Financial Analysis of FMCG (Ismail Industries)

Financial Accounting
Project Report (Spring 2021)
Raheel Iqbal (20212-29240)

Submitted to: Mr. Faraz Nasim

 Table of Contents

1. Introduction …….................................................................................................................................... …4

2. 2 Six years at a Glace .............................................................................................................................. 5

3. 3 balance sheet analysis ………………………………………………………………………………………….6

4. Sales revenue analysis …..................................................................................................................... ….6

5. 4 cash flow analysis ………......................................................................................................................... 8

Introduction:
Ismail Industries Limited is one of the largest business entities of Pakistan. The company has a diverse portfolio ranging
from food products (confectioneries, biscuits, snacks, and nutrition) to high-quality packaging films. Since inception, our
focus has remained on developing the most innovative and unique products for our customers. Since inception, our focus
has remained on developing the most innovative and unique products for our customers. They are proud to develop the
best brands in the business and some of the most innovative products which have become a part of our national lifestyle.
The wide array of products appeals to children and products which have become a part of our national lifestyle. The wide
array of products appeals to children and grown-ups alike and is a source of joy for millions. grown-ups alike and is a
source of joy for millions. Candy land is where it all started in 1988 with our first factory bringing to life the largest
confectionery company of Candyland . Later in 2002, the Bisconni division was introduced which soon became one of the
fastest growing biscuits industries Later in 2002, the Bisconni division was introduced which soon became one of the
fastest growing biscuits industries in the country. In 2006, the SnackCity division was set in motion to explore the chips
and peanuts category. The business further strengthened when in the same year, Astro Plastics was launched as a
specialized division that business further strengthened when in the same year, Astro Plastics was launched as a
specialized division that manufactures packaging and plastic films. Manufactures packaging and plastic films. At Ismail
Industries Limited (IIL), we take pride in being ISO 22000 certified and meeting the global quality standard At Ismail
Industries Limited (IIL), we take pride in being ISO 22000 certified and meeting the global quality standard developed by
the International Organization for Standardization dealing with food safety. We are also certified by developed by the
International Organization for Standardization dealing with food safety. They are also certified by SANHA (South African
National Halal Authority) which is a leading authority in the certification for Halal products SANHA (South African National
Halal Authority) which is a leading authority in the certification for Halal products around the world. Around the world. For
over two decades, Ismail Industries Limited has been exporting its products to more than 40 countries in North for over
two decades, The long-standing customer relationships are a testament to our commitment to manufacturing the highest
quality products and ensuring the satisfaction of our testament to our commitment to manufacturing the highest quality
products and ensuring the satisfaction of our customers all around the world. Customers all around the world. Their
employees operate in an environment where they are empowered to think and act in the highest interest of their
employees operate in an environment where they are empowered to think and act in the highest interest of our key
stakeholders. It is the same culture of innovation that has resulted in many home-grown ideas resulting in some key
stakeholders. It is the same culture of innovation that has resulted in many home-grown ideas resulting in some of the
most innovate products brought to Pakistan confectionery, biscuit, and snack market along with various of the most
innovate products brought to Pakistan confectionery, biscuit, and snack market along with various achievements internally
on driving efficiency and operational excellence.
 6 YEARS AT A GLACE

ISMAIL INDUSTRY FINANCIAL HIGHLIGHTS

  2020 2019 2018 2017 2016 2015
Analysis of Profit or Loss Account (Rs. in millions)
Sales - gross 40,807 37,011 29,971 24,295 20,004 14,317
Gross profit 6,878 6,354 5,361 3,721 3,109 2,476
Profit from operations 1,987 2,264 2,063 1,846 1,584 1,294
Profit before taxation 1,323 1,404 1,838 1,643 1,292 771
Profit after taxation 932 967 1,412 1,166 1,002 640
Analysis of statement of financial position (Rs. in millions)
Total non-current assets 24,942 16,101 14,554 14,355 12,307 7,598
Total current assets 12,566 10,864 8,518 7,883 8,296 6,678
Total assets 37,508 26,964 23,072 22,239 20,604 14,276
Paid-up capital 664 638 638 638 638 505
Reserves 9,236 6,736 6,582 5,634 5,361 3,470
Total equity 9,900 7,374 7,220 6,272 5,999 3,975
Non-current liabilities 15,674 8,824 7,467 8,809 6,197 4,071
Current liabilities 11,934 10,767 8,385 7,159 8,407 6,230
Total liabilities 27,608 19,590 15,852 15,967 14,605 10,301
Total equity and liability 37,508 26,964 23,072 22,239 20,604 14,276
FINANCIAL PERFORMANCE
  2020 2019 2018 2017 2016 2015
Financial Ratios            
Earnings per share (Rs.) 14.49 15.15 22.13 18.27 15.70 12.66
Breakup value (Rs.) 149.19 115.58 113.16 98.29 94.02 78.68
Market Value per share (Rs.) 370.00 390.00 410.00 350.00 257.90 260.00
Return on equity (%) 9.41 13.11 19.56 18.59 16.70 16.09
Dividend payout (%) 35.00 30.00 45.00 27.50 65.00 60.00
Price to earnings ratio 25.54 25.74 18.52 19.15 16.42 20.54
 BALANCE SHEET ANALYSIS
Authorized share Comments
capital

