Textile Composite: GUL AHMED TEXTILE MILLS LIMITED - Period (9 months) Ended June 30, 2005
During the period ended June 30, 2005, for nine months the company's sales in terms of value was posted at Rs 5.876 million. The directors of the company stated that on an annualised basis sales grew by 17.54%.
But profit registered steep decline. Pretax profit for the period (nine months) was Rs 121.91 million as against Rs 250.67 million in the previous year 2004 (12 months). Net profit after taxation was recorded at Rs 75.91 million for nine months of FY 2005 as against Rs 202.75 million last year.
The directors said that profit decreased due to steep rise in mark-up rates resulting in higher finance cost.
As regards future prospects, the company is aware of fierce competitive environment as a result of quota free trade and there are many new entrants in export market. The directors said that to succeed they are focusing on efficiency, operational excellence and pursuing new business opportunities.
The increasing fuel prices and continuing increase in mark-up rates are areas of main concern for the company.
For the period, the company announced bonus stock dividend @10% and 10% right share issue at an issue price of Rs 20 per share.
Gul Ahmed Textile Mills Ltd is a textile composite unit and public limited company incorporated in the province of Sindh. It was listed on the Karachi Stock Exchange (Guarantee) Limited (KSE) in 1970. Its shares are also quoted on the Lahore Stock Exchange. Its manufacturing facilities and registered office are situated in Landhi Industrial Area Karachi. The URL of its website is www.gulahmed.com.
As per instructions of CBR and further clarification by SECP the textile companies are required to change their financial year ending September to June. Accordingly the company has prepared its audited financial statements covering period of nine months ended June 30, 2005. Since the audited comparative figures were available for the year ended September 30, 2004 the same has been disclosed as comparatives in the Annual Report under review. It may be appropriate to emphasise that the last year's figures are not comparable with the figures for the period under review.
According to the KSE published data of the company's share, the closing market value of its share on May 20, was recorded at Rs 48 per share which is incidentally the lowest price of last 52 weeks. In this period the highest price of the share had reached Rs 73.25 per share.
For 2005, the company announced right share issue at 10% at the issue price of Rs 20/share and now the price of the right issue has been quoted at Rs 42.45 per share.
Last year the company had also declared bonus stock dividend at 12.5%. For the year under review the company announced bonus stock dividend at 10%. The company continued to declare relatively handsome cash dividends regularly for four years from the year 2000 to 2003. After that for two years it switched over to bonus stock dividend at modest rates between 10% to 12.5%.
The company continued to make large capital expenditure and for the period under review it made additions in the fixed assets amounting to Rs 758.6 million (2004: Rs 773.00 million). These additions were mostly in plant and machinery and building a leasehold land. It has also invested a sum of Rs 529 thousand in the intangible assets of the computer software.
In the Annual Report under review the company's production data has been published for 2005 for nine months but the capacity figure are for 12 months.
In the cloth department the company produced 53.11 million square meters of cloth for nine months which converted to annualised guess estimate comes to 70.81 million square meters. This annualised estimate of 2005 greatly falls short to the year 2004 (12 months) production figure of 80.24 million square meters of cloth.
As regards yarn department, for 2005 nine months the output has been recorded at 24.77 million kgs of yarn. Its annualised guess estimate figures out to 33.03 million kgs which is more than the last year's (12 months) actual production figure of 32.16 million kgs of yarn. This shows better performance.
It may be mentioned that in both the departments the production figures are based on three shifts. The report made clarification that production was lower due to variation in production mix and various technical factors.
The company maintains robust financial backbone as evidenced from the financial ratios appended below.
However liquidity is locked-in receivables and inventory relatively above modest level.
It is satisfying to observe that gross margin has improved but finance cost more than doubled because long term borrowings shot up by 47% and apparently mark-up was also higher.
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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: 383.32 340.73
Reserves & Surplus: 1,885.43 1,852.11
Shareholders Equity: 2,268.75 2,192.84
L.T. Debts: 2,036.25 1,386.91
Deferred Liabilities: 68.27 110.71
Current Liabilities: 5,432.02 5,385.78
Fixed Assets: 4,028.51 3,469.62
L.T. Investment: 58.45 58.45
L.T. Loans & Advances: 7.02 8.37
L.T. Deposits: 3.56 3.56
Current Assets: 5,707.75 5,536.24
Total Assets: 9,805.29 9,076.24
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Profit & Loss A/c For:
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9 Month ended Year ended
June 30 2005 Sept 30 2004
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Sales: 5,876.26 6,665.90
Gross Profit: 963.37 1,044.81
Operating Profit: 359.15 362.95
Other Operating Income: 6.72 11.45
Finance (Costs): (236.91) (109.59)
(Depreciation/Amortization): (274.67) (328.21)
Profit Before Taxation: 121.91 250.67
Profit After Taxation: 75.91 202.75
Earnings Per Share (Rs): 1.98 5.29
Cash Dividend Per Share (Rs): - -
Dividend Bonus Stock (%): 10.00 12.50
Share Price (Rs) on 20/05/06: 48.00 -
Right Issue (%): 10.00 -
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Financial Ratios
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Price/Earning Ratio: 24.24 -
Book Value Per Share: 59.19 64.36
Price/Book Value: 0.81 -
Debt/Equity Ratio: 47:53 39:61
Current Ratio: 1.05 1.03
Assets Turn Over Ratio: 0.60 0.73
Days Receivables: 120 113
Days Inventory: 179 133
Gross Profit Margin (%): 16.39 15.67
Net Profit Margin (%): 1.29 3.04
R.O.A. (%): 0.77 2.23
R.O.C.E. (%): 1.74 5.49
Capacity & Production (Figures in Millions)
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A) Cloth Sq. Meters (50 Picks Converted)
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Capacity: 83.56 83.56
Production: 53.11 80.24
Capacity Utilization (%): 157.34 96.03
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B) Yarn Kgs (20 Counts Converted)
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Capacity: 36.04 36.04
Production: 24.77 32.16
Capacity Utilization (%): 68.74 89.24
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Note: Year 2000 output for nine months whereas year 2004 output for 12 months.
COMPANY INFORMATION: Chairman & Chief Executive: Bashir H. Ali Mohammad; Director: Zain Bashir; Company Secretary: Mohammad Salim Ghaffar; Mills: Landhi Industrial Area, Karachi-75120; Registered Office: Plot No 82 Main National Highway Landhi, Karachi-75120; Web Address: www.gulahmed.com
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