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Dgkcl Sales 2009 Case Study

Autor:   •  November 16, 2011  •  Case Study  •  2,301 Words (10 Pages)  •  1,000 Views

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3.3 RATIO ANALYSIS

3.3.1 Sales and production

DGKCL DGKCL DGKCL LCL

FY09 FY08 FY07 FY09

Turnover (Rupees in million) 18,038 12,446 6,420 26,330

Turnover growth (%) 44.94 93.86 (19.30) 55.27

In FY09 DGKCL’s sales grew by 44.94% from Rs.12,446million to Rs.18,038million though the percentage of growth in sales was lower than FY08 . Local sales had decreased by 14%, while the export sales had almost doubled and played a major part in the overall increasing sales revenue of DGKCL (Iftikhar Baig, 2009). Demand of cement in the local market decreased as the buying power of the major customers was looking bleak due to global recession and the credit crunch. During FY09 the company's production of cement was 8.3% less than the FY08 due to lack of resources like power and also due to reduced government spending on development projects and adverse business activities in the country. The sales revenue increased due to sole reason of increase in cement prices as the volumetric sales reduced due to lower domestic sales.

The sales of DGKCL ballooned by 93.86% to Rs.12,446million from Rs.6,420million in FY08 as compared to FY07. Local cement sales grew by 52% while the export cement sales posted a tremendous hike and augmented by 331% in comparison with the last year, owing to exports to neighboring countries. This huge increase in sales was attributed to 68% increase in sales volume and the remaining 25.86% was due to hike in cement prices as the selling prices of cement increased from Rs2,566 to Rs.2,939 per ton during FY08 (Business day, 2009). This increase in sales volume was because the expansion plant started operation in Khairpur. During FY07 the cement sales of DGKCL had fallen by 19.3% to Rs.6,420million from Rs.7,955million due to decline in selling prices as the cartel mechanism broke during that year.

The sales growth of LCL was much higher than DGKCL mainly because LCL focused more on export sales. LCL is the market leader and the size of its sales is almost 1.5times that of DGKCL.

3.3.2 Profitability analysis

DGKCL DGKCL DGKCL LCL

FY09 FY08 FY07 FY09

Gross profit (Rupees in million) 5,679 1,915 2,032 9,811

Gross profit margin (%) 31.98 15.38 31.65 37.26

Operating profit margin (%) 18.75 12.11 34.30 27.41

Pre tax profit/(Loss) (Rupees in million) 776 (250) 1,730 5,177

Net profit margin (%) 4.30 (2.00) 26.94 19.67

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