Textile Spinning: HAJI MOHAMMAD ISMAIL MILLS LIMITED - Year Ended 30-06-2005 & 9 Months Ended 31-03-2006

The review begins from the current Financial Year 2005-06 for nine months (9M 2005-06) and with that is dovetailed last financial year 2004-05 for 9 months review along with performance statistics.
During 9M 2005-06 the company has booked net loss of Rs 4.80 million as against net profit of Rs 10.47 million posted in the same period last year (SPLY). But the company's sales for nine months amounted to Rs 468.51 million which is 45.4% higher than Rs 322.24 million posted in SPLY.
Gross profit at Rs 21.40 million against Rs 11.77 million of SPLY was 82% higher.
Operating expenses were almost identical to the SPLY. Other operating income also almost matched the figure of SPLY. Resultantly the operating profit at Rs 14.18 million remained much higher than Rs 4.58 million of SPLY.
But enhanced finance cost of Rs 15.76 million (SPLY: Rs 0.98 million) simply turned the bottom line into the red. The company booked pretax loss of Rs 1.58 million. The company also suffered due to a fire in cotton area in November 2005, burning nearly 2,700 bales of cotton and damaging some machinery. Cotton loss recovered through insurance cover.
Haji Mohammad Ismail Mills Limited was incorporated in the province of Sindh as a private limited company on February 5, 1980 and subsequently converted into public limited company on October 15, 1987.
It is a textile spinning unit located in Kotri Industrial Estate Sindh and is equipped with 2,832 rotors. Haji Mohammad Ismail Mills shares are listed on the Karachi Stock Exchange. At present its 10-rupee share is trading at below par value at Rs 4.05 per share at 59.5% discount. At this discounted price its paid up capital of Rs 99.79 million has reduced as market capitalisation of Rs 40.4 million. During the last one year the price of the share remained within Rs 3.40 and Rs 8.95 per share.
As regards ownership of its equity, on 30th June 2005, the company directors and their family members owned 19.3% of the company's total 9.979 million paid up shares. Pak Mehran (Pvt) Ltd, an associated company owned 23.6% and NBP (Ex-NDFC) owned 16.9% of the company's stock. Among other shareholders with 10% or more voting interest one more shareholder is Crescent Commercial Bank held 11.92% of the company's stock.
Its six years financial statistics show that during this period, the company had announced cash dividend only in one year in 2004 at 3%. The directors report published in the Annual Report 2005 does not give indication for not declaring dividend although the company generated earnings per share at Rs 1.79 for the period nine months of last financial year from October 2004 to June 30 2005 (9M 2004-05).
During this 9 months period the company generated sales at Rs 325.62 million and its annualised sales estimate works out to Rs 434 million which is nearly 5% less than the actual audited sales figure of Rs 457.67 million posted in the 12 months of previous financial year 2003-04.
Gross profit was in the sum of Rs 11.97 million and operating profit amounted to Rs 5.75 million. The corresponding figures of Rs 15.51 and Rs 808 million of previous year are not comparable as FY 2003-04 figures are for 12 months.
The financial cost for 9M 2004-05 is minimal amount of Rs 0.70 million mainly because loan outstandings were settled with banks. As per IAS 8, paragraph 28, the access mark up has been written back (favourably) to financial charges. The write back has been amortised over three years.
During last financial year 9M 2004-05, the company's net profit after taxation was higher at Rs 17.90 million as compared to its profit before taxation at Rs 5.05 million because provision for deferred taxation was favourly adjusted.
Net profit is also very significant because it has enabled the company to wipe out its accumulated deficit of the previous year and simultaneously improved its equity base.
Hence the book value of the share improved at Rs 12.07 carrying 20.7% premium over the par value. For the previous year the book value of the share was at 9.34 per share at 6.6% discount. The company's BMR project started three years ago, has continued. It has booked an amount of Rs 35.71 million in the account of capital work in progress Rs 25.34 million on plant and machinery and Rs 10.37 million in building.

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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:                 99.79          99.79

Reserves:                              20.70         (6.57)

Shareholders Equity:                  120.49          93.22

Surplus on Revaluation:                29.50          30.92

L.T. Debts:                            25.79          27.02

Deferred Liabilities:                   1.17           9.56

Current Liabilities:                  213.60         179.99

Fixed Assets:                         161.68         135.74

L.T. Deposits:                          0.56           0.50

Deferred Assets:                       14.50              -

Current Assets:                       213.81         204.47

Total Assets:                         390.55         340.71

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Profit & Loss A/c for The Nine Months Ended June 30 2005

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                              Oct 01 2004 to Oct 01 2003 to

                              June 30, 2005   Sept 30, 2004

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Sales-Net:                            325.62         457.67

Gross Profit:                          11.97          15.51

Other Operating Income:                 0.08           1.24

Operating Profit:                       5.75           8.08

Finance (Cost):                        (0.70)        (2.96)

(Depreciation):                        (8.23)        (9.65)

Profit Before Taxation:                 5.05          11.04

Profit After Taxation:                 17.90           9.50

Earnings Per Share (Rs):                1.79           0.95

Dividend (%):                              -           3.00

Share Price (Rs) on 07/08/06:           4.05              -

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Financial Ratios

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Price/Earning Ratio:                    2.26              -

Book Value Per Share:                  12.07           9.34

Price/Book Value Ratio:                 0.33              -

Debt/Equity Ratio:                     15:85          18:82

Current Ratio:                          1.00           1.14

Asset Turn Over Ratio:                  0.83           1.34

Days Receivables:                         36             36

Days Inventory:                          167             97

Gross Profit Margin (%):                3.68           3.39

Net Profit Margin (%):                  5.50           2.08

R.O.A.           (%):                   4.58           2.79

R.O.C.E. (%):                          10.11           5.91

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A) Plant Capacity & Production (Million Kgs)

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Installed Capacity (10's Count):        3.69           4.92

Actual Production Converted

 into 10s Count:                        5.65           6.16

Capacity Utilization (%):             153.12         125.20

B) Total Number of Rotors Installed:   2,832          2,832

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