Sitara chemical by Muhammad Waqar

QUAID-E-

AZAMA K B A R , A R F A N , F A R H A T , G O H A R , Z E S H A N , N A V E E D , S H A H I D

Group Name:Quaid-e-Azam

Members:Akbar Butt BC-11038Arfan Afzal BC-11043Farhat Abbas BC-11045M.Gohar Iqbal BC-11050Zeshan Atique BC-11061M. NaveedBC-11010M. Shahid BC-11123

M. NAVEED

Sitara Chemical Industry Ltd.

CONTENTS Introduction History Vision, Mission and Ethics Objective Ratio’s

LiquidityActivityProfitabilitySolvency

SWOT Analysis Suggestion and Conclusion

Introduction

Its product line includes Caustic Soda solid, sodium hypochlorite, caustic soda liquid, hydrochloric acid, liquid chlorine, Specialty Chemical, Fertilizer polyester Cotton.

Head Quarter in Faisalabad

343 Employs

Private Ltd. Company

Chemical Division

Textile Division

Manufactured Company

History

╚ Sitara Group of Industries is one of the well-known industrial groups of Pakistan╚ This group started its industrial activity with textile weaving sector in 1956 under

leadership of two brothers, Haji Abdul Ghafoor (Late) and Haji Bashir Ahmed.╚ By Haji Bashir Ahmed╚ SCIL was incorporated in 1981╚ Began producing caustic soda in 1985╚ Its specialty chemicals and export division was established in 2001 and agri

chemicals division in 2003.

VISION

Strive to develop and employ innovative technological solutions to add value to business with progressive and positive approach.

MISSION

Continuing growth and diversification for bottom line results with risks well contained.

BUSINESSES Sitara Chemical Industries Ltd. Sitara Chemical Industries Ltd. (Textile Division) Sitara Textile Industries Ltd. Sitara Spinning Mills Ltd. Sitara Energy Ltd. Aziz Fatima Trust Hospital Ghafoor Bashir Children Hospital Sitara Developers Ptv. Ltd. Sitara Hamza Pvt. Ltd.

OBJECTIVES

Safety

Quality

Integrity

Respect

Excellence

Innovation

M. SHAHID MUNIR

Ratio’s

Activity

Profitability

Solvency

Liquidity

LIQUIDITY RATIO

LIQUIDITY RATIO“ Liquidity ratios measure the company's ability to meet its short-term obligations.”

Liquidity Ratios:Current Ratio

Quick Ratio

Absolute Ratio

CURRENT RATIO

Definition:Total current assets to total current

liabilities.

Known as:Working Capital Ratio

Bench-Mark Rate:2:1

Formula =

Current Assets/ Current Liabilities

Year 2011 2012

Calculation =

2,293,235,870/3,940,419,539 2,715,289,032/4,279,702,977

Output = 0.58 : 1 0.63 : 1

CURRENT RATIO

Current Assets

Current Liabilities

LIQUID RATIO

Relationship between liquid assets and total current liabilities.

Bench mark rate:

1:1

Acid test ratio, Quick ratio.

Benefit:

Exact test of liquidity.

Also Known as:

LIQUID RATIO

Formula =

Liquid Assets/ Current Liabilities

Year 2011 2012

Calculation =

1,401,115,714 1,805,887,700

3,940,419,539 4,279,702,977Output =

0.36:1 0.42:1

ABSOLUTE LIQUID RATIO

Relates cash , bank and marketable securities to

current liabilities.

Very strict and exacting standard of liquidity.Bench Mark rate:

0.5:1

ABSOLUTE LIQUID RATIO

Formula =

[Cash + Bank+ Marketable Securities]

Current LiabilitiesYears 2011 2012

Calculation =

140,776,990 79,861,6684,27,97,02,977 3,94,04,19,539

Output =

0.04:1 0.02:1

FARHAT ABBAS

ACTIVITY RATIO

ACTIVITY RATIO

“Activity or efficiency ratio reflects the intensity of a company’s resource utilization or how efficient management team uses its assets or capital to generate sales.’’ in other words ‘measure the efficiency of Business’

