The company has been able to raise its capabilities based on latest information technology, enhanced investment in back process of textile plants, upgradation of ISO certification, improvement in the management skills and upgradation of technical skills of its workforce.
IFL's 50 employees were sent to attend training courses, lectures, seminars and exhibitions arranged by renowned Universities and Institutions including Lahore University of Management Sciences (LUMS) Pakistan Institute of Management Sciences (PIMS) and Pakistan Institute of Quality Control (PIQC). During the nine months under review, the company earned pre tax profit of Rs 286 million as against Rs 1250 million during the previous period of 12 months.
The reduced profitability is due to depressed demand of PSF because of higher feed stock prices and record bumper cotton crop and uncertain environment before the implementation of WTO. The company being part of the Ibrahim Group Consortium, acquired 141.98 million shares of Allied Bank Ltd. The turnaround of the bank has been effected and its credit rating improved.
Ibrahim Fibres Limited (IFL) is a public limited company having its registered office located at Ibrahim Centre 1-Ahmed Block, New Garden Town Lahore and its URL is www.lgcpk.com. It was listed at Karachi Stock Exchange in 1995 and its shares are quoted on all stock exchanges in Pakistan. The principal business of the company is manufacture and sale of polyester staple fibre (PSF) and yarn. The manufacturing units are located at Faisalabad-Sheikhupura Road, in the province of Punjab.
This is one of the few companies in Pakistan which are quite advance in implementing sophisticated information technology. It has been reported that after successful implementation of Oracle ERP, the company has seamlessly integrated its various business activities of manufacturing, sales order management, inventory, the business process automation, reengineering and integration of systems achieved while implementing Oracle ERP, will assist in improved decision making through precise MIS and its timely availability at the strategic level.
At IFL Textile plants, during the nine months under review, 135,805 spindles remained operational and manufactured 19,375 tonnes of yarns as against 129,413 spindles operated during the previous year, manufacturing 22,895 tonnes of yarns of different counts.
Its PSF/polyester chips plants were operational at 72% capacity as against the capacity utilisation of 94% during the previous year.
The reduction in capacity utilisation has been attributed to depressed market conditions. The international as well as domestic market of PSF remained under pressure due to record bumper cotton crop, higher feedstock prices and uncertain situation before the implementation of WTO.
In the domestic market, the demand of PSF also struck as the entire textile chain was making all out efforts to minimise their inventories to reduce their one time loss after the reduction in customs duty tariff. In these difficult circumstances, the company has been able to achieve sales of 86,796 tonnes of PSF and polyester chips during the nine months under review.
On the other hand blended yarns produced by IFL Textile plants have a consistent demand due to its better quality and during the period under review, 17,969 tonnes of different counts were sold to the manufacturers of higher value added products thus selling 93% of the production.
It has been visualised that the tariff changes by the government will reduce the duty component in the cost of PSF and will reduce the gap between cotton prices and PSF prices thus making the polyester based products more viable for the downstream industry. Hence the change in the government policy coupled with upcoming capacities in textile industry will result in improvement in demand of PSF.
In this period, the company has made investment in the replacement of the back process of the textile plant. With the new back process coming into operation the installed capacity of yarns has increased by almost 20%.
During the nine months under review, the company generated sales net of sales tax in the sum of Rs 10,323 million. It posted gross profit at Rs 938.9 million but gross profit to sales percentage reduced drastically to 9.09% as compared to 11.01% in the preceding year. The reduction in gross margin was because of increase in prices of raw materials PTA and MEG because of soaring crude oil prices.
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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: 3,105.07 3,105.07
Reserves: 2,657.16 2,990.57
Shareholders Equity: 5,762.23 6,095.64
L.T. Debts: 6,845.50 7,050.20
Deferred Taxation Staff: 874.86 770.41
Staff Retirement Gratuity: 183.52 167.10
Current Liabilities: 5,421.74 4,597.39
Fixed Assets: 8,416.28 8,639.43
Intangible Assets: 21.52 -
L.T. Investment: 6,210.23 6,210.23
L.T. Deposits: 2.55 2.33
Current Assets: 4,437.27 3,828.75
Total Assets: 19,087.85 18,680.74
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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: 10,323.05 16,378.47
Gross Profit: 938.86 1,803.22
Operating Profit: 716.93 1,443.08
Other Operating Income: 22.19 36.86
Finance (Cost): (453.49) (229.73)
(Depreciation): (595.91) (832.95)
Profit Before Taxation: 285.63 1,250.21
Profit After Taxation: 132.35 872.46
Earnings Per Share (Rs): 0.43 2.81
Dividend (%): - 15
Share Price (Rs) Dated 23-2-2006: 41 -
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Financial Ratios
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Price/Earning Ratio: 95.35 -
Book Value Per Share: 18.56 19.63
Price/Book Value Ratio: 2.21 -
Debt/Equity Ratio: 54:46 54:46
Current Ratio: 0.82 0.83
Asset Turnover Ratio: 0.54 0.88
Days Receivables: 33 5
Days Inventory: 120 64
Gross Profit Margin (%): 9.09 11.01
Net Profit Margin (%): 1.28 5.33
R.O.A. (%): 0.69 4.67
R.O.C.E. (%): 0.96 6.19
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Production Capacity (000 Tons)
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A) Polyester Staple Fibre/Polyester Chips: 156.45 208.60
B) Yarn converted into 20/s Count: 31.27 41.70
C) Number of Spindles Installed: 137,088 137,088
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Actual Production
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A) Polyester Staple Fibre/Polyester Chips: 112.41 195.66
B) Yarn converted into 20/s Count: 32.97 41.23
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Capacity Utilisation (%)
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A) Polyester Staple Fibre/Polyester Chips: 71.85 93.80
B) Yarn converted into 20/s Count: 105.44 98.87
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