Вы находитесь на странице: 1из 11

Company’s History

Roots of Treet Corporation (before independence)


 Treet Corporation’s genesis lies in the industrial empire whose origins trace back to the
peak of British rule over South Asia. Syed Maratib Ali was a highly successful entrepreneur
in the early part of the twentieth century and made his fortune supplying a variety of goods
to the British government in India, specifically the British Indian Army.
 He followed in the footsteps of his father, Syed Wazir Ali, who had initially started a
canteen that served troops in the British Indian Army, a business that gradually morphed
into Wazir Ali Industries.
 “In the early 1900s, they caught a decent break, and at one point were managing 10 of [the
Royal British] regiments. Maratib’s three sons – Amjad, Wajid, and Babar – leveraged
their father’s financial success to become highly successful individuals in their own right.
 Amjad, the eldest, became involved in politics. He served as the chief whip of the ruling
Unionist Party in the Punjab Assembly from 1940 to 1945, and in 1946 he was elected to
the Constituent Assembly of India. After Partition, he went on to become Pakistan’s
ambassador to the United States (1953-55), Federal Finance Minister (1955-58), and
ambassador to the United Nations (1964-67).
 Treet was among the first ten companies in Pakistan to obtain ISO 9001:2008 certification
back in 1997 due to higher standards in quality management, stringent quality policy and
outstanding controls.
 The razor manufacturing operations started in 1954 with the brand name of Treet. Different
other blades were successfully added to the product mix with the passage of time. Treet
is oneof the outstanding Pakistani companies, achieving its place as one of the best 25
quoted industries on Karachi Stock Exchange.
 This is the reason they export blades and razors to many countries around the world
including China, Saudi Arabia, Brazil, Canada and USA to name a few.
 Global Arts Limited was incorporated in Pakistan on 26th October 2007as a private limited
later on converted to public limited company in 23 July 2014.
 Treet corporation has their own grd station in order to supply un interrupted electricity to
the machinery.
Razor Blades
 The blade business is the oldest and by far the largest part of the Treet Corporation’s
business.
 Accounting for Rs. 6.094 billion (64.76%) of the company’s total revenues of Rs 9.4 billion
for the financial year ending June 30, 2018.
 They are manufacturing two kinds of products under this business (i.e) shaving blades and
disposable Razors.
 The Treet brand of blades is by far the best-selling blade with no local competitor in
Pakistan.
 According to an official of Treet Corporation they normally manufacture 35 lac blades per
day in three shift.
 For the blade manufacturing they have implemented new ERP system which is going to be
live from 1st of November 2018.
 Treet captures more than 95% of share in local market.
 They import specialized steel for manufacturing blades because such sort of steel is not
manufactured in Pakistan. So they have high cost of production.
 Import, sales and marketing of specialized Chemicals (i.e.) epoxy/ Resin is going to be
operational soon between 2018-2019, and for that Matter Company has invested Rs. 300
million.
First Treet Manufacturing Modarba (FTMM)
 Under this company they used to manufacture and sell corrugated packaging, soaps (i.e)
saba, laila, bodyguard, ovo and fresh white and recently they have initiated the
manufacturing and selling of lead Acid Batteries.
 During FY 2018 batteries have contributed Rs. 322.189 million (3.42 %), whereas
corrugated packaging Rs. 1.662 billion (17.66 %), and Rs. 691.438 million (7.03 %) is
contributed to accumulated revenue by selling Soap.
 The company has signed an agreement with South Korean conglomerate Daewoo to
manufacture (Maintenance Free Batteries) also known as valve-regulated lead acid
batteries.
 For battery manufacturing plant, company has invested in a 40-acre, Rs 6.25 billion in an
industrial estate in Faisalabad during FY 2017.
 Battery plant was recently set on operations during February 2018.
 Initially imported batteries were very expensive as compare to the local market so company
has devised a strategy in order to clear the stocks for which they offered a discount plus
warranty.
 Due to offering this discount company has to book onetime loss of Rs. 380 million (approx)
Treet holding Limited
 Treet Corporation is manufacturing bikes and formed a Modaraba company under Treet
Holding limited.
 Treet bike is not very successful in Pakistan auto mobile Market. On average they uesd to
sell bikes of Rs. 322 million which has dropped to Rs. 320 million in FY 2018.
 First Treet Manufacturing Modaraba is a multipurpose, perpetual and multidimensional
Modaraba formed under the Modaraba Companies and Modaraba (Floatation and Control)
Ordinance, 1980 on 27 July 2005 and rules framed there under and is managed by Treet
Holdings Limited (formerly Global Econo Trade Limited), incorporated in Pakistan under
the Companies Ordinance, 1984 and registered with registrar of Modaraba Companies
 Under TMM Treet Corporation have issues sukuks of Rs. 960.508 million for the purpose
to meet the working capital requirement of the Company.
 An investment of Rs. 7.75 billion is injected in Lead acid battery.
Renacon Pharma
 Renacon pharma Limited specializes in the production of all types of formulation of
Hemodialysis Concentrate in powder and solution form for all brands of machines since
1996. Products also include fully automated mixer of powder.
 Treet Corporation owns majority of shares amounting to Rs. 407 million.
 Treet Corporation is going to pool funds from the capital market to acquire land of 15 acres
in Faisalabad industrial estate, increasing the capacity of dialysis products, manufacturing
pharma grade sodium chloride manufacturing blood tubing lines and general medicines.
 Treet Corporation has acquired this company during 2016-17.
 During current year Pharmaceutical products have generated revenues of Rs. 319.441
million which is 3.39 % of total sales.
 Approximately Rs 1.00 billion is deployed in pharmaceutical business.

