Project Objectives And Overall Research Finance Essay

It was really of import to take my subject carefully, so for this intent I had to measure my involvements, strengths and failings. After measuring myself and sing the options available for I selected topic-8, “ An analysis and rating of the concern and fiscal public presentation of an organisation over a three twelvemonth period ” .

The ground for choosing this subject was that I considered myself good in managerial and analytical accomplishments. My conceptual clasp on fiscal analysis was created during ACCA surveies which induced me towards this subject. Topics other than this did non associate with my accomplishments every bit much as this one so that I intended myself to work on this subject. Factors used to measure concern public presentation are those 1s which were besides used to take investment determinations. Bing an active proctor of stock exchange motions, this was a opportunity for me to measure concern public presentation which would decidedly assist me in future to set up my calling in capital markets.

Reason for taking the organisation

My research undertaking was wholly based on the choice of company. I found cement industry as one of the major turning industry in the state that ‘s why I decided to choose Fauji Cement Company Limited for rating. Basic ground for the choice of this company was that most of the managers of this company are retired ground forces officers and my enthusiasm was to cognize that how these people operate company ‘s personal businesss. I besides wanted to cognize the planning and determination procedures of these people that consequence company ‘s gross. It is one of the top 10 companies in cement sector of Pakistan. The cement works operating in the Fauji Cement is one of the most efficient and best maintained in the Country and has an one-year production capacity of 1.165 million dozenss of cement. Fauji Cement is ISO certified for its Quality & A ; Environment Management Systems and has won figure of awards in its class

( hypertext transfer protocol: //www.fccl.com.pk/main/index-1.html, n.d. )

( hypertext transfer protocol: //www.fccl.com.pk/main/index.html, n.d. )

Undertaking aims

After make up one’s minding the subject and choosing the company, the following measure was to specify the research objectives. The most of import aim of the research is to measure the concern environment and fiscal public presentation of Fauji Cement Company Limited from Financial old ages 2009 to 2011.

Some others back uping research aims are as follows:

To find the general jobs that the cement industry of Pakistan is confronting and happen out the factors that are peculiarly influenced the Turnover of Fauji Cement Company Limited.

To analyze the profitableness place of Fauji Cement Company Limited, and to measure its concern ‘s ability to bring forth net incomes as compared to its disbursals.

To analyse the liquidness place of Fauji Cement Company Limited and to measure the house ‘s ability to pay its short-run debt duties.

To analyse the capital geartrain of Fauji Cement Company Limited, depicting the mix of long-run corporate support provided internally by stockholders to that contributed externally by loaners.

To place its internal strengths and failings, every bit good as its external chances and menaces by utilizing SWOT analysis

Research inquiries

Another of import measure in my research was to outline the research inquiries, which were utilized as a criterion phenomenon for the full undertaking. These inquiries included:

What attack is needed to carry through the research undertaking?

What beginnings should be scrutinized in order to determine relevant informations?

How to associate collected information with capable affair?

Which accomplishments are required to lucubrate, measure and analyse concern public presentation?

What is the turnover form of the company and the grounds behind its fluctuations?

What is the liquidness place of the company?

What is the profitableness of the company?

What is the geartrain of the company?

How has the company performed over three old ages?

What is the company ‘s public presentation as compared to its rival?

What are the internal strengths, failings and external chances and menaces of the company?

How to sum up informations into presentable study so that it could be apprehensible to readers?

What factors should be considered in order to pull decision?

What tools should be used for recommendations and suggestions?

Overall research attack

My research and analysis undertaking started with the choice of subject and the company. In order to place my overall research attack, I set a model by placing research aims. Information battalion for OBU available on ACCA web site helped me in puting of the model. Annual studies were required to obtain information about fiscal ratios. These fiscal ratios were used to size up one-year public presentation of the company. Mathematical figures extracted by ratio analysis became more meaningful and valuable in substance when these consequences were examined in the visible radiation of concern environment and benchmarks set by rivals. Developing an apprehension of relevant events and alining them in my analysis was an epoch-making facet. External and internal factors related to non-financial facets were discussed to measure company ‘s public presentation. SWOT analysis and Five Forces Model were utile to find the current place of company harmonizing to current market personal businesss. At the terminal, a decision was drawn in which suggestions were discussed for the improvement of company ‘s public presentation, and these recommendations were provided harmonizing to best of my cognition and accomplishments.

