COMPANY INFORMATION BOARD OF DIRECTORS:

Transcription

1 CONTENTS Company Information 3 Directors Report 4-5 Balance Sheet 6-7 Profit and Loss Account 8 Cash Flow Statement 9-10 Statement of Changes in Equity 11 Notes to the Accounts

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3 COMPANY INFORMATION BOARD OF DIRECTORS: Mrs. Naz Mansha Mian Raza Mansha Mian Hassan Mansha Mr. Fayaz Ahmad Longi (NIT) Mr. Muhammad Bilal Sheikh (PICIC) Mr. Faisal Ehsan Ellahi Mr. Khalid Qadeer Qureshi Mr. Muhammad Azam Rana Muhammad Mushtaq Chief Executive/ Chairperson Chief Financial Officer COMPANY SECRETARY: Mr. Khalid Mahmood Chohan AUDITORS: Riaz Ahmad & Company Chartered Accountants LEGAL ADVISOR: Mr. M. Aurangzeb Khan, Advocate, Chamber No. 6, District Court, Faisalabad. BANKERS TO THE COMPANY: ABN AMRO Bank Albaraka Islamic Bank B.S.C (E.C) Allied Bank of Pakistan Limited American Express Bank Askari Commercial Bank Limited Bank Alfalah Limited Citibank N.A. Crescent Commercial Bank Limited Deutsche Bank Faysal Bank Limited Habib Bank Limited Habib Bank A.G. Zurich KASB Bank Limited Meezan Bank Limited National Bank of Pakistan NDLC-IFIC Bank Limited PICIC Commercial Bank Limited Standard Chartered Bank The Bank of Punjab The Hong Kong & Shangai Banking Corporation Limited Union Bank Limited United Bank Limited MILLS: Nishatabad, Faisalabad (Spinning, Processing, Stitching units & Power Plant) 12 K.M. Faisalabad Road, (Weaving units & Power Plant) Sheikhupura. 21 K.M. Ferozepur Road, Lahore. (Stitching unit) 5 K.M. Nishat Avenue (Weaving, Dyeing & Finishing Unit Off 22 K.M. Ferozepur and Power Plant) Road, Lahore. 20 K.M. Sheikhupura (Spinning Unit) Faisalabad Road, FerozeWatwan REGISTERED OFFICE & SHARES DEPARTMENT: Nishat House, 53-A, Lawrence Road, Lahore. Tel: Fax: LIAISON OFFICE: Ist Floor, Karachi Chambers, Hasrat Mohani Road, Karachi. Tel: Fax: HEAD OFFICE: 7, Main Gulberg, Lahore. Tel: Fax: nishat@nishatmills.com Website: 3

4 DIRECTORS REPORT We are pleased to present Financial Statements for the nine months ended June 30, The company earned Gross Profit of Rupees 1, million during the period as compared to corresponding period s Rupees 1, million. Sales increased by Rupees 1, million. However, increase in sales did not resulted in corresponding increase in gross profit due to price hike of local, imported cotton, yarn and grey fabric during the current nine months. Lower financial costs have contributed to the Net Profit of Rupees million which showed increase of Rupees million over the corresponding period s profit of Rupees million. Market review Increase in cotton prices, constant threat of imposition of trade barriers from European Union and high cost of quota acquisitions badly affected the profit margins of textile units all over the country. However, we, at Nishat overcame these adverse factors by focusing on building a strong culture that ensured the flow of higher quality products and services. Systems are built to continually enhance the quality of products. We created an intense customer focus that enhanced our capacity to compete and develop business in competitive world. On the similar note, new marketing channels and new clients are added, which resulted into more sales as compared to the preceding year. Many trial orders in high tech textile products were completed which will hopefully consolidate our position in coming quarter. Necessary machines / equipment were also being sourced to support ever changing demands of the customers and to counter intense competition. Nishat is committed to the philosophy of attaining perfection through augmentation and a complete focus on customer satisfaction. Spinning In first quarter of the year our yarn prices for both foreign and local markets touched highest levels due to sky-scraping prices of cotton in domestic market. However, in second quarter, yarn prices came to settle down due to drop in New York cotton index which affected domestic cotton as well. International cotton prices declined in June In June end, NY index showed record low at US$ 47cents/lb where as domestic cotton, on contrary stood at Rupees 2,750/ maund. Eventually, price of yarn started dropping internationally. We believe that if supply, as anticipated, exceeds demand in the prices are expected to remain under pressure. Despite these major fluctuations we tried to maintain our prices similar to the levels being offered by few of our top competitors. We remained focused on capitalizing new opportunities in West and resume business with some major clients in USA and some East European countries. We successfully managed to fulfill yarn requirements of our own weaving and at the same time handled export orders. More efforts have been taken to introduce and sell multi-count yarn which is a new addition in our product line. In addition to this, portfolio of nonconventional counts including slub, lycra, compact yarn is also offered in international market for which we received an encouraging response. Weaving During the nine months ended June 30, 2004, the weaving section of Nishat faced a number of problems, the most evident of which were the quota shortage faced in the first quarter and high prices of yarn in second quarter which adversely affected the profitability of the weaving section. The quarter starting April 2004 has been very slow as far as business activity is concerned. Raw material prices were somewhat stable but on the bullish side. This however was in contrast with the fabric prices that faced a decline in the foreign market. By the end of the quarter cotton futures started to decline, hence stabilizing the yarn rates. However, due to the crash in fabric prices in the Far Eastern market, the decline in cotton futures did not have a positive impact on the profitability as was anticipated. The crash in fabric price level was not significantly 4

