Salfi Textile Mills Limited (KSE: SALT) is a public limited company that was incorporated in Pakistan in 1968 under the Companies Ordinance, 1984. One of the constituent members of a large industrial group of companies, the TATA group; the firm is listed on Karachi Stock Exchange. SALT, headed by Anwar Ahmed Tata, has its registered office on MA Jinnah Road, Karachi; but, the manufacturing facilities are situated at Landhi Industrial Estate, Karachi. The chief activity of the company is production and sale of yarn.
The sales revenue of the firm is gradually improving as compared to the corresponding period of the preceding year. During the nine months of the fiscal year 2013-14, net sales of Rs 3.2 billion expanded marginally by 7.5 percent year on year against net sales of Rs 3.06 billion attained in the same period of last year. This paltry growth was attributed to growing power shortages in Punjab as a result of which demand for synthetic fiber remained dismal.
SALT's gross profit fell by 25.9 percent year on year in 9M FY14. The cost of sales grew out of step due to spinning industry getting impacted by exchange rate fluctuation and hike in energy tariffs. Regardless of falling gross profit and operating profit, SALT has shown net profit after tax of Rs 71.67 million on the back of subsiding 'other expenses'. Additional backing to bottom line was offered by rise in 'other income' by 233.8 percent year on year. However, core operating expenses along with finance cost observed surge of 22.1 percent year on year and 51.2 percent year on year, respectively.
The current ratio for SALT in 9M FY14 was 1.27 and the quick ratio was 0.3, suggesting that the firm holds insignificant readily-available liquefiable assets. The non-current liabilities grew by 56.2 percent year on year due to increase in long-term borrowing and deferred liabilities by the company. Due to drop in profits, the earnings per share fell from Rs 69.82 to Rs 21.41 for vis-à-vis last financial year.
SALT has increased its operational capacity of synthetic yarn unit due to installation of imported machinery, thus, going forward SALT's management foresees increase in top line trickling down to better profitability as a result of enhanced demand from EU: Thanks to the award of GSP+ status!
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9MFY12 9MFY13 9MFY14
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Profitability
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Gross profit margin 9.7% 17.6% 12.2%
Operating profit margin 6.1% 12.3% 6.9%
Net profit margin 0.0% 7.6% 2.2%
ROE 0.1% 9.6% 3.3%
ROA 0.0% 5.1% 1.5%
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Liquidity
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Current ratio 1.08 1.28 1.27
Quick ratio 0.41 0.35 0.30
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Turnover
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Total asset turnover 0.72 0.67 0.69
Fixed asset turnover 1.46 1.55 1.35
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Market
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EPS - Rs 0.33 69.82 21.41
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