Information assemblage and concern techniques used

( Wordss: 1295 )

Information assemblage and beginnings of information

To carry through the research aim, it was necessary to acquire the exact, trusty and timely information. The subject and organisation which I selected for the research undertaking were really helpful in happening relevant and dependable information

Primary Beginnings

Company ‘s Employee

Information Gathered

Mr. Omer Ashraf ( Chief Financial Officer )

I collected the audited one-year studies of last three fiscal old ages, and asked inquiries about company ‘s fiscal public presentation. This meeting helped a batch to understand the company ‘s geographical markets and merchandise publicity schemes.

Secondary Beginning

Beginnings

Information Gathered

World Wide Web

Political and economic factor that influences the company.

Measuring the tendencies in cement industry

Determine the strength, failing, chance and menace to the organisation

Different articles on cement industry to cognize the current matter ‘s

Annual Reports

For ratio analysis, I had collected the fiscal informations from company ‘s one-year study, for rival analysis, I got information from rival company ‘s one-year study.

Text Books

From ACCA class books, I refined my constructs sing the tool and techniques such as SWOT, PEST analysis, etc.

From Student Accountant, I got valuable information about study composing

Newspapers

To roll up the abundant and up-to-date information about any developments in cement industry and gather economic expert reappraisals on current operations of company

Restriction of information assemblage

I conducted interview with cardinal employee of the Fauji Cement Company Limited, but I felt that I could merely acquire limited sum of information, insufficient to organize any analysis. So I used this information in combination with information obtained from other beginnings.

The World Wide Web offered tremendous information both dependable and undependable, so it was a really hard undertaking to take the right and relevant informations.

As the information collected from the cyberspace, inherited some restrictions, it may belie some facts and figures.

Ethical issues

Before beginning of my work, I made the appropriate programs to execute my research work in an ethical mode. During the aggregation of primary information, I took sensible attention in facet of namelessness and did non unwrap the names of people without their permission. Another ethical issue that I made certain to detect was utilizing information provided by others without admiting them, so I made certain that I deal with this adequately I used proper citing to cite the beginning from where the information was extracted.

Accounting and concern techniques used

Fiscal statement and ratio analysis

Fiscal statement analysis can be referred as a procedure of understanding the hazard and profitableness of a company by analysing reported fiscal information, particularly one-year and quarterly studies. Puting another manner, fiscal statement analysis is a survey about accounting ratios among assorted points included in the balance sheet. These ratios include plus utilization ratios, profitableness ratios, purchase ratios, liquidness ratios, and rating ratios. Furthermore, fiscal statement analysis is a quantifying method for finding the yesteryear, current, and prospective public presentation of a company.

( hypertext transfer protocol: //www.readyratios.com/reference/analysis/financial_statement_analysis.html, n.d. )

Financial ratio analysis is one of the most popular fiscal analysis techniques for companies and peculiarly little companies. Ratio analysis provides concern proprietors with information on tendencies within their ain company, frequently called tendency or time-series analysis, and tendencies within their industry, called industry or cross-sectional analysis.

( Peavler, n.d. )

Restriction of fiscal statement and ratio analysis

In malice of fiscal statement analysis being a extremely utile tool, it besides features some restrictions, including comparison of fiscal informations and the demand to look beyond ratios. Although comparings between two companies can supply valuable hints about a company ‘s fiscal wellness, alas, the differences between companies ‘ accounting methods make it, sometimes, hard to compare the information of the two. Besides, many a times, sufficient informations are on manus in the signifier of pes notes to the fiscal statements so as to repeat informations to a comparable footing. Or else, the analyst should retrieve the deficiency of informations comparison before making any distinct decision. However, even with this restriction, comparings between the cardinal ratios of two companies along with industry norms frequently propose avenues for farther probe.

