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Nishat Mills Limited is a textile manufacturing company in Pakistan that engages in spinning, weaving, dyeing and other textile processes. In 2013, the company's profitability increased with profit margins rising from 13% to 15% due to increased sales and efficient cost management. Liquidity also improved with current and quick ratios getting higher. The company's debt burden decreased as debt-to-equity ratio fell from 8.01 to 4.97. While inventory management was less efficient, overall the company saw growth in sales, assets, and profitability in 2013.
Nishat Mills Limited is a textile manufacturing company in Pakistan that engages in spinning, weaving, dyeing and other textile processes. In 2013, the company's profitability increased with profit margins rising from 13% to 15% due to increased sales and efficient cost management. Liquidity also improved with current and quick ratios getting higher. The company's debt burden decreased as debt-to-equity ratio fell from 8.01 to 4.97. While inventory management was less efficient, overall the company saw growth in sales, assets, and profitability in 2013.
Nishat Mills Limited is a textile manufacturing company in Pakistan that engages in spinning, weaving, dyeing and other textile processes. In 2013, the company's profitability increased with profit margins rising from 13% to 15% due to increased sales and efficient cost management. Liquidity also improved with current and quick ratios getting higher. The company's debt burden decreased as debt-to-equity ratio fell from 8.01 to 4.97. While inventory management was less efficient, overall the company saw growth in sales, assets, and profitability in 2013.
Nishat Mills Limited is a public limited Company incorporated in Pakistan under the Companies Act, 1913 (Now Companies Ordinance, 1984) and listed on all Stock Exchanges in Pakistan. Its registered office is situated at 53-A Lawrence Road, Lahore. The Company is engaged in the business of textile manufacturing and of spinning, combing, weaving, bleaching, dyeing, printing, stitching, apparel, buying, selling and otherwise dealing in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic fiber and cloth and to generate, accumulate, distribute, supply and sell electricity. Our Vision To transform the Company into a modern and dynamic yarn, cloth and processed cloth and finished product manufacturing Company that is fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan. To transform the Company into a modern and dynamic power generating Company that is fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan. Our Mission To provide quality products to customers and explore new markets to promote/expand sales of the Company through good governance and foster a sound and dynamic team, so as to achieve optimum prices of products of the Company for sustainable and equitable growth and prosperity of the Company. Ratio Analysis Profitability Ratios Profitability Ratio 2013 2012 Net Profit Margin 15.21083 13.0044 ROA 9.889594 10.31694 GPM 17.2519 15.11258 Assets turn over 0.650168 0.793342
The Nishat Mills Limited (NML) profitability is increases in 2013 comparative to last years. The sale for the year is increases by 16.66%, from 44924101 to 52426030 thousand, gross margin by 14% from 15% to 17% and profit margin is by 17% from 13% to 15%, while return on assets and Assets turnover has reduced by 4% and 18% respectively. The profit margin has increased due to increase in sales efficient management of cost of sales and selling and admin expenses. The sales increase because the company increases its operations and sales more on credit. The return on assets and assets turnover has affected due to company increases its assets by about 42% but sales have not increased considerably. Liquidity Ratios Liquidity Ratios 2013 2012 Current Ratio 1.505642 1.312091 Quick Ratio 0.813926 0.603798
The liquidity analysis shows the liquidity position improved in 2013. The current ratio improved from 1.31 to 1.51whereas the quick ratio improved from 0.60 to 0.82. The current assets rose by 37% and quick assets rose by 64% as well for 2013 whereas current liabilities rose by 19%, thus causing a rise in current ratio for NML. Although cash balances fell by 52%, yet the trade debts rose by 78% and other receivables rose by 34%. The rose in current and quick assets is due more sales on credit which shows the increase in debtors by 78%. Gearing Ratio Gearing Ratios
2013 2012 Debt to equity ratio 4.973206 8.013044 Interest coverage ratio 4.929851 3.318357
The debt burden of the company has reduced form the last year. The debt to equity has decreased from 8.01 to 4.97 and interest coverage is also improved from 3.31 to 4.92. This is due to the increase in companys sales and profitability. The company generates sufficient revenues which make some profit that may used to pay its long term debts as well as short term obligations as well. Efficiency Ratio Efficiency Ratios
2013 2012 Stock turnover 86.83196 93.52011 Debt collection period 43.46868 28.34805 Credit Settlement Period 31.85013 32.51977
