During the year under review, the company has turned the table by posting profit, after several years of losses. The profitability is mainly attributed to high production efficiencies and aggressive marketing efforts.
The continued profitability appears to be sustainable in view of a number of strategic steps taken by the management. On top of all activities the company implemented a Rs 261.55 million BMR programme which included increasing in loom capacity, balancing its back process/utility machinery commissioning gas fired power generator, import of 20 narrow looms and 40 air jet looms.
As regards competition, the Company directors stated that the shift of home textile business mainly China and India largely affected the wider width weaving industry in Pakistan. They reaffirmed that marketing strategy of the company is quite flexible and has made successful switch to apparel business. The company has made apparel customer base in Europe.
Yousuf Weaving Mills Limited was incorporated on January 17, 1988 as a public limited company and listed on Karachi Stock Exchange in the following year 1989. Its shares are also quoted on Lahore Stock Exchange and during the last 52 weeks market value of the company's shares remained below par value between Rs 4.50 and Rs 8.95 per 10-rupee share. On April 16, 2007, the closing price value of the share was recorded at Rs 5 per share.
The company is engaged in the business of textile weaving, spinning and sale of processed fabric and home textile. Its registered office is situated in Chakwal, weaving unit at Bhai Pheru and spinning unit at Patoki, all these locations are in the province of Punjab.
The company's directors emphasized that the implementation of their BMR programme, almost doubled the production capacity during the year. Resultantly in the weaving unit the number of looms increased to 104 with the addition of 50 new looms during the year.
The captive gas fired generator also started power generation without interruption. But according to them the increase in the gas charges has almost made its benefit, to zero. Total cost of the BMR comes to Rs 261.55 million and the sponsors have made significant contribution by injecting Rs 102 million towards the capital outlay of BMR. The company obtained demand finance of Rs 96.73 million and the balance amount came from the company's internal resources.
In order to achieve economies of scale its management decided to make additions of 40 state of the art air jet looms. The shipment of 20 wider width Picanol Air jet looms had arrived and commercial production was planned prior to October 2006.
Realizing the need of change in the market preference, the company also decided to add 20 narrow width looms to meet the growing demand of garment/apparel manufacturers both in the domestic as well as export market. The import of this machinery was scheduled by the end of financial year under review. Additionally, the company also established letters of credit valuing Rs 20 million to balance its back process/utility machinery. The directors said that the commercial production from 20 narrow looms will lead to reduction in operational overhead and thereby improve profitability.
During FY06, the financial year under review encompassing 12 months, the company's net sales amounted to Rs 1.173 billion whereas in FY05, the preceding financial year of nine months, net sales amounted to Rs 0.885 billion. Export sales comprised 19.3% and local sales were 79.5% of gross sales. Export sales were generated from export of grey cloth, processed cloth/made up.
Yarn sales comprised nearly 40% of gross sales of the company. Its spinning unit consists of 23,616 spindles and its annual production capacity has been rated at 9.36 million kgs of yarn. In FY06 the company produced 8.810 million kgs of yarn attaining 73% capacity utilization.
The company was able to achieve profitability and earned an after tax profit of Rs 31.66 million as compared to after tax loss of Rs 111.50 million in the previous period of nine months. After a lapse of several years, the directors announced cash divided at 5%.
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Performance Statistics (Million Rupees)
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31st December 2006 2005
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Shares Capital-Paid-up: 400.00 181.68
Accumulated (Loss): (230.98) (262.64)
Shareholders' Equity: 169.02 (80.96)
L.T. Debts: 450.95 475.89
Deferred Liabilities: 11.33 9.77
Current Liabilities: 325.43 316.62
Fixed Assets Tangible: 637.87 420.68
Deferred Tax Asset-Net: 0.97 1.79
L.T. Loans: 4.61 4.57
L.T. Deposits: 4.80 4.44
Current Assets: 308.48 289.84
Total Assets: 956.73 721.32
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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: 1,172.80 884.98
Gross Profit/(Loss): 124.80 (2.26)
Operating Profit/(Loss): 65.81 (62.78)
Other Operating Income: 1.51 6.30
Finance (Cost): (22.62) (27.41)
(Depreciation): (49.76) (33.94)
Profit/(Loss) Before Taxation: 39.51 (92.40)
Profit/(Loss) After Taxation: 31.66 (111.50)
Earnings (Loss) Per Share (Rs): 1.03 (6.14)
Dividend Cash (%): 5.00 Nil
Share Price (Rs) on 16-04-07: 5.00 -
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Financial Ratios:
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Price/Earning Ratio: 4.85 -
Book Value Per Share: 4.23 (4.46)
Price/Book Value Ratio: 1.18 -
Debt/Equity Ratio: 73:27 (-)
Current Ratio: 0.95 0.91
Asset Turn Over Ratio: 1.23 1.23
Days Receivables: 20 13
Days Inventory: 40 21
Gross Profit Margin (%): 10.64 (0.26)
Net Profit Margin (%): 2.70 (12.60)
R.O.A. (%): 3.31 (15.46)
R.O.C.E. (%): 5.02 (27.55)
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Plant Capacity & Actual Production:
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A) Spinning Unit after conversion
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into 20/s count Yarn (Million Kgs) approximately
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Installed Capacity: 9.358 7.019
Actual Production: 8.811 6.533
Capacity Utilization (%): 94.15 93.08
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B) Number of Spindles
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Installed: 23,616 23,616
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C) Weaving Unit converted
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into 50 picks (Millions Sq. Meters) approx
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Installed Capacity: 50.347 17.562
Actual Production: 36.988 19.194
Capacity Utilization (%): 73.47 109.29
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D) Number of Looms Installed: 104 54
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NOTE: : "Under utilization of weaving unit's capacity is mainly due to installation of 50 looms during the year."
"Under utilization of spinning unit's capacity is mainly due to normal repair and maintenance and change on account of production mix."
COMPANY INFORMATION: : Chief Executive: Khawaja Mohammad Nadeem; Director: Khawaja Mohammad Kaleem; Corporate Secretary: Mohammad Jahangir Khan, BA (LLB), MBA; Chief Financial Officer: Mohammad Nadeem Anwar; Corporate & Shares Department: 31-F, Gulberg-II, Lahore; Registered Office: Kashana-e-Yousaf Khawaja Street, Chakwal (Punjab); Mills: Weaving Unit: 49-Kilometer Multan Road, Bhai Pheru (Punjab); Spinning Unit: 7-Kilometer Multan Road, Patoki (Punjab).
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