( hypertext transfer protocol: //www.readyratios.com/reference/analysis/financial_statement_analysis.html, n.d. )

Restriction of ratio analysis, the lone restriction is if you use mean ratios alternatively of the ratios of high public presentation houses in your industry. Ever wonder why you ever hear that balance sheets merely show historical informations? This is why. A balance sheet is a statement of a house ‘s fiscal status at a point in clip. So, looking back on a balance sheet, you see historical informations. Inflation may hold occurred since that information was gathered and the figures may be distorted. Reported values on balance sheets are frequently different from “ existent ” values. Inflation affects stock list values and depreciation, net incomes are affected. If you try to compare balance sheet information from two different clip periods and rising prices has played a function, so there may be deformation in your ratios. You can cipher all the ratios you can happen from now until Judgment Day. Unless you try to happen the cause of the Numberss you come up with, you are playing a useless game. Ratios are meaningless without comparing against tendency informations or industry informations. Ratios are besides nonmeaningful unless you take the restrictions listed in this article into history. Very big companies may be composed of different divisions fabricating different merchandises or offering different services. To do ratio analysis mean something, different industry norms may necessitate to be used for each different division. The ratio analysis, used in this manner, will surely be more accurate than if you tried to make a ratio analysis for this type of big company. Different companies may utilize different methods to value their stock list. Another issue is depreciation. Different companies use different depreciation methods. The usage of different depreciation methods affects companies ‘ fiscal statements otherwise and wo n’t take to valid comparings. Ratio analysis is based wholly on the information found in concern houses ‘ fiscal statements. If the fiscal statements for a company are non rather every bit good as they should be and a company would wish better Numberss to demo up in an one-year study, the company may utilize window dressing to pull strings the information in the fiscal statements. Bear in head – this is wholly against the construct of fiscal and concern moralss and flies in the face of corporate administration.

( Peavler, n.d. )

SWOT analysis and Limitation of SWOT analysis

SWOT analysis is a tool for scrutinizing an organisation and its environment. It is the first phase of planning and helps sellers to concentrate on cardinal issues. SWOT stands for strengths, failings, chances, and menaces. Strengths and failings are internal factors. Opportunities and menaces are external factors.

( hypertext transfer protocol: //marketingteacher.com/lesson-store/lesson-swot.html, n.d. )

The most of import of which are the deficiency of sing unsure and two sided factors, deficiency of prioritization of the factors and schemes and excessively many extractible schemes.

( hypertext transfer protocol: //wiki.answers.com/Q/What_are_the_advantages_and_disadvantages_of_SWOT # ixzz1mWLVJZBz, n.d. )

Porter Five Forces Analysis and its Restrictions

The strength of competition in an industry is rooted in its implicit in economic construction and goes good beyond the behaviour of current rivals. The province of competition depends on five basic competitory forces shown below. These factors affect the snap of the demand curve, though some affect the long tally vs. the short tally. That is, possible entrants affect the long tally demand curve in that they may alter the industry construction from being more like an oligopoly versus perfect competition

Menace of new entrants

Dickering power of purchasers

Menace of replacement merchandises of services

Dickering power of providers

Rivalry among existing houses

( hypertext transfer protocol: //www.efalken.com/banking/worddoc/Porter.html, n.d. )

Restrictions of Porter Five Forces Analysis

It is of import to be cognizant that this theoretical account, though a powerful construction for treatment, has its restrictions. For illustration, it provides a good model for analysis but does non truly see issues around implementing alterations to repositing for strategic advantage. It is besides, because of its simplification of complex relationships, seemingly additive in construction whereas much competition is more in the signifier of webs and bunchs

( hypertext transfer protocol: //eu.wiley.com/legacy/wileychi/innovate/website/pages/atoz/fiveforcesmodel.htm, n.d. )

Analysis, Conclusion and Recommendation ( Wordss: 3983 )

Brief Introduction of Fauji Cement Company Limited ( FCCL )

A longtime leader in the cement fabrication industry, Fauji Cement Company, headquartered in Islamabad, operates a cement works at Jhang Bahtar, Tehsil Fateh Jang, and District Attock in the state of Punjab. The cement works operating in the Fauji Cement is one of the most efficient and best maintained in the state and has an one-year production capacity of 1.165 million dozenss of cement. The quality port land cement produced at this works is the best in the Country and is preferred the building of main roads, Bridgess, commercial and industrial composites, residential places, and a myriad of other constructions necessitating speedy beef uping bond, cardinal to Pakistan ‘s economic verve and quality of life.

