CENT0RY PAPER W0RK

PROFILE
Century Paper & Board Mills Limited (CPBM), established in 1984, is Flagship Company of the
Lakson Group of Companies Pakistan. The Company started commercial production in 1990
and established its name as major producer of quality Packaging boards in the country. It has
attained a position of Market Leader in Packaging Boards in particular and is considered as most
Preferred Supplier to Printing and Packaging Industry. The Company serves many of the
prestigious clientele and maintaining Strategic Business Relationships with leading Packaging
and Converting units as well as end users, which include national and multinational companies.
The Company is also in export business and its Packaging Boards are successfully competing in
the international market.
The company entered into Corrugated Cartons Manufacturing Business in 2003 by installing
Agnati Italian corrugators, renowned name in the industry. The plant is capable to cater large
continuous orders for different types of boxes to serve multifarious sectors including Soaps &

Detergents, Home Appliances, Dairy Products, Ice Cream, Food and Beverages, Cigarettes and
Tobacco and Lubricants etc. Being vertically integrated corrugation unit with companies own
Liner and Fluting supplies the plant has an edge to ensure consistency in supplies and quality.
The company is managed by a competent team of professionals in all the relevant fields like
Process, Paper Technology, Engineering, Finance, Business Management and Human Resource.
The Company assigns great importance to its Human Capital Development and has been
managing Trainings of its professionals by sending them to Foreign and Local Training
Programs / Exhibitions / Courses.
The plant comprising of Seven Paper Machines (PMs), a Complete Corrugated Cartons
Manufacturing Plant, Integrated Pulp Mills (Major Inputs Wheat Straw), in house Engineering
Workshop, Captive Power Generation Plant, and Chemical House etc. is situated on 162 Acres
close to major business city (Lahore) of the country.

BUSINESS LINES:
y Paper & Paperboard Business
y Corrugated Cartons Business







Paper & Paperboard Business:
Products Categories
Category Brief Description Substance
Range
(g/m2)
Brands
Packaging
Boards
One Side Clay Coated Boards with 100% virgin Fibers 205 - 350 Brands
One Side Clay Coated Boards with recycled fiber in middle
ply
230 400 Brands
Un-Coated Multi layer Boards 125 350 Brands
Papers Machine Finished Writing Printing Papers 55 150 Brands
Machine Glazed Papers 22 70 Brands

OPERATIONS:







Century is a leading manufacturer of quality Paper and Paperboard with a total installed capacity
of 230,000 M. Tons per annum. The plant comprises of some seven Paper & Paperboard Making

Machines with integrated Pulp Mills and a Captive Power Generation plant produces a vast range
of products to meet the market requirements for various Paper & Paperboard types.
The product mix includes a wide range of multi ply One Side Clay Coated Packaging Boards and
un-coated boards to meet Folding Cartons needs of various consumer and industrial products.
Machine Finished (MF) Writing & Printing Papers range cover the needs of Publishing,
Exercise Books, Computer Stationery, Photo Copying, Ink Jet / Laser Printing and general
printing market segments. Machine Glazed Papers range meets the needs of foil / poly
lamination as well as wrapping etc.
The latest addition at Century Paper & Board Mills Limited being the state of the art,
environment friendly machine (PM-7) is a multilayer board machine with multilayer on-line
coating facility. The Machine is capable of producing 130,000 M. Tons / annum of premium
quality Coated Duplex Board in substance range 200 400 g /m 2. The product of this machine
is being used very successfully by leading off-set printing houses on Hi-Tech and Hi-Speed
multicolor Off Set Printing and Hi-speed Die-Cutting Machines.
The company also includes a Box Plant having a corrugation facility capable of an output in
excess of 30 million M sheets and 60 Million of corrugated containers of various sizes and
weights, with up to 3-colour printing. The Plant is capable to meet the special and large size
cartons for Home Appliances (Refrigerators, Air conditioners etc.) Moreover, this is the only
plant in the country which is producing and selling Tobacco Storage Cartons (C-48).
In 2008 the Mills embarked on an ambitious program of adopting the Oracle based Enterprise
Resource Planning (ERP) system for its operations such as Production, Supply Chain, Finance
and Engineering. This is now in operation and started yielding results.
Paper & paperboard manufacturing, being a continuous process, essentially requires an
uninterrupted supply of Electric Power and steam. This is being met by two Captive Power

Plants, CoGen-1 (12.3 MW) and CoGen-2 (22 MW), with a 5MW LESCO connection as stand-
by.

