CHAPTER: 01

INTRODUCTION AND HISTORY OF THE COMPANY

THIS CHAPTER COVERS

1. Mission Statement Of the Company

2. Vision Statement Of the Company

3. Company Information

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Mission Statement

To provide quality products to customers

and explore new markets to promote/expand

sales of the Company through good governance

and foster a sound and dynamic team, so as to achieve

optimum prices of products of the Company

for sustainable and equitable growth

and prosperity of the Company.

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.

Vision Statement

To transform the Company into a modern and dynamic yarn,

cloth and processed cloth and finished product manufacturing

Company with highly professionals and fully equipped to

play a meaningful role on sustainable basis in the economy of

Pakistan.

To transform the Company into a modern and dynamic power

generating Company with highly professionals and fully

equipped to play a meaningful role on sustainable basis in the

economy of Pakistan.

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COMPANY INFORMATIONBOARD OF DIRECTORS:

Mian Umer Mansha Chairman/Chief Executive Mian Hassan Mansha Mr. Muhammad Nawaz Tishna (NIT) Mr. Khalid Qadeer Qureshi Mr. Muhammad Azam Rana Muhammad Mushtaq Ms. Nabiha Shahnawaz Cheema

AUDIT COMMITTEE:

Mr. Khalid Qadeer Qureshi Chairman/Member Mr. Muhammad Azam Member Ms. Nabiha Shahnawaz Cheema Member

CHIEF FINANCIAL OFFICER:

Mr. Badar-ul-Hassan

COMPANY SECRETARY:

Mr. Khalid Mahmood Chohan

AUDITORS:

Riaz Ahmad & Company Chartered Accountants

LEGAL ADVISOR:

Mr. M. Aurangzeb Khan, Advocate, Chamber No. 6, District Court, Faisalabad.

MILLS:

Nishatabad, Faisalabad (Spinning units and Power Plant) 12 K.M. Faisalabad Road, (Weaving units & Power Plant) Sheikhupura. 21 K.M. Ferozepur Road, Lahore. (Stitching unit) 5 K.M. Nishat Avenue (Weaving, Dyeing & Finishing unit, Off 22 K.M. Ferozepur Road, Lahore. Processing unit, Stitching unit

andPower Plant)

20 K.M. Sheikhupura Faisalabad (Spinning unit)Road, Feroze Watwan

REGISTERED OFFICE

Nishat House,

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SHARES DEPARTMENT

53 - A, Lawrence Road, Lahore. Tel: 042-6367812-16, 042-111 113 333 Fax: 042-6367414

HEAD OFFICE:

7, Main Gulberg, Lahore. Tel: 042-5716351-9, 042-111 332 200 Fax: 042-5716349-50 E-mail: nishat@nishatmills.com Website: www.nishatmillsltd.com

LIAISON OFFICE:

Ist Floor, Karachi Chambers, Hasrat Mohani Road, Karachi. Tel: 021-2414721-23 Fax: 021-2412936

BANKS:

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

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FINANCIAL ANALYSIS OF THE COMPANY

THIS CHAPTER COVERS: -

1. RATIO ANALYSIS

2. ADVANTAGES OF RATIO ANALYSIS

3. LIMITATION OF RATIO ANALYSIS

4. TYPES OF RATIO ANALYSIS

I. LIQUIDITY RATIO

II. TURNOVER RATIO

III. PROFITABILITY RATIO

IV. LEVERAGE RATIO

5. HORIZONTAL ANALYSIS OF PROFIT & LOSS ACCOUNT

6. HORIZONTAL ANALYSIS OF BALANCE SHEET

7. VERTICAL ANALYSIS OF PROFIT & LOSS ACCOUNT

8. VERTICAL ANALYSIS OF BALANCE SHEET

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RATIO ANALYSIS

The term "accounting ratios" is used to describe significant relationship between

figures shown on a balance sheet, in a profit and loss account, in a budgetary control

system or in any other part of accounting organization. Accounting ratios thus shows the

relationship between accounting data.

Ratio analysis is very important while measuring the performance of the business.

These ratios are carried out from the Income statement and balance sheet. Many parties

including management, investors and Government are interested in these ratios. The

purpose of analysis is to measure the performance of the company and financial health of

the organization.

Advantages of Ratios Analysis

Ratio analysis is an important and age-old technique of financial analysis. The

following are some of the advantages of ratio analysis:

Simplifies financial statements:

It simplifies the comprehension of financial statements. Ratios tell the whole story of

changes in the financial condition of the business

Facilitates inter-firm comparison:

It provides data for inter-firm comparison. Ratios highlight the factors associated

with successful and unsuccessful firm. They also reveal strong firms and weak firms,

overvalued and undervalued firms.

Helps in planning:

It helps in planning and forecasting. Ratios can assist management, in its basic

functions of forecasting for Planning, co-ordination, control and communications.

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Makes inter-firm comparison possible:

Ratios analysis also makes possible comparison of the performance of different

divisions of the firm. The ratios are helpful in deciding about their efficiency or

otherwise in the past and likely performance in the future.

Help in investment decisions:

It helps in investment decisions in the case of investors and lending decisions in the

case of bankers etc.

Limitations of Ratios Analysis

The ratios analysis is one of the most powerful tools of financial management.

Though ratios are simple to calculate and easy to understand, they suffer from serious

limitations.

Limitations of financial statements: Ratios are based only on the information which

has been recorded in the financial statements. Financial statements themselves are

subject to several limitations. Thus ratios derived, there from, are also subject to those

limitations. For example; non-financial changes though important for the business are

not relevant by the financial statements. Financial statements are affected to a very great

extent by accounting conventions and concepts. Personal judgment plays a great part in

determining the figures for financial statements.

Comparative study required: Ratios are useful in judging the efficiency of the

business only when they are compared with past results of the business. However, such a

comparison only provide glimpse of the past performance and forecasts for future may

not prove correct since several other factors like market conditions, management

policies, etc. may affect the future operations.

Ratios alone are not adequate. Ratios are only indicators, they cannot be taken as

final regarding good or bad financial position of the business. Other things have also to

be seen.

Problems of price level changes: A change in price level can affect the validity of

ratios are calculated for different time periods. In such a case the ratio analysis may not

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clearly indicate the trend in solvency and profitability of the company. The financial

statements, therefore, be adjusted keeping in view the price level changes if a meaningful

comparison is to be made through accounting ratios.

Lack of adequate standard: No fixed standard can be laid down for ideal ratios. There

are no well accepted standards or rule of thumb for all ratios which can be accepted as

norm. It renders interpretation of the ratios difficult.

Limited use of single ratios: A single ratio, usually, does not convey much of a sense.

To make a better interpretation, a number of ratios have to be calculated which is likely

to confuse the analyst than help him in making any good decision.

Personal bias: Ratios are only means of financial analysis and not an end in itself.

Ratios have to interpret and different people may interpret the same ratio in different

way.

Incomparable: Not only industries differ in their nature, but also the firms of the

similar business widely differ in their size and accounting procedures etc. It makes

comparison of ratios difficult and misleading.

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Ratio Analysis

Ratio analysis involves the methods of calculating and interpreting financial ratios to

access the firm’s performance and status. The basic inputs to ratio analysis and firm’s

income statement and balance sheet for the periods to be examined.

TYPES OF RATIO ANALYSIS

Two types of Ratio Analysis are generally carried out,

1. Cross Sectional Approach, in this approach, the effectiveness of business is

compared with the competitors business of the same period.

1. Most companies use the Time Series Analysis in which the performance of

company over a period is measured.

Ratio Analysis categories:

A) Liquidity

B) Turnover

C) Profitability

D) Leverage

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LIQUIDITY RATIOS:

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

Current Ratio:

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

Components:

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

Limitations of Current Ratio:

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

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1. It is crude ratio because it measure only the quantity and not the quality of the current assets.

2. Even if the ratio is favorable, the firm may be in financial trouble, because of more stock and work in process which is not easily convertible into cash, and, therefore firm may have less cash to pay off current liabilities.

3. Valuation of current assets and window dressing is another problem. This ratio can be very easily manipulated by overvaluing the current assets. An equal increase in both current assets and current liabilities would decrease the ratio and similarly equal decrease in current assets and current liabilities would increase current ratio.

Significance

This ratio is a general and quick measure of liquidity of a firm. It represents the margin of safety or cushion available to the creditors. It is an index of the firm’s

financial stability. It is also an index of technical solvency and an index of the strength of working capital.

A relatively high current ratio is an indication that the firm is liquid and has the ability to pay its current obligations in time and when they become due. On the other hand, a relatively low current ratio represents that the liquidity position of the firm is not good and the firm shall not be able to pay its current liabilities in time without facing difficulties. An increase in the current ratio represents improvement in the liquidity position of the firm while a decrease in the current ratio represents that there has been a deterioration in the liquidity position of the firm. A ratio equal to or near 2 : 1 is considered as a standard or normal or satisfactory. The idea of having double the current assets as compared to current liabilities is to provide for the delays and losses in the realization of current assets. However, the rule of 2 :1 should not be blindly used while making interpretation of the ratio. Firms having less than 2 : 1 ratio may be having a better liquidity than even firms having more than 2 : 1 ratio. This is because of the reason that current ratio measures the quantity of the current assets and not the quality of the current assets. If a firm's current assets include debtors which are not recoverable or stocks which are slow-moving or obsolete, the current ratio may be high but it does not represent a good liquidity position.

current ratio current assets/current liabilitiesyear 2008 2007 2006 2005 2004

Nishat 1.19 1.74 1.3

8 1.

24

0.37

Azgard 9 1.08 1.51 1.1

4 1.

09

1.25

Sapphire 1.28 1.66 1.2

1 1.

21

1.31

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Comments:

Current Ratio clears the extent to which the claim of short term creditors can be met by assets that are to become cash within a year. The best standard ratio is 2:1 so, the Azgard Nine has current ratio below standard. There is a mixed trend from 2004 to 2008. Current Ratio of Sapphire is also like Azgard Nine and Nishat.

Current ratio shows that how many times current assets are available to meet its current liabilities. Azgard Nine current ratio shows mixed trend and it has grater than 1:1 but only in 2007 it is higher than other years. Sapphire also shows mixed trend in current ratio. Nishat current ratio shows increasing trend in 2004, 2005 and in 2006 and in 2007 but decreases 2008 which shows that it has less current assets or current liabilities increases.

Liquidity or Acid Test or Quick Ratio:

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

Components:

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

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

Significance:

The quick ratio/acid test ratio is very useful in measuring the liquidity position of a firm. It measures the firm's capacity to pay off current obligations immediately and is more rigorous test of liquidity than the current ratio. It is used as a complementary ratio to the current ratio. Liquid ratio is more rigorous test of liquidity than the current ratio because it eliminates inventories and prepaid expenses as a part of current assets. Usually a high liquid ratios an indication that the firm is liquid and has the ability to meet its current or liquid liabilities in time and on the other hand a low liquidity ratio represents that the firm's liquidity position is not good. As a convention, generally, a quick ratio of "one to one" (1:1) is considered to be satisfactory.

