2018

ANALYSIS OF ANNUAL
REPORT

SUBMITTED TO:
Ma’am Maryam Farooq

SUBMITTED BY:
Munazza Ahmed Hashmi (2017-BBA-138)

Mayra Iftikhar (2017-BBA-162)

 TABEL OF CONTENTS
1. Gillette …………………………………………….(2)
2. Mission…………………………………………….(2)
3. Company overview ……………………………….(2)
4. Products………………………………………..….(2)
5. Performance……………………………………….(3)
6. Directors Report………………………………..….(3)
7. Analysis of Director’s report ……………………….(4)
8. Analysis of Auditor’s report……………….……….(4)
9. Income Statement Analysis…………………….….(5)
10. Balance sheet Analysis…………………………….(6)
11. Ratio Analysis………………………………….….(7)

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 REDCO TEXTILES LIMITED

Redco textile limited is a public limited company. It was incorporated in Pakistan on 17 th

October 1991. It was incorporated under companies ordinance, 1984 and is listed on the Karachi
and Lahore stock exchanges. Redco principles activities include manufacturing and sale of yarn
and greige fabric. The register office of the company is situated at 78-E, Redco Arcade, blue
area, Islamabad.

MISSION
To provide quality products to customers and explore new markets to expand sales of the company.

To cultivate a dynamic team for achieving optimum prices for the company’s products for profitable
and sustainable growth.

VISION
To become a fully Integrated textiles group, capable of developing profitable relationships with the
world’s brands

To launch our own finished products brands.

The company shall strive to become a market leader in its fields of operation with an emphasis on
providing innovative and high quality products.

COMPANY OVERVIEW
Gillette is synonymous with shaving and personal care products including manual and power
razors, scrubs and face wash, gels and foams, moisturizers and deodorants, all of which complete
the Gillette shave care range.

PRODUCTS
1. Gillette Mach 3 Hercules
2. Gillette Mach 3 Sensitive
3. Gillette Mach 3 Turbo
4. Gillette Fusion
5. Gillette Fusion Power
6. Gillette Fusion ProGlide
7. Gillette Fusion ProGlide Power
8. Gillette G2
9. Gillette Blue2
10. Gillette Blue2+
11. Gillette Blue3 Simple
12. Gillette Blue 3
13. Gillette Shaving Gels
14. Gillette Shaving Foam
15. Gillette After Shave

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PERFORMANCE:
The performance of the company as compared to the prior year has improved a little and
the company is in improvement stage because of the management strategy to become
consumer centric and the supplier agreeing in cost cutting measures in certain products, this
will significantly and slowly lead the company towards profit.

DIRECTORS REPORT
On behalf of the directors (the board) of Gillete Pakistan Limited, the director’s report for the year ended
june 30, 2017.

BUSINESS OVERVIEW

The last fiscal year has been another challenging year with sales down 4% Vs. Last year and
significant increase in supply proces leading to a dillution in overall earnings before tax.

During the year, the company focused on distribution, and closed at the highest ever distribution levels due
to coverage expansion. The second half of the year focused on specific interventions to bring the business
back to growth. We also continued to offer our consumers better value promo packs across our portfolio.

Moving forward, the management’s strategy is to become more consumer centric to build the
momentumon business behind balanced portfolio and stronger trade plans. These interventions enabled us
to deliver second half more strongly and continued focus which will enable us to turn the business around,
and achieve profitable growth in the next year.

FINANCIAL RESULTS

The company’s financial results show a reduction in gross margin by 5%: this is primarily driven by
significant increase in supply across prices from our supplier. The company implemented product price
changes to offset this increase, however, complete impact was not transferred to consumer during the year
to ensure our products are competitive and in-line with pricing strategy.

To improve the profitability of the company, the management has been in discussion with the supplier to
get concessions on pricing over certain products which impact the overall revenue of the company.

Based on ongoing discussion the Board is pleased that the supplier has agreed to give a price reduction
in supply price which will significantly increase the profitability in future.

