MS AR 2018 (1)

DESCRIPTION OF ENTITY’S
RESOURCES, CAPITAL STRUCTURE
& SIGNIFICANT CHANGES IN
FINANCIAL POSITION
Description Of Entity’s Resources
The significant resources comprise but are not limited to
human, financial and technological resources. We hire teams
of professionals and technical experts who continuously
strive to ensure that our production and control processes
and systems are working efficiently and effectively and are
constantly being modernized. Further, financial resources
are managed effectively through optimized credit control
and efficient treasury management, focusing on cash flow
forecasting.
Analysis of liquidity
The aggregate net working capital stood at Rs.
2,721.837 million at the close of June 30, 2018,
as compared to Rs. 3,005.387 million in last year
decreasing by Rs. 283.550 million. Current ratio stood
at 1.32 as compared to 1.34. Quick ratio was 0.62 as
compared to 0.68 as at June 30, 2018.
Analysis of cash flows
Analysis of cash flows for the year ended June 30,
2018 is presented through the following major liquidity
generation activities:
• Operating activities
Net cash generated from operations stood at Rs.
932.328 million, as compared to net cash used in
operations amounting to Rs. 1,272.826 million last
year, after adjustment of finance cost of Rs. 517.684
million and income tax payments aggregating to Rs.
437.312 million during the year. The increase was
associated with increase in profits, decrease in stockin-trade
and recoverability of trade debts.
• Investing activities
The Company incurred fixed capital expenditure of
Rs. 2,205.110 million during the year as compared
to Rs. 473.866 million in last year. The investment in
fixed capital expenditure was in line with Company’s
growth plan.
Profit received on term deposit during the year stood
at Rs. 23.109 million as compared to Rs. 18.813
million in last year. Consequently, net cash used in
investing activities stood at Rs. 2,179.843 million, up
by Rs. 1,727.431 million from Rs. 452.412 million last
year.
• Financing activities
The Company repaid long-term financing and
short-term loans resulting in net cash utilization of
Rs. 505.330 million. The Company further obtained
long-term financing to the tune of Rs. 829.000 million
to finance balancing, modernization and replacement
(BMR) of bar re-rolling mill.
Consequently, net cash generated from financing
activities stood at Rs. 159.886 million, as compared
to Rs. 3,667.284 million last year.
• Cash And Cash Equivalents At Year End
The Company recorded a net decrease in cash and
cash equivalents of Rs. 1,087.629 million during
2018, as compared to net increase in cash and cash
equivalents of Rs. 1,942.046 million recorded in cash
and cash equivalents last year, which was mainly due
to utilization of right issue funds during the year.
Financing Arrangements
Long-term financing amounted to Rs. 829.000 million
against total available facility of Rs. 1,500.000 million.
The purpose of financing is balancing, modernization
and replacement (BMR) of bar re-rolling mill,
procurement and installation of induction furnaces and
civil works, if any.
Total short-term loans from banking companies stood
at Rs. 7,540.376 million as compared to Rs. 7,977.002
million in last year. Short-term loans from banking
companies under Shariah compliant arrangements
stood at Rs. 3,205.598 million as compared to Rs.
3,567.460 million in previous year.
Short-term loans from banking companies have been
availed against aggregate credit facilities amounting
to Rs. 19,705.000 million from various banks, under
mark-up / profit arrangements. Out of the total available
facilities, Rs. 8,429.186 million remained unavailed as
at June 30, 2018. External financing is arranged after
extensive cash flow forecasting for working capital,
investment or asset acquisition requirements.
Annual Report 2018
53