Although liquidity ratio is more rigorous test of liquidity than the current ratio , yet it should be used cautiously and 1:1 standard should not be used blindly. A liquid ratio of 1:1 does not necessarily mean satisfactory liquidity position of the firm if all the debtors cannot be realized and cash is needed immediately to meet the current obligations. In the same manner, a low liquid ratio does not necessarily mean a bad liquidity position as inventories are not absolutely non-liquid. Hence, a firm having a high liquidity ratio may not have a satisfactory liquidity position if it has slow-paying debtors. On the other hand, A firm having a low liquid ratio may have a good liquidity position if it has a fast moving inventories. Though this ratio is definitely an improvement over current ratio, the interpretation of this ratio also suffers from the same limitations as of current ratio

quick ratio (current assets-stock)/current liabilitiesyear 2008 2007 2006 2005 2004

Nishat 0.84 1.33 0.9

6 0.78

0.37

Azgard 9 0.69 1.15 0.8

8 0.64

0.71

Sapphire 0.72 1.17 0.7

3 0.59

0.76

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Comments:

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

Turnover/ Activity ratios:

Activity ratios are measures of how well assets are used. Activity ratios -- which are, for the most part, turnover ratios -- can be used to evaluate the benefits produced by specific assets, such as inventory or accounts receivable. Or they can be use to evaluate the benefits produced by all a company's assets collectively.

These measures help us gauge how effectively the company is at putting its investment to work. A company will invest in assets – e.g., inventory or plant and equipment – and then use these assets to generate revenues. The greater the turnover, the more effectively the company is at producing a benefit from its investment in assets

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Inventory days.

The number of day’s inventory is also known as average inventory period and inventory holding period. A high number of days inventory indicates that their is a lack of demand for the product being sold. A low days inventory ratio (inventory holding period) may indicate that the company is not keeping enough stock on hand to meet demands. The number of days inventory and inventory turnover ratios are included in the financial statement ratio analysis spreadsheets highlighted in the left column, which provide formulas, definitions, calculation, charts and explanations of each ratio.

Inventory Days Inventory Days = Inventory / Cost of Sales*365year 2008 2007 2006 2005 2004

Nishat 91.90 79.10 80.0

0 114.4

6 -

Azgard 9 221.08 177.42 199.3

4 225.7

6 208.5

7

Sapphire 138.85 89.36 96.7

4 143.4

6 64.3

2

Comments:

Azgard Nine inventory days increased in 2005 as compare to 2004 and decreased in 2006 and in 2007 and show increasing in 2008 which shows that management is not efficient for managing inventory period.

The above diagram shows that in 2004 and 2005 Sapphire has high inventory days required converting stock in sale which shows that Sapphire management is not efficient but it decreases with the passage of times and increase in year 2008 and Nishat trend is equal to Sapphire. They were show increase in 2005 and low in 2006 and in 2007 and it increases in 2008.

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Debtors Turnover Ratio or Receivables Turnover Ratio:

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

Significance of the Ratio:

This ratio indicates the number of times the debtors are turned over a year. The higher the value of debtor’s turnover the more efficient is the management of debtors or more liquid the debtors are. Similarly, low debtors turnover ratio implies inefficient management of debtors or less liquid debtors. It is the reliable measure of the time of cash flow from credit sales. There is no rule of thumb which may be used as a norm to interpret the ratio as it may be different from firm to firm.

Debtor's day Trade debtors/Credit sales*365year 2008 2007 2006 2005 2004

Nishat 25.

18 17.67

22.83

28.15

56.29

Azgard 9 64.

14 91.26

84.72

83.68

109.31

Sapphire 42.

30 51.08

54.13

66.75

56.29

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Comments:

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

Creditors / Accounts Payable Turnover Ratio

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

Significance of the Ratio:

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

Creditors days Trade Creditors/Credit Sales*365year 2008 2007 2006 2005 2004

Nishat 21.

62 19.69

21.35

26.06

45.33

Azgard 9 48.

74 56.77

92.83

65.34

80.03

Sapphire 18.

38 14.83

30.58

39.33

24.75

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Comments

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

Total Assets Turnover Ratio.

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

FormulaSales/ Total Assets

year 2008 2007 2006 2005 2004

Nishat 0.5

1 0.4

3 0.5

3 0.5

2 1.4

0

Azgard 9 0.3

7 0.2

8 0.2

1 0.4

2 0.5

0

Sapphire 0.7

9 0.8

2 0.8

6 0.7

3 1.2

9

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Comments:

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

But Azgard Nine overall situation regarding to total asset turnover ratio is bad than other two competitor.

Fixed Assets Turnover Ratio:

Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the concern. Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets

Formula Cost of sales / Fixed Assetsyear 2008 2007 2006 2005 2004

Nishat 1.5

3 1.35

1.29

1.01

2.92

Azgard 9 0.8

6 0.60

0.49

1.06

0.86

Sapphire 2.1

9 2.10

1.94

1.52

2.92

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Comments:

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

Profitability Ratios:

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

Gross Profit (GP) Ratio:

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

Components:

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

Significance

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

Formula Gross profit/Sales*100year 2008 2007 2006 2005 2004

Nishat 15.4

1 16.56

16.54

18.77

4.96

Azgard 9 34.1

5 30.28

24.26

25.63

22.66

Sapphire 11.5

7 13.02

9.60

11.32

4.96

Comments:

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

Operating Profit Ratio:

Operating ratio is the ratio of cost of goods sold plus operating expenses to net sales. It is generally expressed in percentage. It measures the cost of operations per dollar of sales. This is closely related to the ratio of operating profit to net sales.

Components:

The two basic components for the calculation of operating ratio are operating cost (cost of goods sold plus operating expenses) and net sales. Operating expenses normally include (a) administrative and office expenses and (b) selling and distribution expenses. Financial charges such as interest, provision for taxation etc. are generally excluded from operating expenses.

Significance:

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

Formula Operating Profit Margin = Operating profit /Sale*100year 2008 2007 2006 2005 2004

Nishat 37.91 12.66 12.1

0 17.5

8 7.5

6

Azgard 9 28.18 23.72 16.2

6 18.3

8 16.7

9

Sapphire 14.42 8.60 8.6

8 10.4

3 5.3

5

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Comments:

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

Net Profit/ (Loss) after Tax:

Net profit ratio is the ratio of net profit (after taxes) to net sales. It is expressed as percentage

Significance:

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

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

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Formula Net profit before tax/Sales*100year 2008 2007 2006 2005 2004

Nishat 33.2

0 7.89

10.71

17.88

9.45

Azgard 9 9.8

8 17.37

25.77

17.91

12.52

Sapphire 6.8

8 3.49

3.31

7.15

3.45

Comments:

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

Return on Assets:

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

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

Formula Net Income / Total Assets*100year 2008 2007 2006 2005 2004

Nishat 16.19 3.06 5.

24 8.5

2 14.8

1

Azgard 9 3.28 4.57 4.

94 7.0

3 5.9

6

Sapphire 5.01 1.94 1.

46 3.9

5 2.9

7

Comments:

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

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Return on Capital Employed (ROCE) Ratio:

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

Formula Profit before interest and taxation / Capital Employed *100year 2008 2007 2006 2005 2004

Nishat 24.42 4.25 7.

29 12.9

8 (30.48

)

Azgard 9 5.87 6.60 8.

27 13.0

0 10.73

Sapphire 10.41 4.46 5.

07 8.8

5 7.25

Comments:

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

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

RETURN ON EQUITY CAPITAL (ROE) RATIO:

In real sense, ordinarily shareholders are the real owners of the company. They assume the highest risk in the company. (Preference share holders have a preference over ordinary shareholders in the payment of dividend as well as capital. Preference share holders get a fixed rate of dividend irrespective of the quantum of profits of the company). The rate of dividends varies with the availability of profits in case of ordinary shares only. Thus ordinary shareholders are more interested in the profitability of a company and the performance of a company should be judged on the basis of return on equity capital of the company. Return on equity capital which is the relationship between profits of a company and its equity, can be calculated as follows.

Equity share capital should be the total called-up value of equity shares. As the profit used for the calculations are the final profits available to equity shareholders as dividend, therefore the preference dividend and taxes are deducted in order to arrive at such profits.

Significance:

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

Formula[(Net profit after tax − Preference dividend) / Equity

share capital] × 100year 2008 2007 2006 2005 2004

Nishat 24.41 4.02 7.7

3 14.5

8 2.6

2

Azgard 9 8.86 11.11 12.4

8 23.9

7 14.9

5

Sapphire 11.08 3.59 3.4

5 10.3

2 7.4

0

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Comments:

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

LEVERAGES RATIOS:

A company can finance its assets either with equity or debt. Financing through debt involves risk because debt legally obligates the company to pay interest and to repay the principal as promised. Equity financing does not obligate the company to pay anything -- dividends are paid at the discretion of the board of directors. There is always some risk, which we refer to as business risk, inherent in any operating segment of a business. But how a company chooses to finance its operations -- the particular mix of debt and equity -- may add financial risk on top of business risk Financial risk is the extent that debt financing is used relative to equity. Financial leverage ratios are used to assess how much financial risk the company has taken on. There

are two types of financial leverage ratios: component percentages and coverage ratios. Component percentages compare a company's debt with either its total capital (debt plus equity) or its equity capital. Coverage ratios reflect a company's ability to satisfy fixed obligations, such as interest, principal repayment, or lease payments.

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DEBT TO EQUITY RATIO:

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

Formula Total Long Term Debts / Shareholders Fundsyear 2008 2007 2006 2005 2004

Nishat 0.04 0.06 0.1

4 0.2

2 0.0

6

Azgard 9 0.91 1.02 0.7

9 1.2

7 0.4

1

Sapphire 0.09 0.13 0.2

5 0.4

7 0.4

4

Comments:

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

It shows that Azgard nine position in debt to equity is better then its competitors.

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DEBT SERVICE RATIO OR INTEREST COVERAGE RATIO:

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

Significance of debt service ratio:

The interest coverage ratio is very important from the lender's point of view. It indicates the number of times interest is covered by the profits available to pay interest charges.

Formula Net Profit Before Interest and Tax / Fixed Interest Chargesyear 2008 2007 2006 2005 2004

Nishat 7.05 1.66 2.3

3 4.9

9 5.5

4

Azgard 9 0.40 1.08 1.9

2 2.4

3 2.7

3

Sapphire 0.84 0.46 0.3

1 1.6

5 1.3

5

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Comments:

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

INVESTMENTS / SHARE HOLDER RATIOS:

Relationship of gains from investments (including realized capital gains) resulting from insurance operations to earned premiums.

EARNINGS PER SHARE (EPS) RATIO:

Earnings per share ratio (EPS Ratio) are a small variation of return on equity capital ratio and are calculated by dividing the net profit after taxes less preference dividend by the total number of equity shares.

Significance:

The earnings per share is a good measure of profitability and when compared with EPS of similar companies, it gives a view of the comparative earnings or earnings power of the firm. EPS ratio calculated for a number of years indicates whether or not the earning power of the company has increased.

Formula Profit after tax/No. of sharesyear 2008 2007 2006 2005 2004

Nishat 38.4

2 7.58

10.22

12.86

5.17

Azgard 9 2.6

5 3.26

4.97

7.42

4.31

Sapphire 30.7

6 10.77

6.70

14.37

8.58

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Comments:

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

EARNINGS YIELD.

