Pak Arab Fertilizers Financial Analysis

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ACKNOWLEDGEMENT
All praises to Almighty Allah alone, the Most merciful and the most kind and His Holy prophet
Muhammad (Peace be Upon Him) the most perfect and praised one among and of ever
born on the surface of earth, who is forever touch of guidance and knowledge for the
humanity. Completion of anything requires supports from various sources. I am very much
fortunate to get the sincere guidance and supervision from a number of persons.
The work presented in this manuscript was accomplished under the guidance, generous
assistance, constructive criticism and enlightened supervision of respected Mr. Taimour
Hussain. His efforts towards the inculcation of spirit of constant work and the maintenance of
professional integrity besides other invaluable words of advice will always serve as beacon of
light throughout the course. I take this humblest opportunity to my deepest sense of
gratitude and thankfulness to him. This internship report is not the result of individual effort.
It is a result of wonderful team-work.
Regards,
Hafiz Muhammad Adnan Akhtar
BBA(HONS)
The Islamia University Bahawalpur

Table of Contents
Topic Page No.
Acknowledgement 1
Executive Summary 3
The Organization
Introduction 4
History 4
Products & Operations 5
Marketing 8
Closing Paragraph 9
Financial Analysis 10
Horizontal Analysis 10-21
Vertical Analysis 22-28
Liquidity Analysis 29-31
Solvency Analysis 32-34
Activity Ratio 34-39
Profitability Ratios 40-47
Bankruptcy Analysis 48-51
Conclusion 52
Recommendations 52
References 53
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Executive Summary
Pak-Arab fertilizers Ltd. Is the manufacturer of fertilizers and ancillary products, established
on November 12, 1973 with a paid-up capital of PRs. 743.061 millions. Pak-Arab Fertilizers
Limited was privatized on July 14, 2005 at a cost of Rs.14.125 billion. It was acquired by the
consortium of Fatima Group and Arif Habib Group. It is located at Khanewal Road, Multan.
Pak-Arab limited is producing Carbon Dioxide, Calcium Ammonium Nitrate (CAN) Nitro
Phosphate (NP) and Urea. The market share of Pak-Arab in urea Production is 6% and have
monopoly in the production of CAN and NP.
It have strong distribution network in Pakistan. It has divided major cities as distribution
regions named as Lahore, Faisalabad, Sahiwal, Multan, Bahawalpur Rahimyar khan, D.G khan,
sukkur and Hyderabad where 920 distribution centers are created with more than 2262
business associates.
In short Pak-Arab is one of the biggest fertilizer production company as a subsidiary company
of Fatima Fertilizers Company, contributing healthily in the economy of Pakistan. The
financial statements of the Pak- Arab Fertilizers limited shows a significant losses due to less
sales during last two years. Which are effected by the less production due to natural gas
crises
Conclusion and Recommendations are an Integral part of this report.

Introduction
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Orientation
Pak-Arab fertilizers Ltd. are the manufacturer of fertilizers and ancillary products, with a
focus on to be preferred fertilizer company for farmers, business associates and suppliers
through quality and services with safety, quality and contribution to national economic growth
and development.
Brief background & history

Pak-Arab Fertilizers Limited was established as a result of protocol concluded and signed on
November 15, 1972 by the Government of Pakistan to further strengthen and develop
fraternal ties between Islamic Republic of Pakistan and State of Abu Dhabi.
A Memorandum of Understanding was concluded between Pakistan Industrial Development

Corporation (PIDC) and Abu Dhabi National Oil Company Limited (ADNOC) on March 7, 1973. A
participation agreement emerged on November 1, 1973 to establish a joint venture for the
expansion and modernization of the old Natural Gas Fertilizer Factory (NGFF) at Multan.
The Company was incorporated on November 12, 1973. Subsequently, PIDC assigned 52% of its
shares to National Fertilizer Corporation (NFC) of Pakistan and ADNOC assigned 48% of its
shares to International Petroleum Investment Company, with a paid-up capital of PRs. 743.061
million.
Under the privatization policy of Government of Pakistan, Pak-Arab Fertilizers Limited was
privatized on July 14, 2005 at a cost of Rs.14.125 billion. It was acquired by the consortium of
Fatima Group and Arif Habib Group. Under the new management, Pak-Arab Fertilizers Limited
has undergone extensive modernization and new improved processes have been introduced to
maximize the output while minimizing the negative impacts on the environment. For this a
Clean Development Mechanism (CDM) plant was installed, which is the first project of its kind
in Pakistan. Basic aim of this project is the abatement of N2O and NOX emissions from the
stack gases of Nitric Acid plant. The reduction of greenhouse effect of these gases shows the
new managements commitment towards a cleaner environment.
Location
Pak-Arab Fertilizers Limited is located at Khanewal Road, Multan. The site area comprises 302
acres, which includes area for the factory and the housing colony with all amenities including
medical center, school, management and staff clubs for recreation of employees and their
families, etc.
Products & Operations

Pak-Arab Fertilizers Limited has been manufacturing and marketing "Compound Fertilizers" in
Pakistan for the last 38 years and offers products that are safe, consistent in quality and are
environment friendly. Working towards providing "balanced nutrition" to the crops, the
Company provides fertilizers for all crops and for the correct stage of growth. It also offers a
wide range of other products that mostly stem from upgraded gas and chemicals coming out
of the fertilizer production plants. As a leading fertilizer manufacturer, Pakarab Fertilizers
Limited has a strong production base for Carbon Dioxide, Calcium Ammonium Nitrate (CAN)
Nitro Phosphate (NP) and Urea and has a monopoly in the production of CAN and NP.it have
following production plants
1. Ammonia Plant
2. Nitric Acid Plant
3. Urea Plant
4. Nitro Phosphate Plant
5. Calcium Ammonium Nitrate (CAN) Plant
6. CO2 Plant
7. Co-Generation power project
1. Ammonia Plant
Based on Kellogg process, steam reforming of the natural gas, the plant commenced
production in November 1978. The plant had capacity of 910 MTPD, which was enhanced by
50 MTPD through addition of Purge Gas Recovery Unit in April, 1986.
The plant is designed to operate 330-days per annum (initially 320-days/annum prior to
capacity increase). Present energy consumption at the plant is 9.6 G.Cal /MT of Ammonia
(excluding non-productive gas), which was 9.464 G.Cal /MT of Ammonia during guarantee
period.
2. Nitric Acid Plant