5 pronounced in the European Market and Nishat assiduously seized this opportunity by strengthening its relationship with existing European clientele and in the meantime focusing on exploring new markets, which are at developmental stages such as Central America, France etc., the goal of the next quarter of the year is to capture substantial market share in these markets. Nishat has been continuously expanding its operations and it follows the principal of obtaining excellence through continued improvement as a corroboration of this continual process of quality, Nishat set up a new weaving unit in the first quarter of 2004 with 110 new Toyota (High Speed) Air Jet Looms. This new project situated in the Dyeing and Finishing premises is supporting the Dyeing project immensely due to its location and flexibility as far as new orders lead-time is concerned. This will ensure that the dyeing project does not lose any business where quick response is required. Printing, Dyeing and Stitching The production of dyed fabric & made-up curtains increased due to increase in jacquard weaving capacity and we were able to cater to the needs of upholstery business in European and US markets. Aggressive marketing campaigns and negotiations with retailers were made to increase the selling prices; however, a major part of the sales remained under pressure, in the meantime, we maintained the sales and maximized the production. Efforts are being made to improve the customer base by using innovative and flexible marketing strategies. We forecast an ease in raw material prices by the end of this year which coupled with the abolishment of quotas is expected to generate substantial demand for finished made-up products. The division has already planned to increase dyeing capacities and to modernize the pre-treatment section. So far new Digital Fabric Printing Machine, Computerized Jiggers and Automated Sewing Equipment have been installed. As our commitment to continuing excellence, feasibility and structural details of other balancing and modernization activities have been set out. We, being able to maintain our customer base in the last 3 quarters even with enormous pressure of raw material price increase, are now set to achieve our targets in future. We are also expecting gradual increase in the margins in near future. However, Pakistan as whole is facing tough competition and lower margins as China and India are offering much lower prices of piece dyed fabric as compared to Pakistan imposing a furious competition. Earnings per share The Earnings per Share of the Company has increased to Rupees 3.68 during the nine months under review as against Rupees 2.86 in the corresponding period. Acknowledgement The directors record their thanks to our bankers for extending their financial support and a note of appreciation for the devotion and hard work of all the employees of the Company during the period. For and on behalf of the Board Chief Executive / Chairperson July 28,

6 BALANCE SHEET AS AT 30 JUNE 2004 (UN-AUDITED) Note 30 June 30 September EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorised share capital 150,000,000 (2003: 150,000,000) ordinary shares of Rupees 10 each 1,500,000 1,500,000 Issued, subscribed and paid up share capital 4 1,224,788 1,224,788 Reserves 6,676,264 4,893,336 NON-CURRENT LIABILITIES 7,901,052 6,118,124 Redeemable capital 5 2,378,655 2,706,249 Liabilities against assets subject to finance lease 16,067 47,140 CURRENT LIABILITIES 2,394,722 2,753,389 Current portion of long term liabilities 851, ,908 Short term finances 5,992,872 4,479,400 Creditors, accrued and other liabilities 815, ,443 Workers' profit participation fund 29,796 28,696 Provision for taxation 407, ,162 Proposed dividend - 183,718 Unclaimed dividend 13,252 11,788 8,110,316 6,583,115 CONTINGENCIES AND COMMITMENTS ,406,090 15,454,628 CHIEF EXECUTIVE 6

7 Note 30 June 30 September ASSETS NON-CURRENT ASSETS Tangible fixed assets Operating fixed assets 7 7,384,925 6,911,233 Assets subject to finance lease 121, ,220 Capital work-in-progress 413, ,208 7,920,422 7,383,661 Long term investments 3,352,666 2,166,157 Long term loans, deposits, prepayments and deferred cost 34,785 99,995 CURRENT ASSETS 11,307,873 9,649,813 Stores, spare parts and loose tools 402, ,013 Stock-in-trade 3,322,464 1,905,278 Short term Investments 708, ,018 Trade debts 925,957 1,047,025 Advances, deposits and prepayments 674, ,323 Other receivables 546, ,293 Cash and bank balances 518,084 1,044,865 7,098,217 5,804,815 18,406,090 15,454,628 DIRECTOR 7

