Course: Strategic Financial Analysis and Design

S.No Student Name Student ID

1 Mansoor Arshad 20222-31369
2 Pooja Motiani 20151-19075
3 Mubaraka Quaid Joher 20161-20827
4 Neha Baig 20191-25341

Startup Business Name: Shield Lubricants International

Business Type: Lubricants
Section Code: MWE-14272
Submitted to: Sir Faisal Dhedhi
Submission Date: 08 /20 /2022.

1|Page
 Table of Contents

Acknowledgement......................................................................................................................................3
Introduction................................................................................................................................................4
Swot Analysis..............................................................................................................................................5
Financial Analysis........................................................................................................................................7
Income Statement / Profit & Loss Statement:...........................................................................................8
Balance Sheet:..........................................................................................................................................10
Financial Ratios.........................................................................................................................................11
Interpretations......................................................................................................................................11
Stocks Investments...................................................................................................................................13
HBL Company Overview:......................................................................................................................13
Selection Criteria:..................................................................................................................................13
OGDC Company Overview:...................................................................................................................14
Reasons for Selecting OGDC company stocks:.....................................................................................14
FFCL Company Overview:.....................................................................................................................14
Selection Criteria:..................................................................................................................................14
Weighted Average Calculation:................................................................................................................14
Conclution: ………………………………………………………………………………………………………………………….15

2|Page
Acknowledgement

Being a student of MBA at the Institute of Business Management, Our prime

appreciation goes to our teacher Sir Faisal Dhedhi, for the encouragement,
motivation, and support he provided us with his knowledge on the subject.
Through his guidance, we have gained invaluable experience and insight related
to the subject of Strategic financial analysis and design. We could not have had
a better advisor.

They have given us precious time from their daily tough routine and guided us
throughout this whole period of the Course.

3|Page
Introduction
Shield Lubricants International is a startup company that is destined towards providing a wide
range of Lubricants products for the transport/logistics companies as well as local vendors.

With a total investment of 20 million, debt will be of 5 million and other 15

million to be invested equally by 4 group partners.
All four partners are diversified in separate fields to support this new startup in their own
convenience and knowledge. Sales, Marketing, Finance, Supply and distribution are wisely
divided in all and will be carried out in the most suitable way

We are providing a complete variety of lubricant products in Transport sectors.

 Transport and Logistics Sector

In Transport and logistics Sector our company is providing 20w-50 synthetic oil and 20w-40 oil
made from group 1 and group 2 virgin base oil and the product is blended by Techno Lube
International. These lubricants Products are reliable for transport tankers, Contract carriage
buses, Courier company trucks, Suzuki Ravi, and bikes as well.

Mostly Buses have long routes and the companies are considering to change oil each time while
the trip is over. Each company has its capacity to consume lubricant product

Furthermore, we have carried out an analysis of our business idea and did thorough research in
to analyze and understand it better in terms of financial analysis that can help us towards our
project implementation & application in the future.

Logistics and Transport Sector

Swot Analysis

4|Page
Exceptional product quality is Dependent on market
certification 90001
Capital Intensive
Excellent creditbility
Dependence on Domestic
Company, equipped with its
Strategic Business plan in line market for growth
with augmenting energy supply Under Performance of Oil
in the Country, has developed and Gas fields means
strategies to optimize reserves limited market share
additions and its production Increase in Oil prices
base
Production capability
Evolving industry Strength Weakness

Opportunties Threat
Acquire overseas acreage by Local Market Competition
buying stakes in existing viable Challengers in the Lubricant Sector
producing fields Commodity price risk can result in
E&P opportunities and joint material and adverse movement in
venture collaborations outside the group's financial performance.
Pakistan, which would include Compliance costs could increase and
swap of assets for reserves place further pressure on Company
acquisition with percentage of resources.
working interest in international Exploration and drilling risks
market. Exchange rate and Reserve
Accelerate Production Growth Depletion

SWOT

5|Page
6|Page
Financial Analysis

Financial analysis refers to an assessment of the viability, stability, and profitability of a

business, sub-business, or project. It is being analyzed by carrying out the workup of the ratios,
balance sheet & Income statements, etc. The use of information taken from financial Analysis is
essential to make a proper analysis of the project financial performance.
The following Analysis is given below as to clear the proper picture of the project analysis.

