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National College of Business Administration

& Economics
School of Business Administration

Topics

Trend Analysis

Of

Noon Sugar Mills Ltd

Submitted By:-

Hifza Tariq 2163173

Submitted To:-
Sir M. Sarmed
Noon Sugar Mills Ltd

Introduction

Noon International (Pvt) Ltd., is a trading company of the group established in 1972. The
company employs 41 people including 13 professional sales engineers.

Noon International represents various international companies of repute in Pakistan and market
their equipment in the fields of textile, power generation, sugar, fertilizer, chemical, steel,
cement, food and milling.

The company has a diversified and large customer base of over 400.

The average annual sales order turn-over is USD 18 Million.

The present equity of the Company is Rs.660 Million, with total investment of over Rs.1,024
Million. The Market Capitalisation is over Rs.455 Million, and annual sales revenue amounts to
over Rs.1.0 Billion , including exports of Rs.309 Million .The average number of employees is
691.

The Company has a gratifying record of 43% average annual Dividend pay out to the share
holders in the last 10 years.

History

The Company was incorporated in 1964 as a public company listed on all the Stock Exchanges
of Pakistan for setting up of a plant for manufacture of white sugar, in the province of Punjab.
The plant went into production in 1966 with a daily crushing capacity of 1,500 MT of sugar
cane, which has since been raised to 4,000 MT per day in 2002. Further extension to 9,000 TCD
has become operative in 2006-2007 crushing season.

Board of Directors

Mr. K. Iqbal Talib


Chairman
Malik Adnan Hayat Noon
Chief Executive
Mr. Salman Hayat Noon
Non-Executive Director
Lt Col (R) Abdul Khaliq Khan
Executive Director
Mr. Muhammad Tariq Mir
Director
Mr. Sayed Ali Raza
Director
Mr. Muhammad Sohail Khokhar
Executive Director

Trend Analysis

Respective Ratios

Current Ratio
Debt Equity Ratio
Net Profit Margin
Dividend Cover Ratio
Cash Flow Ratio
Fixed Asset Turnover Ratio

Current Ratio
The current ratio is a liquidity ratio that measures a company's ability to pay short-
term obligations.

Current Ratio = Current Assets / Current Liabilities

Noon Sugar Mills is running smoothly considering its higher current ratio, but the point of
concern is that it is decreasing is drastically decreasing annually. This suggests that this company
is not been really able to capitalize on their short term liabilities recently.

Year 2005 2006 2007 2008 2009


Rati 216. 130. 85.2 77 74.6
o 7 7
250

200
2005
150 2006
2007
100
2008
50 2009

0
Current Ratio

Debt Equity Ratio


The D/E ratio indicates how much debt a company is using to finance its assets relative to the
amount of value represented in shareholders' equity.

Total Liabilities / Shareholders Equity = Debt-Equity Ratio

We can see variety of changes in the ratio during the 5 years. Here it is clear that apart from
2009, throughout the cycle of 5 years companys liabilities are on a rise. This shows that Noon is
depending more on borrowed money than their own equity.

Year 200 200 2007 2008 2009


5 6
Rati 27.3 89.1 121.1 113 65.6
o
140

120

100
2005
80 2006

60 2007
2008
40 2009
20

0
Debt Equity Ratio

Net Profit Margin


Net profit margin is the ratio of net profits to revenues for a company or business segment.
Typically expressed as a percentage, net profit margins show how much of each dollar collected
by a company as revenue translates into profit.
As far as Noon are concerned so their Profit margin is on a constant low since 2005, the worst
year was 2007 and 2008 where their expenses were so high that were not able to generate profit
instead they took lose.

Year 200 200 2007 2008 2009


5 6
Rati 12.7 8.1 -5 -2.1 3.9
o
14
12
10
8 2005
6 2006
4 2007
2 2008
0 2009
-2 Net Profit Margin
-4
-6

Dividend Cover Ratio


The preferred dividend coverage ratio is a coverage ratio that measures a company's ability to
pay off its required preferred dividend payments. A healthy company will have a high coverage
ratio, indicating that it has little difficulty in paying off its preferred dividend requirements.
Apart from 2005 and 2009 there has been nothing for the dividends, which makes Noon really
vulnerable in the market, because they have not been able to benefit their dividends.

Year 2005 200 2007 2008 2009


6
Rati 441. 0 0 0 376.7
o 1
500
450
400
350 2005
300 2006
250
2007
200
150 2008
100 2009
50
0
Dividend Cover Ratio

Cash Flow Ratio


The operating cash flow ratio can gauge a company's liquidity in the short term. Using cash flow
as opposed to income is considered a cleaner, or more accurate, measure since earnings can be
manipulated.
Noon has done pretty well as far as their cash flows are concerned apart from the nightmare in
2008. Their best year was 2009 where their liabilities were least and they had good cash for self
finance.

Year 2005 200 2007 2008 2009


6
Rati 33.1 30.3 44.3 -436.2 289.9
o
400
300
200
2005
100
2006
0
2007
-100 Cash Flow Ratio
2008
-200
2009
-300
-400
-500

Fixed Asset Turnover Ratio


Fixed-asset turnover is the ratio of sales (on the profit and loss account) to the value of fixed
assets (on the balance sheet). It indicates how well the business is using its fixed assets to
generate sales.

Revenue / PP&E = Fixed Asset-Turnover Ratio

Constant decrease in the ratio suggests that Noon have not been efficient in the use of their
PP&E.

Year 2005 200 2007 2008 2009


6
Rati 0.31 0.05 0.04 0.17 0.22
o
0.35
0.3
0.25 2005
0.2 2006
0.15 2007
0.1 2008
0.05 2009

0
Fixed Asset Turnover Ratio
Conclusion
Observing all the respective ratios one can come to a conclusion that, Noon Sugar Mills have
rather been somehow able to operate themselves well but have never been able to do the most of
the investment. Being investor nobody would fancy investing in them since they have not been
able to pay their dividends back. Drastic changes in ratios of Noon really prevents investor to
invest in them since there is no stability.