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INTRODUCTION

MILLAT TRACTORS Ltd. MCOM 2nd(M)

Millat Tractors Limited (MTL) is an ISO 9002 certified company for its Assembly Plants (Tractor Assembly, Engine Assembly, Industrial/Agricultural Products), Material Testing and Gauge Control Laboratory. It is Pakistans leading engineering concern in the automobile sector, that manufactures;

Tractors, under licensing agreement with Massey Ferguson, UK (AGCO, USA)

Diesel Engines, as per design of Perkins Engine, UK

Diesel Generating Sets and Prime Movers

Forklift Trucks, under license from Anhui Heli Forklift Trucks China and

A range of Agricultural Implements.

The company is also dedicated to customize its Diesel Generating Sets and Prime Moversas per requirements of its Customers.

Millat Tractors Limited (MTL) was established in 1964 as Rana tractors and equipment limited and changed its name to Millat tractors limited in 1972 at the time of take-over. The main activity of the company is to introduce and market Massey Ferguson (MF) Tractors in Pakistan. An assembly plant was set up in 1967 to assemble tractors imported in semi-knocked down (SKD) condition.

The company was nationalized under Economic Reforms Order in 1972 and started assembling and marketing tractors on behalf of Pakistan Tractor Corporation (PTC) which was formed by the Government for import of tractors in SKD condition. In 1980 the Government decided on indigenization of the tractors and entrusted this task to PTC.

PTC transferred this role of indigenization in 1981 to MTL. This was the turning point in the Companys history and it went about the task methodically and rapidly. The Company undertook this new role with enthusiasm and in the spirit of national development and proved its engineering capabilities by surprising the deletion targets set by the Government. Just in one year's time, the company took a giant step towards self-reliance by setting up the first engine assembly plant in Pakistan.

The Company made a strategic decision right in the beginning to bring those manufacturing facilities in-house for which capabilities did not exist in the country and for parts which required high precision and investment. Therefore, in 1984, sophisticated manufacturing facilities for the machining of intricate components were set up. These were previously not available in Pakistan. Currently, critical components like Engine Blocks, Sump, Transmission Case, Axle Housing, Hydraulic Lift Cover, Front Axle Support and Centre Housing are all being machined most successfully in-house at MTL from locally sourced castings.

At MTL, we firmly believe that producing to International quality standards is the key to our continued success and growth, and our quality control department converts this belief into reality.

In 1992, the company was privatized. The employees joined hands and took over the management by winning an open bid.

To maintain its leadership role in tractor manufacturing in the country, MTL continues to look toward future, to identify and exploit new opportunities and to consolidate existing ones. The Tractor Assembly Plant is part of this philosophy. This plant started its production in 1992. The establishment of this modern plant not only increased production capacity to 16000 tractors per year on a single shift basis, but also provided a quantum jump to the quality of the assembled tractors and pushed MTL into ranks of the major tractor manufacturing companies of the World.

After successful takeover, MTL also acquired the management control of Bolan Castings Limited (a Public Limited Company specializing in intricate automotive castings) in partnership with employees of the company, in 1993. The company has been the regular recipient of the Corporate Excellence Award of Management Association of Pakistan and the Top Companies Award of Karachi Stock Exchange, since early eighties. MTL's Annual Report has been acknowledged as the Best Annual Report by the Institute of Chartered Secretaries and Admin Association of Pakistan for several years.

Future Outlook

The Company looks to the future with optimism and plans to broaden its customer base. Consequently the opportunities are being explored in multi-application of engines and tractors in areas other than farming sectors. Mass Production of Generating Sets was started in 1994, while a 3-Ton Fork Lift Truck branded as Millat, based on TCM technology was launched in the year 2002.

The company has established a wholly new company named Millat Industrial Products (Pvt) Limited to manufacture quality automotive batteries.

It is mission of the company to provide total satisfaction to the customers. The employees of the company ably supported by our engineers continue to work with full vigor to further enhance products, performance and reliability.

