Part 1

Company Name
Established on
Core Business
Main Products/Brands
Group
Competitors

General Tyre and Rubber Company of Pakistan Limited

Came into existence in 1963, in Landhi Karachi and commenced its production in 1964.
Tyre Manufacturing
(Passenger Car Tyres, Light Truck Tyres, Truck and Bus Tyres, Tractor Tyres, Motorcycle Tyres, Rickshaw Tyres)
Bibojee Services Private Limited (BSL)
Servis Tyres, Panther Tyres, Diamond Tyres & Tubes, Various distributers/importers of tyres and tyres smuggled into Pakistan

Part 2
2010

2011

2012

2013

2014

99.71
856.58
1,728.40
238.68
1,890.01
4,813.37
378.68
160.57
768.68
331.11
3.51

122.41
848.00
2,652.62
307.43
1,834.73
5,765.18
173.29
117.03
1,011.60
404.61
10.96

148.42
949.82
2,267.21
345.72
1,761.74
5,472.91
86.64
314.48
1,102.11
405.82
11.06

187.68
1,186.98
2,196.39
464.88
1,969.81
6,005.74
200.00
207.46
901.50
345.75
98.11

220.16
1,390.55
2,461.32
531.20
1,959.94
6,563.16
166.67
331.67
421.66
347.54
147.54

Amount in millions
Cash/Bank/marketable securities
Receivables
Inventory
Others
Non Current Assets
Total Assets
Long term liabilities - Financial Institutions
Directors/Associate companies loans
Account payable
Accruals
Customer advances

7,000,000,000
6,000,000,000
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
-

Non Current As s ets

Others
Inventory
Receivables
Cas h/Bank/marketable
s ecurities

2010

2011

2012

2013

2014

2,500,000,000
Cus tomer advances

2,000,000,000

Accruals

1,500,000,000

Cash conversion cycle

Your judgement - 1 (Grade on 1
Quality of Asset mix
Liabilities mix

71.99
to

92.75

66.86

78.95

117.76

Account payable

1,000,000,000

Directors /As s ociate

companies loans

500,000,000

5) 5 being best
4
4

2
2

3
3

4
3

4
4

Long term liabilities Financial Ins titutions

2010

2011

2012

2013

2014

Comment on the asset mix and liabilities mix used by the company. Is it effective? Why does a company uses this particular mix? (100 words max)
Keeping in view the growing sales for the company total assets are also increasing however, company is steadily maintining its assets combination. Around 40% of assets are tied up in
inventory due to lengthy manufacturing process of tyre (100 days on average to convert inventory into cash), this is due to various steps in production are performed manually with machine
and human interaction. On the other hand huge portion of accounts payable on liability side shows that company faced marketing and sales challegenges during year 2011 to 2013. This was
due to floods in 2011, sales tax imposition on tractor tyres, power and gas crisis.

Part 3
Paid-up capital
Reserves
Retained Earning
Total Equity
Debt to Equity ratio
Cost of Long term debt
Cost of Equity
Weighted average cost of capital (WACC)
Marginal cost of capital
Your judgement - 2(Grade on 1
Debt equity ratio
WACC

to

2010
597.71
732.96
1,330.67
2.62
8.56%
16.93%
10.87%
10.87%

2011
597.71
872.01
1,469.73
2.92
14.55%
20.27%
16.01%
16.01%

2012
597.71
926.81
1,524.52
2.59
17.19%
13.40%
16.13%
16.13%

2013
597.71
1,195.80
1,793.51
2.35
3.39%
16.18%
7.21%
7.21%

2014
597.71
1,433.28
2,030.99
2.23
9.29%
10.90%
9.79%
9.79%

5) 5 being best
4
4

3
3

4
3

4
4

4
4

Capital Structure
100%
80%
60%
40%
20%
0%

2010

2011
Total Equity

2012

2013

2014

Total Debt

Is the current capital structure optimal for the company considering the nature of business and industry? Was the capital structure changed recently? Does the company
plan to maintain the same structure in the future? (150 words max)
Capital-intensive industries such as manufacturing tend to have a debt/equity ratio above 2, which is evident in the case of General Tyre. The company generally finance its new plant and
machinery projects through debt financing like their expansion projects and new motorcycle tyre plant during last four years. There are are no drastic change in capital structure but there is
gradual improvement in debt ratio due to increase in company's profitability and consequently retained earnings. It seems like the company will maintain its capital structure around debt to
equity ratio of 2, since the major portion of their debt is current libilities with larger portion in running finances and it seems unavoidable with current production technology they are using and
power & gas shortages with other domestic problems.