There are two units (three lines) of Nitric Acid production. The old line has a capacity of 180
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MTPD of 60% Nitric Acid strength. This line commenced production in 1963. Other two lines
have a capacity of 600 MTPD of 60% Nitric Acid. These two lines commenced production in
December, 1978.
The old line was modified in 1986 when an additional Absorption Tower was added, which
resulted in increase of Nitric Acid concentration to 60% strength and reduced pollution level
i.e. NOx Emission from 4000-6000 mg/cubic meter to 800 mg/cubic meter. The plant is
operated as and when required.
The two new lines have on stream factor of 330 days (originally 320 days). The old line
consumes 0.310 MT Ammonia/ton Nitric Acid (100% basis) while the new lines consume 0.290
MT Ammonia/ton of Nitric Acid (100% basis). Thus old unit of Nitric Acid consumes higher
energy. Approximately 40% of total Ammonia produced is used to produce Nitric Acid.
3. Urea Plant
A new Urea unit of 280 MTPD capacity commenced production in April, 1986 based on Snam
Progetti design. Old Urea unit, Evaporation unit and Prilling Tower were retained.
The new plant has 330 operating days/annum. Urea unit is a trouble free unit. It has the
highest production efficiency. The highest production achieved was 387 MTPD against design
of 280 MTPD (38.2% higher). Last year a production capacity of 101,754 MT of Urea as
compared to design of 92,420 MT/annum and was 10.12% higher despite gas supply disruption
due to load shedding (+ 13,619 M. Tons).
4. Nitro Phosphate Plant
The plant was designed to produce 229.4 MTPD of P2O5 or 1,015 MTPD of Nitro Phosphate
(NP) having 22.6% P2O5 with 300 on stream days/annum. The plant could not produce NP
product at its rated capacity both in terms of designed quality as well as quantity at the time
of guarantees; Uhde was made to undertake modifications on the plant, which they
performed through addition of 2-lines of Crystallizers making total six lines. Similarly 2
centrifuges were added to 4 existing ones and additional refrigeration capacity was provided.
However, even after the modifications desired product quality could not be achieved. The
plant consumes much higher energy level as compared with design. In view of the fact that
plant could not produce 22.6% P2O5, the specs were revised to 20% P2O5 and 22% Nitrogen
(originally 22.6% each of Nitrogen and P2O5).
The process was based on license from Stemicarbon, Holland, while detailed Engineering was
made by Uhde, Germany.
5. Calcium Ammonium Nitrate (CAN) Plant
Designed capacity of this plant is 1,500 MT per day of Calcium Ammonium Nitrate having 26%
Nitrogen contents and 1-2 % Potassium Sulphate as additional nutrient to stabilize the prills &
fulfill the soil requirement. It is manufactured by mixing 75% molten Ammonium Nitrate and
25 % Calcium Carbonate in the mixing tank at 170 Celsius. Around 550 to 700 MT of Ammonium
Nitrate is produced per day directly by reacting Ammonia gas and 60% Nitric acid in the
Neutralization Reactor. 1,050 MT of Ammonium Nitrate is produced per day in the CN Section
by reacting Calcium Nitrate solution with Ammonia and Carbon dioxide gases in the CN
Reactors. 600 MT of Calcium Carbonate is also produced per day in the same CN Reactors.
Calcium Ammonium Nitrate is hygroscopic by nature and absorbs moisture from the
atmosphere therefore it can be used in the soil without sufficient water. It contains 13%
Nitrate Nitrogen which supplies nutrients immediately to the plants and rest 13% Ammonium
Nitrogen gives food slowly till ripe up of the crop. Process of the plant is designed by Hoescht
whereas detail engineering is done by UHDE Germany. This plant is in production since 1979.
6. CO2 Plant
The CO2 Recovery Plant is designed to recover the impure, low pressure CO2 gas emitting
from the Ammonia Plant as a by-product gas and to produce purified, high pressure liquid
CO2. The capacity of this plant is 192 MT per day at a pressure of 21 bar. The temperature of
the Liquid CO2 is -20 C.
The liquefaction of gases is a complicated process that uses various compressions and
expansions to achieve high pressures and very low temperature liquids. There are various
applications of CO2 which range from the use in Beverages, Manufacturing of Urea, Fire
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Extinguishers, Dry Ice and as Food Perseveres.
7. Co-Generation Power project
On 20th July, 2007 Pak-Arab Fertilizers Limited submitted a plan for Co-generation Power
Project. The objective of the project was:
To generate power & steam by Gas Turbines with upstream Heat Recovery Steam
Generators (HRSG) for supply to fertilizer complex using clean, renewable and sustainable
cogeneration technology.
Application of the energy efficient process of cogeneration of heat and power in
natural gas fired cogeneration plant.
To help achieving the objectives of combating climate change under UN-FCCC by
reducing significant amount of greenhouse has (Carbon dioxide) emissions.
Pak-Arab Fertilizers Limited hired the services of Fichtner GmbH & Co. KG, Germany as the
"Project Development Constants" and with a total project cost of $ 35 million, the project
started on 1st January 2008 and was completed in one year.
The cogeneration plant has an operational life of 25 years and the new gas turbine
cogeneration plants estimated emission reduction capacity is 107,746 Tons of CO2 eq/year.
Marketing
Pak-Arab Fertilizers Limited has extended its market geographically in all over the Pakistan
but its major focus is southern Punjab and western sind. It have strong distribution network in
Pakistan. It has divided major cities as distribution regions named as Lahore, Faisalabad,
Sahiwal, Multan, Bahawalpur Rahimyar khan, D.G khan, sukkur and Hyderabad where 920
distribution centers are created with more than 2262 business associates.
The Major Competitor of Pak-arab Fertilizers Limited are Fauji Fertilizers, Pak China
Fertilizer, Engro Chemical Lyallpur Chemicals & Fertilizer, Dawood Hercules, Pak- American
Fertilizer.
Major Fertilizers industries of Pakistan produced different kind of fertilizers with ranking of
Engro Pakistan 33% Urea Production share Fauji Fertilizers (Goth Machi) 38%Fauji Fertilizers
(Bin Qasim) 7%Engro Fatima Pak 6% Arab (Multan) 8%Agri Tech (Mianwali) 7% Dawood Hercules
(Skp) 6% Only FF produces DAP.
Achievements
Pak-Arab Fertilizers Limited is awarded by the ISO 22000:2005 Certification.
Closing paragarph
Pak-Arab fertilizers Ltd. Is the manufacturer of fertilizers and ancillary products, established
on November 12, 1973 with a paid-up capital of PRs. 743.061 millions. Pak-Arab Fertilizers
Limited was privatized on July 14, 2005 at a cost of Rs.14.125 billion. It was acquired by the
consortium of Fatima Group and Arif Habib Group. It is located at Khanewal Road, Multan.
Pak-Arab limited is producing Carbon Dioxide, Calcium Ammonium Nitrate (CAN) Nitro
Phosphate (NP) and Urea. The market share of Pak-Arab in urea Production is 6% and have
In short Pak-Arab is one of the biggest fertilizer production company as a subsidiary company
of Fatima Fertilizers Company, contributing healthily in the economy of Pakistan.
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Financial Analysis
The process of evaluating businesses, projects, budgets and other finance-related entities to
determine their suitability for investment. Typically, financial analysis is used to analyze
whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When
looking at a specific company, the financial analyst will often focus on the income statement,
balance sheet, and cash flow statement. In addition, one key area of financial analysis
involves extrapolating the company's past performance into an estimate of the company's
future performance.
Financial Analysis can be divided into five categories:
1. Liquidity (Solvency) ratios
2. Financial Leverage (Debt) ratios
3. Asset Efficiency (Management or turnover) ratios
4. Profitability ratios
5. Market value ratios
Horizontal Analysis
Horizontal analysis (also known as trend analysis) is a financial statement analysis technique
that shows changes in the amounts of corresponding financial statement items over a period
of time. It is a useful tool to evaluate the trend situations.
The statements for two or more periods are used in horizontal analysis. The earliest period is
usually used as the base period and the items on the statements for all later periods are
compared with items on the statements of the base period.
Horizontal analysis can be performed in the following two different methods i.e. absolute
comparison or percentage comparison.
1. Absolute Comparison
One way of performing horizontal analysis is comparing the absolute currency amounts of
some items over the period of time. This method is helpful in identifying the items which are
changing the most.
2. Percentage Comparison
In the second method of horizontal analysis, percentage differences in certain items are
compared over a period of time. The absolute currency amounts are converted into the
percentages for the purpose of comparison. This method is useful when comparing
performance of two companies of different scale and size. We are performing percentage
Comparison Horizontal Analysis.
Balance Sheet
Description 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Non-Current Assets
Property, plant and equipment 21,285 21,916 37,937 37,290 37,114 100% 102.96% 178.23% 175.19% 174.37%
Assets subject to finance lease 148 283 230 121 51 100% 191.22% 155.41% 81.76% 34.46%
Intangibles 206 183 161 149 144 100% 88.83% 78.16% 72.33% 69.90%
Goodwill 3,305 3,305 3,305 3,305 3,305 100% 100.00% 100.00% 100.00% 100.00%
Investments - related party 7,882 2,930 130 262 295 100% 37.17% 1.65% 3.32% 3.74%
Loan to subsidiary 2,196 4,516 4,516 - - 100% 205.65% 205.65% - -
Security deposits 17 45 57 61 36 100% 264.71% 335.29% 358.82% 211.76%
Total Non-current Assets 35,039 33,178 46,336 41,188 40,945 100% 94.69% 132.24% 117.55% 116.86%
Current Assets
Stores and spare parts 1,880 2,310 2,583 3,023 2,904 100% 122.87% 137.39% 160.80% 154.47%
Stock-in-trade 2,793 2,947 2,058 1,734 812 100% 105.51% 73.68% 62.08% 29.07%
Trade debts 1,427 1,851 890 571 153 100% 129.71% 62.37% 40.01% 10.72%
Other receivables 6,814 3,583 5,300 6,042 3,174 100% 52.58% 77.78% 88.67% 46.58%
Derivative financial instruments 8 69 19 - - 100% 862.50% 237.50% - -
Investments 3,930 6,513 7,359 1,084 - 100% 165.73% 187.25% 27.58% -
Cash and bank balances 235 186 796 994 160 100% 79.15% 338.72% 422.98% 68.09%
Total Current Assets 17,087 17,459 19,005 13,448 7,203 100% 102.18% 111.22% 78.70% 42.15%
Total Assets 52,126 50,637 65,341 54,636 48,148 100% 97.14% 125.35% 104.82% 92.37%
Liabilities and onwers equity

Issued, Subscirbed and Paid up Capital 4,500 4,500 4,500 4,500 4,500 100% 100.00% 100.00% 100.00%
Page100.00%
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Reserves 10,147 7,548 5,714 3,432 1,700 100% 74.39% 56.31% 33.82% 16.75%
Share Deposit money 200 200 200 - - 100% 100.00% 100.00% - -
Revalution Reserve 2,476 2,476 11,942 11,964 11,884 100% 100.00% 482.31% 483.20% 479.97%
Total Equity 17,323 14,724 22,356 19,896 18,084 100% 85.00% 129.05% 114.85% 104.39%
Non-Current Liabilities
Long term Finance 16,191 13,372 8,484 4,559 1,466 100% 82.59% 52.40% 28.16% 9.05%
Suppliers credit - secured - - 1,796 1,488 1,100 - - 100.00% 82.85% 61.25%
Liabilities against assets subject to finance lease 107 218 138 50 - 100% 203.74% 128.97% 46.73% -
Payable against mining rights 52 - - - - 100% - - - -
Long term deposits 732 44 48 46 47 100% 6.01% 6.56% 6.28% 6.42%
Deferred liabilities 46 57 91 115 126 100% 123.91% 197.83% 250.00% 273.91%
Deferred taxation 4,975 5,574 10,967 10,923 9,933 100% 112.04% 220.44% 219.56% 199.66%
Total Non-Current Liabilities 22,103 19,265 21,524 17,181 12,672 100% 87.16% 97.38% 77.73% 57.33%
Current Liabilities
Current portion of long term liabilities 1,339 4,009 6,335 4,878 3,132 100% 299.40% 473.11% 364.30% 233.91%
Finances under mark up arrangements - secured 5,556 4,702 4,644 5,814 4,736 100% 84.63% 83.59% 104.64% 85.24%
Derivative financial instruments - - - - - - - - - -
Payable to Privatization Commission of Pakistan 2,198 2,198 2,198 2,198 2,198 100% 100.00% 100.00% 100.00% 100.00%
Short term loan from related party - secured - - - - 3,000 - - - - 100.00%
Trade and other payables 2,491 4,458 3,121 3,225 3,989 100% 178.96% 125.29% 129.47% 160.14%
Accrued finance cost 989 650 677 366 337 100% 65.72% 68.45% 37.01% 34.07%
Dividend payable - - 3,755 1,078 - - - 100.00% 28.71% -
Provision for taxation 127 631 731 - - 100% 496.85% 575.59% - -
Total Current Liabilities 12,700 16,648 21,461 17,559 17,392 100% 131.09% 168.98% 138.26% 136.94%
Total Liabilities and owner Equity 52,126 50,637 65,341 54,636 48,148 100% 97.14% 125.35% 104.82% 92.37%
Balance Sheet
Assets
1. Non-Current assets
a. Property, plant and equipment
This account indicates the real assets of the company. The results of horizontal analysis shows
an increasing trend in the last five years. This shows that firm is spending more to create its
operating assets. Since the computed value shows a growth of 74% in the Assets during FY2013
as compared to base year.
b. Assets subject to finance lease
The calculated figures are showing that the financial lease assets are decreasing in the firm.
The highest value of assets can be seen during the YF 2010, after that it tends to 34% during
the FY 2013 by decreasing up to 157%. This shows that the firm is avoiding reward
classification and taking risk to increase its profits.
c. Intangibles
Computer software and Mining Rights are amortized using the straight line method.
Calculations shows that Pak-Arab Fertilizers limited purchased it intangibles assets during
FY2009 which are amortized and its value is decreasing gradually year by year.
d. Goodwill
The value of a companys brand name, solid customer base, good customer relations, good
employee relations and any patents or proprietary technology represent goodwill. The
computed values are indicating that there is no change in the in the good will during last five
years. It remains constant during the periods.
f. Investments - related party
Calculations show that the Pak-Arab fertilizers Limited Companys investments to related
parties is following decreasing trend over the year. The highest value can be seen during FY
2009. Thereafter it decreases significantly.
g. Loan to subsidiary
The calculations show that the loan to subsidiary companies following increasing trend from
base year to FY 2011 as the highest value can be seen. There after the account was closed
after getting back the loans.
h. Security deposits
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The security deposits are showing increasing trend from base year to FY 2012 as the highest
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value can be seen during this year. There after there is a decrease in the value during FY
2013.
Total Non-current Assets

