Financial Report

Stock Prices of Food and personal care product industries of

Pakistan

By:
Azeem Dilawar
Yasir
Akbar Ali

Submitted to: Miss Dr. Kiran

Course: Strategic Finance

1
 Companies Selected

 Quice
 Engro foods limited
 Ismail Industries limited
 Mitchells fruit farms limited
 National foods limited

2
 Table of Content
S.No Description Page No
1 Introduction
2 Quice
3 Engro foods limited
4 Ismail industries limited
5 Mitchells fruit farms limited
6 National foods Limited

3
 Introduction
Pakistan is the fourth largest manufacturer of textile goods, According to APTMA,) it
contributes 52% of total exports which is about 12.36 Billion US Dollars, 46% of total
manufacturing, 40% of total labor force 8.5% of total GDP (Gross Domestic Products) and 5% of
the market capitalization. It is also important to mention here that the geographical location of
Pakistan is the favorite for the international trade it shares northern border with China, eastern
border shares to India, western border with Afghanistan and Iran and southwestern border to
the Arabian Sea
For the economic development of Pakistan, textile sector of the country played a vital role for a
long time, the main economic objective of any country either it is a developed country or a
developing country should be to widen the sector which contributes such a great share in
export and GDP as well the generating of tax revenue and providing employments to the
workforce of the country.
The development in this sector was remarkable in the past since four decades after
independence of Pakistan. At the time of independence of Pakistan there were only two textile
mills Okara Textile Mills, Okara and Lyallpur Cotton Mills which was located at Faisalabad, were
in process .With the passage of time this sector started its development process gradually and
finally Pakistan became 4th largest textile exporter but unfortunately textile sector of Pakistan
faced very serious challenges such as energy crises, fluctuating yarn prices, shortage of gas
supply and load shading for several days to the sector, law and order situation in the country,
devaluation of Pakistani rupee, lack of (R&D) institutions in the country to improve the quality
of raw material, lack of modern equipment and machinery, increasing cost of production due to
high fuel prices etc due to all the above situations the producers and exporters of Pakistan are
losing their competitive advantage in global markets. The aim of this research study is to
identify the prospects of challenges and difficulties faced by the textile industry of Pakistan and
the clothing sector to find out some solutions which may help this sector to restart its journey
towards the development process of the economy of the country. This research paper will also
highlight the ongoing status of the textile industry of Pakistan

4
 Day Company Open High Low Close Avg.
31-Dec-18 31.23 40.16 30 40 1.67
29-Dec-17 26.66 31.23 23.89 31.23 1.95
Ahmad Hassan Textile Mills
31-Dec-16 27 28.06 21.95 28.06 0.85
Limited
31-Dec-15 26.25 31.87 24 27 1.86
31-Dec-14 33.2 40.37 20.8 26.25 5.96

AHMED TEXTILE

40
31.23
28.06 27 26.25

1 2 3 4 5

Year 2014:
During this year, inspite of various challenges to textile industry the operations of our company
were quite satisfactory. The second half of the year under review has been very challenging and
worse for the whole industry in terms of financial results due to depressed export market and
dollar exchange rate, energy crises in the country and high rates of markup.

Year 2015:
During the year under review, our operational results remain satisfactory, due to our BMR and
enhancement in production capacity in spinning and weaving units. Energy cost was also
controlled by installing new Gas Generator in spinning unit. But in spite of all these efforts for
cost control, improving production efficiency, the second half of the year under review has
been very challenging and worse for the whole textile industry. Financial results remain
unsatisfactory due to depressed demand in export as well as local market, exchange rates down
fall of Dollar and energy crises in the country. As a result of all these factors, the margin on our
sales were squeezed, so gross profit of the Company has been decreased by 2.94% from 9.36%
to 6.44% as compared to last year

5
Year 2016:
By the grace of Almighty Allah, during the year under review, our operational results are better
than previous year. It is due to our timely decision of BMR, enhancement in production capacity
in spinning and weaving units and installation of new Gas Generator in spinning unit. On the
other hand management has also succeeded in his plan to control cost even in such a
challenging environment of the whole textile industry. However performance of the year under
review is affected as the industry faced many challenges due to economic slowdown. Yarn
prices remained low on account of reduced demand in both export and as well as local markets.
The policy changes by yarn and fabric importers on usage of their cotton reserves and reduction
of import of cotton made a major impact on cotton yarn exports and hence on yarn price but a
slight recovery can be seen from last half year so far which resulted in improvement of our
financial results as well

Year 2017:
At the start of the year 2017-18 was the continuation of difficulties from previous year because
of expensive raw materials and unfavorable conditions in international market.
Prices in local market were more supportive as compared to export market.

