4.

Financial Ratio Analysis

Category Formulas 2023 2022 Interpretition

Liquidity

Current Ratio Current 1.10 1.46 CL increased by 7% and CA decreased by

(Times) Assets/Current 18% as a result of which overall ratio fell to
Liabilities 1.10.

Quick/Acid Test Current Assets- 0.38 0.65 Stock in trade/Inv increased by 92% so in
Ratio (Times) Inv/Current year 2023 a larger amount is reduced from
Liabilities CA to calculate this ratio which reduces the
overall ratio to 0.38

Long Term
Solvency
Debt to Equity Total 0.60 0.43 Long Term lonas increased by 62%, takwn
Debt/Shareholders out for expansion purposes, Whereas equity
Equity portion, share capital onluy increased by
12% only so as a result the debt to equity
ratio increased

Interest Coverage EBIT/Interest 4.54 10.59 It has decreased due to the fact that EBIT
ratio Expense has only increased by 34% and the net
finance cost has increased by 584%

Profitability

GP Margin Gross 30 28.51 It has improved a little as sales increased by

Profit/Revenue 25% whereas the gross profit has also
increased by 32%, which represent that
Variable Costs are controlled in a more
effective way that has increased CM and as
a result the Gross profit margin too.

OP to Sales Op.Profit/Revenue 10.93 13.11 It has decreased, which shows that the
indirect expense/operating expenses are
increased more than that to the increase in
Sales over two years. As sales increased by
25% and operating expenses increased by
157%

Turnover

Total Asset TO Net sales/Avg Total 0.08 0.10 Total assets increased by 22% and net sales
Assets increased by 25%, because of which it fell
 by 2%.

Fixed Asset TO Net Sales/Avg 0.11 0.16 Fixed assets increased by 35% and sales
Fixed Assets increased by 25%, due to this F Asset TO
decreased

Market Value

EPS Net Income-Pref 3.16 3.02 Profit after tax/net income increased only by
Divid/ W.Avg no of 5% and the outstanding no. of shares
shares outstanding increased by a value percentage change of
12%.

P/E Market 3.92 6 EPS of the co. increased by 5% and the

Price/Share/EPS MPS decreased by 31.63%. as shown.so the
PE ratio fell significantly

- 12.38(3.92*3.16) - 2023
- 18.12(6*3.02) - 2022

Capital Not Applicable - -

Adequacy Ratios

Non Perf Loan Not Applicable - -

Loan Loss Prov Not Applicable - -

- Source/Reference: Annual Report for year ended 30 June 2023

 GRAPHICAL REPRESENTATION OF KEY RATIOS

- 5. CORPORATE VALUATION:
- Market Capitalization Method:

Market Price/Share * No of Shares Outstanding

12.38*2,452,847,220 = 30366248583.6

- Total Enterprise Value:

market capitalization + total debt + preferred stock – cash and cash equivalents

30366248583.6 + (31777087000+7387000000+4530981000+4176493000)+ 0 -
3,560,524,000
= 74677285583.6
 5. CAPITAL STRUCTURE, DIVIDEND POLICY & CORPORATE
GOVERNANCE:

- Capital Structure:

The Company’s aim when managing its capital is to safeguard the Company’s ability to continue
as a Going Concern so that it always can provide the best returns for the shareholders and
benefits for its stakeholders and to uphold a strong capital structure to attain a sustainable
development.

Company makes amendments to its capital structure by keeping the changes in the Economic
conditions and by considering whether the proposed change will benefit it more than its costs.

The current capital structure consists of lately introduced debt due to the fact the company is
focusing on its expansion in post-merger scenario with Askari Cement
And the debt-to-equity ratio has increased significantly as compared to last few years and as a
result of which the company can be said to be focusing more on expansions and hence acquiring
loans so eventually its current capital structure does not allows it to pay dividends as the
company is more focused on long term growth aspects and is kind of reinvesting returns rather
than distributing.

- Dividend Policy:

A zero or no dividend policy seems to be in place as for the last 3 to 4 years no cash
dividend is paid by the company to its shareholders, and financial year 2022 was no change
and this year due to the funding requirements of the ongoing expansion projects no dividend
was declared by the entity.
All these expansion projects undertaken are expected to to contribute positively to the
earnings of the company and also are focused on long term wealth maximization of the
shareholders and it may also mean that dividends may hopefully will be paid after these
expansions successfully work in the favor of the company and may be then a dividend policy
may come into effect once again as before.

- Corporate Governance:

It is the way an entity policy itself and lays the very foundation of the guiding principles that
it will follow for ethically doing business that is in the best interests of everyone associated
with it, primarily its stakeholders, whether internal or external.
Principles generally that reflected in a good corporate governance include following:

- Transparency and Fairness

- Accountability
- Risk Management
- Objectivity/Independence.

- Corporate Governance and Capital Structure:

As capital structure only contains equity and debt, so the corporate governance
principles that are affecting either of the two should be considered.

Risk management is one of the principles that is outlined in the corporate

governance principles, and a risk of the company can be assessed in two ways. One
that comes with equity which represents how risky a company’s stock is in
comparison with the market.
Secondly, the risk also comes with increased financial distress when a
company becomes highly geared, so as a result of which the costs of the debt
increase as the company is now seemed to be riskier due to its increased financial
gearing.

The relation between the two lies in a way that, when and if the risk is not
managed by the management of the company, and if the debt is increased without
adequately considering its adverse effects and also when the beta equity of the entity
increases.
These overall hike in both of the risks, if not managed and mitigated as per
defined in the corporate governance, will eventually effect the returns to the
shareholders, as increased in risks will also increased the cost of the capital thus
decreasing the profitability of the company over time.

Moreover, principles of the corporate governance also include Transparency,

and it may also happen that due to the decreased transparency and increased biasness
of the management the capital structure changes made are not favorable to the entity
but the individuals in the senior management, for instance taking loans from related
parties and not disclosing it in order to reflect a lower gearing financially.

This way somehow corporate governance of an entity effects the capital

structure of the company.