Dear Shareholders,

Assalam-o-Alaikum,

 It is a pleasure to welcome you to the 48th Annual General Meeting of the Company and place before you the Audited Financial Statement of the Company for the year ended June 30, 2013.

 

FINANCIAL AND OPERATING RESULTS:

Sales for the year were Rs.20,559 Million as compared to Rs. 19,750 Million last year. This represents an increase of 4.09%.  Profit for the year after tax is Rs. 1,151.122 Million after charging depreciation of Rs. 534.553 Million and contribution to Workers Profit Participation Fund of Rs. 78.787 Million. Earnings per share (EPS) are Rs. 46.04 (2012: Rs. 47.40 Restated). EBITDA of Rs. 3,057.137 Million was generated. EBITDA per ordinary share is Rs. 122.29 (2012:Rs. 140.00 Restated). 

 

Your Directors and Chief Executive Officer, Chief Financial Officer, Company Secretary, their spouses and minor children have made following transaction in Company's shares.

 

 

Description

Sh.Naseem Ahmad & Mst.Nighat

Naseem

Mst. Mahnaz Amir Sh.,  Amir Naseem Sh. & Minor Childern

Rehman Naseem & Minor Childern

Fazal Ahmed Sheikh

Fahad Mukhtar

Faisal Ahmed

Company Secretary

CFO

Opening Balance as on 01.07.2012

229,861

2,153,989

2,177,648

1,538,015

 

 

32,776

1,536,699

1,055

732

Purchase

-

-

-

-

-

-

-

-

Bonus

24,409

228,739

231,252

163,328

3,480

163,189

112

77

Inherited

-

-

-

-

-

-

-

-

Gift

-

-

246,920

-

-

-

-

-

Transfer as Gift

(246,920)

-

-

-

-

-

-

-

Closing Balance as on 30.06.2013

7,350

2,382,728

2,655,820

1,701,343

 

36,256

1,699,888

1,167

809

 

 

During the year 2012-2013, four board meetings were held which were attended as follow:

 

 

 

Sh. Naseem Ahmad          

 Chairman/Chief Executive                4

Mr. Jamal Nasim              

 Nominee of NIT Ltd.                       3

Mr. Amir Naseem            

                                                                                          

4

Mr. Rehman Naseem        

                                                                                           

4

Mr. Fazal Ahmad Sheikh  

  2

Mr. Faisal Ahmad              

  2

Mr. Fahd Mukhtar             

  2

Mst. Mahnaz Amir Sheikh

  3

 

 

 

 

COMPARISON OF LAST SIX YEARS OF OPERATIONS:

 

Salient features of the financial performance of the company for the last six years are reproduced below:

 

 

2013

2012

2011

2010

2009

2008

Production in Kgs Spinning (000)

Production in Meters Fabric (000)

53,013

24,570

53,251

12,210

46,454

-

43,723

-

41,995

-

38,422

-

Sales net (Rs. In millions)

20,559

19,750

18,934

11,211

8,651

7,021

Gross Profit (Rs. In millions)

2,890

2,831

2,026

1,573

1,196

944

Net Profit before tax (Rs. In millions)

1,462

1,648 Restated

1,001 Restated

845 Restated

550 Restated

318 Restated

Provision for taxation including deferred tax (Rs. In millions)

311

463 Restated

225 Restated

198 Restated

92 Restated

165 Restated

Profit after taxation (Rs. In million)

1,151

1,184 Restated

776 Restated

648 Restated

458 Restated

154 Restated

Un-appropriated profit brought forward (Rs. In million)

3,600

3,100 Restated

2,447 Restated

1,761 Restated

1,270 Restated

872 Restated

Appropriation (Rs. In million)

4,959

3,691 Restated

3,016 Restated

2,358 Restated

1,669 Restated

1,173 Restated

Cash Dividend

25%

20%

Nil

Nil

Nil

Nil

Specie Dividend %age

Nil

Nil

50%

100%

Nil

Nil

Bonus Shares %age

20%

10.62%

20.50%

Nil

Nil

Nil

Gross Profit ratio

14.06%

14.33%

10.70%

14.03%

13.83%

13.44%

Net profit to sale ratio

 

5.60%

6.00%

4.36%

4.70%

2.08%

4.85%

Earnings before interest, tax, depreciation and amortization (EBITDA) (Rs. In million)

