MS AR 2018 (1)

COMMENTS ON
SEVEN YEAR ANALYSIS
COMMENTS ON HORIZONTAL
ANALYSIS
Statement Of Financial Position
Total equity showed an increasing trend from year 2012
onwards due to continuous improvement in profitability of
the Company on account of increased sales revenue and
further injection of equity.
Total non-current liabilities showed a mix trend over the
years mainly due to fluctuations in the amount of long
-term financing availed from time to time. However, Current
liabilities showed an increasing trend mainly due to increase
in working capital requirements.
Statement Of Profit Or Loss
Turnover increased over the years from 2012 to 2018, due to
increase in sales volume of rebars and girders. However, in
2017, turnover witnessed a slight declined mainly due to fall
in sale prices.
Gross profit has remarkably increased over the years due
to increase in margins on account of better sale prices and
cost efficiencies. However, in 2017, gross profit declined
mainly due to removal of discount by China and imposition
of regulatory duty in imported billet.
Finance costs over the years has fluctuated adversely /
inadversly due to various reasons, however in 2017, the
decrease was due to elimination of notional interest and
reduction in exchange loss due to shifting from DA LCs to
sight LCs and in 2018 the increase was due to increase in
average outstanding short-term loans as a result of increase
in working capital requirements.
Profit before taxation improved on account of increased
margins and sale revenue, however in 2017, the
declined was mainly due to reasons mentioned in above
paragraphs.
Profit for the year increased significantly over the years
mainly due to the reasons mentioned above. Reduced tax
liabilities as a result of available tax credits also helped to
increase the profit after taxation.
COMMENTS ON VERTICAL
ANALYSIS
Statement Of Financial Position
Debt: Equity Ratio showed continuous improvement over the
years as the Company’s equity share was increased over
the years due to fresh injection of capital, high year-on-year
profits on account of better margins and reduction in debts
on account of repayments.
Current assets reduced from 73.32% of the total assets in
2017 to 63.69% in year 2018. Total current liabilities were
48.12% of total equity and liabilities as compared to 54.57%
in 2017. The decrease in current assets was due to utilization
of right issue funds for CAPEX. Current ratio improved
significantly from 1.03 in 2012 to 1.32 in 2018.
Statement Of Profit Or Loss
Gross profit % age came out to be 12.57% in year 2018 as
compared to 8.16% in 2012. This growth over the years was
mainly due to increase in sales prices, effective mix of local
and export sales and various cost efficiency measures.
Net profits of the Company increased at a good pace from
2.92% in year 2012 to 5.81% in year 2018, however, the net
profit ratios experienced a dip in 2016, mainly as a result
of fall in gross margins, recognition of notional interest
on shareholders’ loan and recognition of income tax and
deferred taxation.
COMMENTS ON CASH FLOW
STATEMENTS
Cash flows form operating activities showed a mix trend
over the years. In 2018 cash generated from operations
amounted to Rs. 932.328 million as compared to cash
utilized in operations amounted to Rs. 1,272.826 million
in 2017, which was mainly due to increase in profits and
decrease in inventory and trade debts.
Net cash used in investing activities depicts cash utilization
on account of fixed capital expenditure. Moreover, in current
year fixed capital expenditures mainly represented CAPEX
relating to power plant expansion project and BMR of bar
mills. The trend depicts management’s strong focus on
investing in the Company to refuel it growth and expansion
ideology.
Cash flows from financing activities exhibit a mix trend and
depends on net cash requirements.
Annual Report 2018
71