Part 4
Sales
Gross profit
Selling and administrative expenses
Earning before interest and tax
Interest/Markup
Net profit(loss)
Return on Assets (ROA)
Return on Equity (ROE)
Times Interest earned
Number of shares
Earning (loss) per share
Price Earning Ratio
Cash dividend per share
Stock dividend per share
Expected share price based on last dividend
Book value per share
Share price as on December 31st
Percentage change in price since last year
KSE annual index change percentage
Beta coefficient
Degree of operating Leverage
Degree of Financial Leverage
Your judgement - 3(Grade on 1 to
Sales growth
Control over cost
sufficency of Times interest earned
Price earning ratio
Payout ratio
Riskiness of the share
Degree of Operating leverage
Degree of Financial leverage

2010
6,355.29
965.34
(296.14)
669.20
(259.92)
218.33
4.54%
16.41%
2.57
59.77
3.65
6.19
2.00
22.60
22.26
22.60
-6.38%
28.08%
0.91
1.44
1.64

2011
7,477.70
998.10
(284.95)
713.16
(318.63)
258.60
4.49%
17.60%
2.24
59.77
4.33
4.83
2.50
20.91
24.59
20.91
-7.48%
-5.61%
(0.05)
1.40
1.81

2012
7,806.47
998.40
(369.23)
629.17
(381.67)
202.74
3.70%
13.30%
1.65
59.77
3.39
7.82
2.00
26.54
25.51
26.54
26.92%
48.98%
1.41
1.59
2.54

2013
8,167.09
1,328.60
(460.96)
867.63
(289.22)
395.36
6.58%
22.04%
3.00
59.77
6.61
7.97
4.50
52.72
30.01
52.72
98.64%
49.43%
0.61
1.53
1.50

2014
8,606.65
1,595.07
(521.67)
1,073.39
(326.25)
513.74
7.83%
25.30%
3.29
59.77
8.60
16.94
6.50
145.64
33.98
145.64
176.25%
27.20%
(0.30)
1.49
1.44

Sales
9,000,000,000
8,500,000,000
8,000,000,000
7,500,000,000
7,000,000,000
6,500,000,000
6,000,000,000
2010

2011

2012

2013

2014

2013

2014

Cost Control
1,700,000,000
1,500,000,000
1,300,000,000
1,100,000,000
900,000,000
700,000,000
500,000,000
2010

2011

Gros s profit

2012

Earning before interes t and tax

Dividend Policy
10.00

5) 5 being best
5
4
4
4
4
4
4
4

4
4
4
3
4
5
4
4

3
3
4
4
4
3
3
3

4
4
5
4
4
4
4
4

5
4
5
5
4
5
4
4

8.00
6.00
4.00
2.00
2010

2011
Earning (los s ) per s hare

2012

2013

2014

Cas h dividend per s hare

Comment on the dividend policy followed by the company? Does it follow the industry norms? Is the company a low payer or high payer? Why is that so? (200 words max)
The company seems like following constant payout of average 65% of EPS while maintaining its capital structure on safe side of 2 - 2.5 debt to equity ratio. Reason being, company finance its
new projects only through debt and to maintain its capital structure it pays out dividend to signal to the outsiders regarding the company's stability and growth prospects and they seems
confident about keeping up with their good performance. Company seems low to average payer of dividend in comparision to Automotive & Parts sector average, but during last five years
company paid the dividend consistently due to continued progress in company's sales revenue and investment in new product and plant improvement. However company has good potential to
increase its profitablity and consequently the dividend payout if government takes initiative to stop tyre sumuggling and control energy crisis.

