INTERNATIONAL ISLAMIC UNIVERISITY ISLAMABAD
Project: Financial management
Submitted by: Rabia Konain 222-FMS/BBA-2Y/F23
Nayyab Kanwal 230 -FMS/BBA-2Y/F23
Maryam Tahir 223-FMS/BBA-2Y/F23
Malaika Kanwal 218-FMS/BBA-2Y/F23
Submitted to: Dr. Tahira Awan
Tariq Glass Industries Ltd
Introduction: For the past 30 years, Tariq Glass Industries Ltd. has
been the premier glass tableware manufacturer in Pakistan. In addition
to being the market leaders in Pakistan, Tariq Glass Industries Ltd’s
brands Toyo Nasic, Omroc and Nova are exported across the world.
With a production capacity of almost 300 tons per day and using state of the art
technology, Tariq Glass Industries Ltd. produces its tableware products on
single and double gob press machines as well as H-28 (press & blow) and
stretch machines. Onsite mould workshop, all weather warehousing,
international standard packaging, advanced laboratory and Tecno 5 decorating
machines are just a few examples of the facilities that Tariq Glass Industries
offers to its valued customers.
In 2013, Tariq Glass Industries Ltd. launched its latest venture, Tariq Float
Glass. An ultramodern plant having a production capacity of 550 tons per day,
Tariq Float Glass, has quickly established brand recognition not only in
Pakistan, but in the international markets as well. This facility is capable of
producing clear float glass ranging from 2mm to 13mm as well as 5mm tinted
and reflective glass through an online CVD coating machine, along with
sandblasted glass and aluminium coated mirrors.
Innovation, quality and reliability are the cornerstones of Tariq Glass Industries
Ltd. Its vast product offering of tableware and float glass are designed to meet
and exceed the expectations of the customers.
Production:
Tariq Glass Industries Limited, a prominent manufacturer of glass containers,
opal glass, tableware, and float glass in Pakistan, has been performing notably in
recent times. The company's production capacity for float glass stands at 500
metric tons per day. Its products include a range of tableware such as ashtrays,
jugs, mugs, plates, bowls, and various sets, as well as clear, mirror, sandblasted,
and tinted/reflective float glass.
Price:
As for the financial aspects, Tariq Glass Industries' share price was recently
around PKR 87.89, with fluctuations observed over the past year. It has
experienced a 32.17% increase in share price over the last year, though the stock
price has seen a recent decline of about 10.57% in the last month. The company
reported full-year earnings for 2023 with an EPS of PKR 14.63, down from PKR
24.05 in the previous year .
SWOT Analysis of Tariq Glass Industries:
Strengths:
1. Market Leadership: Tariq Glass Industries holds a leading position in
Pakistan's glass manufacturing sector, with strong brand recognition through its
Toyo Nasic, Omroc, and Nova brands.
2. Robust Financial Performance: The company has demonstrated significant
financial growth, doubling its profits in the first half of FY 2024 compared to the
previous year, attributed to increased revenues and improved gross margins.
3. Diverse Product Range: The company offers a wide variety of glass
products, including tableware, containers, and float glass, catering to both
domestic and international markets.
4. Advanced Production Capabilities: With a production capacity of
approximately 300 metric tons per day and state-of-the-art printing and
decorating facilities, Tariq Glass ensures high-quality output and customization
for its clients.
Weaknesses:
1. High Operating Costs: Despite increased profitability, the company faces
high operating expenses, including a significant rise in selling and distribution
costs.
2. Dependency on Raw Material Prices: Fluctuations in the cost of raw
materials can affect production costs and profitability, making the company
vulnerable to market volatility Opportunities:
1. Expansion in International Markets: There is potential for further growth in
international markets, especially in Europe, the Middle East, Africa, and Asia.
2. Innovation and Product Diversification: Continued investment in new
technologies and product lines can help Tariq Glass capture new market
segments and meet evolving consumer demands .
3. Sustainability Initiatives: Embracing eco-friendly manufacturing practices can
enhance the company's brand image and meet increasing consumer and
regulatory demand for sustainable products .
Threats:
1. Economic Fluctuations: The company’s financial performance can be
impacted by macroeconomic factors such as inflation, interest rates, and
economic downturns in key markets.
2. Intense Competition: The glass manufacturing industry is highly
competitive, with both local and international players striving for market share,
which can pressure prices and margins.
