1. FINANCIAL ANALYSIS
OF CHERAT CEMENT
COMPANY LTD

2. Executive Summary
Cherat Cement Company Limited is a Ghulam Faruque Group (GFG)
Company. It was incorporated in 1981 and started its production in
1984.It was the first Cement factory in private sector. This Company
is engaged in the manufacturing, marketing and sale of cement. The
company has a production capacity of 2,400,000 tons per annum
and 6,700 tons per day enjoys strong brand loyalty amongst its
customers both in Pakistan and abroad.
The shares of the company are listed on the Karachi, Lahore and
Islamabad Stock Exchanges and it is a recipient of Forbes “Asia
under a Billion Dollar” company award. The company has an ISO
9001:2008 certification.

3. The Cherat Company is amongst the pioneers of cement industry in
Pakistan and is the number 1 cement in its region. Quality is his
business; therefore, there are no compromises on Quality
Management. Cherat cement is not only one of the best qualities
cements in Pakistan
The plant of Cherat Cement is located at Village Lakrai, District
Nowshera, Khyber Pakhtunkhwa (KPK) Province. The Main Office of
Cherat Cement Company is in Karachi, Sales Office is in Peshawar,
Regional Office is in Lahore and in Islamabad they have also an
office.

4. Cherat Cement Company Limited (CCCL) is a Ghulam Faruque
Group Company. Its main business activity is manufacturing,
marketing and sale of Ordinary Portland Cement. The
Company is the number one cement in its region and amongst
the pioneers of cement industry in Pakistan. Our businesses
Quality; therefore, there are no compromises on Quality
Management. The Company’s annual installed capacity is 01
million tons of clinker. The plant is located at Village Lakrai,
District Nowshera, Khyber Pakhtunkhwa (KPK) Province.
.

5. Scope of the Work
Cherat Cement Company limited consists of the following six sections:
 Booking
 Planning and Coordination
 Dispatch
 Computer
 Accounts
 Marketing
Cherat Cement Company limited consist of above different sections ,
as described but being a student of BBA (Finance) we concentrate
more on account section.

6. Vision
Vision of the group is the growth through the best value creation for the
benefit of all stakeholders.
Mission
 Invest in projects that will optimize the risk-return profile of the
Company.
 Achieve excellence in business.
 Maintain competitiveness by leveraging technology.
 Continuously develop our human resource.
 To be regarded by investors as amongst the best blue-chip stocks in
the country.

7. Projects of the Group
 Greaves Carbon Products
 Cherat Electric Limited
 Cherat Cement Company Limited
 Faruque Private limited
 Greaves Cotton Air-Conditioning Pvt. Limited
 Greaves Cotton Pakistan
 Cherat Paper-Sack Limited
 Mirpurkhas Sugar Mills
 Zen soft Private

8. FINANCIAL BACKGROUND & BANKERS
The Company is considered liquid on all financial considerations
throughout its performances and has a strong financial
background. It is enjoying excellent relations with its bankers
and all necessary credit limits and facilities at most
competitive terms. Following are the existing bankers of the
company:
 ABN Amro Bank
 Allied Bank
 American Express Bank
 Bank Al-Habib Limited
 Muslim Commercial bank Limited
 National Bank Of Pakistan
 Standard Chartered Bank
 Soneri Bank Limited
 Union Bank Limited
 United Bank Limited

9. CURRENT MARKET SITUATION
Cherat Cement has come out stronger and better at the end of the
financial year 2016 and 2017. Cherat Cement Company has grown
and has proven that it has potential to sustain growth and
profitability. Now the company has a production capacity of 24 lack
tons per annum and enjoys strong brand loyalty amongst its
customers both in Pakistan and abroad. The shares of the company
are listed on the Karachi, Lahore and Islamabad Stock Exchanges
and it is a recipient of Forbes “Asia under a Billion Dollar” company
award.

