TERM REPORT

GROUP MEMBERS:
Asad Bilal Bumbia (20191-25975)
M. Akbar Jamal Khan (20191-25906)
Muhammad Bilal (20191-26279)

SUBMISSION DATE:
11 April 2021

SUBMITTED TO:
Sir Khurram Ali
TABLE OF CONTENTS
TERM REPORT ............................................................................................................................. 1
ACKNOWLEDGMENT ................................................................................................................. 1
EXECUTIVE SUMMARY............................................................................................................. 1
INTRODUCTION .......................................................................................................................... 1
HISTORY & COMPANY PROFILE ............................................................................................. 2
VISION & MISSION...................................................................................................................... 2
MISSION STATEMENT ............................................................................................................... 2
NISHAT GROUP ........................................................................................................................... 3
DG KHAN CEMENT COMPANY ................................................................................................ 3
EXPANSION .................................................................................................................................. 4
SUBSIDIARIES.............................................................................................................................. 4
ENVIRONMENTAL, HEALTH AND SAFETY POLICIES ........................................................ 6
CORPORATE SOCIAL RESPONSIBILITY ................................................................................ 6
BOARD OF DIRECTORS ............................................................................................................. 7
INDUSTRY OVERVIEW .............................................................................................................. 7
PAKISTAN ECONOMIC SURVEY FY 2020 BRIEF ANALYSIS …………………………….9
PAKISTAN ECONOMIC SURVEY FY 2019 BRIEF ANALYSIS …………………………11
PAKISTAN ECONOMIC SURVEY FY 2018 BRIEF ANALYSIS …………………………12
DG KHAN FINANCIAL STATEMENTS ……………………………………………………...14
BALANCE SHEET ……………………………………………………………………………..15
RATIOS …………………………………………………………………………………………21
CONCLUSION …………………………………………………………………………………24
REFERENCES ………………………………………………………………………………….25
 ACKNOWLEDGMENT
We would like to express our sincere gratitude to our instructor, Sir Khurram Ali, for providing
his invaluable guidance, comments and suggestions throughout the course of this term report.

EXECUTIVE SUMMARY
This report is a complete insight of DG Khan Cement Company and financial analysis. The report
was conducted solely for the Introduction to Business Finance course by conducting research and
analysis on DG Khan Cement Company. This report comprises of DGKCC’s overview, history
and vision & mission. Further it has been analyzed in detail.

INTRODUCTION
D.G. Khan Cement Company Limited (DGKC/the Company) is a Pakistani public limited
company. The Pakistan Stock Exchange has it classified. It's a high-quality stock.
The Memorandum and Articles of Association, which have been registered with the country's
corporate authority, were used to create and regulate the business. The Company is primarily
engaged in production and sale of Clinker, Ordinary Portland Cement and Sulphate Resistant
Cement.
The Company is progressive and its track record is witness to it. It has created, developed and
improved stringent and efficient systems in all areas. Ethics are core to it. The Company is
compliant to all applicable laws, regulations and standards.

1|Page
 HISTORY & COMPANY PROFILE
The company was established in 1986 to meet Pakistan's cement needs. The Japanese company
Ube Industries supplied the factory. Initially, it was a state-owned enterprise under the State
Cement Corporation of Pakistan, which employed thousands of people. The company began
production after establishing their first active plant in the southern Punjab city of Dera Ghazi
Khan. This was the first step toward industrializing Punjab's southern province. Then they
opened a second plant in Chakwal's Khairpur. As a result, their production capacity increased,
and they became one of Pakistan's most successful cement companies.

Nishat Group owns DG Cement, a Pakistani construction materials firm. With a daily production
capacity of 14,000 tonnes, it is Pakistan's largest cement manufacturer. In Khairpur, Chakwal,
Dera Ghazi Khan, and Hub, Balochistan, the company operates three active plants. In 1992,
Nishat Group acquired the company under privatization scheme.

DG Khan cement stands for Dera Ghazi Khan cement. This is due to fact that first plant was
setup in southern Punjab city Dera Ghazi Khan.

VISION & MISSION

"To transform the Company into a modern and dynamic cement manufacturing company with
qualified professionals and fully equipped to play a meaningful role on a sustainable basis in the
economy of Pakistan."

MISSION STATEMENT
To provide quality products to customers and explore new markets to promote/expand sales of the
Company through good governance and foster a sound and dynamic team, so as to achieve
optimum prices of products of the Company for sustainable and equitable growth and prosperity
of the Company.

2|Page
 NISHAT GROUP
Nishat is a business conglomerate based in Pakistan. It has a diverse presence in a variety of
industries. All of its businesses are managed by experts who follow the most up-to-date business
practices while adhering to national and international regulations. It has a market capitalization of
around PKR 285 billion as of June 30, 2020. (about USD 1.7 billion). There are over 41,000 daily
workers in the Community. The banking sector accounted for 67.3 percent of group market
capitalization on June 30, 2020, followed by cement (13.1 percent), textile (9.6%), power (5.9%),
and insurance (4.1 percent).