250,000,000 (2019: -
250,000,000) ordinary
shares
of Rs. 10 each 0%  
2,500,000,000 2,500,000,000

Shareholders' equity
Issued, subscribed and 4% Ordinary shares issued against cash consideration
paid-up share capital 663,569,400 638,047,500 through right issue
Reserves 37% Increase in Share premium by 154% Upto value 1.5
9,236,215,197 6,736,199,160 Billion
Total shareholders' 34%  
equity 9,899,784,597 7,374,246,660

Non-Current liabilities
Sponsors' loan- - During the year, the sponsors' loan have been
subordinated 902,151,770 converted into ordinary shares through the issue of right
shares.
Long term finances- 120 Long Term Finance Secured from Conventional and
secured 13,513,452,828 6,152,679,111 % Islamic banks During the year
Lease liabilities -33% Under the agreements, lease rentals are payable in 36
91,245,081 136,024,558 equal monthly, 16 equal quarterly & 6 equal biannually
installments. Taxes, repairs, replacement and
insurance costs, if any, are borne by the Company. The
financings from conventional
Deferred Liabilities 27% Mainly Due to The Deffered tax Liability of 1.6 Billion
2,069,506,039 1,632,662,558
Total non-current 78%  
liabilities 15,674,203,948 8,823,517,997
Current liabilities
Trade and other 68% Mainly Due to The Increase in Payables against Trade
payables 3,436,484,784 2,051,217,937 Creditors by 64% up to value of 2.2 Billion
Accrued mark-up -5% Finance Cost of interest over bank long term loans
195,966,471 205,692,929
Short term finances- 8% Short Term Loan taken from Banks
secured 6,789,925,030 6,299,903,812
Current portion of:
- long term finances- -49% Loan Principal Amount payables to Banks
secured 985,228,903 1,913,163,282
- Lease liabilities -23% Under the agreements, lease rentals are payable in 36
77,281,836 100,219,845 equal monthly, 16 equal quarterly & 6 equal biannually
installments. Taxes, repairs, replacement and
insurance costs, if any, are borne by the Company. The
financings from conventional
Unclaimed dividend 13% Dividends Payables
2,644,785 2,338,500
Advances from 130 Advance Received from Customers recorded as Un-
customers - unsecured 446,414,508 194,194,572 % erned Income.
Total current 11%  
liabilities 11,933,946,317 10,766,730,877
Total liabilities 41%  
27,608,150,265 19,590,248,874
Total equity and 39%  
liabilities 37,507,934,862 26,964,495,534
Fixed asset analysis

8 Fixed Asset Account Description

18,128,018,179 Opening Book Value 1 July 2019

2,864,967,008 Addition & Transfer Inn from Capital work in Process During 19-20
(34,641,226 Disposal During 19-20
)
20,958,343,961 Closing Book Value on June 30 2020

Accumulated depreciation Description

-6,339,069,392 Opening Book Value 1 July 2019
-1,221,257,144 Addition & Transfer Inn from Capital work in Process During 19-20
25,778,867 Disposal During 19-20
(7,534,547,669) Closing Value of Accumilated Depreciation on June 30 2020

20,958,343,961 Cost of Asset at Closing Book Value on June 30 2020

(7,534,547,669) Accumulated depreciation Closing Book Value on June 30 2020
13,423,796,292 Closing Cost of Fixed Asset on June 30 2020
 Depreciation schedule

Depreciation Schedule Opening Addition Disposal Depreciatio Depreciation Closing Book