Vision:
To be the market leader and an enduring force in the paper, board and packaging industry,
positively influencing and providing value to our stakeholders, society and our nation.
Mission Statement:
To strive incessantly for excellence and sustain our position as a preferred supplier of quality
paper, board and packaging material within a team environment and with a customer focused
strategy.
Core Values:
We Strive For Excellence.
We Deliver Customer Satisfaction.
We are Ethical in All our Actions.







Ratio Analysis OF Century Paper Company
Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication
of a firm's financial performance in several key areas. The ratios are categorized as Short-term
Solvency Ratios, Debt Management Ratios, Asset Management Ratios, Profitability Ratios, and
Market Value Ratios.
Ratio Analysis as a tool possesses several important features. The data, which are provided by
financial statements, are readily available. The computation of ratios facilitates the comparison
of firms which differ in size. Ratios can be used to compare a firm's financial performance with
industry averages. In addition, ratios can be used in a form of trend analysis to identify areas
where performance has improved or deteriorated over time.
Liquidity Ratios:
Liquidity ratio, expresses a company's ability to repay short-term creditors out of its total cash.
The liquidity ratio is the result of dividing the total cash by short-term borrowings. It shows the
number of times short-term liabilities are covered by cash.
Two commonly used liquidity ratios are calculated as following:
1. Current Ratio:
Current ratio is a financial ratio that measures whether or not a company has enough resources to
pay its debt over the next business cycle (usually 12 months) by comparing firm's current assets
to its current liabilities. The current ratio is calculated by dividing current assets by current
liabilities.


Current Ratio (2007) =



=

= 1.00
Current Ratio (2008) =



=

= 1.01
Current Ratio (2009) =



=

= 1.02
Current Ratio (2010) =



=

= 0.99

Interpretation:
The current ratio less than one means that company has negative working capital and may be
facing liquidity crisis. The Century paper Companys Current ratio in 2007, 2.8 and 2.9 are 1.00,
1.01 and 1.02 respectively; which shows that they have positive working capital and they have
enough resources to pay their debts. In 2010 there Current Ratio is 0.99 which indicates that

Century paper have negative working capital and they do not have enough resources to pay their
debts. This shows that for every $1 liability they have 1.00 assets in 2007, 1.01 assets in 2..8,
1.02 assets in 2..9 and 0.99 assets to cover their liabilities.

2. Quick Ratio:
Quick Ratio is an indicator of company's short-term liquidity. It measures the ability to use
its quick assets to pay its current liabilities. Quick ratio specifies whether the assets that can
be quickly converted into cash are sufficient to cover current liabilities. Ideally, quick ratio
should be 1.1. Quick ratios lower than 1.1 indicates that company relies too much on
inventory or other assets to pay its short-term liabilities.
Quick ratio formula is:
Quick Ratio (2007) =



=

= 0.77
Quick Ratio (2008) =



=

= 0.86
Quick Ratio (2009) =



=

= 0.82


Quick Ratio (2010) =



=

= 0.80
Interpretation:
According to our calculation we can see that the Quick Ratio of Century paper in 2007, 2008,
2009 and 2010 are 0.77, 0.86, 0.82 and 0.80 respectively. This means that in overall these four
years the Company Century paper relies on their inventory or other assets to pay their short- term
liabilities than on their quick assets.
Asset Management Ratio:
Asset management ratios are the key to analyzing how effectively and efficiency your small
business is managing its assets to produce sales. Asset management ratios are also called
turnover ratios or efficiency ratios. It tells us that how effectively your company is managing the
assets. If the company have excessive investments in assets, then its operating assets and capital
will be unduly high, this will reduce its free cash flow and its stock price. On the other hand if
the company doesnt have enough assets; it will lose sales, which will hurt profitability, free cash
flow and its stock price.
Ratios that described different types of assets are described as following:
1. The Inventory Turnover Ratio:
Inventory Turnover Ratio measures company's efficiency in turning its inventory into sales. Its
purpose is to measure the liquidity of the inventory. Inventory Turnover Ratio measures

company's efficiency in turning its inventory into sales. Its purpose is to measure the liquidity of
the inventory.
A low inventory turnover ratio is a signal of inefficiency, since inventory usually has a
rate of return of zero. It also implies either poor sales or excess inventory. A low turnover rate
can indicate poor liquidity, possible overstocking, and obsolescence, but it may also reflect a
planned inventory buildup in the case of material shortages or in anticipation of rapidly rising
prices.
A high inventory turnover ratio implies either strong sales or ineffective buying (the
company buys too often in small quantities, therefore the buying price is higher).A high
inventory turnover ratio can indicate better liquidity, but it can also indicate a shortage or
inadequate inventory levels, which may lead to a loss in business.