Millat is a global group of companies, recognized for a range of quality products with innovative design capabilities.

Millat to be market leader in agricultural tractors and machinery, building Companys image through innovation and competitiveness, grow by expanding market and investing into group companies, ensuring satisfaction to customers and stakeholders and to fulfill social obligations.

Our customers as our first priority

Profitability for the prosperity of our stakeholders that allows us to constantly invest, improve and succeed

Corporate social responsibilities to enrich the lives of community where we operate

Recognition and reward for the talented and high performing employees

Excellence in every thing we do

Integrity in all our dealings

Respect for our customers and each other

BOARD OF DIRECTORS

Chairman

Sikandar Mustafa Khan Cheif Executive

Sohail Bashir Rana M.C.B Nominee Latif Khalid Hashmi

Laeeq Uddin Ansari

Mian Muhammad Saleem

Bashir Ahmad Chaudhry

Rana Muhammad Saddique

Syed Kokub Mohyuddin

Mian Nawaz Tishna

S.M. Tanveer

Mian Muhammad Saleem

Company Secretary

Mian Muhammad saleem

Chief financial officerJaved munir

Auditors

M/s, ford Rhodes sidat hyder & co.

chartered accountant

legal advisors

Walker martineau saleem

Advocates & legal consultants

Altaf & Altaf

Advocates

Bankers

ABN Amro Bank

Bank Alfalah Ltd.

Habib Bank Ltd.

MCB Bank Ltd.

Standard Chartered Bank

Meezan Bank Ltd.

United Bank Ltd.

Registered office & plant

Sheikhupura Road, Distt. Sheikhupura

Tel; 042-7911021-25, 111-200-786

Fax; 042-7924166, 7925835

Website; www.millat.com.pkE-mail; [email protected]

COMMITIES OF BOARD OF DIRECTORS & MANAGEMENT

Board of Directors committee

Audit committeeLatif Khalid Hashmi Chairman

Mr. M. Nawaz Tishna Member

Mr. Mazhar Uddin Ansari Member

Mian Muhammad Saleem Member

Mr. S. M. Tanvir Member

Management Committees

Business strategy committeeMr. Sikandar Mustafa khan Chairman

Mr. Sohail Bashir Rana Member

Mr. Latif Khalid Hashmi Member

Mr. Laeeq Uddin Ansari Member

Mian Muhammad Saleem MemberRemuneration Committee

Mr. Sikandar Mustafa khan Chairman

Mr. Sohail Bashir Rana Member

Mr. Latif Khalid Hashmi Member

Mr. Javed munir Member

Systems & technology CommitteeMr. Sohail Bashir Rana Chairman

Mr. shaukat ali sheikh Member

Mr. Javed munir Member

Dr. Syed Amer Ali Member

Mr. Farough Iqbal Member

Environment Committee

Mr. Sohail Bashir Rana Chairman

Mr. Mubashar Iqbal Member

Mr. Nasim A. Sindhu Member

Mr. Muhammad Ali Member

Safety committee

Mr. Nasim A. Sindhu ChairmanMr. Ahsan Imran MemberMr. Shafaat Ahmad MemberMr. Muhammad Akbar MemberMr. Muhammad Ali Member