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

Formula Earning Per Share / Market Price Per Share * 100year 2008 2007 2006 2005 2004

Nishat 44.69 5.87 9.7

5 16.9

2 9.7

9

Azgard 9 4.30 6.26 22.5

4 23.1

9 19.1

6

Sapphire 42.46 11.64 9.5

7 15.9

7 12.2

6

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Comments:

Earning Yield of Azgard Nine, Nishat and Sapphire was at lowest point in 2007 due to economic crises. But it has very good condition in 2004 to 2006.Azgard Nine is at lowest point in 2008 due to economic and financial crises and purchase a project of fertilizers. Return on investment of Sapphire and Nishat were very high in 2008.of all these competitors but Sapphire shows a good trend but Azgard nine is less than Sapphire and Nishat.

Market Value of Shareyear 2008 2007 2006 2005 2004

Nishat 85.

97 129.2

0 104.8

0 76.0

0 52.8

0

Azgard 9 61.

56 52.1

0 22.0

5 32.0

0 22.5

0

Sapphire 72.

45 92.5

0 70.0

0 90.0

0 70.0

0

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Comments:

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

PRICE EARNING RATIO (P/E RATIO):

Price earning ratio (P/E ratio) is the ratio between market price per equity share and earning per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company.

Significance of Price Earning Ratio:

Price earnings ratio helps the investor in deciding whether to buy or not to buy the shares of a particular company at a particular market price

Generally, higher the price earning ratio the better it is. If the P/E ratio falls, the management should look into the causes that have resulted into the fall of this ratio.

Formula Market price per equity share / Earnings per share

year 2008 2007 2006 2005 2004

Nishat 2.24 17.04 10.2

5 5.

91 10.2

1

Azgard 9 23.23 15.98 4.4

4 4.

31 5.2

2

Sapphire 2.36 8.59 10.4

5 6.

26 8.1

6

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Comments:

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

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HORIZONTAL AND VERTICAL ANALYSIS

HORIZONTAL ANALYSIS

"In the base statement of previous year every item is given 100% and is subsequent

years these are changed to the related percentages as per base years.”

Importance

Comparative statement can be prepared for several years in a columnar form. The

changes from period to period can be reflected by establishing a base year and making it

100%. Thereafter all such changes are reflected in percentages. This analysis is

invaluable to management and other analysts because the absolute large data are

condensed into percentages. The purpose of horizontal analysis is to highlight the

changes.

Balance Sheet

The purpose o balance sheet is to reflect financial position of an entity on a particular

date. The balance sheet consists of assets, which are the property of the entity, the

liabilities, which are the debts payable to outside investors or suppliers of goods and

services, and the shareholder’s equity, which represents owners’ interest in the entity. At

any given date, assets must be equal to the contributions of the creditors and owners.

Profit And Loss Account

Profit and loss account is also named income statement or income statement or

income and expenditure account or statement of operations and encompasses all sources

of revenue, gain and losses and expenses for a particular period, grouped into various

headings as per charts of accounts of a company. In other words, it summarizes the

results of operations for an accounting period. The net income is closed by transfer to

balance sheet after paying the dividends and appropriations. Sometimes an appropriation

is made to general reserve and still some portion is left as retained earning. The

procedure of horizontal analysis of profit and loss account is same as of balance sheet.

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NISHAT COMPANY LIMITEDHORIZENTAL BALANCE SHEET

2008 2007 2006 2008 2007

EQUITY AND LIABILITIES

CAPITAL AND RESERVES

Share Capital 1,597,857,000

1,597,857,000 1,452,597,000 0% 10%

Reserves 23,549,323,000

28,566,041,000 19,659,812,000 -18% 45%

Accumulated profit -

- -

Total Equity 25,147,180,000

30,163,898,000 21,112,409,000 -17% 43%

SHAREHOLDERS EQUITY

NON CURRENT LIABILITIES

Loan term finances 1,047,794,000

1,773,820,000 2,982,353,000 -41% -41%

liabilities against assets subject to finance lease

-

- 33,031,000 0% -100%

1,047,794,000

1,773,820,000 3,015,384,000 -41% -41%

CURRENT LIABILITIES

Trade and other payables 1,141,227,000

926,593,000 960,436,000 23% -4%

Interest/ mark up on loans 201,847,000

131,744,000 151,236,000 53% -13%

short term borrowings 9,175,518,000

5,018,664,000 4,315,708,000 83% 16%

Current portion of long term liabilities 926,025,000

1,341,565,000 1,342,771,000 -31% 0%

Provision for income tax 276,988,000

230,807,000 281,382,000 20% -18%

11,721,605,000

7,649,373,000 7,051,533,000 53% 8%

CONTIGENCY AND COMMETMENTS

-

- -

TOTAL EQUITY AND LIABILITIES

37,916,579,000

39,587,091,000 31,179,326,000 -4% 27%

ASSETS 2008 2007 2006 0% 0%

NON-CURRENT ASSETS

Property, Plant and Equipment 10,647,310,

000 10,586,159,000 10,611,353,000 1% 0%

Capital Work in progress 13,321,088,

000 15,672,980,000 10,793,026,000 -15% 45%

Loan term loans-secured and deposits 8,122,000

9,523,000 6,377,000 -15% 49%

Loan term loans-secured and deposits 10,541,000

9,342,000 10,130,000 13% -8%

23,987,061,000

26,278,004,000 21,420,886,000 -9% 23%

CURRENT ASSETS

stores, spares parts and loose tools 490,229,000

422,428,000 471,520,000 16% -10%

stock in trade 4,103,648,000

3,106,436,000 3,003,174,000 32% 3%

Trade Debts 1,329,027,000

831,653,000 1,026,884,000 60% -19%

Short term investments 7,129,154,000

8,118,459,000 4,350,146,000 -12% 87%

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loans and advances 403,295,000

411,270,000 418,794,000 -2% -2%

Short term deposit and prepayments 30,400,000

26,395,000 30,525,000 15% -14%

others receivables 370,013,000

322,839,000 407,147,000 15% -21%

Cash and bank balances 73,752,000

69,607,000 50,250,000 6% 39%

13,929,518,000

13,309,087,000 9,758,440,000 5% 36%

TOTAL ASSETS 37,916,579,000

39,587,091,000 31,179,326,000 -4% 27%

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Non-Current Assets

As we can see from the horizontal balance sheet analysis of two years, the total non-current assets have shown increasing trend. In 2007 it increases0% from 2006 and it increases in 2008 by 1% as compare to 2007. This shows investment in fixed assets by the management.

Capital work in process decreased by 45% in year 2007, increased by -15% in year 2008 respectively. Lon-term loans and advances has shown an increasing trend in 2007 by 49%in 2007 and decreased by -15%. Its long term deposits increased in 2007 by -8% and increases in 2008 by 13%

Current Assets

Store, spare and tools has shown decreased in 2007 as compare to 2006 by -10% and increased in 2008 by 16%, which shows that company is in good position as liquidity point of view. Stock in trade shows increasing trend and increased in 2007 by 3% and in 2008 increased by 32%. This average stock of inventory is indication of good inventory management. Trade debts has shown decreasing trend in 2007 as compare to 2006 by -19% and it increased by 60% in 2008.Receivable management is inefficient in 2008 by showing increasing trend. Loans and advances showed an decreasing trend it increased in 2007 by -2% and in 2008 it decreases -2%. Cash and cash in bank has also shown decreasing trend in 2007 and increasing trend in 2008.

Equity and Liabilities

Share capital show a changing trend in 2007 by 10% and 0% increasing trend in 2008. Reserves have increased in year 2007 by 45% and decreased by -18% in 2008, which shows that company, has utilized all its reserves for expansion of project.

Non-Current Liabilities

Non-current liabilities have also shown an decreasing trend in 2007 and decreasing trend in 2008. There is a sharp decrease in year 2007 and also decrease in year 2008. Long term security deposits and retention money also decreases in 2007 by -41% and decreased in 2008 by-41% as compare to 2006 and 2007 respectively. Liabilities against assets decreases in 2007 by -100% and in 2008 by 0% as compare to 2006 and 2008 respectively.

Current Liabilities

Total current liabilities have also shown a increasing trend in 2007 and also increasing trend in 2008. This is also inline with decrease and increase in current assets of the company. Short term financing is taken to meet the working capital requirements. Company is meeting its obligation on regular basis.

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Trade payables decreased in 2007 by -04% but increased in 2008 by 23%. Markup on secured loans also decreased in 2007 by 13% in 2007and increased 53% in 2008. Short term borrowing also increased by 16% in 2007 and 83% in 2008 as compare to 2006 and 2007 respectively.

Finally, size of the company has increased during the last five years. More investment is made in capital assets. Company is in expansion phase since the base year. Investment in new expansion project and technology is being made in order to keep pace with changing business environment.

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NISHAT COMPANY LIMITEDHORIZENTAL PROFIT AND LOSS

2008 2007 2006 2008 2007

SALES 19,267,633,000 17,180,192,000 16,417,358,000 12% 5%

COST OF SALES (16,298,857,000) (14,335,254,000) (13,701,626,000) 14% 5%

GROSS PROFIT 2,968,776,000 2,844,938,000 2,715,732,000 4% 5%

DISTRIBUTION COST (961,711,000) (928,778,000) (663,671,000) 4% 40%

ADMINISTRATIVE EXPENSES (398,757,000) (320,202,000) (264,807,000) 25% 21%

OTHER OPERATING (110,781,000) (91,758,000) (78,689,000) 21% 17%

OTHER OPERATING INCOME 5,806,873,000 671,275,000 277,961,000 765% 141% 4,335,624,000 (669,463,000) (729,206,000) -748% -8%

OPERATING PROFIT 7,304,400,000 2,175,475,000 1,986,526,000 236% 10%

FINANCE COST (907,432,000) (819,267,000) (755,054,000) 11% 9%

share of profit in associated companies - - 527,394,000 0% -100%

(907,432,000) (819,267,000) (227,660,000) 11% 260%

PROFIT BEFORE TAXATION 6,396,968,000 1,356,208,000 1,758,866,000 372% -23%

TAXATION (258,000,000) (145,000,000) (126,000,000) 78% 15%

PROFIT AFTER TAXATION 6,138,968,000 1,211,208,000 1,632,866,000 407% -26%

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ANALYTICAL REVIEW OF PROFIT & LOSS ACCOUNT

Sales of the Company has shown a increasing trend and has increased up to 5% in 2007 and 12% in 2008 as compare to 2006 and 2007 respectively.

Cost of sales has also shown an increasing trend. In last two years the cost has increased, it has increased in 2007 by 5% and in 2008 14% as compare to 2006 and 2007 respectively. This increase is more than the increase in sales which is not good for the company.

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

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

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Vertical Analysis

“An analysis of percentage financial statements where all balance sheet items are divided by total assets and all income statement items are divided by net sales or revenue”

The expression of individual financial statement item as percentages of total helps the analyst spot trends with respect to the relative importance of these items over time.

Balance Sheet

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

Profit And Loss Account

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

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NISHAT COMPANY LIMITEDVERITCAL PROFIT AND LOSS ACC.