The analysis shows that the total non-current assets are showing ups and down trends over
the previous five years. Highest value can be seen during the FY 2011. There after the value is
decreasing significantly till FY 2013.
2. Current Assets
a. Stores and spare parts
The analysis shows that the Stores and spare parts are showing ups and down trends over the
previous five years. Highest value can be seen during the FY 2012. There after the value is
decreasing till FY 2013. This means that company is now losing its Stores and spare parts.
b. Stock-in-trade
The analysis show that the Stock in trade are showing upward trends till FY 2010 as the
highest value can be seen during this year. There after the value is decreasing significantly till
FY 2013. This means that company Prefers to have low stock in trade.
c. Trade debts
The calculated figures are showing that the trade debts were following increasing trend
during the FY 2010. The highest value of assets can be seen during the FY 2010, after that it
tends to decrease from FY2011to FY 2013 by decreasing up to 119%. This shows that the firm
is avoiding sales on credit.
d. Other receivables
The calculated figures are showing that the companys other receivable were following
decreasing trend from the base year to FY 2011, after a slight rise during FY 2012 it tends to
decrease again during FY 2013.This shows that the firm is focused to get back is receivables.
e. Derivative financial instruments

The analysis showed that the Derivative financial instruments showed upward trend till FY
2010 as the highest value can be seen during this year. Than the value was significantly
decreased during FY 2011. Thereafter this account was terminated. This means that company
Preferred to have cash for operations.
f. Investments
The analysis showed that the investment account showed upward trend till FY 2011 as the
highest value can be seen during this year. Than the value was significantly decreased during
FY 2012. Thereafter this account was terminated. This means that company Preferred to have
cash for operations.
g. Cash and bank balances
The analysis showed that the investment account showed upward trend till FY 2012 as the
highest value can be seen during this year. Than the value is significantly decreasing during FY
2013. This shows that the company is facing loss.
Total Current Assets

The calculated figures are showing that the total current assets are following increasing trend
from the base year to FY 2011 as the highest figure can be seen during this year. Thereafter it
is following decreasing trend during FY 2012 to FY 2013. This shows that the current assets of
the company are decreasing and facing loss.
Liabilities and owners equity

1. Equity
a. Issued, Subscribed and Paid up Capital
The analysis show that the Issued, Subscribed and Paid up Capital following constant trend
without any ups and down during the last five years. It means that the company did not issued
any share after FY2009.
b. Reserves
The analysis show that the reserves are following decreasing trend during the last five years.
It means that the reserves are declining very fast.
c. Share Deposit money
The analysis show that the share deposit money account following constant trend without any
ups and down during the base year to FY 2012.thereafter the account is terminated.
d. Revaluation Reserve
The analysis show that the revaluation of reserves account is following constant trend without
any ups and down till FY 2010. There after it follows an increasing trend as the highest value
can be seen during the FY 2012, and a slight decrease in FY 2013 came again. It means that
17
the value of assets is increasing.
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Total Equity
The analysis show that the total equity account is following increasing trend till FY 2011.
There after it follows decreasing trend till FY 2013.
2. Non-Current Liabilities
a. Long term Finance
The analysis show that the Long term finance account is following decreasing trend over the
previous five years. The results show that the company is paying off its long term debt.
b. Suppliers credit secured
The analysis show that the Suppliers credit secured account was created during FY 2011 and
following decreasing trend over the previous three years. The results show that the company
is paying off its suppliers debt.
c. Liabilities against assets subject to finance lease
The analysis show that Liabilities against assets subject to finance lease account is following
increasing trend till FY 2010 as the highest value can be during this year. There after it
follows decreasing trend till FY 2012, and account is terminated during FY 2013.
d. Long term deposits
The analysis show that the long term deposit account is following decreasing trend over the
five previous years and decreased significantly.
e. Deferred liabilities
The analysis show that deferred Liabilities account is following increasing trend during the
last five years as the highest value can be during FY 2013.this shows that firm is preferring to
hold cash rather than paying off, as long as possible.
f. Deferred taxation
The analysis show that deferred Taxation account is following increasing trend till FY 2012 as
the highest value can be during this years. There after the value of is at decreasing trend over
till FY 2013. This shows that firm is preferring to hold cash rather than paying off taxation, as
long as possible.
Total Non-Current Liabilities

The analysis show that total noncurrent Liabilities account is following decreasing trend with
slightly ups and down during the last five years. This shows that firm is preferring to pay off
its long term liabilities.
3. Current Liabilities
a. Current portion of long term liabilities

The analysis show that Current portion of long term liabilities account is following increasing
trend till FY 2011.there after it show decreasing trend. This shows that firm is paying off its
long term liabilities.
b. Trade and other payables
The analysis show that trade and other payables account is following increasing trend till FY
2010 as the highest value can be seen this year. There after it show decreasing trend till
FY2012 and increase in FY 2014. This shows that firm is paying less or more to its suppliers.
c. Dividend payable
The analysis show that the dividend payable account was created during FY 2011 and
following decreasing trend for next year. There after the account is terminated. This shows
that firm had paid dividend only two years.
Total Current Liabilities
Total current liabilities are at increasing trend till FY 2011. Thereafter following decreasing
trend.
Total Liabilities and owner Equity
Total liabilities and owner equity accounts following mixed trend. It followed increasing trend
till 2012 as the highest value can be seen during this year. Thereafter the value is decreasing
too. Its means that the liabilities are decreasing which is good sign.
Income Statement
Description 2009 2010 2011 2012 2013 200920102011 2012 2013
Sale 16,706
18,24816,701 8,136 7,428 100%
109%100% 49% 44%
Cost of Goods sold (9,796)

(9,051)
(7,188)(6,221)
(7,143) 100%92% 73% 64% 73%
Gross profit 6,910 9,197 9,513 1,915 286 100%

133%138% 28% 4%
Administrative Expenses (610) (780) (969) (1,165)(888) 100%

128%159% 191% 146%
Selling & Distribution cost (898) (994) (829) (299) (495) 100%
111%92% 33% 55%
Financial cost (3,159)

(3,589)
(3,472)(2,610)
(1,579) 100%
114%110% 83% 50%
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Other operating Expenses (244) (386) (510) (218) (382) 100%
158%209% 89% 157%
Othr Operating Income 342 1,409 1,855 1,528 261 100%

412%542% 447% 76%
Operating Profit 2,341 4,856 5,588 (849) (2,798) 100%

207%239% -36% -120%
Re- measurement gain/(loss)

2,866 (121) 741 (47) - 100%-4% 26% -2% -
Share gain/(loss) of associated

(25)company
(39) (18) - - 100%
156%72% - -
Profit before Tax 5,183 4,697 6,311 (896) (2,798) 100%91% 122% -17% -54%
Taxation (444)(1,464)
(1,721) 656 973 100%
330%388%-148%-219%
Profit After Tax 4,738 3,232 4,590 (240) (1,825) 100%68% 97% -5% -39%
EBITDA 8,342 8,943 10,665 2,929 (745) 107%

100% 128% 35% -9%
Income Statement
1. Sales
The sales account is following increasing trend during the FY 2010 as the highest value can be
during this year 109%. After that it follow decreasing trend till FY 2013.The results shows that
the sales of the company decreasing significantly. this is a bad sign for company.
2. Cost of Goods sold
Cost of goods sales account is following decreasing trend till FY 2012. After that there is a
slight rise in value during FY 2013. This shows that the cost of good sales is decreasing.
3. Gross profit
The gross profit account is following over all decreasing trend it is increasing till 2011. After
that it is decreasing significantly till 2013 as the value is just 4%. The result shows that the
cost of goods sales is increasing which cause the less in gross profit.
4. Administrative Expenses
Administrative Expenses is following overall increasing trend as the highest value can be seen
during the FY2012. Then it is following decreasing trend. This is not a good sign for the firm.
5. Selling & Distribution cost