ACTIVITY RATIO

Fixed assets turnover ratioWorking capital turnover ratio

Creditor conversion periodCreditor turnover ratio

Debtors conversion periodDebtors turnover ratio

Stock conversion periodStock turnover ratio

Years 2011 2012Formula =

CGS / Average Inventory

Calculation =

4,663,238,913 5,393,939,325885,083,340 902,720,830

Output = 5.27 Times 5.98 Times

STOCK TURNOVER RATIO

Years 2011 2012

Formula =

Days in a year

stock turnover ratioCalculation = 365/5.27 365/5.98Output = 69 Days 61 Days

Inventory Conversion Period

Years 2011 2012

Formula =

net credit salesAvg. account receivables

Calculation =

4,663,238,913 5,393,939,325512,397,911 893902085

Output = 12.13 Times 11.41 Times

Debtors Turnover Ratio

Years 2011 2012

Formula =

Days in a yeardebtor’s turnover ratio

Calculation = 365 /12.13 365 / 11.41

Result = 30 Days 32 Days

Debtors/ Receivables Conversion Period

Creditors/Payables Turnover Ratio

Years 2012 2011

Formula =

Net Credit purchasesAvg. payable

Calculation =

4,663,238,913 5,393,939,325

1,439,419,941 1,356,248,460

Output = 3.74 times 3.44 times

Years 2011 2012

Formula =

Days in a yearCreditor’s turnover ratio

Calculation = 365/3.44 365/3.74Output = 106 Days  97 Days

Creditor/Payable Conversion Period

Formula =

C.G.S/Fixed Assets

Year 2011 2012

Calculation =

4,663,238,913 5,393,939,325

8,001,028,528 10,165,371,942

Out Put =

0.58 Times 0.53 Times

Fixed Assets Turnover Ratio

WORKING CAPITAL TURNOVER RATIOHow efficiently working capital is being used for the generation of revenues

WORKING CAPITAL TURNOVER RATIO

Formula =

C.G.S/ Average Working Capital

Years 2011 2012

Calculation =

4,663,238,913 5,393,939,325

-1,647,183,669 -1,564,413,945

Output =

-2.83 Times -3.45 Times

GOHAR IQBAL

Profitability Ratio’s

PROFITABILITY RATIO

Gross profit ratio Operating profit

ratio Net profit ratio Operating ratio Expenses ratio

Types of Profitability Ratio

Formula =(Gross Profit/ Net Sale)*100

Year 2011 2012

Calculation =

(1,553,641,041 (2,069,987,192

6,216,879,954)*1007,463,926,517)*100

Output =

24.99 % 27.73 %

GROSS PROFIT RATIO

Formula =(Net Profit Ratio/Net Sale) * 100

Year 2011 2012

Calculation =

(427,991,321 (688,481,947 *100

6,216,879,954)*100 7,463,926,517)

Output =

6.88 % 9.22 %

NET PROFIT RATIO

Formula =

(Operating Profit/ Net Sale) * 100

Year 2011 2012

Calculation =

(1,078,065,020 (1,124,322,2276,216,879,954)*1

007,463,226,517)*100

Output =

17.34 % 15.06 %

Operating Profit Ratio

Formula =

(C.G.S+ Operating Expenses) *100

Net Sales

Years 2011 2012

Calculation =

(5,046,378,387 (5,832,847,717 *100

6,216,879,954)*100 7,463,926,517)

Output =

81.17 % 78.15 %

Operating Ratio

Formula =

(Expenses/Net Sale)*100

Year 2011 2012

Calculation =

(1,078,065,020 (1,124,322,2276,216,879,954)*100 7,463,926,517)*100

Output =

17.34 % 12.06 %

EXPENSE RATIO

ZEESHAN ATTIQUE

SOLVENCY RATIO

The ratio’s are used to determine the long term debt paying capacity of any organization & measure the efficiency of firm regarding interest payment.

SOLVENCY RATIO

In which including…..

