Capital University of science and technology, Islamabad.

Report:
Financial statement analysis of Descon chemical ltd.

Submitted by:
Faheem ul Hassan

(BF 133002)

Asad ur Rehman

(BF 133003)

Zain Shakeel

(BF 133010)

Saqib Rohail

(BF 133005)

Subject:
Financial Statement Analysis

Submitted to:
Sir. Zia ul Islam

Introduction:
Descon is one of the largest conglomerates in Pakistan operating for over three
decades. Founded in 1977, initially it was a multi-faceted engineering and manufacturing
concern that has now become the largest Engineering, Procurement, Construction &
Commissioning [EPCC] company in the country.
A few years after its establishment, the focus turned to chemicals, materials and power
generation. For over three decades now, Descon Chemicals Limited has built Descons culture
into what it is today a place for creating and bringing ideas to life. Descons Chemical
Business comprises of Descon Chemicals Limited, NIMIR Resins Limited, Descon Corporation
Limited and Descon Oxychem Limited. From the manufacturing of a wide variety of chemicals
to their trading, they provide a one-stop solution for all industrial chemicals needs.
Having a workforce of over 600 persons and operating from Lahore, Pakistan, we offer a wide
range of around 200 innovative products and services for markets including Coating &
Emulsion, Paper and Packaging, Textile Auxiliaries, Printing Inks and Unsaturated Polyester.
Our enterprise is more than a collection of successful businesses that are owned under one roof.
We strive to gain competitive advantage from opportunities for constructive collaboration.
Descon Oxychem Limited is an addition to the Descon chemical business area that manufactures
Hydrogen Peroxide. With the state-of-the-art chemical plant and latest technology, Oxychem
aims to create sustainable solutions essential for a better, safer, healthier life for people
everywhere. The plant has an annual capacity of 28,000 metric tons and is spread over 28 acres.
We envision providing technical support and after sale services in order to build and maintain the
Brand Equity not only in Pakistan but around the globe as well. Descon Oxychem also is the
proud pioneer of food grade hydrogen peroxide production in Pakistan. We have started selling
our food grade product to the local industries. We also export Hydrogen Peroxide to Turkey,
India, Sri Lanka, Bangladesh, South Africa and UAE.
With the aim to bring the best quality solutions to its clients all over the world, Descons
Chemicals Business fast emerges as a name epitomizing excellence and dedication with the
vision --To become a leading chemicals solutions provider to industry worldwide.

Competitor Colgate-Palmolive
The Colgate-Palmolive Company is an American multinational consumer products company
focused on the production, distribution and provision of household, health care and personal
products, such as soaps, detergents, and oral hygiene products (including toothpaste and
toothbrushes). Under its "Hill's" brand, it is also a manufacturer of veterinary products.
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Companys internal analysis:

Liquidity ratio:
Company faces huge losses from past few years due to some liabilities. So, the liquidity ratios
decrease from the base year but inventory turnover increase from the base year. Operating cycle
increase from base year due to company performance decline from past year. but their account
receivable turnover increase from its base year this will affect their performance in bad manner.
Their cash flow ratio increase from its past years this show company is generated more cash then
its past year from its operation which have ability to pay its current liabilities as well its long
term liabilities.
Long term debt-paying ability:
Its shows that company have better debt-paying ability from its past years. The cash generated
from its operation help to improve its debt-paying ability.

Profitability:
Company has bad impression from its return on investment due to some bad decision of its
member company face some huge losses. Although company doing everything to survive but
these bad decision had bad impression on its profitability ratio from its past year.
These ratio decreases from the base year.

Investor Analysis:
Due to some huge losses and its liabilities company cannot offer any dividend from past few year
so, investor cant get any return on investment from this company. Although its market share
price increase from past year which will give good impression on its goodwill and investor can
earn from selling and buying of its shares.

Vertical analysis:
The companys cost of good increase while the gross profit decreases as compare to its past
years.
Its operating income decrease as compare to its past year. While its interest expenses increases.
Its net income also decreases but its current assets increase. On the other side its long-term assets
decrease due to sale and converted into scrap.
Its total liabilities also decreasing which a good sign for company and its equity also increasing.
Overall company performance getting better than past year.

Horizontal analysis:
Its sales decreases from base year as well gross profit but its income increases from its base year.
Its total assets decreases from its base year due to some bad investment and fixed assets convert
into scrap. But its liabilities also deceasing which a good sign for this company.
Its total equity also increases which will give good impression to public.
Overall company performance going better than its base year.

Comparison from competitor:

Liquidity ratios:
Its competitor has better impression from its analysis because they earn huge profit from its
operation. Their receivable turnover and inventory turnover far better than this company.
They much more working capital than this company. Their acid test, current, cash increase from
their past year due to their huge profit.
But their sales to working capital decrease from their past year .
The basic difference between this company and its competitor is that this company have huge
liabilities and face losses every year from its investment on the other side its competitor have less
liabilities and face huge profit from its operation.
Overall descon chemical have poor performance than its competitor on liquidity ratios.

Long-term Debt-paying Ability:

This company have better debt/equity, debt/assets, debt ratio from its competitor although
company faces some hard time but Descon chemicals ltd. do anything to recover from its fall
and they are doing good job. But cash flow/total debt of its competitor has better impression then
this company.
Descon chemicals ltd. Try to pay off their liabilities from anything they generated to survive and
better future.

Profitability:
Its competitor has better profitability ratio than this company. Every year they earn huge profit as
compare to this company their return on equity, investment, assets are far better than this
company.

Investor analysis:
Its competitor has better earning per share. They have better price on share and they pay dividend
on better percent.
There is a lot of difference between this company and its competitor.
Overall its competitor has better financial position then this company.