1,871,517) (561,465) (65,122) (34352) (60,695)

Other

operating

Expense

(189,015) (795,854) (581,913) (139,721) (191,850) (93,786)

Other

operating

Income

911,672 770,137 847,344 479,420 294,114 707,692

Profit from

operations

2,261,163 3,383,258 1,507,581 2,202,393

3,908,802

2,425,312

Finance

Cost

(1,902,76

0)

(2,606,35

8)

(1,749,837)

(467,759) (450,696) (304,401)

Profit/Loss

Before Tax

358,406 776,900 (250,930

)

1,720,4

71

3,448,5

33

2,121,2

71

Taxation (125,381) (251,319) 197,700 (98,000) 1,030,078

(439,193)

Profit/Loss

forthe year

233,022 525,581 (53,230) 1,622,471

2,418,455

1,628,078

17



Basic

Earnings

per share

0.72 1.63 (0.21) 6.43 10.37 9.12

COMPARATIVE BALANCE SHEET OF DGKCC

2010 2009 2008 2007 2006 2005

Capital

and

Reserves

26,519,2

20

20,918,4

42

30,528,440

33,923,185

19,268,200

9,317,998

Non-

current

Liabilities

6,740,63

4

5,969,80

0

10,250,352

10,430,917

9,020,740 5,642,649

Current

Liabilities

13,786,1

89

15,834,7

99

12,899,306

7,390,229 6,015,436 3,055,858

Assets

Non-

current

Assets

30,628,5

51

29,435,4

49

33,835,927

32,529,377

24,394,481

13,819,736

Current

Assets

16,417,4

92

13,287,5

92

19,842,171

19,214,954

9,909,895 4,196,769

18

Term Paper Dgk Cement

Documents

Transcript of Term Paper Dgk Cement