( hypertext transfer protocol: //www.rozee.pk/company-details.php? compid=9800, n.d. )

Ratio Analysis

Employee turnover Analysis

The turnover public presentation of the company shows worsening tendency over the three periods decreased by Rs 572 million from 2009 to 2011. In FY10 the turnover is decline by 28 % from Rs.5315 million in FY09 to Rs 3808 million in FY10, but in the following FY11, there is little addition in the gross revenues turnover by 25 % to Rs 4743 million. Over the three old ages the gross revenues turnover has fallen by 11 % , from Rs 5315 million in FY09 to Rs 4743 million in FY11, which depicts that the growing in gross revenues turnover in FY11 is non sufficient to counterbalance the loss of growing in FY10

In FY10, there was a lessening in capacity use. In the last twelvemonth capacity use of 2008-09 was 100.09 % but in FY2009-10 it has been decreased by 96.06 % . In the following twelvemonth this capacity use falls farther by 93 % . This autumn in production was due to shortage of natural gas and electrical power supply. FCCL ‘s public presentation in run intoing the local demand was non up to the grade. There was a diminution in domestic despatchs by 11.74 % and 20 % in FY10 and FY11 severally. Overall domestic despatchs in industry in FY10 were increased by 14.63 % but in FY11 there was a worsening tendency in the domestic despatchs by 7 % . This was due to monolithic cut on the populace sector developments by the authorities. On the other manus, the export of FCCL was fantastic in both FY10 and FY 11. There was an addition in export despatchs by 21 % in FY10 and 37 % inFY11. If we take a glimpse over the proportion of the local demand in entire gross, the local demand contributed majorly. In FY09 the proportion of the local demand was 83 % , in FY10 it was decrease by 75 % and in FY11 domestic gross revenues were farther decreased by 67 % . In FY10, the local despatchs comprised 70 % and in FY11 it was 58 % of the entire cement despatchs. The worsening tendency in the local despatchs is an dismaying state of affairs.

( Annual Reports, FCCL, 2010, 2011 )

During FY10, due to adverse economic status the overall cement sector public presentation was sulky.

( Timess, 2010 )

During FY11, cement ingestion declined by 8.24 % as compared to last twelvemonth. It was an alarming state of affairs for the cement industry. Cement despatchs for FY11 has reflected the lowest capacity use of the industry at 76.12 % in past eight old ages. In FY11 entire despatchs declined by 6.68 % to 21.97 million dozenss, down from 23.55 million dozenss in FY10. Low ingestion of the cement reflects the low GDP of the economic system. Cement industry has been sing immense losingss due to high cost of production, worsening exports and lessening in local demand.

( Today, 2011 )

From the tabular array given below, the rival company, Attock Cement Pakistan Limited ( ACPL ) has successfully maintained the degree of turnover in hard economic environment over the three periods. Attock Cement Pakistan Limited has focused to increase market portion in domestic markets every bit good as export markets. Furthermore, through efficient gross revenues mix, the rival company was able to surpass the FCCL. The usage of waste heat recovery system, refused derived fuel and confined power undertaking helped the company to accomplish maximal volumetric production.

( Annual Reports, ACPLL, 2010, 2011 )

Employee turnover

FY11 ( 000 )

FY10 ( 000 )

FY09 ( 000 )

Fauji Cement Company limited

4,742,593

3,808,455

5,314,538

Attock Cement Pakistan limited

8,553,921

7,668,133

8,510,071

( Figures are taken from Financial Statements )

Employee turnover

Net income before Tax

FCCL was basking the smart net income before revenue enhancement boulder clay FY09. But in FY10, there was a crisp diminution in the net income by 77 % from Rs 1422 million in FY09 to Rs 324 million in FY10. However in the really following fiscal twelvemonth, FCCL tried to retrieve from this diminishing tendency and was able to increase its net income by 50 % , to Rs 488 million. This addition was non plenty to retrieve the loss from the old twelvemonth. Over the three old ages, net incomes declined by Rs 934 million, down by 66 % .