Book Value n% For the Value
Period
Leasehold land 900,660, 1% 9,546,5 891,113,684
240 56
Freehold land 88,688 0% 88,688,580
,580 -
Building on leasehold 2,301,727, 204,44 10% 241,847,719 2,264,324,315
land 358 4,676
Plant and machinery 8,123,872, 2,541,682 (24,444,57 10% To 15% 902,988,764 9,757,385,826
859 ,617 1)
Furniture and fittings 37,648 17,04 (29,0 10% 4,684,660 49,995,348
,761 0,210 00)
Equipment’s 200,490, 23,69 10% 21,261,364 202,921,640
734 2,270
Computers 31,207 4,80 (43,0 20% 6,845,441 29,161,783
,390 7,850 00)
Vehicles 104,652, 73,29 (10,124,65 20% 26,035,707 140,205,116
866 9,385 5)
Total 11,788,948, 2,864,967 (34,641,22   1,213,210,2 13,423,796,2
788 ,008 6) 11 92
 Intangible assets

9 Intangible Assets  
85,453,143 Opening Book Value 1 July 2019
33.33% Amortization Rate charge for the year
(30,159,93 Less: Amortization charge for the year
3)
55,293,21 Closing Book Value on June 30 2020
0

88,667,156
-33,373,946 Accumulated Ammortization
55,293,21 Closing Book Value on June 30 2020
0

*Note Represent various computer softwares amortized on straight line basis over a period of 36 months.

LONG TERM
10 INVESTMENTS  
The company received revaluation gain in shares of Hudson Pharma (Private) Limited
(HPL)
623,885,000 Gain during the year

One of the Associate Company make Profit of 1.4 Million During the Year.
2,001,232,631 The Bank of Khyber Opening shareholding
1,440,383,465 Acquisition of Shares & Profit During the Year
3,441,616,096 The Bank of Khyber Closing shareholding
 Horizontal
LONG TERM DEPOSITS 2020 2019 Analysis
Lease - Conventional 13,702,400 19,309,400 -29%
Lease - Islamic 12,282,390 8,362,240 47%
Less: Current maturity - Conventional -8,686,100 -6,360,770 37%
Utilities 12,029,293 11,049,093 9%
Others 7,677,598 11,943,528 -36%
Decreased in Long Term
Total 37,005,581 44,303,491 -16% Deposits
Horizontal
STOCK-IN-TRADE 2020 2019 Analysis
2,752,429,00 2,951,988,97 Decrease in
Raw materials 6 5 -7% RM
Increase in
Packing materials 661,948,508 451,115,557 47% PM
Increase in
Work-in-process 175,501,874 82,183,155 114% WIP
2,661,778,94 1,626,328,44 Increase in
Finished goods 1 1 64% FG

6,251,658,32 5,111,616,12
Total 9 8 22%

Horizontal
Accounts Receivable     2020 2019 Analysis
- export - secured 1,056,320,953 784,297,206 35%
- local - unsecured 2,384,634,776 2,038,377,90 17%
 7
2,822,675,11
Total A/R For The Year     3,440,955,729 3 22%
Allownce For bad Debts 2020 2019
Balance at the beginning of the year -76,343,145 -51,963,694    
Charge during the year - net -19,627,495 -24,379,451

Total (95,970,640) (76,343,145) (95,970,640) (76,343,145) 26%

Accounts Receivable Balance at the End of year 2,746,331,96

June 30th     3,344,985,089 8 22%

LOANS AND ADVANCES 2020 2019 Horizontal Analysis

Loans - secured – employees 49,935,105 41,769,164 20%
Advances – unsecured
- suppliers 825,763,077 1,499,160,624 -45%
- LC margins 61,078,888 41,011,447 49%
- Others 17,899,292 -100%

Total of loan & Advances 936,777,070 1,599,840,527 -41%

Horizontal
TAXATION – net 2020 2019 Analysis
1,554,860,27 1,223,297,52
Advance income tax 5 5 27%
Provision for taxation -281,774,530 -293,841,398 -4% Tax Liablity

1,273,085,74
  5 929,456,127 37%

Horizontal
CASH AND BANK BALANCES 2020 2019 Analysis
 Cash holding Increase
Cash in hand 17,840,930 7,303,543 144% During the year
Cash at banks:
Cash at
- current accounts – conventional 12,680,687 20,660,039 -39% Banks
Cash at
- current accounts – Islamic 20,673,583 4,430,682 367% Banks

