Final Internship Report

D.G. KHAN CEMENT COMPANY LTD.
(A unit of Nishat Group)
D.G. Khan Cement Company Ltd

Introduction
NISHAT GROUP
Nishat Group is one of the leading and most diversified business groups in South
East Asia. With assets over PRs.300 billion, it ranks amongst the top five business
houses of Pakistan. The group has strong presence in three most important
business sectors of the region namely Textiles, Cement and Financial Services. In
addition, the Group has also interest in Insurance, Power Generation, Paper
products and Aviation. It also has the distinction of being one of the largest players in
each sector. The Group is considered at par with multinationals operating locally in
terms of its quality of products & services and management skills.
Mian Mohammad Mansha, the chairman of Nishat Group continues the spirit of
entrepreneurship and has led the Group successfully to make it the premier business
group of the region. The group has become a multidimensional corporation and has
played an important role in the industrial development of the country. In recognition
of his unparallel contribution, the Government of Pakistan has also conferred him
with “Sitara-e-Imtiaz”, one of the most prestigious civil awards of the country.
D.G. Khan Cement Company:
D.G. Khan Cement Company Limited (DGKCC), a unit of Nishat group, is the second
largest cement-manufacturing unit in Pakistan with a production capacity of 13,400
tons clinker per day. It has a countrywide distribution network and its products are
preferred on projects of national repute both locally and internationally due to the
unparallel and consistent quality. It is list on all the Stock Exchanges of Pakistan.
DGKCC was established under the management control of State Cement Corporation
of Pakistan Limited (SCCP) in 1978. DGKCC started its commercial production in
April 1986 with 2000 tons per day (TPD) clinker based on dry process technology.
Plant & Machinery was supplied by UBE Industries of Japan.
Acquisition of DGKCC by Nishat Group

Nishat Group acquired DGKCC in 1992 under the privatization initiative of the
government. Starting from the privatization, the focus of the management has been
on increasing capacity as well as utilization level of the plant. The company undertook
the optimization by raising the capacity immediately after the privatization by 200tpd
to 2200tpd in 1993.
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H. Waqar Akhtar (CIIT/FA06-BBA-26/LHR)
D.G. KHAN CEMENT COMPANY LTD. (A unit of Nishat Group)
Capacity Addition
To meet the increasing demand and to capitalize on its geographic location, the
management further expanded the capacity by adding another production line with a
capacity of 3,300 tons per day in year 1998. Design of the new plant is based on
latest dry process technology, energy efficient and environmental protection from
particulate pollution according to the international standards. The plant and machinery
was supplied by M/s F.L. Smidth of Denmark. As a result, DGKCC emerged as the
largest cement production plant in Pakistan with annual production capacity of
1,650,000 M tons of clinker (1,732,000 M.Tons Cement) constituting about 10% share
of the total cement production capacity of the country. The optimization plan is still
underway to increase the total capacity of the two units to 6700 TPD by mid of 2005
from 5500 TPD at present.
Expansion -Khairpur Project

Furthermore, the Group has also set up a new cement production line of 6,700 TPD
clinker near Kalar Kahar, Distt, Chakwal, the single largest production line in the
country. First of its kind in cement industry of Pakistan, the new plant have two
strings of pre-heater towers, the advantage of twin strings lies in the operational
flexibility whereby production may be adjusted according to market conditions. The
project equipped with two vertical cement grinding mills. The cement grinding mills
are first vertical Mills in Pakistan. The new plant is not only increasing the capacity
but also providing proximity to the untapped market of Northern Punjab and NWFP
besides making it more convenient to export to Afghanistan from northern borders.
Power Generation
For continuous and smooth operations of the plant uninterrupted power supply is
very crucial. The company has its own power generation plant along with WAPDA
supply. The installed generation capacity is 23.84 MW.
Environmental Management
DG Khan Cement Co. Ltd., production processes are environment friendly and
comply with the World Bank’s environmental standards. It has been certified for
“Environment Management System” ISO 14001 by Quality Assurance Services,
Australia. The company was also certified for ISO-9002 (Quality Management
System) in 1998. By achieving this landmark, DG Khan Cement became the first and
only cement factory in Pakistan certified for both ISO 9002 & ISO 14001...
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COMPANY PROFILE
Company Name:
D.G. KHAN CEMENT COMPANY LIMITED
Legal Status:
Public Limited Company
Registered Office:
Nishat House, 53-A, Lawrence Road,
Lahore, Pakistan.
Phone: 92-42-6367812-20
Fax: 92-42-6367414
E-mail: info@dgcement.com
Web: www.dgcement.com
Chairperson
Mrs. Naz Mansha

Chief Executive:
Mr. Mian Raza Mansha
Board of Directors:
• Mrs. Naz Mansha Chairperson/Director

• Mian Raza Mansha Chief Executive/Director
• Saqib Elahi Director
• Khalid Qadeer Qureshi Director
• Mohammad Azam Director
• Zaka ud din Director
• Inayat Ullah Niazi Director & Chief Financial Officer
Company’s Secretary:
Mr. Khalid Mahmood Chohan
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Auditors:
KPMG Taseer Hadi & Co, Chartered Accountants

Legal Advisor:
Mr. Shahid Hameed, Bar-at-Law

Bankers:
Royal Bank of Scotland (Formerly ABN AMRO Bank (Pakistan)

Limited)
Allied Bank Limited
Askari Bank Limited
Bank Alfalah Limited
CitiBank N.A.
Habib Bank Limited
MCB Bank Limited
National Bank of Pakistan
Standard Chartered Bank (Pakistan) Limited
The Bank of Punjab
United Bank Limited
Sales Offices
Lahore Regional Sales Office
Multan Regional Sales Office
DG Khan Regional Sales Office
Karachi Regional Sales Office
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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.
Vision Statement
To transform the Company into modern and dynamic cement manufacturing
company with qualified professionals and fully equipped to play a meaningful role on
sustainable basis in the economy of Pakistan.
Corporate Strategy
Their Corporate Strategy and objectives for the future are to find new and improved
means of cost reduction, fuel economy and to acquire advanced manufacturing
capabilities to support their product development efforts and product line expansion
and stand ready to leverage their debts and be responsive to the changing economic
scenario. DG Khan Cement 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 their
shareholders and their employees.
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Cement Production Process

The following raw material is required in the production process:
1. Lime stone: This raw material is company owned and is extracted from the
nearby mountains of Dera Gazi khan Unit. Limestone has the highest composition in
the cement product. 76% of the cement constitutes of limestone.
2. Clay: Clay is another natural resource. This raw material is also company owned.
24% of cement composition comprises of clay
3. Iron Ore, Bauxites and silica sand: Iron Ore is the only resource that is bought
from contractors. Iron Ore, Bauxites and silica sand are added in small quantities
less then one percent and it helps to strengthen the cement.
4. Gypsum: Gypsum acts as a retarding agent. It slows down the hardening process
which in turn gives the constructor enough time to use it.
Step 1:
Raw Materials:
There are basically three main raw materials that are used for the production of
cement.
In addition to that, a small proportion of other additives such as silica and Bauxites
are also added.
1. Limestone 76%
2. Clay 24%
3. Iron ore (less than 1%)
4. Silica sand (less than 1%)
5. Bauxites (less than 1%)
Lime stone and clay are extracted from the same place. Iron ore is bought from a
contractor.
Step 2:
The raw materials are providing for separate “crushers” that break them into smaller
pieces. After that they are stored in separate piles.
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Storage area: It is a stacker that provides immediate storage. In case there is a

problem with the crusher, the stock present can be utilized immediately to provide
enough amounts to be used for three days.
Step 3:
From the stacker the components are mixed and made into an ultra fine powder in
the grinder. A weighing scale is maintained to check that the appropriate composition
of the materials is maintained and the right quantity is added. Again the mixture is
stored in a Consistent flow Silo. It is to be noted that until now only a physical
change has taken place. The next step would involve a chemical change.
Step 4:
The mixture is then added into a KILN. This is a rotating machine that heats the
mixture up to 1300*C where it is converted into a compound as a chemical reaction
takes place.
This compound is the cement produced in molten form. As it moves onwards an air
cooler is present that cools the cement and converts it into small stones known as
CLINKER. This is the intermediate product that is formed. After that the clinker is
stacked in piles, 1.5 ton clinker produced 1 ton cement.
Step 5:
The clinker is then added into a grinder. At this stage another element known as
Gypsum is added. The composition of the cement is 95% and that of gypsum is 5 %.
The gypsum acts as a retarding agent. Cement on its own when kept in contact with
water hardens very fast. It ensures rapid setting but gives cement the time to harden
in the grinder the cement is crushed into a powder form.
This stage is very critical in the cement production process because of the fact that if
something goes wrong with the composition, the quality of the cement gets affected
and the whole costs that are incurred to produce the cement is wasted. Because of
that the quality check at this stage is the maximum and continuous.
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Cement Production Process:
Raw material Crushing and

from grinding of lime Preheating
Quarry blasting stone and clay
Cooling
Rotary Kiln
Cement Grinding
Clinker Cement Cement
+
storage Mill Packing Plant
Gypsum
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MARKETING & SALES Department
INTRODUCTION
The basic aim of company’s marketing strategy is to get the unique competitive
position for the company. Their marketing strategy is very evident from the mission
of the company. It stresses on to provide quality products to customers and explore
new markets to promote the sales of the company and to achieve optimum prices of
products of the company for sustainable and equitable growth and prosperity of the
company.
Sales and Marketing Department

Sales are the lifeblood of any business. This department deals in booking and sales
of the cement. This department also takes part in the marketing decisions of the
company. All the staff in this section is qualified and trained for their professional
duties. These are the people who are responsible to create image of the company
and its products. Leading personality of this department having a smiling look on his
face is always ready to solve the customer’s problem. All the members in this section
are very frank as to their behavior. They are very hard working and conscious as to
the customer care and their marketing targets.
Marketing division is soul of company’s goodwill. This is the marketing effort of this
department who win the confidence of consumers and distributors. Sales and
Marketing sections are combined. The marketing and sales division of the company
faces all the competition. First objective of marketing staff is to attract the customer
and next is to gain his confidence through the solution of his problem, if any.
The structure and working of this department is as following:

a. Director marketing
Mr. Farid Fazal
A man of success takes special care of company staff and employees. Being
responsible personnel of the company he engages best of his efforts to bring
success for the company. This man of unique ideas knows how to keep the company
flag up and up, to improve the market share of the company. Company’s own
products rely upon this brain. He played a key role in this successful organization,
and still enthusiastic about further achievements.
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b. Deputy General Manager (Marketing)