Selling and admin cost account is following an overall decreasing trend it is increasing during
2010 there after it is decreasing.
6. Operating Profit
Operating profit account shows an overall decreasing trend. It is increasing till FY 2011. There
after it is decreasing till FY 2013 as it is showing negative. This shows that the company is
facing loss due to less sales.
7. Taxation
Taxation account is showing an overall decrease in the values. It is increasing till FY 2011 as
the highest value can be seen during this year. Thereafter the value is decreasing. This show
the company is getting tax return benefit as the company is facing losses.
8. Profit After Tax
Profit after tax of Net Profit account is showing an overall decrease in the values. It is
decreasing till FY 2010 and after one year there is an increase as the highest value can be
seen during FY 2012. Thereafter the value is decreasing and showing losses. This show the
company is facing losses.
Statement of cashflow
Description 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Cash from Operating activities
Cash genrted form operations 10,118,399 8,454,216 8,090,550 2,054,616 1,227,742 100% 84% 80% 20% 12%
Finance cost paid (2,983,608)(3,929,090) (3,445,470) (2,921,456) (1,608,527) 100% 132% 115% 98% 54%
Taxes paid (403,835) (379,235) (581,191) (257,656) (233,540) 100% 94% 144% 64% 58%
Retirement benefits (27,816) (36,713) (41,345) (54,076) (67,930) 100% 132% 149% 194% 244%
Long term deposit received 8,318 - - - - 100% - - - -
Net cash outflow from operating activities 6,711,458 4,109,178 4,022,544 (1,178,572) (682,255) 100% 61% 60% -18% -10%
Cash flows from investing activities
Purchase of property, plant and equipment (1,521,256)(1,193,641) (637,189) (416,094) (232,139) 100% 78% 42% 27% 15%
Purchase of intangible assets - - - (9,266) (22,493) - - - 100% 243%
Security deposits (9,438) (27,472) (12,018) (11,369) 965 100% 291% 127% 120% -10%
Sale proceeds of property, plant and equipment disposed
2,718 22,255 26,581 64,648 75,006 100% 819% 978% 2379% 2760%
Investments made (6,635,883) (20,000) (103,133) (128,096) (1,408) 100% 0% 2% 2% 0%
Investments redeemed - - - 1,800,000 - - - - 100% -
Sale proceeds of investment disposed - 150,000 - - 8,768 100% 6%
Short term loan to related party - - - (1,300,000) - - - - 100% -
Page 21
Loans repaid by related party (2,196,320)(2,319,245) - 5,815,565 - 100% 106% 0% -265% -
Interest received on receivable from related party - 386,602 - 27,229 1,595,798 - 100% - 7% 413%
Preference dividend received from related party - - - 824 1,337,214 - - - 100% 162283%
Profit on bank deposits received 7,715 12,593 15,622 26,997 28,252 100% 163% 202% 350% 366%
Net cash inflow from investing activities (10,352,464)(2,988,908) (710,137) 5,870,438 2,789,963 100% 29% 7% -57% -27%
Cash flows from financing activities
Repayment of redeemable capital (2,000) (297,000) (2,625,000) (3,825,000) (3,215,000) 100% 14850% 131250% 191250% 160750%
Proceeds from long term loans acquired 1,524,198 1,066,201 1,437,836 2,000,000 - 100% 70% 94% 131% 0%
Proceeds from short term loan acquired from related
2,037,500
party - - - 3,000,000 100% 0% 0% 0% 147%
Repayment of long term loans - (943,270) (1,277,419) (3,551,419) (1,667,614) - 100% 135% 377% 177%
Payment of liability against mining rights - (52,500) (84,000) - (21,000) - 100% 160% 0% 40%
Share deposit money refunded (40,000) - - (200,000) - 100% 0% 0% 500% 0%
Payment of finance lease liabilities (52,899) (89,849) (94,454) (88,092) (50,326) 100% 170% 179% 167% 95%
Net cash outflow from financing activities 3,466,799 (316,418) (2,643,037) (5,664,511) (1,863,940) 100% -9% -76% -163% -54%
Net increase/(decrease) in cash and cash equivalents
(174,207) 803,852 669,370 (972,645) 243,768 100% -461% -384% 558% -140%
Cash and cash equivalents at the beginning of
(5,146,498)
the year (5,320,705) (4,516,853) (3,847,483) (4,820,128) 100% 103% 88% 75% 94%
Cash and cash equivalents at the end of the (5,320,705)
year (4,516,853) (3,847,483) (4,820,128) (4,576,360) 100% 85% 72% 91% 86%
Cash and cash equivalents at the end of the year(in
-5,321
millions)
(4,517) (3,847) (4,820) (4,576) 100% 85% 72% 91% 86%
Statement of cash flow
1. Net cash inflow from operating activities
Net cash inflow from operating activities account is showing an overall decrease in the values.
It is decreasing and positive till FY 2011 and after one year there is decreased to negative
value as it can be seen during FY 2012. Thereafter the value is increasing slightly but showing
negative value. This show the company is facing losses.
1. Net cash inflow from investing activities

Net cash inflow from investing activities account is showing an overall decrease in the values.
It is decreasing and positive till FY 2011 and after one year there is decreased to negative
value as it can be seen during FY 2012. Thereafter the value is increasing slightly but showing
negative value. This show the company is facing losses.
2. Net cash inflow from financing activities

Net cash inflow from financing activities account is showing an overall decrease in the values.
It is decreasing till FY 2012 and after one year there is an increased in value as it can be seen
during FY 2013.The value is increasing significantly but showing negative value. This show the
company is facing losses.
3. Cash and cash equivalents at the end of the year

Cash and cash equivalents at the end of the year account is showing an overall decrease in
the values. It is decreasing till FY 2011 and after one year there is an increased in value as it
can be seen during FY 2012.The value is decreasing again in FY 2013 as can be seen in table.
This show the company is facing losses.
Balance Sheet
Description 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Assets
Non-Current Assets
Property, plant and equipment 21,285 21,916 37,937 37,290 37,114 40.83% 43.28% 58.06% 68.25% 77.08%
Assets subject to finance lease 148 283 230 121 51 0.28% 0.56% 0.35% 0.22% 0.11%
Intangibles 206 183 161 149 144 0.40% 0.36% 0.25% 0.27% 0.30%
Goodwill 3,305 3,305 3,305 3,305 3,305 6.34% 6.53% 5.06% 6.05% 6.86%
Investments - related party 7,882 2,930 130 262 295 15.12% 5.79% 0.20% 0.48% 0.61%
Loan to subsidiary 2,196 4,516 4,516 - - 4.21% 8.92% 6.91% 0.00% 0.00%
Security deposits 17 45 57 61 36 0.03% 0.09% 0.09% 0.11% 0.07%
Total Non-current Assets 35,039 33,178 46,336 41,188 40,945 67.22% 65.52% 70.91% 75.39% 85.04%
Current Assets
Stores and spare parts 1,880 2,310 2,583 3,023 2,904 3.61% 4.56% 3.95% 5.53% 6.03%
Stock-in-trade 2,793 2,947 2,058 1,734 812 5.36% 5.82% 3.15% 3.17% 1.69%
Trade debts 1,427 1,851 890 571 153 2.74% 3.66% 1.36% 1.05% 0.32%
Other receivables 6,814 3,583 5,300 6,042 3,174 13.07% 7.08% 8.11% 11.06% 6.59%
Derivative financial instruments 8 69 19 - - 0.02% 0.14% 0.03% 0.00% 0.00%
Investments 3,930 6,513 7,359 1,084 - 7.54% 12.86% 11.26% 1.98% 0.00%
Cash and bank balances 235 186 796 994 160 0.45% 0.37% 1.22% 1.82% 0.33%
Total Current Assets 17,087 17,459 19,005 13,448 7,203 32.78% 34.48% 29.09% 24.61% 14.96%
Total Assets 52,126 50,637 65,341 54,636 48,148 100% 100% 100% 100% 100%
Liabilities and onwers equity Page 23

Issued, Subscirbed and Paid up Capital 4,500 4,500 4,500 4,500 4,500 8.63% 8.89% 6.89% 8.24% 9.35%
Reserves 10,147 7,548 5,714 3,432 1,700 19.47% 14.91% 8.74% 6.28% 3.53%
Share Deposit money 200 200 200 - - 0.38% 0.39% 0.31% 0.00% 0.00%
Revalution Reserve 2,476 2,476 11,942 11,964 11,884 4.75% 4.89% 18.28% 21.90% 24.68%
Total Equity 17,323 14,724 22,356 19,896 18,084 33.23% 29.08% 34.21% 36.42% 37.56%
Non-Current Liabilities
Long term Finance 16,191 13,372 8,484 4,559 1,466 31.06% 26.41% 12.98% 8.34% 3.04%
Suppliers credit - secured - - 1,796 1,488 1,100 0.00% 0.00% 2.75% 2.72% 2.28%
Liabilities against assets subject to finance lease 107 218 138 50 - 0.21% 0.43% 0.21% 0.09% 0.00%
Payable against mining rights 52 - - - - 0.10% 0.00% 0.00% 0.00% 0.00%
Long term deposits 732 44 48 46 47 1.40% 0.09% 0.07% 0.08% 0.10%
Deferred liabilities 46 57 91 115 126 0.09% 0.11% 0.14% 0.21% 0.26%
Deferred taxation 4,975 5,574 10,967 10,923 9,933 9.54% 11.01% 16.78% 19.99% 20.63%
Total Non-Current Liabilities 22,103 19,265 21,524 17,181 12,672 42.40% 38.05% 32.94% 31.45% 26.32%
Current Liabilities
Current portion of long term liabilities 1,339 4,009 6,335 4,878 3,132 2.57% 7.92% 9.70% 8.93% 6.50%
Finances under mark up arrangements - secured 5,556 4,702 4,644 5,814 4,736 10.66% 9.29% 7.11% 10.64% 9.84%
Derivative financial instruments - - - - - 0.00% 0.00% 0.00% 0.00% 0.00%
Payable to Privatization Commission of Pakistan 2,198 2,198 2,198 2,198 2,198 4.22% 4.34% 3.36% 4.02% 4.57%
Short term loan from related party - secured - - - - 3,000 0.00% 0.00% 0.00% 0.00% 6.23%
Trade and other payables 2,491 4,458 3,121 3,225 3,989 4.78% 8.80% 4.78% 5.90% 8.28%
Accrued finance cost 989 650 677 366 337 1.90% 1.28% 1.04% 0.67% 0.70%
Dividend payable - - 3,755 1,078 - 0.00% 0.00% 5.75% 1.97% 0.00%
Provision for taxation 127 631 731 - - 0.24% 1.25% 1.12% 0.00% 0.00%
Total Current Liabilities 12,700 16,648 21,461 17,559 17,392 24.36% 32.88% 32.84% 32.14% 36.12%
Total Liabilities and owner Equity 52,126 50,637 65,341 54,636 48,148 100% 100% 100% 100% 100%
Verticle Analysis
Balance Sheet
1. Assets
a. Total Non-current Assets
The analysis show that total noncurrent Assets account was 67.22% of total assets during the
FY 2009 and 71% during FY 2011. Thereafter it is increasing over the years and noticed as 85%
during the FY 2013. This shows that the company is focused on increasing its long term assets
which is good sign for the company and cause to increase its operations.
b. Current Assets
The analysis show that total current Assets account was 32.78% during the FY 2009 and 29%
during FY 2011 of total assets. Thereafter it is decreasing over the years and noticed as 14%
during the FY 2013. This shows that the company is financing its long term assets through
short term liabilities and have less assets to finance its operations.
2. Liabilities and owners equity

a. Total Equity
The analysis show that total equity account was 33% during the FY 2009 and 34% during FY
2011 of total liabilities and owners equity. Thereafter it is increasing over the years and
noticed as 37% during the FY 2013. This shows that the equity is increasing and financial
health of the company is getting stronger than ever to finance its operations.
b. Total Non-Current Liabilities

The analysis show that total non-current liabilities account was 42% during the FY 2009 and
33% during FY 2011 of total liabilities and owners equity. Thereafter it is decreasing over the
years and noticed as 26% during the FY 2013. This shows that the long term liabilities are
decreasing and financial health of the company is getting stronger.
c. Total Current Liabilities