Risk Management CommitteeMr. Sikandar Mustafa khan Chairman

Mr. Sohail Bashir Rana Member

Mr. Latif Khalid Hashmi Member

Mr. Laeeq Uddin Ansari Member

Mian Muhammad Saleem MemberManagement co-ordination committee

Mr. Sohail Bashir Rana ChairmanMr. Shaukat ali sheikh Member

Dr. Syed Amer Ali Member

Mr. Mubashar Iqbal Member

Mr. Javed munir Member

Mr. M. Aslam khokhar MemberMr. Muhammad Akram Member

Budget CommitteeMr. Sohail Bashir Rana ChairmanDr. Syed Amer Ali Member

Mr. Mubashar Iqbal Member

Mr. Javed munir Member

Mr. Muhammad Akram Member

Human Resource Committee

Mr. Ahsan Imran ChairmanMr. Shafaat Ahmad Member

Mr. Zulfiqar Elahi Member

Syed Azhar Hussain Member

PRODUCTS

PRODUCTS ARE AS FOLLOW: 1. TRACTORS

2. Industrial Products

3. Agricultural Implements

1.TRACTORS

A wide range of Massey Ferguson Tractors from 50 hp to 85 hp is available to cater to the needs of farmers. These Tractors can be procured against Cash, as well as through Bank Financing Millat Tractors Limited (MTL) offers five models that range from 50 horse power(hp) to 85 horse power. All models are meant to fulfill specific requirements of our valued customers.MF240

Most economical in 50 HP range

Rugged, maneuverable and compact

Easy accessability to service points

Ideal, versatile, all round tractor

Spring suspension deluxe Seat

Availability of parts and service facilities at your doorstep

MF260 High performance, fuel efficient, Perkins Turbocharged Engine

Less Smoke emmission due to better fuel burning

Oil cooler added for effective cooling

High PTO power for efficient operation of Tube Wells, Rotavators, Threshers etc.

Robust Straddle Rear Axle

Efficient oil immersed Disc Brakes

Spring suspension deluxe seat

MF375S Environment friendly, High performance Perkins 4.41 Engine

Oil Cooler for effective cooling

Gaseous Emmisions under ECE R49

Robust Straddle Rear Axle

Efficient oil-Immersed Disc Brakes

Heavy-Duty Front Support

Spring Suspension Deluxe Seat

Easy Accessibility to Service points

Heavy-Duty Spindle and Steering Arm

Specious Operator's Area

New Sheet Metal Style

MF385 HighPerformance 4.41, low noise Engine

Gaseous Emmissions under ECE R49

Reduced Smoke Level

Oil Cooler added for effective cooling

Hydrostatic Power Steering

Efficient Oil Immersed Disc Brake System

Spring Suspension Deluxe Seat

MF385 4WD EDGE OVER 2WD

Traction (30% More)

Drawbar Power (16% More)

Drawbar Pull (34% More)

Tyre Wear (15% less)

Fuel Efficiency (15% More)

Field Work Speed (13-20% More)

2.Industrial Products Industrial Products of Millat Tractors Limited (Millat) include:

