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7/27/2019 SPM Final Project
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INTERNATIONAL ISLAMIC
UNIVERSITY
SUBJECT: FINANCIAL MANAGEMENT
SUBMITTED TO: MAAM MISBAH WADOOD
SUBMITTED BY:
AMMARA HAMID- 2222
HALEEMA ZIA- 2239
MARYAM BATOOL- 2255
NAYAB AROOJ- 2263
NADIA BATOOL-2259
AMINA SHAUKAT-2221
MAHWISH ARIF CHOUDHRY-2249
Submission date: May 11
th
, 2010
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SPM Cement Corporation
Basic Corporation Information:
Name of Corporation:
Super Product Manufacturers
Business Type:
Manufacturing and supply
Location:
Sangjani, near Islamabad
Sources of Information:
www.google.com
www.understanding-cement.com
www.malvern.com
Annual Report of FACTO Cement Company
Project In Charge:
Amina Shaukat
Ammara Hamid
Haleema Zia
Mahwish Arif Choudhry
Maryam Batool
Nadia Batool
Nayab Arooj
Of BBA 18 A
Project Authorities: Maam Misbah Wadood
http://www.google.com/http://www.understanding-cement.com/http://www.malvern.com/http://www.google.com/http://www.understanding-cement.com/http://www.malvern.com/7/27/2019 SPM Final Project
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INTRODUCTION OF SPM:
SPM Cement Corporation is one of the emerging manufacturer and suppliers of cement in
Pakistan. The plant is located at Sangjani, near Islamabad. SPM Cement quality is a
paramount importance with a 24 hour automated camera in the burning zone and automatic
rotopacker machine. The plant has the state of art dry process rotary kiln technology that
ensures manufacture of high grade ordinary portland cement. The cement plant operating inSPM Cement Co. is one of the most efficient and best maintained in the country and it has
the annual production capacity of 1.165 million tons of cement. The quality Portland
cement produced at this plant is best in the country and is preferred in following
applications:
Parking areas
Streets and highways
Airport pavement
Ditch and canal lining
Reservoir lining
Dam facing
Pipe bedding and backfill
Industrial storage areas
Road widening and shoulders
All-weather construction roads & fire lanes
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Mission Statement:
To manage and operate the company in a manner that allows growth and profitability
without high risk for stakeholders and the company by offering quality product to ourcustomers, while striving to improve our product to meet our customers needs.
Vision Statement:
To compete in tough and competitive market, focusing on Satisfaction of customers and
stakeholders with challenging spirit and flexibility, striving hard to make profit, creating
value for our customers and to continue as a successful company.
Registration & IPO of SPM:
SPM is registered with the regulatory body called Security & Exchange
Commission of Pakistan (SECP) as it meets the following requirements:
Representation [from a class or classes of persons or professions] on the
governing body of a Stock Exchange or any of its Committees;
The manner in which business should be transacted including restrictions on
the business of the members;
Memorandum and Articles of Association, rules, regulations and by-laws of
a Stock Exchange; and
The maintenance of accounts and records including those of members, andtheir audit.
SPM has filled public offerings and other legal documents. Its prospects are made
publicly available. Prospects include details such as present company financials,
company management, stock owners, growth potential and potential risks.
SPM is tied up with number of underwriters for distribution of its shares. The
underwriters
Al Falah Bank
NBP
ABN Amro Bank
SPM and its investment banks worked togather to settle price of its share. The
shares have a par value of Rs.35 which is based on companys financial stability,
past performance, growth potential and market willingness.
Authorized Shares 5,00,000
Issued Shares 4,56,000
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SPM provided its stocks to broker clients in addition they are also publibly offered
to retail investors and institutional clients.
Corporate Strategy:
Our corporate strategy and objectives for the future are to find new and improved means of
cost reduction, fuel economy and to acquire advance manufacturing capabilities to support
our product development efforts and product line expansion and stand ready to leverage our
debts and be responsive to the changing economic scenario. We believe in harnessing the
inherent strengths of available human resource and materials to the utmost and a
commitment for building a solid foundation poised for sustainable growth for the long term
benefit of our shareholders and employees.
Operations:
Cement is typically made from limestone and clay or shale. These raw materials are
extracted from the quarry crushed to a very fine powder and then blended in the correct
proportions.