The operating cycle has increased from 121 days to 130 days. The inventory turnover in days has decreased from 93 days to 87 days. But the outstanding sales days has increased from 28 days to 43 days. This shows that company manage its inventory not so efficiently and an inefficient credit policy towards in debtors. But on the other hand the creditor settlement period is slightly reduced from 32.5 days to 31.85 days. This may show that company have good relation with suppliers and pay for its material purchased at time. Conclusion From the above discussion it is concluded that the company sales and profit margin increases 16.66% and 17% respectively and cost of sales and operating expenses are managed efficiently. The company also increased its assets by 42%. This shows that company going to increase its operations. For paying of its short term obligation it has sufficient current assets. The operating cycle of company is become longer than last year from 121 days to 130 days. The longer time take operating cycle to complete means the inventory management and credit policy toward debtors is not efficient. The overall view is that NML is going on profitable and increases its sales and assets, which means the growth of company. Recommendation The NML performing well in the market but I suggest some things which I think help the company in some extent. The company sales and profitability showing increasing trend but as the assets increases the company not increases its sales by the same rate. Management need to concentrate and invest more in marketing sector to increase sales. The company also need to change its credit policy toward debtors because longer operating cycle will may make some liquidity problems for the company. References Brecorder.com. (2010, November 01). Retrieved June 12, 2014, from Brecorder.com: http://www.brecorder.com/top-stories/single/595/0/1119344/ NML. (2013). Annual Report of Nishat Mills Limited for the year ended june 30, 2013. Lahore: Nishat Mills Limited. Sharif, M. (2010, June 11). Retrieved June 13, 2014, from scribed: http://www.scribd.com/doc/32892270/CHENAB-TEXTILE-MILLS-FAISALABAD
Appendixes Profit and Loss Account For the Year ended June 30, 2014
Balance Sheet As at June 30, 2013
2013 2012 Equity and liability Share capital and reserves Authorize Share Capital 1100000000 ordinary share of Rs 10 each 11000000 11000000 Issues , subscribed and paid up share capital 3515999 3515999 Reserves 55401036 34246750 Total equity 58917035 37762749 Liabilities Noncurrent liabilities Long term financing 3083410 3289538 Liabilities against assets subject to finance lease 66322 137040 Deferred income tax liability 499415 310305 3649147 3736883 Current liabilities Trade and other payable 3785501 3397640 2013 2012 Sales 52426030 44924101 Cost of Sales (43381545) (38134910) Gross Profit 9044485 6789191 Distribution Cost 2529455 2555327 Admin Expenses 870269 731740 Other Expenses 409429 343699 (3809153) (3630766) 5235332 3158425 other Income 2739102 2683685 Profit form operation 7974434 5842110 Finance Cost (1617581) (1760543) Profit before taxation 6356853 4081567 Taxation (510000) (553000) Profit after taxation 5846853 3528567 Earnings per share basic and diluted (Rupees) 16.63 10.04 Accrued markup 300755 269579 short term borrowing 11939028 9665849 Current portion of noncurrent liabilities 1310769 1106902 Provision for taxation 732359 686781 18068412 15126751 Total Liabilities 21717559 18863634 Total liabilities and equities 80634594 56626383 Assets Noncurrent Assets Property plant and equipments 15530320 14318639 Investment properties 394745 241969 Long term investment 37378224 21912790 Long term loans 84997 268330 long term deposits and prepayments 41748 36984 53430034 36778712 Current assets stores spare parts and loose tools 1285371 1019041 stock in trade 10945439 9695133 Trade debts 6243535 3489070 Loan and advances 1898334 867631 Short term deposits and prepayments 40018 41008 other receivables 1019164 758077 Accrued Interest 13550 30062 Short term investments 4362880 1589093 Cash and bank balances 1128862 2358556 26937153 19847671 Noncurrent Assets held for sale 267407 27204560 19847671 Total Assets 80634594 56626383
Changes during the year from last Year 2013 2012 % Change Sales 52426030 44924101 16.69911881 Cost of Sales 43381545 38134910 13.75808937 Gross Profit 9044485 6789191 33.21889162 Selling and Admin Expenses 3809153 3630766 4.913205643 Profit form operation 7974434 5842110 36.49921005 Finance Cost 1617581 1760543 -8.120335601 Reserves 55401036 34246750 61.77020009 Total equity 58917035 37762749 56.01892489 Long term financing 3083410 3289538 -6.266168684 Trade and other payable 3785501 3397640 11.41560024 Current liabilities 18068412 15126751 19.44674702 Total Liabilities 21717559 18863634 15.12924286 Noncurrent Assets 53430034 36778712 45.27434783 stock in trade 10945439 9695133 12.89622329 Trade debts 6243535 3489070 78.94553563 other receivables 1019164 758077 34.44069666 Cash and bank balances 1128862 2358556 -52.1375791 Current Assets 27204560 19847671 37.06676214 Total Assets 80634594 56626383 42.39757111