The analysis show that total current liabilities account was 424% during the FY 2009 and 33%
during FY 2011 of total liabilities and owners equity. Thereafter it is decreasing over the
years and noticed as 36% during the FY 2013. This shows that the short term liabilities are
increasing and financial health of the company is getting stronger than ever to finance its
operations.
Income Statement
Description 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Sale 16,70618,24816,701 8,136 7,428 100% 100% 100% 100% 100%
Cost of Goods sold (9,796)

(9,051)
(7,188)
(6,221)
(7,143) -59% -50% -43% -76% -96%
Gross profit 6,910 9,197 9,513 1,915 286 41% 50% 57% 24% 4%
Administrative Expenses
(610) (780) (969) (1,165) (888) -4% -4% -6% -14% -12%
Selling & Distribution (898)

cost (994) (829) (299) (495) -5% -5% -5% -4% -7%
Financial cost (3,159)

(3,589)
(3,472)
(2,610)
(1,579) -19% -20% -21% -32%
Page-21%
25
Other operating Expenses
(244) (386) (510) (218) (382) -1% -2% -3% -3% -5%
Othr Operating Income

342 1,409 1,855 1,528 261 2% 8% 11% 19% 4%
Operating Profit 2,341 4,856 5,588 (849) (2,798) 14% 27% 33% -10% -38%
Re- measurement gain/(loss)

2,866 (121) 741 (47) - 17% -1% 4% -1% -
Share gain/(loss) of associated

(25) (39)
company
(18) - - 0% 0% 0% - -
Profit before Tax 5,183 4,697 6,311 (896) (2,798) 31% 26% 38% -11% -38%
Taxation (444) (1,464)

(1,721) 656 973 -3% -8% -10% 8% 13%
Profit After Tax 4,738 3,232 4,590 (240) (1,825) 28% 18% 27% -3% -25%
EBITDA 8,342 8,943 10,665 2,929 (745) 50% 49% 64% 36% -10%
Income Statement
1. Cost of Goods sold

The analysis show that cost of goods sold account was 50% during the FY 2009 and 43% during
FY 2011 of total Sales. Thereafter it is increasing over the years and noticed as 96% during the
FY 2013. This shows that the cost of Goods sold is increasing and not a good sign for company
and cause loss.
2. Gross profit
The analysis show that gross Profit account was 41% during the FY 2009 and 57% during FY
2011 of total Sales. Thereafter it is decreasing over the years and noticed as 4% during the FY
2013. This shows that the cost of Goods sold is increasing and cause of less gross profit.
3. Administrative Expenses
The analysis show that administrative expenses account was 4% during the FY 2009 and 6%
during FY 2011 of total Sales. Thereafter it is increasing over the years and noticed as 12%
during the FY 2013. This shows that the expenses are increasing and cause of less profit.
4. Selling & Distribution cost

The analysis show that Selling & Distribution cost account was 5% during the FY 2009 to FY
2011 of total Sales. Thereafter it is increasing over the years and noticed as 7% during the FY
2013. This shows that the expenses are increasing and cause of less profit.
5. Operating Profit
The analysis show that the operating profit account was 14% during the FY 2009 and 33%
during FY 2011 of total Sales. Thereafter it is decreasing over the years and noticed as 38%
loss during the FY 2013. This shows that the firm is facing loss currently.
6. Taxation
The analysis show that the taxation account was 3% during the FY 2009 and 10% during FY
2011 of total Sales. Thereafter it is decreasing over the years and noticed as 13% tax return
during the FY 2013. This shows that the firm is facing loss currently and getting return as
27
compensation.
Page
7. Profit After Tax
The analysis show that the profit after tax account was 28% during the FY 2009 and 27%
during FY 2011 of total Sales. Thereafter it is decreasing over the years and noticed as 25%
loss during the FY 2013. This shows that the firm is facing loss currently.
Statement of Cash Flow
Description 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013
Cash from Operating activities
Cash genrted form operations 10,118,399 8,454,216 8,090,550 2,054,616 1,227,742 100% 100% 100% 100% 100%
Finance cost paid (2,983,608) (3,929,090)(3,445,470)(2,921,456)(1,608,527) -29% -46% -43% -142% -131%
Taxes paid (403,835) (379,235) (581,191) (257,656) (233,540) -4% -4% -7% -13% -19%
Retirement benefits (27,816) (36,713) (41,345) (54,076) (67,930) 0% 0% -1% -3% -6%
Long term deposit received 8,318 - - - - 0% - - - -
Net cash outflow from operating activities
6,711,458 4,109,178 4,022,544 (1,178,572) (682,255) 66% 49% 50% -57% -56%
Cash flows from investing activities 0% 0% 0% 0% 0%
Purchase of property, plant and equipment
(1,521,256) (1,193,641) (637,189) (416,094) (232,139) -15% -14% -8% -20% -19%
Purchase of intangible assets - - - (9,266) (22,493) - - - 0% -2%
Security deposits (9,438) (27,472) (12,018) (11,369) 965 0% 0% 0% -1% 0%
Sale proceeds of property, plant and equipment
2,718 disposed
22,255 26,581 64,648 75,006 0% 0% 0% 3% 6%
Investments made (6,635,883) (20,000) (103,133) (128,096) (1,408) -66% 0% -1% -6% 0%
Investments redeemed - - - 1,800,000 - - - - 88% -
Sale proceeds of investment disposed - 150,000 - - 8,768 - 2% - 0% 1%
Short term loan to related party - - - (1,300,000) - - - - -63% -
Loans repaid by related party (2,196,320) (2,319,245) - 5,815,565 - -22% -27% - 283% -
Interest received on receivable from related -party 386,602 - 27,229 1,595,798 0% 5% - 1% 130%
Preference dividend received from related party
- - - 824 1,337,214 - - - 0% 109%
Profit on bank deposits received 7,715 12,593 15,622 26,997 28,252 0% 0% 0% 1% 2%
Net cash inflow from investing activities
(10,352,464)(2,988,908) (710,137) 5,870,438 2,789,963 -102% -35% -9% 286% 227%
Cash flows from financing activities 0% 0% 0% 0% 0%
Repayment of redeemable capital (2,000) (297,000) (2,625,000)(3,825,000)(3,215,000) 0% -4% -32% -186% -262%
Proceeds from long term loans acquired
1,524,198 1,066,201 1,437,836 2,000,000 - 15% 13% 18% 97% 0%
Proceeds from short term loan acquired
2,037,500
from related party
- - - 3,000,000 20% - - - 244%
Repayment of long term loans - (943,270) (1,277,419)(3,551,419)(1,667,614) - -11% -16% -173% -136%
Payment of liability against mining rights - (52,500) (84,000) - (21,000) - -1% -1% - -2%
Share deposit money refunded (40,000) - - (200,000) - 0% - - -10% -
Payment of finance lease liabilities (52,899) (89,849) (94,454) (88,092) (50,326) -1% -1% -1% -4% -4%
Net cash outflow from financing activities
3,466,799 (316,418) (2,643,037)(5,664,511)(1,863,940) 34% -4% -33% -276% -152%
Net increase/(decrease) in cash and cash
(174,207)
equivalents
803,852 669,370 (972,645) 243,768 -2% 10% 8% -47% 20%
Cash and cash equivalents at the beginning
(5,146,498)
of the
(5,320,705)
year (4,516,853)(3,847,483)(4,820,128) -51% -63% -56% -187% -393%
Cash and cash equivalents at the end
(5,320,705)
of the year
(4,516,853)(3,847,483)(4,820,128)(4,576,360) -53% -53% -48% -235% -373%
Statement of cash flow
29
1. Net cash inflow from operating activities
Page
The analysis show that the Net cash inflow from operating activities account was 66% during
the FY 2009 and 50% during FY 2011 of Cash generated from operations. Thereafter it is
decreasing over the years and noticed as 56% loss during the FY 2013. This shows that the firm
is facing loss currently.
2. Net cash inflow from investing activities
The analysis show that the Net cash inflow from investing activities account was -102% during
the FY 2009 and -9% during FY 2011 of Cash generated from operations. Thereafter it is
increasing over the years and noticed as 227% during the FY 2013. This shows that the firm is
getting profit currently.
3. Net cash inflow from financing activities
The analysis show that the Net cash inflow from financing activities account was 34% during
the FY 2009 and -33% during FY 2011 of Cash generated from operations. Thereafter it is
decreasing over the years and noticed as -152% during the FY 2013. This shows that the firm is
facing loss currently.
4. Cash and cash equivalents at the end of the year
The analysis show that Cash and cash equivalents at the end of the year account was -53%
during the FY 2009 and -48% during FY 2011 of Cash generated from operations. Thereafter it
is decreasing over the years and noticed as -373% during the FY 2013. This shows that the firm
is facing loss currently and dont have enough cash to finance its operations.
Liquidity Analysis
Liquidity ratios are used to determine a companys ability to meet its short-term debt
obligations. Investors often take a close look at liquidity ratios when performing
fundamental analysis on a firm. Since a company that is consistently having trouble meeting
its short-term debt is at a higher risk of bankruptcy, liquidity ratios are a good measure of
whether a company will be able to comfortably continue as a going concern.
1. Current Ratio
A liquidity ratio that measures a company's ability to pay short-term obligations. This ratio is
mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt
and payables) with its short-term assets (cash, inventory, receivables).
Current Ratio Current assets Current liabilities

Description 2009 2010 2011 2012 2013 Average
Current assets 17,087 17,459 19,005 13,448 7,203 14,840
12,700 16,648 21,461 17,559 17,392 17,152
Current liabilities
Current ratio 1.35 1.05 0.89 0.77 0.41 1
Current Ratio
1.60
1.40 1.35
1.20 1.05
1.00 0.89
0.77
Current Ratio 0.80
0.60
0.41
0.40
0.20
0.00
2009 2010 2011 2012 2013
Years
Linear ()
31 Page
Current ratio measures the short term debt paying of the firm. The higher the current ratio,
the more capable the company is of paying its obligations. Calculations shows that the
current ratio of Pak-Arab fertilizers is following decreasing trend with a rate 0f 13% per year
as it was higher during the FY 2009. During the FY 2013 it was just 0.41. This shows that the
firm is losing its short term debt paying ability and firm is using its short term debts to
finance long term assets.
2. Quick Ratio
An indicator of a companys short-term liquidity. The quick ratio measures a companys ability
to meet its short-term obligations with its most liquid assets. For this reason, the ratio
excludes inventories from current assets. It measures the dollar amount of liquid assets
available for each dollar of current liabilities.
(Current assets - Inventory & Prepayments) Current
Quick Ratio liabilities
Quick assets 12,414 12,202 14,364 8,691 3,487 10,232
Current
12,700 16,648 21,461 17,559 17,392
liabilities 17,152
Quick Ratio 0.98 0.73 0.67 0.49 0.20 0.62
Quick Ratio
1.20
0.98
1.00
0.80 0.73
0.67
Quick Ratio
Quick Ratio 0.60 0.49 Linear (Quick Ratio)
0.40
0.20
0.20
0.00
2009 2010 2011 2012 2013
Years
The calculated results indicate that the ability of the Pak-Arab Fertilizers limited to pay its
short term debt is decreasing with a rate 0f 15% per year. During the FY2009 the value of
Quick ratio was highest after that it is declining to 0.20 till FY 2013. Its means that firm have
quick assets of PKR 0.20 against every PKR 1 of its currents liabilities.
3. Net Working Capital

