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43
Analysis
AL-GHAZI TRACTORS LTD
Profitability
Sales revenue 12,098,828 9,636,109 8,780,685 9,262,626 14,779,564 10,113,572
Gross profit 3,348,741 2,499,478 2,268,143 2,069,369 2,791,227 1,872,956
Investment income 125,039 424,444 435,143 378,450 513,137 534,544
Profit before taxation 2,877,525 2,392,046 2,251,937 2,023,294 2,872,795 2,062,675
Taxation 950,641 799,763 677,193 651,804 957,164 703,795
Profit after taxation 1,926,884 1,592,283 1,574,744 1,371,490 1,915,631 1,358,880
Earnings before investment income,
tax and depreciation (EBITDA) 2,810,598 2,013,749 1,859,004 1,683,845 2,396,532 1,562,668
Manpower Cost - Direct 266,848 224,434 183,387 204,828 209,657 180,444
Manpower Cost - Indirect 217,209 263,981 219,621 196,481 165,435 152,820
Total Manpower Cost 484,057 488,415 403,008 401,309 375,092 333,264
Financial position
Fixed assets 649,897 612,208 466,751 404,433 373,481 373,295
Long-term investments - - 42,800 44,800 55,800 74,000
Other non-current assets 5,818 2,913 2,131 9,333 21,228 32,448
655,715 615,121 511,682 458,566 450,509 479,743
Represented by:
Share capital 289,821 289,821 289,821 214,682 214,682 214,682
Reserves 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Unappropriated profit 2,069,648 4,498,759 7,261,674 7,004,277 6,711,631 5,551,592
3,359,469 5,788,580 8,551,495 8,218,959 7,926,313 6,766,274
CASH FLOWS
Operating activities 3,239,509 619,833 1,078,632 1,175,686 2,121,542 (609,573)
Investing activities 986,817 3,702,394 (342,666) 522,032 31,665 (733,436)
Financial activities (4,339,794) (4,321,698) (1,219,754) (1,071,853) (1,177,685) (535,675)
80 85
300.00%
70
250.00%
60
62.5
50 200.00%
40 44.62
150.00%
30 33.24
31.94
100.00%
27.17 27.47
20 25 25
22.5
50.00%
10
0 0.00%
2012 2013 2014 2015 2016
Dividend per share (Rs) Earnings per share (Rs) Dividend payout ratio (%) Earning Yield (%)
Financial
Annual Report 2016
Analysis
Financial Ratios 45
Profitability Ratios
Gross profit ratio 27.68% 25.94% 25.83% 22.34% 18.89% 18.52%
Pre-tax profit ratio 23.78% 24.82% 25.65% 21.84% 19.44% 20.40%
Net profit to Sales 15.93% 16.52% 17.93% 14.81% 12.96% 13.44%
EBITDA margin to sales 23.23% 20.90% 21.17% 18.18% 16.22% 15.45%
Operating Leverage ratio 1.55 0.85 -2.00 0.80 1.16 1.26
Return on asset 41.49% 24.86% 15.77% 13.96% 20.23% 15.88%
Return on Equity / Capital employed 57.36% 27.51% 18.41% 16.69% 24.17% 20.08%
Liquidity Ratios
Current Ratio 3.32 10.54 7.02 6.09 6.12 4.70
Quick Ratio 2.15 6.61 5.42 4.99 5.07 3.11
Cash to current liabilities 1.10 4.24 2.91 1.50 2.57 1.44
Cash flow from operations to sales 26.78% 6.43% 12.28% 12.69% 14.35% -6.03%
Operating Cycle
No. of days in inventory 73 110 108 82 65 84
No. of days in receivables 5 1 4 11 5 5
No. of days in payables 20 34 58 49 25 36
Operating Cycle 58 78 54 44 45 53
46 Analysis
Analysis of Profit & Loss
Sales Revenue
Gross Profit
Company has managed to improve its GP% to 27.68% from 25.94% in year 2015. This
performance is attributable to appreciable response from customer to improved product
quality and launch of new 85 HP tractor model. Coupled with operational efficiencies,
better sale mix and restricted price increases allowed to vendors.
A significant increase of 9% in GP% from year 2011 is a proof of companys strength and
profitability.
Other Income
Other income mainly represents income from investments. A declining trend in other
income is mainly due to payment of extra ordinary dividends during the year 2015 and
2016. Which ultimately resulted in reduced investments in the financial market.
Financial
Annual Report 2016
Analysis
Profitability
Property, plant and equipment have increased from Rs 612 million in 2015 to Rs
650 million. The increase is mainly attributable to capitalization of various assets and
equipment acquired to improve the product quality.
Stock in trade
The Company makes all efforts to maintain raw material and components inventory at safety
stock levels to minimize production disruptions due to supply chain issues of auto sector.
Local and imported inventory is reviewed and analyzed on monthly basis to avoid built up of
inventory, resulting in decrease in stock in trade by 34% from the year 2015.
48 The Company monitors its cash inflows and outflows on a daily basis. Cash
management and investment strategies are then planned to maximize returns. The
Company has generated Rs. 7.6 billion from operations since December 2011.
Cash used in investing activities represent cash usage on account of fixed capital
expenditure and investments.
Cash outflow from financing activities has increased over the years due to increase in
dividend payments. Rs. 4.3 billion was paid as dividend in the year 2016 as compared to
Rs 0.96 billion in 2011. AGTL is a debt free Company.
Analysis of Ratios
Profitability Ratios
The Company being debt free, has reported favorable liquidity ratios.
Decrease in operating cycle is mainly due to lower inventory balance at the year-end as
explained above.
Market Ratios
Analysis 49
Company's Share price is interlinked with the Company's financial performance and has
positive correlation wih the factors influencing the Company's performance.
In the prevailing business scenario, management considers the following factors to which
the performance and share price of the Company may be sensitive.
Government decisions
Government decisions on crop prices, taxes, subsidized tractor schemes etc. are
important drivers of the Companys share prices. Decisions favourable to the Company
have led to increase in share price, whilst decisions to the contrary have negatively
impacted share price.
Weather patterns
Raging floods and inadequate rainfall affects the financial performance of the tractor
industry, thus affecting the share price.
Plant operations
Stability of plant operations is of paramount importance. Stable plant operations allow for
higher production and add to the profitability of the Company which can positively affect
the share price.
50 Analysis
Rupees 000 2016 2015 2014 2013 2012 2011
BALANCE SHEET
Analysis 51
Increase / (decrease) from preceeding year in Rs 000 2016 2015 2014 2013 2012 2011
BALANCE SHEET
52 Analysis
Rupees 000 2016 2016 2015 2015 2014 2014
% % %
BALANCE SHEET
Fixed assets 649,897 19.35% 612,208 10.58% 466,751 5.46%
Long-term investment - 0.00% - 0.00% 42,800 0.50%
Long-term loans and deposits 5,818 0.03% 2,913 0.03% 2,131 0.03%
Analysis 53
% % %
BALANCE SHEET
Fixed assets 404,433 4.92% 373,481 4.71% 373,295 5.52%
Long-term investment 44,800 0.55% 55,800 0.70% 74,000 1.09%
Long-term loans and deposits 9,333 0.11% 21,228 0.27% 32,448 0.48%