The company posted profit before taxation at Rs 49.32 million (FY05: Rs 22.02 million). After providing for current taxation at Rs 8.57 million and for deferred tax at Rs 12.09 million, the profit after tax amounted to Rs 28.66 million.
The company's directors in their report stated that under the circumstances, the results for the year 2006 were satisfactory. They also pointed out that interest rate was quite high. In order to conserve cash, they recommended issue of bonus stock dividend. The issue of bonus shares was @10% ie 1.00 fully paid share of Rs 10 for every 10 shares held on October 23, 2006. In order to reduce costs and improve profitability, the company inducted new machinery.
One sizing machine, three Dual Fuel Conversion Kits and gas operated generating set should have already come under operation by this time. The directors also informed that during the year under review the company incurred capital expenditure of Rs 16.83 million for roads and building, Rs 54.61 million for machinery and Rs 1.65 million for factory equipment and electric installation as they consider BMR absolutely necessary for survival.
Prosperity Weaving Mills Ltd is a textile weaving unit of Tehsil and District Sheikhupura and a constituent member of Nagina Group of Companies. The company was incorporated in the province of Punjab in November 1991, having its registered office located in Nagina House Gulberg III, Lahore. The company is currently listed on Karachi & Lahore stock exchanges. The company is primarily engaged in the manufacturing and sale of cloth.
Nagina Group of Companies is renowned industrial group whose some other members are Ellcot Spinning Mills Ltd and Nagina Cotton Mills Ltd. As regards ownership of Prosperity Weaving Mills Ltd, the company's directors and members of their family owned 53.33% of the company's stock on June 30, 2006. Its associated companies which include aforesaid two companies as well as ARH (Pvt) Ltd and Monell (Pvt) Ltd held 34.46% of its stock. Individual shareholders from the general public held 4.51% of its stock and remaining 7.7% stocks were owned by other institutional investors among whom were mostly financial institutions.
Prosperity Weaving Mills Ltd had obtained Moody International Certification of ISO 9001-2000 in April 2006, which is valid until March 2009. The certification's scope is as manufacturer/exporter of fabrics and certifies that the Quality Management Systems of the company were assessed and comply with the requirements of said ISO (International Standard Organisation).
The company's share price has invariably remained above its par value. During the last 52 weeks the market value of its share remained between Rs 10 and Rs 14.75 per share.
Source: Daily Business Recorder March 30, 2007.
Recently the closing price of the share was recorded at Rs 11.45 per share carrying 14.5% premium over the par value. The comparative figures in the accounts under review of the company for the previous financial year ended June 30, 2005 (FY05) are for nine months while those of the financial year 2006 (FY06) are for 12 months, hence not comparable. However, for the purpose of having a feel of its performance an attempt has been made in this 'Brief' to figure out annualized estimates, wherever absolutely necessary.
During FY06 the company produced 44.32 million linear meters of Grey fabrics of various widths and densities converted into statistical standard 50 picks, its production works out to 58.23 million linear meters. The capacity utilization was 75.5% in FY06 as compared to 80% in FY07. This shows wide gap between the capacity and actual production and this difference has been attributed to, "in normal course of business." Any way, the goal of achieving economies of scale remained illusive.
During the financial year under review (FY06), the company generated net sales at Rs 2.674 billion as against its annualized estimate of Rs 2.285 billion (actual Rs 1.713 billion) in FY05 showing 17% increase YoY. On a 10-year time scale, its Gross Profit as a percentage of sale was 7.55% (FY05: 6.83%) while highest ratio of 14.48% was achieved in FY1997 and FY2000.
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Performance Statistics (Million Rupees)
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30th June 2006 2005
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Share Capital-Paid-up: 168.00 168.00
Reserves & Surplus: 182.30 153.64
Shareholders' Equity: 350.30 321.64
Surplus on Rev. of F/Assets: 43.71 -
L.T. Financing from directors: 60.00 -
Other L.T. Debts: 527.20 635.56
Deferred Liabilities: 29.45 15.69
Current Liabilities: 412.25 494.33
Fixed Assets Tangible: 998.23 994.88
L.T. Deposits: 0.43 0.43
Current Assets: 424.25 471.91
Total Assets: 1,422.91 1,467.22
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Profit & Loss A/c:
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For Year For 9 Months
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Ended June 30 Ended June 30
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2006 2005
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Sales-Net: 2,673.82 1,713.52
Gross Profit: 201.80 117.01
Other Operating Income: 2.81 1.91
Finance (Cost): 96.79 48.69
(Depreciation): 102.25 65.39
Profit Before Tax: 49.32 22.02
Profit After Tax: 28.66 13.70
Earnings Per Share (Rs): 1.71 0.82
Dividend Bonus Stock (%): 10.00 -
Share Price (Rs)
on 29-03-07: 11.45 -
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Financial Ratios:
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Price/Earning Ratio: 6.70 -
Book Value Per Share: 20.85 19.15
Price/Book Value Ratio: 0.55 -
Debt/Equity Ratio: 54:46 66:37
Current Ratio: 1.03 0.95
Asset Turn Over Ratio: 1.88 1.17
Days Receivables: 17 29
Days Inventory: 25 30
Gross Profit Margin (%): 7.55 6.83
Net Profit Margin (%): 1.07 0.80
R.O.A. (%): 2.01 0.93
R.O.C.E. (%): 2.84 1.41
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Plant Capacity & Actual Production
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Weaving Unit at 50 picks fabrics (Million Meters)
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Installed Capacity: 58.71 38.51
Actual Production: 44.32 30.68
Capacity Utilization (%): 75.49 79.67
Number of Air Jet
Looms Installed: 324 324
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NOTE: : "The difference between installed capacity and actual production is in normal course of business."
COMPANY INFORMATION: : Chairman: Shaikh Enam Elahi; Chief Executive Officer/Mg. Director: Shaukat Ellahi Shaikh; Director: S.M. Yusuf; Chief Financial Officer (CFO): Muhammad Tariq Sheikh; Corporate Secretary: Shahid Yaqoob; Registered Office: Nagina House, M.M. Alam Road, Gulberg-III, Lahore-54660. Mills at: Mouza Ghazi Androon Sheikhupura, Sharaqpur Road Tehsil and District Sheikhupura.
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