This blended raw material is called the 'raw feed' or 'kiln feed' and is heated in a rotary kiln
where it reaches a temperature of about 1400 C to 1500 C. In its simplest form, the rotary
kiln is a tube up to 200 metres long and perhaps 6 metres in diameter, with a long flame at
one end. The raw feed enters the kiln at the cool end and gradually passes down to the hot
end, then falls out of the kiln and cools down.
The material formed in the kiln is described as 'clinker' and is typically composed of
rounded nodules between 1mm and 25mm across.
After cooling, the clinker may be stored temporarily in a clinker store, or it may pass
directly to the cement mill.
The cement mill grinds the clinker to a fine powder. A small amount of gypsum - a form of
calcium sulfate - is normally ground up with the clinker. The gypsum controls the setting
properties of the cement when water is added.
Cement Manufacturing Process
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Business Description:
SPM Cement Co. is a type of business that is based on Corporation. The twenty five
shareholders of this business selected this form as it is easy to invest and a large source of
gathering capital and it has limited liability as well.
Nature of Operations:
Manufacturing and supplying
Types of Shares:
Forms
of
Busines
s
Sole
Proprietors
hip
Partnershi
p
Corporatio
n
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Current Assets:
Cash 400,000
Stores and Spares
18,000,000
Stock-in-trade 1,000,000
Trade debts-considered goods 700,000
Loans, advances, deposits, prepayments and accrued markup 600,000
Cement equipment
Mill Equipment
Model PMG series high efficient ball mill have been designed with the merits of
open circuit grindi...
Drying Equipment
Rotary dryer is mainly consist of rotary body, raw material feeding plate,
driving and supporting d...
Rotary Kiln
We can supply Zoneding brand rotary kiln (titanium pigment kiln, sintering
furnace, industrial furn...
Dust collector/environment equipment
http://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/42.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/44.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/45.htmlhttp://www.zoneding.com/proinfo/47.html7/27/2019 SPM Final Project
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Product environment pay close attention to health and together set up green
world is the ideal of ...
Conveying Equipment
In the meantime to develop large sized main equipment like rotary kiln, ball mill
and etc. our comp...
Grate Cooler Grate Cooler is a kind of quench cooler.Its principle is to quench clinker which
is laid in levels ...
Tubular Cooler
Tubular Cooler is one of the important equipment in the rotary kiln
system.function of the equipmen...
Electrical Control System
Model XK Rotary Kiln Monitoring System Grinding Plant Monitoring System
& Micrcomputer Control Bat...
vertical mill/roller press/grinding equipment
Model HRM & PRM roller mill are new equipment designed by digesting and
assimilating advanced techn...
http://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/47.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/49.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/52.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/51.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/50.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.htmlhttp://www.zoneding.com/proinfo/43.html7/27/2019 SPM Final Project
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SPM CEMENT CORPORATION
BALANCE SHEET
FOR THE PERIOD OF 2009-2013
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2009 2010 2011 2012 2013
PROPERTY, PLANT AND EQUIPMENT
Operating assets 18,612,583 25,612,583 25,612,583 25,612,583 25,612,583
Capital work in progress 7,000,000 0 0 0 0
25,612,583 25,612,583 25612583 25612583 25612583
LONG TERM
LOANS 500,000 7675000 9450000 10281250 9890000
CURRENT ASSETS
Stores and spares 1,800,000 2250000 3037500 5752500 6539875
Stock-in-trade 1,612,584 2726799 1687500 4421723 4157707
Trade debts - considered good 700,000 875000 1181250 3373750 3071063Loans, advances, deposits, 600,000 750000 1012500 2600203 5682186
prepayments and accrued markup
Cash and bank balances 400,000 500000 675000 927703 1207750
5,112,584 7101799 7593750 17075879 20658581