Part 5
Overall health (Grade on 1

to

5) 5 being best

Comment on overall financial health of the company (200 word max)

General tyre is the only largest tyre manufacturer in Pakistan even then it is not able to make huge profits due to several domestic, law and order and energy situation. Unlike other companies
in automotive & parts sector some companies like Indus Motors, Battery manufacturers have larger customer base, but in case of general tyre most of their customer segment is focused to B2B
i.e. automobile manufacturers and government since they experience tough competition from under-invoiced smuggled tyres in domestic market. Hence they experienced poor profitability
whenever automobile sales decline, however during past five years company improved its performance by improving its plant machinery and expanding its customer based with new plant for
motorcycle tyre manufacturing. In addition to that improvement in power and gas supply allowed company to increase its production in last few years but they are still operating 6 days a week
due to gas shortage.
Company for the future is trying to expand its motorcycle manufacturing plant to cater motorcycle OEMs demand and also planning for alternate gas supply to improve its production which
means that there is excellent growth prospect for company in future.

Month
KSE Index Price %change Stock
12/2009
9386.92
01/2010
9614.19
2.42%
02/2010
9657.79
0.45%
03/2010
10178.43
5.39%
04/2010
10428.12
2.45%
05/2010
9326.42 -10.56%
06/2010
9721.91
4.24%
07/2010
10519.02
8.20%
08/2010
9813.05
-6.71%
09/2010
10013.31
2.04%
10/2010
10598.4
5.84%
11/2010
11234.76
6.00%
12/2010
12022.46
7.01%
01/2011
12359.36
2.80%
02/2011
11289.22
-8.66%
03/2011
11809.54
4.61%
04/2011
12057.54
2.10%
05/2011
12123.15
0.54%
06/2011
12496.03
3.08%
07/2011
12190.37
-2.45%
08/2011
11070.58
-9.19%
09/2011
11761.97
6.25%
10/2011
11868.88
0.91%
11/2011
11532.83
-2.83%
12/2011
11347.66
-1.61%
01/2012
11874.89
4.65%
02/2012
12877.88
8.45%
03/2012
13761.76
6.86%
04/2012
13990.38
1.66%
05/2012
13939.32
-0.36%
06/2012
13801.41
-0.99%
07/2012
14577
5.62%
08/2012
15391.58
5.59%
09/2012
15444.82
0.35%
10/2012
15910.11
3.01%
11/2012
16573.86
4.17%
12/2012
16905.33
2.00%
01/2013
17242.74
2.00%
02/2013
18173.67
5.40%
03/2013
18043.31
-0.72%
04/2013
18982.42
5.20%
05/2013
21823.05
14.96%
06/2013
21005.69
-3.75%
07/2013
23312.77
10.98%

Price %change
23.96
27
12.69%
31.39
16.26%
26.81 -14.59%
24.42
-8.91%
21.89 -10.36%
22.8
4.16%
27.03
18.55%
23 -14.91%
22.53
-2.04%
21.91
-2.75%
22.01
0.46%
22.6
2.68%
23.79
5.27%
22
-7.52%
23.6
7.27%
24.01
1.74%
23.7
-1.29%
23.1
-2.53%
22.75
-1.52%
23.05
1.32%
20.51 -11.02%
17.3 -15.65%
16.5
-4.62%
20.91
26.73%
17.6 -15.83%
17.51
-0.51%
19.64
12.16%
24.37
24.08%
23
-5.62%
20.5 -10.87%
23.75
15.85%
28.98
22.02%
28.67
-1.07%
25.22 -12.03%
26
3.09%
26.54
2.08%
28.74
8.29%
32.11
11.73%
28.96
-9.81%
41.38
42.89%
39.37
-4.86%
42.2
7.19%
53.42
26.59%