The founding father, Mian Mohammad Yahya, was born in Chiniot in 1918. When he was running
a leather business in Calcutta in 1947, he witnessed the profound changes that swept the Indo-Pak
subcontinent, culminating in Pakistan's birth. He moved to the new world, like many of his
contemporaries. This is a tale about achieving success through sheer hard work and a fearless
entrepreneurial spirit. He started out as a cotton exporter, but quickly expanded into ginning, cotton
and jute textiles, chemicals, and insurance. He was elected Chairman of the All-Pakistan Textile
Mills Association, the country's leading textile trade association.

Mian Mohammad Mansha, like his father before him, continues the entrepreneurial spirit and has
led the Group to become a multi-faceted business with diverse interests. Nishat has evolved from
a cotton exporter to the country's leading business conglomerate.

DG KHAN CEMENT COMPANY

DG Khan Cement Company Limited (PSX: DGKC) is Pakistan's third-largest cement producer.
Lucky and Bestway Cement are in first and second place, respectively. It has a daily capacity of
22,400 tonnes (6.72 million tonnes per year). DGKCC operates four cement plants: two in Dera
Ghazi Khan, one in Khairpur District of Chakwal, and one in Hub Lasbela District (Balochistan).
Many of the plants use the most up-to-date Dry Process Technology. The company has a
nationwide distribution network that is run by various Regional Sales offices. Because of the
unrivalled and reliable quality of the Company's goods, they are favored on projects of national
repute both locally and internationally.

According to the company's official website, the company has 2200 dealers spread throughout the
country and ten exporting destinations, including Afghanistan, India, Kenya, and other African
countries, with the majority of exports going to India by road. Clinker, Portland cement, and
sulphate-resistant cement are all manufactured by the firm. It has an 11 percent rated capacity and
a 13 percent market share. In 1992, Pakistani business group Nishat Group purchased the
government-owned company in order to grow and diversify their operations.

3|Page
 EXPANSION
Pakistan has an attractive market of cement industry. In 2015, it was reported local demand for
cement increase by 12% in one year and so the DG Khan cement decided to increase their capacity.
Pakistani cement demands are increasing with time due to active construction industry. In 2015, it
was reported that local demand increased drastically due to Pakistan-China Economic Corridor.
With this hike in demand DG Khan setup their third and one of the largest plants of Pakistan in
Hub, Balochistan which is on the edge of Pakistani metropolis Karachi. Cement manufacturing
plant usually takes two to three years to complete. So, it is expected that this plant's construction
will complete in 2018 making DG Khan cement largest cement manufacture of Pakistan.

SUBSIDIARIES
1. Nishat Dairy Limited

NDPL is a Pakistani private company limited by shares that was established on October 28, 2011.
Its primary business is the manufacture and distribution of raw milk. The company was established
with the primary goal of conducting dairy business in Pakistan. The dairy operations will be set up
on 147 acres of land near Sukheki. The Company has 2,957 mature milking animals as of June 30,
2020. Nishat Group and SÜTAS, a Turkish brand that is one of the largest producers of milk and
dairy products in Turkey, signed a joint agreement in October 2018. The agreement aimed to
produce, market, and sell high-quality dairy products in Pakistan. DGKC owns 55.1% holding in
NDPL.

2. Nishat Paper Products Company Limited

PPCL is a Pakistani public limited company that was established on July 23, 2004. Its main
business is the production and selling of paper goods and packaging materials. Its manufacturing
facility is on the parent company's land in Khairpur. To assist the cement industry in meeting their
packing requirements, the company has three main production lines with a total capacity of 220
million bags per year. NPPCL is 55 percent owned by DGKC.

4|Page
 A BRIEF TIMELINE
1978 - Established under the control of State Cement Corporation of Pakistan Limited.

1986 - Commenced commercial production with clinker capacity of 2,000 TPD at DG Khan site.

1992 - Acquired by Nishat Group under privatization initiated by the Government.

1993 - Clinker production capacity of existing production line increased to 2,200 TPD.

1996 - Installation of 23.84 MW furnace oil based captive power plant.

1998 - Addition of another production line with clinker capacity of 3,300 TPD at DG Khan site.

2001 - Kiln Firing System converted from furnace oil to coal-based system.

2005 - Increase in production capacity of existing lines to 6,700 tons per day.

2007 - Installation of plant at Khairpur Chakwal, enhanced the capacity to 13,400 TPD. Installation
of 33 MW dual fuel power plant at Khairpur site.

2010 - Installation of 10.4 MW WHR power plant at DG Khan site.

2013 - Installation of 8.6 MW WHR power plant at Khairpur site.

2016 - Installation of 30 MW Coal Fired Power Plant at DG Khan site.

