While substantial and continued investment in BMR&E has provided competitive edge, the company still has to do more. In the age of information technology, the whole business process has to be reviewed then utilise the IT facilities. The company has done some work in the shape of customer care and service centre. But what is more required is the CRM approach review. During the year the company recorded sale at Rs 2.803 billion and after tax profit at 235.85 million.
The General Tyre & Rubber Company of Pakistan Limited was incorporated in the province of Sindh on March 7, 1963 as a private limited company and was subsequently converted into a public limited company. The company's shares are quoted on the Karachi and Lahore Stock Exchanges. The company is engaged in the manufacture of tyres for automobiles.
The company had entered into a Royalty Technical Service Agreement dated September 1, 1984 (the 'TSA') with General Tire International Company (GTIC), USA, a subsidiary of Continental Tire North American Inc (CTNAI), USA whereby the company was allowed to use trade marks such as 'General,' 'General Tire' and logo big "G".
The company has concluded a new Royalty Technical Service Agreement with CTNAI on May 29, 2002, which became effective from September 1, 2002.
Under the new arrangement the company shall continue to be entitled to use the aforementioned trademarks and logo for a period of seven years from September 1, 2002. The manufacturing facilities of the plant has been rated at 1.1 million tyres. During the year the company reviewed its production cycle and brought about process changes with limited capital expenditure to increase the capacity of the plant from 900 thousand tyres to 1100 thousand tyres.
The company has also approved projects for Balancing, Modernising, Rehabilitation (BMR) and Expansion to cater to the increased demand of OEMs (Original Equipment Manufactures) and the projected growth in the Replacement Market.
Capacity of the plant will be increased through installation of additional tyre building machines, cutting presses and moulds over the next few years.
The financial position of the company remained strong. Total assets increased substantially and fixed assets were recorded at Rs 540.33 million as compared to Rs 406.53 million showing Rs 133.8 million increase. During the year new assets were added in the sum of Rs 125.35 million (2002-03: Rs 69.31 million). In addition an amount of Rs 91 million was booked in the account of capital work-in-progress.
Break-up value of the General Tyre share at Rs 17.91 carries Rs 7.91 per share premium on the par value of Rs 10.
On 27th January, the market value of the share was at Rs 40.10 per share which is more than four times of the par value. The current ratio at 2.14 is excellent ratio compared to the benchmark ratio of "one" showing easy liquidity position although closing cash and bank position at Rs 44.81 million was much lower than opening position of Rs 143.13 million.
The long term debt to equity ratio at 12:88 shows strong coverage of long term borrowing by equity as the company maintains relatively large reserve which has provided stimulous, to shareholders equity to cross billion rupees threshold for the first time in its history.
The year under review, registered highest ever sales volume at 1.204 million tyres (2002-03: 0.984 million tyres). The company's volume sales was spurred by the buoyant automobile assembler sector and increase in the share of Replacement Market.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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June 30
2004 2003
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Share Capital-Paid-up: 597.71 597.71
Reserve: 472.67 236.82
Shareholders Equity: 1,070.38 834.53
L T Debts: 153.05 5.84
Staff Benefits: 99.56 94.63
Deferred Credit: 0.72 -
L T Deposits From Dealers: 9.00 8.91
Current Liabilities & Provisions: 639.50 758.94
Fixed Assets: 540.33 506.53
L T Investments: 1.18 1.16
L T Loans & Advances: 3.66 4.26
Deferred Taxation: 51.40 36.76
L T Deposits & Prepayments: 5.39 3.73
Current Assets: 1,370.25 1,250.41
Total Assets: 1,972.21 1,702.85
Sales, Profit & Pay Out:
Net Sales: 2,802.67 2,239.09
Gross Profit: 626.59 530.07
Operating Profit: 398.99 345.14
Other Income: 24.44 28.06
Financial (Charges): (7.55) (8.23)
(Depreciation) & Amortisation: (63.24) (57.11)
Profit Before Taxation: 377.46 334.50
Profit After Taxation: 235.85 196.69
Dividend Cash Nil (2003 @
Rs 2/Share): - 119
Earning Per Share (Rs): 3.95 3.29
Share Price (Rs) Dated 27/01/05: 40.10 -
Financial Ratios
Price/Earning Ratio: 10.15 -
Book Value Per Share: 17.91 13.96
Price/Book Value Ratio: 2.23 -
Debt/Equity Ratio: 12:88 1:99
Current Ratio: 2.14 1.65
Assets Turn Over Ratio: 1.42 1.31
Days Receivables: 46 41
Days Inventory: 110 78
Gross Profit Margin (%): 22.36 23.67
Net Profit Margin (%): 8.42 8.78
R O A (%): 11.96 11.55
R O C E (%): 17.69 20.83
Plant Capacity & Production Number of Units:
Capacity Tyre sets: 1,100,000 900,000
Production Tyre sets: 1,204,255 982,211
Capacity Utilisation (%): 109.45 109.13
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COMPANY INFORMATION: Chairman: Lieutenant General Ali Kuli Khan Khattak (Retd); Chief Executive: Haroon Ahmed Zuberi; Company Secretary: S. Ehtesham Taqi; Factory/Registered Office: H-23/2 Landhi Industrial Trading Estate Landhi, Karachi; Web Address: Not Reported; Branch Offices: Lahore, Islamabad; Liaison Office: Islamabad.