Mr. Chaudhary Muhammad Aslam
He is the key person in marketing department because he is the oldest one and has
a lot of experience of cement industry. He has been working in the organization
since it was run under the name of State Cement.
c. Deputy Manager Sales
Mr. Aabid Nasir
As I told earlier that sale are the lifeblood of any business and in this department Mr.
Aabid Naseer is the lifeblood of sales department. He is a sales deputy manager but
he is also controlling the advertisement. He is although a young man but he is
experienced and professional at his job. He is a man of remarkable success,
responsible for sales and advertisement. He has always good and innovative ideas
to improve the sales and to promote the company’s image. He is very hard working
and has a good command over his work.
d. Assistant Manager Sales
Mr. Nadeem Badshah
He is key person in sales as he controlling all the booking and sales in the
department. He is really a competent and hard working person and master of his
work, performing his duties well. He is really a catalyst as he says that managers are
catalysts. He is very jolly and frank with all the team at marketing department. He is
playing a leading role in the department.
Marketing and Competitive Strategy
Product:
Two different products are produced at DGKCC namely Ordinary Portland Cement
and Sulphate Resistant Cement. These products are marketed through two different
brands:
• DG brand & Elephant brand Ordinary Portland Cement

• DG brand Sulphate Resistant Cement
Products:
• Ordinary Portland Cement
• Sulphate Resistant Cement
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Ordinary Portland cement:
Exceptional Strength: At DGKCC the chemical composition and grinding fineness

are closely monitored to ensure that both Pakistani and British standards are
surpassed and our customers get cement of exceptional strength.
Ideal Setting Time: In order to allow sufficient time for application, cement must
have a quick initial settings time, however once in place; the final settings should not
take too long. At DGKCC ideal initial and final setting times are maintained.
Sulphate Resistant Cement:
Low C3A Content: Sulphate salts present in this soil combine with moisture and tri-
calcium alumnate (C3A), one of the constituents of cement to form a compound
known as Sulpho, Alumnate off Hydrated Calcium. This compound is highly
expansive and gradually results in the destruction of concrete. However, if “C 3A”
content is very low, it is rendered inert and there is thus no reaction at all. British and
Pakistani standards specify that in a Sulphate Resistant Cement, the C3A content
must not exceed 3.5%. D.G Sulphate Resistant Cement has a much lower C3A
content, making the cement highly effective against Sulphate attacks.
Low Heat of Hydration: Heat of hydration is the heat generated on reaction of

cement and water. This is undesirable because it produces a corresponding thermal
expansion which deforms the concrete. Upon cooling down, there is a thermal
contraction which causes the concrete to crack. D.G Sulphate Resistant Cement has
a low heat of hydration making it EXTREMELY SUITABLE for BULK POURING and
MASS CONCRETING.
High Strength: As with any type of cement, strength is the fundamental property of
Sulphate Resistant Cement D.G. Sulphate Resistant Cement achieves high strength
through finer grinding and better particle distribution. In term of strength,, it not only
exceeds by far the standards specified for Sulphate Resistant Cement, but also
exceeds those of Ordinary Portland cement
Low Alkali Content: Certain aggregates contain alkali sensitive ingredients, which
under unfavorable conditions; can result in expansion leading to cracking of
concrete. The presence of alkali also causes staining and other undesirable effects
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on concrete. American Standards specify that cement can be termed low-alkali if its
alkali content does not excced 0.6% D.G. Sulphate Resistant Cement has alkali
content below 0.6 and a unique distinction of being a Sulphate Resistance Cement
that can also be classified as low - alkali cement.
PRICE:
One of the four major elements of the marketing mix is price. Pricing is an important
issue because it is related to product positioning. Furthermore pricing affects other
marketing mix elements such as product features, channel decisions, and
promotions.
At DG cement prices are relatively high than competitors, which reflect their quality
of product. They have settled different prices for different segments. It is very high in
DG khan where factory is located. The reason for this is that there is no competitor in
that region. So they are monopolist in that region. They have settled different prices
for both brands, as their cost is different.
PLACE:
The company uses distributors for the distribution of its products. Company uses the
term stockist and non-stockist. Agency is issued if party deposits amount of 25000-
50000 on the basis of agency sales. Company gives incentives to the agency holder
for each bag. So they use push strategy to promote the product.
PROMOTION:
Company used a long ago their advertisement for the promotion of their product but
now a day’s company is not using any advertisement program. They are just relying
on giveaways, which are distributed among the distributors only. So they much rely
on the push strategy.
POSITIONING:
Company positions its product through its slogan, which is about durability. So they
use product features to position its product.
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COMPETITIVE STRATEGY
Company’s main competitors are Lucky Cement, Maple Leaf cement, Askari cement,
and Bestway cement. So they set all their strategies keeping in view the strategies of
these companies. They set their prices according to the pricing strategy of their
competitors. More over they have competitive edge of their plant, which is of modern
technology. So they produce cement of much better quality than their competitors.
They also have competitive edge of their factory site, which is in vicinity of all raw
materials and in that area they have no competitors
HR And MIS Department

HR department is playing key role in recruitment. For recruitment jobs/posts are
advertised in newspapers and then formal procedure for interviewing and testing is
used. The main function of MIS department is to develop the software for the
company. It is also responsible for the maintenance of the software.
Inbox provides Oracle License Renewal to D.G. Khan Cement
Inbox Business Technologies provides Oracle License Renewal to D.G. Khan

Cement.
The services provided are mainly for:
• Oracle E-Business Suite,

• Oracle Enterprise Asset Management,
• Oracle Enterprise Planning & Budgeting,
• Oracle HR Intelligence,
• Oracle Payroll,
• Oracle Time & Labor,
• Oracle Advanced Benefits, and Discoverer Desktop Edition.
This would enable the cement manufacturing company to continue running their
current systems and processes smoothly. Being an Oracle Certified Partner, Inbox is
authorized to provide Oracle products and services to customers in Pakistan.
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DG Khan Factory Site
At site there are Finance, HR and Admin, Power Generation, MIS, Operations,
Quality control, Sales and Dispatch, security, and Operations departments. A brief
description of all these departments is as following:
Finance department is working on the same standards as that of head office. HR
department is also working on the same patterns as that of the head office. HR
department at site is headed over by Naseem-ul-Ghani who is General Manager HR
& ADMIN at site.
At site power is generated by the Power Plant, which is of WATSILLA Co. (Finland).
The plant is operated on gas and it produces 8.5 MW (Mega Watts) per plant. There
are three such plants. They are running on gas. Before gas the plant was operated
on coal. The plant is providing electricity facility to the colony and the cement plant
as well.
Operations department controls the working of cement plant. There are three
cement plants are working. At DG Khan Site, one is old plant of Japanese
technology. Its capacity was 2200 tpd (tons per day). Its capacity was expanded in
2005 and after expansion its capacity has increased from 2200 tpd to 2700 tpd. But
according to the site engineers it is producing more than guaranteed 2700 tpd with
substantial savings in fuel and energy.
The plant 2 is of F.L.Smidths (Denmark) and its capacity is 4000 tpd. The total
production capacity of the two plants is about 7000 tpd. Third plant was installed at
Khairpur it is Major Expantion with the capacity of 6700 tpd.unit.
Quality Control department ensures the Quality. Department is headed over by Dr.
Hafeez Ulah Shah who is Sr. Manager Quality Control. According to Mr. Shah
Quality is not that which cement sells better but quality is to control all the necessary
elements of cement and how effectively your cement plant controls these elements
so that better cement can be produced for the consumers. To ensure the quality, the
samples are checked after every hour so that quality cement should be produced.
Samples are checked physically as well as chemically. CCR department controls
plant digitally.
Sales and Dispatch Department is responsible for all the cement dispatches.
Cement is packed from cement silos electronically. The workers only have to fix the
sacks on the Machine. After packing the cement is loaded on the trucks for delivery.
Mr. Shahab controls this department.
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Facilities for Workers at Site (Factory DG Khan)

Company has tried its best to provide all the basic facilities to the workers at site.
Company has provided them houses there at company’s colony. There are about
4000 to 4500 workers living in the colony. There are about 350-400 houses built for
the workers. They have been provided with a hospital, two schools, and ambulance
services. They are also provided with playgrounds and clubs. There is also a water
purification plant for the purification of canal water to make it useable for drink.
FINANCE DEPARTMENT
Introduction:
Director Finance heads finance department and working is controlled by Mr. Inayat-
Ullah Niazi who is General Manager Finance. All the accounts are maintained
according to international accounting standards. Software is used to maintain the
accounting records, which is developed by the MIS department. Software is
developing in Oracle e-business suit. The whole system of the organization is
computerized and sales department is also using this software for booking purposes
and software is linked to the Dera Gazi Khan Units and Kairpur unit.
Finance department has very important role in for any business firm now a days. So
DGKCCL has established its own Finance Department on professional basis.
DGKCCL has different financial managers who are responsible for the financial
aspects of the DGKCCL. This department plays a key role in organization’s
performance. Finance department is responsible to maintains accounts of all
departments within the organization. For solving the complex and difficult problems,
Finance Department is segregated into four divisions. These divisions are as follows:
1. Account Division
2. Internal Audit Division
3. Cost & Tax Division
Major Functions of Finance Department
Finance department performs different functions in the organization to run the

finance of the organization more effectively. Finance Manager is responsible for the
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company’s financial management. The major functions which by this department are
as follows:
• Calculate different expenses of the organization.

• Calculation of all incomes, receiving from sales & other resources.
• Financial planning of the organization.
• Distribution of profit to the share holders.
• Getting loans from banks and other financial institutions.
• Costing the production.
• To make the efficient use of money of the company.
• Maintains all the accounts about inventory & imports of material.
• Maintains all the records about purchases made by organization.
ACCOUNT DIVISION:
Finance department maintains all types of accounts in the organization. Finance

department records the transaction, design & implement the accounting system and
prepares the financial statements for the company. This department is under the
Finance Manager.
a) Inventory Section
b) Sales Accounts Section
c) Purchase Section
d) Cash & Bank Section
e) Pay Roll Section
f) Excise & Tax Section
g) Import & Export Section
a) Inventory Section
Inventory Section plays a very important role in any organization & is an important
part of the Accounting Section. This section maintains all the record and accounts
about inventory and imports of material. It is concerned mainly with the:
• Control of inventory
• Imports
• Investments
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• Loans
• Accounting aspects of fixed assets
All store items lying in the stores of DGKCCL includes in inventory. Each item of
inventory is recorded on BIN CARDS or TAGS. These provide an independent check
on the store ledger. It is the duty of inventory section to know how much inventory is
there in stores and for how long it is going to be kept.
This section also checks the value of all assets. Inventory section also reconciles the
quantity of various assets with the help of store keeper to prepare the STOCK
EVALUATION REPORT. Inventory valuation is based on the average principle
because they believe that it is the best system. Inventory section also deals with the
loans of the company. DGKCCL has the policy to finance all long term projects
through loaning.
Documentation Used in Inventory Section
The Inventory Section deals with different types of documents such as:
• Issuance Requisition (IR)

• Store Transfer Note
• Goods Received Notes
• Store Evaluation Report
• Store Return Report
Principles followed by Inventory Section
Accounting principles followed by inventory section:
• Assets are depreciated at Straight Line Method.