10. ACCOUNTING SECTION
In Cherat Cement Company, there is a well established accounting
section which helps to keep a frequent check on all the transactions.
The accounts section keeps all the records of inflows and outflows.
The account section keeps all the records of transactions with
all the proofs. Then if somewhere the loss occurs or any fault occurs
in the transaction, can be easily checked from the account section.
Some of the main jobs performed by the accounts section in
Peshawar sales office are mentioned below:
PREPARATION OF VARIOUS TYPES OF VOUCHERS:
 Cash Payment Voucher
 Bank Payment Voucher
 Journal Voucher
 Cash Receipt Voucher
 Bank Receipt Voucher

11. . PREPARATION OF THE BANK RECONCILIATION
STATEMENT
Bank reconciliation statement is prepared on daily basis in order to
check the accuracy of the company’s cashbook with the bank
statement.
CONFIRMATION OF DEPOSITE SLIP:
The accounts also carry a computerized record of the customer’s balance. Before any
order is booked for the customer, the deposit slip is to be confirmed from the
accounts section, if he has a credit balance the order is booked for him but if the
balance is in debit then he is not given any kind of supply.
POSTING OF PETTY CASH TRANSACTION IN TO GENERAL LEDGER:
General Ledger (GL) is a computerized ledger at CCCL. Each and every petty cash transaction
is posted into GL once or twice a week. The aim is to keep the system up to date.

12. CHECKING OTHER DISPATCH:
Every area or division has got specific prices for cement, these processes or rates are
checked with the printed address in the final dispatch plan, and if there are any
discrepancies then they are corrected according to the code numbers of the area.
CHECKING OTHER REPORTS:
The accounts section also perform the important job of verifying various types of
reports like booking schedule, booking journals, daily dispatch summary and
customer ledger etc. Usually the amount received in the reports is checked and
here after verified.
COLLECTION:
The main collection account of the company is in MCB, university town branch Peshawar. All
amount collected by almost all the banks is sent ultimately to this branch.

13.  SWOT ANALYSIS
SWOT analysis is the analysis of a company’s strength, weaknesses, opportunities
and threats. Cherat Cement Company limited is a good company of cement
industry and the must need to maintain its position more goodly.
1. STRENGTHS:
 HIGHT STANDARD:
Cherat Cement have Quality Control department, which never compromise on Quality. So it has join
reputation because of high quality.
 ISO 9002 CERTIFIED:
Cherat Cement is ISO 9002 certified which give it high repute. And give customers a sense of quality and
great image in their mind.
 LOCATION:
The factory is located in the center near main target markets i.e. Peshawar, Nowshera, Mardan &
Charsadda, So due to sound location, the company have high profit margin as compare to other
competitions.

14.  DEVELOPING MARKETING & SOLE PROCEDURE:
The representatives of Cherat Cement Company Limited marketing department regularly visit
the market, they are therefore aware of the problems of retailers & customers.
 USAGE OD OWN ELECTRICITY & PAPER SACK:
Cherat Cement produces his own electricity, which is situated inside the factory. Also they have
their own proper sack mill. These both give much benefit & minimize the cost of production
as compare to others.
 RAW MATERIAL:
Another factor of strength for Cherat Cement is that raw material (Gypsum & others) are in
much quantity in the areas where factory is also located.
2. WEAKNESS:
 LACK OF STAFF IN MARKETTING SECTION:
Due to high demand, the workload on marketing staff is high & it is difficult for them to control.
 DELEGATION OF AUTHORITY:
In Cherat Cement Co. the authority is more centralized. Every department/section has a
manager who has the sole authority and there is no delegation to subordinates

15.  SLOW DISPATCHES:
The Dispatches rate of Cherat Cement Company Limited is relatively low then others due to
demand and scarcity of transporters. It can affect the dealers & customers highly.
 ADVERTISMENTS:
Although cement is an industrial product & there is not that much need of advertisement of it.
However Cherat Cement Company Limited needs somewhat advertisement in that market.
Cherat Co gives less emphasis to advertisement, (promotion) as compare to competitors.
3. OPPERTUNITIES:
 HIGH DEMAND:
Cherat Cement Company has high demand because of improvement in construction sector
through housing schemes, & major projects by government. So it is an opportunity for
Cherat Cement to avail and make the profit.
 NEW MARKET COVERAGE:
As the Cherat Cement has high demand in the market. Because of high demand throughout
whole country Cherat Cement Company can over new market locally as well as in
Afghanistan. There are opportunity & potential for new markets in Northern areas and in
Northern Afghanistan.