In FY10, the chief cause of diminution in net income was the lessening in cement monetary values. The net income from operations was decreased from Rs 1646 million to Rs 366 million defining a lessening of 78 % . During the same twelvemonth the rise of 234 % in travel and amusement disbursal, from Rs 703 1000 in FY09 to Rs 2,351 thousand, was appeared to be attempts of the company to derive more from the chances existed in the market. There was a important lessening in export cargo to Rs 1,101 1000 in FY10 as compared to last twelvemonth Rs 8,758 1000, down by 87 % was seemed that by increasing the exports, the company has adopted the efficient policies to cut down the cost of export cargo. At the terminal of the FY10, despite the addition of short-run and long-run debts therefore the effects of involvement cost of these loans were non apparent on the finance cost. In FY11, net income has increased as compared to the last twelvemonth. The addition in net incomes was due to the addition in selling monetary value of the cement. The monetary values of the cement in the FY11 increased runing net incomes by 62 % from Rs 366 million in FY10 to Rs 592 million. Travel and amusement farther rose by 493 % , to Rs 13,953 1000 as compared to old twelvemonth from Rs 2,351 1000, owing to the greater focal point on availing the chances globally and research the export market as local market portion has been worsening. The consequence of short and long term loans on the finance cost was conspicuously seen in this twelvemonth by the addition to Rs 104 million as compared to the last twelvemonth Rs 41 million, which was an addition of 154 % .

( Annual Reports, FCCL, 2010, 2011 )

The monolithic addition in travel and amusement disbursals of the company was caused after curtailment of export of the cement to India by about 80 % , the cement industry was seeking alternate markets for the exports. After researching other markets, like Sri Lanka, South Africa, Namibia, Oman and Mauritius, cement makers have started export to these states.

( Ahmed, 2009 )

From the tabular array below, by comparing the public presentation of Attock Cement Pakistan Limited with Fauji Cement Company Limited, the rival company has besides experienced the downward tendency in the last three periods. Despite of accomplishing greater production mark, Attock Cement has besides suffered from the worsening tendency of runing net incomes. However, the rival company was able to pull off its operating disbursals, there was Rs 600 million in FY09 diminishing down by 18 % to Rs 492 million in FY10. This showed efficient policies and techniques adopted by the rival. In FY11, due to crisp addition in rising prices, the operating disbursals have increased by Rs 180 million, up by 37 % .

Net income before Tax ( Rs )

FY11 ( 000 )

FY10 ( 000 )

FY09 ( 000 )

Fauji Cement Company limited

488,153

324,911

1,421,517

Attock Cement Pakistan limited

1,034,486

1,388,317

1,988,726

( Annual Reports )

Net income before Tax

Gross Profit Margin ( % )

The gross net income per centum in FY09 was 31.75 % , which declined significantly by 13.54 % in FY10. In the following fiscal twelvemonth, the restitution of the gross net income per centum has seen and improved to 17.35 % .

The lessening in net incomes in FY10 was due to the diminution in cement monetary values as mentioned earlier. The cement monetary values rose in the following twelvemonth, and the company successfully took advantage from that addition and recovered its gross net income. In FY11, there was crisp addition in the fuel consumed cost from the last twelvemonth 2010 Rs 1,338 million to Rs 1,917 million in FY11, which was an addition of 43 % . The lifting electricity duty and addition in monetary values of coal in international market have affected the net income borders of the Company. Due to fragile market status, most of the clip company was unable to go through on the impact of raising monetary values to stop user. FCCL is besides continuously worsening its production degree due to shortage of electric power supply and gas curtailment, made the company unable to accomplish economic systems of graduated table. There was an add-on of new cement works during the twelvemonth 2011 with a production capacity 7560 TPD in order to accomplish the economic systems of graduated table. Through this works incorporating province of the art engineering, company will be able to accomplish greater net income borders. ( Director Report, Financial Statements )

During FY10, the inauspicious impact of bead in gross revenues turnover affected the entire gross net income of the sector by lessening of 49 % year-on-year ( YoY ) . This diminution besides affected the gross border which became 17 % compared to the last twelvemonth ‘s 29 % . On per-tone-basis, in FY10 keeping monetary values were lowered by 21 % YoY and gross net income lowered by 53 % YoY.