2018 - Addition of new plant at HUB enhanced the clinker capacity to 22,400 TPD.

2020 - Addition of 12 MW new waste heat recovery power plant at Khairpur site.

5|Page
 ENVIRONMENTAL, HEALTH AND SAFETY POLICIES

The key goal of DGKC is to achieve environmental excellence. They devote considerable
resources to key environmental concerns such as biodiversity and conservation, as well as
renewable energy, climate change, and pollution monitoring. They are completely committed to
doing business in an environmentally friendly and sustainable manner, with the goal of reducing
the environmental impact of our operations. To do so, they've taken the following steps:

• Actively pursue a policy of pollution prevention.

• Comply with company policies and procedures and all applicable local laws and regulations.
Make strategic efforts to maximize energy and resource efficiency, lower carbon intensity and
reduce emissions by managing usage of energy, water consumption and waste generation.

• Responsibly manage the land within their operations to protect ecosystems and biodiversity and
to maximize our contribution to nature conservation.

• Maintain open and effective communication channels with employees, contractors, customers,
the community.

• Provide the necessary resources for instruction, training and supervision to appropriately
manage the environmental aspects of our operations.

• Plan, review and assess our environmental performance against measurable targets and industry
best practices to drive continuous improvement.

CORPORATE SOCIAL RESPONSIBILITY

DGKC has always been a purpose-driven company, despite being a part of one of Pakistan's largest
conglomerates. They strive to meet and achieve market objectives while still pursuing long-term
social objectives. Our CSR arm, which aims to improve the lives of people living in low-income
communities through impact investments, exemplifies this vision. DGKC community engagement
programmes include social investments and business inclusive ventures that combine financial and
managerial capital to improve lives and pave the way for long-term sustainability. The following
foundations underpin these initiatives:

6|Page
- Skill growth and education for employability.

- Sustainable and resilient infrastructure and mobility

- Charity, Social welfare and reduction of poverty from society

- Culture of environmental protection, health and safety

- Reduction of carbon footprints.

BOARD OF DIRECTORS
Mrs. Naz Mansha Chairperson - Non-Executive

Mr. Raza Mansha Chief Executive - Executive

Mr. Khalid Niaz Khawaja - Independent

Mr. Usama Mahmud - Independent

Mr. Mahmood Akhtar - Non-Executive

Mr. Farid Noor Ali Fazal - Executive

Mr. Shahzad Ahmad Malik - Non-Executive

INDUSTRY OVERVIEW
On the eve of the Federal Budget FY20-21, the Pakistan government published its economic
survey for FY19-20. The construction and cement industries have been identified by the
government as a significant source of potential growth and investment. In April 2020, it
announced an incentive programme for the construction industry, with the goal of increasing
local cement consumption. An amnesty programme, tax exemptions, and a PKR30 billion
(US$182.2 million) subsidy for Naya Pakistan are all part of the kit. In addition, the construction
industry has been granted industry status.
Similarly, the province of Balochistan has significant reserves of limestone, gypsum, and coal,
as well as investment opportunities for the construction of cement plants.

7|Page
Dispatches/export of cement
During the first nine months of the fiscal year, from July 2019 to March 2020, Pakistan's cement
industry grew at a healthy pace. Increased exports of mostly clinker, which increased by 100%
during the time, have aided the cement sector's output. Domestic cement demand increased as the
government increased infrastructure spending, and improved remittances inflows could have
boosted private construction activity.

COVID-19, as predicted, had an effect on cement consumption in the United States, which fell
by 16.7% in March 2020. Exports rose at the slowest rate of 5.3 percent, indicating that global
economies are still feeling the effects of the pandemic. Total dispatches (local and shipping) fell
14.3% to 3.72 million tonnes in March 2020, down from 4.34 million tonnes in March 2019. The
domestic market was under even more pressure, with uptake falling to 3.214Mt in March 2020
from 3.858Mt the previous month. Exports, on the other hand, increased slightly from 0.482
million tonnes in March 2019 to 0.507 million tonnes in March 2020.

Regional performance
Domestic consumption in the northern part of Pakistan fell by 10.5% in March 2020, to 2.749
million tonnes, down from 3.071 million tonnes the previous month. Exports from the northern
grinding centers fell by 18.9% to 0.107 million tonnes in March 2020, down from 0.132 million
tonnes in March 2019.

Domestic dispatches from southern Pakistan's grinding units dropped 41% to 0.464 million
tonnes in March 2020, compared to 0.787 million tonnes in March 2019. Exports from the south,
meanwhile, rose by 14.3%, from 0.351 million tonnes in March 2019 to 0.401 million tonnes in
March 2020.

Cumulative dispatches
Total local dispatches increased by 3.8 percent YoY to 30.588Mt from 29.461Mt in the
9MFY19-20. Total exports increased by 25.6 percent to 6.446 million tonnes, up from 5.131
million tonnes in the same timeframe last year.