Net working capital is used to measure the short-term liquidity of a business. The
33
measurement can also be used to obtain a general impression of the ability of company
Page
management to utilize assets in an efficient manner.
Net Working Capital Current assets - Current liabilities

17,08
17,459 19,005 13,448 7,203
Current assets 7 14,840
12,70
16,648 21,461 17,559 17,392
Current liabilities 0 17,152
Net Working Capital 4,387 811 (2,456) (4,111) (10,189) (2,312)
Net Working Capital

6,000
4,387
4,000
2,000 811
-
2009 2010 2011 2012 2013 Net Working Capital
(2,000)
Net Working Capital (2,456) Linear (Net Working Capital)
(4,000)
(4,111)
(6,000)
(8,000)
(10,000)
(10,189)
(12,000)
Years
The result of calculations showed that net working capital of the Pak-Arab fertilizers showing
decreasing trend with a rate 0f 66% per year as it was highest during the FY2009. Calculations
indicate that the firm had negative networking capital which shows that the firms short term
assets are very low.
Solvency Analysis
The ability of a company to meet its long-term financial obligations. Solvency is essential to
staying in business. A company that is insolvent must enter bankruptcy.
1. Debt Ratio
A financial ratio that measures the extent of a companys leverage. The debt ratio is defined
as the ratio of total debt to total assets, expressed in percentage, and can be interpreted as
the proportion of a companys assets that are financed by debt.
Debt Ratio Total liabilities Total assets

Total assets 52,126 50,637 65,341 54,636 48,148 54,178
Total liabilities 34,803 35,913 42,985 34,740 30,064 35,701
Debt ratio 67% 71% 66% 64% 62% 66%
35
Debt Ratio
Page
72% 71%
70%
68% 67%
66%
66%
Debt Ratio Debt Ratio Linear (Debt Ratio)
64% 64%
62%
62%
60%
58%
2009 2010 2011 2012 2013
Years
The result indicates that the debt ratio showing decreasing trend with a rate 0f 1.7% per year.
The debt portion in the assets of Pak-Arab limited were highest as 71 % in the FY 2010.
Gradually it is decreasing as the years are passing, during the FY2013 debt ratio is 62%. This
means that the company is financing its assets with equity and reducing its debt ratio.
2. Debt to Equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by
stockholders' equity. It indicates what proportion of equity and debt the company is using to
finance its assets.
Debt to Equity Ratio Total liabilities Total Equity

Total equity 17,323 14,724 22,356 19,896 18,084 18,477
Total liabilities 34,803 35,913 42,985 34,740 30,064 35,701
Debt Equity Ratio 201% 244% 192% 175% 166% 196%
Debt to Equity Ratio

300%
244%
250%
201% 192%
200% 175% 166%
Debt to equity ratio 150%
100%
50%
0%
2009 2010 2011 2012 2013
Years
Debt to Equity Ratio Linear (Debt to Equity Ratio)

This shows that the aggressiveness of Pak-Arab limited in financing its growth with debt. The
37
above calculation shows that financial leverage of the company is at slightly decreasing trend
Page
with a rate 0f 3.5% per year. During the YF 2010 the value was highest, as it was 244%.
Thereafter the values are decreasing, as it is 166% during the FY 2013. This shows the
company is showing less aggressiveness in the financing.
3. Capitalization Ratio
The capitalization ratio measures the debt component of a company's capital structure, or
capitalization to support a company's operations and growth.
Capitalization Ratio Long term debt Long term debt+ Shareholders equity
Total Long term Debt 22,103 19,265 21,524 17,181 12,672 18,549
Shareholders Equity 17,323 14,724 22,356 19,896 18,084 18,477
Capitalization Ratio 56% 57% 49% 46% 41% 50%
Capitalization Ratio
60% 56% 57%
49% 46%
50% 41%
40%
Capitlization Ratio 30%
20%
10%
0%
2009 2010 2011 2012 2013
Years
Capitalization Ratio Linear (Capitalization Ratio)

The results of calculations show that the value of capitalization ratio is following decreasing
trend with a rate 0f 5.35% per year. Pak-Arab fertilizers limited had maximum debt in its
capital structure during FY 2010 as it was 57%. Thereafter company reduces its debt year by
year. The calculations of YF 2013 showed the value of capitalization ratio 41%. This shows that
the company is reducing is debt and financing its capital structure with equity.
Activity Ratio
Accounting ratios that measure a firm's ability to convert different accounts within its balance
sheets into cash or sales. Activity ratios are used to measure the relative efficiency of a firm
based on its use of its assets, leverage or other such balance sheet items. These ratios are
important in determining whether a company's management is doing a good enough job of
generating revenues, cash, etc. from its resources.
1. Accounts Payable Turnover

A short-term measure used to quantify the rate at which a company pays off its suppliers. The
measure shows investors how many times per period the company pays its average payable
amount.
Accounts Payable Turnover Cost of Goods Sale Avg. Accounts Payables

Cost of Goods Sale 9,796 9,051 7,188 6,221 7,143 7,880
Avg. Accounts Payables 2,793 2,870 2,503 1,896 1,273 2,267
Accounts Payable Turnover 3.51 3.15 2.87 3.28 5.61 4
39
Account Payable Turnover
Page
6.00 5.61
5.00
4.00 3.51 3.28
3.15 2.87
Account Payable 3.00
2.00
1.00
0.00
2009 2010 2011 2012 2013
Years
Accounts Payable Turnover Linear (Accounts Payable Turnover)
The above calculations shows that the value of account payable turnover ratio is following
increasing trend with a rate 0f 12 % per year. It is decreasing from FY 2009 to FY 2012 as it
was 3.51 times to 3.28 times respectively. Thereafter in FY 2013 the Value showed a boom
and it reached to 5.61 times. The results are showing that the Pak-Arab has reduced the days
of payments to its suppliers.
2. Average Payment Period

Average payment period means the average period taken by the company in making payments
to its creditors. It is computed by dividing the number of working days in a year by creditors
turnover ratio.
Avg. Payment Period 360 Accounts Payables Turn over

Number of days 360 360 360 360 360 360
Accounts Payable Turnover 4 3 3 3 6 4
Avg. Payment Period 102.64 114.15 125.33 109.72 64.16 103
Avg. Payment Period

150.00 125.33
114.15 109.72
102.64
100.00
64.16
Avg. Payment Period
50.00
0.00
2009 2010 2011 2012 2013
Years
Avg. Payment Period Linear (Avg. Payment Period)

The calculations show that the value of average payment period following decreasing trend
41
with a rate 0f 7.5% per year. It is following slightly up and down trend from FY 2009 to FY
Page
2012 as it was 103 day to 110 day respectively. During the FY 2013 results showed that the
Pak-Arab fertilizers limited paying its payables in 64 days.
3. Inventory Turn over

A ratio showing how many times a company's inventory is sold and replaced over a period. The
days in the period can then be divided by the inventory turnover formula to calculate the
Inventory Turn over Cost of Goods Sold Avg. Inventory

Cost of Goods Sold 9,796 9,051 7,188 6,221 7,143 7,880
Avg. Inventory 1,880 2,095 2,447 2,803 2,964 2,438
Inventory Turnover 5.21 4.32 2.94 2.22 2.41 3
Inventory Turn over

6.00 5.21
4.32
4.00 2.94
2.22 2.41
Inventory Turnover
2.00
0.00
2009 2010 2011 2012 2013
Years
Inventory Turn over Linear (Inventory Turn over)

Above calculation shows that the inventory turnover of Pak-Arab Fertilizers limited is
following decreasing trend with a rate 0f 10.5% per year. It is decreasing by the FY 2009 to FY
2012. Thereafter the trend line shows a slightly increase in the value. The results of above
graph indicating that the company is not working efficiently as it is reducing inventory
turnover which cause to low profit and higher expenses.
4. Average Age of Inventory
The average number of days it takes for a firm to sell to consumers a product it is currently
holding as inventory.
Avg. Age of Inventory 360 Inventory turn over

Days 360 360 360 360 360 360
Inventory Turnover 5 4 3 2 2 3
Age. Age of Inventory 69.09 83.33 122.53 162.21 149.36 117
Avg. Age of Inventory

200.00 162.21 149.36
150.00 122.53
Avg Age of inventory 100.00 69.09 83.33
50.00
0.00
2009 2010 2011 2012 2013
Years
Avg. Age of Inventory Linear (Avg. Age of Inventory)

The calculation are indicating that the average age of inventory is showing an increasing
43
trend with a rate 0f 23% per year throughout the trend line, it is increasing from FY2009 to FY
Page
2012.thereafter in FY 2013 the value have a minor decrease. The result shows that the
holding time of inventory is increasing due to inefficiency. The inventory holding time is
almost double as compared to base year, which cause of less profit and high expenses.
5. Accounts Receive able Turn over
By maintaining accounts receivable, firms are indirectly extending interest-free loans to their
clients. A high ratio implies either that a company operates on a cash basis or that its
extension of credit and collection of accounts receivable is efficient. A low ratio implies the
company should re-assess its credit policies in order to ensure the timely collection of
imparted credit that is not earning interest for the firm.
Accounts Receive able Turn over Credit sales Avg. Accounts Receivable
Credit Sales 8,241 5,434 6,190 6,613 3,327 5,961
Avg. Account Receivable 1,427 1,639 1,371 731 362 1,106
Accounts Receive able Turn over 5.78 3.32 4.52 9.05 9.19 6
Accounts Receive able Turn over

9.05 9.19
10.00
5.78 4.52
5.00 3.32
Account Receivable turn over
0.00
2009 2010 2011 2012 2013
Years
Accounts Receive able Turn over

