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PRESENTED BY, PRESENTED TO,

HUMA SIRAJ (FA15-EX-0123) SIR FAISAL MAJID


ICI Pakistan Limited (Chemical
Industries) is located
in Karachi, Pakistan.
It was set up as a public limited
company in Pakistan in 1952.
ICI Pakistan was acquired by Akzo
Nobel on January 2008.
TO BE THE FIRST CHOICE FOR CUSTOMER & SUPPLIERS ENSURING
SUSTAINED LEADERSHIP POSITION IN THE MARKET WHERE WE COMPETE,
DELIVERING LONG TERM BUSINESS VALUE THROUGH A HIGH
PERFORMANCE CULTURE, INNOVATION, ETHICS & RESPONSIBLE CARE.
EBIT
4043576
LESS: INTEREST
398079
NET INCOME
3645497
DIVIDED BY: EQUITY OF CAPITALIZATION(KE)
22.50%
VALUE OF EQUITY
16183900
ADD: VALUE OF DEBTS
7530362
VALUE OF FIRM
23714262
TOTAL DEBTS
7530362
ADD:TOTAL EQUITY
16183900
TOTAL CAPITAL
23714262
EBIT/
4043576/
VALUE OF FIRM
273714262
WACC
17.05%
SOURCE OF BOOK SPECIFIC WEIGHT WACC
FINANCE VALUE COST

TOTAL DEBTS 7530362 #3.96 0.32 1.2672

TOTAL EQUITY 16183900 23 0.68 15.74

23714262 17.01%
INTEREST / TOTAL DEBTS
=398079 / 7530362

=0.0528 OR 5.28
AFTER TAX:
KT=KD (1-TAX)
KT=0 .0528 (1-0.25)

COST OF DEBTS AFTER TAX


=3.96 OR 0.396
% CHANGE IN EBIT/
16%/
% CHANGE IN SALE
12%
DOL

1.334TIMES
EBIT/
=4043576/
EBIT-INTEREST
4043576- 398076
DFL
=1.109TIMES
DOL * DFL
1.334* 1.109
DTL
=1.47TIMES
A measure of a stock's risk of volatility
compared to the overall market
The ICI Pakistan Beta is 1.0397
LINK:
https://markets.ft.com/data/equities/tearshe
et/forecasts?s=ICI:KAR
THE COMPANY MARKET RRICE

PER SHARE IS 769.5


The value of equity for ICI is very much high as
compared to debts, equity is more expensive than
debt; the cost of capital refers to the claim on
earning which must be afforded by shareholders
for their ownership stake in the business.

The current operating leverage is of 1.334 indicates


a good leverage for the year. However, there is a
significant risk that operation cost would
significantly increase in future considering the
merger of two businesses within ICI in the year
2017/18.
Statement of income
2015-2016 2016-2017

12% EQUITY INCREASED 14,417 16,184

13% CAPITALEXPENDITURE 4,254 4,800


 ICI must consider using its debts source more affectively as they
are cheaper than equity.
 Selling and distributions costs have been increased significantly
by 23.08% in 2016/17, this ultimately affects operating profits. It
must be controlled by planning and introducing new affective
strategies to control selling and distribution cost.
 Current liabilities have increased by 28% indicating a significant
increase. Financial leverage may come below 1 if not controlled.
Strategies must be planned to sort out the current problems and
actions must be taken to lower current liabilities. For e.g. if
payables days are increased in order to maintain working capital
but it would also negatively affect supplier trust and they may
reduce credit sales.
 ICI is highly dependent on natural resources for maintaining sales.
Considering 80% for natural gas resources are depleting ICI may
consider using alternative materials to maintain its sales.
Otherwise profits would significantly drop and WACC would be
very low for the company.