Income Statement / Profit & Loss Statement:

7|Page
The income statement communicates how much revenue the company has generated during a
period and what costs it incurred in connection with generating that revenue. The basic
equation underlying the income statement, ignoring gains and losses, is Revenue minus

Expenses equals Net income.

For the projected three years the Net Profit / Sales that has been derived as 6%, 8% & 11%
accordingly. Which is simultaneously growing higher in percentage, which signals a good
performance of the business. Though the total Operating Expenses are also getting higher
which reflects related to the growing business needs & investments (i.e., details are already
mentioned in Income generation).

8|Page
Balance Sheet:

9|Page
Financial Ratios

Interpretations
For the YEAR - 2022:

OPERATING PROFIT MARGIN: This ratio reflects the percentage of profit a company produces
from its operations before subtracting taxes and interest charges. For the year 2022 the
company has 8% of the revenue left after accounting for operating expenses and cost of sales.

RETURN ON ASSETS: This indicates how profitable a company is in relation to its total assets.
For 2022, the company earned a return of 4% in relation to its total assets.

NET PROFIT MARGIN: The net profit margin measures how much net income or profit is being
generated as a percentage of revenue. For 2022, Net profit is 6% of the revenue.

GROSS PROFIT MARGIN: This ratio indicates how much is left with the company after
accounting for cost of goods it has sold. For 2022, Gross profit makes to 30% of the revenue
earned.

TOTAL ASSETS TURNOVER: This ratio helps understand how effectively company is using its
assets to generate sales. For 2022, sales for the year accounts for 57% of the total assets.

RETURN ON EQUITY: Return on equity signifies how good the company is in generating returns
on the investment it received from its shareholders. For 2022, this company generated 4%
profit of the investments.

10 | P a g e
For the YEAR - 2023:

OPERATING PROFIT MARGIN: This ratio reflects the percentage of profit a company produces
from its operations before subtracting taxes and interest charges. For the year - 2023 the
company has 11% of the revenue left after accounting for operating expenses and cost of sales.

RETURN ON ASSETS: This indicates how profitable a company is in relation to its total assets.
For 2023, the company earned a return of 6% in relation to its total assets.

NET PROFIT MARGIN: The net profit margin measures how much net income or profit is
generated as a percentage of revenue. For 2023, Net profit is 8% of the revenue.

GROSS PROFIT MARGIN: This ratio indicates how much is left with the company after
accounting for cost of goods it has sold. For 2023, Gross profit makes to 30% of the revenue
earned.

TOTAL ASSETS TURNOVER: This ratio helps understand how effectively company is using its
assets to generate sales. For 2023, sales for the year accounts for 68% of the total assets.

RETURN ON EQUITY: Return on equity signifies how good the company is in generating returns
on the investment it received from its shareholders. For 2022, this company generated 6%
profit of the investments.

For the YEAR - 2024:

OPERATING PROFIT MARGIN: This ratio reflects the percentage of profit a company produces
from its operations before subtracting taxes and interest charges. For the year - 2024 the
company has 13% of the revenue left after accounting for operating expenses and cost of sales.

RETURN ON ASSETS: This indicates how profitable a company is in relation to its total assets.
For 2024, the company earned a return of 9% in relation to its total assets.

NET PROFIT MARGIN: The net profit margin measures how much net income or profit is
generated as a percentage of revenue. For 2024, Net profit is 11% of the revenue.

GROSS PROFIT MARGIN: This ratio indicates how much is left with the company after
accounting for cost of goods it has sold. For the year - 2024, Gross profit makes to 30% of the
revenue earned.

TOTAL ASSETS TURNOVER: This ratio helps understand how effectively company is using its
assets to generate sales. For 2024, sales for the year accounts for 80% of the total assets.

11 | P a g e
RETURN ON EQUITY: Return on equity signifies how good the company is in generating returns
on the investment it received from its shareholders. For 2022, this company generated 9%
profit of the investments.

