Final Project

Report
ITTEFAQ IRON INDUSTRIES LTD.

Submitted To
Sir ,SAMEEN GHANI
FINANACIAL MANAGEMENT

Submitted by
Aman 61500
M.Anas 7909
Subhan Lodhi 62293

“PAF-Karachi Institute Of Economics And Technolgy

 ACKNOWLEDGEMENT

Thanks to Allah Almighty Who enabled me to research on this topic.

I submit my heartiest gratitude to our respected and honorable teacher Sir, Sameen Ghani for his
sincere guidance and help for completion of this course and this project My joys knows no bounds
in expressing our cordial gratitude to my teacher .His support and encouragement was a great help
throughout this semester and during this course We humbly extend thanks to all concerned person
who cooperated with us in this regards.
 ITTEFAQ IRON INDUSTRIES
LTD.

Ittefaq Iron Industries is a Pakistani company

which manufactures steel and is based
in Lahore Pakistan It is part of Al-Shafi
Group which was once part of Ittefaq
GroupIt was formed with the merger of
Alshafi Steel and Ittefaq SonsIt is listed on
the Pakistan Stock Exchange. Alshafi Group
of Companies carries its legacy from Ittefaq Foundries; established by Mian Muhammad Sharif
in early 1940s, from a small foundry to a group of companies having several sugar, textile, paper
and steel mills. After its separation from Ittefaq Foundries during early 1990s; Alshafi Group
inherited Ittefaq Sugar Limited and Brother Steel (Pvt) Ltd. Afterwards Kashmir Sugar Mills
Ltd, Kashmir Feeds Ltd, Alshafi steel (Pvt) Ltd, Ittefaq sons (Pvt) Ltd, Ittefaq Bio Tech (Pvt) ltd
and Kashmir Poultry Breeders (Pvt) Ltd and hatchery farms that later merged in Kashmir Feeds
limited, were established during the period from 1990 to date. The group is now a days actively
working on to unveil its power generation projects with both of its sugar units.

Since 1990 Alshafi Group, being the trustee of Ittefaq Hospital Trust (established 1984), is
contributing in health care and social uplift of local community. Ittefaq Hospital Trust is
equipped with latest medical equipment for surgery, and diagnosis. Renowned Physicians and
Surgeons are available round the clock for all medical emergencies. Considering a constructive
obligation by Alshafi Group towards the health sector, a teaching and Nursing College was
established 2013 to prepare skilled staff in Health care. Ittefaq Hospital Trust has a remarkable
history of helping the under privileged class through its charity ventures.

With a history of over 60 years of professional expertise in steel to its credit; Alshafi Steel (Pvt)
Ltd was established in year 2006 consisting of one Induction furnace along with a continuous
casting plant (CCM).In same time while diversifying the business risks another entity was
incorporated in the name of Ittefaq Sons (Pvt) Ltd in year 2006 with principal business activity
was to manufacture steel Bars of varied dimensions in a fully automated state of the art unit.
Furthermore to ensure quality standards the entity was equipped with latest laboratory unit for
Chemical and Mechanical Analysis consisting of an Optical Emission Spectrometer of M9
Series, CS loco-Apparatus, Ultimate Tensile Machines.

Later on in 2008 another Induction furnace was erected/ installed in Alshafi Steel (Pvt) Limited
to meet ever increasing billet requirements of Ittefaq Sons (Pvt) limited.

Both units were located at 08-km Manga Raiwind Road District Kasur. Later On Alshafi Steel
(Pvt) Limited was merged with Ittefaq Sons (Pvt) Ltd in year 2009 and now the Company is
named as Ittefaq Iron Industries Limited. Today Ittefaq Sons (Pvt) Ltd stands as one of the top
notch manufacturers of steel products with the aim to uplift national trade, contribute to overall
GDP growth and sustainable development of Pakistan.Ittefaq Iron Industries Limited has its own
Grid Station equipped with latest electrical equipments to save machine from electrical
trippings.In year 2012 Ittefaq Iron Industries Limited undertook a further business extension by
importing and installing a fully automated steel profile manufacturing unit which is one of the
biggest steel section manufacturing unit of Pakistan. This Smart unit is capable of producing
heavy steel Section for residential and industrial purposes like I-beams, H-beams, Angles,
Channels.

Today Ittefaq Iron Industries Limited stands as a major player in Steel Market by utilizing all its
resources, to capture major market share by participating in all major Government Projects and
exporting its products to Afghanistan. Customer Loyalty established over the years through the
supply of ultimate products has enabled Ittefaq Steel to become a brand name in Steel market.

 Ownership Status
Publicly Held

 Financing Status
Corporation
 VISION

To contribute to the society by creating better value, innovative technology, high quality steel
products and superior services.

MISSION STATEMENT

Ittefaq Steel aims to proceed on its path to be the leading provider of quality steel products,
through empowerment with safe and environmentally sound practice.

STRATEGIC GOALS:

Providing Customer Satisfaction by Serving with Superior Quality Production of Steel Bar,
Girder Etc. At Lowest Cost. Ensuring Security and Accountability for Employees, Production
Facilities and Products. Ensuring Efficient Resource Management by Managing Human,
Financial, Technical and Infrastructural Resources So As To Support All Our Strategic Goals
and To Ensure Highest Possible Value Addition to Stakeholders
Key information:

 Name: Ittefaq Iron Industries Limited

 Ticker: ITTEFAQ
 Exchange: KASE
 Founded: 2007
 Industry: Steel
 Sector: Materials
 Market Cap: PK₨2.139b
  Shares outstanding: 144.34m

PRODUCTS
Ittefq Sons is the leading steel rolling mill in Pakistan with the capability to manufacture
international quality products with various standards, such as DIN, ASTM etc. the company has
created a name for itself and is known as the pioneer in steel products.

their state of the arts rolling mill can produce structure steel (with close tolerance and the
required mechanical properties) and cater to tringent requirements for critical applications.
Highly responsive and flexible production capability producing trailor made solution has resulted
in Ittefaq Sons becaome a preffered supplies to key customers of structural steel in the region.