Local sales growth was entirely driven by the northern region, while export production was aided
by the southern region. According to the APCMA, local dispatches from the north increased by
12.1% in July, while dispatches from the south decreased by 26.8%. During the time, southern
exports increased while northern exports decreased by 3.7 percent.

During the period under review, the volume of cement exports fell by 5.1 percent, while the
quantity rose by 7.3 percent. However, in terms of market access, Pakistani cement exports have

8|Page
been more diverse this year than they were last year, when India was the primary importer of
Pakistani Portland cement, accounting for one-fourth of Pakistan's cement export volumes.

PAKISTAN ECONOMIC SURVEY BRIEF ANALYSIS (FY2020)

INFLATION
The recent COVID-19 outbreak has weakened demand putting downward pressure on commodity
prices but there is also a risk of supply disruption. Thus, falling international commodity prices
especially crude oil will help ease inflationary pressures; however, supply disruption and hoarding
to push prices up. The government is making all efforts in maintaining a smooth supply. The
government is also committed to take strict action against hoarding thus the risk of price hike has
been considerably reduced.

GROWTH
As economies reopen with expectations that the adverse impact of COVID-19 is bottoming out,
there is an on-going debate over the shape of the Recovery. Investors have fears about decline in
economic growth and business profits due to a decrease in demand. Further, still, restriction on
imports in many countries may dampen demand for Pakistan’s exports. Capital flight is also
expected with prevailing uncertainty and vulnerabilities, thus putting pressure on the exchange
rate. The economic outlook is not very clear as well as doesn’t seem promising, however, the fiscal
stimulus package of Rs 1.24 trillion along with measures taken by State Bank of Pakistan for
providing liquidity support to households and businesses will counteract the current economic
downturn.

TRADE AND PAYMENTS

The improvement in Pakistan’s balance of payments that started in FY2019 continued in FY2020
as well. The implementation of other demand management policies adopted earlier resulted in a
sharp 73.1 percent decline in the current account deficit to only US$ 2.8 billion during July
March FY2020 against US$ 10. The significant reduction in the current account deficit of a wide
range of non-energy and energy products. observed across all product categories of most of
Pakistan’s principal import commodities. Low international prices suppress export earnings of
many emerging markets including Pakistan as unit prices of textiles and rice continued to drop.
Lower unit values dominated, partially offsetting the impact of significant volumetric growth.

9|Page
The COVID-19 outbreak has jolted even significant challenges for investments and with regard
to Pakistan despite the adverse impact of Corona virus on economy the overall external account
liquidity has improved on the back of a slowdown in global economies. the current account
deficit. spillover impact of the Coronavirus outbreak on global trade and financial markets is
moderate and short-lived. In such a scenario, the export slowdown and market volatility should
be contained while the benign growth and inflation impacts of lower global commodity prices
would dominate. Under a worst and severe phase of weak demand in Pakistan’s major exports
and remittances may fall significantly due to lay-offs of our workers abroad. COVID-19
challenge, has taken various measures to prevent its outbreak and adopted semi-lockdown
approach with well this difficult time. 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000
Fig: 8.13 Foreign Exchange Reserves Pakistan Economic Survey 2019-20 The improvement in
Pakistan’s balance of payments that started in FY2019 continued in FY2020 as well. The
implementation of the market-based exchange rate system, along with other demand
management policies adopted earlier resulted in a sharp 73.1 percent decline current account
deficit to only US$ 2.8 billion during July March FY2020 against US$ 10.3 billion last year. The
significant reduction in the current account deficit is mainly due to import compression energy
and energy products. Quantum-led import declines were observed across all product categories
and were complemented by lower international prices of most of Pakistan’s principal import
commodities. Low international prices suppress export earnings of many emerging markets
including Pakistan as unit prices of textiles and lower unit values dominated, partially offsetting
the impact of several of the major export products.

POPULATION, LABOR FORCE AND ENVIRONMENT

Pakistan has been blessed with unprecedented youth human resources. This young population
has tremendous energy and talent and the present Government is making sincere efforts to
provide them proper avenues for the positive utilization of their energies.

ENERGY
The supply side bottlenecks in energy sector have adversely affected the economy of the country
in the last decade and half. To ensure smooth delivery of energy services, efficient projects are
being incorporated to the supply side.

10 | P a g e
PAKISTAN ECONOMIC SURVEY BRIEF ANALYSIS (FY2019)

INFLATION
The rising input costs on the rear of high utility prices and therefore the lagged impact of rate of
exchange Depreciation likely to take care of upward pressure on inflation within the following
month of current fiscal Year. The impacts are going to be more visible in nonfood prices while the
food prices likely to stay stable Due to effective monitoring of costs and smooth supply of essential
items by the federal and Provincial governments. The headline CPI inflation is projected to fall
within the range of seven .0 to 8.0 Percent in FY2019 and it's anticipated to be considerably higher
in FY 2020 thanks to any longer Adjustment of energy prices, volatility in international oil prices
alongside rationalization of taxes.