Linear (Accounts Receive able Turn over)
The calculation are indicating that the Account receivable turnover is showing increasing
trend with a rate 0f 11.8% per year. It is increasing from FY2012 to FY 2013.Before that during
the FY 2009 Company had an average value of account receivable turnover. Thereafter during
the FY 2010 to FY 2011 there was a significant decrease in the values. The results are showing
that the Pak-Arab fertilizers limited is focusing on the holding of their own money rather than
lending it.
6. Average Collection Period

The approximate amount of time that it takes for a business to receive payments owed, in
terms of receivables, from its customers and clients.
Avg. Collection Period 360 Accounts Receive able Turn over

Days 360 360 360 360 360 360
Accounts Receive able Turnover 6 3 5 9 9 6
39.1
62.34 108.58 79.71 39.77 66
Avg. Collection Period 7
Avg. Collection Peroid

120.00 108.58
100.00
79.71
80.00 62.34
Avg. Collection Period 60.00
39.77 39.17
40.00
20.00
0.00
2009 2010 2011 2012 2013
Years
Avg. Collection Peroid Linear (Avg. Collection Peroid )

45 Page
The calculation of above values show that the average collection period is showing decreasing
trend with a rate 0f 11.4% per year. During FY 2010 the value of average collection period was
highest as it was 109 days, thereafter its value is decreasing year by year. During FY 2013 the
value was 39 days. The results are showing that the Pak-Arab fertilizers limited is focusing on
getting back its cash.
Profitability Ratios
A class of financial metrics that are used to assess a business's ability to generate earnings as
compared to its expenses and other relevant costs incurred during a specific period of time.
For most of these ratios, having a higher value relative to a competitor's ratio or the same
ratio from a previous period is indicative that the company is doing well.
1. Gross Profit Ratio
A financial metric used to assess a firm's financial health by revealing the proportion of money
left over from revenues after accounting for the cost of goods sold. Gross profit margin serves
as the source for paying additional expenses and future savings.
Gross Profit Ratio Gross Profit Net Sales

Gross Profit 6,910 9,197 9,513 1,915 286 5,564
Net Sales 16,706 18,248 16,701 8,136 7,428 13,444
Gross Profit Ratio 41.4% 50.4% 57.0% 23.5% 3.9% 35%
Gross Profit Ratio

57.0%
60.0% 50.4%
50.0% 41.4%
40.0%
G.P Ratio 30.0% 23.5%
20.0%
10.0% 3.9%
0.0%
2009 2010 2011 2012 2013
Years
Gross Profit Ratio Linear (Gross Profit Ratio)
The calculation shows that the gross Profit margin is showing decreasing trend with a rate 0f
18% per year. It is increasing from FY 2009 to FY 2011. Thereafter it shows that there was
significant decrease from FY 2012 to FY 2013 as it was just 3% of the sales. The results shows
that the cost of goods is increasing significantly.
2. Net Profit Margin

A ratio of profitability, measures how much out of every dollar of sales a company actually
keeps in earnings.
47
Net Profit Margin Net Profit Net Sales
Page
4,73 3,23 4,59
(240) (1,825) 2,099
Net Profit 8 2 0
Net Sales 16,706 18,248 16,701 8,136 7,428 13,444
Net Profit Margin 28.4% 17.7% 27.5% -2.9% -24.6% 9%
Net Profit Margin

40.0%
28.4% 27.5%
30.0%
17.7%
20.0%
Net Profit Margin 10.0%
Net Profit Margin Linear (Net Profit
-2.9% Margin)
0.0%
2009 2010 2011 2012 2013
-10.0%
-20.0%
-30.0% -24.6%
Years
Above calculations are showing that the net profit margin is following decreasing trend with a
rate 0f 37% per year throughout the graph except FY 2011 as it was 27.5%. The value of net
profit margin is becoming negative from the FY 2012 to till now. The results show that the
Pak-Arab fertilizers limited was earning 28%, 17.7 % and 17.5% profit from FY2009 to FY2010
respectively. There were ups and down in profit. Thereafter the in FY2012 there was 2.9 %
which was increased to 24.6 %. It means that the cost of goods sold and other expenses are
increasing.
3. Total Assets Turn over

The amount of sales or revenues generated per dollar of assets. The Asset Turnover ratio is an
indicator of the efficiency with which a company is deploying its assets.
Total Assets Turn over Net Sales Total Assets

Net Sales 16,706 18,248 16,701 8,136 7,428 13,444
Total Assets 52,126 51,382 57,989 59,989 51,392 54,575
Total Assets Turn over 0.32 0.36 0.29 0.14 0.14 0.25
Total Assets Turnover

0.40 0.36
0.35 0.32
0.29
0.30
0.25
Total Asset turnover 0.20 Turnover
Total Assets Linear (Total Assets Turnover)
0.14 0.14
0.15
0.10
0.05
0.00
2009 2010 2011 2012 2013
Years
The calculations show that the value of total assets turnover is following decreasing trend
with a rate of 11% per year over the years. The highest value of total assets turnover can be
seen in the FY 2010.thereafter the value it is decreasing till FY 2012 and same for FY 2013.
The results show that the Pak-Arab was generating PKR 0.32 by investing every single Rupee
after that it is decreasing to 0.14 till FY 2013.
4. Return on Assets
An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to
how efficient management is at using its assets to generate earnings.
49
Return on Assets Net Profit Avg. Operating Assets
Page
Net Profit 4,738 3,232 4,590 (240) (1,825) 2,099
Avg. Operating Assets 52,126 51,382 57,989 59,989 51,392 54,575
Return on Assets 9.09% 6.29% 7.92% -0.40% -3.55% 4%
Return on Assets
10.00% 9.09%
7.92%
8.00% 6.29%
6.00%
4.00%
Return on Assets Linear (Return on Assets)
ROA 2.00%
-0.40%
0.00%
2009 2010 2011 2012 2013
-2.00%
-4.00%
-3.55%
-6.00%
Years
Since the calculations show that the value of ROA is following decreasing trend with a rate of
27.8% per year. Company was generating highest ROA during the FY 2009. Thereafter it tends
to decrease but during the FY 2011 once again there was a boom. During the FY 2012 the
company was facing losses so the return was slightly negative but in FY 2013 the value was
significantly negative.
5. Fixed Assets Turnover
The fixed-asset turnover ratio measures a company's ability to generate net sales from fixed-
asset investments - specifically property, plant and equipment. A higher fixed-asset turnover
ratio shows that the company has been more effective in using the investment in fixed assets
to generate revenues.
Fixed Asset turnover Net Sales Fixed Assets

Net Sales 16,706 18,248 16,701 8,136 7,428 13,444
Fixed Assets 35,039 33,178 46,336 41,188 40,945 39,337
Fixed Asset turnover 0.48 0.55 0.36 0.20 0.18 0.35
Fixed Asstet turnover

0.60 0.55
0.48
0.40 0.36
Fixed Turnover 0.20 0.18
0.20
0.00
2009 2010 2011 2012 2013
Years
Fixed Asstet turnover Linear (Fixed Asstet turnover)

51
Page
The calculation shows that the fixed assets turnover ratio is following decreasing trend over
the years with a rate 0f 12.5% per year. The highest value can be seen during the FY2010.
There after the values are decreasing to its lowest point during FY 2013. This means that the
company is earning very low return on investing every single rupee in the fixed assets.
6. Earnings Per Share

The portion of a company's profit allocated to each outstanding share of common stock.
Earnings per share serves as an indicator of a company's profitability.
Earnings Per Share Net Profit No. of share out standing

Net Profit 4,738 3,232 4,590 (240) (1,825) 2,099
No. of share out standing 450 450 450 450 450 450
Earnings Per Share 10.529 7.182 10.200 -0.533 -4.056 4.66
Earning Per Share

15.000 10.529 10.200
10.000 7.182
Earning Per Share 5.000 -0.533
0.000
-5.000 2009 2010 2011 2012 2013
-4.056
Years
Earning Per Share Linear (Earning Per Share)

The above calculation shows that the value of earning per share is following decreasing trend
with a rate of 27.7% per year. The highest values can be seen that during the FY 2009 and FY
2010. Thereafter the value of earning per sharing was negative.
7. Dividend per share

The sum of declared dividends for every ordinary share issued.
Dividend per share Dividend No. of share out standing

Dividend - - 3,755 1,078 - 967
No. of share outstanding 450 450 450 450 450 450
Dividend per share 0.00 0.00 8.34 2.40 0.00 2.15
Dividend Per share

10.00 8.34
8.00
Dividend per Share 6.00
4.00 2.40
2.00
0.00
2009
0.00 2010
0.00 2011 2012 2013
0.00
Years
Dividend per share Linear (Dividend per share)

The calculation shows that the company had given dividend during the FY 2011 and FY 2012
53
only. It is decreasing with a rate 0f 35.6% per year.
Page
8. Dividend Yield Ratio
A financial ratio that shows how much a company pays out in dividends each year relative to
its share price.

