During the year under review the company has been able to register impressive growth in sales which are record highest of its career. However, intense competition in the export market and rising cost has drastically lowered its profit since the last three years.
The company has launched an expansion programme to upgrade quality of products and to house all its manufacturing facilities under one roof to have better control, to minimise end cut down its overhead to achieve a better financial result and a relatively higher profit. At present its production factories are spread over at three locations as can be seen from the 'company information' appended with this "Brief."
According to its Annual Report 2006 the project was almost complete by 5th October 2006 (when Directors Report was published). The project, infact had gone into operation since the last three months from the date of the Directors' Report. They emphasized that benefits of the project would take time to show on paper.
Towellers Limited was incorporated in the province of Sindh as a private limited company on May 31, 1973 and subsequently converted into a public limited company in June 1994 and was listed on Karachi Stock Exchange in the following year 1995.
Towellers's shares are also quoted on Lahore Stock Exchange and are traded at quite higher market value. During the last one year market value of the share ranged between Rs 22.60 and Rs 27.90 per share. Recently, on 16th April 2007, the Towellers share's closing price was recorded at Rs 22.60 per share which is more than double of its par value.
The company is primarily engaged in manufacturing and export of textile made ups, garments and towels. The company's registered office is located at Federal 'B' Area Karachi-75950, URL of its website is www.towellers.com and its email address is towellers@cyber.net.pk. Its manufacturing facilities are spread over three locations in the province of Sindh. One unit is located at North Karachi Industrial Area while the other is at Deh Hattul Buth Taluka Thana Bola Khan and the third unit is in District Dadu.
On 30th June 2006, the company directors and members of their family had owned 34.9% and Pakistan Insurance Corporation held 10.8% of the company's total 17 million paid up shares of Rs 10 each. Its individual shareholders from general public remained the largest category of shareholders with 53.9% of the company's stock.
According to the six years' financial statistics published in its Annual Report 2006, the company has not been able to announce cash dividend for the last three years, although the company has remained profitable in all these six years.
During FY06, the year under review (of 12 months), the company posted net sales at Rs 2.212 billion and in FY05, preceding year (of 9 months) at actual net sales at Rs 1.384 billion. While computing the annualised sales estimate of last year, (Rs 1.85 billion) the FY06 actual sales showed improvement by 19.6% over the preceding year's annualised sales estimate. Despite impressive growth the company could just manage to post a relatively small profit of Rs 9.96 million (FY05, 9 months Rs 2.86 million). According to the directors of Towellers Ltd, with this profit amount they could merely raise head above water after meeting all operational, administrative, financial and other expenses, though the: cotton yarn prices during the year went up; the shipping companies again increased their freight rates in the period; fuel, gas and electricity charges increased; prices of dyes and chemicals also went up, and; to top it all, selling prices went down.
The directors lamented and said that the period under review was a very disastrous year, keeping in view, the above mentioned facts and also keeping in mind that the orders were booked in June 30, 2005 for the next 12 months and had to be honoured at the booked prices.
The other critical factor is that the country's textile industry in general also faced tough competition from other exporting countries like Bangladesh, India and China etc. The directors emphasized that the respective governments of these competitors helped their textile exporters. They acknowledged the small mercies extended by the government in the shape of help by sharing the expenses for modernising machinery and IT by giving a 6% rebate on garments. But their main business is in towels and bed wear, so the aforesaid help by the government is not enough as they look forward in tiding over increase in prices of local raw material.
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Performance Statistics (Million Rupees)
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30th June 2006 2005
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Share Capital-Paid-up: 170.00 170.00
Reserves & Surplus: 375.36 362.99
Shareholders' Equity: 545.36 532.99
Surplus on Rev. of F/Assets: 129.06 131.47
L.T. Debts: 133.00 244.52
Deferred Liabilities-Gratuity: 48.43 54.49
Current Liabilities: 1,477.66 1,155.35
Fixed Assets Tangible: 987.44 850.06
Current Assets: 1,335.66 1,257.56
Total Assets: 2,333.51 2,118.82
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Profit & Loss A/c:
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For the 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: 2,212.07 1,384.21
Gross Profit: 325.54 213.65
Other Operating Income: 22.36 0.27
Profit from Operations: 71.49 25.88
Financial (Costs)-Net: (41.13) (13.20)
(Depreciation): (37.73) (32.76)
Profit Before Taxation: 30.36 12.67
Profit After Taxation: 9.96 2.86
Earnings Per Share (Rs): 0.59 0.17
Dividend: - -
Share Price (Rs) on 16-04-07: 22.60 -
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Financial Ratios:
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Price/Earning Ratio: 38.30 -
Book Value Per Share: 32.08 31.35
Price/Book Value Ratio: 0.70 -
Debt/Equity Ratio: 16:84 27:73
Current Ratio: 0.90 1.09
Asset Turn Over Ratio: 0.94 0.65
Days Receivables: 61 94
Days Inventory: 116 181
Gross Profit Margin (%): 14.72 15.43
Net Profit Margin (%): 0.45 0.21
R.O.A. (%): 0.43 0.13
R.O.C.E. (%): 1.16 0.30
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