Textile Spinning: FAZAL TEXTILE MILLS LIMITED - Period (9 Months) Ended June 30, 2005

This textile manufacturing unit of Federal 'B' Area Karachi belongs to a very strong industrial group-Younus Brothers Group which has the speciality of installing state-of-the-art textile technology and having sustained outreach in global export market.
During the nine months under review the company posted sales in terms of value at Rs 1,642.38 million which contributed in creating higher gross profit. The nine month's gross profit at Rs 162.69 million is much higher than previous year's (12 months) figure of Rs 91.86 million.
In nine months finance cost shot up to Rs 41.41 million which is double of last 12 months figure of Rs 20.61 million. Even then its pretax profit reached Rs 78.17 million which is 3.6 times of Rs 21.74 million posted for the preceding 12 months (2004 full year).
The net profit of the company at Rs 40.88 million (2004: Rs 29.83 million) works out to Earning Per Share of Rs 6.61. At the present market value of its share its PER is multiple of 41, exhibiting immense confidence of the investors in the enterprise. The directors resolved to maintain the profitability despite rising inflation and higher finance cost.
Fazal Textile Mills Ltd (FTML) was incorporated on July 6 1963 as a private limited company and was converted into public limited company in May 1986.
FTML is located in the city of Karachi and was taken over by the Yunus Brothers Group in 1987.
Yunus Brothers took over FTML when it was closed down unit since 1984 due to heavy losses. The new management of FTML took prompt and comprehensive actions to revitalize the unit by discarding the old machinery and imported and installed the latest machinery within a year's time. Only in four years FTML produced positive results. During the year 1991, the new management cleared the deficit of previous years and posted a net profit. At present total of installed spindles in FTM has reached 60,000.
The group comprises very reputed corporate entities. The other member of Yunus Brothers Group is Gadoon Textile Mills Ltd equipped with 150,000 spindles.
FTML's another sister concern is Yunus Textile Mills which is an state of the art textile weaving, processing, finishing and stitching facility equipped with 214 Air Jet Looms established in the year 2000 and it is the flagship of the Yunus Brothers Group. It has the distinction of being Pakistan's newest and most advanced integrated textile mill, manufacturing a wide range of fabrics, home textiles and garments.
The other associated concern of FTML is Lucky Textile Mills. It has 3 major plants with 750 looms and all located in Karachi. Lucky Textile also produces a wide range of home textiles including bed linen curtains and table linen at their stitching facilities.
The group also owns one of the largest grey portland cement unit in Pakistan namely, Lucky Cement Ltd. The cement company uses a modern dry process leading to energy conservation and improved cement quality.
Fazal Textile Mills Ltd is certified with ISO 9002 and Oeko-Tex100 Standards. Its annual sales turnover is approximately US $40 million. Export sales are mainly to Far Eastern, European, US, South American, North African and Middle Eastern markets.
FTML is mainly producing 100% Grey and Combed Yarn for end use of knitting as well as Air Jet Weaving. It is also producing wide range of Blended Heather (Melange).
In 1994, the company (FTML) entered into value added segment through installation of four circular machines of knitted fabrics. But now FTML has 16 Fukuhara brand knitting machines which produce fabrics like jersey, single and double pique, RIB, 2-end fleece, 3-end fleece, Inter lock etc.
During the nine months of 2004-05, the period under review, the company's spinning section produced 34.454 million lbs of yarn after conversion into 20's count and attained 99.2 percent utilised capacity.
In the same period its knitting unit produced 632.1 thousand kgs attaining 70 percent utilised capacity.
The company continued to invest in plant and machinery to sharpen its competitive edge and extend its outreach to most discussing and sophisticated customer. During the nine months under review FTML made additions in the fixed assets in the sum of Rs 116 million as compared to Rs 153 million in the preceding year's 12 months.
The company's shares are quoted on all stock exchanges in Pakistan since 1971. On 15th June 2004 marked value of its share was quoted at Rs 147.95 which is nearly 15 times of the par value. During the last one year its market value had reached Rs 190.95 per share.
For the period (nine months) under review the company declared cash dividend at 25% as against 15% for 2004 (12 months).

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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:            61.87          61.87

Reserves & Surplus:              650.82         619.22

Shareholders Equity:             712.69         681.09

Deferred Gratuity:                13.46          11.60

Deferred Taxation:                77.07          60.02

Current Liabilities:             896.14         634.37

Fixed Assets:                    669.94         602.89

L.T. Loan & Advance:               4.12           5.11

L.T. Deposits:                     0.53           0.53

Current Assets:                1,024.76         778.55

Total Assets:                  1,699.36       1,387.08

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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-Net:                     1,642.38       2,265.60

Gross Profit:                    162.29          91.86

Operating Profit:                122.60          41.51

Other Income:                      2.02           2.23

Finance (Cost):                  (41.41)       (20.61)

(Depreciation):                  (49.68)       (60.87)

Profit Before Taxation:           78.17          21.74

Profit After Taxation:            40.88          29.83

Earnings Per Share (Rs):           6.61           4.82

Dividend Rs Per Share:             2.50           1.50

Share Price (Rs) on 15-6-2006:   147.95              -

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Financial Ratios

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Price/Earning Ratio:              40.98              -

Book Value Per Share:            115.19         110.08

Price/Book Value Ratio:            1.28              -

Debt/Equity Ratio:                0:100          0:100

Current Ratio:                     1.14           1.23

Asset Turnover Ratio:              0.97           1.63

Days Receivables:                    52             66

Days Inventory:                     170             44

Gross Profit Margin (%):           9.88           4.05

Net Profit Margin (%):             2.48           1.31

R.O.A (%):                         2.41           2.15

R.O.C.E. (%):                      5.89           3.96

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Capacity & Actual Production Spinning After Conversion

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                                into 20s (Million lbs)

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A) Capacity:                     34.725         45.398

Production:                      34.454         45.381

Capacity Utilisation (%):         99.22          99.96

B) Number of Spindles

 at year end:                    59,508         59,508

Knitting (Thousand kgs)

A) Installed Capacity:           907.50       1,059.96

Actual Production:               632.11       1,052.15

Capacity Utilisation (%):         69.65          99.26

B) Total Number Knitting

 Machine Installed:                  18             18

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