• Issue requisition of goods received note is the source of information of
inventory.
• Fixed assets are stated at cost less accumulated depreciation.
• Inventory evaluation is based on Average Method of Costing.
• Assets, raw material and other stocks are recorded.
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Depreciation in respect of such assets is charged in annual installments so as to

write off their yearend book value over their remaining re-estimated useful lives.
b) Sales Accounts Section:

The sales account section maintains customer’s record and the sales records. Sales
department is actually deals with the Marketing Department and assist the sales
force about the financial aspects. Sales department deals with three basic
documents. These documents are very important in the activities of Sales Section.
These are:
• Order Confirmation
• Internal Sale Order (ISO)
• Dispatch Note (DN)
The actual procedure starts when the sales officer of Marketing Department gets an
order from his clients. When a customer confirms an order, the Marketing
Department issues an “Order Confirmation Slip”. The customer must sign the order
confirmation. After the confirmation, another document is prepared which is called
the “Internal Sales Order” which is used within the company. It is includes details
such as the following:
• Purchase Order Number

• Product Code
• Quantity Ordered
• Rate Agreed
• Total Value of the Order
• Sales Officer’s Code
• Code of the Unit where cement are to be manufactured
The other document Dispatch Notes are prepared by the Dispatch Section, which
exists in the Marketing Department. Dispatch Notes contains:
• Name of the customer

• Customer number
• Dispatch date
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• Dispatched to
• Mode of transfer
• Destination code
Sales section convert this ISO into coding and then check coding with ISO’s and
send this coding in computer section which enter this coding into computer. MIS
department then send Edit Report to the Sales Section to check it. After checking
this edit report it sends back to computer section and gets Invoice & Freight Debit
Note.
Another job of the Sales Section is to pay customer’s claims. If there are any
difference in the agreed quantity, quality or specifications the customer send a claim
and is verified by the Area Marketing Manager. Then the Marketing Department
sends a “Sales Return Note”, to the Planning Department and Accounts Department.
A “Credit Note” is issued in favor of the customer. Sales are debited and the
customer is credited, as the accounting entry. If transportation company is
responsible then sales department issue Debit Note to the concerned company. All
accounting process in the sales section are computerized.
A “Debit Note” is issued to the customer for the extra goods (more than the ordered)
delivered. The customer is debited and sales are credited.
As a policy matter, DGKCCL prefers to deal with customers who pay in advance or
against an LC for which the guarantee is provided by a bank. Insurance for the
delivered goods is borne by the customer, but he can request for a notification to his
insurance about the delivery of the goods. As for as exports are concerned, all
export documents are also prepared by this section and so are the local LCs.
A record book containing all the current accounts of the company’s sales is also
maintained and is called the “Account Current Ledger”.
c) Purchase Section:
DGKCCL has its own Purchase Accounting section. This section normally deals with
the records of all purchase made by DGKCCL. In DGKCCL purchases are actually
made by the Commercial Department but its accounts deal by the Purchase Section.
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Purchase department also deal with different documents such as:
• Issue Requisition (IR)

• Purchase journal (PJ)
• Cash Voucher (CV)
• Purchase Journal Through Staff (PJS)
• Goods Received Note (GRN)
• Purchase Requisition (PR)
• Store Return Note (SRN)
• Store Transfer Note (STN)
The purchases section records all the daily purchases of company made by
commercial division or any other department. The purchases made by DGKCCL may
be on cash or Credit basis.
There are two types of purchases made by the company:
1. Credit Purchases:
Some purchases of goods made on credit. Such types of purchases are done by
authorized purchases of the company on the credit basis. Credit purchases are of
two types:
• Against goods
• Against services rendered
Normally goods need for manufacturing purpose such as packaging machinery,

chemicals etc. purchase on credit.
2. Local Purchase through Staff:
Commercial Department Staff members purchase this type of purchases. In this type
of purchases cash is paid immediately. Such purchases are recorded in purchase
journal through commercial staff and send it to the Purchase Section.
d) Cash and Bank Section
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The staff of this section is assigned the job of making payments on behalf of the
company. It receives checks and records them in the cash and bank book on daily
basis. All the travelling allowance bills, petty cash expenses and monthly payments
of salaries are made through this section.
Operations of Cash & Bank Section:
• To maintain Cash Book

• The Management of Short Term Loans
• Payments in the Shape of Cheques
• Payments to the suppliers
• To check the Bank Reconciliation Statement
• Payments for Local Travelling
1. Cash Book:
The cash & bank section maintains a cash book in which details of all cash receipts
and payments are noted. A daily balance is prepared after examining daily cash
receipts and payments which is carried towards the next day as beginning balance of
the next day. All receipts of the organization are recorded on the credit side and all
the payments are recorded on the debit side.
2. Payments for Local Travelling:

Travelling within a radius of 50 km from DGKCCL is considered as local travelling f
or which traveling allowance is given to the employees. It is only given when an
employee uses a mode of transport for official purpose.
3. Short Term Loans Management:

In DGKCCL loans are also given for the purchase of cars and motorcycles. The
recommendations this regard is given by the departmental head and is finally
approved by the Finance Manager. The payments are made by loaner on
installments basis i.e., a part of his/her salary is deducted as installment. It is the
Cash & Bank Section responsibility to maintains it. This section is also responsible
for the management of all short term loans of the DGKCCL. DGKCCL is getting the
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banking facilities from about eleven banks. In this regard this section normally seeks
the Bank Guarantees and Working Capital Loans in form of over draft facility. All the
machinery in the DGKCCL is on leasing, so it is Cash & Bank Section duty to see the
accounts of all things. The basic objective of this section is to finance the company’s
operations in a better way.
4. Issuance of Cheque:
When payment is not made on cash, then the organization issues cheques to its
creditors. The cheque issued has four copies. The original copy is sent to the
creditor or supplier. One copy is kept for posting purposes. One other copy is sent to
the sales department and the last copy is kept as a record. It is the job of Cash &
Bank Section to reimburse all those expenses paid by the employees on behalf of
the organization. Normally this payment is made twice in a month. All employees
send the details of the expenses incurred by them on the prescribed form. Cash &
Bank Section pays the amount either on the 1st day of the month or on the 15th day
5. Payment to the Suppliers:
One of the most important jobs of Cash & Bank section is to made payments to the
suppliers for the goods or services which they provided to the company. The
purchase section sends the bill indicating that the goods have been received and the
payment should be made.
e) Pay Roll Section
This section deals with the salaries and wages of the employees working in the
organization. There are two categories of employees:
• Working on hourly basis

• Working on monthly basis
The hourly paid employees are paid every fortnight whereas the other category
receives the salary at the end of month.
f) Payable & TAX Section
22 | P a g e
DGKCCL is engaged in production of Cement, payable section deals with the

payment of suppliers, sales tax, income tax, withholding tax and excise duty.
Mr. Khalid Mahmood Khalid (Manager A. Payable) responsible for confirmation of

payments document, these documents included, purchase order, Material Receiving
Report, sales tax invoice and the copy of journal voucher. He make sure that the
payment is according to purchase order and the requirements of purchase order is
fulfill, this section is also responsible for the computation of tax and maintaining the
whole tax data.
Computation of sales tax payable:
Sales Tax payable can be calculated by undertaking the following four steps:
• Step 1: Calculation of Output tax payable

• Step 2: Calculation of Input tax payable
• Step 3: Payable Tax = Difference between Output tax payable and
• Step 4: Submission of sales tax returns
There are hundreds of suppliers every new case is different from previous one.
• NO Deduction Certificate: some suppliers have Deduction Certificate in this

case DGKCCL not deduct With Holding Tax (WHT) from supplier’s payment.
Suppliers are responsible to make direct payment to Government.
• Advance Payments: Some suppliers have Advance Payments in this case
DGKCCL payable section check supplier’s ledger before payment.
• Sales tax Invoice: some suppliers have dispute in income tax payable to
Govt. in this case payable section require sale tax invoice from supplier for
sales tax returns.
23 | P a g e
SWOT ANALYSIS
SWOT analysis is a tool for auditing an organization and its environment. It is the
first stage of planning and helps marketers to focus on key issues. SWOT stands for
Strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are
internal factors. Opportunities and threats are external factors.
The SWOT analysis of DG Khan Cement Co. is as following:
Strengths:
1. Availability of Raw Material.
2. DG Cement is a well-known brand in Pakistan and it has good image in

the market. People rely on this cement. The customer demands for the DG
Cement. They have good positioning through their slogan, which
represents durability.
3. Imported Machinery and plants in most of companies, which provide better
quality to over all process.
4. Pakistan has been ranked 5th in the world’s cement exports after a jump
of 47 percent in exports during last fiscal year, the Global Cement Report
shows. ( Daily Times Saturday, August 01, 2009)
5. The compressive strength is a very important factor of cement. The

Portland cement achieves its maximum strength in 28 days. The Pakistan
standard PSS 232-1883 (R) & British Standard BS 12: 1978 provides for
28 days strength of 5000Psi and 5950Psi respectively for mortar cubes.
6. Cement industries in Pakistan are currently operating at their maximum

capacity due to the boom in commercial and industrial construction within
Pakistan.
24 | P a g e
7. Housing demand to grow:

Following indications have showed a considerable demand of cement in
Pakistan:
• Housing projects consume roughly 40% of cement demand
• Currently 0.3mn houses are built annually against demand of 0.5mn
• Low interest rates, post 9/11 remittances’ inflow, and real estate boom
have helped housing sector growth
• Easy mortgage availability and announcement of low cost housing
schemes will determine housing sector growth in the long-run.
8. Government’s development spending shall continue to rise due to:
• Government development expenditures count for one third of total

cement consumption
• Increase in development expenditures has helped cement demand

to grow at very high rates
• Increase in PSDP- as announced in Medium Term Development