16.  AFGHANISTAN (EXPORT):
The Govt. of Pakistan has loosened the rules regarding export to Afghanistan regarding
cement. It cuts excise & sales tax 10 %. As the taxes are low to the export to Afghanistan
So the CCCL has opportunity to establish roots in Afghanistan and penetrate the market
because of high demand of its brand & image.
4. THREATS
 NEW ENTRANCES:
Some new factories are entering in to the market which pose & threat t other existing
companies in terms of market like in Punjab, recently three new plants (companies) are
under construction.
 SURVIVOR OF THE LATEST:
Cherat Cement Company Limited has small plants as compare to lucky and other who are
having large capacity to produce. So those who are having large plant can utilize in terms of
markets or reliability of its product.

17.  LOOSING DEALER NETWORK:
Wholesaler provides more incentives to dealers or company. Live dealer need no to
deposit security in of wholesale also the dealer pry to wholesaler after the product
is sold Cherat Cement Company Limited take advance receipt also it takes
security from dealers. So this is the reason that Cherat Cement Company Limited
is losing the dealer network.

18. RATIO ANALYSIS
Accounting ratios attempt to highlight the relationships between significant items in
the accounts of a firm. Financial ratios are the analyst’s microscope; they allow
them to get a better view of the firm’s financial health than just looking at the raw
financial statements Ratios are used by both internal and external analysts.
Internal Uses
 Planning
 Evaluation of management
External Uses
 Credit granting
 Performance monitoring
 Investment decisions
 Making of policies

19. 1. LIQUIDITY RATIOS:
The Company has consistently maintained strong liquidity position due to better
working capital management policies. However, decline in the liquidity is
witnessed due to installation of new plant. This decline will be substantiated in
later year after completion of new plant.
 CURRENT RATIOS:
This is a ratio of current assets to current liabilities. The current ratio shows how a
firm is able to cover its current liabilities with its current assets.
Formula: Current assets ÷ Current liabilities = Current Ratio
2017 2,004,822,000 ÷ 1,810,761,000 = 1.11
2016 2,266,600,000 ÷ 826,861,000 = 2.74
2014 2,905,175,000 ÷ 881,141,000 = 3.30
2013 1,533,642,000 ÷ 781,813,000 = 1.96
2013 1,289,206,000 ÷ 1,100,598,000 = 1.24

20. 0
1
2
3
4
2017 2016 2015 2014 2013
YEAR 2017 2016 2015 2014 2013
Current
assets
2,004,822 2,266,600 2,905,175 1,533,642 1,289,206
Current
liabilities
1,810,761 826,861 881,141 781,813 1,100,598
Currents
ratios
1.11 2.74 3.30 1.96 1.24
Interpretation
Cherat Cement has managed to create a good combination of the current assets and
liabilities making it financially sound and liquid enough to cover its liabilities. There is
however a substantial fall in the year 2017 and 2016 as compared to the industry
average. This phenomenon may be attributed to the large sum of short term running
finance taken to feed its growing operational costs during the year.

21.  QUICK RATIO:
This ratio shows how a firm is able to cover its current liabilities with
the most liquid of its assets excluding the inventories which are not
so easily converted into cash.
Formula: (Short-Term Payments + Other Receivables + Short-Term Investments +
Cash) ÷ Current Liabilities = Quick ratio
2017 (993,623+13,586 +7,704+ 662,377 + 0000000 +23,002)÷1,810,761=
0.94
2016 (983,385 + 17,429 +16,453+ 167,405 + 600,118 + 18,354)
÷826,861= 2.18
2015 (1,181,254+ 18,028 +74,136+ 2,498 + 1,242,271+ 17,116) ÷881,141=
2.88
2014 (967,917 + 12,969 +33,634 + 59,806 + 000000+ 25,548) ÷781,813=
1.41
2013 (869,760 + 11,174 +37,283 + 14,758 + 00000+ 37,728) ÷1,100,598=
0.93

22. Year 2017 2016 2015 2014 2013
Quick ratio 0.94 2.18 2.88 1.41 0.93
0
1
2
3
4
2017 2016 2015 2014 2013
Interpretation
As it can be seen from the above table that although the ratios have been a
little higher than normal which is favorable but a major decline is visible in
2016to 2017 where the ratio is a lot less than normal. This can be due to
the fact that current liabilities have risen but the severity can also be
attributed to the high levels of inventory held by the enterprise.

