The manufacturing facilities of this textile composite unit of Umer Group of Companies has been able to achieve marginal growth in net sales but suffered decline in net profit.
The company attained capacity utilisation 100% in spinning unit and more than 100% in weaving unit. During FY06, the directors announced cash dividend at 7.5% which is identical to the preceding year's. The company has gratifying record of almost regular profit distribution as it has made announcements in five years out of last six years.
During the year under review it continues to implement its existing BMR and expansion programme which includes addition in gas based power generation unit. About further expansion, the directors inform that cost of doing business here is very high, therefore, no further expansion is under consideration.
Faisal Spinning Mills Ltd was incorporated in Pakistan on January 31, 1985 as a public limited company under the companies Ordinance, 1984. The company is currently listed on Karachi Stock Exchange (Guarantee) Limited and Lahore Stock Exchange (Guarantee) Limited. It is a textile composite unit and is primarily engaged in manufacturing and sale of yarn and fabrics.
Its spinning unit is located at SITE Nooriabad (Sindh) and weaving unit at 18 km Sheikhupura Road, Feroz Watwan District Sheikhupura (Punjab). Its production facilities include 30,720 spindles and 223 looms. Its annual installed capacity of spinning unit has been rated at 11.434 million kgs of yarn at 20/s count. The annual installed capacity of weaving unit has been rated at 30.406 million meters of cloth after conversion into 50 picks.
Faisal Spinning Mills Ltd is one of the constituent members of industrial group - Umer Group of Companies. The company has made investments in the share of its associated company Blessed Textile Mills Ltd to the extent of Rs 111.32 million.
As regards ownership of its equity, 50.32% of its total 10 million shares are owned by the company directors and the members of their family. This enables the company to hold majority voting power directly or indirectly.
In the Annual Report 2006, the categories summary of shareholders does not segregate individual shareholders from general public from the directors. So statistical analysis would lack clarity.
Moreover the ownership of shares by directors and others are in terms of number of share and not in terms of group percentages. An economic analysis will term this approach of reporting as "too many data is no data."
This is an IT era which involves globalisation, digitisation and deregulation. But it seems that such approach would probably not come upto even data processing era. To help enterprises address global challenges - value addition, supply chain management and business process re-engineering are being recommended by business management academia for which entry into the IT Era appears to be prerequisite.
During FY06, the year under review of 12 months, the company posted net sales at Rs 3,199.9 million as against FY05 of nine months at Rs 2.339 million. Since these two financial years are of varying periods, therefore, are not comparable. Therefore an annualised estimate of last year's would give at least a "feel" of the performance of the company.
In this case the annualized estimate of net sales of last year figures out to Rs 3,118.8 million and after comparing this figure it shows that FY06 net sales improved by 2.6% YoY. On the other hand the company attained capacity utilisation in the spinning unit at nearly 100 percent and in weaving unit at 126 percent which would mean that the company is availing economies of scale.
Faisal Spinning's pre-tax profit in FY06 was for Rs 132.64 million (FY05 for nine months: Rs 157.06 million). The result is apparent at a glance, that the period with nine months produced higher result than the period with 12 months. The main cause is higher finance cost and depreciation charges.
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Performance Statistics (Million Rupees)
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30th June 2006 2005
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Share Capital-Paid-up: 100.00 100.00
Reserves & Surplus: 748.06 666.72
Shareholders' Equity: 848.06 766.72
L.T. Debts: 967.01 740.62
Infrastructure Fee Payable: 4.29 4.08
Deferred Liabilities: 26.08 24.49
Current Liabilities: 796.89 1,301.02
Fixed Assets Tangible: 1,671.96 1,722.89
L.T. Investment: 111.32 88.21
L.T. Loans: 5.07 4.46
L.T. Deposits: 2.69 1.06
Current Assets: 851.29 1,020.31
Total Assets: 2,642.33 2,836.93
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Profit & Loss A/c:
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For Year For 9 Months
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Ended June 30 Ended June 30
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2006 2005
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Sales-Net: 3,199.88 2,339.08
Gross Profit: 393.31 303.25
Other Operating Income: 1.08 1.50
Finance (Cost): (189.28) (82.96)
(Depreciation): (180.40) (99.69)
Profit Before Tax: 132.64 157.06
Profit After Tax: 88.84 130.72
Earnings Per Share (Rs): 8.88 13.07
Dividend Cash (%): 7.50 7.50
Share Price
(Rs) on 23-03-07: 67.00 -
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Financial Ratios:
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Price/Earning Ratio: 7.54 -
Book Value Per Share: 84.81 76.67
Price/Book Value Ratio: 0.79 -
Debt/Equity Ratio: 53.47 49.51
Current Ratio: 1.07 0.78
Asset Turn Over Ratio: 1.21 0.82
Days Receivables: 18 26
Days Inventory: 76 119
Gross Profit Margin (%): 12.29 12.96
Net Profit Margin (%): 2.78 5.59
R.O.A. (%): 3.36 4.60
R.O.C.E. (%): 4.81 8.5
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Plant Capacity & Actual Production
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A) Spinning Unit after conversion into
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Converted to 20/s count Yarn (Million Kgs)
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Installed Capacity: 11.434 5.866
Actual Production: 11.419 6.792
Capacity Utilisation (%): 99.87 115.79
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B) Number of Spindles
Installed: 30,720 30,720
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C) Weaving Unit after conversion
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into 50 picks (Million Meters)
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Installed Capacity: 38.406 31.233
Actual Production: 48.423 36.987
Capacity Utilisation (%): 126.08 118.42
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D) Number of Looms
Installed: 223 223
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