Beta
0.909523

-0.051947

1.409635

0.613628

08/2013
09/2013
10/2013
11/2013
12/2013
01/2014
02/2014
03/2014
04/2014
05/2014
06/2014
07/2014
08/2014
09/2014
10/2014
11/2014
12/2014

22160.85
21832.68
22775.85
24302.19
25261.14
26784.34
25783.28
27159.91
28912.98
29737.69
29652.53
30314.07
28567.74
29726.39
30376.53
31197.98
32131.28

-4.94%
-1.48%
4.32%
6.70%
3.95%
6.03%
-3.74%
5.34%
6.45%
2.85%
-0.29%
2.23%
-5.76%
4.06%
2.19%
2.70%
2.99%

56.46
47.03
41.73
40
44.15
52.5
55.26
48.65
51.74
67.98
80.05
80
88.41
87.4
106.79
146.37
145.64

5.69%
-16.70%
-11.27%
-4.15%
10.38%
18.91%
5.26%
-11.96%
6.35%
31.39%
17.76%
-0.06%
10.51%
-1.14%
22.19%
37.06%
-0.50%

-0.300144

Part 1
Company Name
Established on
Core Business
Main Products/Brands
Group
Competitors

General Tyre and Rubber Company of Pakistan Limited

Came into existence in 1963, in Landhi Karachi and commenced its production in 1964.
Tyre Manufacturing
(Passenger Car Tyres, Light Truck Tyres, Truck and Bus Tyres, Tractor Tyres, Motorcycle Tyres, Rickshaw Tyres)
Bibojee Services Private Limited (BSL)
Servis Tyres, Panther Tyres, Diamond Tyres & Tubes, Various distributers/importers of tyres and tyres smuggled into Pakistan

Part 2
2010

2011

2012

2013

2014

Amount in millions
Cash/Bank/marketable securities
Receivables
Inventory
Stores and spares
Loans and advances
Other receivables
Deposits and prepayments
Taxation - net
Others
Non Current Assets
Total Assets

99,710,000
856,577,000
1,728,398,000
356,248,000
20,654,000
25,456,000
33,860,000
158,706,000
238,676,000
1,890,012,000
4,813,373,000

122,406,000
848,001,000
2,652,619,000
372,207,000
30,380,000
31,328,000
21,846,000
223,878,000
307,432,000
1,834,726,000
5,765,184,000

148,422,000
949,821,000
2,267,210,000
385,806,000
23,243,000
24,860,000
26,444,000
271,170,000
345,717,000
1,761,744,000
5,472,914,000

187,680,000
1,186,976,000
2,196,390,000
408,060,000
31,422,000
26,565,000
33,132,000
373,765,000
464,884,000
1,969,812,000
6,005,742,000

220,159,000
1,390,553,000
2,461,320,000
462,164,000
36,182,000
33,742,000
246,248,000
215,025,000
531,197,000
1,959,935,000
6,563,164,000

Long term liabilities - Financial Institutions

Current maturity of long term finance
Short term finances
Running finances under mark-up arrangements
Directors/Associate companies loans
Account payable
Accrued expenses
Accrued markup
Accruals
Customer advances
Provisions

378,679,000
205,393,000
453,044,000
1,180,716,000
160,565,000
768,680,000
248,529,000
82,579,000
331,108,000
3,512,000
53,804,000
68.17
71.99

173,286,000
86,643,000
709,899,000
1,521,902,000
117,031,000
1,011,604,000
323,285,000
81,326,000
404,611,000
10,956,000
75,703,000
74.77
92.75

86,643,000
86,643,000
720,145,000
1,179,312,000
314,477,000
1,102,105,000
332,246,000
73,576,000
405,822,000
11,061,000
71,965,000
76.43
66.86

200,000,000
33,333,000
904,241,000
1,198,569,000
207,461,000
901,504,000
282,942,000
62,811,000
345,753,000
98,106,000
72,075,000
67.52
78.95

166,667,000 100%
66,666,000 90%
714,413,000 80%
2,180,130,000 70%
331,671,000 60%
50%
421,664,000 40%
269,225,000 30%
78,317,000 20%
347,542,000 10%
0%
147,540,000
103,357,000
43.05
117.76

