Textile Spinning: TATA TEXTILE MILLS LIMITED - Half Year Ended December 31 2006

The company was incorporated in Pakistan on April 15, 1987 as a public limited company and is listed on Karachi and Lahore stock exchanges.
It is one of the constituent members of a large industrial group of companies Tata Group, whose other undertakings are Island Textile Mills Ltd and Salfi Textile Mills Ltd. According to the Chairman's message on the Group's website, starting with a humble beginning in the early eighties today Tata Group of Companies is known for its high quality and commitment towards its customers to provide them the best quality yarn.
The company has attained certification of ISO 9001-2000, Supima and Uster Technologies A.G. Tata Textile Mills Ltd is considered flagship company of Tata Group. It is equipped with 44,400 spindles and its manufacturing facilities include most modern machineries, and contamination control equipments.
The manufacturing facilities of the company are situated at 10th KM M.M. Road Khanpur-Baggasher District Muzaffargarh in the province of Punjab.
During the first half of the financial year 2006-07 (HYD 2006-07), the company generated sales at Rs 1.226 billion as compared to Rs 870.69 million in the same period last year (SPLY) registering commendable growth of 40.8%.
Gross Profit Margin (Gross Profit to Sales Ratio) eroded by 2.77 percentage from 19.54 percent in SPLY to 16.77 percent in the period under reporting. However Gross Profit amount was 20.9% higher as compared to the preceding year's.
On the other hand distribution cost increased by 13.6% and administrative expenses went up by 34.7% as compared to corresponding figures in the SPLY. The increase in distribution cost was due to increase in sales. But above all, the finance cost sharply increased from Rs 86.13 million in SPLY to Rs 104.78 million by 21.6%.
The company earned net profit after taxation at Rs 26.18 million in HYD 2006-07, as compared to Rs 23.99 million in the SPLY. The company directors commented that the textile industry is passing through a critical stage due to unprecedented increase in the cost of production besides confronting unhealthy competition from the regional countries.
The manufacturing facilities of the company comprise two district units. Unit No 1 uses only Pakistani cotton, which was purchased during the last cotton season which lasted till the end of December 2006. The purchase of cotton in Pakistan is limited to four months only ie October to January and this exposes to the risk of price increase-decrease. Unit No 2 is running on imported cotton, mainly upland cotton and PIMA cotton from America. The directors inform that they have also established a market in Europe for yarn produced from PIMA.

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Performance Statistics                         (Mln Rs)

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Balance Sheet ----As At----  December 31        June 30

                                    2006           2006

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                              Un-audited        Audited

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Share Capital Paid-up:            173.25         173.25

Reserves & Surplus:               275.96         263.02

Shareholders Equity:              449.21         436.27

Surplus on Revaluation

 of Fixed Assets:                 119.26         123.33

L.T. Debts:                       645.30         771.89

Deferred Liabilities:              49.12          46.48

Current Liabilities:            1,764.63       1,177.80

Fixed Assets Tangible:          1,458.26       1,495.27

L.T. Deposits:                      0.75           0.74

Current Assets:                 1,568.51       1,059.76

Total Assets:                   3,027.52       2,555.77

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Profit & Loss A/c for Half Year Ended

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---December 31---                   2006           2005

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Sales:                          1,226.12         870.69

Gross Profit:                     205.68         170.17

Other Operating Income:             1.59           0.85

Finance (Cost):                  (104.78)       (86.13)

Profit Before Taxation:            41.98          36.24

Profit After Taxation:             26.18          23.99

Earnings Per Share (Rs):            1.51           1.39

Share Price (Rs) on 12/07/07:      25.50              -

Price/Earning Ratio:               16.88              -

Debt/Equity Ratio:                 53:47          58:42

Current Ratio:                      0.89           0.90

Gross Profit Margin (%):           16.77          19.54

Net Profit Margin (%):              2.13           2.75

R.O.A. (%):                         0.86           0.94

R.O.E. (%):                         5.82           5.50

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