GROWTH
The present government has made significant measures to curb aggregate demand that has
compounded the size of external current account deficit to an unprecedented level. During
FY2019, the economy felt partial adjustments due to inertia as evident from still high consumption
to GDP ratio and fiscal deficit. Irrespective of direction of cause, historically, there is significant
relationship between trade deficit and budget deficit. Policy maker thus make the stand that by
limiting fiscal deficit, trade deficit can be controlled.

TRADE AND PAYMENTS

Although expansionary monetary policy in recent years, business activities and export-oriented
sector had not been happening as it should be rather exports remained low after seeing higher
growth in 2013-14. The present government is sternly focused on enhancing exports and in this
direction taken various initiatives with respect to adjustment of exchange rates and monetary
tightening. Imports during Jul-Apr FY2019 declined by 4.9 percent while worker’s remittances
increased by 8.45 percent. This proved to be a major support to the current account balance
which improved by 26.9 percent during the period. However, exports remained a source of
concern as they declined during Jul-Apr FY2019. There is a continuous increase in the flows of
credit to private sector in manufacturing and export-oriented industry which is a welcome
development in terms of business activities. However, the downside risk of the impact of
continuous rise in policy rate and global slowdown in trade activities may influence the exports.

In Pakistan, financial and physical resources are inadequate and the growing population is
putting increased pressure on these scarce sources. However, government is well aware of this
problem and is making efforts to control the population growth rate through various population
welfare programs which are expected to contribute in controlling population growth rate, fertility
rate, infant mortality rate and maternal mortality rate.

11 | P a g e
ENERGY
Pakistan has successfully removed bottlenecks on the generation side of electricity during
previous government. However, congestion, inefficiency and lack of infrastructure on the
transmission and distribution side of the supply chain has hampered sustained delivery of
electricity and energy services. Furthermore, such aggressive capacity additions are now a
fundamental part of our energy pricing mechanisms of near- and medium-term future.
Contextualizing the aggressive capacity additions of previous governments will help us guide
our way forward in addressing the capacity payment issues of near to medium term future.
Integrated Energy Plan, which details the demand projections from power as well as petroleum
divisions, will help in foreseeing the evolving energy mix as well as keeping the focus on
indigenous resources. Such detailed planning will help us avoid issues of circular debt and
capacity payments for future with evidence-based policy interventions. Foreseeing our energy
mix and dependence of our energy security on indigenous resources will need to be synchronized
with our international obligations under Nationally Determined Contributions and Sustainable
Development Goals. It is the focus of the GoP to provide sustainable energy for all.

PAKISTAN ECONOMIC SURVEY BRIEF ANALYSIS (FY2018)

INFLATION
CPI inflation was contained to three .9 percent, with an end period of inflation of 5.2 percent,
compared with 4.2 percent during FY 2017. the most reason for increase in a rate of inflation was
a rise in prices of non-food items which increase by 5.4 percent. the rise in non-food items was
thanks to higher energy prices and powerful overall domestic demand. the mixture demand
increases rapidly because there had been a fiscal deficit during the last two years. During FY18,
development expenditures declined, while growth in current expenditures accelerated. Food
inflation was just one .8 percent, thanks to only a moderate increase in international prices of food
items. Low food inflation helped keep overall inflation relatively low.

GDP
According to the economic survey of Pakistan, the economic process rate was 5.5% which was
very low. the expansion rate became unsustainable thanks to rising macroeconomic imbalances
i.e., high and increasing fiscal and accounting deficits. In FY2018 deficit was historically high in
price ($ 32 billion). On August 18, 2018, this government took office and started tackling the
challenge of stabilizing the economy primarily by managing the aggregate demand and addressing

12 | P a g e
the deep-rooted structural problems. the govt took positive measures like this account deficit
reduces greatly. However, the GDP growth in FY2018-19 remains subdued.

INVESTMENT
In FY2018, there was rise in consumption both by private sector and general government because
of contained inflation and maintained rate of exchange. Considering both goods and services,
imports increased to US$ 68 billion in FY2018, whereas the exports remained US$ 30 billion.
Saving-Investment gap increase to US$ 19.9billion in FY2018 thus resulting in an outflow of US$
8 billion from SBP reserves. the govt made a sizeable adjustment within the interest and exchange
rates to contain the mixture demand and ease the pressure on the balance of payments. These
efforts helped in reducing Saving-Investment gap.