SOLVENCY RATIO

1. Debt to equity ratio2. Fixed asset ratio3. Proprietary ratio4. Interest coverage

ratio

DEBT EQUITY RATIO“A solvency ratio calculated as total debt divided by total shareholders equity”

Three Types of Formulas:1. Debt to equity Ratio =

Long term debt

Equity2. Debt to equity Ratio =

Total debt

Equity3. Debt to equity Ratio =

Long term debt

Long term funds

1. DEBT TO EQUITY RATIO

Year 2011 2012

Formula =

Long term debt/equity

Calculation =

1,810,242,786 1,334,775,746

3,786,411,020 4,402,885,955Output =

0.48:1 0.30:1

2. DEBT TO EQUITY RATIO

Year 2011 2012

Formula =

Total debt/equity

Calculation =

6,765,231,754 7,011,708,546

3,786,411,020 4,402,885,955

Output =

1.79:1 1.59:1

3. DEBT TO EQUITY RATIO

Year 2011 2012

Formula =

Long term debt/Long term funds

Calculation =

1,810,242,786 1,334,775,746

5,596,653,806 5,737,661,701Output =

0.32:1 0.23:1

This ratio establishes the relationship between proprietor's fund to total resources of the unit.

PROPRIETARY RATIO

Formula:EquityTotal

Funds

FORMULA =(Equity/Total Funds)*100Years 2011 2012

Calculation =

(3,786,411,020 (4,402,885,9558,001,028,528)*1

0012,880,660,974)*10

0

Output = 36.78 % 34.18 %

PROPRIETARY RATIO

In 2011 is contributed by the proprietor was 36.78%But in 2012 this contributed was decreased and the figure was 34.18% remaining

This ratio measures the relationship between the long term funds and the fixed assets

FIXED ASSETS RATIO

Formula:Fixed AssetsLong term Funds

Formula =

Fixed Assets/Long Term Funds

Years 2011 2012

Calculation =

8,001,028,528 10,165,371,942

6,611,223,235 7,134,891,524

Output =

1.21% 1.42%

FIXED ASSETS RATIO

FORMULA =

EBIT/Interest

Years 2011 2012

Calculation =

1,213,154,939 1,669,465,200

703,493,583 682,871,270

Output = 2.44 Times 1.72 Times

INTEREST COVERAGE RATIO

Akbar Butt

Earning Per Share

EPS:EPS is the most important term for the investors of stock exchange

Definition:“This ratio tells us about how much earning on “1” share”.

Formula =

Profit After Tax/Number Of Shares Outstanding

Year 2011 2012

Calculation=427,991,321 688,481,94721,429,407 21,429,407

Output = Rs. 19.97 Rs. 32.13

EARNING PER SHARE

RETURN ON INVESTMENT RATIO

Return On Investment Ratio

Return on investment is the primary ratio to measure the overall profitability and efficiency of business.

2 TYPES

Return On Investment

Ratio

Return on Equity

Return on capital

employed

FORMULA =(EBIT/Capital Employed)*100Year 2011 2012

Calculation =

(1,213,154,939 (1,669,465,200

6,353,844,859)*100 8,600,957,997)*100

Output 19.09 % 19.41 %

Return On Capital Employed

FORMULA =(Profit After Tax/Equity)*100

Year 2011 2012

Calculation =

(427,991,321 (688,481,947

3,786,411,020)*100 4,402,885,955)*100

Output = 11.30 % 15.64 %

Return On Equity / Share Holder Funds

ARFAN M. AFZAL

SWOT ANALYSIS

Strength Largest manufacture caustic soda Largest Shareholder Advance Technology Plant Infrastructure Strong Management Strong Brand name Financially Sound

SWOT ANALYSIS

Weaknesses Need Considerable Market to Sustain Lack of Operations in Abroad Relying on Permanent Customers

Opportunities Increase Production Capacity Increase Product Line Taking Advantage of Geographic

position Provide Online Customer

Service Ordering System

SWOT ANALYSIS

ThreatsCompetitorsEconomic EnvironmentEnergy CrisesThreat of StakeholdersUnstable Law & Order Situation

SWOT ANALYSIS

POSITIVE POINTS

We did not found much difference in the SWOT Analysis of SCIL. They are performing pretty well and have strong strategic direction.

When we Comparison with other Chemical industries like NIMIR the SCIL worked in well Condition.

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

product in new markets. Sitara Chemical Industry must involve employees in decision making. Increase the Basic salary of its employees to increases their motivations. Avoid more credit Purchases. Control the Cost of product with the use of Advance Technology.

Another they have to make segment in their website through which they can provide online customer services in which customer can place order and provide Feedback as well, this will help them to capture more customers throughout the world

CONCLUSION After the completion of ratio analysis ,we have

concluded that the Industry has good will in market but this year some profitability ratios decreased & some increased as compare to previous year plus E P S. It’s means that the company has to take measures to maintain its position

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

THANKS