Note of Meeting with Chairman Audit Committee:
Meeting Held on: Tuesday, 27th October 2009, 4:30 PM
Good Afternoon. The interview session with chairman audit committee was also very productive. He helped me to understand the financial performance of the company over the period of time. He helped me to identify the factors which have an impact on the business and financial performance of the company. He also told me the business strategy of ACPL which was also very helpful in performing the business and financial analysis of the company. He also told me the future prospects of the company. The chairman also told me the impact of environmental factors on the performance of ACPL.
I am really thankful to you for providing me an opportunity to have an interview session with you.
Student: Can you please tell me about group profile give me a brief explanation of the Group to which ACPL belongs and how has being associated to such a large group benefited ACPL?
Chairman: ACPL is a part of the Pharaon Group. give me a brief explanation of the Group to which ACPL belongs and how has being associated to such a large group benefited ACPL?
Chairman: ACPL is a part of the Pharaon Group. Pharaon Group’s sponsor is Dr. Ghaith R. Pharaon, International Investor and Industrialist who, apart from his financial and trading interests in other parts of the world, has substantial investments in Pakistan over the past several years through Pharaon group of companies in the Cement, Oil and Gas sectors. The group has strong management skills and vast technical and administration capabilities, which has helped our company to sustain through difficult times
Student: What is your contribution towards the country’s economy?
Chairman: ACPL Our company is making substantial contribution to the country’s economy and deposited over Rs.2,646 million which equals to around (US$ 31.5 million) in the form of Excise Duty , Sales Tax, Royalty and Income Tax during the year ended 2008-2009.
Student: I was shall be thankful if you can tell me about the production capacity of your company also interested to know the reason behind the improved financial performance of ACPL during FY2009, especially in terms of profitability.
Chairman: The financial results of our company have improved significantly in the year ended 2009. The main reason for this that assessing the macroeconomic factors we decided to shift the focus of our sales to exports, which offered higher retention prices and improved margin on sales. This year our exports grew to 5 times their size as compared to 2008. And as you notice this has helped in accumulation of our reserves, despite having paid a dividend of Rs.5 per share. Presently, ACPL has the daily and annual production capacity of 2400 MT per day and 756,000 MT per annum, respectively. However, company has started its expansion plan titled as Line 2. It is expected that Line 2 will be fully operational from January 1, 2007 and will have additional daily and annual production capacity of 3000 MT per day and 945,000 MT per annum, respectively.
Student: My next question is very much related to the previous one, I also noticed a build-up of working capital due to improved performance. How does the company intend to invest this in future How has the company been able to realize higher retention price?
Chairman: Yes we do realize that there has been an immense increase in cash reserves mainly on account of upsurge in sales. Our intention is to invest these in the most suitable and beneficial way. Several investment options are currently under consideration. However, after the recent expansion strategy implemented in shape of production in Line 2, we are not inclined to invest in further expansion projects as yet. The company has been able to realize higher retention price due to better market mix.
Student: What has been the reason of increase in the inventory days levels of the company?
Chairman: The management of the company took the decision to increase the amount of inventory held by the company. Because of this decision of the management there was an increase in the inventory days of the company The rationale behind this decision was, as you have seen, a drastic increase in operations of our company. The management felt that in order to satisfy demand and to ensure that stock-outs don’t occur the inventory levels had to be increased.
Student: What has been the reason of decrease in the payables days of the company?
Chairman: This decrease in the payables days of the company depicts that the management of the company took the decision to decrease its reliance on trade creditors as a source of finance.
Student: What are the strengths of your company in your opinion?
Chairman: ACPL has very good plant and machinery. The quality of Cement being manufactured and marketed under the brand name of (Attock Cement Pakistan Limited) Falcon Cement is of a high standard and surpasses benchmarks not only with Pakistan standards but also the British and American Standard specifications. It is this very quality that has helped our company earn the ISO-9001 certification.
Student: What macroeconomic factors do you believe have a major effect on the performance of ACPL , particularly in wake of environmental impacts of the company ‘s operations ?
Chairman: As you know Pakistan has been politically unstable for over two years now. This has majorly affect ed the performance of the company. Inflation is on the rise , the Pak rupee has been depreciation constantly and the performance of Stock exchanges has eroded. Almost all economic development has seized due to political uncertainty . As such our production processes do not have a major environmental impact. However as a socially and environmentally respo n sible company it has made e very effort to effectively maintain greenery within plant premises and in the surrounding areas .
Student: Thank you for your time. The information you have provided is of much importance to me in my project and would particularly help me make an appropriate conclusion on the final ratios that I will calculate .
Chairman: I am happy to help a student who has taken interest in the company. I am hoping that on basis of information I have provided you would be able to present the company’s performance in a positive light. As a matter of fact I am sure our Annual reports are of such high Quality that you do not even need to calculate these ratios on your own as we present the main ratios every year.
Student: Yes th e quality of your annual reports and the level of disclosure are undoubtedly very good. However being a student of a professional accountancy body it is important that I do the work that is required of me honestly. I would have to calculate the ratios myself ; the ratios in the annual report can only serve as supporting of my calculation. According to the Code of ethics I will have to form an independent opinion of the organization ‘ s performance .