SPM Final Project

7/27/2019 SPM Final Project

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INTERNATIONAL ISLAMIC

UNIVERSITY

SUBJECT: FINANCIAL MANAGEMENT

SUBMITTED TO: MAAM MISBAH WADOOD

SUBMITTED BY:

AMMARA HAMID- 2222

HALEEMA ZIA- 2239

MARYAM BATOOL- 2255

NAYAB AROOJ- 2263

NADIA BATOOL-2259

AMINA SHAUKAT-2221

MAHWISH ARIF CHOUDHRY-2249

Submission date: May 11

th

, 2010


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SPM Cement Corporation

Basic Corporation Information:

Name of Corporation:

Super Product Manufacturers

Business Type:

Manufacturing and supply

Location:

Sangjani, near Islamabad

Sources of Information:

www.google.com

www.understanding-cement.com

www.malvern.com

Annual Report of FACTO Cement Company

Project In Charge:

Amina Shaukat

Ammara Hamid

Haleema Zia

Mahwish Arif Choudhry

Maryam Batool

Nadia Batool

Nayab Arooj

Of BBA 18 A

Project Authorities: Maam Misbah Wadood
http://www.google.com/http://www.understanding-cement.com/http://www.malvern.com/http://www.google.com/http://www.understanding-cement.com/http://www.malvern.com/


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INTRODUCTION OF SPM:

SPM Cement Corporation is one of the emerging manufacturer and suppliers of cement in

Pakistan. The plant is located at Sangjani, near Islamabad. SPM Cement quality is a

paramount importance with a 24 hour automated camera in the burning zone and automatic

rotopacker machine. The plant has the state of art dry process rotary kiln technology that

ensures manufacture of high grade ordinary portland cement. The cement plant operating inSPM Cement Co. is one of the most efficient and best maintained in the country and it has

the annual production capacity of 1.165 million tons of cement. The quality Portland

cement produced at this plant is best in the country and is preferred in following

applications:

Parking areas

Streets and highways

Airport pavement

Ditch and canal lining

Reservoir lining

Dam facing

Pipe bedding and backfill

Industrial storage areas

Road widening and shoulders

All-weather construction roads & fire lanes


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Mission Statement:

To manage and operate the company in a manner that allows growth and profitability

without high risk for stakeholders and the company by offering quality product to ourcustomers, while striving to improve our product to meet our customers needs.

Vision Statement:

To compete in tough and competitive market, focusing on Satisfaction of customers and

stakeholders with challenging spirit and flexibility, striving hard to make profit, creating

value for our customers and to continue as a successful company.

Registration & IPO of SPM:

SPM is registered with the regulatory body called Security & Exchange

Commission of Pakistan (SECP) as it meets the following requirements:

Representation [from a class or classes of persons or professions] on the

governing body of a Stock Exchange or any of its Committees;

The manner in which business should be transacted including restrictions on

the business of the members;

Memorandum and Articles of Association, rules, regulations and by-laws of

a Stock Exchange; and

The maintenance of accounts and records including those of members, andtheir audit.

SPM has filled public offerings and other legal documents. Its prospects are made

publicly available. Prospects include details such as present company financials,

company management, stock owners, growth potential and potential risks.

SPM is tied up with number of underwriters for distribution of its shares. The

underwriters

Al Falah Bank

NBP

ABN Amro Bank

SPM and its investment banks worked togather to settle price of its share. The

shares have a par value of Rs.35 which is based on companys financial stability,

past performance, growth potential and market willingness.

Authorized Shares 5,00,000

Issued Shares 4,56,000


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SPM provided its stocks to broker clients in addition they are also publibly offered

to retail investors and institutional clients.

Corporate Strategy:

Our corporate strategy and objectives for the future are to find new and improved means of

cost reduction, fuel economy and to acquire advance manufacturing capabilities to support

our product development efforts and product line expansion and stand ready to leverage our

debts and be responsive to the changing economic scenario. We believe in harnessing the

inherent strengths of available human resource and materials to the utmost and a

commitment for building a solid foundation poised for sustainable growth for the long term

benefit of our shareholders and employees.

Operations:

Cement is typically made from limestone and clay or shale. These raw materials are

extracted from the quarry crushed to a very fine powder and then blended in the correct

proportions.