Total Cash and Bank Balances 51,195,200 32,394,264 58%

ISSUED, SUBSCRIBED AND PAID-UP SHARE Horizontal

CAPITAL 2020 2019 Analysis
Ordinary shares of Rs. 10 each fully paid in cash 505,207,500 505,207,500 0.00%
consideration other than cash under scheme of
132,840,000 132,840,000
arrangement for amalgamation 0.00%
Ordinary shares issued against cash consideration
through right issue 25,521,900 Issued Right Issue Shares

  663,569,400 638,047,500 4%

Horizontal
RESERVES 2020 2019 Analysis
Capital reserve
1,472,531,50
- Share premium 0 579,265,000 154%
- Remeasurement of investment in associate 41,535,172 -854,605,234 -105%
- Reserve arising due to amalgamation 916,862,067 916,862,067 0%
Revenue Reserve
6,805,286,45 6,094,677,32
- Unappropriated profit 8 7 12%
9,236,215,19 6,736,199,16
  7 0 37%
 Horizontal
TRADE AND OTHER PAYABLES 2020 2019 Analysis
2,225,495,46 1,358,568,34
Trade creditors 8 0 64%
Accrued liabilities 801,929,421 482,344,352 66%
Gratuity payable 13,604,082 2,131,736 538%
Workers' profit participation fund 54,621,136 54,718,374 0%
Workers' welfare fund 26,993,940 28,892,420 -7%
Sales tax payable 299,733,305 89,008,333 237%
Other liabilities 14,107,432 35,554,382 -60%
3,436,484,78 2,051,217,93
  4 7 68%

SALES REVENUE ANALYSIS:

In the year 2019 the total gross sales were Rs.37, 011,160,866 and about 10.25% growth. The Company's export sales have been
primarily made to continents in the Asia, Africa, Europe, North America and Australia. There were no major customers of the
Company which constituted 10 percent or more of the Company's revenue. Which closes at Rs. 40,806,855,687 after the deduction
of sales return, discounts and rebates the net sales is of Rs. 33,218,272,910 or 10.4 % of net sales growth. The net profit of Ismail
industries after the taxation Rs. 61,569,139 or if we compare the profit has increased by 3.8 % or Rs. 34,632,674 compared to the
year 2019.
Other income
Income from financial assets:
Income from financial assets Profit on sale of shares - 156,011 while Exchange gain on shares is Rs. 87,662,874 making the total
gain on income from financial assets.
Income from non-financial assets:
The other income Recovery is majorly from the sale of production scrap 198,251,009 166,010,668 Gain on disposal of property, plant
and equipment-net 20,515,462 10,886,911 Processing income 23,338,275 35,358,254 Income from Term Finance Certificates
22,000,000 - Others 1,636,762.

Horizontal analysis

  2020 2019
sales revenue 40,806,855,687 37,011,160,866 10.3%
COST OF SALES 2020 2019  
Raw materials consumed 16,282,551,508 14,323,186,931 14%
Packing materials consumed 5,401,432,580 4,813,862,868 12%
Stores and spares consumed 469,362,445 434,482,542 8%
Salaries, wages and other benefits 2,762,474,591 2,187,178,775 26%
Electricity, gas, fuel and lubricants 1,159,207,160 784,433,054 48%
Repairs and maintenance 192,752,573 159,454,006 21%
Cold storage - rent & maintenance 644,587 1,682,250 -62%
Printing and stationery 9,234,752 6,359,034 45%
Insurance 28,775,382 25,894,008 11%
Rent, rates and taxes 5,284,676 11,564,123 -54%
Water charges 41,231,858 59,134,440 -30%
Postage and telephone 9,300,512 6,150,413 51%
Travelling and conveyance 9,161,582 6,086,264 51%
Vehicle running and maintenance 23,714,132 24,156,710 -2%
Depreciation 1,184,879,047 1,016,272,524 17%
Amortization charge 15,157,980 1,480,952 924%
Laboratory expenses 8,292,223 7,869,024 5%
Fees and subscription 2,248,510 1,307,509 72%
 Cartage inward 19,425,351 25,362,073 -23%
Procurement expenses - 8,050,140  
Other manufacturing expenses 6,761,892 12,875,320 -47%
  27,631,893,341 23,916,842,959 16%
Work-in-process at the beginning of the year 82,183,156 117,725,966 -30%
Work-in-process at the end of the year -175,501,874 -82,183,156 114%
  -93,318,718 35,542,810 -363%
Trial production cost      
transferred to CWIP -209,133,763 -  
Cost of goods manufactured 27,329,440,860 23,952,385,769 14%