I. Millat Generating Sets

II. Massey Generating Sets

III. Fork Lift Truck

IV. Prime Movers

(I).Millat Generating Sets

MPG-25

1. 15 kVA Manual

2. 27 kVA Manual

MPG-42

40kVA Manual

(II).MTL Generators Massey GeneratorsMODELS

1. 930-1000E: 1000kVA / 800kW

2. 930-1000: 1000kVA / 800kW

3. 930-100E: 100kVA / 80kW

4. 930-100: 100kVA / 80kW

5. 930-1100E: 1100kVA / 880kW

6. 930-110E: 110kVA / 88kW

7. 930-1250: 1250kVA / 1000kW

8. 930-135: 135kVA / 108kW

9. 930-1375E: 1375kVA / 1100kW

10. 930-1500: 1500kVA / 1200kW

11. 930-150E: 150kVA / 120kW

12. 930-160H: 160kVA / 128kW

13. 930-1650E: 1650kVA / 1320kW

14. 930-1700: 1700kVA / 1360kW

15. 930-1750: 1750kVA / 1400kW

16. 930-175HE: 175kVA / 140kW

17. 930-1825: 1825kVA / 1460kW

18. 930-1875E: 1875kVA / 1500kW

19. 930-1925E: 1925kVA / 1540kW

20. 930-2000E: 2000kVA / 1600kW

21. 930-2000: 2000kVA / 1600kW

22. 930-200H: 200kVA / 160kW

23. 930-2200E: 2200kVA / 1760kW

24. 930-220HE: 220kVA / 176kW

25. 930-230H: 230kVA / 184kW

26. 930-250HE: 250kVA / 200kW

27. 930-250H: 250kVA / 200kW

28. 930-275HE: 275kVA / 220kW

29. 930-300: 300kVA / 240kW

30. 930-330E: 330kVA / 264kW

31. 930-350: 350kVA / 280kW

32. 930-380E: 380kVA / 304kW

33. 930-380: 380kVA / 304kW

34. 930-425E: 425kVA / 340kW

35. 930-450: 450kVA / 360kW

36. 930-500E: 500kVA / 400kW

37. 930-500: 500kVA / 400kW

38. 930-550E: 550kVA / 440kW

39. 930-626E: 60 Hz only

40. 930-188HE: 60 Hz only

41. 930-600: 600kVA / 480kW

42. 930-60P1: 60kVA / 48kW

43. 930-650: 650kVA / 520kW

44. 930-65E1: 65kVA / 52kW

45. 930-660E: 660kVA / 528kW

46. 930-715E: 715kVA / 572kW

47. 930-725: 725kVA / 580kW

48. 930-75P1: 75kVA / 60Kw

49. 930-800E: 800kVA / 640kW

50. 930-800: 800kVA / 640kW

51. 930-83E1: 82.5kVA / 66kW

52. 930-880E: 880kVA / 704kW

53. 930-90: 90kVA / 72kW

54. 930-910: 910kVA / 728kW

(III). Forklift Truck FD30M1 3000(KG)

FEATURES Low cost of ownersship, low cost of operation and high quality

Simple and conveniently placed controls.

Positive feel of the hoist and tilt function for precise load control

Millat/Perkins D3.152 engine with low maintenance and nationwide availability of parts

Complete after sales service and support availability

(IV).Prime MoversFEATURES Total power package easy to install & ready to operate reducing on-site installation and labour cost.

Long life & fuel efficient.

An extensive after-sale service backup through Millat nationwide dealer's network.

Assured ready avilability of full range of spare parts.

Realiability on Millat/Perkins Engine reduces down-time and operational cost.

3.Agricultural ImplementsThe most Impotant plough for primary tillage in canal irrigated or heavy rain areas where too much weeds grow. The objective for ploughing with a Mould Board is to completely invert and pulverize the soil, up-root all weeds, trash and crop residues and bury them under the soil. The shape of mould Board is designed to cut down the soil and invert it to right side, completely burying the undesired growth which is subsequently turned into manure after decomposition.

Millat Tractors Limited (MTL) deals in different types of Agricultural Implements, which give MTL a unique position in agricultural driven market place.

The Agricultural Implements include different types of ploughs, farm trailers, lawn mowers, jib cranes, agricultural loader

Chisel Plough [MT-01] Disc Plough [MT-765] Mould Board Plough [MT-02(M)]

Tine Tillers [MT-38/13 tines] Front Blade [MF-08/1] for MF240/MF260

JIB CRANE [MT-16]

MASCHIO LAWN MOVER

FRONT BLADE [MT-08/2]

Agriculture Loader [MT-11/1 (for MF 240)]

Offset Disc Harrow Model [MT-03 (M)]

The ratios which measure the short term solvency or financial position of a firm are called liquidity ratios. These ratios are calculated to comment upon the short term paying capacity of a concern or the firms ability to meet its current obligations.These ratios are;

1. Current Ratio

2. Quick Ratio

3. Absolute Quick Ratio

Current Ratio:

A measure of liquidity calculated by dividing the firms current assets by its current liabilities.

The standard of Current Ratio is 2:1.Current Ratio= Current asset Current liabilities

Quick Ratio:

A measure of liquidity calculated by dividing the firms current assets minus inventory by its current liability, it is also known as Liquid Ratio and Acid-Test Ratio.