TRADE
In FY2018, global economic changes like increased oil prices (60.06 $/brl), trade protectionism
and regional frictions affected many developed and developing economies including Pakistan.
During the FY2018, Pakistan’s exports picked up and reached to US$ 24.7 billion; showing a
growth of 12.57 percent over previous year FY 2017. Imports on the opposite hand also increased
by 16.25 percent and touched the very best figure of US$ 56.6 billion. As a result the deficit
widened to US$ 31.8billion which was the very best since last ten years. However, the present
government is taking measures to scale back the gap.

ENERGY
Pakistan has successfully removed bottlenecks on the generation side of electricity during previous
government. However, congestion, inefficiency and lack of infrastructure on the transmission and
distribution side of the availability chain has hampered sustained delivery of electricity and energy
services. For the FY2018, oil reliance has reduced to 31.2 percent. However, this FY2018 has
recorded a high of 12.7 percent coal consumption within the energy mix. Pakistan energy
requirements are increasing rapidly.

POPULATION, LABOR FORCE AND EMPLOYMENT

The population of Pakistan has increased to 212.82 million in 2018. Moreover, the population
growth rate has increased to 2.4%. During the year 2017-18, the labor pool population is 65.50
% out of which only 61.71 you're employed. The percentage is 5.8% which has slightly reduced
as compared with the survey of year 2014-15.