2008 2007 2006 2008 2007 2006

SALES 19,267,633,000 17,180,192,000 16,417,358,000 314% 1418% 1005%

COST OF SALES (16,298,857,000) (14,335,254,000) (13,701,626,000) -265% -1184% -839%

GROSS PROFIT 2,968,776,000 2,844,938,000 2,715,732,000 48% 235% 166%

DISTRIBUTION COST (961,711,000) (928,778,000) (663,671,000) -16% -77% -41%

ADMINISTRATIVE EXPENSES

(398,757,000) (320,202,000) (264,807,000) -6% -26% -16%

OTHER OPERATING (110,781,000) (91,758,000) (78,689,000) -2% -8% -5%

OTHER OPERATING INCOME

5,806,873,000 671,275,000 277,961,000 95% 55% 17% 4,335,624,000 (669,463,000) (729,206,000) 71% -55% -45%

OPERATING PROFIT 7,304,400,000 2,175,475,000 1,986,526,000 119% 180% 122%

FINANCE COST (907,432,000) (819,267,000) (755,054,000) -15% -68% -46%

share of profit in associated companies - - 527,394,000 0% 0% 32%

(907,432,000) (819,267,000) (227,660,000) -15% -68% -14%

PROFIT BEFORE TAXATION

6,396,968,000 1,356,208,000 1,758,866,000 104% 112% 108%

TAXATION (258,000,000) (145,000,000) (126,000,000) -4% -12% -8%

PROFIT AFTER TAXATION

6,138,968,000 1,211,208,000 1,632,866,000 100% 100% 100%

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ANALYTICAL REVIEW OF VERTICLE PROFIT & LOSS ACCOUNT

As we can see from the vertical profit and loss account the sales revenue increased in 2007 by1418% and in 2008 Increased by 314%. Cost of sales also decreased in 2007 by -1184% and it decreased by -265% in 2008, gross profit increased in 2008 by 48% as compared to 2007 and in 2007 it had increased by 235% as compared to 2006.

Selling and distribution expenses had decreased in 2008 by -16% and decreased in 2007 as compared to 2006 which was -77%. Financial charges showed decreasing trend in relation to sales with a decreased in 2008 as compare to 2007 and 2006 Other operating income had increased in 2007 and also increased in 2008 which is Greater then increase in 2007.Profit before taxation has increased in year 2006 and year 2007 and also in year 2008. In year 2008 the profit/loss before taxation was 104% and in 2007 the profit increase by 112% .

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

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NISHAT COMPANY LIMITEDVERITCAL BALANCE SHEET 2008 2007 2006 2008 2007 2006EQUITY AND LIABILITIES

CAPITAL AND RESERVES

Share Capital 1,597,857,000

1,597,857,000

1,452,597,000 4% 4% 4%

Reserves 23,549,323,000

28,566,041,000

19,659,812,000 62% 75% 52%

Accumulated profit -

- -

Total Equity 25,147,180,000

30,163,898,000

21,112,409,000 66% 80% 56%

SHAREHOLDERS EQUITYNON CURRENT LIABILITIES

Loan term finances 1,047,794,000

1,773,820,000

2,982,353,000 3% 5% 8%

liabilities against assets subject to finance lease

-

-

33,031,000 0% 0% 0%

1,047,794,000

1,773,820,000

3,015,384,000 3% 5% 8%

CURRENT LIABILITIES

Trade and other payables 1,141,227,000

926,593,000

960,436,000 3% 2% 3%

Interest/ mark up on loans 201,847,000

131,744,000

151,236,000 1% 0% 0%

short term borrowings 9,175,518,000

5,018,664,000

4,315,708,000 24% 13% 11%

Current portion of long term liabilities

926,025,000

1,341,565,000

1,342,771,000 2% 4% 4%

Provision for income tax 276,988,000

230,807,000

281,382,000 1% 1% 1%

11,721,605,000

7,649,373,000

7,051,533,000 31% 20% 19%

CONTIGENCY AND COMMETMENTS

-

- -

TOTAL EQUITY AND LIABILITIES

37,916,579,000

39,587,091,000

31,179,326,000 100% 104% 82%

ASSETS 2008 2007 2006 2008 2007 2006

NON-CURRENT ASSETS

Property, Plant and Equipment 10,647,310,00

0 10,586,159,000

10,611,353,000 28% 28% 28%

Capital Work in progress 13,321,088,00

0 15,672,980,000

10,793,026,000 35% 41% 28%

Loan term loans-secured and deposits

8,122,000

9,523,000

6,377,000 0% 0% 0%

Loan term loans-secured and deposits

10,541,000

9,342,000

10,130,000 0% 0% 0%

23,987,061,000

26,278,004,000

21,420,886,000 63% 69% 56%

CURRENT ASSETS

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stores, spares parts and loose tools

490,229,000

422,428,000

471,520,000 1% 1% 1%

stock in trade 4,103,648,000

3,106,436,000

3,003,174,000 11% 8% 8%

Trade Debts 1,329,027,000

831,653,000

1,026,884,000 4% 2% 3%

Short term investments 7,129,154,000

8,118,459,000

4,350,146,000 19% 21% 11%

loans and advances 403,295,000

411,270,000

418,794,000 1% 1% 1%

Short term deposit and prepayments

30,400,000

26,395,000

30,525,000 0% 0% 0%

others receivables 370,013,000

322,839,000

407,147,000 1% 1% 1%

Cash and bank balances 73,752,000

69,607,000

50,250,000 0% 0% 0%

13,929,518,000

13,309,087,000

9,758,440,000 37% 35% 26%

TOTAL ASSETS 37,916,579,000

39,587,091,000

31,179,326,000 100% 104% 82%

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ANALYTICAL REVIEW OF VERTICLE ANALYSIS OF BALANCE SHEET

ASSETS

Non-Current Assets

As we can see from the vertical balance sheet of the company total fixed assets are constant in relation to total assets with little variations. The management is more focusing on working capital management than on fixed asset in last three years as shown by the vertical balance sheet.

Property, plant and equipment have shown a same trend in year 2006 which was 28% and in 2007 also which was 28% and after that improvement in last year 2008 that was 28% Capital work in progress was increased in 2007 as compare to 2006, Store spare held for capital expenditures increase in 2007 and 2008. Long-term deposits remains the same by 0% in 2006 and 0% and 0% increased in 2007 and 2008.

Current Assets

Total current assets have shown an increasing trend over the last three year period. Stores and spares declined in year 2007 after that it has shown an increasing trend. In 2006 it increased by 1%, n 2007 1% and in 2008 it was 1%.

Stock in trade has shown an increasing trend. Stock in trade is about 8% of the total current assets in 2006 and it was 8% of total assets in 2007 and11% in 2008. Stores and spares have the largest portion

among all current assets. Receivable had 1% o total assets in 2006 and they were 1% in 2007 and 1% in 2008. Trade debtors were 3% in 2006, 2% in 2007 and 4% in 2008. Cash and cash equivalent were 0% in 2006, 0% in 2007 and 0% n 2008.

EQUITY AND LIABILITIES

Share capital and reserves have shown increasing trend. appropriated profit has shown increasing trend and company had gain in 2008. Issued, subscribed and paid up capital was 4% of total liabilities in 2006 same 4% in 2007 and it was also 4% in 2008. Reserves were increased were 52%, 75% and 62% in 2006,2007 and 2008 respectively.

Non-Current Liabilities

Total long-term liabilities of the company have shown increasing trend in relation to total liabilities except marginally increase in year 2008. The company is focusing on equity financing than debts due to the higher financing costs. Liabilities against assets have shown a mix trend over the last three year period.

49/85

Long term financing was 8% in 2006, 5% in 2007 and 3% in 2008 to all of its liabilities.

Current Liabilities

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

50/85

CHAPTER # 03

1) Company Analysis

2) Company Life Cycle

51/85

COMPANY ANALYSIS:

Directors are pleased to present the 60th annual report and audited accounts for the year

ended June 30, 2008 Nishat Mills has earned profit after tax Rs 6,138.968 Million for

the year ended June 30, 2008. The profit increased by 406.85% as compared to Rs.

1,211.208 Million for the pervious period. this increase in profit is mainly due to capital

gain of Rs. 5,060.413 million resulting from mark to market transaction of our

investment in MCB Bank shares, and increase in dividend income by Rs. 230.765

million. resulting from mark to market transaction of our 4.35 % respectively as

compared to the previous Period. Percentage increase in gross profit does not

commensurate with that of sales due to the facts that there was an increase of 22.62 % in

local cotton rates (2008: Rs. 3,047/mound, 2007: Rs. 2,485/mound) and an increase of

7.65 % in imported cotton rate (2008: Rs. 3,714/mound, 2007: Rs. 3,450/mound).

Finance cost increase by 10.76 % mainly due to increase in average borrowing by 5%.

The Board of Directors of the company has recommended 25% cash dividend (2007:

25% cash dividend) and recommends transferring Rs. 4,870 Million (2007: Rs. 1,244

Million) to general reserve.

General market scenario & future prospects

In fiscal year ended june 2008 observed some major changes in world economics in

general and for textile sector in particular. This year witnessed crude oil touching the

record high of $140 per barrel, substitution of food crops to biofuel crops, rising capital

and commodity price indexes and galloping inflation in all major economies of the

world. Overall there was a major shift in fuel, labor and operating costs of all business

activities. For textile sector, matters were further complicated by an unprecedented rise

in cotton prices in September and October 2007, with no signs of stability by the year

end. Additional factors were energy crises at domestic level, low yield of cotton in

Pakistan and a very weak demand from US and European and credit crunch for general

consumers. Although softening of Pak Rupee against US dollar helped to cover a small

factor of this accumulated cost pressure, the overall picture for domestic textiles industry

was that of inflating costs and a deflating product demand. Forecasting future is

intricate in the present scenario of the country and capricious market. It mainly depends

upon cotton market for the coming season, which seems bullish. As per estimate of

52/85

experts, Pakistani cotton production is short by approximately 30 to 35 % as compared to

the demand. We need our government to chalk out a proper and long term textile policy

for the survival of industry. On our part, we need to increase customers profile and

explore new markets to increase business volumes. Our strategy to drive our marketing

activities would be the timely adoption of innovative products, finishes and production

technique.

Spinning Section

The year 2008 mainly started with difficulties in the shape of the bullish and uncertain

cotton market. Ever highest cotton prices were seen this year in Pakistan. Cotton prices

started with Rs. 2,900/maund and went up to Rs. 4,000/ maund during this year. Most of

the Spinning mills remained in a serious cotton crisis through out the year.

We have, however, by passed these crises by following our one time cotton buying

policy and same has also helped us to maintain steady quality results. Demand of 100%

grey cotton yarn remained steady and we tried to uphold the prices along with market

and to keep over all spinning in profits. by the end of year, far east market. showed good

response in terms of demand and prices of carded & combed yarn. Far East remained our

main selling market of cotton yarn. USA had some steady demand during this year,

where as in Europe demand of cotton yarn was reduced more. Development in terms of

machinery is in progress for better quality of yarn. Installation of state of art ring frames

is under way at one ofour spinning units.

Weaving Section

During the year under review, we have observed highest ever yarn prices which made the

job more difficult. The increases in the yarn price was not absorbed by the fabric prices.

We faced a lot of difficulties to win the business in international market because of high

raw material prices. Moreover, political instability, law and order situation and energy

crisis (Oil, Gas and Power shortage), increased our cost of production and held our

product uncompetitive in international market. It is becoming difficult to maintain our

performance in the present scenario. Fareast market showed difficult on ground of price.

Business in South America reduced by 80% in comparison with previous period because

of the bullish yarn market and cheaper prices from competitors. Our wider width looms /

home textiles greige capacity continued facing decline in prices. Our strategy in this

competition was to diversify ourselves customer wise, market wise and product wise.