Framework 2005-10 will help cement demand to grow in the country
• Infrastructure development in a region triggers private development

projects having even positive impact on cement demand.
25 | P a g e
9. Pakistan cement industry is one the largest exporter in Asia, major

markets are of Afghanistan and Iraq will be after peace. It’s increased
GDP by exports, providing cements in Large Dams Project and
earthquake rehabilitations projects.
10. Laboratory testing facilities meeting all American and European

standards and Vertical cement grinding mills.
11. Today, we find a relatively better scenario as compare to past. Most of

the cement plants, that used to operate on furnace oil, have now been
converted into coal and gas system, which has substantially reduced cost
of production.
12. The most modern selection of production equipment possible in every

major department of the plant.
13. Cement export to India through railway

• Most of the cement export to India is through railway. In order to
facilitate cement export to India, the railways has doubled its cement
capacity and increase its frequency of trains to India from Pakistan.
This step has been taken by Pakistan Railways in order to increase
cement export to India. This is regarded as a highly profitable market.
14. Use of Coal
• Coal is found in all the four provinces of Pakistan. The country has
huge coal resources, about 185 billion tones, out of which 3.3 billion
tones are in proven/measured category and about 11 billion are
indicated reserves, the bulk of it is found in Sindh.
• At present most of the cement companies have switch to coal or

gas as their basic fuel; the process has been completed in the last 6
to 7 years. According to the data of the All Pakistan Cement
Manufacturing Association of mid-2007, the cost of cement
production per ton by furnace oil was around Rs2, 083 whereas the
cost of production per ton by coal was Rs8, 68, saving Rs1, 215 per
ton. Similarly, the saving per bag was Rs60.75, which is a huge
difference. Reserves of coal can become strength for Pakistani
cement industry if Pakistan import sulphur washing plant from
26 | P a g e
European country than Pakistan cement industry is able to utilize

local coal to meet its energy requirement
15. Cheaper labor
• The labor of Pakistan is very cheap. This is the important strength

of the cement industry as the cement companies of Pakistan has to
pay less to their labor which result in saving of their income which
later on can be utilized in the expansion of cement plant. Which will
increase the cement production?
16. Good Domestic and Foreign Market
• The export reached to $ 500 million during 2008. Data for the first
quarter of FY08 shows that Afghanistan is Pakistan’s largest
cement export market. The prospects for cement exports seem
bright in the medium term due to rising domestic as well as regional
cement demand.
17. Good Government Policies
• Government policies are in the favor of cement sector. Due to the

government favorable policies the cement sector gets the highest
growth rate of 21.11% among all the industries of Pakistan in year
2006-07. The total industry installed capacity is expected to reach
49.1 million tons per annum by FY10
18. High Quality of Cement
• Pakistan produces good quality of cement. This is the main reason

due to which recently Russia is offering high price for Pakistani
cement. Globally Pakistan is recognized for producing good quality
of cement due to which countries like Afghanistan, India, Middle
East and some African countries prefer to import cement from
Pakistan.
Weaknesses:
1. The stage of industrial development, in most of the segments, is still at a very

low level of technology and the existing industrial base is very narrow and
27 | P a g e
consists of very basic industries such as cement, sugar, textile, cigarette,

edible oil, fertilizer, soda ash, caustic soda, PVC etc.
2. Since cement is a specialized product, requiring sophisticated infrastructure

and production location. So, most of the cement industries in Pakistan are
located near/within mountainous regions that are rich in clay, iron and mineral
capacity. Structure of Cement industry in Pakistan is as such that there is not
much substitutability to buyers. Which shows that the Cross elasticity of
demand is negligible.
3. The customer has no choice at all to switch between two brands of cement
due to cartel of all of the cement manufacturers in Pakistan.
4. The freight charges are a massive 20% of the retail prices. The plants located
very close to each other and tapping the same market will have to expand
their markets which will increase their freight expenses. Dandot, Pioneer,
Maple Leaf and Garibwal are all located within a radius of 100 kilometers and
are selling bulk of their production in the same areas and will thus face
serious competition from each other.
5. Consumers face a tough decision with regards to prefer which brand over
which because of the similar pricing of cement industry. The formation of
cartel by the cement manufacturers have exploited local consumers a lot and
this has led to the concentrated degree of oligopoly, where the firms are
acting as a single unit to perform their monopoly. Their combined market
power is simply a diluted version of the dominance that a single firm with a
monopoly market share can exert.
6. Increase freight charges
• Exporters of the cement often complain that railways freight charges for
carrying cement from Lahore city to the border of India are Rs500 per
ton ($8 per ton) while it covers only 35 km. Against this, they say on
the Indian side, the freight is only $3 per ton for bringing goods from
Chundrigar to the border area. Cement exports have been badly hit by
high fee that is being charged by trucks and also by foreign shipping
companies for the haulage of cement from Pakistan to India. This
increase in freight charges effect our exports due to which our exports
is declining
28 | P a g e
7. Logistic Problem
• Some of the cement companies of Pakistan have received orders from

Russia with a price tag of Rs 860 per bag. But our logistics is the
biggest hurdle in the way as our transportation system is not good
enough to transport cement to Russia due to which our cement
companies might lose the chance to capture the Russian market which
is a highly profitable market.
8. Usage of Paper bag
• Pakistani cement companies export there cement in paper bags

because paper bags are cheap as compared to plastic bags. But the
Cement exported in paper bags is against the International standards
and companies have to pack the cement in plastic bag. The cement
export to India could be affected by the shortage of plastic bags used
for transporting the commodity. Although there are two companies that
are manufacturing plastic bags for cement but they are not able meet
the demand. So that’s why Pakistan cement companies export cement
in paper bags.
9. Idle capacity of various players:
• The biggest problem of cement industry is the idle capacity of various

players. As many cement players are not operating at their full
capacity.
10. They are still using obsolete marketing practices. Top management should
use up-to-date marketing practices rather to use orthodox ideas. This is the
age of advertisement and they should advertise their product rather use push
29 | P a g e
strategy. They should emphasize on pull strategy as well. They have good,
energetic, experienced marketing and sales team they should use it
constructively.
11. They have not divided their zones for marketing and sales teams.
12. They are not paying much attention to promotional tools. They are not
advertising their product. They are only using trade promotions, which are not
enough to have a good positioning in the market.
13. They do not have much interaction with the distributors. They do not go to the
distributors for inquiring about the sales.
Threats:
1. Unanticipated increase in interest rates or less than expected demand growth
might create severe crises for the sector couple of years forward.
2. Lack of demand or depressed demand in future will prove to be lethal for the
sector that has just started to recover from the miseries of 90s. Lack of
demand forced cement units to operate at very low capacity utilization in
nineties. There was a fierce competition among cement manufacturers.
3. A price war was witnessed which ended up with no conqueror. Similar

apprehensions exist for the future when there will be plenty of excess
capacity. Any hurdle in the growth of cement demand may force the sector
into the price war. Yet, we expect cement manufacturers to act prudent and
learn lesson from the history. Any mistake, similar to the one made in the last
decade, will again coerce the sector into the era where all are losers with no
winner.
4. Main component of the cost is fuel. Pakistan's cement industry has converted
their plants to coal considering it to be the cheapest fuel, but its price in
international markets has gone up by more than 300 per cent in the last one
year, which directly relate increasing the cost of production.
5. The demand of cement falls heavily during rainy weather in the country, which
directly affects the running cost of a unit. It is only the rising levels of cement
exports, which are sustaining the industry.
6. Instead of appreciating the marketing skills of cement entrepreneurs to

explore new markets for cement, the industry is being pressurized constantly
without realizing that any reduction in cement exports from Pakistan will not
30 | P a g e
only deprive the country of foreign exchange ($2 billion last year), but will also
result in losses to the industry.
7. The burden of increased input costs has to be borne by the consumers. It is

only the government, which can provide relief to the consumers by cutting
down or abolishing the central excise duty.
8. Problems of oversupply situation:
Following problems might arise with the oversupply situation in cement

industry:
• Lower capacity utilization will reduce benefits of economies of

scale. High leverage will also adversely affect profitability of new
plants.
• New plants will gain market share at the cost of older players, which
are not undergoing expansion. Large idle capacity is will create
panic in players and this may result in price wars in the coming
years.
9. IMF Package in Future can cause to decrease GDP and economical

development in Pakistan. Which will also be cause to stop development of
infrastructure? So it will have huge effect on cement industry also.
10. Indian and Iran industry is also expanding its cement capacity
• Presently, India faces an acute cement shortage in its Southern states

of Tamilnado and Madras and in north Punjab. However, reports
indicated that the Indian industry is also working on a fast track to
expand their capacity in these regions to off-set the shortfall
Major capacities of countries like India and Iran are expected to
come online by FY10 and onwards which are likely to convert these
countries from dependent importers to potential exporters.
11. High energy prices
• Recently cement industry of Pakistan is facing high energy prices due

to increase in the international prices of coal and oil. As our coal
contain high percentage of sulphur. Due to which Pakistan cement
industry is not able to use local coal as a source of energy. Due to
31 | P a g e
which Pakistan cement industry has to import coal from different

countries at high prices. High finance and depreciation cost as
Pakistan cement industry is expanding its capacity to get the proper
advantage of strong demand of cement in different countries. The total
industry installed capacity is expected to reach 49.1 million tons per
annum by FY10 and because of higher expansion finance and
depreciation cost is also going to rise by the FY10.
12. Decrease profitability due to competition in cement industry
• The sharp decline in cement prices has been witnessed due to

domestic competition among producers has dampened the profitability
of the industry. This increase in competition among the players has
further decreased the prices of cement in the local market. The cement
manufacturers decrease the prices of their products in order to get high
market as compared to its competitor.
13. High level of taxation
• Presently, the cement industry of Pakistan is heavily burdened due to

levy of Federal Excise Duty @ Rs. 750 per ton and General Sales Tax
@ 16% on duty paid value. In addition to Federal Excise Duty and
General Sales Tax, cement industry is also paying the provincial levies
(Royalty and Excise Duty) on acquiring of raw material for production of
cement i.e. lime stone and shall clay.
Opportunities:
1. The local cement industry faces high upfront fuel costs. In order to facilitate
their conversion to coal, which is widely available in the country, the
government has given incentives for imported plant and equipment for coal
firing units.
2. The demand of Pakistani cement is expected to continue to grow at the rate of