Venture Capital Business

 In addition to all of these and other businesses that are housed within the company (they
have not even described the company’s foray into higher education), Treet also acts as a
venture capital investor, and has invested in several promising startups.
 In early 2017, Treet Corporation invested $150,000 (Rs16.5 million) in Car Chabi, a
Lahore-based startup which provides a digital key to cars using smartphones.
 Later in the same year, he invested in two more startups. The first of these was Grocer app,
an ecommerce company that seeks to make grocery shopping in Pakistan migrate online.
Sheharyar invested Rs.10 million for 17% of the equity, which valued the company at just
under Rs. 60 million, or 2.5 times their sales.
 The second startup was Data spine, a company that dabbles in the intersection between
cloud computing and artificial intelligence, and is building a platform that can be deployed
as a service on any cloud or on-premises enabling data science and engineering teams to
seamlessly build, deploy, monitor and scale their models and production pipelines using
their existing tools and workflows without the in-house technical debt and operations
overhead. Mr. Sheharyar (Executive Director) teamed up with a friend to invest Rs10
million in Data spine, in exchange for a safe note.

Other Businesses

 Other than aforementioned businesses Treet company has also established a business under
the name of GCL( Global Arts Limited) in order to promote educational institutions,
college of arts, research, sciences, information technology and business administration and
other high schools.
 Then there is society of cultural education registered under societies registration Act XXI
of 1860.
 Treet Corporating has invested Rs, 1.6 billion in educational projects which went
operational in September 2018

Future Projects

Treet Corporation has following project for coming years

1. To establish a medical complex that will provide state of the art health care facilities
that meet the best international standards.
2. Initiating specialized pharmacy chain.
3. Building a multi- purpose commercial complex.
4. Expansion is expected in near future at following sites (i.e.) 12 kanals at Multan road
lahore, (18 kanal) at Raiwind road Lahore and (15 acres) of land at Faisalabad industrial
estates.

Share Holding

Share Holder Percentage


Shares Held by directors 40
Shares held by associates 5
Shares held by foreign companies 4
Shares held by governmental institutions 9
Others 42
Total 100%

SWOT Analysis

Strengths Weaknesses
 Diversity of business.  Negative profit margins.
 Goodwill of the Group  High cost of imported steel used for
 Experienced Senior Management blades.
 Significant Export business  Un operational projects (i.e.) university
 Own Grid Station from past 4 years.
 Implementation of ERP system.  Slow production pace.
 High utility cost due to increasing cost
of diesel, electricity.
 High salaries and wages.

Opportunities Threats
 Exploring opportunities to increase  Currency devaluation
export.  Loss making new projects (i.e.) batteries
 Coming up with innovation in bikes and and bikes.
batteries.  Reducing profit margins of Soap,
 Increasing the product mix of blades and blades, corrugation due to competition.
razor by focusing on increasing demand  Increasing financial charges.
of trimmers.

Financial Analysis

Income statement

Sales
During FY 2018 revenues are heading toward positive trajectory be generating the sales of
Rs. 9.410 billon comparing to Rs. 8.418 billion of FY 2017. These sales are majorly
increased as the sales of blades and razors have gone up export of blades have increased
by Rs. 182.8 million whereas the local sales are escalated to Rs. 3.719 billion as compare
to Rs. 3.178 billion. This increase in sales is attributed to better distribution network and
outperforming the imported blades, mainly their prime buyers are saloons who are very
satisfied by the quality of blade.
Cost of Sales
Cost of sales have increased by 19.5 % as compared to previous FY 17. During FY 18
company has reported CGS of Rs. 7.653 billion, this figure is showing that cost of goods
to sales ratio has also increased from 76% in FY 17 to 81.32% in FY18, this increase is
subjected to the high cost of imported steel that is used in the manufacturing of Blades and
Razors which has grown by Rs. 223 million primarily due to fluctuating exchange rate and
devaluation of Pakistani Rupee whereas the salaries and wages expense is also increased
by Rs. 241.3 million as the bonuses and benefits are given to employees under employee
benefit scheme and defined contribution scheme. The cost of sales is primarily effected
due to the first time incurred raw material cost of Batteries which is Rs. 563.638 million,
as the production level is very low and distribution of the newly produced battery is not
started yet so the company has to bear the fixed cost, but as the distribution will be started
this cost will be reduced as the number of units will be increased.
Cost Analysis of manufacturing Batteries

Detailed Distribution of Revenue


Gross Profit
Company’s gross profit has decreased from Rs. 2.015 billion in FY17 to Rs. 1.757 billion in
FY18. This substantial decrease in gross profit is attributed to increase in CGS by Rs. 1.250
billion on account of the heavy cost incurred on procurement of raw material for batteries and
blades amounting Rs. 563.6 million and Rs.223 million, mainly due to exchange currency
fluctuation and duties incurred on import by the local government, then there is another jump in
salaries expenses of Rs. 241 million. Gross margin has also decreased from 24% (FY 17) to
18.7% (FY 18).