53/85

This was the only way to survive in such uncertain market. Another strategy was to cut

costs by bringing innovative technologies. We continued to replace our old looms with

the new state of the art looms and got new looms in different widths to meet the varying

requirements of all our customers. This is the first time that Nishat has looms with 90”

width. By having these looms, we will be more competitive and can supply all types of

greige fabric in varying widths. We hope that after getting these new looms, we would

not lose any business because of the width problem, especially stretch articles. Moreover,

we are planning for PFD plant in our weaving to give PFD fabrics to our customers, as

many customers in Europe are asking for PFD fabrics instead of weaved fabric. In this

way, we will be much competitive product wise and quality wise. It would increase our

customer profit in Europe. We are also trying to reduce our production lead times by

bringing state of the art looms. Customer services, keeping stocks for special fulfillment,

yarns and fibers, are our major tools for a better lead time. We have added new European

customers and started to increase business in France, Denmark, turkey and Poland

markets to fulfill the gap of the Fareast and South American markets. Our business in the

special and technical fabric (Antistatic, Fire retardant, and military fabrics) has also

increased with continuation of orders. We have increased the sales volumes to Nishat

Dyeing and Finishing with a better product mix. We have launched several new products

like Viscose Lycra, Cotton/Kapok/Lycra, Bamboo Lycra and Linen based items etc. in

the Fairs/ Exhibitions and developed the same in different

markets.

Processing and Stitching Section

The year 2008 was a difficult year for fabric processing mills as in addition to the

domestic challenging scenario, recession of American market further slowed down the

entire business

cycle. Retailers were stuck up with high inventory levels, which hindered new ventures.

Unanticipated bankruptcy of some major textile businesses including, Dan River, Linen

& Things, Goody’s Family Inc also gave unprecedented setback to an already fading

market. This

situation did not allow suppliers to increase any prices to overcome excessive overhead

costs

and ease out the worsening condition. Even though all major concerns were facing

54/85

a perpendicular decline in the revenues, our company was able to sustain its sales in step

with the plant efficiency. A particular focus was conferred upon enhancing production

efficiency are drawing more production in less number of hours and with optimum

workforce. With reference to this cost cutting strategy, an important step was taken by

shifting the Faisalabad stitching unit to Lahore, adjacent to the processing plant. This

adaptation is

expected to play an extra ordinary role in improving the supply, operations’ management

and reduction in transportation costs. It will overcome unnecessary operational delays

and costs. Moreover, this stitching unit is being upgraded with the latest machinery and a

state of the art switch-track system that will enhance the working efficiency enormously

along with the product quality. We are installing caustic soda recovery plant to have

further value addition, cost reduction and diversification in production resources. We

have installed new gerbur cutting

equipment in our sewing operation. For exports, European market remained our main

bread & butter earner during the period due to its economic and currency strength.

Devaluation of rupee provided an auxiliary edge to European customers to shop more on

our existing prices, which consequently increased our production & sales. We are

exploring more

opportunities to enhance our strong presence in European market. Furthermore, a lot of

developmental works are underway for American market for regular and branded items.

With escalating value of Chinese currency, Pakistani market is once again expected to

attract US importers. Coupled with Nishat’s capabilities and competencies, our vertically

integrated production facilities that can turn raw cotton in final finished consumer.

product, always attract attention of US clients. We are very positive to materialize

currentdevelopments into tangible sales in near future.

Nishat Dyeing & Finishing – (NDF)Given the circumstances of textile industry and all challenges, NDF managed to perform

quite well. NDF not only managed to retain all its major customers despite the cut throat

price competition, but also increased its customer base both in US as well as in Europe.

Thereby the low demand by existing customers due to poor retail was covered well by

addition of this new business. This increase in customer base was both due to the

complete verticality offered to customer for fabric till finished garments. as well as to the

increased marketing activities on tapping new customers. The overall picture is not

55/85

expected to improve Much in the next fiscal year as in the market still remains highly

unstable. All the factors contribution to the current inflationary pressures and weak

demand are still present and far from being settled. As much as it is hard to establish a

firm marketing strategy in such a volatile market, NDF has formulated the key principles

follow in the next fiscal year.

These revolve around a further expansion in its customer base, retaining the current

major customers, increasing marketing efforts in the still profitable European market and

concentrated

effort towards specialized finished over regular run-of-the-mill products to fetch better

margins.

Power GenerationNishat has 80 MW of self power generation facilities at different sites. We have always

concentrated on installation of most modern and efficiency to power generation machine

to get

more with less fuel consumption. Out of the total generation capacity, 46 MW generation

is done through most modern and highly efficiency gas fired generators and their design

is based on “tri-generation” concept i.e. besides generating power these plants are

producing steam for use in processing, for further power generation and hot water for

process use or air conditioning. This concept makes it possible to use the precious energy

to to maximize profitability of the company and help reduce environmental pollution.

Keeping in view the current power shortage in the country, Nishat has responded to

beckon of the Government and sold its excessive power

from different locations to the local distribution companies.

56/85

Company Life Cycle

Last Five Years Sales of the Company

Comments:

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

57/85

CHAPTER # 04

1. Five Years Review

2. Recommendation

3. Conclusion

4. Bibliography

58/85

FIVE YEARS REVIEW

Explanation:

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

59/85

RECOMMENDATIONS

o The Company should design effective internal control system, which not only increase the efficiency but also reduce the pressure exists on accounts and finance department.

o The Company should arrange training and orientation programs for its employees on regular basis so that they can equip themselves with the latest developments in the field of finance and accounts.

o Monthly accounts should be prepared on regular basis so that it will help the management to make better and timely decisions.

o Calculations of mark-up should be made by the Company to reconcile and check the mark-up charged by the banks to keep a good control on the financial charges charged by the banks.

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

Conclusion

Directors are pleased to present the 60th annual report and audited accounts for the

year ended June 30, 2008 Nishat Mills has earned profit after tax Rs 6,138.968 Million

for the year ended June 30, 2008. The profit increased by 406.85% as compared to Rs.

1,211.208 Million for the pervious period. this increase in profit is mainly due to capital

gain of Rs. 5,060.413 million resulting from mark to market transaction of our

investment in MCB Bank shares, and increase in dividend income by Rs. 230.765

million. resulting from mark to market transaction of our 4.35 % respectively as

compared to the previous Prriod. Percentage increase in gross profit does not

commensurate with that of sales due to the facts that there was an increase of 22.62 % in

local cotton rates (2008: Rs. 3,047/maund, 2007: Rs. 2,485/maund) and an increase of

7.65 % in imported cotton rate (2008: Rs. 3,714/maund, 2007: Rs. 3,450/maund).

Finance cost increase by 10.76 % mainly due to increase in average borrowing by 5%.

The Board of Directors of the company has recommended 25% cash dividend

(2007: 25% cash dividend) and recommends transferring Rs. 4,870 Million (2007: Rs.

1,244 Million) to general reserve.

60/85

In fiscal year ended june 2008 observed some major changes in world economics in

general and for textile sector in particular. This year witnessed crude oil touching the

record high of $140 per barrel, substitution of food crops to biofuel crops, rising capital

and commodity price indexes and galloping inflation in all major economies of the

world. Overall there was a major shift in fuel, labor and operating costs of all business

activities. For textile sector, matters were further complicated by an unprecedented rise

in cotton prices in September and October 2007, with no signs of stability by the year

end. Additional factors were energy crises at domestic level, low yield of cotton in

Pakistan and a very weak demand from US and European and credit crunch for general

consumers. Although softening of Pak Rupee against US dollar helped to cover a small

factor of this accumulated cost pressure, the overall picture for domestic textiles industry

was that of inflating costs and a deflating product demand. Forecasting future is

intricate in the present scenario of the country and capricious market. It mainly depends

upon cotton market for the coming season, which seems bullish. As per estimate of

experts, Pakistani cotton production is short by approximately 30 to 35 % as compared to

the demand. We need our government to chalk out a proper and long term textile policy

for the survival of industry. On our part, we need to increase customers profile and

explore new markets to increase business volumes. Our strategy to drive our marketing

activities would be the timely adoption of innovative products, finishes and production

technique.

The year 2008 mainly started with difficulties in the shape of the bullish and

uncertain cotton market. Ever highest cotton prices were seen this year in Pakistan.

Cotton prices started with Rs. 2,900/mound and went up to Rs. 4,000/ mound during this

year. Most of the Spinning mills remained in a serious cotton crisis through out the year.

We have, however, by passed these crises by following our one time cotton buying

policy and same has also helped us to maintain steady quality results. Demand of 100%

grey cotton yarn remained steady and we tried to uphold the prices along with market

and to keep over all spinning in profits. by the end of year, far east market. showed good

response in terms of demand and prices of carded & combed yarn. Far East remained our

main selling market of cotton yarn. USA had some steady demand during this year,

where as in Europe demand of cotton yarn was reduced more. Development in terms of

61/85

machinery is in progress for better quality of yarn. Installation of state of art ring frames

is under way at one of our spinning units.

During the year under review, we have observed highest ever yarn prices which

made the job more difficult. The increases in the yarn price was not absorbed by the

fabric prices. We faced a lot of difficulties to win the business in international market

because of high raw material prices. Moreover, political instability, law and order

situation and energy crisis (Oil, Gas and Power shortage), increased our cost of

production and held our product uncompetitive in international market. It is becoming

difficult to maintain our performance in the present scenario. Fareast market showed

difficult on ground of price. Business in South America reduced by 80% in comparison

with previous period because of the bullish yarn market and cheaper prices from

competitors. Our wider width looms / home textiles greige capacity continued facing

decline in prices. Our strategy in this competition was to diversify ourselves customer

wise, market wise and product wise. This was the only way to survive in such uncertain

market. Another strategy was to cut costs by bringing innovative technologies. We

continued to replace our old looms with the new state of the art looms and got new looms

in different widths to meet the varying requirements of all our customers. This is the

first time that Nishat has looms with 90” width. By having these looms, we will be more

competitive and can supply all types of grieve fabric in varying widths. We hope that

after getting these new looms, we would not lose any business because of the width

problem, especially stretch articles. Moreover, we are planning for PFD plant in our

weaving to give PFD fabrics to our customers, as many customers in Europe are asking

for PFD fabrics instead of weaved fabric. In this way, we will be much competitive

product wise and quality wise. It would increase our customer profit in Europe. We are

also trying to reduce our production lead times by bringing state of the art looms.

Customer services, keeping stocks for special fulfillment, yarns and fibers, are our major

tools for a better lead time. We have added new European customers and started to

increase business in France, Denmark, turkey and Poland markets to fulfill the gap of the

Fareast and South American markets. Our business in the special and technical fabric

(Antistatic, Fire retardant, and military fabrics) has also increased with continuation of

orders. We have increased the sales volumes to Nishat Dyeing and Finishing with a

better product mix. We have launched several new products like Viscose Lycra,

Cotton/Kapok/Lycra, Bamboo Lycra and Linen based items etc. in the Fairs/ Exhibitions

and developed the same in different markets.