20 per cent for about four years to come. It may then follow traditional growth
rate of seven per cent per year. Announcement of major dams will
dramatically increase this demand.
3. Deregulation after accession of Pakistan to WTO is expected to open the

window of competition from cheaper markets. There may be no tariff after this
32 | P a g e
deregulation on import of cement allowing its entry into Pakistan from cheaper
market at lower rate. Cement from cheaper markets may also block
Pakistan’s export of cement to its neighboring countries. Global market has
vigorously taken up the advantage of economy of scales and multinational
giants now control more than 40 per cent of world production (China not
included). The recent acquisition of Chakwal Cement by an Egyptian giant,
Orascom may be a beginning of such an entry in Pakistan by multinationals.
New avenues for export of cement are opening up for the indigenous industry
as Sri Lanka has recently shown interest to import 30,000 tons cement from
Pakistan every month. If the industry is able for avail the opportunity offered, it
may secure a significant share of Sri Lanka market by supplying 360,000 tons
of cement annually.
4. Government Development Expenditure
• Government development expenditures count for one third of total
cement consumption. Increase in development expenditures has

helped cement demand to grow at very high rates. Increase in PSDP-
as announced in Medium Term Development Framework 2005-10 –
made the cement demand to grow in the country. Infrastructure
development in a region triggers private development projects having
even positive impact on cement demand.
5. Construction of large dams
• Construction of four large dams will generate demand of 3.7mn tons as

construction activities start. Our estimate does not include demand
33 | P a g e
generation from Skardu-Katzarah dam as its feasibility study in not yet

completed. Extent of demand generation will depend on size of dam,
type of dam, and extent of relocation/resettlement activities required.
Bhasha dam will generate maximum demand as it is RCC concrete
dam whereas other dams being Earth fill/Rock fill dams will require less
cement for their construction. Resettlement activities for Kalabagh dam
will generate maximum demand as it is located in a highly populated
area.
6. Improved access to regional market
• Afghanistan is Pakistan’s largest cement export market. The prospects

for cement exports seem bright in the medium term due to rising
domestic as well as regional cement demand. Pakistan also achieved
improved access to India after the complete removal of the 12.5
percent custom duty on Portland cement imports in this country from
January 2007, showing improved export opportunities for Pakistan.
India is planning to import more cement from Pakistan to stabilize
prices in the market and the government wants a balance in demand
and supply of cement in the current fiscal year. The import of cement
from Pakistan has increased manifold during last four months. India
has registered a number of Pakistani cement manufacturers, a
requirement to facilitate import of cement. Pakistan has already
increased the frequency of trains from one to three in a week to carry
cement from Pakistan to Wagah border. Due to boom in the
construction industry, India needs cement in bulk to meet its growing
needs.
7. Demand of Pakistani cement by Russia
• Fresh enquiries have been received from Russia and buyers are
quoting very attractive prices as Pakistani cement quality is of very high
standard and holds good strength.
8. High prices of cement in the international market
• Cement exports are expected to soar by a massive 107 per cent due to
the primary source of overall cement growth in FY08, the high exports
34 | P a g e
owing to the cement supply shortage in India and Middle East which
lead to rocketing cement prices in the region.
9. Increase in demand of cement due to the upcoming sports event
• South Africa is schedule to host the football world cup of 2010 due to
which they need to make the football stadiums for the World Cup and
Sri Lanka are also expected to approach Pakistani companies for
cement imports because Sri Lanka to co-host the cricket world cup of
2011.
CEMENT
PRODUCT LIFE CYCLE
Product Life Cycle Stages
Maturity
Growth
Decline
Introduction
The product life cycle model can help analyzing product and industry maturity
stages.
In the above diagram arrow shows the product life cycle stage of cement and
cement industry as well. According to this diagram cement is at this time the
sales of cement are increasing because of enormous demand for the cement in
both local and foreign markets. More over competitors in this industry are
increasing day by. They are rushing to this industry because of ever increasing
demand of cement. So the product of the company is at growth stage and whole
cement industry is also at the growth stage.
35 | P a g e
BUSINESS ANALYSIS
Cement sector background
At the time of independence in 1947, only one or two units were producing grey
cement in the country. During the decade of 1948-58, the number of cement units
increased to six. During the Ayub era the economy started to grow and the
construction activities underwent a boom. To meet the growing demand of cement
new units were set up. During the decade of 1958-68, the number of cement units
increased from 6 to 9. During the following period of Zulfiqar Ali Bhutto all the
industrial units, including cement industry, were nationalized, therefore, no new unit
was set up during 1971-77. During the period of General Zia-ul-Haq, 1977-88,
denationalization of industrial units boosted the investments. Housing and
construction industries picked up and the demand for cement increased. Thus, the
number of cement units increased from 9 to 23 and finally 24.
The cement industry in Pakistan has become a long way since independence when
country had less than half a million tons per annum production capacity. By now it
has exceeded 10 million tons per annum as a result of establishment of new
manufacturing facilities and expansion by existing units. Privatization and effective
price decontrol in 1991-92 heralded a new era in which the industry has reached a
level where surplus production after meeting local demand is expected in 1997.
The cement industry is needed a highly important segment of industrial sector that
plays a pivotal role in the socio-economic development. Through the cement industry
in Pakistan has witnessed its lows and high in recent past, it has recovered during
the last couple of years and is buoyant once again.
There are total number of units are 23, from which 4 units are in the public sector
while the remaining 19 units are owned by the private sector. Two of the four units in
36 | P a g e
the public sector had to close down their operations due to stiff competition and
heavy cost of production. The cement plants are located in every province of
Pakistan.
The province wise distribution of cement plant is as under.
Providence Units Capacity (Million
Tons)
Punjab 8 7.488
Sindh 8 3.851
NWFP 6 4.945
Baluchistan 1 0.758
Total 23 17.040
Three additional cement plants with installed capacity of over 2.1 million tons are in
the final stage of completion despite the available excess capacity in this sector. The
following table shows installation of new cement factories and expansion of the
existing facilities during the current decade.
The industry is divided into two broad regions, the northern region and the southern
region. The northern region has over 87 percent share in total cement dispatches
while the units based in the southern region contributes 13 percent to the annual
cement sales.
37 | P a g e
Name of New/ Expansion Year of New Capacity

company Commission Created(Tons)
Northern Region
Askari Cement Expansion 1964 945,000
Askari cement New 1996 630,000
Bestway cement New 1988 1,039,500
D.G Khan cement Expansion 1988 1,039,500
Fauji cement New 1997 945,000
Lucky cement New 1996 1,260,000
Maple Leaf Expansion 1998 1,039,500
cement
Pioneer cement New 1994 630,000
Sub-Total 7,528,500
Southern Region
Essa cement Expansion 1988 315,000
Total 7,843,500
Financial Analysis Of DG khan Cement Company Ltd
Overview of Income Statement

Overview of Income statement 2008 2007 2006 2005 2004
Sales 12,445,996 6,419,625 7,955,665 5,279,560 3,882,756
Cost of sales -10,530,723 -4,387,640 -3,992,822 -3,330,769 -2,497,262
Gross profit 1,915,273 2,031,985 3,962,843 1,948,791 1,385,494
Administrative expenses -111,658 -104,169 -121,953 -76,480 -68,645
Selling and distribution expenses -561,465 -65,122 -34,352 -60,905 -38,560
Other operating expenses -581,913 (139,721 -191,850 -93,786 -61,735
Other operating income 847,344 479,420 294,114 707,692 128,462
Profit from operations 1,507,581 2,202,393 3,908,802 2,425,312 1,345,016
Finance cost -1,749,837 -467,759 -450,696 -304,041 -224,601
Share of loss of associated -8,674 -14,163 -9,573
companies
Profit\ Loss before tax -250,930 1,720,471 3,448,533 2,121,271 1,120,415
38 | P a g e
Taxation 197,700 -98,000 -1,030,078 -439,193 -325,922

Profit\ Loss for the year -53,230 1,622,471 2,418,455 1,682,078 794,493
Basic earnings per share -0.21 6.43 10.37 9.12 4.31
Rupees
Diluted earnings per share 6.43 9.14 7.82 3.78
Overview of Balance sheet

Overview of Balance sheet 2008 2007 2006 2005 2004
Capital and Reserve 30528440 33923185 19268200 9317998 6317055
Non-current Liabilities 10250352 10430917 9020740 5642649 3020575

Current Liabilities 12899306 7390229 6015436 3055858 2376989
Assets
Non-current Assets 33835927 32529377 24394481 13819736 8833476
Current Assets 19842171 19214954 9909895 4196769 2881143
Liquidity Position with Graphical Presentation
Liquidity Position
Liquidity Position 2008 2007 2006 2005 2004

Current Ratio 1.54 2.60 1.65 1.37 1.21
Acid Test Ratio 1.22 2.33 1.44 0.96 0.64
Cash Ratio 1.18 2.31 1.43 0.94 0.62
2.5
2 current ratio
1.5 acid test ratio
1 cash ratio
0.5
0
2008 2007 2006 2005 2004
The liquidity position of DGKC deteriorated during the first nine months of FY'09.
This was due to a 40% decrease in current assets and a 14% increase in current
liabilities if the company. The current liabilities of the company increased due to 14%
rise in trade payables, 61% increase in accrued markup and around 7% increase in
short term borrowing by the company.
39 | P a g e
On the other hand, current assets of the company declined due to decrease in
investments from Rs 15 billion at the end of FY08 to Rs 7 billion at the end of March
FY09. Also the cash and bank balance of the company decreased by 22%. Thus,
decrease in current assets and a corresponding increase in current liabilities resulted
in a less favorable liquidity position as compared to that in FY08.
DGKC's liquidity stance had been strengthening since FY04 and in FY07 its liquidity
position was the most favorable. The increase in current assets had brought about
this change. There was a 98% increase in short term investments. Furthermore, the
cash and bank balances had also risen considerably.
In FY08 the current assets of the company declined slightly but a 63% rise in current
liabilities caused a decrease in the liquidity of the company. Investments constitute
nearly 79% of the company's total current assets and they declined by 11% in FY08.
The investments decreased further from Rs 15 billion at year-end FY08 to Rs 10.9
billion by end of 1Q09.
Activity Ratios
Activity Ratios 2008 2007 2006 2005 2004
Days Sales in 13.57 days 8.20 3.40 days 5.27 days 4.95 days
Receivables days
Account 41.02 58.78 105.79 81.94 73.78
Receivables times times times times times
Turnover
Account 8.89 days 6.20 3.45 days 4.45 days 4.94 days
Receivables days
Turnover in Days
120 Activity
100 Ratio
days sale s in
80 receivables Inventory
A/R turnover Turnover
60
40 A/R turnover in days in days

20 Inventory
0 Turnover
2008 2007 2006 2005 2004 Days Sales
in
Inventory
40 | P a g e
Operating Cycle
Activity 2008 2007 2006 2005 2004
Ratio
Operating 36.55days 27.89 days 18.41 days 26.34 days 48.58 days
Cycle
60
50
40
30 operating cycle
20
10
0
2008 2007 2006 2005 2004
Debt Ratios
Debt Ratios 2008 2007 2006 2005 2004
Debt to Tangible net 77 52 78 93 85
worth
Debt To Equity Ratio 76 53 78 93 85
Debt Ratio 43 34 44 48 46
250
200
150 debt to tangible networth