There has been 4% increase in selling, marketing and distribution expenses from previous year. A portion
is due to continued focus on selling and marketing activities to enable greater distribution and reach
within the Gillete consumers. Transport and warehouse costs were down in line with sales for the year.

The decrease in administrative and selling expenses in due to pension indexation from 7.75% to 4.47%
amounting to Rs. 33.15 million. The Trustees and Board are in concurrence with 4.75% over and above
current pakistan inflation rate.

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There was a reduction in interest income due to maturing of term deposits and reduction in cash position
due to payment paid to suppliers.

The current inventory at the balance sheet holds certain SKU’s costing Rs. 80.3 million which are
being carried at net realizable value and the impact of this to the profit and loss account is hurt of Rs.
11.93 million.

DIVIDEND

The board reviewed the financial results of the company along with the financial position for the
year ended june 30, 2017 and decided not to pay dividend for the year.

ANALYSIS OF DIRECTOR’S REPORT

The last fiscal years has been another challenging year with sales down 4% versus last year and
significance increase in supplier prices leading to a dilution in overall earnings before tax.

During the year the company focused on distribution and marketing to provide convenience to
their consumers, moving forward the management strategy is to become more consumer strategy
to build the momentum on business behind balanced portfolio and stronger trade plan. To
improve the profitability of the company the management has been in discussion with the
supplier to get concession on pricing over certain products, the ongoing discussion with supplier
led to the supplier giving the price reduction in supplier price which will significa ntly improve
the profitability in future which will impact the overall revenue of the company.

The board decided not to give dividend to the shareholders for the year.

ANALYSIS OF AUDITOR’S REPORT

The auditor has audited the balance sheet of GLPL (the company) as at June 30 2017 and the
related profit and loss account, statement of comprehensive income, cash flow statement and
statement of changes in equity, for the year then ended and they have stated that we have
obtained all the information and explanations which, to the best of their knowledge and
belief, were necessary for the purpose of their audit.

They have conducted audit in accordance with the auditing standards as applicable in
Pakistan. In their opinion proper books of accounts have been kept as required by the
company’s ordinance 1984. The expenditure incurred during the year was for the purpose of
the company’s business and the business conducted, investments made and the expenditure
incurred during the year were in accordance with the objects of the company. The auditor
report gives a true and fair view of the state of the company’s affairs at June 30 2017 and of
loss. In their opinion No Zakat was deductible under the Zakat and Ushr ordinance, 1980.

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 INCOME STATEMENT ANALYSIS
Horizontal Analysis Vertical Analysis 2017 Vertical Analysis 2016

Net sales 3.55% 100% 100%

CGS 2.25% 77.49% 82.09%

Gross Profit 23.46% 22.57% 17.90%

Selling & Marketing 3.74% 15.32% 16.47%

Expenses
Admin Expenses 69.41% 3.82% 1.21%

Other Expenses 419.34% 1.00% 5.39%

Bank Charges 37.04% 0.001% 0.0009%

Operating Profit 10.54% 0.201% 23.08%

Other Income 59.21% 1.49% 0.63%

Loss/Profit before tax 11.97% 3.91% 4.54%

Income Tax Expense 5.99% 5.46% 5.99%

Loss After Tax 559.76% 1.54% 10.54%

Loss Per Share 558.82% 0.00008% 0.0054%

COMMENTS ON HORIZONTAL ANALYSIS OF INCOME STATEMENT

The horizontal analysis is showing that the company’s net-sales have been dropped to 3.55% and the
cost is increased so the gross profit of the company has dropped upto 23.46%. By the increase in
bank charges, expenses and income tax, and decrease in company’s other incomes, the company’s net
loss has been raised to 559.76%.

COMMENTS ON VERTICAL ANALYSIS OF INCOME STATEMENT

The company’ vertical analysis is showing that the company has performed well in 2017 as compared to 2016.
The cost has been decreased and there is an increase in the gross profit. The company is in loss after tax but as
compare to 2016 the loss is very low which can be covered in future by good performance.