62/85

The year 2008 was a difficult year for fabric processing mills as in addition to the

domestic challenging scenario, recession of American market further slowed down the

entire business cycle. Retailers were stuck up with high inventory levels, which hindered

new ventures. Unanticipated bankruptcy of some major textile businesses including, Dan

River, Linen & Things, Goody’s Family Inc also gave unprecedented setback to an

already fading market. This situation did not allow suppliers to increase any prices to

overcome excessive overhead costs and ease out the worsening condition. Even though

all major concerns were facing

a perpendicular decline in the revenues, our company was able to sustain its sales

in step with the plant efficiency. A particular focus was conferred upon enhancing

production efficiency are drawing more production in less number of hours and with

optimum workforce. With reference to this cost cutting strategy, an important step was

taken by shifting the Faisalabad stitching unit to Lahore, adjacent to the processing plant.

This adaptation is expected to play an extra ordinary role in improving the supply,

operations’ management and reduction in transportation costs. It will overcome

unnecessary operational delays and costs. Moreover, this stitching unit is being upgraded

with the latest machinery and a state of the art switch-track system that will enhance the

working efficiency enormously along with the product quality. We are installing caustic

soda recovery plant to have further value addition, cost reduction and diversification in

production resources. We have installed new Gerber cutting equipment in our sewing

operation. For exports, European market remained our main bread & butter earner during

the period due to its economic and currency strength. Devaluation of rupee provided an

auxiliary edge to European customers to shop more on our existing prices, which

consequently increased our production & sales. We are exploring more opportunities to

enhance our strong presence in European market. Furthermore, a lot of developmental

works are underway for American market for regular and branded items. With escalating

value of Chinese currency, Pakistani market is once again expected to attract US

importers. Coupled with Nishat’s capabilities and competencies, our vertically integrated

production facilities that can turn raw cotton in final finished consumer. product, always

attract attention of US clients. We are very positive to materialize current developments

into tangible sales in near future.

Given the circumstances of textile industry and all challenges, NDF managed to

perform quite well. NDF not only managed to retain all its major customers despite the

63/85

cut throat price competition, but also increased its customer base both in US as well as in

Europe. Thereby the low demand by existing customers due to poor retail was covered

well by addition of this new business. This increase in customer base was both due to the

complete verticality offered to customer for fabric till finished garments. as well as to the

increased marketing activities on tapping new customers. The overall picture is not

expected to improve Much in the next fiscal year as in the market still remains highly

unstable. All the factors contribution to the current inflationary pressures and weak

demand are still present and far from being settled. As much as it is hard to establish a

firm marketing strategy in such a volatile market, NDF has formulated the key principles

follow in the next fiscal year.

These revolve around a further expansion in its customer base, retaining the current

major customers, increasing marketing efforts in the still profitable European market and

concentrated effort towards specialized finished over regular run-of-the-mill products to

fetch better margins.

Nishat has 80 MW of self power generation facilities at different sites. We have

always concentrated on installation of most modern and efficiency to power generation

machine to get more with less fuel consumption. Out of the total generation capacity, 46

MW generation is done through most modern and highly efficiency gas fired generators

and their design is based on “tri-generation” concept i.e. besides generating power these

plants are producing steam for use in processing, for further power generation and hot

water for process use or air conditioning. This concept makes it possible to use the

precious energy to maximize profitability of the company and help reduce environmental

pollution. Keeping in view the current power shortage in the country, Nishat has

responded to beckon of the Government and sold its excessive power from different

locations to the local distribution companies.

64/85

Bibliography

REFERENCE & SOURCES USED

1) http://www.nishatmillsltd.com/nishat/invest.html

2) http://www.nonprofitsassistancefund.org/files/MNAF/ToolsTemplates/NonprofitFinancialRatios.pdf

3) http://www.azgard9.com/html/financial-info/2008/Security%20Analys_g%20-%20Q1.pdf

4) http://www.azgard9.com/html/financial-info/2008/Consolidated%20ANL.pdf

5) http://www.azgard9.com/html/financial-info/2008/Azgard%209%20AR07%20Consolidati%20(2).pdf

6) http://www.azgard9.com/html/financial-info/2007/ANNUAL%20REPORT-2006%20PAGE%2021%20TO%20110.pdf

7) http://www.azgard9.com/html/financial-information.htm

8) http://www.sapphire.com.pk/cstmaccounts.htm

9) http://www.sapphire.com.pk/home.htm

References

Special Thanks to

Mr. Muhammad Zeshan Raza

65/85

CHAPTER # 05

Annexure:

1) Five Years Balance Sheet of Nishat Mills limited Company

2) Five Years Profit and Loss account of Nishat Mills limited Company

3) Five Years Balance Sheet of Azgard Nine Pvt limited Company

4) Five Years Profit and Loss account of Azgard Nine Pvt limited Company

5) Five Years Balance Sheet of Sapphire Mills limited Company

6) Five Years Profit and Loss account of Sapphire Mills limited Company

7) Ratio Working of Nishat, Sapphire and Azgard Nine Company

66/85

NISHAT PVT. LIMITED

BALANCE SHEET

FOR THE YEAR ENDED 2008 2008 2007 2006 2005 2004EQUITY AND LIABILITIES

CAPITAL AND RESERVES

Share Capital

1,597,857,000

1,597,857,000

1,452,597,000

1,452,597,000

1,597,857,000

Reserves

23,549,323,000

28,566,041,000

19,659,812,000

11,353,517,000

28,566,041,000

Accumulated profit

-

-

-

-

-

Total Equity

25,147,180,000

30,163,898,000

21,112,409,000

12,806,114,000

30,163,898,000

SHAREHOLDERS EQUITYNON CURRENT LIABILITIES

Loan term finances

1,047,794,000

1,773,820,000

2,982,353,000

2,796,512,000

1,773,820,000

liabilities against assets subject to finance lease

-

-

33,031,000

61,643,000

-

1,047,794,000

1,773,820,000

3,015,384,000

2,858,155,000

1,773,820,000

CURRENT LIABILITIESTrade and other payables

1,141,227,000

926,593,000

960,436,000

812,216,000

926,593,000

Interest/ mark up on loans

201,847,000

131,744,000

151,236,000

88,449,000

131,744,000

short term borrowings

9,175,518,000

5,018,664,000

4,315,708,000

4,284,815,000

5,018,664,000

Current portion of long term liabilities

926,025,000

1,341,565,000

1,342,771,000

711,164,000

1,341,565,000

Provision for income tax

276,988,000

230,807,000

281,382,000

356,689,000

230,807,000

11,721,605,000

7,649,373,000

7,051,533,000

6,253,333,000

7,649,373,000

CONTIGENCY AND COMMETMENTS

-

-

-

-

-

TOTAL EQUITY AND LIABILITIES

37,916,579,000

39,587,091,000

31,179,326,000

21,917,602,000

39,587,091,000

ASSETS 2008 2007 2006 2005 2004

NON-CURRENT ASSETSProperty, Plant and Equipment

10,647,310,000

10,586,159,000

10,611,353,000

9,151,096,000

2,429,954,944

Capital Work in 13,321,088,000

15,672,980,000

10,793,026,000

5,003,177,000

57,608,750

67/85

progressLoan term loans-secured and deposits

8,122,000

9,523,000

6,377,000

4,890,000

Loan term loans-secured and deposits

10,541,000

9,342,000

10,130,000

12,022,000

23,820,007

23,987,061,000

26,278,004,000

21,420,886,000

14,171,185,000

2,511,383,701

CURRENT ASSETSstores, spares parts and loose tools

490,229,000

422,428,000

471,520,000

424,827,000

1,249,572,742

stock in trade

4,103,648,000

3,106,436,000

3,003,174,000

2,897,392,000

Trade Debts

1,329,027,000

831,653,000

1,026,884,000

877,358,000

1,150,579,738

Short term investments

7,129,154,000

8,118,459,000

4,350,146,000

2,173,530,000

109,138,820

loans and advances

403,295,000

411,270,000

418,794,000

424,533,000

245,255,091

Short term deposit and prepayments

30,400,000

26,395,000

30,525,000

39,180,000

13,497,444

others receivables

370,013,000

322,839,000

407,147,000

388,598,000

-

Cash and bank balances

73,752,000

69,607,000

50,250,000

520,999,000

56,528,131

13,929,518,000

13,309,087,000

9,758,440,000

7,746,417,000

2,824,571,966

TOTAL ASSETS

37,916,579,000

39,587,091,000

31,179,326,000

21,917,602,000

5,335,955,667

68/85

NISHAT PVT. LIMITED

PROFIT & LOSS A/C

FOR THE YEAR ENDED 20082008 2007 2006 2005 2004

SALES

COST OF SALES

19,267,633,000

17,180,192,000

16,417,358,000

11,374,630,000

7,461,055,757

(16,298,857,000)

(14,335,254,000)

(13,701,626,000)

(9,239,731,000)

7,091,114,328

GROSS PROFIT

2,968,776,000

2,844,938,000

2,715,732,000

2,134,899,000

14,552,170,085

DISTRIBUTION COST ADMINISTRATIVE EXPENSES

(961,711,000)

(928,778,000)

(663,671,000)

(510,246,000)

-

OTHER OPERATING

(398,757,000)

(320,202,000)

(264,807,000)

(175,040,000)

54,689,456 OTHER OPERATING INCOME

(110,781,000)

(91,758,000)

(78,689,000)

(70,978,000)

27,986,950

5,806,873,000

671,275,000

277,961,000

621,569,000

111,644,873

4,335,624,000

(669,463,000)

(729,206,000)

(134,695,000)

194,321,279

OPERATING PROFIT

7,304,400,000

2,175,475,000

1,986,526,000

2,000,204,000

14,746,491,364

FINANCE COSTshare of profit in associated companies

(907,432,000)

(819,267,000)

(755,054,000)

(407,696,000)

127,260,241

-

-

527,394,000

440,846,000

13,544,903

(907,432,000)

(819,267,000)

(227,660,000)

33,150,000

140,805,144

PROFIT BEFORE TAXATION

6,396,968,000

1,356,208,000

1,758,866,000

2,033,354,000

14,887,296,508

TAXATION

(258,000,000)

(145,000,000)

(126,000,000)

(166,000,000)

85,046,149 PROFIT AFTER TAXATION

6,138,968,000

1,211,208,000

1,632,866,000

1,867,354,000

14,972,342,657

69/85

AZGARD NINE PVT LIMITED

BALANCE SHEET

AS AT 31 DECEMBER 2008

2008 2007 2006 2005 2004 EQUITY AND LIABILITIES

Rs. Rs. Rs. Rs. Rs.