Trend of Gross Margin

Operating Profit/(loss)
The company has booked a loss of Rs. 93.357 million (FY 18) contrary to the profit of Rs. 512
million (FY 17). They major impact is due to aforementioned reasons, whereas the
administration and distribution cost is also increased slightly due to increase in salaries of
distributers to compensate them in order to achieve higher sales next year and advertisement cost
as the batteries are in their introductory phase and advertisement is required to pool the audience
attention.
Net Loss
Treet Corporation has registered a loss and the figure is negative by Rs. 631 million as other
than the reason of battery plant, there is an increase of 95 million in financial cost on account of
the high markup rate paid over short term borrowings and taxes have increased by Rs. 63
million.

Net Profit/(Loss) after Tax

Balance Sheet Analysis


Assets
Current Assets
Current assets has increased by Rs. 1.3 billion in FY 18 as compare to FY 17. This increase is
primarily attributed to the piling stocks in trade that has escalated by Rs. 600 million as the
stocks of raw and packing material for batteries have increased by Rs. 759 million on account of
recently launched batteries, they are trying to clear the pre-existing stocks of imported batteries
at discount, contrary to this, stocks of raw material for blades has reduced by Rs. 208 million as
blade’s inventory has a high turnover rate due to excessive consumption locally as well as
internationally, razors and blades are utilized in huge amount locally and exported in extensive
quantity to foreign countries especially export of disposable razor increased twice during haj
season in Saudi Arabia.
Trades debts have increased by Rs. 148 million as the company has to receive Rs 821 million
from the local debtors and Rs.215 millon from the foreign debtors. Company’s debt aging is
showing that they normally receive debts of Rs. 3.209 million in first thirty day and Rs. 20.27
million of debts with In 90 days. At the end of every month maximum amount of outstanding
debts is Rs. 4.7 million on average, which shows the company is trading over good credit terms.
Company’s receivables and advances has increased by Rs. 555 million over a year as they
have paid Rs. 120 million excess in advance to suppliers comparing to previous year, the
company has given additional Rs. 31 million of housing finance to its employees whereas
custom duty has also increased by Rs. 41 million and sales tax is elevated by Rs. 273 million as
per the policies of new Government Pakistan.
Fixed Assets
Fixed assets of the company has accelerated by Rs 1.9 billion as they have acquired new land in
different areas for their upcoming projects and expansion of existing businesses. They had
acquired 8 kanals of land at Raiwind road lahore, 15 acres of land at Faisalabad industrial estate
and another 8 kanals land at Multan road Lahore.
Liabilities
Current Liabilities
Current liabilities are increased substantially by Rs. 3.6 billion as the company has increased its
short term borrowing in order to run their daily operations smoothly as they have invested a lot
of money tu setup battery manufacturing plant and has booked a loss in FY 2018, so they are in
need to take short term borrowings.
Treat Holding Company  Holding company has arranged facilities
for short term finance from various banks
to meet the working capital requirement
including sharia arrangement to the
extend of Rs. 7.775 million.
 The running finance facility of Rs. 3.975
million that can interchangeably used as
export refinance at the rate of 2.4% to
2.5% per annum.
 Fund based facility aggregating to Rs. 900
million can interchangeably earmarked for
utilization of subsidiary companies
First Treet Modarba This company has availed following facilities.
 Istisna finance facility availed from bank
Islami Pakistan Lmited of Rs. 500 million
at the rate of KIBOR plus 0.5% p.a.
 They have also availed Running
Musharakah of Rs. 752 million from
MCB Islamic Bank Limited at KIBOR
plus 0.4% p.a.
 It includes Istisnah finance from Bank Al-
Habib of Rs 200 million at KIBOR plus
0.35% p.a.
 It includes running musharaka of Rs. 495
million from Faysal Bank limited at the
rate of KIBOR+0.5% p.a.

Fixed Liabilities
Fixed liabilities have decreased by Rs. 150 million as the company has paid its long term
liability of Rs. 56.426 million and redeemable capital has reduced by Rs. 179 million, these are
the certificates that Holding Company has issued 41,822,250 (participation term certificate) at
Rs 30 and proceeds from these certificates were utilized to repay the bank borrowings. Besides
these reduction deferred liabilities and taxation have increased by Rs. 86 million on account of
employee gratuity and superannuation fund.

Owner’s Equity
Equity has reduced by Rs. 381 million majorly due to loss unappropriated profit has decreased
by Rs. 723 million whereas the capital reserves has increased by Rs. 172 million on account of
share premium at the rate of 49.14 which can be utilized only by the company under the
companies Act, 2017. Paid up capital has also increased by Rs. 179 million as ordinary shares
are issued on conversion of PTCs and ordinary shares are fully issued as bonus shared along with
ordinary shares issued against employee share option scheme.