financial analysis of a company

Finance Mega Project

Ittehad Chemicals Limited

Table of Contents› Origin

› Mission

› Vision

› Products

› Income Statements

› Balance Sheets

› Horizontal analysis

› Vertical analysis

› Ratio's analysis

› Competitor's analysis

› SWOT analysis

› Problems facing by ICL

› Conclusion

› Recommendations

ICL was established in 1962 under the name of United Chemicals by a private entrepreneur.

The initial plant was set up by M/S Oronzio Denora of Italy.

The factory is strategically located on the 19th/20th Kilometer of GT Road and spread over an area of 106 acres

Under the Economic Reforms Order, United Chemicals was nationalized in 1971 along with other industries of the country and renamed as Ittehad Chemicals

It was initially managed by the Board of Industrial Management and thereafter the Federal Chemicals & Ceramics Corporation Ltd under the Ministry of Production, Govt. of Pakistan

ORIGIN

The factory was ultimately denationalized in 1995 by the Privatization Commission Govt. of Pakistan.

Accordingly, the company established its own state-of-the-art Power Plant of 30 MW capacity in the year 2005.

With a rich and illustrious history, ICL is the founding company in Pakistan for the Chlor-alkali industry.

With a growing interest for ICL products in the international market, the organization has made the necessary arrangements (and will continue to do so in the future) to cater for the growing demand.

› Create an environment to attract and retain the best talent.

› Optimize cost and securitize energy through latest technology.

› Serving the Customers to their satisfaction levels.

› Ensuring that we are environment friendly & zero Injury Company.

› CSR is our forte.

Mission

VISION

An "Ittehad" of Pakistan's best talent and technology that serves as a catalyst to deliver sustainable chemical products to its customers thus optimizing returns for investors

Products

Caustic Soda (Liquid / Solid / Flakes)

Sodium Hypochlorite

Liquid Chlorine

Hydrochloric Acid

Shaffaf (Bleaching Earth)

CP (Chlorinated Paraffin)

Zinc Sulphate

Calcium Chloride

Income Statement

Balance Sheet ( Assets Perspective)

Liabilities side

Horizontal analysis Income Statement

Balance Sheet ( Asset side)

Liability side

Vertical analysis Income Statement

Balance SheetAsset side

Liability side

Ratio's Analysis

Competitors Analysis

› 2011 market share

After Engro Polymer & Chemicals limited (EPCL)

entry in this industry, the market has become more

competitive for the other players as witnessed in the

declining trend in capacity utilization of all caustic soda

producers.

EPCL has increased its market share to around

34%, whereas, Sitara Chemicals remained around the

previous year’s level (41%) while market share of

Ittehad Chemicals dropped to about 25%

•2013 market share

Share price has increased 28.8% in the last three months asopposed to the benchmark KSE 100-Share Index that inched upmerely 2.9% over the same period

While the company’s top line has crossed Rs 4 billion, there is stillno price discovery in its stock

ICL’s average daily volume for the last three months has been only30,769 shares.

SWOT Analysis

Strengths› Ittehad Chemicals has large numbers of competent

workers these are near about 4000 employees 40 ofthem are permanent and others are at daily wagesor contract basis.

› It has two chemical plants in Lahore one ismanufacturing chemicals and second ismanufacturing products from these chemicals and italso uses the waste on one plant in second as a rawmaterial.

› It has a large product length as capered to itscompetitors in Pakistan as well as in Asia.

› It uses modern technology to manufacturechemicals.

› It is the king of chemicals manufacturing industry.

› It also has its own carriage container to distributethe chemicals in all over the Pakistan.

Weaknesses

› The company has a labor union that consists of many toplevel supervisors to deal the problems of the workers inthe company but this union is very harmful for the companythat many times it happens the union leader black mail thetop management with the power of workers as strike andetc.

› Company has its own energy source but it is not enough forthe company to maintain its power in this period as there islack of electricity in Pakistan

Opportunities

› There are no big competitors of IttehadChemicals Limited in the market expect SitaraChemicals Pvt. Limited. But Sitara Chemicalsdoes not have a large product length and linethat it can compete the Ittehad Chemicals Ltd.It is big opportunity for ICL that it hascompetitive edge over its competitor.

Threats

› In this modern period Ittehad chemicalsLimited also facing many problem from thepressure groups.

› The most growing competitor of IttehadChemicals Limited is Sitara Chemicals thatis increasing its product line and lengthtowards the ICL and SCPL manufacturingthe same product and selling them to theircustomers that are diversifying from ICLto SCPL.

Problems facing by ICL:Inefficiency of Plants

High Transportation Charges

Capacity Issues

Excess Of inventory

Unskilled Workers

High Maintenance cost

Union of workers

ConclusionWe conclude that:

It is a very informative and worth learning project

Ittehad Chemicals is a competing company.

It is going towards progress but also facing many issues. They haveno shot term plans, they only deal with big plants and therefore theydon’t lease it or don’t opt for any other option

They only predicting demand and forecasting they determine theircapacity requirements.

There is also a problem in their inventory that is they have excess ofunnecessary inventory which is not beneficial for them as they haveto bear maintenance cost on it

Another issue they face is of their competitors, engro chemicals is ahuge competitor of Ittehad chemicals, the market share is high andalso competitive advantage is towards engro due to the by-product

Recommendations

They are using DSA plant which is now getting ruined due tobecoming old, because of this, they are facing lose, gettingdown in market position. They have to replace their plant DSAwith IEM plant, which is more efficient and less costly as well.

They should gives wages to their employees, give moreincentives to them and divide their duty in shifts

Market needs more and rapid production of products and givespreference to those companies which follows these tips, so werecommend ICL to makes their new plant for rapid production.

If they give space to their employees and gives highpreference to their customers need, make order according tothe demand , they will definitely reach towards success andhave a good market place.

Reference:

http://www.ittehadchemicals.com/