SHARE CAPITAL AND RESERVES

ISSUED, SUBSCRIBED AND PAID UP CAPITAL

3,827,118,540

3,788,822,900

3,788,838,900

1,737,308,680

1,737,308,680

RESERVES 3,532,469,002

3,530,626,122

3,578,262,182

403,331,469

362,142,241

Inappropriate Profit 2,764,494,959

2,400,605,174

1,807,067,052

952,462,490

410,657,982

10,124,082,501

9,720,054,196

9,174,168,134

3,093,102,639

2,510,108,903

Surplus on revaluation of property, Plant and equipment

219,356,257

239,073,077

257,360,867

278,943,671

306,564,511

Non current liabilities

Redeemable capital Secured

3,962,461,561

4,491,185,372

2,268,598,953

2,333,220,175

1,147,729

Long term finance secured

2,686,842,500

2,973,551,252

3,519,216,988

347,920,000

750,000,000

Liabilities against assets subject to finance lease

25,210,944

14,357,005

9,622,618

40,173,972

116,503,819

6,674,515,005

7,479,093,629

5,797,438,559

2,721,314,147

867,651,548

Current Liabilities

Current Portion of non current liabilities

1,470,921,493

981,049,256

450,047,125

433,780,774

363,081,881

Short term Borrowings

6,574,080,304

3,820,688,516

6,006,117,630

3,142,402,324

1,492,909,892

derivative financial liabilities

50,536,909

34,369,582

32,021,607

-

-

Trade and other payables

1,350,500,115

1,030,875,769

1,243,588,067

791,641,172

691,981,192

Due to related parties- unsecured

426,768,193

-

-

-

-

Markup accrued on borrowings

466,226,443

317,690,929

195,249,017

79,679,935

64,824,871

70/85

Unclaimed dividend 14,686,046

9,694,014

22,312,061

362,062

95,414

10,353,719,503

6,194,368,066

7,949,335,507

4,447,866,267

2,612,893,250

Contingencies and commitments

-

-

-

-

-

27,371,673,266

23,632,588,968

23,178,303,067

10,541,226,724

6,297,218,212

ASSETS 2008 2,0

07

2,006

2,005

2,004 Non-current assets Rs. Rs. Rs. Rs. Rs.

Property, Plant and equipment

7,734,950,547

7,643,649,558

7,601,895,866

3,113,043,032

2,847,936,402

Capital work in progress

918,670,893

167,987,854

150,650,477

2,459,655,906

84,292,338

intangible assets 33,536,216

51,142,669

60,544,809

73,937,276

88,375,589

Long term investments

7,521,644,051

6,391,905,201

6,303,488,906

4,670,138

2,666,296

Long term deposits 19,777,502

20,239,502

19,906,757

29,745,135

18,517,830

16,228,579,209

14,274,924,784

14,136,486,815

5,681,051,487

3,041,788,455

Current assets

Stores spares and loose tools

201,693,270

125,468,877

101,762,486

87,790,355

72,608,693

Stock in trade 4,034,103,119

2,246,132,173

2,022,510,924

2,034,180,550

1,394,729,330

Trade receivable 1,777,232,612

1,657,196,735

1,134,897,149

1,013,883,584

945,111,856

Derivative financial assets

175,673,993

388,993,278

555,680,244

13,458,916

-

Advances, deposits, prepayments and other receivables

789,515,062

1,004,944,292

857,744,304

895,807,879

712,923,170

Current Taxation 63,948,605

51,050,683

-

-

-

Short Term investment

4,018,853,586

3,838,444,830

3,788,315,521

769,411,595

109,148,931

Cash and Bank Balances

82,073,810

45,433,316

580,905,624

45,642,358

20,907,777

11,143,094,057

9,357,664,184

9,041,816,252

4,860,175,237

3,255,429,757

27,371,673,266

23,632,588,968

23,178,303,067

10,541,226,724

6,297,218,212

71/85

Profit and Loss Accountfor the year ended 31-12-208

2008

2,007 2 ,006

2, 005

2,004

Rs. Rs. Rs. Rs. Rs.

Sales - Net 10,113,499,351

6,628,341,926

4,889,681,966

4,422,472,357

3,155,912,427

Cost of Sales (6,660,223,767)

(4,620,988,950)

(3,703,361,406)

(3,288,786,063)

(2,440,779,273)

Gross Profit 3,453,275,584

2,007,352,976

1,186,320,560

1,133,686,294

715,133,154

Administrative and selling expenses

(603,529,743)

(435,185,073)

(391,290,338)

(320,622,883)

(185,112,548)

Operating Profit 2,849,745,841

1,572,167,903

795,030,222

813,063,411

530,020,606

Other income - Net

620,148,589

641,224,883

1,122,601,656

305,447,731

9,864,791

Finance cost (2,470,391,655)

(1,061,933,212)

(657,548,074)

(326,374,206)

(144,623,062)

Profit before Taxation

999,502,775

1,151,459,574

1,260,083,804

792,136,936

395,262,335

taxation (102,218,852)

(72,007,073)

(115,569,082)

(50,843,271)

(20,000,000)

Profit after Taxation

897,283,923

1,079,452,501

1,144,514,722

741,293,665

375,262,335

72/85

SHAPPHIRE (PVT). LIMITED

BALANCE SHEET

FOR THE YEAR ENDED 2008

ASSETS 2008 2007 2006 2005 2004

NON-CURRENT ASSETS

Property, Plant and Equipment 3,936,3

57,164

3,793,621,479

3,721,368,562

3,124,152,756

2,429,954,944

Capital Work in progress 136,6

65,017

309,357,308

202,119,669

166,674,519

57,608,750

Intangible Assets

1,035,155

1,863,283

2,691,411

3,519,539

Investment Property

140,660,297 - - -

333,581,557

Long term Investment

550,455,739

400,087,567

404,687,567

359,687,567 -

Loan term loans-secured and deposits

18,609,945

27,886,920

24,224,793

26,179,194

23,820,007

4,783,783,317

4,532,816,557

4,355,092,002

3,680,213,575

2,844,965,258

CURRENT ASSETS

Inventories

3,278,652,891

1,949,146,494

1,908,734,607

1,860,863,775

1,249,572,742

Trade Debts

1,129,634,217

1,280,852,424

1,181,491,096

976,382,566

1,150,579,738

Loan and advances

61,803,031

115,677,608

41,516,776

31,165,687

109,138,820

Investments

- - - -

245,255,091

Advance/ refundable income tax

96,288,064

36,985,119

51,613,256

176,041,185

131,021,514

Trade deposits and short term prepayments

7,173,454

5,253,941

3,300,053

1,228,857 -

Other receivables

78,562,147

119,316,598

121,598,423

47,125,900

13,497,444

Short term investments -

73/85

2,821,493,005 3,032,180,857 1,521,732,569 503,644,001

Cash and bank balances

66,874,980

53,774,469

33,312,085

41,256,301

56,528,131

7,540,481,789

6,593,187,510

4,863,298,865

3,637,708,272

2,955,593,480

TOTAL ASSETS

12,324,265,106

11,126,004,067

9,218,390,867

7,317,921,847

5,800,558,738

EQUITY AND LIABILITIES

CAPITAL AND RESERVES

Share Capital

200,831,400

200,831,400

200,831,400

200,831,400

200,831,400

Reserves

4,758,930,127

5,601,774,092

3,558,561,976

2,307,510,163

1,954,795,027

Accumulated profit

617,730,082

216,262,838

134,535,088

288,773,074

172,307,002

Total Equity

5,577,491,609

6,018,868,330

3,893,928,464

2,797,114,637

2,327,933,429

SHAREHOLDERS EQUITY

NON CURRENT LIABILITIES

Redeemable Capital

- - - - -

Loan term finances

469,501,210

734,946,877

934,380,957

1,188,017,068

940,304,765

Custom duty payable

-

188,878

188,878

188,878

188,878

Deferred liabilities

396,649,544

407,355,062

366,278,699

326,710,352

279,462,992

866,150,754

1,142,490,817

1,300,848,534

1,514,916,298

1,219,956,635

CURRENT LIABILITIES

74/85

Trade and other payables

490,810,513

371,952,583

667,349,055

575,330,266

505,961,833

Interest/ mark up on loans

82,211,756

71,196,500

58,954,600

45,081,569 -

short term borrowings

4,923,882,728

3,109,232,345

2,611,402,600

1,933,610,996

1,540,819,433

Current portion of long term liabilities

322,903,996

347,063,492

603,236,109

352,343,252

147,896,239

Current portion of gratuity fund

- -

24,078,287 - -

Provision for income tax

60,813,750

65,200,000

58,279,967

99,133,295

57,629,936

Dividend payable

- -

313,251

391,534

361,233

CONTIGENCY AND COMMETMENTS

5,880,622,743

3,964,644,920

4,023,613,869

3,005,890,912

2,252,668,674

TOTAL EQUITY AND LIABILITIES

12,324,265,106

11,126,004,067

9,218,390,867

7,317,921,847

5,800,558,738

75/85

SHAPPHIRE (PVT). LIMITED

PROFIT & LOSS A/C

FOR THE YEAR ENDED 2008

2008 2007 2006 2005 2004

SALES

9,746,607,946

9,152,455,933

7,966,281,051

5,338,810,168

7,461,055,757

COST OF SALES

8,618,580,605

7,961,253,425

7,201,536,030

4,734,528,479

7,091,114,328

GROSS PROFIT

1,128,027,341

1,191,202,508

764,745,021

604,281,689

369,941,429

DISTRIBUTION COST

442,316,060

391,366,747

41,676,645

29,575,561

-

ADMINISTRATIVE EXPENSES

115,086,239

91,860,697

77,811,031

49,747,754

54,689,456

OTHER OPERATING

500,000

16,367,023

13,866,302

20,088,074

27,986,950

OTHER OPERATING INCOME

835,158,563

95,620,045

59,902,250

51,726,587

111,644,873

277,256,264

403,974,422

73,451,728

47,684,802

28,968,467

OPERATING PROFIT

1,405,283,605

787,228,086

691,293,293

556,596,887

398,909,896

RE-MEASUREMENT OF HELD FOR TRADING INVESTMENTS

-

-

-

-

751,601

FINANCE COST

734,683,187

467,520,225

427,833,551

174,923,488

127,260,241

OTHER CHARGES

-

-

-

-

13,544,903

734,683,187

467,520,225

427,833,551

174,923,488

141,556,745

PROFIT BEFORE TAXATION

670,600,418

319,707,861

263,459,742

381,673,399

257,353,151

TAXATION

52,870,336

103,445,023

128,924,654

92,900,325

85,046,149

PROFIT AFTER TAXATION

617,730,082

216,262,838

134,535,088

288,773,074

172,307,002

76/85

Ratio analysis

current ratio current assets/current liabilitesyear 2008 2007 2006 2005 2004

Nishat (13929518000/11721605000)

13309087000/7649373000

(9758440000)/7051533000

(7746417000)/6253333000

(2824571966)/7649373000

Azgard 9 (11143094057/10353719503)

(9357664184/6194368066)

(9041816252/7949335507)

(4860175237/4447866267)

(3255429757/2612893250)

Sapphire (7540481789/5

880622743) (6593187510/3964644920)

(4863298865/4023613869)

(3637708272/3005890912)

(2955593480/2252668674)

quick ratioquick ratio (current assets-stock)/current liabilites

year 2008 2007 2006 2005 2004

Nishat (13929518000-4103648000)/1

1721605000

(13309087000-

3106436000)/7649373000

(9758440000-3003174000)/7

051533000

(7746417000-

2897392000)/6253333000

(2824571966-0)/7649373000

Azgard 9 (11143094057-4034103119)/1

0353719503

(9357664184-2246132173)/6

194368066

(9041816252-2022510924)/7

949335507

(4860175237-

2034180550)/4447866267

(3255429757-1394729330)/2

612893250

Sapphire (7540481789-3278652891)/5

880622743

(6593187510-1949146494)/3

964644920

(4863298865-1908734607)/4

023613869

(3637708272-

1860863775)/3005890912

(2955593480-1249572742)/2

252668674

77/85

inventory day

Inventory Days Inventory Days = Inventory / Cost of Sales*365year 2008 2007 2006 2005 2004

Nishat (4103648000/16298857000)*3

65

(3106436000/14335254000)