31,225,167 40,389,382 42656333 52969712 56785931
SHARE CAPITAL
Authorized
5,000,000
Issued, subscribed and paid-up
45,6000 preferred shares @ Rs.35 Par Value 15,960,000 24,260,616 27528833 31000000 31000000
Issued for cash
Retained earnings 1225167 4178766 4178766 5697212 7123876
NON-CURRENT LIABILITIES
Long term financing 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Liabilities against assets 1,000,000 1350000 1350000 1350000 1600000
subject to finance lease
Deferred taxation 4,000,000 1500000 3060000 3060000 5569200
10,000,000 7850000 9410000 9410000 12169200
CURRENT LIABILITIES
Short term running finance 1,000,000 1000000 1687500 1900000 2724767
Current maturity of long term liabilities 1,200,000 1500000 2025000 2735000 2934022Trade and other payables 1,840,000 1600000 2005000 2227500 834066
4,040,000 4100000 5717500 6862500 6492855
31,225,167 40389382 42656333 52969712 56161164
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SPM CEMENT CORPORATION
INCOME STATMENT
FOR THE PERIOD OF 2009-2013
2009 2010 2011 2012 2013
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Sales 5082647 8523456 10200000 18036495 23056478
CGS 2769588 3246579 5026479 6954679 7754982
Gross profit 2313059 5276877 5173521 11081816 15301496
Other selling and general expenses 150000 200000 3789653 5469873 6024565
Selling and distribution 50000 65000 78000 93600 112320
Depreciation expense 930629 930629 930629 930629 930629
Total
CGS 1130629 1195629 4798282 6494102 7067514
EBIT 1182430 4081248 375239 4587714 8233982
Interest (17%) 850000 1105000 1547000 1436500 1411000
EBT 332430 2976248 -1171761 3151214 6822982
Tax 37892 195344 0 285729 620289
Net Income 294538 2780904 -241132 2865485 6202693
Dividend 0 757934 0 2277668 5706658
Retained Earnings (100%) 294538 2022970 0 587817 496035
PAY BACK
PERIOD:
PV = 122516 + 3711533 + 689497 + 37961114 +
713332
2
(1.17)1 (1.17)2 (1.17)3 (1.17)4 (1.17)5
= 1047151 + 2711325 +430502 + 20257950 + 3253588
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= 27700516
As it is returned to us in three years and some months so we will divide amount of 4th year
by 12 to calculate months.
4th year = 20257950
12
= 1688163
Total of 3 years = 1047151 + 2711325 + 430502
4188978
We require 2500000 hence we have to add some portion of 3rd year.
Difference = 20960000 4188978
16771022
Now for finding exact time period we will divide difference with the 3rd year time.
Pay Back Period = 16771022
168816310 months
So we need 3 years and 10 months for payback period.
NET PRESENT VALUE:
NPV = PV OF Cash Inflows - PV OF Cash Outflows
NPV = 27700516- 20960000
6740516
INTERNAL RATE OF RETURN:
Its the rate at which PV of cash inflows is equal to PV of cash outflows. Its answer is in
percentages.
At 27%:
= 1225167 + 3711533+ 689497+ 37961114+ 7133322(1.27)1 (1.27)2 (1.27)3 (1.27)4 (1.27)5
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= 964698.43 + 2301155.06 + 336606 + 14592310.59 + 2159102.32= 20353872.4
At 28.5%:= 1225167 + 3711533 689497 37961114 7133322
(1.285)1 (1.285)2 (1.285)3 (1.285)4 (1.285)5
= 953437.35 + 2247745.16 + 324954.8 + 13922795.3 + 2035992.58= 19484925.19
At 26%:
= 1225167 + 3711533 689497 37961114 7133322
(1.26)1
(1.26)2
(1.26)3
(1.26)4
(1.26)5
=972354.7619 + 2337826.279 + 344683.6995 + 15061102.64 +
2246151.798
= 20962119.18
So at IRR = 26% the present value of cash inflows will be equal to the
present value of cash outflows
KD :
= Kd (1-T)
= 0.17(1-0.15)*100
= 0.14
Kp :
= Dp /Pp
= 3.83 / 35
= 0.109
WACC :
= Wd*Kd +Wp*Kp
= (0.468*.14) + (0.532*0.109)
= 0.123736*100
= 12%
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Feasibility of Project:
The project is profitable and feasible and we can earn profit from it. Because we have
recovered the total investment in 3 years and 9 months so it means the project is profitable.
The second reason is the value of NPV obtained is greater than 0 and is positive and IRR ismore than WACC, it means you will accept the project. This method is used by firms for
evaluation of a project.
AFN :
= (A*/So)S - (L*/So)S -M(S1)(1-d)
=(27357129/18036495) 5019983 - (12203222/18036495) 5019983 -0.158
(23056478)(1-0.79)
= 624,767.05
So AFN shows that 624,767.05 rupees are required to finance assets.
Sales Analysis:
-5000000
0
5000000
10000000
15000000
20000000
25000000
1 2 3 4 5 6
Sales
Year
Profit