23. 2. FINANCIAL LEVERAGE (DEBT) RATIOS:
Shows the extent to which the firm is financed by debt. The objective of
the company is to utilize financing resources at it most favorable
situation level. Financial leverage in current year is higher due to
debt drawdown for financing the expansion project. This effect will
be offset in later years with enhanced profitability from greater
sales.
 DEBT TO EQUITY RATIOS:
The magnitude of debt contributed in the financing of the firm is shown by debt to equity ratio.
Formula: [Total Debts ÷ Shareholder’s Equity]:1 = Debt to Equity Ratio
2017 [6,321,784,000 ÷ 9,140,188,000]:1 = 0.69:1
2016 [1,437,795,000 ÷ 8,026,041,000]:1 = 0.18:1
2015 [1,566,700,000 ÷ 4,864,268,000]:1 = 0.32:1
2014 [1,355,472,000 ÷ 3,709,029,000]:1 = 0.36:1
2013 [2,023,980,000 ÷ 2,687,584,000]:1 = 0.75:1

24. Year 2017 2016 2015 2014 2013
Total debts 6,321,784 1,437,795 1,566,700 1,355,472 2,023,980
Shareholder’
s equity
9,140,188 8,026,041 4,864,268 3,709,029 2,687,584
Debt to
Equity ratio
0.69 0.18 0.32 0.36 0.75
0
0.2
0.4
0.6
0.8
2017 2016 2015 2014 2013Interpretation
The computation of this ratio brings to life the fact that Cherat cement has
not been able to feed its financing through equity as its ratios are
considerable higher than the favorable “1 or less”. The debt to equity ratios of
Cherat Cement are all less than 1 which means that it can easily fulfill his
liabilities.

25.  DEBT TO TOTAL ASSET RATIO:
Total debt to asset ratio gives us an estimate of total amount of debt
that is being used in asset or the proportion of an asset that can be
used to feed the debt.
Formula: Total Debts ÷ Total Assets = Debts to
Total Assets Ratio
2017 6,321,784 ÷ 15,461,972 = 0.40
2016 1,437,795 ÷ 9,463,836 = 0.15
2015 1,566,700 ÷ 6,430,968 = 0.24
2014 1,355,472 ÷ 5,064,501 = 0.27
2013 2,023,980 ÷ 4,711,564 = 0.43

26. Year 2017 2016 2015 2014 2013
Total debts 6,321,784 1,437,795 1,566,700 1,355,472 2,023,980
Total assets 15,461,972 9,463,836 6,430,968 5,064,501 4,711,564
Debt to total
Assets ration
0.40 0.15 0.24 0.27 0.43
0
0.1
0.2
0.3
0.4
0.5
2017 2016 2015 2014 2013Interpretation
Cherat Cement is in a favorable state in this regard as its debt is covered by a larger
base of asset although it does not match the cement industry median of 0.20. It is
none the less in a respectable state but the situation may get worse if it keeps on
funding itself on debt. This phenomenon can be seen from the 2017 ratio where it
shows a tendency to grow unless the proportion is curtailed.

27. CONCLUSION
Industrial development is the primary requirement of any economy. Similarly the
cement industry of a country is a very important sector of its economy. In fact, it is
so important that is per capita consumption is gauge of the economic activity in a
country. Cement manufacturing is classified as heavy industry requiring high
investment.
Cherat Cement Company Limited is not only one of the best qualities cements in
Pakistan, but in the entire region due to its natural favor ”the limestone” which is
one of the best quality reserve in the world and in export contribution to total sales,
Cherat Cement is on 2nd position.
Cherat Cement Growth is Affect due to the last 10 years instability of the government,
the investors are unwilling to invest in Pakistan, which leads to reduction of
construction work, which affects the Cherat cement company. The inflation rate is
increasing day by day and the earning power of common man is low, due to which
the consumption of cement has decreased. Due to insufficient financial resources
and no saving habit of the common people of Pakistan, do not have surplus money
for the purpose of constructing houses.

28. THANK YOU