( Timess, 2010 )

A prima cement manufacturer, Tariq Saigol said that most of the industry is bearing losingss due to monolithic addition in costs. The monetary values of the fuels were at their historic highs and doing record. The addition in electricity rates are besides acquiring intolerable for all the industries.

( Ahmed, 2011 )

The tendency of gross net income of the rival company, Attock Cement is besides worsening continuously, apparent from the tabular array below. This diminution is non every bit crisp as FCCL has during the three old ages. Over the three periods, the gross net income per centum of Attock Cement Pakistan Limited has decreased by 36 % , from 31.83 % in FY09 to 20.23 % in FY11, whereas this per centum of Fauji Cement Company Limited has declined from 31.75 % in FY09 to 17.35 % in FY11, down by 45 % . The chief ground was that Attock Cement has an ability to absorb the lifting monetary values of the natural stuff efficaciously due to high production capacity and by accomplishing economic systems of graduated table.

Gross Net income

FY11

FY10

FY09

Fauji Cement Company limited

17.35

13.54

31.75

Attock Cement Pakistan limited

20.23

25.53

31.83

( Annual Report )

Gross Net income

Fixed Asset Turnover ( Times )

The fixed assets turnover of FCCL is sing worsening tendency. The company ‘s belongings, works and equipment in FY10 were increased by 27 % from Rs 18,777 million in FY09 to Rs 23,819 million but net gross revenues in the same twelvemonth were decreased by 28 % from Rs 5,314 million in FY09 to Rs 3,808 million in FY10. This lessening was due to diminish in the cement monetary values of the cement, locally every bit good as globally. Therefore the merchandising monetary value per bag has decreased. In order to win the clients the gross net income borders was declined from 31.75 % in FY09 to 13.54 % in FY10. However, FCCL did n’t acquire the expected response from the market, hence the production despatches has decreased to 96.06 % as compared to old twelvemonth 100.09 % . In FY 11, the fixed assets turnover has increased a spot from 0.16 times in FY10 to 0.18 times in FY11, due to the addition in net gross revenues by 24.6 % from Rs 3,808 million in FY10 to Rs 4,743 million, in FY11 by increasing the belongings, works and equipment by 12 % , from Rs 23,819 million in FY10 to Rs 26,658 million in FY11. The addition in net gross revenues was due to betterment in cement monetary value degrees.

( Annual Reports, FCCL, 2010, 2011 )

Tariq Saigol, a competent cement manufacturer said in his interview that chief job for the cement industry is that its cost of production is higher than the gross revenues in the domestic market. He farther added that it is non possible to increase cement monetary values under current economic scenario.

( Ahmed, 2011 )

From the tabular array given below, fixed plus turnover of Attock Company is much high as compared to FCCL, but they are besides sing the worsening tendency continuously. Attock Cement Pakistan Limited has earned high turnover by utilizing the fixed assets Rs 5,396 million as compared to Fauji Cement Company Limited ‘s fixed assets Rs 26,658 million, which were 5 times greater. Through an effectual gross revenues mix, the rival company, maximise its gross revenues gross greater than the FCCL by utilizing relatively less fixed assets.

Fixed Asset Turnover

FY11

FY10

FY09

Fauji Cement Company limited

0.18

0.16

0.28

Attock Cement Pakistan limited

1.60

1.82

2.05

( Figures are taken from Financial Statements )

Fixed Asset Turnover

Current Ratio

In order to run into its short term liabilities the current ratio should be at least 1. FCCL ‘s current ratio throughout the period was less than 1. In FY10, the lessening in current ratio by 22 % , from 0.81 % last twelvemonth to 0.63 % in FY10, was chiefly due to the addition in current liability by Rs 1357 million, up by 52 % as compared to the addition in current assets by Rs 417 million, up by 25 % . On farther probe the rise in current liabilities was due to the rise in the accrued markup by RS 254 million, up by 267 % and current part of long term liabilities by Rs 746 million, up by 230 % . The addition in markup accrued and current part of long term funding was due to the addition in long term funding from Rs 6,224 million in FY09 to Rs 11,909 million was due to the finance required for the building of the new works. In the following FY11, company improved its current ratio by 41 % . This addition was chiefly due to the addition in current assets by Rs 2,721 million, up by 131 % as compared to the current liabilities by Rs 1,400 million up by 35 % . The sudden addition in current assets was caused by the addition in stocks by Rs 397 million, which was a important addition of 413 % . The stock in trade is considered to be the least liquid plus. The addition in stock was due to worsen in local demand as authorities has non passing on the public development plans, consequences in stacking up of stocks. The addition in hard currency and bank balance to Rs 979 million as compared to old twelvemonth balance Rs 192 million, which is a positive mark for the company to run into its short-run liabilities.

