Ferozsons Laboratories Limited
Financial Analysis Report
Period coverage: 1st July 2011 to 30th June 2012
Prepared and Presented by:
Dr. Babur Zahiruddin Raza,
Corporate Office
Consultant in Human Resources & Master Trainer in H.R Applications
Research Consultant
Mr. J. S Khan
IT Consultant
Mr. Raheel Rustam
Ph: 051-5584905, 5792836
Cell: 0332 – 4923235
Email: baburzahiruddin@yahoo.com,
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Financial analysis of FEROZSONS Laboratories Limited
TABLE OF CONTENTS
SR no
Description
Page no
1
Financial analysis approach ------------------------------------------
3
2
Key discussion points for AGM---------------------------------------
4
3.
Conclusion & summary -------------------------------------------------
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Financial analysis of FEROZSONS Laboratories Limited
1. FINANCIAL ANALYSIS APPROACH
We have tried to perform holistic and integrated financial analysis of Ferozsons laboratories LTD with
the help environmental analysis, industry analysis, company operational review and annual report.
1.1 Flow chart of analysis approach
Environmental analysis
Industry analysis
Operational review of
Company
Financial analysis
2.2 Requisite essential documents for financial analysis
The under mentioned documents are essential to perform comprehensive analysis of financial position,
performance and cash position of FEROZSONS LABORATORIES LIMITED
1.
2.
3.
4.
5.
Financial plan-Year 2011 to 2015
Audited financial statements-Year 2012
Internal audit reports
Management letter /. Letter of internal control from external auditors
Minutes of board meetings
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Financial analysis of FEROZSONS Laboratories Limited
KEY DISCUSSION POINTS FOR AGM
POINT NO 1
HUMAN RESOURCES
No mention of Human Resource and its Application on the day today running of the company.
 Lower cadre employees job security and their progression planning.
 Succession planning for hierarchy of the management of FEROZSONS LABORATORIES LIMITED
We would like to know the underlying reasons of not highlighting such an important aspect of
corporate resource management and development in the annual report?
Point no 2:
Corporate Social Responsibility Page 11 of Annual Report
Lip service being done to corporate social responsibility by doling out money to LUMS Lahore which is
already a well established and well funded organization.
So we would like to make request to directors to clarify the above mentioned point that why
FEROZSONS LABORATORIES LIMITED choose to give donation to already such a rich entity?
Point no 3:
PROFIT AND LOSS PAGE NO. 24 (Note 27 & 28)
Administrative expenses have increased by 19 million and Selling and distribution expenses have
increased by 114 million.
We would make a request to the directors of Company to clarify the underlying reasons of this increase
in profit and loss account?
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Financial analysis of FEROZSONS Laboratories Limited
Point no 4:
Trade and other payable (Creditors Page No. 40)
Creditors have increased by 28,24,73,88/Why is it that there is a quantum jump in the creditors payables?
Point no 5:
Capital work in progress (note 12.3 ) Page No. 42)
There is an increase of 122 million since last year. What is the reason for this?
Point no 6:
Building & Civil works (note 12.3 ) Page No. 44)
Increase of 20 million for Building and Civil works and Plants & machinery 80 Million. What is the reason
for this?
Point no 7:
Grain & loss Page No. 45)
Gain / loss of disposal of property plant in equipment
Serial no 4 & 9 Honda City Cars cost 931500 – 500000 (Sale) how old is the model? And why was is it
sold at such a low price cost 704000 – 490000 (Sale) what is the company policy?
Point no 8:
Intangible Asset Page No. 46 Note 13)
Last year ZERO this year 3,714,037 why sudden increase in this entity?
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Entity resource _____________which ERP did you use.
Did you train the employees?
The System conversion from old to new system?
How much time did they take?
Are there any grey areas?
What price did you pay for the ERP
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Financial analysis of FEROZSONS Laboratories Limited
Point no9:
SHORT TERM INVESTMENT Page No. 48 Note 22)
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Short term investments in 2011 9.7 million and 2012 - 266 million. This had a carrying value of
13 million, you have invested these in HABIB Money market fund.
On whose recommendation?
Is there any investment committee
Point no10:
Administrative Expenses Page No. 50 Note 27.3)
Under administrative expense donations of 2.9 million given to LUMS Lahore?
Point no11:
Other Expenses Page No. 52 Note 30)
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Exchange loss 1.4 million?
Why is that this was not mitigated by risk management?
Point no12:
Foreign Risk management Page No. 58 Note 36.3)
The company has stated that they do not enter in to forward exchange contracts. Why is it so?
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Financial analysis of FEROZSONS Laboratories Limited
Summary and Conclusion
The management of Ferozsons Limited should try to run the company like a corporate entity and not like
a family business where the whims likes and dislikes of the directors takes precedence over prudence
and good governance.
The need of the hour is that the BOD should have experienced directors to run the company and people
with foresight and vision to handle the AGMs. The shareholders meet with the BOD of the company
once in a year and it is obligatory on the directors to give befitting answers to the questions put up by
the shareholders and should not dismiss any question that “ I
have not seen or heard any
thing like this before”. This shows the emotional temperament and the inexperience of the
directors answering the questions of the shareholders.
The young directors should be sent on a course for learning the code of conduct for good corporate
governance and also briefed on sections of Companies Ordinance 1984.
Shareholders are advised that since this is a cornered share with tight holding to increase their portfolio
from time to time and also to put a minority director on the board to look after their interest.
DR. BABUR ZAHIRUDDIN
Shareholder
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Financial analysis of FEROZSONS Laboratories Limited