The standard of Quick Ratio is 1:1.Quick Ratio= Quick assets Current liabilities

Absolute Quick Ratio:

It is ratio of Absolute Liquid Asset to Current Liability in the computation of this ratio, only the Absolute Liquid Assets are compared with Liquid Liabilities. The Absolute Liquid Assets are Cash, Bank and Marketable Securities. A standard 0.5:1 Absolute Liquid Ratio is considered an acceptable norm.Absolute Quick Ratio= Absolute liquid assets Current liabilities

RATIOS20062007RESULTREASONS

Current Ratio1.41.6FavorableBecause of more decrease in current liabilities as compared to decrease in current assets

Quick Ratio0.91.1FavorableBecause of stock of trade decreased

Absolute Quick Ratio0.740.79FavorableBecause of more decrease in liabilities as compared in decease in absolute quick assets.

RATIOSITEM%CHANGE

Current ratioTrade & other payables31.9%

Quick ratioStock in trade18.9%

Comments:Result:The overall liquidity of the firm is seems to be a good shape. Its Current Ratio, Quick Ratio and Absolute Quick Ratio are good relative to the previous year. The company is capable to meet short term obligations.

Working capital is being properly utilized.

Reasons:In 2007, current liabilities as well as current assets decreased but there is heavy decrease in current liabilities as compared to current assets.

Effects:

The liquidity ratios of Millat Tractors are viewed as good leading indicators of cash flow problems. The company is in a business with a relatively predictable annual cash flow so its current ratio and quick ratio are acceptable.

Activity Ratios are calculated to measure the efficiency with which resources of the firm have been employed. These ratio are also called Turnover Ratios because they indicate the speed with which Assets are being turned aver into sales.

In short the effectiveness of management towards utilization of resources to generate sales.

These ratios are;

1. Inventory Turnover

2. Average Collection Period

3. Average Payment Period

4. Total Asset Turnover Ratio

5. Working Capital Turnover

Inventory Turnover:Inventory turnover also known as stock turnover is the relationship between Cost of Gods Sold during a particular period of time and cost of Average Inventory during that period. It is expressed in number of times. This ratio indicated the number of times the stock has been turned over during the period and evaluated the efficiency with which the firm is able to mange its inventory. This ratio indicates whether investment in stock is with in proper limit or not.Inventory Turnover ratio= Cost of sales Average inventoryAverage Collection Period:

The debtor turnover ratio when calculated in terms of days known as Average Collection Period or debtor collection period ratio. The average collection period ratio represents the average number of days for which a firm has to wait before its debtors are converted into cash.Average collection period= accounts receivable *365 Annual salesAverage Payment Period:

The ratio gives the average credit period enjoyed from the creditor. It represents the number of days taken by the firm to pay its creditor.

Average payment period= accounts payable * 365

Annual purchases

Total Asset Turnover Ratio:The total asset turnover indicated the efficiency with which the firm uses its assets to generate sales.

Total Asset Turnover Ratio= Cost of sales Total assets

RATIOS20062007RESULTREASONS

Inventory Turnover

3.695.3FavorableBecause of increase in cost of sales

Average Collection Period

8.211.3UnfavorableBecause of increase in A/R

Average Payment Period

1735910293FavorableBecause of decrease in A/P

Total Asset Turnover Ratio

1.291.71FavorableBecause of increase in sales and decrease in assets

RATIOSITEM%CHANGE

Inventory Turnover

Cost of sales16.7%

Average Collection Period

creditors88.8%

Average Payment Period

debtors84.2%

Comments:Result:

The companys activity ratios appear in a good shape. And the ratio stands favorable for Millat tractors company. Reasons:Its inventory turnover seems to have improved. In 2007, it has low level of stock as compared to pervious year which causes of good inventory turnover. The firm is facing difficulty in receiving its debts as compared to previous year, so this could adversely affect the firms credit standing. Its collection period is poor. Its total assets decreased which results in increase its sales so its total assets turnover is Favorable. Effects:The overall activity position of the company is Good and so we can say that there is a speedy disposable of finished goods stock; effective use of working capital, efficient operations that have a positive and healthy impact on the success and the profitability of the Millat tractors.

These ratios measure the results of business operation or overall performance and effectiveness of the firms.

