As of June-19, the installed capacity for spindles amounted to 115,824 - an increase by 5.5 percent year-on-year. The company has 196 looms installed for producing cloth while power generation capacity stands at 20.45 megawatts.
Pattern of shareholding
The ownership in the company is highly concentrated between Directors/Chief Executive Officer, their spouses and the general public with a stake of 42.6 percent and 50.1 percent respectively, followed by associate companies have a 6 percent share in the company.
Current performance
During the year FY19, the top-line of the company witnessed a sharp increase of 34 percent. The bulk of the revenue is generated through exports-accounting for over 80 percent of the turnover. Though it is worth mentioning that domestic sales performed better in comparison to exports during the year. Exports for MEHT increased 13 percent versus domestic sales which increased by 30 percent, dragging the revenue to the highest level in the past five years. The increase in turnover is also in line with peer companies - as larger players in the industry have witnessed rising top-line. In comparison, the large players of the industry are all involved in the export business, a massive 20 percent devaluation in the currency during FY19 has resulted in swelled up revenues throughout the industry- impact depending on the sales mix.
| Pattern of Shareholding (as on June 2019) | |
| Categories of Shareholders | Share |
| Directors/Chief Executive Officer and their spouse and minor Children | 42.6% |
| Associated Companies, Undertakings and related parties | 6.1% |
| Banks, Development Financial Institutions & Non-Banking Financial Institutions | 0.1% |
| NIT & ICP | 0.2% |
| Insurance companies | 0.9% |
| General Public | 50.1% |
| Total | 100% |
| Source: Company accounts |
Gross profit almost doubled during the period under review. Gross profit margin stood at 10.6 percent for FY19 as compared to 7.1 percent in the preceding period. Management attributes the increase to volumetric sales growth and added production capacity. Company accounts reveal a 6 percent increase in capacity for yarn manufacturing during FY19. Minor curtailment on the cost side was seen
Future outlook Going forward, energy costs, cotton crop and finance costs will be crucial factors in determining the profitability for the company. The company will be subject to industry forces that entail policies and demand and supply dynamics.
| Mehmood Textile Mills | ||||
| Rs | FY19 | FY18 | chg | |
| Sales | 24,386,739,696 | 18,154,143,998 | 34% | |
| Cost of sales | ############## | ############## | 29% | |
| Gross Profit | 2,573,885,868 | 1,280,241,180 | 101% | |
| Administrative Expenses | (407,556,096) | (320,276,930) | 127% | |
| Distribution Cost | (498,863,722) | (473,311,216) | 105% | |
| Other expenses | (776,126,381) | (314,735,415) | 247% | |
| Other income | 456,932,782 | 800,670,995 | -43% | |
| EBIT | 1,348,272,451 | 972,588,614 | 39% | |
| Share of profit of associates | 1,239,741,314 | 44,960,466 | 2657% | |
| Finance Cost | (1,525,678,163) | (742,765,764) | 105% | |
| EBT | 1,062,335,602 | 274,783,316 | 287% | |
| Taxation | (231,219,098) | (62,573,046) | 270% | |
| PAT | 831,116,504 | 212,210,270 | 292% | |
| EPS (Rs) | 55.41 | 14.15 | ||
| Gross Margin | 10.55% | 7.05% | ||
| Profit Margin | 3.41% | 1.17% | ||
| Source: Company Accounts | ||||
On the cost side, raw material costs are expected to increase as per industry sources. This may be attributed to the low expectation on the upcoming cotton crop yield. Prices in the international markets will also influence the direction of prices in the future. If cotton prices do increase, it will squeeze margins as raw material costs account for more than 70 percent of the total cost of goods. A way around this involves a volumetric increase in sales, penetrating further into domestic markets, as prices on the local front are more enticing according to industry sources. This would help the company achieve economies of scale and hence a better margin.