The directors explained to the shareholders that during the year the company booked a loss of Rs 64.13 million after charging depreciation of Rs 82.24 million. Profit before charging depreciation works out to Rs 18.1 million.
Profitability was adversely impacted because of depressed sale prices due to unfavourable market conditions and fluctuations in the international prices of petro chemical products including chips.
Moreover there was interrupted power supply from its only supplier of electricity S.G. Power which runs on natural gas.
Unfortunately supply of gas was contaminated with oil as a result the generators shut down a number of times in a day.
Due to interrupted power supply the company's entire plant was also shut down, which was cause of great loss to the company.
Moreover due to Gulf war, prices of ships increased and chips are prime raw material of the company. The company had to curtail production instead of closing the factory.
S.G. Fibre, Ltd, was incorporated in the province of Sindh having its registered office B-40, SITE Karachi. It was listed at Karachi Stock Exchange in 1996.
The company is primarily engaged in manufacturing and sale of polyester filament yarn.
The paid-up capital of the company at Rs 150.0 million has remained constant since 1998. Its accumulated deficit has swelled to Rs 137.76 million from Rs 54.99 million in the preceding year.
The company's shareholders' equity in 1998 had amounted to Rs 582.07 million which depleted to Rs 349.64 million.
However the inherent financial strength of the organisation got boost from the long term loan of directors.
This is interest free loan and its repayment term was not decided by the company during the year under review.
This has provided substantial coverage to long term loans from bankers enabling the company to arrive at excellent long term debt to equity ratio.
The "other" long term debts (including the current maturities) reduced substantially to Rs 173.51 million from Rs 216.14 million.
A number of loans got repaid which had included loan of S.G. Power Ltd, (an associated company amounting to Rs 24.2 million), PICIC Commercial Bank (Rs 20.0 million), Habib Bank A.G. Zurich (Rs 68.88 million) and Habib Bank Ltd (Rs 96.06 million).
However, current ratio seems to be much below the benchmark ratio of "one." The directors did clarify about this in their report.
They affirmed that the current ratio was not according to the requirements of Prudential Regulations, as the company paid off its major long term borrowings and liabilities during the year.
They further explained that this has been the management's policy from the beginning to reduce the liability as much as desired in the policy.
The company had borrowed long term loans but in order to get rid of the liability as early as possible the company generated funds from all sources.
Moreover, this was also necessary in order to reduce the financial cost of previous long term debts acquired before the present lower mark up rates available in the financial market.
The management is also negotiating to obtain long term loans on current market ratio of mark-up. At the same time, they believe that as partners of progress, the company will continue to enjoy full confidence, co-operation and support of all concerned and specially banks for the development and progress of the company.
During the year under review the company registered sales at Rs 1.027 billion (2001-02: Rs 1.007 billion exhibiting marginal growth.
But gross profit sharply declined to Rs 84.8 million by 48% from previous year's amount of Rs 163.5 million.
This ultimately led to the loss before taxation at Rs 64.13 million compared to profit before taxation at Rs 12.36 million.
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Performance Statistics (Million Rupees)
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30 June 2003 2002
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Share Capital-Paid-up: 150.00 150.00
Share Premium: 337.40 337.40
Accumulated (Loss): (137.76) (54.99)
Shareholders Equity: 349.64 432.41
L.T Loan from Directors: 100.77 100.77
Other L.T Debts: 77.52 62.05
Deferred Liabilities: 68.45 50.70
Current Liabilities: 683.06 620.87
Tangible Fixed Assets: 907.53 846.13
L.T Deposits: 2.11 2.07
Current Assets: 369.80 418.60
Total Assets: 1,279.44 1,266.80
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Sales, Profit & Pay Out
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Sales: 1,027.36 1,007.25
Gross Profit: 84.78 163.46
Depreciation: (82.24) (83.28)
Operating (Loss)/Profit: (42.17) 48.82
Other Income: 13.85 9.77
Financial (Expenses): (35.04) (45.56)
(Loss)/Profit Before Taxation: (64.13) 12.36
(Loss) After Taxation: (82.77) (30.58)
Accumulated (Loss) B/F: (54.99) (42.21)
(Loss) Per Share (Rs): (5.52) (2.03)
Share Price (Rs) Dated 06.03.2004: 52.80 -
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Financial Ratios
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Price/Earning Ratio: (-) -
Book Value Per Share: 23.31 28.82
Price/Book Value Ratio: 2.26 -
Debt/Equity Ratio: 15:85 10:90
Current Ratio: 0.54 0.67
Asset Turn Over Ratio: 0.80 0.79
Days Receivables: 8 4
Days Inventory: 85 115
Gross Profit Margin (%): 8.25 16.22
Net Profit Margin (%): (8.06) 3.04
R.O.A (%): (6.46) 2.41
R.O.C.E. (%): (13.87) (4.73)
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Plant Capacity & Production (M.T)
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Capacity (based on 75 denier): 10,500 10,500
Actual Production: 9,066 8,772
Utilised Capacity (%): 86.34 83.54
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COMPANY INFORMATION: Chairman: S.M. Ahmed; Chief Executive: Sohail Ahmed; Director: Asim Ahmed; Company Secretary: Muneer Ahmed; Registered Office: B-40, SITE Karachi.
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