( Annual Reports, FCCL, 2010, 2011 )

As compared to its rival Attock Cement Pakistan Limited, FCCL is non at safe border. Attock cement Pakistan Limited has been maintained its liquidness rather expeditiously above 1. The lessening in current ratio in FY11 was due to the lessening in hard currency and bank balances and short term investings. The rival company has invested in waste heat recovery system and other fuel bring forthing undertakings, which helped Attock Cement Pakistan Limited to equilibrate its energy.

Fauji Cement Company limited ( Rs )

FY11 ( 000 )

FY10 ( 000 )

FY09 ( 000 )

Current Assetss

4,792,126

2,070,718

1,654,014

Current Liabilitiess

5,384,740

3,984,915

2,628,010

Stock

493,922

96,684

137,451

Receivabless

36,960

24,514

54,641

Creditors

207,636

315,661

197,703

( Annual Reports )

Current Ratio

FY11

FY10

FY09

Fauji Cement Company limited

0.89

0.63

0.81

Attock Cement Pakistan limited

1.70

2.62

2.43

( Annual Reports )

Current Ratio

Debt: Equity Ratio

FCCL has increased its geartrain continuously over the last three old ages. In the FY10, the addition of long term finance by 91 % , from Rs 6,224 million last twelvemonth to Rs 11,909 million in FY10, was the chief cause of the addition in the proportion of debt. This addition in debt was due to the finance required for the building of a new line 7560 TPD cement works. In the FY11, the debt to equity ratio is at stable place. The stockholders might be dissatisfied from the public presentation of the company and feel loath to put farther in the company.

( Annual Reports, FCCL, 2010, 2011 )

Harmonizing to spokesman of APCMA, the uninterrupted losingss to cement industry are intolerable and might jeopardize the service of Rs 132 billion in loans the cement sector owes to the banking sector.

( Today, 2011 )

From the tabular array given below, Attock Cement Pakistan Limited has wholly depending on the equity from the last two old ages. Attock Cement Pakistan Limited has reduced its dependance on debt in those conditions where cement sector were facing losingss. FCCL should benchmark its debt dependance with the Attock Cement Pakistan Limited.

Debt: Equity Ratio

FY11

FY10

FY09

Fauji Cement Company Limited

0.55

0.57

0.40

Attock Cement Pakistan Limited

_

_

0.13

( Annual Reports )

Debt Equity Ratio

SWOT Analysis

Strengths:

Fauji cement has installed a German engineering works that ameliorates its cinder production by 7200 dozenss per twenty-four hours raising the entire capacity from 1.1 billion dozenss to 2.2 billion dozenss. Furthermore, the works is coal efficient as it replaces 170 dozenss coal per twenty-four hours.

( State, 2011 )

United Nations Environment Program ( UNEP ) has certified Fauji cement Ltd under part to “ Plant the Planet: Billion Tree Campaign ” , as the company stands house over environmental issues. Moody International has awarded the company, for care of up to day of the month and effectual environmental systems, ISO 14001 position.

( hypertext transfer protocol: //www.fccl.com.pk/main/index-7.html, n.d. )

In the cement industry major volume leaders, in stock market Karachi, harmonizing to topline sector analyst are three companies including Fauji cement with 31.2 million portions deriving Rs 0.3.

( Timess, 2012 )

The company has installed a garbage derived fuel system at a cost of Rs 320 million, cut downing 300-400 dozenss of refuse to bring forth inexpensive power for the company ‘s production demands.

( Recorder, 2011 )

The company despite high debt sums has sound hard currency flows to back up its purchase, with better involvement coverage ratios.

( IGI, 2008 )