debt/equity ratio
100
debt ratio
50
0
2008 2007 2006 2005 2004
The debt management ratios of DGKC showed a positive trend during FY07. The
debt to asset and equity ratios as well as the long-term debt ratio all receded during
the period and this reflected a reduction in the company's dependence on debt
41 | P a g e
financing. However, during FY08 the debt ratios of the company rose because the
total debt increased in FY08 mainly due to a 63% increase in the current liabilities
which form 55% of the total debt.
Long term debt however decreased. The long term debt to equity increased because
of a decline in the equity base due to fall in reserves. The TIE ratio continued to fall
in FY08 against a positive trend that prevailed before FY07. The reason is
substantial rise in finance charges due to high interest rates in the economy.
Also the operating income in FY08 decreased, thus reducing the extent to which
operating income can decline before the firm is rendered unable to meet its interest
costs. Due to the losses that DGKC experienced in FY08 and the decrease in
profitability during July-March FY09, its Earning per Share (EPS) and Price to
Earning (P/E) Ratio have been negative. During July-May 2009 the share price
averaged around Rs 31.1.
This shows that the dismal profits of the company have started reflecting in the low
investor confidence and falling share price. The average share price of DGKC had
hovered around Rs 100/share except during the fourth quarter of FY08 when share
price fell well below the average. The management did not recommend any dividend
for FY08 due to the dismal profitability situation in the period.
Profitability Ratios
Profitability Ratios 2008 2007 2006 2005 2004
Gross Profit Margin 15 32 49 37 36
Operating Profit 12 34 49 46 35
Margin
Net Profit Margin 7.84 25 31 31 20
140
120
gross profit margin
100
80 operating income
60 magin
40 net profit margin
20
0
2008 2007 2006 2005 2004
42 | P a g e
After experiencing declining profitability during FY08, the cement sector came back
strongly to post a growth of 167% in earnings during first quarter (July-September) of
fiscal year 2009. The cement sector posted profit after taxation of Rs 1.3 billion in
first quarter of FY09 as compared to Rs 500 million in the corresponding period of a
year earlier.
This growth was mainly due to higher local retention prices and depreciation of the
rupee against the dollar that resulted in an increase of rupee-based export sales.
The net sales of the cement sector in the period July-March FY09 was 58% higher
than the net sales generated during the corresponding period of FY08. It is believed
that the profits of cement companies increased due to an arrangement among them
to keep prices high in the local market.
However, higher sales revenue could not be translated into an increase in profits
during the period. Increased costs of sales, operating expenses and finance
expenses caused the profitability of DGKC to remain low during July-March FY09.
The cost of sales of the company increased by 30% during the period and resulted in
a gross profit of Rs 3,733 million.
The furnace oil/coal costs for the period July-March FY09 was Rs 5,258.6 million as
compared to Rs 3,095.7 million during the corresponding period of FY08. The
electricity and gas costs were lower, however, the cost of raw material and packing
material consumed increased by 12%. The administration expenses increased by
31% while the selling & distribution expenses increased drastically by 456% (from Rs
246 million in July-March FY08 to Rs 1,370 million in July-March FY09).
Selling expenses may have increased due to higher transportation costs involved
with exports and higher fuel costs. Also, the finance costs increased substantially by
77% as interest rates rose owing to tight monetary policy and liquidity crunch in the
market.
These rising costs greatly hampered the profitability of the company and resulted in
a profit after taxation of Rs 321 million in the period July-March FY09, which is 34%
lower than the profit (Rs 487 million) during July-March FY08. Therefore, the earning
per share (EPS) of the company declined from Rs 1.92 in July-March FY08 to Rs
1.27.
Profitability - Financial Year 2002 to Financial Year 2008
The profitability ratios of the company have shown a declining trend since after
43 | P a g e
FY05. The gross profit margin increased in FY06 only to fall in FY07 and FY08. The
profit margin of the company has decreased continuously along with return on assets
(ROA) and return on equity (ROE).
The profit after taxation had declined by 33% in FY07 due to lower net retention
prices caused by a supply overhang in the overall industry. Also the problem of rising
input costs had begun in FY07. This rise in cost of production and raw material have
continued into FY08 and further aggravated, causing the declining trend of the
profitability of DGKC.
Despite a strong growth in cement dispatches, the cement sector experienced
declining profitability during FY08. The profitability of the sector fell by 73.6% to Rs
562 million till March 2008 from Rs 2,133 million in the corresponding period of
FY07. Although the sales volume of the cement companies increased, the net sales
revenue did not increase to an equal extent due to decrease in net retention prices in
the sector.
Over the years all cement manufacturers undertook huge capacity expansion plans.
This created a situation of excess supply in the market. Companies resorted to price
wars leading to a fall in prices and reduced the profit margins for the companies. The
average cement price during the period July-March FY08 was Rs 128.3 per bag as
compared to Rs 133.6 per bag in the same period in FY07.
Similar was the case with DGKCC. Increased production facilitated higher sales
volume which in turn translated into almost doubling of sales revenue in FY08. The
company had earned the highest sales revenue of Rs 12.445 billion in FY08.
However, despite this, the gross profit of DGKC in FY08 (amounting to Rs 1.9 billion)
was around 6% lower than the gross profit posted in FY07 (Rs 2.0 billion).
The reason for lower gross profit was a 140% increase in the cost of sales during the
fiscal year. Major input costs increased and dampened the profitability of DGKC and
resulted in a loss after taxation of Rs 53.230 million in FY08 against a profit after
taxation of Rs 1.622 billion in FY07. The cement manufacturers in the industry were
faced with rising fuel and power costs during FY08.
The cost of production for the cement companies went up due to rise in the prices of
imported coal. The cement companies in Pakistan have shifted from oil to coal or
gas during the past few years. Coal is now used as a basic fuel by all cement
manufacturers. Pakistan has huge reserves of coal, but cement companies are
compelled to import it, as local coal has high sulphur content.
44 | P a g e
Crude oil prices shot up during FY08 and had its impact on prices of coal and natural
gas. The rise in the costs of international coal prices has been one of the biggest
reasons behind the dampening of gross margins of cement companies during FY08.
There was a nearly 50% rise in the coal prices in FY08
Along with the hike in the international coal prices, the depreciation of the rupee
against the dollar also added to the cost of importing coal. Finance charges rose due
to higher interest rates, long term finances, short term borrowing and inclusion of
workers' profit participation fund in FY08.
Assets Utilization
Asset Utilization 2008 2007 2006 2005 2004

Sales to Fixed Assets 54 43 108 80 62
Return on Operating 24 33 10 13 11
Assets
Operating Asset 20 9.6 20 28 33
turnover
Return on Assets 18.5 3.8 23 11 6.60
250
sales to fixed assets
200
return on operating
150 assets
operating assets
100 turnover
return on assets
50
0 total asset turnover

2008 2007 2006 2005 2004
The performance of DGKC in terms of asset management was weak during FY07.
During the year, the inventory turnover (days) of the company more than doubled
compared to FY06 when the management of inventory seemed most efficient
(evident from the lowest inventory turnover in days). This could be traced back to
lower sales revenue for the period, coupled with a higher stock of inventory.
45 | P a g e
At the same time, the average time taken by the company to recover cash from sales
also increased. The increase in inventory turnover in days and Days sales
outstanding (DSO) prolonged the operating cycle of the company in FY07.
However, in FY08 the asset management of DGKC improved as the inventory

turnover rate increased because the company earned sales revenue more in
proportion to the increase in inventory. Thus the days to convert inventory into sales
became less (from approx. 100 days in FY07 to 79 days in FY08).
Although the days to convert sales into cash (DSO) increased slightly, the
substantial decrease in ITO (days) led to the shortening of the operating cycle in
FY08. The days sales outstanding was higher because the trade debt increased
substantially (by 153%) during FY08 as against sales.
Besides this the sales to equity and total asset turnover of the company which had a
declining trend till FY07 increased in FY08. The sales to equity ratio had been
decreasing because of an increase in the paid up capital. But the trend was reversed
in FY08 because the paid up capital remained same while the reserves fell, causing
a decrease in the equity base of the company.
Also higher growth in sales increased the sales/equity ratio. Total asset turnover also
improved because the management of the company's assets was effective in
generating higher sales revenue. The company's performance in the area has
improved as full-scale production from the newly inaugurated Khairpur plant has
augmented the sales.
Return on Investment
Return on total equity
Return 2008 2007 2006 2005 2004

Ratios
Return on 2.92 5.34 12.58 15.47 10.07
Investment
46 | P a g e
Return on 0.30 0.37 17 22 13

Total
Equity
25
20
15
Return on investment
10 Return on total equity
0
2008 2007 2006 2005 2004
One of the most important profitability metrics is return on equity [or ROE for short].
Return on equity reveals how much profit a company earned in comparison to the
total amount of shareholder equity found on the balance sheet. If you think back to
lesson three, you will remember that shareholder equity is equal to total assets
minus total liabilities. It's what the shareholders "own". Shareholder equity is a
creation of accounting that represents the assets created by the retained earnings of
the business and the paid-in capital of the owners. The return on Equity has
decreased drastically and there is quite a hell of decrement in ROE, which is not very
much encouraging for the investors in shares.
Investment Ratios
• Degree of financial leverage
• Earnings per common shares
• Price earnings ratio
Investment ratios 2008 2007 2006 2005 2004
Degree of financial 15.48 1.27 1.13 1.14 1.20

leverage
Earning per common 0.017 0.60 0.10 0.76 0.35

shares
47 | P a g e
Price earning ratio 258.08 4.81 3.38 3.96 8.19
100%
80% Price earning ratio
60%
Earning per
common shares
40%
Degree of financial
20% leverage
0%
2008 2007 2006 2005 2004
A leverage ratio summarizing the affect a particular amount of financial leverage

has on a company's earnings per share (EPS). Financial leverage involves using
fixed costs to finance the firm, and will include higher expenses before interest and
taxes (EBIT). The higher the degree of financial leverage, the more volatile EPS will
be, all other things remaining the same. Most likely, the firm under evaluation will be
trying to optimize EPS, and this ratio can be used to help determine the most
appropriate level of financial leverage to use to achieve that goal.
The company’s ratio ha increased dramatically in the year 2008 by 15 times. So
there is quite a margin for company to get leveraged.
The portion of a company's profit allocated to each outstanding share of common
stock. Earnings per share serve as an indicator of a company's profitability.
Earnings per share are generally considered to be the single most important variable
in determining a share's price. It is also a major component used to calculate the
price-to-earnings valuation ratio. The EPS of company is fluctuating but in current
year it has decreed drastically which is not a good sign for share holders. An
important aspect of EPS that's often ignored is the capital that is required to
generate the earnings (net income) in the calculation. Two companies could
generate the same EPS number, but one could do so with less equity (investment) -
that company would be more efficient at using its capital to generate income and, all
other things being equal would be a "better" company. Investors also need to be
aware of earnings manipulation that will affect the quality of the earnings number. It
48 | P a g e
is important not to rely on any one financial measure, but to use it in conjunction with
statement analysis and other measures.
A valuation ratio of a company's current share price compared to its per-share
earnings is Price Earning ratio. In general, a high P/E suggests that investors are
expecting higher earnings growth in the future compared to companies with a lower
P/E. However, the P/E ratio doesn't tell us the whole story by itself. It's usually more
useful to compare the P/E ratios of one company to other companies in the same
industry, to the market in general or against the company's own historical P/E. It
would not be useful for investors using the P/E ratio as a basis for their investment to
compare the P/E of a technology company (high P/E) to a utility company (low P/E)
as each industry has much different growth prospects.
The P/E is sometimes referred to as the "multiple", because it shows how much
investors are willing to pay per dollar of earnings. It is important that investors
note an important problem that arises with the P/E measure, and to avoid basing a
decision on this measure alone. The denominator (earnings) is based on an
accounting measure of earnings that is susceptible to forms of manipulation, making
the quality of the P/E only as good as the quality of the underlying earnings number.
Investment Ratios
• Dividend payout ratio
• Dividend yield ratio
• Book value per share
Investment ratios 2008 2007 2006 2005 2004
Dividend payout ratio 19.83 23.62 48.31 28.37 27.74
Dividend yield ratio 7.68 4.90 14.23 7.17 3.38
Book value per share 18.74 20.87 16.62 7.80 5.29
49 | P a g e
60
50
40 Dividend payout ratio
30 Dividend yield ratio
20 Book value per share
10
0
2008 2007 2006 2005 2004
Indicates the proportion of earnings that are used to pay dividends to shareholders.
A reduction in dividends paid is looked poorly upon by investors, and the stock price
usually depreciates as investors seek other dividend paying stocks
.
A stable dividend payout ratio indicates a solid dividend policy by the company's
board of directors. The situation of DG Khan Cement Co. Ltd. Shows increment in
2006 but from there is consistent decrement in this ratio by more than two times so
company is trying to build there retained earnings instead of giving dividend.
During bull markets the stock price is more likely to trade significantly higher than
book value, and in a bear market the two values may be close to equal. The
dividend yield or the dividend-price ratio on a company stock is the company's
annual dividend payments divided by its market cap, or the dividend per share
divided by the price per share. It is often expressed as a percentage. There is quite
fluctuations in this ratio which shows there is lack of stability in the company policy
towards this section.
Now if we look at the book value per share, as we know that somewhat similar to the
earnings per share, but it relates the stockholder's equity to the number of shares
outstanding, giving the shares a raw value. Comparing the market value to the book
value can indicate whether or not the stock in overvalued or undervalued. During bull
markets the stock price is more likely to trade significantly higher than book value,
and in a bear market the two values may be close to equal.
50 | P a g e
Univariate Model
1. Cash flow/Total debt
Calculation in (Rupees’ 000) Values