8 PROFIT AND LOSS ACCOUNT FOR THE QUARTER ENDED 30 JUNE 2004 (UN-AUDITED) NOTE April to Oct 03 to April to Oct 02 to June 04 June 04 June 03 June 03 Sales 3,872,824 11,021,255 3,136,237 9,867,968 Cost of goods sold 8 3,383,625 9,621,848 2,686,831 8,422,921 Gross profit 489,199 1,399, ,406 1,445,047 Administrative, Selling and General expenses 243, , , ,122 Operating profit 245, , , ,925 Other income 54, ,560 55, , , , , ,482 Financial and other charges 100, , , ,928 Workers' profit participation fund 9,985 29,796 8,453 23, , , , ,461 Profit before taxation 189, , , ,021 Provision for taxation 38, ,793 33,044 95,881 Profit after taxation 150, , , ,140 Unappropriated profit brought forward 300, , Unappropriated profit carried forward 451, , , ,286 Earnings per share (Rupees) The annexed notes form an integral part of these accounts. CHIEF EXECUTIVE DIRECTOR 8

9 CASH FLOW STATEMENT FOR THE PERIOD ENDED 30 JUNE 2004 (UN-AUDITED) 30 June 30 June CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation 565, ,021 Adjustments : Depreciation and amortization 547, ,028 Gain on disposal / adjustment of fixed assets (40,501) (44,470) Amortization of deferred cost 43,188 19,759 Financial charges 319, ,627 CASH FLOW FROM OPERATING ACTIVITIES BEFORE WORKING CAPITAL CHANGES 1,434,272 1,463,965 CASH FLOW FROM WORKING CAPITAL CHANGES (Increase) / decrease in current assets Store, spare parts and loose tools 6, ,102 Stock-in-trade (1,417,185) (514,717) Trade debts 121,068 (585,384) Advances, deposits and prepayments (95,440) (102,212) Other receivables (168,004) 72,990 Increase / (decrease) in current liabilities Short term running finances 1,513,472 1,266,722 Creditors, accrued and other liabilities 129,418 30,193 Workers' profit participation fund 1,099 5,867 NET CASH FLOW FROM WORKING CAPITAL CHANGES 90, ,561 CASH GENERATED FROM OPERATIONS 1,525,170 1,738,526 Financial charges paid (291,652) (514,213) Taxes paid (121,666) (93,133) NET CASH INFLOW FROM OPERATING ACTIVITIES 1,111,852 1,131,180 9

10 30 June 30 June CASH FLOW FROM INVESTING ACTIVITIES Long term loans, deposits, prepayments and deferred costs 22,022 1,505 Proceeds from disposal of operating fixed assets 214, ,833 Investment made (332) (131,594) Fixed capital expenditure (1,257,824) (1,078,552) NET CASH OUTFLOW FROM INVESTING ACTIVITIES (1,021,928) (888,808) CASH FLOW FROM FINANCING ACTIVITIES Redeemable capital 200,000 1,105,660 Redemption of redeemable capital (535,764) (1,005,141) Repayment of long term loans - (73,855) Liabilities against assets subject to finance lease (98,687) (154,048) Dividend paid (182,254) (683) NET CASH OUTFLOW FROM FINANCING ACTIVITIES (616,705) (128,067) NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (526,781) 114,305 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 1,044, ,546 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 518, ,851 CHIEF EXECUTIVE DIRECTOR 10

11 STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 30 JUNE 2004 (UN-AUDITED) Reserve for Premium on issue Fair Value General Unapprop- Shareholders Share capital issue of of right shares reserve reserve riated profit equity bonus shares Balance as at 30 September ,113, ,344 1,027,622 (1,082,847) 3,085, ,255,227 Fair value gain ,358,232 1,358,232 Bonus shares issued during the period 111,344 (111,344) Net profit for the 9 month ended 30 June , ,140 Balance as at 30 June ,224,788-1,027, ,385 3,085, ,286 5,963,599 Net profit for the 3 month ended 30 September ,439 60,439 Fair value gain , ,804 Proposed dividend (183,718) (183,718) Transfer to general reserve ,000 (227,000) - Balance as at 30 September ,224,788-1,027, ,189 3,312, ,118,124 Fair value gain ,331, ,331,599 Net profit for the 9 month ended 30 June , ,329 Balance as at 30 June ,224,788-1,027,622 1,884,788 3,312, ,336 7,901,052 The annexed notes form an integral part of these accounts. CHIEF EXECUTIVE DIRECTOR 11