Dividend - - 8 2 - 2
Market Price Per Share 39 33 50 44 40 41
Dividend Yield Ratio 0.00% 0.00% 16.80% 5.42% 0.00% 0.04
Dividend Yield Ratio

20.00% 16.80%
15.00%
Dividend Yield 10.00% 5.42%
5.00%
0.00%
0.00%
2009 0.00%
2010 2011 2012 0.00%
2013
Years
Dividend Yield Ratio Linear (Dividend Yield Ratio)

The above calculations show that dividend yield ratio is showing decreasing trend with a rate
0f 33% per year. As the company had given the dividend. The dividend yield ratio is also can
be seen with highest value. Thereafter company is not giving any dividend.
9. Price Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings.
Price earnings Ratio Market Price per share Earning Per share
Market Price 39 33 50 44 40 41
Earnings per share 10.529 7.182 10.200 (0.533) (4.056) 5
Price earnings Ratio 3.66 4.56 4.87 -82.89 -9.91 (15.94)
Price Earning Ratio

20.00 3.66 4.56 4.87
0.00
2009 2010 2011 2012 2013
-20.00 -9.91
Price-40.00
earning Ratio Linear (Price earning Ratio)
Price Earning Ratio
-60.00
-80.00
-100.00 -82.89
Years
The above calculation shows that the value of price earnings ratio showing decreasing trend
55
with a rate 0f 74% per year. The highest value can be seen during the FY 2010. Thereafter the
Page
ratio is going negative form FY 2012.
10.Earning yield Ratio

The earnings per share for the most recent 12-month period divided by the current market
price per share.
Earning yield Ratio Earnings Per share Market Price per share
Earnings per share 10.529 7.182 10.200 (0.533) (4.056) 4.664
Market Price Per Share 39 33 50 44 40 41
Earning yield Ratio 27.35% 21.95% 20.53% -1.21% -10.09% 11.71%
Earning Yield Ratio

30.00% 27.35%
25.00% 21.95% 20.53%
20.00%
15.00%
10.00%
Earning Yield Ratio
5.00% -1.21%
0.00%
-5.00% 2009 2010 2011 2012 2013
-10.00%
-15.00% -10.09%
Years
Earning yield Ratio Linear (Earning yield Ratio)
The above calculations show that the value of earning yield ratio is following decreasing trend
with a rate 0f 27% per year throughout the last five years. The highest value can be seen
during the FY 2009. There after it tend to zero and then negative. The results are showing
company earned highest percentage on investing in stock during FY 2009 and then there is a
declined.
Bankruptcy Analysis
A legal proceeding involving a person or business that is unable to repay outstanding debts.
The bankruptcy process begins with a petition filed by the debtor or on behalf of creditors. All
of the debtor's assets are measured and evaluated, whereupon the assets are used to repay a
portion of outstanding debt. Upon the successful completion of bankruptcy proceedings, the
debtor is relieved of the debt obligations incurred prior to filing for bankruptcy. There are
two models to analyze.
1. Univariate Model
A univariate model uses a single variable. Such a model would use individual financial ratios
to forecast failure. The firm is classified as failed when any one of the following events are
occurred i.e. Bankruptcy, overdrawn bank account or nonpayment of preferred stock
dividend. Following ratios are the best for forecasting financial failure.
a. Cash Flow/total debt

The Cash Flow to Total Debt ratio measures the length of time it will take the company to pay
its total debt using only its cash flow.
cash flow/Total Debt Ratio Operating cash Flow/Total Debt

Cash Flow 6,711 4,109 4,023 (1,179) (682) 2,596
Total Debt 34,803 35,913 42,985 34,740 30,064 35,701
cash flow/Total Debt Ratio 19% 11% 9% -3% -2% 7.27%
Operating Cash Flow/Total Debt

25%
19%
20%
15%
11% Operating Cash Flow/Total Debt
9%
Cash flow/debt 10% Linear (Operating Cash
Flow/Total Debt)
5%
0%
2009 2010 2011 2012 2013
-5% -2%
-3%
Years
57 Page
The above calculations show that the cash flow to debt ratio following decreasing trend over
the years with a rate 0f 22% per year. The highest value can be seen during the FY 2009 as it
was 19% which was fair. Thereafter the trend shows that the cash from operating actives of
Pak-Arab fertilizers limited is decreasing. The results are showing that the ability of company
to pay its debt is getting lower and the company have risker financial position.
b. Return on Assets
An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to
how efficient management is at using its assets to generate earnings.
Return on Assets Net income/Total Assets

(1,825
Net Income 4,738 3,232 4,590 (240) ) 2,099
Total Assets 52,126 50,637 65,341 54,636 48,148 54,178
Return on Assets 9.1% 6.4% 7.0% -0.4% -3.8% 3.87%
Return on Assets
10.0% 9.1%
8.0% 7.0%
6.4%
6.0%
Return on Assets
4.0%
Linear (Return on Assets)
2.0%
0.0%
2009 2010 2011 2012
-0.4% 2013
-2.0%
-4.0%
-3.8%
-6.0%
Since the calculations show that the value of ROA is following decreasing trend with a rate 0f
28.8% per year. Company was generating highest ROA during the FY 2009. Thereafter it tends
to decrease but during the FY 2011 once again there was a boom. During the FY 2012 the
company was facing losses so the return was slightly negative but in FY 2013 the value was
significantly negative. The results shows the management of the company is not working
efficiently and financial position of company is risker.
c. Debt Ratio
The debt ratio is defined as the ratio of total debt to total assets, expressed in percentage,
and can be interpreted as the proportion of a companys assets that are financed by debt.
Debt Ratio Total Liabilities/Total Assets

Total Liabilities 34,803 35,913 42,985 34,740 30,064 35,701
Total Assets 52,126 50,637 65,341 54,636 48,148 54,178
Debt Ratio 67% 71% 66% 64% 62% 65.90%
59
Debt Ratio
Page
72% 71%
70%
68% 67% Debt Ratio
66%
66% Linear (Debt Ratio)
64%
64% 62%
62%
60%
58%
2009 2010 2011 2012 2013
The calculations show that the debt ratio following decreasing trend over the previous five
years with a rate 0f 1.5% per year. The highest value can be seen during the FY 2010.
Thereafter the value of debt is decreasing till FY 20113.the results show that the debt
particle in the assets of Pak-Arab Fertilizers Company is decreasing with the financial
leverage is also lower.
1. Multi- variate Model
Edward I. Altman developed a multivatiate model to predict bankruptcy called Z score. That
distills five key performance ratios into a single score. As it turns out, the Z-score gives
investors a pretty good snapshot of corporate financial health.
Z-
Z-Score ((0.012X1)+(0.014X2)+(0.033X3)+(0.006X4)+(0.010X5))*100 Score
Variables Value
X1 X2 X3 X4 X5
Rati Wigh Rati Rati Rati Wigh Rati
Years Wight Wight Wight
o t o o o t o
2009 0.012 0.08 0.014 0.09 0.033 0.10 0.006 0.50 0.01 0.32 1.18
2010 0.012 0.02 0.014 0.06 0.033 0.09 0.006 0.41 0.01 0.36 1.02
2011 0.012 -0.04 0.014 0.07 0.033 0.10 0.006 0.52 0.01 0.26 0.94
2012 0.012 -0.08 0.014 0.00 0.033 -0.02 0.006 0.57 0.01 0.15 0.34
2013 0.012 -0.21 0.014 -0.04 0.033 -0.06 0.006 0.60 0.01 0.15 0.02
Z-Score Analysis
1.40
1.18
1.20 1.02
1.00 0.94
0.80
Z- score 0.60
0.40 0.34
0.20
0.02
0.00
2009 2010 2011 2012 2013
Years
Z-Score Analysis Linear (Z-Score Analysis)
The calculations show that the value of Z score is following decreasing trend over the last five
years. The highest value can be seen during the FY 2009 as it is 1.18. it is too less form the
2.675.which means that the companys financial health is risky. Thereafter the value of Z-
score is getting lesser and predicting that the company is more likely to bankrupt.
61Page
Conclusion
It is observed that the Pak-Arab Fertilizer limited is one of the biggest Fertilizers Company in
the Pakistan. They are producing 6 % of the total urea produced in Pakistan and has a
The analysis shows that the Net profit of the company is showing negative value. Which
means that the company is facing loss from previous two years. On the other hand the sales of
the company are also decreasing, to reduce the burden company is reducing its costs and
expenses.
According the investors point of view the company is facing over losses during the two years
due to which Pak-Arab fertilizers is not providing any financial reward to its shareholders. The
market value of its common share is also decreasing so investor cannot get any financial
reward form investing in it.
Although Pak-Arab fertilizers limited have the capacity to generate profits but they are not
utilizing there production facilities. The basic reason is that the company required natural gas
to produce fertilizers. Due to crises of natural gas in Pakistan and special in Punjab Company
cannot fulfill the demand of its production.
The analysis shows the company have more liabilities than the resources due to which the
company have a risker financial position.
Recommendations
1. Company should produce alternative agro products.
2. They should reduce its cost and other expenses to avoid its bankruptcy chances.
3. They should migrate to sind or any place where they can easily get natural gas.
4. They should sell out there land which is located in populated area, with which they
can reduce their liabilities
5. They should hire highly-qualified and experience administration to avoid the any
mismanagement during migration.
References
1. http://www.fatima-group.com/pakarabfertilizers/aboutus.php
2. http://www.investopedia.com/
3. http://pakbiz.com/profile/Pak-Arab-Fertilizers-Pvt-Ltd/

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Pak Arab Fertilizers Financial Analysis

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Hafiz Muhammad Adnan Akhtar

The Islamia University Bahawalpur

Conclusion and Recommendations are an Integral part of this report.

Brief background & history

A Memorandum of Understanding was concluded between Pakistan Industrial Development

Products & Operations

2. Nitric Acid Plant

4. Nitro Phosphate Plant

5. Calcium Ammonium Nitrate (CAN) Plant

7. Co-Generation Power project

Pak-Arab Fertilizers Limited is awarded by the ISO 22000:2005 Certification.

Liabilities and onwers equity

Total Non-current Assets

a. Stores and spare parts

e. Derivative financial instruments

Total Current Assets

Liabilities and owners equity

Total Non-Current Liabilities

a. Current portion of long term liabilities

Total Current Liabilities

Total Liabilities and owner Equity

Description 2009 2010 2011 2012 2013 200920102011 2012 2013

Cost of Goods sold (9,796)

Gross profit 6,910 9,197 9,513 1,915 286 100%

Administrative Expenses (610) (780) (969) (1,165)(888) 100%

Financial cost (3,159)

Othr Operating Income 342 1,409 1,855 1,528 261 100%

Operating Profit 2,341 4,856 5,588 (849) (2,798) 100%

Re- measurement gain/(loss)

Share gain/(loss) of associated

EBITDA 8,342 8,943 10,665 2,929 (745) 107%

5. Selling & Distribution cost

1. Net cash inflow from investing activities

2. Net cash inflow from financing activities

3. Cash and cash equivalents at the end of the year

Liabilities and onwers equity Page 23

2. Liabilities and owners equity

b. Total Non-Current Liabilities

c. Total Current Liabilities

Sale 16,70618,24816,701 8,136 7,428 100% 100% 100% 100% 100%

Cost of Goods sold (9,796)

Selling & Distribution (898)

Financial cost (3,159)

Othr Operating Income

Re- measurement gain/(loss)

Share gain/(loss) of associated

Taxation (444) (1,464)

1. Cost of Goods sold

4. Selling & Distribution cost

2. Net cash inflow from investing activities

3. Net cash inflow from financing activities

4. Cash and cash equivalents at the end of the year

Current Ratio Current assets Current liabilities

3. Net Working Capital

Net Working Capital Current assets - Current liabilities

Net Working Capital

Debt Ratio Total liabilities Total assets