This blended raw material is called the 'raw feed' or 'kiln feed' and is heated in a rotary kiln

where it reaches a temperature of about 1400 C to 1500 C. In its simplest form, the rotary

kiln is a tube up to 200 metres long and perhaps 6 metres in diameter, with a long flame at

one end. The raw feed enters the kiln at the cool end and gradually passes down to the hot

end, then falls out of the kiln and cools down.

The material formed in the kiln is described as 'clinker' and is typically composed of

rounded nodules between 1mm and 25mm across.

After cooling, the clinker may be stored temporarily in a clinker store, or it may pass

directly to the cement mill.

The cement mill grinds the clinker to a fine powder. A small amount of gypsum - a form of

calcium sulfate - is normally ground up with the clinker. The gypsum controls the setting

properties of the cement when water is added.

Cement Manufacturing Process


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Business Description:

SPM Cement Co. is a type of business that is based on Corporation. The twenty five

shareholders of this business selected this form as it is easy to invest and a large source of

gathering capital and it has limited liability as well.

Nature of Operations:

Manufacturing and supplying

Types of Shares:

Forms

of

Busines

s

Sole

Proprietors

hip

Partnershi

p

Corporatio

n


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Current Assets:

Cash 400,000

Stores and Spares

18,000,000

Stock-in-trade 1,000,000

Trade debts-considered goods 700,000

Loans, advances, deposits, prepayments and accrued markup 600,000

Cement equipment

Mill Equipment

Model PMG series high efficient ball mill have been designed with the merits of

open circuit grindi...

Drying Equipment

Rotary dryer is mainly consist of rotary body, raw material feeding plate,

driving and supporting d...

Rotary Kiln

We can supply Zoneding brand rotary kiln (titanium pigment kiln, sintering

furnace, industrial furn...

Dust collector/environment equipment
http://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/47.html


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Product environment pay close attention to health and together set up green

world is the ideal of ...

Conveying Equipment

In the meantime to develop large sized main equipment like rotary kiln, ball mill

and etc. our comp...

Grate Cooler Grate Cooler is a kind of quench cooler.Its principle is to quench clinker which

is laid in levels ...

Tubular Cooler

Tubular Cooler is one of the important equipment in the rotary kiln

system.function of the equipmen...

Electrical Control System

Model XK Rotary Kiln Monitoring System Grinding Plant Monitoring System

& Micrcomputer Control Bat...

vertical mill/roller press/grinding equipment

Model HRM & PRM roller mill are new equipment designed by digesting and

assimilating advanced techn...
http://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.html


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SPM CEMENT CORPORATION

BALANCE SHEET

FOR THE PERIOD OF 2009-2013


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2009 2010 2011 2012 2013

PROPERTY, PLANT AND EQUIPMENT

Operating assets 18,612,583 25,612,583 25,612,583 25,612,583 25,612,583

Capital work in progress 7,000,000 0 0 0 0

25,612,583 25,612,583 25612583 25612583 25612583

LONG TERM

LOANS 500,000 7675000 9450000 10281250 9890000

CURRENT ASSETS

Stores and spares 1,800,000 2250000 3037500 5752500 6539875

Stock-in-trade 1,612,584 2726799 1687500 4421723 4157707

Trade debts - considered good 700,000 875000 1181250 3373750 3071063Loans, advances, deposits, 600,000 750000 1012500 2600203 5682186

prepayments and accrued markup

Cash and bank balances 400,000 500000 675000 927703 1207750

5,112,584 7101799 7593750 17075879 20658581

31,225,167 40,389,382 42656333 52969712 56785931

SHARE CAPITAL

Authorized

5,000,000

Issued, subscribed and paid-up

45,6000 preferred shares @ Rs.35 Par Value 15,960,000 24,260,616 27528833 31000000 31000000

Issued for cash

Retained earnings 1225167 4178766 4178766 5697212 7123876

NON-CURRENT LIABILITIES

Long term financing 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000

Liabilities against assets 1,000,000 1350000 1350000 1350000 1600000

subject to finance lease

Deferred taxation 4,000,000 1500000 3060000 3060000 5569200

10,000,000 7850000 9410000 9410000 12169200

CURRENT LIABILITIES

Short term running finance 1,000,000 1000000 1687500 1900000 2724767

Current maturity of long term liabilities 1,200,000 1500000 2025000 2735000 2934022Trade and other payables 1,840,000 1600000 2005000 2227500 834066