1. Gross Profit Margin.

2. Operating Profit Margin.

3. Net Profit Margin.

4. Earning Per Share.

5. Return on Assets.

6. Return on Equity.

Gross profit margin:Gross profit margin is the ratio of gross profit to net sales expressed as a percentage. It expresses the relationship between gross profit and sales. Gross profit margin reflects its products .there is no standard gross profit ratio for evaluation it may vary from business to business.Gross profit ratio= Gross profit Net sales

Operating Profit Margin:Operating profit margin is the ratio of operating profit to net sales expressed as a percentage. It expressed the relationship between operating profit and sales. Operating profit is pure profit because they measures only the profits earned on operations and ignore interests, taxes and preferred stock dividend. A high operating profit is preferred.Operating Profit ratio= Operating Profit Net sales

Net Profit Margins:This is the ratio of net profit (after taxes) to net sales. It is also expressed as percentage. This is used to measure the overall profitability and have it is very useful to proprietors. This ratio is very useful as if the net profit is not sufficient, the firm shall not be able to achieve a satisfactory return on its investment. This ratio also indicates the firms capacity to face adverse economic conditions such as price competition, law demand etc. obviously, higher the ratio the better is the profitability. Net Profit ratio= Net Profit Net sales

Earning Per Share:Earning per share is a small variation of return on equity capital and is calculated y dividing the net profit after taxes and prefer dividend by the total no. of equity shares. It is a good measure of earning.Earning Per Share=

Earning available for common stockholders

No of sharesReturn on Assets:The return on assets, often called the return on investment measure the overall effectiveness of management in generating profits with its available assets. The higher the firms return on total assets, the better.Return on Assets=

Earning available for common stockholders

Total assets

Return on Equity:Return on equity measures the return earned on the common stock holders investment in the firm. Generally, the higher this return, the better off is the owners. In the real sense, the common stock holders are the real owner of the company. They assume the highest risk in the company. This ratio is more meaningful to the equity shareholders who are interested to know the profit earned by the company and those profits which can be made available to pay dividend to them.

Return on Equity=

Earning available for common stockholders

Common stock equity

RATIOS20062007RESULTREASONS

Gross Profit Margin13.2%10.3%UnfavorableBecause of high sales

Operating Profit Margin9.52%5.42%UnfavorableBecause of high sales

Net Profit Margin7.47%5.94%UnfavorableBecause of high sales

Earning Per Share39.4235.17UnfavorableDue to decrease in earning available for common stock holders

Return on Assets9.6%10.2%FavorableDue to decrease in total assets

Return on Equity30.4%24.2%UnfavorableDue to increase in equity

RATIOSITEM%CHANGE

Gross Profit Margin Gross profit11.57%

Operating Profit Margin Operating profit35.71%

Net Profit Margin Net profit10.1%

Earning Per Share EPS10.76%

Return on AssetsTotal assets15.05%

Return on EquityGeneral reserve24.12%

Comments:Results:Millat tractors profitability is not as good as compare to previous year.So in this year, it is unfavorable for company.

Reasons:Its Gross Profit, Operating Profit and Net Profit is not better than the previous year and its sales increased but decrease in Gross Profit, Operating Profit and Net Profit adversely affects profitability ratios of the firm.EPS is also not better in this year due to decrease in earning available for common stock holders. But its return on assets is quite similar in this year. Shareholders equity remained low as compare to previous year which affects the return on equity; it shows that firm is not performing well.Effects:In profitability, the efficiency of business is measured. The profitability of Millat tractors Limited is low because of:

A low profitability arises due to lack of control over the expenses.

There is increase in sale without corresponding increase in profits.

There is poor impact of profitability because the bankers, financial institutions and other creditors look at the profitability ratios as an indicator, whether or not the firm earns substantially more than it pays interest for the use of borrowed funds and whether the ultimate repayment of their debt appears reasonably certain.

The debt position of a firm indicates the amount of other peoples money being used to generate profits.