Stocks Investments

Investment Plan B
Total investment in Stock Portfolio
Stock Portfolio 5,000,000
Total 5,000,000

Company Sectors Investment Portfolio % Investment Amount

HBL Banking 40% 2,000,000
OGDC Oil & Gas 30% 1,500,000
FFCL Fertilizer 30% 1,500,000
5,000,000

Returns Calculation:
P1 Po D1 Investment Portfolio
r=(D1+P1-Po)/Po
HBL 176 96.61 10 92%
OGDCL 149.6 85.21 6 82.6%
FFCL 141.9 102.24 17.8 56.20%

HBL Company Overview:

HBL was the first commercial bank to be established in Pakistan in 1947. Over the years, HBL
has grown its branch network and maintained its position as the largest private sector bank
with over 1,700 branches. Habib Bank Limited is incorporated in Pakistan and is engaged in
commercial banking related services in Pakistan and overseas. The Aga Khan Fund for Economic

Development (AKFED), S.A. is the parent company of the Bank and its registered office is in
Geneva, Switzerland.

Selection Criteria:
HBL declared a consolidated profit after tax of Rs. 30.9 billion for the year ended December 31,
2020, double that for the same period last year. The Bank’s earnings per share increased to Rs.
23.5 compared to Rs. 25.6 for 2021.

12 | P a g e
HBL maintained its position as the lead private sector financier of the agriculture sector, with a
30% market share. HBL grew its domestic deposits by a phenomenal Rs. 400 billion, with
market share increasing to over 14%. An increase of over Rs. 100 billion in current and more
than over Rs. 200 billion in savings accounts resulted in strong CA and CASA ratios of 35.0% and
86.6% respectively; HBL’s total deposits increased to Rs. 2.8 trillion.

OGDC Company Overview:

Oil and Gas Development Company Limited, commonly known as OGDCL, is a Pakistani oil and
gas company. It has a primary listing on the Pakistan Stock Exchange, established in 1961 by the
Government of Pakistan, it was turned into a public listed company on 23 October 1997. Today
it is involved in exploring, drilling, refining and selling oil and gas in Pakistan. It is the market
leader in terms of reserves, production and acreage.

Reasons for Selecting OGDC company stocks:

 A good dividend paying stock.
 Production has historically remained adequate
 Expected to post good results in coming quarters.

FFCL Company Overview:

Fauji Fertilizer Company Limited (FFC) is a Pakistani chemical company which produces
chemical fertilizer and is the largest urea manufacturer in Pakistan also. It was incorporated in
1978 as a joint venture between Fauji Foundation (a leading charitable trust in Pakistan) and
Haldor Topsoe of Denmark. The first urea complex was commissioned in 1982 in Sadiqabad,
Punjab. To keep up with the Urea demand in the country, a second plant was built at the same
location.

Selection Criteria:
Fertilizer sector is a safe sector in tough economic times as the demand for fertilizers have
remained firm over the years due to stable demand dynamics. Countries food security heavily
relies on this sector; therefore, we don't expect any abrupt regulatory decision from
government regarding fertilizer sector.

FFC is the largest producer of urea in the country with production of ~2.5mn tons. Company has
decent cost pass on ability and has a stable business. FFC also pays quarterly dividend and have
payout ratio of ~80%.

Weighted Average Calculation:

Wa = 0.75
Ra = 0.06

13 | P a g e
 Wb = 0.25
Rb 0.769

WaRa + WbRb = 0.237061

Conclusion

An important element while taking a right investment decision is to analyze the financial
statements of any company. Financial Statement analysis is a process to select, evaluate and
interpret financial data to assess a company’s past, present and future financial performance.
Through financial analysis, we conclude that the Net Profit / Sales that has been derived as 6%,
followed by 8% in next year. Financial analysis determines shield lubricant international’s health
and stability, providing an understanding of how the company conducts its business. However,
it does has some limitation such as Monetary data alone is contemplated in financial analysis
while non-monetary factors are overlooked and The financial statements are outlined on the
ground of accounting concept, as such, it does not mirror the current position.

14 | P a g e