3,057

3,164

Restated

2,106 Restated

1,734 Restated

1,565 Restated

1,145 Restated

 

 

CORPORATE GOVERNANCE:

 

As required by the code of corporate governance the board of directors hereby declares that:

 

  • The financial statements for the year ended June 30, 2013 present fairly the state of affairs, the result of its operations, cash flows and changes in equity;
  • Proper books of account have been maintained;
  • Appropriate accounting policies have been consistently applied in preparation of financial statements for the year ended June 30, 2013 and accounting estimates are based on reasonable and prudent judgment;
  • International Accounting Standards (IAS) as applicable in Pakistan, have been followed in preparation of financial statements;
  • The system of internal control is sound in design and has been effectively implemented and monitored;
  • There is no doubt about the Company to continue as going concern;
  • There has been no material departure from best practices of corporate governance as detailed in listing regulations;

  

PATTERN OF SHAREHOLDING:

 

The pattern of share holding as on June 30, 2013 is annexed.

 

FUTURE OUTLOOK:

 

Since August 2013, electricity tariff has been increased by a massive 50% and gas tariff by 17.64%.  Further increase in gas tariff is expected. Power and fuel cost for the Company will register a sharp increase during the current year.  This will squeeze profit margins.

 

However, supply of electricity and gas for textile industry has been rationalized by the new Government resulting in full operations and no downtime due to load shedding.  If this policy continues, as expected, it will result in higher utilization of installed capacity mitigating the negative effects of tariff increase. During the current year expansion of spinning and weaving capacities of the Company will also come online.  This will result in an increase in turnover and increase in profit margins due to economies of scale.

 

Cotton prices have increased to Rs. 7,000 from Rs. 5,800 last year.  Yarn and fabric prices, however, have not increased proportionately. However, due to the steady devaluation of Pakistani Rupee and expected increase in demand from China, your management expects yarn and fabric prices to rise.  Overall impact on profit margins due to these factors cannot be ascertained at this time.

 

Financial performance for the first quarter ending September 30, 2013 remains satisfactory, although due to the factors mentioned above, full year performance is difficult to forecast.

 

 

DIVIDEND ANNOUNCEMENT

Your Directors have proposed to distribute @ 25% cash dividend and “Bonus Shares” in the proportion of 20 shares for every 100 ordinary shares held i.e. 20%. (2012: 20% cash dividend and Bonus Shares in the Proportion of 10.61947 shares for every 100 shares held).

 

 

Subsidiary Company

 

The Company has annexed its consolidated financial statements along with its separate financial statements in accordance with the requirements of International Accounting Standard-27 (Consolidated and Separate Financial Statements). 

 

Following is a brief description of subsidiary company of Fazal Cloth Mills Limited.

 

The Company owns and controls 100% shares of this subsidiary.  The registered office of the Company is

69/7, Abid Majeed Road, Survey # 248/7, Lahore Cantt, Lahore and the manufacturing facility of the Company is located at Mauza Khairabad, Qadirpur Rawan bypass, Khanewal Road, Multan.  The Principal activity of the Company is to carry business of textile spinning and weaving. During the year, the Company has started installation of textile machinery and plans to commence its commercial operations by the month of February, 2014.

 

 

AUDITORS:

 

M/s.KPMG Taseer Hadi & Co., Chartered Accountants, auditors of the Company retires and being eligible offers themselves for reappointment for the year 2013-2014.

 

 

MANAGEMENT/LABOUR RELATIONS:

 

The management/labour relations remained warm and cordial throughout the year under review. We place great importance on our employees. We continue to invest in the professional development and improvement of skills of our human resources, since we believe that by investing in our people we invest in our future. Company’s human resource policy is based on the underlying values of fairness, merit, equal opportunity and social responsibility. Complying with our human resource policies we do not hire any child labour.

 

The employees and management of the company continued to make joint efforts to keep up high standards of productivity. By the grace of Allah the Almighty, relationship of management and employees continued to remain in total harmony.

 

The board wishes to place on record its deep appreciation to all of them for their hard work and dedication to achieve these results.

 

 

 

Dated: October 05, 2013

                                                                                                                                               Sd/-

                                                                                                                                 (SH. NASEEM AHMAD)
                                                                                                                           Chairman / Chief Executive Officer