2008 (641970)/23149658 -2.773%
2007 475661/17821146 2.67
2006 4190452/15036176 27.869
2005 2484759/8698507 28.57
2004 945521/8698507 10.8
2. Net Income/Total Assets (Return on Assets)
Year Calculation in (Rupees’ Values

000)
200 25685/53678098 0.047%
8
200 1622471/51744331 3.13
7
200 2418455/34304376 7.05
6
200 1682078/18016505 9.34
5 3. T
200 794493/11714619 6.78
o
4
t
al debt/Total Assets (debt ratio)
Year Calculation in (Rupees’ 000) Values

200 23149658/53678098 43.13%
8
200 17821146/51744331 34.44
7
200 15036176/34304376 43.83
6
200 8698507/18016505 48.28
5
200 5397564/11714619 46.07s
4
51 | P a g e
Multivariate Model
X1= Working Capital/Total Assets

Year Calculation in (Rupees’ 000) X1
2008 6942865/53678098 12.934%
2007 11824725/51744331 22.85
2006 3894459/34304376 11.35
2005 1140911/18016505 6.33
2004 504154/11714619 4.30
X2=Retained Earning/Total Assets

2008 30202533/53678098 56.27%
2007 33923185/51744331 65.56
2006 19259849/34304376 56.144
2005 9317998/18016505 51.72
2004 6317055/11714619 53.9
X3=EBIT/Total assets
2008 1513505/53678098 2.82%
2007 2202393/5174 4.26
2006 3908802/34304376 21.69
2005 2425312/18016505 13.46
2004 1345016/11714619 11.48
X4= Market value of equity/Book value of total debt

2008 253541157*30.97/23149658 339.19%
2007 253541157*30.97/17821146 440.60
2006 184393569*30.97/1503176 379.79
2005 184393569*30.97/8698507 656.51
2004 167630518*30.97/5397564 961.82s
X5=Sales/Total Assets

200 12464347/53678098 23.22%
8
200 6419625/51744331 124.79
7
200 7955665/34304376 23.19
6
200 5279560/18016505 29.30
5 52 | P a g e
200 3882756/11714619 33.14
4
DuPont Analysis
1. DuPont Return on Assets= (Net profit margin).(Total assets turnover)
Year Calculation in Dupont Return

(Rupees,000) on Assets
2008 7.84*0.24 1.88
2007 0.25*0.15 3.75
2006 0.31*0.74 22.94
2005 0.31*0.35 10.85
2004 0.20*0.33 6.60s
DuPont return on Assets has a decreasing trend. In 2008 net profit of co decrease
due to high cost of goods sold. Co does not utilize its assets properly in 2008. In
2007 trend of this ratio is good. But in last 3 years it also has increasing trend.
Horizontal Analysis of Income Statements
2008 2007 2006 2005 2004

Net sales 321.01 % 165.34 % 204.89 % 135.97 100 %
Cost of sale (421.58) (175.7) (159.89) (133.38) 100
Gross profit 139.75 146.66 286.02 140.66 100
administrative (61.33) (151.75) (177.66) (111.41) 100
53 | P a g e
expense
selling &dist. (145.98) (168.88) (89.09) (157.95) 100
expenses
other operating (964.90) (226.32) (310.76) (151.29) -100
expense
other Operating 659.03 373.20 228.95 550.89 100
income
profit from operation 112.53 163.74 290.61 180.32 100
finance cost (786.41) (208.26) (200.66) (1345.25) 100
share of loss of - - - - 100
associated company
income before 15.64 153.56 307.79 189.33 100
taxes
Provision for (61.66) (30.06) (316.05) (134.75) 100
taxation
Net profit 3.23 204.21 304.40 211.72 100
Horizontal analysis of income statement shows that net sales of the Co has
increasing trend. But on the other hand Cost of goods sold jump quickly. This is not a
good trend. Cost of goods sold of the Co increases due to expensive raw materials.
Gross profit of the co decreases from last year’s due to high cost of goods sold.
Administrative and selling expense of the Co has decreasing trend. Other operating
expenses of the Company are increasing quickly. Company is also increasing trend
in other operating income. Profit from operations also decreases. Co also has high
finance cost from last years. Income before taxes has decreasing trend due to high
cost of goods sold and finance cost. Net profit of the Company is Very small as
compare to last years.
Vertical Analysis of Income Statements

2008 2007 2006 2005 2004
Net sales 100% 100% 100% 100% 100 %
Cost of sale (84.46%) (68.35%) (50.18%) (63.09%) (64.32%)
Gross profit 15.35 31.64 49.81 36.91 35.68
administrative expense (0.88) (1.62) (1.53) (1.45) (1.77)
selling &dist. expenses (4.52) (1.01) (0.43) (1.15) (0.99)
other operating (4.78) (2.17) (2.41) (1.78) (1.59)
expense
other Operating 6.79 7.47 3.70 13.40 3.37
income
profit from operation 12.14 34.31 49.13 45.94 34.64
finance cost (14.17) (7.28) (5.66) (5.76) (5.78)
54 | P a g e
Excess of acquires 0.69

interest in the net - - - -
assets of acquire
share of loss of (0.66) (0.22) (0.12)
associated company
income before taxes 1.41 26.80 43.34 40.18 28.86
Provision for taxation (1.61) (1.53) (12.95) (8.32) (8.39)
Net profit 20.20 25.27 30.40 31.86 20.46
In vertical analysis of income statement shows that has high cost of goods sold from
last years. Gross Profit of the Co has decreasing trend. This is decrease due to high
cost of goods sold. Operative expense of the co has minimum portion in the income
statement. Profit from operations also has decreasing trend. Share of loss of
associated co also increases Income before taxes also decreases from last years.
Provision for income taxes also has decreasing trend.
Horizontal Analysis of Balance Sheet
Assets 2008 2007 2006 2005 2004

issued subscribed 151.25 151.25 110.00 110.00 100
& paid up capital
reserves 629.62 675.08 343.70 163.96 100
accumulated profit 12.87 698.43 926.07 110.26 100
total
Total - 537.01 305.02 147.51 100
non-current
Liabilities
long term finance 324.88 318.12 269.99 179.42 100
liabilities against 0.47 1.36 34.50 158.09 100
assets subject to
lease finance
long-term deposits 243.34 261.71
retirement and other 141.59 104.40 69.65 119.96 100
benefit
deferred taxation 906.52 1176.81 1129.71 389.13 100
current liabilities
55 | P a g e
trade and other 293.56 207.96 284.81 233.70 100

payables
accrued mark up 28.78 25.18 25.03 70.60 100

current portion of 580.43 419.14 332.27 123.07 100
long term liabilities
provision for taxes 100 100 100 100 100
total 542.67 310.91 25.47 128.56 100
assets
non-current assets
property plant & 395.29 360.92 122.74 108.31 100
equipment
assets subject to 4.10 80.06 177.12 190.45 100
finance lease
capital work in 220.96 169.35 1044.28 353.71 100
progress
investment 475.06 589.07 323 188.13 100
long-term loans 2094.94 99 1342.11 1084.80 100
&deposits
current assets 100 115.7 116.10 121.51 123
stores spares and 247.53 159.37 89.05 110.25 100
loose tools
stock in trade 435.56 98.86 75.79 33.83 100
trade debts 880.71 274.11 140.94 144.88 100
investment 1087.57 11221.05 616.07 199.67 100
advanced deposits 355.55 190.57 126.71 100.96 100
cash and bank 290.60 138.32 91.88 111.72 100
balance
Liabilities and owner equity of the balance sheet shows that issued and paid up
capital of the company is increasing. And reserves of the co also jump 343% to
675% in the year of 2006 to 2007. Accumulated profits of the co have decreasing
trend. And it is dangerous for the co.
Noncurrent liabilities of the co increases from 2004 to 2007 but there is a decline in
2008. Current liabilities of the co also have increasing trend.
This horizontal analysis of balance sheet shows that Fixed Assets of the Co increase
from last years. It means Co have much productive assets. It shows a good trend of
fixed assets. On other side trend of assets subjects to finance lease going to
decrease. Co also have asset that are work in progress but trend of these assets
also going to decrease. Co also invests in long term investment and this asset also
56 | P a g e
has increasing trend from 2004 to 2008. Co also has long term deposits and these
also have increasing trend.
Current Assets of the Co also have increasing trend. Trade debts of the Co also
have increasing trend and its debts are not in a good position. Short term
investments of the co also increase and Co use its idle cash in good manners.
.
Vertical analysis of balance sheet
Assets 2008 2007 2006 2005 2004

issued subscribed 4.72% 4.89% 5.37% 10.23% 14.31%
& paid up capital
reserves 51.48 57.26 43.97 39.94 37.47
accumulated profit 0.06 3.39 6.79 1.54 2.15
total
Total 56.26 65.55 56.16 51.72 53.92
Non-current
Liabilities
long term finance 16.52 16.79 2.49 27.19 23.31
liabilities against 0.000732 0.0022 0.084 0.73 0.71
assets subject to
lease finance
Long term 0.13 0.15 0.098 0.16 0.26
deposits
retirement and 0.10 0.077 0.077 0.25 0.32
other benefit
deffered taxation 2.33 3.14 4.54 2.98 1.18
Total 19.09 20.16 26.29 31.32 25.78
Current liabilities
Trade & other 2.70 1.98 4.10 6.41 4.22
payables
accrued mark up 0.73 0.66 0.99 5.33 11.61
Short term 15.26 7.62 7.62