1: DEFORMED BARS

Ittefeq Sons has been shaping steel for the nation for more than 50 Years. Our Deformed steel
bars of Grade 40 and Grade 60 are produced in all American and British Standards Sizes from
10mm to 50mm.

2: GIRDER, T-IRON, I & BEAM, CHANNEL & ANGEL

I-Beam are commonly made of structured steel. A common type of I-Beam is the Rolled Steel
joist (RJS). These sections have parallel flanges. Ittefaq Steel is manufacturing I & H-Beam,
Girder, T-Iron, Channel and Angle that has no match in strength and durability.

3: STEEL BILLETS

Ittefaq Steel has quickly emerged as one of the most productive mills in Pakistan producing high
quality industrial steel conforming to international standards industrial section, angles girders,
channels, rounds, and special shapes.
PRODUCTION FACILITIES

INDUCTION FURNACES

Melt shop is the heart of steel making operation at ittefaq. Here, steel scrap is transformed in to a
semi-finished product (Called a Billet) of correct size and chemistry, in two medium frequency
induction furnace each having of 15 ton capacity per heat.
LADLE REFINING FURNACES

Ladle Refining Furnace with a capacity of 20 ton per heat is used for refining liquid steel to
produce high quality alloy steel. LRF reduces the dissolved gas content and helps in improved
quality with better content and helps in improved quality with better recover of Ferro Alloys.
AOD CONVERTER

A. O.D is an improved Air-Oxygen Decarburization (AOD) Convertor. At Ittefaq Steel, our

AOD has a capacity of 22 tons per heat for making Stainless Steel and low carbon alloy steels.

CONTINUOUS CASTING

The two strand 6/11 radius continous caster is occupied with special features, for the production
of 100mm X 100mm to 200mm x 200mm steel billet.
BAR ROLLING MILL

Fully automatic rolling of 20” straight with auto controlled re-heating furnace has the capacity to
roll steel bars from 10mm to 50mm size according to international standards.
STRUCTURAL MILL

A 24” modern structural mill has been recently installed with a rolling capacity of 35-40 ton per
hour to produce Ms Joist, Ms Channel, Ms Angle, Ms T-Iron, Round Bar and other shapes of
steel structure.

Name Formula 2016 2017 2018

RATIOS

Du Pont Analysis
Profitability Net Income / Sales
0.04 0.03 0.04
Asset Sales/Assets
Efficiency 0.98 0.93 1.03
Equity Assets / Equity
multiplier 4.48 2.30 2.89
Return on Equity 18% 7% 13%

Cost of Equity Calculation

Dividend   28.61% 26.54% 25.65%
Payout ratio
Dividend per 6 9
share 8
Growth Rate (1-payout ratio) * 13.14% 4.98% 9.63%
ROE
   
Market Value   115.39 209.72 410.30
Per Share
Cost of (DPS/Market 18.34% 8.80% 11.83%
Equity Value)+Growth
Rate of Dividends

Value of the Firm

Value of the Debt + [(EBIT -
Firm I)*(1-T)]/Ks 1,700,236,335.3 2,271,186,762.4 2,885,547,861.48
6 5
Change of 33.581% 27.050%
value in %

Debt Management:

Debt to Asset Debt/Assets 22.58% 16.26% 9.45%

Equity Assets/Owners'
Multiplier Equity 4.478 2.299 2.887

Leverage Ratio

Debt to Total Debt/ Total 101.12% 37.38% 27.27%

Equity Ratio Equity

Other Ratios

PE Ratio   5.5 6.96 11.7

(times)
Return on Net Income/Total 4% 3% 4%
Asset (%) Assets
Interest EBIT/Interest
Coverage 2.25 2.58 4.05
ratio
LISTING
Ticker Exchange Primary Security Country Currency Listed
Security Type on

ITTEFAQ KASE (Pakistan Stock Yes Ordinary PK PKR Jul

Exchange Limited) Shares 2017

Past Performance

-42.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: ITTEFAQ has high quality earnings.

Growing Profit Margin: ITTEFAQ became profitable in the past.

Financial Position Analysis

Short Term Liabilities: ITTEFAQ's short term assets (PKR4.9B) exceed its short term

liabilities (PKR2.3B).
Long Term Liabilities: ITTEFAQ's short term assets (PKR4.9B) exceed its long term
liabilities (PKR478.4M).

Debt to Equity History and Analysis

Debt Level: ITTEFAQ's debt to equity ratio (43.8%) is considered high.

Reducing Debt: Insufficient data to determine if ITTEFAQ's debt to equity ratio has reduced
over the past 5 years.
Debt Coverage: ITTEFAQ's debt is not well covered by operating cash flow (3.3%).
Interest Coverage: ITTEFAQ's interest payments on its debt are well covered by EBIT (8.4x
coverage).

DIVIDEND:

The Board is pleased to propose a cash dividend of Rs:0.50 per share like 5% and 10% bonus
shares for the year ended June 30, 2018.