VERTICAL ANALYSIS

The vertical analysis shows the comparison of sales revenue with the operation expenses, the major hike is on the traw
material cost which is most likely to rise due to the inflation and covid

2020 2019
sales revenue 40,806,855,687 37,011,160,866
COST OF SALES    
Raw materials consumed 40% 39%
Packing materials consumed 13% 13%
Stores and spares consumed 1% 1%
Salaries, wages and other benefits 7% 6%
Electricity, gas, fuel and lubricants 3% 2%
Repairs and maintenance 0% 0%
Cold storage - rent & maintenance 0% 0%
Printing and stationery 0% 0%
 Insurance 0% 0%
Rent, rates and taxes 0% 0%
Water charges 0% 0%
Postage and telephone 0% 0%
Travelling and conveyance 0% 0%
Vehicle running and maintenance 0% 0%
Depreciation 3% 3%
Amortisation charge 0% 0%
Laboratory expenses 0% 0%
Fees and subscription 0% 0%
Cartage inward 0% 0%
Procurement expenses   0%
Other manufacturing expenses 0% 0%

CASH FLOW ANALYSIS

CASH FLOWS FROM OPERATING ACTIVITIES
The CASH GENERATED FROM OPERATION can be elaborated as the Profit before taxation was 1,322,703,082 and 1,403,540,255
in 2019 after the Adjustments for non-cash and other items:

category Detail 2020 2019 variance

Depreciation   1,274,047,121 1,094,899,902 16%
  Amortization charge 30,159,933 3,214,013 838%
  Gain on disposal of property, -20,515,462 -10,886,911 88%
  plant and equipment-net
Provision for staff gratuity 126,970,154 96,565,569 31%
scheme - unfunded
Finance cost   1,155,785,614 905,629,820 28%
  Share of profit from associated -491,972,141 -45,385,014 984%
  companies-net
  Profit on sale of shares - -156,011  
  Provision for slow moving - stock - -18,886,489  
   in trade
  Allowance for expected credit 19,627,495 24,379,451 -19%
  loss
  Unrealized exchange gain on -46,658,848 -64,050,757 -27%
  trade debts
  Unrealized exchange loss on 9,191,212 53,900,978 -83%
trade and other payables
  3,379,338,160 3,442,764,806 -2%
Working capital changes      
(Increase) / Decrease in current      
assets
Stores and spares -72,871,331 -83,084,329 -12%
Stock-in-trade   -1,140,042,201 -123,189,019 825%
Trade debts   -571,621,768 -1,140,474,402 -50%
  Loans and advances 663,063,457 -864,548,922 -177%
  Trade deposits and short term -2,650,359 -20,239,396 -87%
  prepayments
  Other receivables 12,043,467 4,247,649 184%
    -1,112,078,735 -2,227,288,419 -50%
 
(Decrease) / Increase in current      
 
liabilities
 
  Trade and other payables 1,362,471,554 570,571,867 139%
  Short term finances-secured 2,075,204,930 775,888,390 167%
  Advances from customers - 252,219,936 56,885,293 343%
unsecured
  3,689,896,420 1,403,345,549 163%
Net increase/(decrease) in 2,577,817,685 -823,942,870 -413%
working capital
Cash generated from operations 5,957,155,845 2,618,821,937 127%

Working capital changes (Increase) / Decrease in current assets: the changes suggest reduction in stores and spares, prepayments
and other receivables.

Financial activities:
 ISMAIL INDUSTRIES LIMITED ANNUAL REPORT 2020
 
 
 
 
    2020 2019 variance
FINANCIAL INSTRUMENTS --------- Rupees    
AND ---------
RELATED DISCLOSURES      
Financial instruments by      
category
Financial assets        
At amortized cost        
Long term deposits   37,005,581 44,303,491 -16%
Trade debts   3,440,955,729 2,822,675,113 22%
Loans and advances   111,013,993 82,780,611 34%
  Trade deposits - unsecured 17,017,157 26,433,174 -36%
Other receivables   113,575 175,428 -35%
Cash and bank balances   51,195,200 25,090,721 104%
  At fair value through OCI      
Short term investment   200,000,000 -  
Total financial assets   3,857,301,235 3,001,458,538 29%

The total financial assets of the company shows an increase of 29 % assets which shows the outflow of cash and company has
invested in purchase of assets short term investment of Rs. 200,000,000 has also been done while Loans and advances and been
increased by 34 %