Year 2018:
Reduction of import of cotton made a major impact on cotton yarn exports and hence on yarn
price but a slight recovery can be seen from last half year so far which resulted in improvement
of our financial results as well

6
 Day Company Open High Low Close Avg.
31-Dec-18 36.76 55.1 36.76 46.17 45.04
29-Dec-17 51.05 58.75 32.52 37.08 41.8
Gul Ahmed Textile Mills
31-Dec-16 36.25 61.2 32.99 51.17 43.43
Limited
31-Dec-15 65.25 68 34.01 36.24 48.56
31-Dec-14 47.58 73.25 45.5 64.99 59.07

GUL AHMED

64.99
51.17
46.17
37.08 36.24

1 2 3 4 5

Year 2014:
Due to shortage of cotton supply and also due to power supply breakdown, the production
effect very badly in the fiscal year 2014.
And the stock price is not good as it should be but as compare to the fiscal year, 2015 to 2018 ,
its stock price is high and good enough.

Year 2015:
Shortage of cotton in the market which distort the profitability
Exchange rate fluctuations which effect the export sales of the company in PKR.

7
Pronouncement by Government of Pakistan relating to rebates, taxes, duties, refines rates etc
which are price sensitives, these effect the performance of the company.

Year 2016:
Shortage of cotton in the market.
Exchange rate fluctuations effect the export sales of company
Subsidies to the industry in energy prices , lower tax, or duties rates will effect the
competitiveness of the industry in Pakistan if such facilities not provided to the company by
government of Pakistan.

Year 2017:
Exchange rate fluctuations effect the export sales of the company and where the same does not
float free, it makes the company uncompetitive with the regional competitors.
Intrest rate fluctuations effect the finance cost of the company and also effect the decisions of
the management to expand its operations /modernaize its production facilities due to
borrowing cost.

Year 2018:
Due to shortage/excess of cotton in the market 9local and international) may disort the
profitability as at times the company has to resort to buying on highier prices to meet demand.
Pronouncement by foreign governments such as award of GSP plus Status to Pakistan from
Europeon Union which may boost the export revenue of the textile industry.

8
 Day Company Open High Low Close Avg.
31-Dec-18 66.85 79.8 40.51 45.08 46.9
29-Dec-17 118 130.99 56.05 66.25 90.9
31-Dec-16 Kohinoor Textile Mills Limited 71.8 119 62.5 116.2 80.07
31-Dec-15 35.7 78 35.7 71.5 60.26
31-Dec-14 30.25 36.9 20.85 35.05 26.36

KOHINOOR

116.2

66.25 71.5
45.08
35.05

1 2 3 4 5

Year 2014:
The extra-ordinary income the company realised in FY13 due to the one off gain of Rs824
million gains on the recognition of financial liabilities.
Barring that outlier, net margins have remained in 1.5-2.2 percent range for the past five years.
The overall gloomy textile sector conditions have affected the company's export sales which
have been steadily decreasing as part of the company's overall revenue mix

Year 2015:
The company's exports made up almost 87 percent of the top-line in FY14 which has dropped
down to 77

9
Year 2016:
Over the past few years, the company's weaving division has struggled due to tough
international competition and consistently rising raw material prices.

Year 2015:
The margin cushion has been provided by the higher value added dyeing division, which has
been able to capitalize on increased sales to international brands that has resulted in higher
capacity utilization as well.

Year 2018:
FY18 told the same story with the KTM's weaving division continuing to underperform, which
the company blamed on increase in raw material prices and competition. As a lot of raw
material used by the textile industry including dyes and fabric are imported, the sharp currency
devaluation has resulted in these input costs going up as well. However, the company is bullish
on the future and has increased the capacity of the weaving division by 60 percent with the
addition of 84 looms. According to the company's annual report for FY18, this increase in
capacity was absorbed by the dyeing division, but new export markets have been tapped and
the revenue is expected to increase as a result.

KTM has also increased the dyeing division production capacity by 20 percent, which will bode
well given the government's priority to increase textile exports. However, during FY18
international demand remained depressed while the increase in raw material and utility costs
did no favour to the division's margins.

10
 Day Company Open High Low Close Avg.
31-Dec-18 0.5 0 0 0.5 0
29-Dec-17 0.5 0 0 0.5 0
(Colony) Sarhad Textile Mills
31-Dec-16 0.5 0 0 0.5 0
Limited
31-Dec-15 0.5 0 0 0.5 0
31-Dec-14 0.5 0 0 0.5 0

SARHAD TEXTILE

0.5 0.5 0.5 0.5 0.5

1 2 3 4 5

Year 2014:
Financial year 14 was one of the most frustrating years for the economy of Pakistan in the
recent past. Crippling power and gas shortages, rising energy prices, increasing interest rates,
undue strengthening of Pakistani Rupee, precarious security situation and fragile geopolitical
environment of our country and the region continued to plague the business environment.