12 NOTES TO THE ACCOUNTS FOR THE PERIOD ENDED 30 JUNE 2004 (UN-AUDITED) 1. THE COMPANY AND ITS OPERATIONS Nishat Mills Limited is a public company incorporated in Pakistan under the Companies Act, 1913 (Now Companies Ordinance, 1984) and listed on Stock Exchanges in Pakistan. The company is engaged in the business of textile manufacturing and of spinning, combing, weaving, bleaching, dyeing, printing, stitching, buying, selling and other wise dealing in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic fibre and cloth and to generate, accumulate, distribute and supply electricity. 2. ACCOUNTING POLICIES Accounting policies adopted for the preparation of these accounts are consistent with those applied in the preparation of the latest preceding annual published accounts. 3. These financial statements are unaudited and are being submitted to shareholders as required u/s 245 of Companies Ordinance, 1984 and have been prepared in accordance with the International Accounting Standard No. 34 " Interim Financial Reporting" as applicable in Pakistan as notified by Securities and Exchange Commission of Pakistan. 30 June 30 September ISSUED, SUBSCRIBED AND PAID UP SHARE CAPITAL 67,762,264 (2003: 67,762,264) ordinary shares of Rupees 10 each fully paid up in cash 677, ,623 14,471,340 (2003: 14,471,340) fully paid ordinary shares of Rupees 10 each issued for consideration other than cash 144, ,713 40,245,199 (2003: 40,245,199) ordinary shares of Rupees 10 each issued as fully paid bonus shares 402, ,452 1,224,788 1,224, ,380,187 (September 2003: 13,380,187) shares of the company are held by the associated undertakings. 5. REDEEMABLE CAPITAL Opening balance 3,523,032 3,131,007 Add: Disbursement during the period 200,000 1,805,660 3,723,032 4,936,667 Less: Repayments during the period 535,764 1,413,635 3,187,268 3,523,032 Less: Current portion shown under current liabilities 808, ,783 2,378,655 2,706,249 12

13 6. CONTINGENCIES AND COMMITMENTS Contingencies i) The company is contingently liable for Rupees 61,891 thousand (September 2003: Rupees 61,891 thousand) on account of central excise duty not acknowledged as debt as the cases are pending before court. ii) Guarantees of Rupees 228,342 thousand (September 2003: Rupees 185,458 thousand) have been given by the banks of the company. Commitments i) Contracts for capital expenditure are approximately amounting to Rupees 146,086 thousand (September 2003: Rupees 564,426 thousand). ii) Letters of credit other than for capital expenditure are amounting to Rupees 264,613 thousand (September 2003: Rupees 230,501 thousand). 7. OPERATING FIXED ASSETS 30 June 30 September Opening written down value 6,911,233 6,327,546 Add: Additions during the period 1,184,886 1,468,905 8,096,119 7,796,451 Less: Disposals during the period 173, ,183 7,922,413 7,594,268 Less: Depreciation charged for the period 537, ,035 7,384,925 6,911,233 13

14 8. COST OF GOODS SOLD April to Oct 03 to April to Oct 02 to June 04 June 04 June 03 June 03 Raw materials consumed 1,361,230 3,953,396 1,001,540 3,022,829 Cloth and yarn used 953,481 3,057, ,590 2,529,502 Processing charges 15,657 36,910 10,346 39,678 Salaries, wages and other benefits 199, , , ,513 Stores, spare parts and loose tools 308, , , ,473 Packing materials 64, ,905 62, ,275 Repair and maintenance 38, ,216 42, ,949 Fuel and power 231, , , ,672 Insurance 5,151 16,381 5,708 17,831 Other factory overheads 34,521 90,935 36,341 94,897 Depreciation and amortization 175, , , ,745 3,387,686 10,042,554 2,791,257 8,535,364 Work-in-process: Opening stock 950, , , ,629 Closing stock (856,299) (856,299) (838,940) (838,940) 94,525 (168,045) (39,612) (91,311) Cost of goods manufactured 3,482,211 9,874,509 2,751,645 8,444,053 Finished goods: Opening stock 938, , , ,536 Closing stock (1,037,071) (1,037,071) (893,668) (893,668) (98,586) (252,661) (64,814) (21,132) 3,383,625 9,621,848 2,686,831 8,422, TRANSACTIONS WITH RELATED PARTIES 30 June 30 June Purchase of goods and services rendered 15, ,205 Sale of goods 40,673 45,386 Sale of fixed assets - 1,241 Dividend income 12,924 27, These transactions are carried out at an arm's length price determined in accordance with comparable uncontrolled price method. 14

15 10. TAXATION Current provision represents the tax due under section 169 of the Income Tax Ordinance, AUTHORISED FOR ISSUE These financial statements were approved by Board of Directors and authorised for issue on July 28, Figures have been rounded of to nearest thousand of rupees. CHIEF EXECUTIVE DIRECTOR 15