The percentage of steam sales of total sales also improved. However cost of furnace oil shot up significantly.
In addition, prices of lube oil and H.S. Diesel oil also increased. This exerted immense pressure on its profitability.
Operating expenses were slightly on the higher side and other income on the lower side. Financial charges were almost identical to the last year's which is unusual in the backdrop of declining lending rates.
The financial backbone of the balance sheet is robust as is evident from the break-up value of the share, current and long term debt to equity ratios.
The price of the share in the company during the last 52 weeks zoomed to Rs 38.50 from Rs 20 per share.
Its net profit declined to Rs 108.96 million from Rs 111.45 million in the preceding year. Its future profitability depends on furnace oil prices and electricity tariff.
Sitara Energy Limited was incorporated on November 7, 1991 (under the Companies Ordinance), 1984 in the province of Sindh. Its registered office is located in Karachi in Business Centre, Mumtaz Hassan Road.
The company is engaged in generation, distribution and sales of electricity. The power plant of the company is located at Tehsil Jaranwalla, District Faisalabad.
Its power generation facilities include 8 generators one of which is stand by generator. The installed energy generating capacity of the plant is 417,677 Megawatt hours (Mwh). Operating generating capacity (excluding standby generator is 365,467 (Mwh).
The actual generating was recorded at 303,646 Mwh as against previous year's 294,785 Mwh registering 3.0% increase over the preceding year's and capacity utilisation (on the basis of 7 engines) at 83.08%. The utilised capacity improved marginally over the preceding year's 80.66%.
The company sold 95.90% of the electricity as against 95.94%. Line losses reduced to 0.75% from 0.79% in the preceding year.
One of the main reasons for unutilised capacity is that there is "extra" capacity for future growth in demand/business.
The power is sold to associated undertakings at Wapda power tariff. Furnace oil is the main input of cost of generation.
During the year under review, Furnace Oil Average rate increased to Rs 11,583 per ton from Rs 10,543 per ton.
Gross sales turnover at Rs 1,141.375 million included 3.05% steam sales as against 2.8% steam sales in the preceding year.
Net sales turnover at Rs 1,129.80 million arrived after discount and electricity duty whereas last year sales turnover was recorded at Rs 1050.20 registering 7.6% growth which is remarkable under the present business scenario which emanates from the companies who purchase electricity from the company. As this is almost a captive power plant for the purchasing enterprises.
Gross profit registered lesser growth than sales showing pressure on gross margin, gross profit increased by 1.20% whereas gross margin eroded by 0.92 percentage point from 15.68% to 14.76% during the year under review.
Operating expenses increased by Rs 4.49 million and other income declined by Rs 2.06 million.
Financial charges were marginally on the lower side. The pre-tax profit Sitara Energy Limited decreased by Rs 3.61 million to Rs 109.29 million from Rs 112.90 million in the preceding year.
The profits and gains derived by the company from electric power generation are exempt from income tax.
The company posted net profit after taxation at Rs 108.96 million as against Rs 111.45 million posted in the preceding year.
This works out to earning per share at Rs 5.71 per share. At the prevailing market value of its share the price to Earning Ratio is nearly multiple of 5 showing immense confidence of the investors in the financial position of the company including its dividend pay-out potential on the long term basis.
For the year under review, the management's declaration of dividend was identical to the preceding year's ie Rs 3 per 10-rupee share.
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Performance Statistics (Million Rupees)
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30 June 2003 2002
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Share Capital-Paid-up: 190.92 190.92
Reserves: 573.19 543.19
Unapp Profit: 194.43 172.75
Shareholders Equity: 958.54 906.86
L.T Debts: - 46.97
Current Liabilities: 371.29 179.20
Fixed Capital Expenditure: 584.93 600.72
L.T Investments: 50.00 -
L.T Deposits: 0.15 0.30
Current Assets: 640.75 532.01
Total Assets: 1,275.83 1,133.03
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Sales, Profit & Pay Out
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Sales: 1,129.80 1,050.20
Gross Profit: 166.75 164.77
Operating Profit: 132.86 135.37
Other Income: 2.77 4.83
Financial (Charges): (20.59) (21.23)
(Depreciation): (56.37) (59.72)
Profit Before Taxation: 109.29 112.90
Profit After Taxation: 108.96 111.45
Dividend Cash @ Rs 3/Share: (57.28) (57.28)
Earnings Per Share (Rs): 5.71 5.84
Share Price (Rs) Dated 19.12.2003: 28.20 -
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Financial Ratios
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Price/Earning Ratio: 4.93 -
Book Value Per Share: 50.21 47.50
Price/Book Value Ratio: 0.56 -
Debt/Equity Ratio: 0:100 5:95
Current Ratio: 2.02 2.96
Asset Turn Over Ratio: 0.88 0.93
Days Receivables: 137 77
Days Inventory: 30 11
Gross Profit Margin (%): 14.76 15.68
Net Profit Margin (%): 9.64 10.61
R.O.A (%): 8.54 1.01
R.O.C.E (%): 11.36 11.68
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Plant Capacity & Production (Mega Watt Hours)
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A) Installed Energy
Generation Capacity: 417,677 417,677
Actual Energy Generation: 303,646 294,785
Capacity Utilisation (%): 72.70 70.58
B) Number of Generators Installed: 8 8
C) Number of Generators Worked: 7 7
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COMPANY INFORMATION: Chairman: Haji Bashir Ahmed; Chief Executive: Javed Iqbal; Director: Muhammad Adrees; Company Secretary: Mazhar Ali Khan; Registered Office: 601-602, Business Centre Mumtaz Hasan Road Karachi; Plant: 33 KM Sheikhupura Road Faisalabad.