Cash conversion cycle

Your judgement - 1 (Grade on 1
Quality of Asset mix
Liabilities mix

to

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

7,000,000,000
6,000,000,000
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000
1,000,000,000
2010

2011

2012

2013

2014

2010

2011

2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
2010

2011

2012

2013

2014

2010

2011

5) 5 being best
4
4

2
2

3
3

4
3

201

4
4

99
Comment on the asset mix and liabilities mix used by the company. Is it effective? Why does a company uses this particular mix? (100 words max)
Keeping in view the growing sales for the company total assets are also increasing however, company is steadily maintining its assets combination. Around 40% of assets are tied up in inventory due to lengthy manufacturing
process of tyre (100 days on average to convert inventory into cash), since various steps are performed manually with machine and human interaction. On the other hand huge portion of accounts payable on liability side shows
that company faced marketing and sales challegenges during year 2011 to 2013. This was due to floods in 2011, sales tax imposition on tractor tyres, power and gas crisis.

2012

Part 3
Paid-up capital
Reserves
Retained Earning
Total Equity
Debt to Equity ratio
Total Debt
Interests on Long term loan
Tax rate
Cost of Long term debt
Growth
Cost of Equity
Weighted average cost of capital (WACC)
Marginal cost of capital
Your judgement - 2(Grade on 1
Debt equity ratio
WACC

to

2010
597,713,000
732,957,000
1,330,670,000
2.62
3,482,703,000
55,965,000
42.09%
8.56%
7.42%
16.93%
10.87%
10.87%

2011
597,713,000
###
872,014,000
1,469,727,000
2.92
4,295,457,000
38,545,000
34.59%
14.55%
7.43%
20.27%
16.01%
16.01%

2012
597,713,000
926,810,000
1,524,523,000
2.59
3,948,391,000
18,167,000
18.03%
17.19%
5.46%
13.40%
16.13%
16.13%

2013
597,713,000
###
1,195,797,000
1,793,510,000
2.35
4,212,232,000
9,954,000
31.80%
3.39%
7.05%
16.18%
7.21%
7.21%

3
3

4
3

4
4

2014
597,713,000
100%
1,433,277,000
80%
2,030,990,000
2.23
60%
4,532,174,000
22,555,000
40%
31.34%
20%
9.29%
6.17%
0%
10.90%
9.79%
9.79%

Capital Structure

Cap
7,000,000,000
6,000,000,000
5,000,000,000
4,000,000,000
3,000,000,000
2,000,000,000

divided interest with the same year debt

1,000,000,000
Dividend Growth (G) = (1 - payout ratio) x Return on Equity
2010

2011
Total Equity

2012

2013

2014

2010

Total Debt

5) 5 being best
4
4

4
4

126
Is the current capital structure optimal for the company considering the nature of business and industry? Was the capital structure changed recently? Does the company plan to maintain the same structure in the future? (150
words max)
Capital-intensive industries such as manufacturing tend to have a debt/equity ratio above 2, which is evident in the case of General Tyre. Company generally finance its new plant and machinery projects through debt financing
like their expansion projects and new motorcycle tyre plant during last four years. There are are no drastic change in capital structure but there is gradual improvement in debt ratio due to increase in company's profitability and
consequently retained earnings. It seems like the company will maintain its capital structure around debt to equity ratio of 2, as major portion of their debt is current libilities with larger portion in running finances and it seems
unavoidable with current production technology they are using and power & gas shortages with other domestic problems.

