Textile Spinning: IDRIS TEXTILE MILLS LIMITED - Period (9 Months) Ended June 30, 2005 & 9 Months Ended March 31, 2006
During the nine months of the current financial year 2005-06 (9M 2005-06), the company's sales, and profitability declined whereas gross profit improved as compared to nine months of last year 2004-05.
On the other hand finance cost at Rs 44.74 million was nearly four times of same period last year. During 9M 2005-06, the company posted sales at Rs 461.9 million and pretax profit at Rs 20.41 million registering 28% and 71% decline as compared to nine months of the last year 2004-05.
Earning per share was Rs 1.20 as compared to Rs 3.66 per share in the nine months of last year.
The nine months of current year were characterised by the shortfall of cotton crop by more than two million bales. In this season prices of cotton remained high but yarn prices did not show corresponding increase.
For the remaining period of the year the directors expect no significant increase in the yarn prices. So they conclude, not to expect any abnormal growth in the profits. After the review of current year 2005-06, follows the review about the last year 2004-05 which is based on Annual Report 2005 and the Performance Statistics of 9M 2004-05 are also appended.
Idris Textile Mills Limited was incorporated in the province of Sindh as an unquoted public limited company on June 5, 1990 and was listed on Karachi and Lahore Stock Exchanges on April 28, 1992. The registered office of the company is situated at 6-C Ismail Centre, 1st Floor, Central Commercial Area Bahadurabad Karachi-74800. The principal activity of the company is manufacturing and sale of yarn and fabric.
The manufacturing facilities of Idris Textile Mills Ltd include 31,812 spindles and its factory is located in the province of Punjab at Kot Shah Mohammad, Tehsil Nankana, District Sheikhupura. The annual production capacity of the plant has been rated at 9.740 million kgs of yarn after conversion into 20s count. As the financial year has been changed from September to June, therefore the Annual Report 2005 is for nine months of financial year 2004-05 but the comparative figure of previous year is for 12 months.
For the nine months of 2004-05, the actual production in terms of 20s count was recorded at 5.647 million kgs of yarn. This enabled the company to attain capacity utilisation at 77.30% whereas in the previous financial year FY 2003-04 the capacity utilisation was much less at 67.02%.
An annexed note to the account has tried to clarify that the comparison of production capacity and actual production in the textile industry is subject to wide fluctuations because of various factors. In this case, one is baffled as to how an enterprise can fail to give the reason of gross under utilisation of capacity. If that be so how the production efficiency is measured. It is high time that the enterprise reviews its business processes because if the production is not optimised then the company cannot avail economies of scale.
At present the company's share is trading at Rs 8.70 per share at 13% discount. During the last one year market value of the share ranged between Rs 7.10 per share and Rs 12.10 per share showing that the price of the share had gone above the par value. It may be hoped that if the company betters its profit distribution track record then the investors might think to upgrade its market value.
The company has not given the data about its dividend in its comparative statement of operating result for the years 2000-2005. One may hope that in future the data will be provided for the various stakeholders ie shareholders, bankers and investors etc.
However the directors report conveys its recommendation of cash dividend distribution @7.5% for 9M 2004-05 but for minority shareholders. The daily stock market's published statistics mentions NIL distribution for the previous year 2003-04.
As regards the ownership of its equity the directors and members of their family owned 27.05% of the company's stock. Its associated companies owned 27.5% and its 4362 individual shareholders held 62.17 of the company's stock.
The financial position of the company remained robust as is evidenced from the financial ratios appended below. The directors associates and others have also injected interest free loan in the sum of Rs 70.33 million.
The continued additions in the fixed assets is gratifying as this enables the company to sell quality products. During 9M 2004-05, the company made additions in the fixed assets at Rs 52.21 million (9M 2003-04: Rs 103.79 million) which was booked mostly for plant and machinery.
During last year 2004-05 the company posted sales at Rs 671 million. Its nine months gross profit was higher at Rs 90.4 million as compared to previous 12 months gross profit of Rs 65.77 million. However in the preceding financial year the favourable reversal of markup on markup had improved the profitability. Hence the 9M 2004-05 net profit at Rs 33.43 million is less than FY 2003-04 net profit of Rs 66.99 million.
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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: 180.48 180.48
Un-appropriated Profit: 61.55 21.09
Shareholders Equity: 242.03 201.57
Surplus on Revaluation
of Fixed Assets: 138.10 145.12
Interest Free Loan From
Directors, Associates & Others: 70.33 70.33
Others L.T. Debts: 179.27 159.70
Deferred Income: 2.44 -
Deferred Liabilities: 73.94 75.44
Current Liabilities: 523.48 393.65
Fixed Assets: 629.68 633.34
L.T. Deposits: 5.55 11.09
Current Assets: 594.36 401.38
Total Assets: 1,229.59 1,045.81
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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: 670.69 820.08
Gross Profit: 90.35 65.77
Other Operating Income: 1.85 3.62
Operating Profit: 71.02 48.69
Finance (Cost): (38.02) (29.88)
(Depreciation): (38.02) (48.67)
Markup Waived on Rescheduling of Loan: - 48.08
Profit Before Taxation: 33.00 66.90
Profit After Taxation: 33.43 66.99
Earnings Per Share (Rs): 1.85 3.71
Divided (%): 7.5 -
Share Price (Rs) on 11/08/06: 8.70 -
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Financial Ratios
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Price/Earning Ratio: 4.70 -
Book Value Per Share: 13.41 11.17
Price/Book Value Ratio: 0.65 -
Debt/Equity Ratio: 28:72 28:72
Current Ratio: 1.14 1.01
Asset Turn Over Ratio: 0.54 0.78
Days Receivables: 112 55
Days Inventory: 164 89
Gross Profit Margin (%): 13.47 8.01
Net Profit Margin (%): 4.98 8.17
R.O.A. (%): 2.72 6.40
R.O.C.E. (%): 4.73 10.27
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Capacity & Production of Yarn
Converted into 20/s Count (Million Kgs)
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A) Installed Production Capacity: 7.305 9.740
Actual Production
(Converted 20/s Count): 5.467 6.528
Capacity Utilization (%): 77.30 67.02
B) Number of Spindles Installed: 31,812 31,812
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COMPANY INFORMATION: Chairman: S.M. Idrees Allawala; Chief Executive Officer: Imran Idrees Allawala; Director: Mansoor Idrees Allawala; Chief Financial Officer: Muhammad Jawaid; Company Secretary: Syed Shahid Sultan; Registered Office/Share Department: 6-C, Ismail Center First Floor, Central Commercial Area, Bahadurabad Karachi 74800; Web Address: Not Reported; Factory: Kot Shah Mohammad Nankana District Sheikhupura.
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