13 | P a g e
 DG KHAN FINANCIAL STATEMENTS

Statement of Profit & Loss

2020 2019 2018

Sales-Net Rs38,033,124 Rs40,516,525 Rs30,668,428

Cost of Sales Rs36,447,218 Rs35,154,086 Rs21,928,207

Gross Profit Rs1,585,906 Rs5,362,439 Rs8,740,221

Administrative Expenses Rs658,874 Rs628,517 Rs624,725

Selling & Distrubtion Expenses Rs1,783,422 Rs1,305,695 Rs898,156

Other Operating Expenses Rs146,477 Rs22,343 Rs2,354,656

Other Income Rs2,429,575 Rs538,207 Rs3,026,661

Operational Profit Rs2,427,266 Rs7,889,345

Finance Cost Rs4,653,286 Rs3,304,102 Rs519,267

Profit/Loss Before Tax Rs3,756,188 Rs1,990,841 Rs7,370,078

Taxation Rs1,597,527 Rs381,082 Rs1,467,530

Profit After Tax Rs2,158,661 Rs1,609,759 Rs8,837,608

14 | P a g e
 Balance Sheet

2020 2019 2018

Cash & Short Term Investments 13,816 15,179 16,518

Cash Only 689 1,050 499

Short-Term Investments 13,126 14,129 16,019

Cash & Short Term Investments Growth -8.98% -8.10% -5.58%

Cash & ST Investments / Total Assets 9.62% 10.97% 13.02%

Total Accounts Receivable 9,003 6,370 5,179

Accounts Receivables, Net 3,163 1,842 520

Accounts Receivables, Gross 3,392 1,913 525

Bad Debt/Doubtful Accounts -229 -70 -5

Other Receivables 5,840 4,527 4,659

Accounts Receivable Growth 41.34% 22.99% 135.69%

Accounts Receivable Turnover 4.62 6.85 6.46

Inventories 14,051 15,096 8,765

Finished Goods 470 494 535

Work in Progress 3,362 2,802 493

15 | P a g e
 Raw Materials 1,289 1,904 1,399

Progress Payments & Other 8,930 9,895 6,337

Other Current Assets 749 1,101 815

Prepaid Expenses 7 22 16

Miscellaneous Current Assets 742 1,079 799

Total Current Assets 37,618 37,745 31,277

Net Property, Plant & Equipment 88,056 84,664 81,219

Property, Plant & Equipment - Gross 121,850 114,538 107,372

Buildings 26,728 26,622 24,646

Land & Improvements 2,196 2,179 2,125

Machinery & Equipment 71,791 73,360 65,956

Construction in Progress 6,562 3,053 3,073

Leases 263 263 63

Transportation Equipment 1,325 1,296 1,091

Other Property, Plant & Equipment 12,985 7,765 10,418

Accumulated Depreciation 33,794 29,874 26,153

Buildings 7,802 6,744 5,787

Machinery & Equipment 20,818 20,747 17,060

Transportation Equipment 770 673 597

16 | P a g e
 Other Property, Plant & Equipment 4,371 1,685 2,688

Total Investments and Advances 9,574 10,030 13,860

LT Investment - Affiliate Companies 5,651 - 12,028

Other Long-Term Investments 3,923 10,030 1,832

Long-Term Note Receivable 5 0 1

Other Assets 58 61 60

Tangible Other Assets 58 61 60

Total Assets 143,563 138,398 126,879

Assets - Total - Growth 3.73% 9.08% 14.13%

Asset Turnover 0.3 - -

Return On Average Assets -1.57% - -

Liabilities & Shareholders' Equity

All values PKR Millions. 2020 2019 2018

ST Debt & Current Portion LT Debt 27,899 28,154 15,953

Short Term Debt 25,850 22,938 13,615

Current Portion of Long Term Debt 2,049 5,216 2,338

Accounts Payable 4,186 3,555 3,606

Accounts Payable Growth 17.76% -1.42% 122.96%

17 | P a g e
 Income Tax Payable 35 35 35

Other Current Liabilities 8,338 6,027 4,821

Dividends Payable 34 33 28

Accrued Payroll 143 40 27

Miscellaneous Current Liabilities 8,161 5,954 4,766

Total Current Liabilities 40,459 37,771 24,415

Current Ratio 0.93 1 1.28

Quick Ratio 0.58 0.6 0.92

Cash Ratio 0.34 0.4 0.68

Long-Term Debt 22,679 16,659 18,330

Long-Term Debt excl. Capitalized Leases 22,679 16,659 18,330

Non-Convertible Debt 22,679 16,659 18,330

Provision for Risks & Charges 522 449 278

Deferred Taxes 2,723 4,340 4,300

Deferred Taxes - Credit 10,975 10,238 4,763

Deferred Taxes - Debit 8,252 5,898 463

Other Liabilities 254 242 110

Other Liabilities (excl. Deferred Income) 254 242 110

Total Liabilities 74,889 65,360 47,896

18 | P a g e
 Total Liabilities / Total Assets 52.16% 47.23% 37.75%

Common Equity (Total) 66,657 70,999 76,988

Common Stock Par/Carry Value 4,381 4,381 4,381

Additional Paid-In Capital/Capital Surplus 4,557 4,557 4,557

Retained Earnings 35,105 37,744 37,884

Unrealized Gain/Loss Marketable Securities 17,150 18,852 24,701

Other Appropriated Reserves 354 354 354

Unappropriated Reserves 5,111 5,111 5,111

Common Equity / Total Assets 46.43% 51.30% 60.68%

Total Shareholders' Equity 66,657 70,999 76,988

Total Shareholders' Equity / Total Assets 46.43% 51.30% 60.68%

Accumulated Minority Interest 2,016 2,040 1,995

Total Equity 68,674 73,039 78,983

Liabilities & Shareholders' Equity 143,563 138,398 126,879

Balance Sheet:

As can be seen in the income statement for the years 2018-2020, the business went from a positive
profit after taxes to a loss in 2020. This can be seen on the balance sheet, as the organization has
consistently taken out and spent its funds over the years, with the reserve amount in 2018 being
34,781,625 and the reserve amount in 2020 being 27,226,658. Since the cost of revenue has
increased, the company could be using this money to purchase raw materials, but the sales price
remains constant. This may also be due to the fact that the company's costs have risen while its
gross profit has decreased.

19 | P a g e
The company's long-term finance has risen, implying that it has borrowed more money to pay
interest, as shown by the increased interest expense on the income statement. The company's trade
payable has risen slightly, indicating that the company is borrowing more material from the market
in order to keep money for a longer time. Short-term liabilities have risen as well, possibly to cover
trade payables. The company's current and non-current assets have remained relatively unchanged,
indicating that the company has not made significant investments in long- or short-term assets in
comparison to the market loan.

20 | P a g e
 2020 2019 2018
Asset Turnover 29.36 32.17 25.16
Current Ratio 0.91 0.98 1.29
Effective Tax Rate -42.53 19.14 19.91
Interest Cover 0.19 1.6 15.19
Inventory Turnover 8.74 10.91 22.26
Quick Ratio 0.79 0.87 1.23
Times Interest Earned 0 0 0

RATIOS

Liquidity Ratios
Liquidity proportions estimates how rapidly assts are changed over into cash. Liquidity
proportions additionally gauges the capacity of an organization to take care of its transient
commitments.

CURRENT RATIOS: This proportion communicates current resources corresponding to

current liabilities.

The current proportion has decline from 1.29 in 2018 contrasted with 0.91 in 2020. There is a
critical change in the current proportions principally on the grounds that there is exceptional
expansion in the current liabilities of DG Khan concrete. The exchange payables have ascended
undeniably. This is because of the organization is taking additional time in paying its providers,

21 | P a g e
for example, its payable in days are 108 days in 2020 contrasted and 65 days in 2018.
Additionally, in 2019, there had been impromptu acquiring by both private and public area
including DG Khan concrete organization that dispatched two tasks which add money cost too.
This makes organization to take additional time in settling up its banks.

Basic analysis RATIO: This proportion analyzes the organization's most transient liabilities
with current liabilities.

This basic analysis proportion has decline from 1.23 in 2018 to 0.79 in 2020. It has a similar
pattern like in current proportions. In the wake of taking away the stock, the current resources
contracted extraordinarily. The stock turnover has decreased from multiple times to multiple
times (2018-2020) as DG Khan organization's fare has tumbled from 31 % 2011-12 to 13% in
2017.This shows the expansion stock because of lower interest from different nations. The
decrease in speedy proportions mirrors that organization is getting less fluid.