Year 2015:
Negative factors like suppressed global demand, high energy cost clubbed with excessive load-
shedding, volatility in raw material prices, law and order problems together with significant
increase in volume of Indian and Chinese yarns and fabric dumped in the local market adversely
affected the textile business. Consequently, the optimal utilization of installed capacities in
spinning and weaving could not be materialized

11
During current financial year, like the rest of textile industry, the weaving business segment also
went through very difficult phase. Sluggish demand of fabrics in both local and international
markets resulted in slashing down the prices of weaving products, whereas the conversion cost
simply kept on escalating. Buyers were unwilling to place long term orders due to uncertainty
and only buy day to day at lower and lower prices. Huge quantities of subsidized fabrics from
India and China were also dumped in our domestic market unchecked which made the matters
worse..

Year 2016:
Textile exports of the country recorded a major declining trend. The main reason of this
situation is the high cost of doing business as compared to our competitors in the international
markets. Textile Industry in Pakistan is facing problems like high cost of energy, heavy taxes,
high value of Pak Rupee, intense competition from India and China because of getting subsidies
from their Governments and dumping of smuggled yarn and fabric into local markets. Further
the Textile Industry is persistently facing the liquidity crunch as major refunds are still unpaid
and billions of Rupees are stuck up in Sales tax and Income tax refunds. The performance of the
spinning and weaving segments is very disappointing due to the reason that the exporters have
been relying on China for last many years and due to slow down in China, yarn and greige fabric
exports from Pakistan have declined significantly. The general expectation is that these sectors
will continue to remain challenging in Pakistan in future also because of ever increasing cost of
doing business.

Year 2017:
The global economic slowdown continues while capacity increases continue to come on line in
the region.
There is a drastic decline in Pakistan's exports including the textile sector and contrary to
expectations the zero rated regime and textile package had failed to generate positive trend in
textile exports. On the other hand rising costs of doing business and delays in release of tax
refunds, regional and national changing scenarios are making the things more difficult. The
performance of the spinning and weaving segments is very disappointing due to the reason that
the exporters have been relying on China for last many years and due to slow down in China,
yarn and greige fabric exports from Pakistan have declined significantly. The general
expectation is that these sectors will continue to remain challenging in Pakistan in future also
because of ever increasing cost of doing business.

Year 2018:
The year has seen a rise in cost of raw materials as well as gas mix for Punjab based mills. The
changes in these two major components of cost of production has substantially raised cost
during the year. Although the market remained highly competitive forcing companies to

12
improve quality and reduce price yet your company has been able to significantly increase its
sales from last year.
Although the turnover of the spinning sector has increased as compared with the
corresponding period but the margins are below the industrial averages. Spinning has largely
become a business where most of the profitability comes from inventory gain on timely
procurement of raw materials
Due to shortage of working capital lines we were also unable to procure raw material in time to
improve our bottom line

Day Company Open High Low Close Avg.

31-Dec-18 0.41 0 0 0.41 0
29-Dec-17 0.41 0 0 0.41 0
31-Dec-16 Taj Textile Mills Limited 0.41 0 0 0.41 0
31-Dec-15 0.41 0 0 0.41 0
31-Dec-14 0.41 0 0 0.41 0

TAJ TEXTILE

0.41 0.41 0.41 0.41 0.41

1 2 3 4 5

Year 2014:
Company performed well during the year and earned tax profit of Rs. 71.177 M with an EPS of
Rs. 7.37. Appreciation of Rupees verses Dollar further eroded margins on Export Sales. Secondly
there was abnormal increase in the fuel and power. Improvements in power supply position
and betterment in market conditions.

Year 2015:
13
Company perform well as compare to last year.as earlier textile industry was suffering from
long spell of slowdown in the market. Still due to savings in some production costs the GP on
sales was higher than previous year.

Year 2016:
The turnover in this year reduced by 4.13% due to slow down in textile market and low
production during first quarter due to closure of Mill for necessary maintenance.
Increase in energy cost is weighing heavily on the industry. The production cost is currently
increasing making the industry uncompetitive in export market.

Year 2017:
There was a difficult market situation. The demand is low, net sales increased by 10.87% in
comparison with the corresponding period of last year.
This situation is exerting pressure on fabric prices and we are forced to sell at low margins.
Overall exports are also falling.

Year 2018:
Overall fabric market continued to remain under stress. However the profitability was greatly
supported by rupee devaluation and export rebate announced by government of Pakistan.
The major reasons for cost exhalation were high yarn prices, energy costs and increase in
depreciation due to new plant and machinery installed.

14