The Inventory Turnover Ratio (2007) =

=



= 16.66
The Inventory Turnover Ratio (2008) =

=



= 12.04
The Inventory Turnover Ratio (2009) =

=




= 11.71
The Inventory Turnover Ratio (2010) =

=



= 13.13
Interpretation:
That number signifies the number of times inventory is sold and restocked each year. According
to our calculation, the Inventory Turnover Ratio of Century paper in 2007, 2008, 2009 and 2010
are 16.66, 12.04, 11.71 and 13.13. This shows a good/high inventory turnover ratio. It means that
every year they are efficient in turning their inventory into sales. They have high sales and
efficient liquidity but it is not increasing with time. According to our calculations, it is gradually
decreasing up till 2010.
2. Average age of Inventory Turnover:
Average age of inventory is another way of looking at inventory turnover. This ratio takes
inventory turnover ratio and divides it into 365 days. The formula for average age of inventory
is:
Average age of Inventory turnover (2007) =



=

= 22 days



Average age of Inventory turnover (2008) =



=

= 30 days
Average age of Inventory turnover (2009) =



=

= 31 days
Average age of Inventory turnover (2010) =



=

= 27 days
Interpretation:
This shows that in 2007 the average age of our inventory was 22, 30, 31, 27 in 2008, 2009 and
2010 respectively. Which tells us that our inventory was kept for this much days before their
sales.
3. Fixed Asset Turnover Ratio:
The Fixed Asset Turnover Ratio measures how effectively the firm uses its plant and equipment,
to generate sales. If you can't use your fixed assets to generate sales, you are losing money
because you have those fixed assets. Property, plant, and equipment are expensive to buy and

maintain. In order to be effective and efficient, those assets must be used as well as possible to
generate sales. The fixed asset turnover ratio is an important asset management ratio because it
helps the business owner measure that efficiency.
Fixed Asset Turnover Ratio (2007) =

= 1.67
Fixed Asset Turnover Ratio (2008) =

=



= 1.13
Fixed Asset Turnover Ratio (2009) =

=



= 0.704
Fixed Asset Turnover Ratio (2010) =

=



= 0.984



Interpretation:
According to above calculation, we can see that our Fixed Asset Turnover ratio in four years was
1.67, 1.13, 0.704, and 0.984 respectively. This means that that in 2007, they have 1.67 times the
ratio that shows their investment in plant and equipment which are generating revenue for them,
1.13 times the ratio in 2008, 0.70 times the ratio in 2..9 and 0.984 times the ratio in 2010.
According to these calculations, we are also getting to know that there fixed asset turnover ratio
was also gradually decreasing in four years which is not a good sign.
4. Total Assets Turnover Ratio:
The total asset turnover ratio is the asset management ratio that is the summary ratio for all the
other asset management ratios. If there is a problem with inventory, receivables, working capital,
or fixed assets, it will show up in the total asset turnover ratio. The total asset turnover ratio
shows how efficiently your assets generate sales. The higher the total asset turnover ratio, the
better and the more efficiently you use your asset base to generate your sales.
Total Assets Turnover Ratio (2007) =

=



= 0.39
Total Assets Turnover Ratio (2008) =

=



= 0.32

Total Assets Turnover Ratio (2009) =

=



= 0.51
Total Assets Turnover Ratio (2010) =

=



= 0.68
Interpretation:
Our Total Asset Turnover ratio in four years was 0.39, 0.32, 0.51, and 0.68. According to these
we are getting to know that they are increasing every year which is a good sign. We can also say
it as they have 0.39 times the ratio for every $1 worth asset to generate sales in 2007, 0.32 times
the ratio in 2008, 0.51 times the ratio in 2..9 and 0.68 times the ratio in 2010.
Debt Management Ratio:
A measure of the extent to which a firm uses borrowed funds to finance its operations. Owners
and creditors are interested in debt management ratios because the ratios indicate the riskiness of
the firm's position. Debt can help or harm a company. It can help a company when the assets that
have been paid for by debt earn more than the cost of the debt. It harms a company when the
debt becomes too large. Debt management ratios are used to evaluate your debt level and
determine whether it is adding to or taking away from the company's bottom line.
Following are the ratios calculated in order to know our Debt Management.