Money RATIO: The money proportion ordinarily addresses a solid proportion of a substance's
liquidity in an emergency circumstance.

This proportion is likewise diminishing as the proportion diminishes from 2.26 in 2018 to 1.17 in
2019 and 0.73 in 2020. DG Khan concrete organization decrease in productivity and exorbitant
costs because of development makes it left with little money.

PROFITABILITY RATIOS

Net PROFIT: shows the level of income accessible to cover working and different costs and to
produce benefit. There has been a considerable decrease in the gross net revenue. The rate
diminishes structure 42% in 2018 to 28% in 2020.Hence this decline was somewhat below the
concrete business midpoints which 43.5% in 2020. The business comprises of neighborhood and
unfamiliar deals. It is accounted for that the unfamiliar deals have significantly diminished as
trades diminishes from 31% in 2011-12 to 13% in 2019. Furthermore, the sends out fall because
of vacillation in concrete costs. Then again, there DG khan experienced significant expense of
deals as coal costs increments quickly from 52$ in 2016 to 96$ in 2020.

Working PROFIT MARGIN: Operating benefit is determined as gross benefit less working
expenses.

22 | P a g e
The working overall revenue tumbles from 34% in 2018 to 31% in 2019 and afterward reach to
16%. There is blend of components that cause a lessening in working overall revenue. DG Khan
sends out decreased because of extreme rivalry in African business sectors and Afghanistan
market is caught by Iranian concrete. In addition, the expense of deals increments as there had
been an inventory of LNG rather than gas which was similarly costly. what's more, the
organization was going through extensions which likewise raise up costs of the organization.

PRE-TAX MARGIN: is the proportion of pretax pay to income. As other benefit proportions,
the pre-charge edge has likewise diminished from 42% in 2018 to 24% in 2020. The money cost
has incredibly ascended as the organization dispatched two tasks in 2019. Already, during the
time of 2018-2019, the public authority proceeded with the expansionary financial arrangement.
Afterward, the new government presents the contractionary monetary strategy which prompts an
increment in financing costs. As the organization took advances from banks for these tasks, it
needs to bear the hefty money cost.

NET PROFIT MARGIN: is determined as incomes less all costs.

The net overall revenue has somewhat decline from 29% to 28% (2018-20). Nonetheless, it is as
yet higher than industry normal for example 26% in 2020. The general productivity of the
organization has scaled down due to high fund costs because of extension ventures and coal and
LNG costs ascend. Be that as it may, shockingly, there had been a critical decrease in tax
collection as the organization is conceded a tax break because of its further extension in the
country.

RETURN ON ASSETS: gauges the return procured by an organization on its resources.

The profit from resources have additionally decreased from 11% to 7.6% (2018-20). In the event
that this proportion is contrasted and the business normal, it is low as the business normal has
expanded from 10% to 15%. The principal justification this abatement is the decrease in
productivity of the organization because of numerous variables clarified better than as high
account expenses and cost of deals. The resources of the organization have expanded as the two
tasks were dispatched.

RETURN ON EQUITY: This proportion shows what amount go with has procured on its value
capital.

The profit from value has diminished from 13% to 11% (2018-20). Nonetheless, the ROE of
concrete industry has increment from 15% to 21% (2018-2020). There is a decrease in benefit
which has caused extraordinary consequences for different proportions also. Nonetheless, the
return is additionally low due to expansion projects going on. Along these lines, the investors
need to bear the significant expense as the organization has taken advances and depreciation of
money.

23 | P a g e
 CONCLUSION

As indicated by the above determined proportions, it very well may be reasoned that DG Khan
concrete organization's benefits are narrowing because of money devaluation, broad deterioration
of new private enterprise, high coal costs, lower concrete costs, extension projects and so on
Nonetheless, the organization's productivity is still better compared to different contenders. From
the financial backer's point of view, productivity and EPS is fundamental. Presently, the
productivity isn't agreeable and EPS is 1.83 which is a lot of lower than opponents, for example,
Bestway concrete with EPS of 16.93. I would recommend the financial backers should sit tight
for the ideal time as the organization is going through extension and all the more critically the
monetary conditions are not steady as it very well may be conceivable that the concrete area may
succeed again if government dispatch the advancement undertakings like development of dams,
streets, 5,000,000 lodging units ,CPEC and so forth The financial backers should consider the to
be term productivity as the extension ventures would assist the organization with being more
proficient and investigate new business sectors.

24 | P a g e
 REFERENCES

https://www.cemnet.com/News/story/169022/economic-survey-reviews-pakistan-cement-
industry-for-fy19-20.html

https://www.dgcement.com/

http://watchdog.pk/Financials.aspx?Symbol=DGKC&Year=

http://www.finance.gov.pk/survey_1920.html

| Finance Division | Government of Pakistan |

25 | P a g e