borrowing secured
current portion of 5.27 3.95 4.72 3.33 4.16
long term liabilities
provision for taxes 0.06 0.068 0.10 0.19 0.29
total 24.03 14.28 17.54 16.96 20.29
assets
57 | P a g e
non-current assets
property plant & 45.13 42.74 21.92 36.83 52.31
equipment
assets subject to 0.012 0.26 0.86 1.76 1.42
finance lease
capital work in 4.63 3.68 34.28 22.11 9.61
progress
investment 12.28 15.79 13.06 14.49 11.85
long-term loans 0.97 0.38 0.97 1.51 0.21
&deposits
Total 63.03 62.86 71.11 76.71 75.41
Current liabilities
stores spares and 4.32 2.89 2.44 5.75 8.01
loose tools
stock in trade 2.42 0.57 0.66 0.56 2.55
trade debts 0.86 0.27 0.22 0.42 0.45
investment 28.09 32.72 24.90 15.37 11.84
advanced deposits 0.79 0.44 0.44 0.67 1.03
cash and bank 0.45 0.22 0.22 0.52 0.72
balance
Total 36.26 37.13 28.88 23.29 24.59
Vertical Analysis of the balance sheets shows that in 2008 that Equity portion of Co
have large portion of equity .And there is minimum portion of noncurrent liabilities.
And it shows a good trend. Co finances his assets through equity and pay minimum
amount of interest. Current liabilities of the co increase from last years. On current
assets co do not pay interest. Co pays his obligation timely and there is no chance of
insolvency.
On the other side of balance sheet are assets of the Co. Co have more productive
assets. Analysis show that Company Finance minimum assets at lease. Current
assets of the Co slightly decrease from last year.
LEARNING AS AN INTERNEE
58 | P a g e
 The actual purpose of internship is the basic learning of practical and

professional approach of the studies. As an internee in DG Khan Cement
Company I have been assigned different duties.
 My internship of Six weeks includes 36 working days. The whole ‘work done
by me’ can be well illustrated by distributing among six weeks depending
upon the nature of work, thereto. It can be well explained under following
heads;
 WEEK-1
• Department:
I. Finance/ Accounts
• Worked with:
I. Mr. Khalid Mahmood Khalid (Manager A. Payable)
• Duties and Accomplishments:
I. Work on Rectification of error
II. Work on Closing Entries
 WEEK-2
• Department:
• Worked with:
I. Mr. Khalid Mahmood Khalid (Manager A. Payable)
II. Mr. Sultan (Dy Manager)

I. “COMPUTATION OF SALES TAX
PAYABLE”
II. Sales Tax Status for Reconciliation
 WEEK-3
• Department:
• Worked with:
59 | P a g e
I. Mr. Elahi Bakhsh

II. Mr. Sultan (Dy Manager)

I. Cement Manufacturing Process
II. Book keeping, Filing and Maintaining the records
III. Intra Company Reconciliation
IV. Bank reconciliation statement
 WEEK-4
• Department:
I. Finance (Export Section)
II. Marketing and Sales
• Worked with:
I. Mr. Elahi Bakhsh
II. Mr. Abid Nasir
III. Mr. Haneef

I. Sales procedure and dealing with the Customers
II. Preparation of Sales Documents.
III. Letter Of Credit (L/C)
IV. Maintaining payments document
V. Export Process
WEEK-5
• Department:
I. Sales and Marketing
II. MIS/ ERP
• Worked with:
60 | P a g e
I. Mr. Abid Nasir
II. Mr. Amir
III. Mr. Waqas ( C.A)
IV. Mr. Hanif

I. Cash disbursements
II. Accounting module of Oracle E-Business
III. Maintaining Customer order form
IV. Report Generation
 WEEK-6
• Department:
I. ERP (enterprise Resource planning)
• Worked with:
I. Mr. Kashif: Manager Audit in Ferguson & Co.
II. Mr. Waqas

I. Maintaining information reports
II. Reporting of General Ledger
III. Maintain suppliers Ledger
RECOMMENDATIONS
61 | P a g e
 Top management should use up-to-date marketing practices rather to use

orthodox ideas. This is the age of advertisement and they should advertise their
product rather use push strategy. They should emphasize on pull strategy as
well. They have good, energetic, experienced marketing and sales team they
should use it constructively.
 They should divide their zones for marketing and sales teams and should send
their teams to the distributors so that company should live in contact with the
distributors.
 They should pay much attention to promotional tools. They should advertise their
product. They are only using trade promotions, which are not enough to have a
good positioning in the market. They should use other promotional tools as well
 They should pay much attention to their employee’s promotion. They should use
better performance appraisal system.
 The middle level management should be involved in decision-making. In this way
they will feel sense of responsibility and their productivity will increase. Their
loyalty with the organization will also increase.
 They should also introduce some employee recognition program. In this way the
employees will be more satisfied with their jobs and ultimately will be beneficial
for the organization in terms of high productivity.
 Skills and performance based performance appraisal program should be applied
and should not rely on one person’s formulated ACR.
 Employees should be promoted on the basis of their achievement.
 Employees should be rotated in different jobs and tasks, as monotony decreases
productivity
62 | P a g e
Consolidation is needed for industry stability because of following

observations.
1. Cartels are unstable by their nature.
2. Industry needs one or two dominant players for long-term sustainability
in prices and profits
3. Top four players command 46% of market share in the industry that will be
increased to 50% in FY10.
4. World norm is that top four players have more than 60% market share
5. Consolidation process will be needed to increase market share of larger
players rather than going for capacity expansions
6. We may see acquisitions in the industry as the industry goes
through overcapacity cycle.
CONCLUSION
It was really a good experience as I have learnt a lot about the practical environment
of the offices, particularly about the cement industry I have learnt for the first time. In
my opinion working environment of large business groups is not much different from
that of theoretical study of management.
International Trend
Although international energy prices have declined recently, any beneficial impact on
margins has largely been negated by substantial depreciation of Pak Rupee.
PACRA, therefore, believes that the performance of cement companies
could weaken further impacting their financial profile. Pakistan's cement industry
is poised to face a tough challenge as the regional markets, mainly China and India,
are likely to emerge as competitors in the export market, following a slowdown
in their domestic economies and enhanced production capacity.
63 | P a g e
Glossary
MIS Management Information System

HR Human Resource
DGKCCL Dera Gazi Khan Cement Company Limited
ERP Enterprise Resource planning
IR Issuance Requisition
STN Store Transfer Note
GRN Goods Received Notes
SER Store Evaluation Report
SRR Store Return Report
OC Order Confirmation
DN Dispatch Note (DN)
PO Purchase Order
PC Product Code
QO Quantity Ordered
SOC Sales Officer’s Code
ISO Internal Sale Order (ISO)
RC Reconciliation Statement
CV Cash voucher
BV Bank voucher
JV Journal voucher
64 | P a g e
References
Mr. Elahi Bakhsh Manager Finance

Mr. Khalid Mahmood Khalid Manager (A. Payable)
Mr. Ch. Abid nasir Sr. Deputy Manager Marketing
Mr. Shehzad Gul Assistant Manager (fin)
Mr. Sultan Mahmood Deputy Manager Finance
Electronic References
www.kmlg.com
www.dgcement.com/
www.pioneercement.com/
www.bestwaycement.com/
www.luckycement.com/
www.iptu.co.uk/content/pakistan_employment_law.asp
www.unescap.org
www.defence.pk/forums/economy-development
www.cia.gov
www.iht.com/articles/ap/2008/07/29/business/AS-Pakistan-Interest-Rates.php
www.thenews.com.pk/daily_detail.asp?id=123450
www.pakistan.gov.pk
www.probertencyclopaedia.com
www.thepost.com.pk
www.pwc.com/pk
65 | P a g e
Annexure
Summarized Income Statement
1. Summarized Balance Sheet
2. Liquidity Ratios
Long Term Debt Paying Ability
Profitability Ratios
3. Assets Utilization
Investment Ratios
4. DGCCL’s ORGANOGRAM ( Head office)
5. Organizational Chart
Purchase accounting system
Production process
Sale accounting system
66 | P a g e

Final Internship Report

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D.G. KHAN CEMENT COMPANY LTD.

(A unit of Nishat Group)

D.G. Khan Cement Company Ltd

Acquisition of DGKCC by Nishat Group

Expansion -Khairpur Project

D.G. KHAN CEMENT COMPANY LIMITED

Public Limited Company

Nishat House, 53-A, Lawrence Road,

Mrs. Naz Mansha

Mr. Mian Raza Mansha

• Mrs. Naz Mansha Chairperson/Director

Mr. Khalid Mahmood Chohan

KPMG Taseer Hadi & Co, Chartered Accountants

Mr. Shahid Hameed, Bar-at-Law

Royal Bank of Scotland (Formerly ABN AMRO Bank (Pakistan)

Allied Bank Limited

Askari Bank Limited

Bank Alfalah Limited

Habib Bank Limited

MCB Bank Limited

National Bank of Pakistan

Standard Chartered Bank (Pakistan) Limited

The Bank of Punjab

United Bank Limited

Lahore Regional Sales Office

Multan Regional Sales Office

DG Khan Regional Sales Office

Karachi Regional Sales Office

Cement Production Process

Storage area: It is a stacker that provides immediate storage. In case there is a

Cement Production Process:

Raw material Crushing and

MARKETING & SALES Department

Sales and Marketing Department

The structure and working of this department is as following:

b. Deputy General Manager (Marketing)

Marketing and Competitive Strategy

• DG brand & Elephant brand Ordinary Portland Cement

Ordinary Portland cement:

Exceptional Strength: At DGKCC the chemical composition and grinding fineness

Sulphate Resistant Cement:

Low Heat of Hydration: Heat of hydration is the heat generated on reaction of

HR And MIS Department

Inbox provides Oracle License Renewal to D.G. Khan Cement

Inbox Business Technologies provides Oracle License Renewal to D.G. Khan

The services provided are mainly for:

• Oracle E-Business Suite,

DG Khan Factory Site

Facilities for Workers at Site (Factory DG Khan)

Major Functions of Finance Department

Finance department performs different functions in the organization to run the

• Calculate different expenses of the organization.

Finance department maintains all types of accounts in the organization. Finance

Documentation Used in Inventory Section

• Issuance Requisition (IR)

Principles followed by Inventory Section

Accounting principles followed by inventory section:

• Assets are depreciated at Straight Line Method.

Depreciation in respect of such assets is charged in annual installments so as to

b) Sales Accounts Section:

• Purchase Order Number

• Name of the customer

Purchase department also deal with different documents such as: