During the year under review the company has been successful in improving financial and operating results. It can be seen from the performance statistics appended below, that production figures of various divisions were substantially higher than preceding year's.
Sales and gross profit were also higher. The company turned the table this year by posting pretax profit as against last year's large pretax loss. But company booked net loss after taxation this year also. However, the directors recommended bonus shares maintaining stream of dividends.
The gross profit margin definitely improved and credit goes to the directors for this as higher capacity utilisation provided enough financial space.
Escalating finance costs continued to affect the profitability which further accelerated the accumulated deficit. Nevertheless, the company continues to have the confidence of its investors. It may be seen that the company's share remained highly priced. During the last 52 weeks its share price ranged between Rs 25.15 and Rs 43 per share. On November 6, 2006 the market price of the company share was quoted at Rs 30.10 per share which is more than three times of the par value.
Kohinoor Weaving Mills Ltd (KWML) was incorporated on December 21, 1987 in Pakistan as a public limited company and its shares are quoted on Karachi, Lahore and Islamabad. Its registered office was changed from 42 Lawrence Road Lahore to 8th KM-Manga, Raiwind Road, Kasur with effect from March 13, 2006.
The company is principally engaged in the business of textile manufacturing covering; knitting, bleaching, dyeing stitching, buying selling and otherwise dealing in yarn, bed linen, home furnishing, socks, cloth and distributing electricity.
The company is changing its name to Kohinoor Mills Ltd, as the word weaving, in the name of the company does not fully represent the scope of present businesses carried out by the company. It was a small weaving mill in 1987 but today it has diversified into broad spectrum of business activities as mentioned above.
With an annual turnover of over Rs 6.36 billion today KWML employs around 3,000 employees. The directors aim to create superior value of Kohinoor's customers and stakeholders without compromising its commitment to safety, environment and health for the communities in which it operates. Its products range from greige fabric to processed fabric and stitched home furnishing articles. It is also producing world class athletic socks.
KWML intends to expand and diversify its business by making an equity investment upto Rs 200 million to make QMart (Pvt) Ltd its wholly owned subsidiary. The concept of QMart is to set up a retail chain all over Pakistan starting from Punjab and to make it a 'family' store providing a comprehensive retailing experience under one roof.
Investment in QMart has strategic marketing advantage also as this will provide a platform for domestic sales of company's products through QMart stores throughout Pakistan. This will reduce KWML dependence on exports which is facing stiff competition across the globe.
During the year under review, FY 2005-06, the company posted sales at Rs 6.358 billion as against Rs 3.572 billion posted in the previous financial year 2004-05 encompassing only nine months. If the rough annualised estimate is derived for last year's sales, this works out to Rs 4.763 billion. Hence the FY 2005-06, sales figure shows 33.5% increase over the last year's annualised sales figure which is quite impressive.
The company's gross profit amounted to Rs 721.89 million and this works out to gross profit margin at 11.35 percent as against Rs 5.71 percent in the preceding year showing increase by 5.64 percentage points.
Last year the company had booked a large pretax loss of Rs 182.12 million but for the year under review, the company turned the table as it earned pretax profit of Rs 6.05 million.
As the pretax profit was wafer thin hence, a large tax provision amount of Rs 59.22 million turned the bottom line into the red with net loss of Rs 53.17 million. Last year the company's net loss after taxation was in the sum of Rs 201.43 million. So this year the accumulated deficit increased to Rs 236.19 million from Rs 183.03 million of last year.
However a large reserve has kept the shareholders equity base robust as it converted into book value of the share of Rs 46.99 per share which is nearly five times of the par value. This enabled the directors to propose bonus shares at 10% to maintain regular stream of dividends which the company has maintained for the last six years except for the last year.
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Performance Statistics (Million Rupees)
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30th June 2006 2005
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Share Capital-Paid-up: 330.59 330.59
Reserves: 1,459.03 1,459.03
Accumulated (Loss): (236.19) (183.03)
Shareholders Equity: 1,553.43 1,606.59
Surplus on Revaluation
of Investments: 151.25 87.25
L.T. Debts: 1,438.96 2,013.43
Current Liabilities: 4,679.88 3,222.56
Fixed Assets: 4,099.63 4,122.94
Intangible Fixed Assets-Software: 5.00 -
L.T. Investment: 11.94 11.94
L.T. Security Deposits: 3.12 3.08
Current Assets: 3,703.83 2,791.87
Total Assets: 7,823.52 6,929.83
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Profit & Loss A/c:
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For 12 Months For 9 Months Period
Ended June 30 Ended June 30
2006 2005
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Sales: 6,357.99 3,571.94
Gross Profit: 721.89 204.07
Other Operating Income: 40.19 10.85
Operating Profit/(Loss): 414.70 (42.07)
Finance (Cost): (408.65) (140.05)
(Depreciation): (268.13) (163.50)
Profit/(Loss) Before Taxation: 6.05 (182.12)
Profit/(Loss) After Taxation: (53.17) (201.43)
(Loss) Per Share (Rs): (1.61) (6.09)
Share Price (Rs) on 06-11-2006: 30.10 -
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Financial Ratios
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Price/Earning Ratio: (-) -
Book Value Per Share: 46.99 48.60
Price/Book Value Ratio: 0.64 -
Debt/Equity Ratio: 46:54 54:46
Current Ratio: 0.79 0.87
Asset Turn Over Ratio: 0.82 0.51
Days Receivables: 60 61
Days Inventory: 87 103
Gross Profit Margin (%): 11.35 5.71
Net Profit Margin (%): (0.84) (5.64)
R.O.A. (%): (0.68) (2.91)
R.O.C.E. (%): (1.69) (5.43)
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Plant Capacity & Actual Production
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A) Weaving Converted 60 Picks Million Sq. Meters
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Rated Capacity: 69.834 54.760
Actual Production: 62.340 46.052
Capacity Utilization (%): 89.26 84.10
Looms Installed: 256 256.00
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B) Dyeing (Million Linear Meters)
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Rated Capacity: 30.000 22.438
Actual Production: 25.682 14.389
Capacity Utilization (%): 85.61 64.13
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C) Hosiery (Million Dozs)
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Rated Capacity: 8.760 3.285
Actual Production: 5.710 1.939
Capacity Utilization (%): 65.18 59.03
Knitting Machines Installed: 480 240
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D) Home Tax (Million Linear Meters)
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Rated Capacity: 10.984 -
Actual Production: 5.873 -
Capacity Utilization (%): 53.46 -
Number of Stitching Machine Installed: 229 -
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E) Genertek Power Plant (Thousand Megawatt Hours)
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Installed Capacity: 222.33 11.47
Actual Power Generation: 99.24 87.30
Capacity Utilization (%): 44.64 74.32
Number of Main Generators Installed: 3 3
Standby Generators: 2 8
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Note:
-Under utilization of available capacity for weaving, dyeing and home tax divisions are due to normal maintenance and actual demand.
-Actual generation in Genertek in comparison to installed is low due to periodical scheduled and unscheduled maintenance of generators in low demand. During the maintenance period electricity is supplied from stand by generators.
COMPANY INFORMATION: Chief Executive/Chairman: Aamir Fayyaz Sheikh; Director: Rashid Ahmed; Chief Financial Officer: Syed Mohsin Raza Naqvi; Company Secretary: Muhammad Imran; Registered Office, Mills & Shares Department: 8th KM, Manga Raiwind Road, District Kasur; Website: www.kohinoorweaving.com
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