Total

Part 4
2010
2011
2012
2013
2014
9,000,000,000
Sales
6,355,293,000
7,477,695,000
7,806,470,000
8,167,086,000
8,606,649,000
8,500,000,000
Gross profit
965,337,000
998,103,000
998,397,000
1,328,598,000
1,595,065,000
8,000,000,000
Selling and administrative expenses
(296,135,000)
(284,948,000)
(369,229,000)
(460,964,000)
(521,674,000)
7,500,000,000
Earning before interest and tax
669,202,000
713,155,000
629,168,000
867,634,000
1,073,391,000
Sales
Interest/Markup
(259,916,000)
(318,633,000)
(381,671,000)
(289,217,000)
(326,251,000) 7,000,000,000
Taxation
158,706,000
136,758,000
44,581,000
184,374,000
234,475,000
6,500,000,000
Net profit(loss)
218,326,000
258,600,000
202,735,000
395,360,000
513,741,000
6,000,000,000
Return on Assets (ROA)
4.54%
4.49%
3.70%
6.58%
7.83%
2010
2011
2012
2013
2014
Return on Equity (ROE)
16.41%
17.60%
13.30%
22.04%
25.30%
Cost Control
Times Interest earned
2.57
2.24
1.65
3.00
3.29
Number of shares
59,771,250
59,771,250
59,771,250
59,771,250
59,771,250
1,700,000,000
Earning (loss) per share
3.65
4.33
3.39
6.61
8.60
1,500,000,000
Price Earning Ratio
6.19
4.83
7.82
7.97
16.94
1,300,000,000
Cash dividend per share
2.00
2.50
2.00
4.50
6.50
1,100,000,000
Stock dividend per share
###
###
900,000,000
Expected share price based on last dividend
22.60
20.91
26.54
52.72
145.64
700,000,000
Book value per share
22.26
24.59
25.51
30.01
33.98
500,000,000
Share price as on December 31st
22.60
20.91
26.54
52.72
145.64
2010
2011
2012
2013
2014
Percentage change in price since last year
-6.38%
-7.48%
26.92%
98.64%
176.25%
2009 price = 24.14
Gross profit
Earning before interest and tax
Closing Index on Dec 31
12,022.46
11,347.66
16,905.33
25,261.14
32,131.28
9,386.92
KSE annual index change percentage
28.08%
-5.61%
48.98%
49.43%
27.20%
Dividend Policy
Beta coefficient
0.91
(0.05)
1.41
0.61
(0.30)
10.00
Degree of operating Leverage
1.44
1.40
1.59
1.53
1.49
Degree of Financial Leverage
1.64
1.81
2.54
1.50
1.44
8.00
0.55
0.58
0.59
0.68
0.76
6.00
Your judgement - 3(Grade on 1 to 5) 5 being best
4.00
Sales growth
5
4
3
4
5
2.00
Control over cost
4
4
3
4
4
sufficency of Times interest earned
4
4
4
5
5
2010
2011
2012
2013
2014
Price earning ratio
4
3
4
4
5
Earning (loss) per share
Cash dividend per share
Payout ratio
4
4
4
4
4
Riskiness of the share
4
5
3
4
5
Degree of Operating leverage
4
4
3
4
4
Degree of Financial leverage
4
4
3
4
4
95
Comment on the dividend policy followed by the company? Does it follow the industry norms? Is the company a low payer or high payer? Why is that so? (200 words max)
The company seems like following constant payout of average 65% of EPS while maintaining its capital structure to 2.5 debt to equity ratio. Company seems low to average payer of dividend in comparision to Automotive &
Parts sector average, but during last five years company paid the dividend each year due to continued progress in company's sales revenue and investment in new products and plant improvement. The reason for such dividend
policy is that the company mostly depend upon debt to finance its new projects and pay dividends to shareholders to maintain its debt ratio.

Part 5
Overall health (Grade on 1 to 5) 5 being best

4
3
2
4
5
98
Comment on overall financial health of the company (200 word max)
In automotive & parts sector some companies like Indus Motors, Battery manufacturers have diversified customer base, but in case of general tyre most of their customer segment is focused to automobile manufacturers and
government and they experience tough competition from under-invoiced smuggled tyres in domestic market. And hence they experienced poor profitability whenever automobile sales decline, however during past five years
company improved its performance by improving its plant machinery and expanding its customer based with new plant for motorcycle tyre manufacturing. In addition to that improvement in power and gas supply allowed
company to increase its production to its capacity in last few years but they are still operating 6 days a week due to gas shortage.