Comments on Analysis

As of June 30, 2016, significant variation as compared to FY 2015 is because of the following:
- Shareholders' equity rose by Rs. 9.3 bn due to net retained income generated during the year.
- Total non current assets increased by Rs. 2.5 bn mainly due to increase in deferred tax asset by Rs. 2.7 bn which was partly set off with decrease in investments by Rs. 0.5 bn.
- Current assets decreased by Rs. 1.5 bn primarily due to decrease in stock in trade by Rs. 7.7 bn owing to dip in international oil prices by 23% which was partly set off with increase in other receivables
by Rs. 6.7 bn.
- Total Liabilities decreased by Rs. 8.3 bn primarily due to decrease in trade payables, retirement and other service benefits payables.

Key Financial Ratios with Analysis

201620152014201320122011
Profitability Ratios
Gross Profit ratio % 2.52 2.06 2.61 2.64 2.86 3.52
Net Profit ratio % 1.13 0.62 1.55 0.98 0.75 1.52
EBITDA margin % 2.70 2.16 3.09 2.16 2.21 3.18
Return on Shareholders' Equity % 11.22 8.43 27.75 20.84 18.74 35.27
Return on total assets % 3.00 2.03 5.86 4.48 2.60 5.63
Return on capital employed % 23.96 25.43 50.73 41.29 47.52 66.16
Operating Leverage Ratio % (9.03) 218.63 659.57 73.42 (65.90) 65.49

The variation in ratios as compared to FY2015 is because of the following:
- The GP ratio of FY2016 has increased by 22% as compared to last year due to decrease in gross sales by 19 % owing to price reduction. NP and EBITDA ratios have also increased by 82% and 25% respectively mainly due to decrease in finance cost and other expenses as explained earlier.
- The return on shareholders' equity and return on total assets have increased by 33% & 48% respectively due to increase in net profit as mentioned above; however return on capital employed has decreased by 6% mainly due to higher capital employed.
- The decline in operating leverage ratio is mainly due to decrease in sales as compared to last year on account of dip in oil prices.

201620152014201320122011
Capital Structure Ratios
Interest Cover ratio (x) 3.28 2.09 4.45 3.53 2.17 2.51
Operating Gearing ratio % 52.04 54.79 47.70 16.57 47.74 34.67
Financial Leverage ratio (x) 1.15 1.24 1.17 0.28 0.95 0.59
Weighted Average Cost of Debt % 5.99 9.58 13.57 8.78 10.62 13.69

The variation in ratios as compared to FY 2015 is because of the following:
- Interest cover ratio has increased due to increase in EBIT by 1.7% and decrease in finance cost as mentioned earlier.
- Operating gearing ratio and financial leverage ratio have decreased due to increase in cash and bank balances and increase in shareholders' equity.
- Weighted average cost of debt has decreased by 37% due to decrease in finance cost by 35%.

201620152014201320122011
Liquidity Ratios
Cash to Current Liabilities (x) (0.12) (0.16) 0.03 0.02 (0.06) (0.09)
Cash Flow from Operations to Sales (x) (0.001) (0.03) (0.04) 0.06 (0.02) (0.01)
Current Ratio (x) 1.12 1.10 1.09 1.03 1.15 1.16
Quick Ratio (x) 0.91 0.87 0.79 0.54 0.85 0.72

The variation in ratios as compared to FY 2015 is because of the following:
- Cash to current liabilities has improved by 25% due to increase in cash and bank balances and decrease in current liabilities.
- Cash Flow from Operations to Sales has increased due to improvement in operational cashflows whereas current ratio has remained flat.
- Quick ratio has increased mainly due to decrease in stock-in-trade.

201620152014201320122011
Investment/Market Ratios
Earning per share Rs. 37.81 25.53 80.31 50.84 52.80 86.17
Earning per share (Diluted) Rs. 37.81 25.53 80.31 46.52 33.34 54.39
Market value per share (Year End) Rs. 375.46 385.79 388.85 320.38 235.84 264.58
Highest Price Rs. 399.55 408.05 452.43 334.88 270.77 313.80
Lowest Price Rs. 287.00 325.63 262.10 184.67 205.67 236.68
Break-up value Rs. 337.09 302.96 289.05 245.52 281.01 243.62
Price earning ratio (P/E) (x) 9.93 15.11 4.84 6.30 4.47 3.07
Cash dividend per share Rs. 12.50 10.00 8.00 5.00 5.50 10.00
Bonus Share % - - 10.00 20.00 20.00 -
Dividend Payout (including bonus) % 33.06 39.17 11.21 13.77 14.20 11.60
Dividend yield (including bonus) % 3.33 2.59 2.31 2.18 3.18 3.78
Dividend cover ratio (including bonus) (x) 3.02 2.55 8.91 7.31 7.04 8.59

The variation in ratios as compared to FY 2015 is because of the following:
- Price earning ratio has decreased due to increase in bottom line by 48%, which is not reflected in the prevailing market value at year end.
- The dividend payout percentage has reduced despite increase in dividend by Rs. 2.5 per share due to increase in the bottom line.
- The dividend yield percentage is showing an increasing trend due to increase in dividend payout and decrease in market price.
- The dividend cover ratio has increased due to increase in profit as mentioned above.

201620152014201320122011
Activity/Turnover Ratios
Inventory turnover ratio* (x) 17.83 19.05 16.33 12.20 13.55 10.22
No. of days in Inventory No. 20 19 22 30 27 36
Debtor turnover ratio* (x) 5.08 6.16 8.04 16.90 5.50 7.82
No. of days in Receivables No. 72 59 45 22 66 47
Creditor turnover ratio* (x) 9.17 10.54 8.80 7.82 5.11 5.52
No. of days in Creditors No. 40 35 41 47 71 66
Total asset turnover ratio (x) 2.65 3.12 4.31 4.11 3.93 4.19
Fixed asset turnover ratio (x) 138.98 181.35 246.04 226.77 200.39 155.68
Operating Cycle No. 52 43 26 5 22 17

* Note: Inventory, debtor and creditor turnover ratios have been calculated on the basis of closing values rather than the average values.
The variation in ratios as compared to FY2015 is because of the following:
- Inventory turnover ratio has decreased by 6% due to decrease in sales by 19% which is partly offset by decrease in stock-in-trade balance by 13%.
- Debtors turnover ratio has decreased by 17.5% due to decrease in sales and creditors turnover ratio has decreased by 13% due to decrease in purchases respectively.
- Total asset and fixed assets turnover have decreased by 15% and 23% respectively mainly due to decrease in sales by 19%.
- The operating cycle has witnessed an increase by 9 days mainly on account of increase in number of days trade debts remained outstanding as a result of delayed payments by the customers.