1. How the Company is Financed: Debt Ratio:
Debt ratio is a ratio that indicates proportion between company's debt and its total assets. It
shows how much the company relies on debt to finance assets. The debt ratio gives users a quick
measure of the amount of debt that the company has on its balance sheets compared to its assets.
The higher the ratio, the greater risk will be associated with the firm's operation. A low debt ratio
indicates conservative financing with an opportunity to borrow in the future at no significant
risk.
Debt Ratio (2007) =



=

*100
= 69.8 %
Debt Ratio (2008) =



=

*100
= 78.1%
Debt Ratio (2009) =



=

*100
= 86.3%

Debt Ratio (2010) =



=

*100
= 65.2%
Interpretation:
According to our calculation, in the century paper 69.8% assets were being funded by the debts.
78.1% in 20008, 86.3% in 2009 and 65.2% in 2010. This is showing that with passing four years
they are relying on their debts more but in 2010 they reduced their debt ratio by 21.1% which is a
good sign as they are doing the conservative financing with an opportunity to borrow in the
future. This is the higher ratio in general, that shows greater risk associated with the Companys
operation.
2. Ability to pay Interest: Times-Interest-Earned:
Times interest earned (TIE) ratio is an indication of the company's ability to handle interest costs
from earnings. The TIE ratio is calculated as Earnings before Interest and Taxes (EBIT)/Interest.
The high ratio is considered to be better. Ratios under 1.0 indicate a company with insufficient
earnings to pay interest payments.
The calculation of the times interest earned ratio is use the earnings before interest and taxes
(EBIT) figure off the income statement and divide it by the interest expense (I) figure off the
income statement.
Times-Interest-Earned (2007) =

= 2.38 times
Times-Interest-Earned (2008) =

=



= 1.37 times
Times-Interest-Earned (2009) =

= 0.22 times
Times-Interest-Earned (2010) =

= 1.06 times
Interpretation:
In our calculations, we are getting know that the Century paper company have 2.38% interest
earned ration in 2007, 1.37%, 0.22% and 1.06% in the next following years respectively. This
means that in 2007, Century paper that the company is 2.38 times efficient to meet its interest
obligations and so on for the following years. But in 2009, the company is 0.22 times to meet the
interest obligations means that the company is not able to meet its total interest expense from its
debts.

3. Debt-To-Equity Ratio:
The Debt to Equity Ratio measures how much money a company should safely be able to borrow
over long periods of time. It does this by comparing the company's total debt (including short
term and long term obligations) and dividing it by the amount of owner's equity.
Debt to equity is very industry specific; and it also really depends on the company at hand and
the way they chose about doing things. It must be noted that neither a company with a high debt
to equity ratio or a company will a low ratio is necessarily better than each other; it all depends
on how they operate. If a company has a high debt to equity ratio it simply means that they used
a lot of outside financing (such as business) to finance their company, meaning a lot of the
businesss expenses go towards repaying these loans.
Debt-To-Equity Ratio (2007) =

= 2.31 times
Debt-To-Equity Ratio (2008) =

= 3.57 times
Debt-To-Equity Ratio (2009) =

= 6.33 times

Debt-To-Equity Ratio (2010) =

= 1.87 times
Interpretation:
Our debt to Equity ratio in the four years are 2.31, 3.57, 6.33 and 1.87 which means that the
company was using 2.31 times of equity and debt to finance its assets in 2007, 3.57 times in
2008, 6.33 times in 2009 and 1.87 times in 2010. This also shows us the gradual decrease in
2010 which also a good sign for the company.
Profitability Ratios:
Every firm is most concerned with its profitability. One of the most frequently used tools of
financial ratio analysis is profitability ratios which are used to determine the company's bottom
line. Profitability measures are important to company managers and owners alike. If a small
business has outside investors who have put their own money into the company, the primary
owner certainly has to show profitability to those equity investors.
Profitability ratios show a company's overall efficiency and performance. We can divide
profitability ratios into two types: margins and returns. Ratios that show margins represent the
firm's ability to translate sales dollars into profits at various stages of measurement. Ratios that
show returns represent the firm's ability to measure the overall efficiency of the firm in
generating returns for its shareholders.
1. Net Profit Margin:
When doing a simple profitability ratio analysis, net profit margin is the most often margin ratio
used. The net profit margin shows how much of each sales dollar shows up as net income after

all expenses are paid. For example, if the net profit margin is 5% that means that 5 cents of every
dollar is profit. The net profit margin measures profitability after consideration of all expenses
including taxes, interest, and depreciation.
Net Profit Margin (2007) =