*365

(3003174000/13701626000)

*365

(2897392000/9239731000)

*365

(0/7091114328)*365

Azgard 9 (4034103119/6660223767)*36

5

(2246132173/4620988950)*

365

(2022510924/3703361406)*

365

(2034180550/3288786063)

*365

(1394729330/2440779273)*

365

Sapphire (3278652891/8618580605)*36

5

(1949146494/7961253425)*

365

(1908734607/7201536030)*

365

(1860863775/4734528479)

*365

(1249572742/7091114328)*

365

Debtor's day

Debtor's day Trade debtors/Credit sales*365year 2008 2007 2006 2005 2004

Nishat (1329027000/19267633000)*3

65

(831653000/17180192000)*

365

(1026884000/16417358000)

*365

(877358000/11374630000)

*365

(1150579738/7461055757)*

365

Azgard 9 (1777232612/10113499351)*3

65

(1657196735/6628341926)*

365

(1134897149/4889681966)*

365

(1013883584/4422472357)

*365

(945111856/3155912427)*3

65

Sapphire (1129634217/9746607946)*36

5

(1280852424/9152455933)*

365

(1181491096/7966281051)*

365

(976382566/5338810168)*

365

(1150579738/7461055757)*

365

78/85

Creditors days

Creditors days Trade Creditors/Credit Sales*365year 2008 2007 2006 2005 2004

Azgard 9 (1350500115/10113499351)*3

65

(1030875769/6628341926)*

365

(1243588067/4889681966)*

365

(791641172/4422472357)*

365

(691981192/3155912427)*3

65

Sapphire (490810513/9746607946)*365

(371952583/9152455933)*3

65

(667349055/7966281051)*3

65

(575330266/5338810168)*

365

(505961833/7461055757)*3

65

Nishat (1141227000/19267633000)*3

65

(926593000/17180192000)*

365

(960436000/16417358000)*

365

(812216000/11374630000)

*365

(926593000/7461055757)*3

65

Total Asset TurnoverFormula Sales/ Total Assets

year 2008 2007 2006 2005 2004

Nishat (19267633000/37916579000)

(17180192000/39587091000)

(16417358000/31179326000)

(11374630000/2191760200

0)

(7461055757/5335955667)

Azgard 9 (10113499351/27371673266)

(6628341926/23632588968)

(4889681966/23178303067)

(4422472357/10541226724

)

(3155912427/6297218212)

Sapphire (9746607946/1

2324265106) (9152455933/11126004067)

(7966281051/9218390867)

(5338810168/7317921847)

(7461055757/5800558738)

79/85

Fixed Asset Turnover Ratio

Formula Cost of sales / Fixed Assetsyear 2008 2007 2006 2005 2004

Nishat (16298857000/10647310000)

(14335254000/10586159000)

(13701626000/10611353000)

(9239731000/9151096000)

(7091114328/2429954944)

Azgard 9 (6660223767/7

734950547) (4620988950/7643649558)

(3703361406/7601895866)

(3288786063/3113043032)

(2440779273/2847936402)

Sapphire (8618580605/3

936357164) (7961253425/3793621479)

(7201536030/3721368562)

(4734528479/3124152756)

(7091114328/2429954944)

Gross profit to SalesFormula Gross profit/Sales*100

year 2008 2007 2006 2005 2004

Azgard 9 (3453275584/10113499351)*1

00

(2007352976/6628341926)*

100

(1186320560/4889681966)*

100

(1133686294/4422472357)

*100

(715133154/3155912427)*1

00

Sapphire (1128027341/9746607946)*10

0

(1191202508/9152455933)*

100

(764745021/7966281051)*1

00

(604281689/5338810168)*

100

(369941429/7461055757)*1

00

Nishat (2968776000/19267633000)*1

00

(2844938000/17180192000)

*100

(2715732000/16417358000)

*100

(2134899000/11374630000

)*100

(369941429/7461055757)*1

00

80/85

Operating Profit MarginFormula Operating Profit Margin = Operating profit /Sale*100

year 2008 2007 2006 2005 2004

Nishat (7304400000/19267633000)*1

00

(2175475000/17180192000)

*100

(1986526000/16417358000)

*100

(2000204000/11374630000

)*100

(564262708/7461055757)*1

00

Azgard 9 (2849745841/10113499351)*1

00

(1572167903/6628341926)*

100

(795030222/4889681966)*1

00

(813063411/4422472357)*

100

(530020606/3155912427)*1

00

Sapphire (1405283605/9746607946)*10

0

(787228086/9152455933)*1

00

(691293293/7966281051)*1

00

(556596887/5338810168)*

100

(398909896/7461055757)*1

00

Net Profit/ (Loss) Before TaxFormula Net profit before tax/Sales*100

year 2008 2007 2006 2005 2004

Nishat (6396968000/19267633000)*1

00

(1356208000/17180192000)

*100

(1758866000/16417358000)

*100

(2033354000/11374630000

)*100

(705067852/7461055757)*1

00

Azgard 9 (999502775/10113499351)*10

0

(1151459574/6628341926)*

100

(1260083804/4889681966)*

100

(792136936/4422472357)*

100

(395262335/3155912427)*1

00

Sapphire (670600418/9746607946)*100

(319707861/9152455933)*1

00

(263459742/7966281051)*1

00

(381673399/5338810168)*

100

(257353151/7461055757)*1

00

81/85

Net Profit/ (Loss) after interest and TaxFormula Net profit after tax/Sales*365

year 2008 2007 2006 2005 2004

Nishat (6138968000/19267633000)*1

00

(1211208000/17180192000)

*100

(1632866000/16417358000)

*100

(1867354000/11374630000

)*100

(790114001/7461055757)*1

00

Azgard 9 (897283923/10113499351)*10

0

(1079452501/6628341926)*

100

(1144514722/4889681966)*

100

(741293665/4422472357)*

100

(375262335/3155912427)*1

00

Sapphire (617730082/9746607946)*100

(216262838/9152455933)*1

00

(134535088/7966281051)*1

00

(288773074/5338810168)*

100

(172307002/7461055757)*1

00

Return on AssetsFormula Net Income / Total Assets*100

year 2008 2007 2006 2005 2004

Nishat (6138968000/37916579000)*1

00

(1211208000/39587091000)

*100

(1632866000/31179326000)

*100

(1867354000/21917602000

)*100

(790114001/5335955667)*1

00

Azgard 9 (897283923/27371673266)*10

0

(1079452501/23632588968)

*100

(1144514722/23178303067)

*100

(741293665/10541226724)

*100

(375262335/6297218212)*1

00

Sapphire (617730082/12324265106)*10

0

(216262838/11126004067)*

100

(134535088/9218390867)*1

00

(288773074/7317921847)*

100

(172307002/5800558738)*1

00

82/85

Return on Capital employedFormula Profit before interest and taxation / Capital Employed *100

year 2008 2007 2006 2005 2004

Nishat (6396968000/26194974000)*1

00

(1356208000/31937718000)

*100

(1758866000/24127793000)

*100

(2033354000/15664269000

)*100

(705067852/-2313417333)*

100

Azgard 9 (999502775/17017953763)*10

0

(1151459574/17438220902)

*100

(1260083804/15228967560)

*100

(792136936/6093360457)*

100

(395262335/3684324962)*1

00

Sapphire (670600418/6443642363)*100

(319707861/7161359147)*1

00

(263459742/5194776998)*1

00

(381673399/4312030935)*

100

(257353151/3547890064)*1

00

Return on equity Ratio (ROE)Formula [(Net profit after tax − Preference dividend) / Equity share capital] × 100

  2008 2007 2006 2005 2004

Nishat ((6138968000-0)/2514718000

0)*100

((1211208000-0)/301638980

00)*100

((1632866000-0)/211124090

00)*100

((1867354000-0)/1280611

4000)*100

((790114001-0)/3016389800

0)*100

Azgard 9 ((897283923-0)/1012408250

1)*100

((1079452501-0)/972005419

6)*100

((1144514722-0)/917416813

4)*100

((741293665-0)/309310263

9)*100

((375262335-0)/2510108903

)*100

Sapphire ((617730082-

0)/5577491609)*100

((216262838-0)/6018868330

)*100

((134535088-0)/3893928464

)*100

((288773074-0)/279711463

7)*100

((172307002-0)/2327933429

)*100

83/85

Debt to Equity RatioFormula Total Long Term Debts / Shareholders Funds

  2008 2007 2006 2005 2004

Nishat (1047794000/2

5147180000) (1773820000/30163898000)

(3015384000/21112409000)

(2858155000/12806114000

)

(1773820000/30163898000)

Azgard 9 (6674515005/7

359587542) (7479093629/7319449022)

(5797438559/7367101082)

(2721314147/2140640149)

(867651548/2099450921)

Sapphire (469501210/49

59761527) (734946877/5

802605492) (934380957/3

759393376) (1188017068/2508341563)

(940304765/2155626427)

Interest Coverage RatioFormula Net Profit Before Interest and Tax / Fixed Interest Charges]

  2008 2007 2006 2005 2004

Nishat (6396968000/9

07432000) (1356208000/

819267000) (1758866000/

755054000) (2033354000/407696000)

(705067852/127260241)

Azgard 9 (999502775/24

70391655) (1151459574/1061933212)

(1260083804/657548074)

(792136936/326374206)

(395262335/144623062)

Sapphire (617730082/73

4683187) (216262838/4

67520225) (134535088/4

27833551) (288773074/174923488)

(172307002/127260241)

84/85

Earning Per ShareFormula Profit after tax/No. of shares

  2008 2007 2006 2005 2004

Nishat (6138968000/1

59785736) (1211208000/

159789974) (1632866000/

159771625) (1867354000/145206376)

(790114001/152826693)

Azgard 9 (897283923/33

8597707) (1079452501/

331120399) (1144514722/

230284652) (741293665/

99904807) (375262335/8

7067827)

Sapphire (617730082/20

082252) (216262838/2

0080115) (134535088/2

0079864) (288773074/

20095551) (172307002/2

0082401)

Earning YieldFormula Earning Per Share / Market Price Per Share * 100

  2008 2007 2006 2005 2004

Nishat(38.42/85.97)*1

00(7.58/129.2)*1

00(10.22/104.8)*

100(12.86/76)*10

0(5.17/52.8)*10

0

Azgard 9(2.65/61.56)*10

0(3.26/52.1)*10

0(4.97/22.05)*1

00(7.42/32)*100

(4.31/22.5)*100

Sapphire(30.76/72.45)*1

00(10.77/92.5)*1

00(6.7/70)*100

(14.37/90)*100

(8.58/70)*100

Market Value of Share

  2008 2007 2006 2005 2004Nishat 85.97 129.20 104.80 76.00 52.80

Azgard 9 61.56 52.10 22.05 32.00 22.50 Sapphire 72.45 92.50 70.00 90.00 70.00

Price Earning RatioFormula Market price per equity share / Earnings per share

  2008 2007 2006 2005 2004Nishat (85.97/38.42) (129.2/7.58) (104.8/10.22) (76/12.86) (52.8/5.17)

Azgard 9 (61.56/2.65) (52.1/3.26) (22.05/4.97) (32/7.42) (22.5/4.31) Sapphire (72.45/30.76) (92.5/10.77) (70/6.7) (90/14.37) (70/8.58)

85/85