4,040,000 4100000 5717500 6862500 6492855

31,225,167 40389382 42656333 52969712 56161164


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SPM CEMENT CORPORATION

INCOME STATMENT

FOR THE PERIOD OF 2009-2013

2009 2010 2011 2012 2013


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Sales 5082647 8523456 10200000 18036495 23056478

CGS 2769588 3246579 5026479 6954679 7754982

Gross profit 2313059 5276877 5173521 11081816 15301496

Other selling and general expenses 150000 200000 3789653 5469873 6024565

Selling and distribution 50000 65000 78000 93600 112320

Depreciation expense 930629 930629 930629 930629 930629

Total

CGS 1130629 1195629 4798282 6494102 7067514

EBIT 1182430 4081248 375239 4587714 8233982

Interest (17%) 850000 1105000 1547000 1436500 1411000

EBT 332430 2976248 -1171761 3151214 6822982

Tax 37892 195344 0 285729 620289

Net Income 294538 2780904 -241132 2865485 6202693

Dividend 0 757934 0 2277668 5706658

Retained Earnings (100%) 294538 2022970 0 587817 496035

PAY BACK

PERIOD:

PV = 122516 + 3711533 + 689497 + 37961114 +

713332

2

(1.17)1 (1.17)2 (1.17)3 (1.17)4 (1.17)5

= 1047151 + 2711325 +430502 + 20257950 + 3253588


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= 27700516

As it is returned to us in three years and some months so we will divide amount of 4th year

by 12 to calculate months.

4th year = 20257950

12

= 1688163

Total of 3 years = 1047151 + 2711325 + 430502

4188978

We require 2500000 hence we have to add some portion of 3rd year.

Difference = 20960000 4188978

16771022

Now for finding exact time period we will divide difference with the 3rd year time.

Pay Back Period = 16771022

168816310 months

So we need 3 years and 10 months for payback period.

NET PRESENT VALUE:

NPV = PV OF Cash Inflows - PV OF Cash Outflows

NPV = 27700516- 20960000

6740516

INTERNAL RATE OF RETURN:

Its the rate at which PV of cash inflows is equal to PV of cash outflows. Its answer is in

percentages.

At 27%:

= 1225167 + 3711533+ 689497+ 37961114+ 7133322(1.27)1 (1.27)2 (1.27)3 (1.27)4 (1.27)5


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= 964698.43 + 2301155.06 + 336606 + 14592310.59 + 2159102.32= 20353872.4

At 28.5%:= 1225167 + 3711533 689497 37961114 7133322

(1.285)1 (1.285)2 (1.285)3 (1.285)4 (1.285)5

= 953437.35 + 2247745.16 + 324954.8 + 13922795.3 + 2035992.58= 19484925.19

At 26%:

= 1225167 + 3711533 689497 37961114 7133322

(1.26)1

(1.26)2

(1.26)3

(1.26)4

(1.26)5

=972354.7619 + 2337826.279 + 344683.6995 + 15061102.64 +

2246151.798

= 20962119.18

So at IRR = 26% the present value of cash inflows will be equal to the

present value of cash outflows

KD :

= Kd (1-T)

= 0.17(1-0.15)*100

= 0.14

Kp :

= Dp /Pp

= 3.83 / 35

= 0.109

WACC :

= Wd*Kd +Wp*Kp

= (0.468*.14) + (0.532*0.109)

= 0.123736*100

= 12%


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Feasibility of Project:

The project is profitable and feasible and we can earn profit from it. Because we have

recovered the total investment in 3 years and 9 months so it means the project is profitable.

The second reason is the value of NPV obtained is greater than 0 and is positive and IRR ismore than WACC, it means you will accept the project. This method is used by firms for

evaluation of a project.

AFN :

= (A*/So)S - (L*/So)S -M(S1)(1-d)

=(27357129/18036495) 5019983 - (12203222/18036495) 5019983 -0.158

(23056478)(1-0.79)

= 624,767.05

So AFN shows that 624,767.05 rupees are required to finance assets.

Sales Analysis:

-5000000

0

5000000

10000000

15000000

20000000

25000000

1 2 3 4 5 6

Sales

Year

Profit

Documents

SPM Final Project