1. Debt Ratio.

2. Time Interest Earned Ratio.

3. Fixed Payment Coverage Ratio.

Debt Ratio:It measure the proportion of total assets financed by the firms creditors the higher the ratio, the greater the amount of other peoples money being used to generate profit and the more financial leverage it has.

Debt Ratio=

Total liabilities

Total assets

Time Interest Earned Ratio:It measures the firms ability to make contractual interest payments. This ratio relates the fixed interest changes to the income earned by the business. It indicates whether the business has earned sufficient profit to pay periodically the interest charges. It is an index of the financial strength of an enterprise. The higher its value, the better able the firm is to fulfill its interest obligations. It is also known as interest coverage ratio.Time Interest Earned Ratio=

Earning before interest and tax

Interest

Fixed Payment Coverage Ratio:It measures the firms ability to meet all fixed payment obligation, such as loan interest and principal, lease payment and preferred stock dividends. Like the time interest earned ratio, the fixed payment coverage ratio measures risk, the lower the ratio the greater the risk to both lenders and owners; the greater the ratio, the lower the risk.

Fixed Payment Coverage Ratio=

Earning before interest and tax +lease payment

Interest+lease payment+ [(prin+pref.div)*[1/1-T)]

RATIOS20062007RESULTREASONS

Debt Ratio0.670.56FavorableBecause of heavy decrease in total liabilities,

Time Interest Earned Ratio162.2532.1UnfavorableBecause it paid heavy interest in this year

RATIOSITEM%CHANGE

Debt RatioTrade & other payables31.9%

Time Interest Earned RatioFinance cost311%

Comments:Result:

The overall solvency ratio of company is not favorable for the firm.

Reason:The debt ratio of the company is indicating favorable position as compared to the previous year, companys liabilities decreased more as compare to the assets which is good. While the companys net profit has decreased as compare to the previous year but company paid more interest in 2007. Time Interest Earned Ratio is less than previous year which shows the firms less ability to pay its contractual interest payments.Effects:The firms ability to pay its contractual interest payments became less in this year.In short, it appears that the companys ability to pay debts in 2007 does not compensate for its increased degree of indebtedness.

It relates a firms market value as measured by its current share price to certain accounting values. These ratios give insight into how well invertors in the market place feel the firm are doing in term of risk and return.

The popular market ratios are:

1. Price Earning Ratio.

2. Market Book Ratio.

3. Book Value per Share.

4. Dividend Yield Ratio

Price Earning Ratio:Price Earning Ratio is the ratio between market price of share and Earning per Share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by investors to decide whether or not to buy shares in a particular company. Generally the higher the Price Earning Ratio the better it is.

This ratio is calculated on daily basis.

Price Earning Ratio=

Market price per share of common stockholder

Earning per share

Market Book Ratio:Provide an assessment of how investors view the firms performance. Book Value per Share: This ratio shows the strength of the share of a company in the business. It is the true indicator to show the strength of share.

Market Book Ratio=

Market price per share of common stockholder

Book value per share of common stockholder

RATIOS20062007RESULTREASONS

Price Earning Ratio.

8.269.75FavorableBecause of decrease in EPS

Market Book Ratio2.122.38FavorableDue to decrease in book value

Book Value per Share.

153.2143.9UnfavorableBecause of decrease in common stock equity

RATIOSITEM%CHANGE

Price Earning Ratio.

Earning available for common stockholders10.75%

Market Book RatioBook value6.07%

Comments:Results:

The market ratios of Millat tractors seem to be satisfied as compared to 2006. Reasons:

The price Earning ratio increased because decrease in EPS in 2007.The book value decreased in 2007 but due to increase in market price of the share of the firm, the companys market book ratio become favorable.Effects:Millats market value ratios show that:

The higher P/E ratio indicates that investors have greater confidence in the firm in 2007. This ratio suggests that firms risk has declined.

The firms M/B ratio implies that investors are optimistic about the firms future performance.

In short the firm appears to be growing.

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