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 BALANCE SHEET ANALYSIS
Horizontal Analysis Vertical Analysis 2017 Vertical Analysis 2016
Non-Current Assets 0% 0.04% 0.04%
Stock in Trade 2.91% 40.66% 53.07%
Trade Debts 328.76% 36.65% 18.06%
Loans 469.52% 0.2% 0.9%
Trade Deposits 24.17% 0.6% 1.06%
Interests 12.18% 0.01% 0.02%
Other Receivable 2969.16% 28.12% 1.27%
Other Financial Assets 49.32% 6.6% 17.49%
Sales Tax Refundable 42.44% 2.68% 2.53%
Taxation Net 12.43% 2.7% 4.24%
Cash & Bank Balance 0.4% 0.97% 1.3%
Current assets 34.33% 99.9% 99.9%
Total Assets 34.31% 100% 100%

Share Capital 0% 13.96% 18.76%

Issued Capital 0% 13.41% 18.01%
Unapropriated Profit 37.10% 23.04% 49.21%
Total Equity 27.16% 36.45% 67.21%
Non-Current Liabilities 50.76% 0.64% 0.57%

Current Liabilities 162.30% 62.91% 32.21%

Total Equity and 34.31% 100% 100%

Liabilities

COMMENTS ON HORIZONTAL ANALYSIS OF BALANCE SHEET

According to the horizontal analysis of the balance sheet of the company, 8 aspects of balance sheet
are decreasing and 9 are increasing, so we can say that company has improved a little and they are
much focused on marketing and distribution as these expenses are increasing because they want their
consumers to have the convenience and knowledge of Gillette.

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COMMENTS ON VERTICAL ANALYSIS OF BALANCE SHEET

The company’ vertical analysis is showing that the assets of company are not increasing but the
liabilit ies are increasing which is not good at all because the company is not able to pay it liabilities
in time and it shows a bad image of company to creditors and investors.

RATIO ANALYSIS
LIQUIDITY RATIOS:
Liquidity ratio that measures whether or not a firm has enough resources to meet its short-term
obligations

GROSS WORKING CAPITAL

2017: 1431217 (Rupees in ‘000)

2016: 1065436 (Rupees in ‘000)

NET WORKING CAPITAL

2017: 530496 (Rupees in ‘000)

2016: 722049 (Rupees in ‘000)

CURRENT RATIO

2017: 1431217/900721=1.58

2016: 1065436/343387=3.10

COMMENTS:

The company’s current ratio is not explaining a balanced situation for both years. They must try
their best to meet the standard of 2/1 situation as earlier as possible so that creditor/investor feel
confident to invest in this company.

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SOLVENCY RATIO:
A solvency ratio measures the extent to which assets cover commitments for future payments,
the liabilities.

DEBT RATIO

2017: 1431833/909887 x100= 157.36%

2016: 1066052/349467 x100= 305.05%

COMMENTS:

The debt ratio is better than prior year but it should attain the value of 40% so that creditor/inve
stor invest in the company, but at this stage creditor/investor will not invest in the company. In
future when company’ debt ratio will be near to 40% then creditor/investor will invest.

PROFITABILITY RATIO:
Profitability ratios are used to assess a business's ability to generate earnings relative to its
associated expenses

GROSS PROFIT RATIO

2017: 328572/1834575 x100= 17.90%

2016: 429301/1902154 x100= 22.56%

COMMENTS:

The company’s gross profit ratio is decreasing so for a limited time span creditor/investor should
not invest in the company.

RETURN ON ASSETS
2016: 74494/1248942= 5.9%

COMMENTS:

Return on assets is insufficient and it is not generating a good Image of company for the
creditors and investors.

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 CONCLUSION
We conclude that the company as compared to the prior year has improved a little and the
company is in improvement stage because of the management strategy to become consumer
centric and the supplier agreeing in cost cutting measures in certain products, this will
significantly and slowly lead the company towards profit.