The financial backbone of the company is robust and as evident from the solvency, liquidity and profitability ratios. It has a relatively small capital base. So the company is expanding the same through bonus stock dividend at 25%. The stockholders are further enriched as the company has declared cash dividend at 25% (2002-03: 70%).
The company has highly attractive profit distribution profile as it has never skipped dividend since 1999 and that the payout rates ranged between high rate of 40% to 70%. The company is continuously replacing its aging spindles with new ones to ensure quality product. Moreover the company produces man-made blended yarn. But the year under review witnessed abnormal price hike of man-made fibres so the management is thinking to replace a portion of aging manufacturing facilities with new spindles for cotton/cotton blended yarn. The company's sales increased by 29.3%. But gross profit declined by 17%. Depreciation increased due to induction of new assets. Net profit after tax declined by 26.5% to Rs 18.58 million (2002-03: Rs 25.27 million).
Sana Industries Ltd was incorporated in the province of Sindh having its registered office located at S.I.T.E. Karachi. It is principally engaged in the manufacturing and sale of man-made blended yarn. Its manufacturing facilities are located in the Balochistan province at Hub Industrial Estate District Lasbella which is adjacent to the Karachi District of Sindh province. Its proximity to Karachi gives access to the large textile market port facilities and above all reservoir of large skilled workforce of the textile industry. The shares of the company are quoted on all stock exchanges of the country. The company was listed at Karachi Stock Exchange in 1988. On 27th January the price of the share closed at Rs 66.50 per share carrying substantial premium over the par value as the price works out to nearly 7 times of the par value. In fact, the highest price of the share during the last one year had appreciated by 565% to Rs 99.95 per share.
The company has relatively small paid-up capital of Rs 40 million divided into 4 million shares of Rs 10 each. However the shareholders equity at Rs 188.92 million shot up to 4.7 times of the capital.
The aggregate holding of directors and spouses is 63% of 4 million of its total shares. NBP (NIT) holds 11.11% of the company's stock. During the period under review, the company made additions in the fixed assets in the sum of Rs 8.08 million (FY 2002-03: Rs 54.00 million).
In addition, payment was made amounting to Rs 9.8 million for advances for the acquisition of fixed assets. The manufacturing facilities of the company include 25,328 spindles and the production capacity of the plant has been rated at 5.486 million kgs of yarn interms of 30/s count. Its actual production was recorded at 30/s count at 3.911 million kgs (2002-03: 3.649 million kgs). Production increased by 0.262 million kgs over the preceding year's and utilised capacity reached 71.29%.
The report issued clarification for the shortfall in the production capacity that it was due to frequent changes in the production mix.
The directors also reasoned that the increase in production was mainly due to the expansion of 3456 spindles undertaken during last year. Last year the expanded facilities were in operation for only 57 days whereas during the period under review, the company used these facilities to full year. Higher utilised capacity tends to improve economies of scale. Resultantly, cost per unit declines. The report affairs this hypothesis based on statistics.
The cost of manufacturing over-heads have fractionally declined from Rs 25.94 per kg to Rs 25.21 per kg mainly due to enhanced production. After successful implementation of the Expansion and Modernization plan undertaken during the last year the company has further planned to scrap 2,464 old spindles and replace these with 3,024 new spindles (7 frames 432 spindles each) and other allied machineries for balancing and modernizing the enhanced production. Necessary LC's for these additional machines were established in early June of 2004 and production commenced since early December 2004. The capacity as on 18 December 2004 enhanced to 25,888 spindles.
In view of abnormal price increase of man-made fibres the profitability of the company was slashed down. The management is seriously thinking to diversity some part of the capacity for the production of cotton/cotton blended yarn. As most of the spindles are aging so the management is working to add new spindles for cotton/cotton blended yarn.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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Sept 30
2004 2003
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Share Capital-paid-up: 40.00 40.00
Reserves & Surplus: 148.92 140.34
Shareholders Equity: 188.92 180.34
Deferred Taxation: 3.34 4.45
Current Liabilities: 89.98 74.65
Fixed Assets Tangible: 100.74 96.97
L T Deposits: 0.20 0.22
Current Assets: 181.39 162.25
Total Assets: 282.33 259.44
Sales, Profit & Pay Out
Sales-Net: 477.71 369.27
Gross Profit: 44.36 53.47
Operating Profit: 30.85 41.08
Financial Charges: (1.18) (1.29)
Other Income-Net: 0.10 1.40
(Depreciation): (14.68) (12.30)
Profit Before Taxation: 27.69 39.03
Profit After Taxation: 18.58 25.27
Reserve for Bonus Stock Dividend: (10.00) -
Cash Dividend @ Rs 2.50/-
(2003:Rs 7/-) Per Share: (10.00) 28.00
Earning Per Share (Rs): 4.64 6.32
Share Price (Rs) Dated 27/01/05: 66.50 -
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Financial Ratios:
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Price/Earning Ratio: 14.33 -
Book Value Per Share: 47.23 45.09
Price/Book Value Ratio: 1.41 -
Debt/Equity Ratio: 0:100 0:100
Current Ratio: 2.01 2.17
Asset Turn Over Ratio: 1.69 1.42
Days Receivables: 76 105
Days Inventory: 62 49
Gross Profit Margin (%): 9.30 14.48
Net Profit Margin (%): 3.89 6.84
R O A (%): 6.58 9.74
R O C E (%): 9.66 13.67
Capacity & Production Yarn 30/s Count (Million kgs)
Capacity: 5.486 5.471
Production: 3.911 3.649
Capacity Utilization (%): 71.29 66.69
Number of Spindles: 25,328 25,328
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COMPANY INFORMATION: Chairman: Mohammed Yusuf: Chief Executive: Mohammed Younus Nawab: Director: Hafiz Mohammed Irfan Nawab: Chief Financial Officer & Company Secretary: Abdul Hussain Antaria; Registered Office: S.F. Unit No 96 S I T E P.O. Box No 10651 Karachi-75700; Web Address: www.listedcompanies.com.pk Sana Industries Plant Site B-186 Hub Industrial Trading Estate Hub Chowki, District-Lasbella Balochistan.
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