Textile Composite: HUSEIN INDUSTRIES LIMITED - Period (9 Months) Ended June 30,2005

During the year under review, on November 5, 2004, the illustrious industrialist and Chairman & Chief Executive of the company, Latif E. Jamal breathed his last. In his place, the Company's Board of Directors appointed Aziz L. Jamal as Chairman & Chief Executive and Miss Hina Abdul Rashid as director to fill the casual vacancy.
During the nine months under review, the company posted sales in terms of value at Rs 908.44 million. In this period gross profit margin percentage was on the higher side but on the expense side finance cost also went up. Consequently the nine months finance cost was much higher than last 12 months finance cost. The high inventory and receivables also locked-in much liquidity. The company posted net profit after taxation at Rs 21.79 million and the directors recommended cash dividend for nine months under review at 10% as against 20% for the past full year.
The new Chairman of the company took several initiatives such as efficient and economic operation, cost control measures, company's diversification policy, focus on local market, strict control and implementation of BMR programme which resulted in improvement of gross profit and operating profit percentages
Husein Industries Limited is a public limited company incorporated in the province of Sindh on May 25, 1953.It is listed on Karachi & Lahore Stock Exchanges and is primarily engaged in manufacturing cotton and polyester yarn, cloth and garments which are marketed within and outside Pakistan.
The address of its registered office/head office/factory is Landhi Industrial and Trading Estate, Karachi and URL of its website is www.husein.com
As regards ownership of its equity, the aggregate shareholding of the company's directors is 26.28 percent of its total 10.626 million paid-up shares of Rs 10 each. The other shareholder Husein Ebrahim Foundation owns 20.57 percent as well as three charitable institutions own 12.93 percent of the company's stock. Its 890 individual investors own 11.47 percent whereas remaining shares are held by other institutions such as insurance companies, modarabas etc.
Husein Industries share value has remained quite high during the last one year as it ranged between Rs 26.80 and Rs 55.95 per share. On 6th March, 2006 the closing price of the share was quoted at Rs 37.60 per share which is nearly 4 times of the par value. The main reason of sharp appreciation of its share price is the investors rising confidence in the viability of this 53 years old enterprise because of its continued profitability and uninterrupted as well as attractive dividend payouts.
For the nine months under review, the directors recommended cash dividend at 10 percent as compared to 20 percent in the preceding year. In between the years 2000 and 2004 the dividend pay out rates had been 20 percent or more.
The long-term strategies of the directors appear to be continued investment in the fixed assets to ensure the competitiveness. In this period under review additional fixed assets amounted to Rs 79.92 million whereas last year the amount was even larger at Rs 135.17 million.
During the period, the company produced yarn at 7.88 million kgs after conversion into 20 count and spun cloth at 17.27 million sq. meters.
The capacity utilisation of yarn decreased to 99.12 percent from the preceding year's 106.4 percent. However the utilised production capacity of fabrics improved to 99.08 percent from 94.39 percent in the previous year. Hence the capacity utilisation came very close to 100 percent, therefore it should have been able to have availed economies of scale.
The manufacturing facilities of yarn are equipped with 50,696 spindles but the Report under review does not inform the number of looms/rotors installed at the weaving unit.
The financial backbone of the company is robust as evident from the absence of long-term debts and current ratio coming very close to benchmark ratio of "one." However the liquidity is tied in higher inventory volume and large receivables amount as can be seen from the Performance Statistics mentioned below.
During nine months under review, the company posted sales in terms of value at Rs 908.44 million. The annualised estimate of sales figures out to Ra 1211 million which is much lower than last 12 months actual audited figure of Rs 1628.59 million
However gross profit margin percentage has moved up at 14.49 percent from 12.63 percent in the previous year.
Finance cost has increase and net profit after taxation has been posted at Rs 21.79 million for nine months under review as against Rs 48.44 million booked last year.

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Performance Statistics                    (Million Rupees)

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Balance sheet                                      -As At-

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                                  June 30     September 30

                                     2005             2004

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Share Capital-Paid-up:             106.26           106.26

Reserves & Surplus:                337.10           336.48

Shareholders Equity:               443.36           442.74

Deferred Liabilities:               29.09            18.81

Current Liabilities & Provisions: 1,354.84        1,231.10

Fixed Assets:                      524.27           490.91

L.T. Investments:                    0.45             0.38

L.T. Deposits:                       5.06             5.09

Current Assets:                  1,297.51         1,196.27

Total Assets:                    1,827.29         1,692.65

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Profit & Loss A/c for:

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                           9 Months Ended       Year Ended

                             June 30 2005     Sept 30 2004

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Sales:                             908.44         1,628.59

Gross Profit:                      131.64           205.76

Finance (Cost):                    (32.39)         (23.43)

Operating Profit:                   35.36            52.51

Other Income:                        1.55             2.42

(Depreciation):                    (48.63)         (57.32)

Profit Before Taxation:             36.91            54.93

Profit After Taxation:              21.79            48.44

Earnings Per Share (Rs):             2.05             4.56

Dividend Cash (%):                  10.00            20.00

Share Price (Rs) on 06/03/06:       37.60                -

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Financial Ratios

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Price/Earning Ratio:                18.34                -

Book Value Per Share:               41.72            41.66

Price/Book Value Ratio:              0.90                -

Debt/Equity Ratio:                  0:100            0:100

Current Ratio:                       0.96             0.97

Asset Turn Over Ratio:               0.50             0.96

Days Receivables:                     246              134

Days Inventory:                       262              117

Gross Profit Margin (%):            14.49            12.63

Net Profit Margin (%):               2.40             2.97

R.O.A. (%):                          1.19             2.86

R.O.C.E (%):                         4.61            10.50

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Plant Capacity & Actual Production   (Figures in Millions)

                            Capacity     Actual Production

                            2005     2004     2005    2004

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Spinning (Kgs 9 Months):    7.95    10.16     7.88   10.81

Capacity Utilization (%):      -        -     9.12  106.40

Weaving (Sq.Mtrs-9Months): 17.43    21.73    17.27   20.51

Capacity Utilization (%):      -        -    99.08   94.39

Number of Spindles Installed:  -        -   50,696  50,696

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