*100
=


*100
= 2.17%
Net Profit Margin (2008) =


*100
=


*100
= 0.64%
Net Profit Margin (2009) =


*100
=


*100
= 14.7%
Net Profit Margin (2010) =


*100
=


*100
= 0.43%

Interpretation:
Through our calculation we got to know that the Net Profit Margin of Century Paper in 2007 is
2.17%, 0.64% in 2008, and 14.7% in 2009 and in 2010 0.43%. But it is decreasing gradually.
This is a bad sign for the company. This means that they are having 2.17% profit for every $1 it
generates in revenues or sales. The higher ratio shows us the better performance. But right now,
for the current analysis it is a bad performance.
2. Gross Profit Margin:
Gross profit margin is a key financial indicator used to asses the profitability of a company's core
activity, excluding fixed cost. Gross profit margin measures company's manufacturing and
distribution efficiency during the production process. It is a measurement of how much from
each dollar of a company's revenue is available to cover overhead, other expenses and profits.
The ideal level of gross profit margin depends on the industries, how long the business has been
established and other factors. Although, a high gross profit margin indicates that the company
can make a reasonable profit, as long as it keeps the overhead cost in control. A low
margin indicates that the business is unable to control its production cost.
Gross profit margin can be used to compare a company with its competitors. More efficient firms
will usually see a higher margin. Also, it provides clues about company's pricing, cost structure
and production efficiency. Therefore, gross profit margin can be used to compare company's
activity over time.
Gross Profit Margin (2007) =

=


*100
= 7.95%

Gross Profit Margin (2008) =

=


*100
= 7.30%
Gross Profit Margin (2009) =

=


*100
= 1.03%
Gross Profit Margin (2010) =

=


*100
= 1.59%
Interpretation:
Through our calculation, the Century Paper is having Gross Profit Margin of 7.95% in 2007,
7.30% in 2008, 1.03% in 2009 and 1.59% in 2010. This means that that for every $1 generated in
sales, the Century Paper Company have 0.75 cents, 0.01cents, 0.015 cents in 2010 at the end of
the day to cover basic operating costs and profit.
3. Return on Assets:
The Return on Assets ratio is an important profitability ratio because it measures the efficiency
with which the company is managing its investment in assets and using them to generate profit.

It measures the amount of profit earned relative to the firm's level of investment in total assets.
The return on assets ratio is related to the asset management category of financial ratios.
Return on Assets (2007) =



=

*100
= 0.86%
Return on Assets (2008) =



=

*100
= 0.21%
Return on Assets (2009) =



=

*100
= -7.65%
Return on Assets (2010) =



=


*100
= 0.30%


Interpretation:
Through our calculation, in 2007 the Century Paper Company had 0.86% of Return on Assets
means that they got 0.86% for every $1 on assets, 0.21% in 2008, -7.65% in 2009, 0.30% in
2010. The ratios are gradually decreasing in the years especially in 2009. This means that the
company is not efficiently managing its investments on the assets to generate profit.
4. Return on Equity:
The Return on Equity ratio is perhaps the most important of all the financial ratios to investors in
the company. It measures the return on the money the investors have put into the company. This
is the ratio potential investors look at when deciding whether or not to invest in the company.
Return on Equity (2007) =

*100
= 2.87%
Return on Equity (2008) =

*100
= 0.95%
Return on Equity (2009) =

*100

= -0.56%
Return on Equity (2010) =

=


*100
= 0.86%
Interpretation:
Through our calculation we get to know that in 2007 the Century Company had 2.87% returns on
equity. This means that for every $1 investment done in the company, investors are earning
2.87% in 2007, 0.95% in 2008, -0.56% in 2009 and 0.86% in 2010. And this is also showing that
the ratio is gradually decreasing especially in 2009.