3. Regulatory Changes: Changes in industry regulations, especially
concerning environmental standards, could increase compliance costs and affect
operational efficiency.
Overall, Tariq Glass Industries is well-positioned for continued growth,
leveraging its strong market presence, financial health, and production
capabilities. However, it must navigate challenges such as high operating costs
and competitive pressures to sustain its success.
Risk and return:
RISK:-
The term risk is issued unchangeably with the term uncertainty to refer to the
variability of actual returns from those expected from a given assets.
RETURN:-
The return on an asset is the total gain or loss experienced on an investment over
a given period of time. It is commonly measured as the change in value plus any
cash distribution during the period.
There are two parameters
1-The expected return
2-The standard deviation
Expected Return:-
The expected return is the weighted average of possible return, with the weight
being the profile to of occurrence. Standard Deviation:-
The risk of return can be measured by the returns ‘ standard deviation or variance.
The standard deviation is a statistical measure of the dispersion of a distribution
around the expected value. It is the square root of the variance ( the sum of
suqared deviation ) of the distribution Yhe standard deviation is the most
common statistical measure of an asset’s risk. Historical risk:
Historical risk is the analysis of an investment's past performance to assess its
potential future volatility and risk. It involves examining historical data to
identify patterns and estimate the likelihood of adverse outcomes, helping
investors make informed decisions and manage risk.
Coefficient of Variation:-
The standard deviation can sometimes be misleading in comparing the risk of
investment alternatives if the alternatives differ and different in size.The Co
efficient of variation, CV is a measure of relative dispersion that is useful in
comparing the risk of assets with differing expected returns.
RISK AND RETURN IN A PORTFOLIO CONTEXT:-
A portfolio is a combination of two or more assets. The risk.
Portfolio Return:-
The expected return on a portfolio is the weighted average of the expected return
of the assets ( securities ) comparison that portfolio.
Standard Deviation of a portfolio:-
The Standard Deviation of portfolio return is found by applying the formula for
the standard deviation.
Portfolio Risk and Co variation:-
While the portfolio expected return is is a weighted average of return on the
individual assets, the portfolio S.D is not the simple weighted average of the
standard deviation of the individual assets making up the portfolio.
The Capital Assets Pricing Model (CAPM):-
One of the basic theories that links together risk and return for all marketable
assets is the capital assets pricing model (CAMP) initially developed by sharpe
(1964)and lintner (1965). A number of other economists subsequently tested
,advanced, refined and extended its applicability (Black(972),Merton (1793)).
Unsystematic risk:- Systematic
risk:-
The Beta coefficient and the Market Premium:-
The beta coefficient ,β measure the non -diversifiable risk.
Security Market Line (SML):-
When the CAMP is depicted graphically it is called the Security Market Line
(SML).
Cost of capital:
The Weighted Average Cost of Capital (WACC) is a financial metric used to
measure a company's cost of capital, accounting for the proportion of equity and
debt. It represents the average rate a company is expected to pay to finance its
assets. WACC is crucial for valuation, investment decisions, and performance
assessments, as it reflects the minimum return that investors expect for providing
capital of the company. Explanation of Components:
1. Market Value of Equity (E): This is the total market value of all
outstanding shares of the company's stock. It reflects the value investors place
on the company's equity.
2. Market Value of Debt (D): This is the total market value of the company's
debt. It represents the amount the company owes to its lenders.
3. Cost of Equity (Re): This is the return required by equity investors. It can
be estimated using models like the Capital Asset Pricing Model (CAPM), which
considers the risk-free rate, the stock's beta, and the equity.
4. Cost of Debt (Rd): This is the effective rate that the company pays on its
current debt. It is often calculated as the yield to maturity on existing debt.
5. Corporate Tax Rate (Tc): This is the tax rate applicable to the company.
Since interest expenses on debt are tax-deductible, the after-tax cost of debt is
considered in the WACC calculation.
Usage of WACC:
Investment Decisions: WACC is used as a hurdle rate for evaluating the
feasibility of investment projects. A project is typically considered if its expected
return is higher than the WACC.
Valuation: It is used in discounted cash flow (DCF) analysis to discount future
cash flows to their present value.
- Performance Assessment: Comparing the company's return on invested capital
(ROIC) with its WACC helps assess if the company is generating value over and
above its cost of capital.
