By Qudsia Bano
ISLAMABAD, June 08 (INP-WealthPK): Revenues of Cherat Packaging Limited (CPL), a major supplier of cement bags, climbed 23% to Rs22.5 billion during the first nine months of the financial year (July-March 2021-22) from Rs18.4 billion in the same period last year.
As a result, the company earned Rs3.4 billion in after-tax profit during the period.
Due to high increases in coal and power rates, the cost of sales also increased by 20% during the period. Thanks to advantageous discount rates, the use of the wage financing programme, and the repayment of long-term loans, financing costs decreased compared to the same period last year.
| Cherat Packaging Limited Profit& Loss Accounts
For the Period Ended in March 2022 |
Period ended
(Rs in ‘000) |
YOY Growth % |
| |
March 31, 2022 |
March 31, 2021 |
|
| Turnover – net
Cost of sales |
22,581,450
(16,343,799) |
18,420,773
(13,575,623) |
23%
20% |
| Gross profit
Distribution costs
Administrative expenses
Other expenses
Other income |
6,237,651
(245,881) (298,520)
(929,963)
303,740 |
4,845,150
(212,836)
(169,368)
(698,665)
65,010 |
29%
16%
76%
33% |
| Operating profit
Finance costs |
5,611,428
(905,322) |
4,211,495
(1,205,628) |
33%
-25% |
| Profit before taxation
Taxation |
4,706,106
(1,270,801) |
3,005,867
(783,589) |
57%
62% |
| Net profit |
3,435,305 |
2,222,278 |
55% |
The industry has faced a tremendous challenge since international commodity prices, particularly for oil and coal, have risen significantly. Coal prices have soared to never-before-seen heights, with no signs of abating anytime soon.
Cherat Packaging Limited (CPL) Annual Performance Summary
| PATTERN OF SHAREHOLDING – Cherat Packaging Limited (CPL)
As of June 30, 2021 |
| Categories of Shareholders |
Shares Held |
Percentage |
| Directors, Chief Executive Officers and their spouse(s), and minor children |
1,999,842 |
4.7 |
| Associated Companies, undertakings, and related parties |
11,724,952 |
27.59 |
| Executives |
19,700 |
0.05 |
| NIT and ICP |
- |
- |
| Banks, Development Financial Institutions, Non-Banking Financial Institutions |
574,626 |
1.35 |
| Insurance Companies |
10,505,901 |
24.72 |
| Modarabas and Mutual Funds |
686,082 |
1.61 |
| General Public |
|
|
| Local |
13,903,028 |
32.70 |
| Foreign |
766,843 |
1.80 |
| Foreign Companies |
2,000 |
0.00 |
| Others |
2,323,861 |
5.47 |
| Total |
42,506,835 |
100.00 |
| Source: Company financial Report |
As of June 30, 2021, directors, chief executive officers and their spouse(s) and minor children owned 4.7% of the company’s shares. Associated corporations, undertakings and related parties owned 27.59% of the total shares. The general public (local) owned 32.70% and foreign 1.80% of the shares, respectively, while banks, development financial institutions, and non-banking finance companies owned 1.35% of the shares. “Others” held 5.47% of the shares. Insurance companies owned 24.72% of the total shares.
Company Turnover
| Cherat Packaging Limited (CPL) Historical Turnover Ratios |
| |
Unit |
2021 |
2020 |
2019 |
2018 |
2017 |
| Operating Performance Ratios |
| Inventory turnover ratio |
Times |
3.23 |
2.87 |
2.61 |
3.42 |
3.66 |
| No. of Days in Inventory |
Days |
112 |
125 |
138 |
105 |
98 |
| Debtor turnover ratio |
Times |
5.33 |
5.34 |
6.17 |
7.26 |
7.97 |
| No. of Days in Receivables |
Days |
68 |
67 |
58 |
50 |
45 |
| Total Assets turnover ratio |
Times |
0.89 |
0.85 |
0.71 |
0.76 |
1.16 |
| Fixed Assets turnover ratio |
Times |
2.24 |
1.85 |
1.57 |
1.48 |
3.53 |
| Creditor turnover ratio |
Times |
16.29 |
18.25 |
19.16 |
10.34 |
18.68 |
| No. of Days in Creditors |
Days |
22 |
20 |
19 |
35 |
19 |
| Operating Cycle |
Days |
157 |
172 |
177 |
120 |
124 |
As the company works to implement good inventory management, its inventory turnover has been on the rise. Since the company's primary raw materials are imported, its inventory turnover days remain high. Keeping the customers’ creditworthiness in mind, the company aims to keep its credit level up to 45 days.
The company feels that solid relationships with vendors are essential for ensuring the smooth supply of goods and services, which is why it works hard to maintain them. The asset turnover ratio increased after the firm implemented effective management practices.
In 2020-21, which was marked by economic uncertainty, Cherat Packaging went above and beyond to help its clients while still delivering a great financial performance. The company's sales of cement bags manufactured during the year were boosted by the country's historic surge in cement consumption. During 2020-21, the company's revenues increased by 19% due to higher sales volumes. Despite inflationary pressures on various input goods, such as Kraft paper and polypropylene granules, the company successfully maintained its manufacturing costs.
Other expenses increased during the financial year 2020-21 owing to increasing profitability, primarily due to provisions for WPPF (Workers Participation Fund) and WWF (Workers Welfare Fund). Financing costs decreased as a result of lower discount rates and the company's low-cost salary financing facility. The company made an after-tax profit of Rs855 million for the year ended June 30, 2021, compared to Rs70 million the previous year.
Higher earnings per share (EPS) was a direct indication of the company's overall performance. The current year's (2021) (EPS) of Rs20.12 was the highest since 2018. This is attributed to higher sales, more efficient production, and more effective marketing methods. Furthermore, the market price of the company's shares climbed during the course of the year. This is primarily due to the company's performance in comparison to the expectations of its shareholders.
Cherat Packaging Limited Vs KSE-100
It is worth noting that CPL has been the main producer and supplier of packaging material to the cement industry in Pakistan since its inception. It is ISO 9001:2008 certified and has won numerous prestigious awards, including the Best Company Award from the Karachi Stock Exchange and the Management Association of Pakistan. CPL can produce 265 million paper bags and 195 million polypropylene bags per year.
CPL manufactures a variety of top-quality cement bags using the highest-grade raw materials to meet the individual needs of its customers. With the addition of the polypropylene bag plant, CPL is able to meet the cement packaging requirements of its valuable customers by providing single-window operation. CPL is the only company in Pakistan, and in the region, to produce and supply both varieties of cement bags – bags made from Kraft paper and polypropylene granules.
