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Department of Commerce, The Islamia University of Bahawalpur has always
been admirable in its efforts to equip the future executives with arms of creativity,
business environment.
To achieve the above goals the department is providing both text and practical
knowledge to its students with its available resources. Text knowledge is very
well transferred to the students within the premises of the department; Practical
country. Faculty members are always trying their best to ask the students to
explore the market by assigning different field activities and to prepare a report.
This report has been written on the “Colony Thal Textile Mills Ltd.” I have done
my best efforts to complete this report efficiently and effectively with all abilities. I
hope this report fulfills the criteria and expectations of Department of Commerce.
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All praise for ALLAH, the most merciful and his prophet Muhammad
(PBUH) is for every torch of guidance and knowledge for humanity. I offer
humblest and sincerest words of thanks to ALLAH Almighty who blessed me with
I would also show our gratitude to our honorable and respected teacher
Mr. Farrukh Naveed Who furnished me with the opportunity to complete this
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“I dedicate my Financial Analysis Report efforts to my PARENTS &
respected Teachers who taught & hold my hands on every step of my life.”
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Ch:N Contents Page #
o
1 Executive Summary 07
11 Profitability Analysis 26
12 Investor Analysis 29
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13 Cash flow Analysis 29
16 Conclusion 34
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LTD. In this report I have used different techniques that are necessary to make
recasting, trend analysis, vertical analysis, and ratios including short term liquidity
ratios, long term liquidity ratios, profitability ratios, investor’s analysis, cash flow
our export and also the total Gross Domestic Product (GDP). This sector gives
Introduction of Company:
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yarn including carded and combed, slab and core yarn, single and double yarn,
made from 100% cotton and synthetic material, catering to the needs of knitting
The Colony Group is one of Pakistan's oldest and the most revered business
groups. The Group has grown phenomenally and has become a leading player in
all the sectors in which it operates. The Group has set up different companies
whose activities span various sectors like Textiles, Sugar and Distillery.
History of Company:
The Colony Group was founded in 1986 with a focus on providing high net worth
guidance. Since its founding, the firm has grown substantially, attracting
delivering out performance over full market cycles. Our proprietary, research-
investment process.
Mission Statement:
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• To install new Machinery and to acquire sophisticated process technology
delivery.
the Company.
• To enable all employees to develop and fulfill their individual goals and
Vision Statement:
Our work force will be the most efficient in the industry through multiple skill
learning, the fostering of team work and security of safe work environment.
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MRS AYESHA TANVEER
LAHORE CANTT.
PH (042) 6666634
FAX (042)6687353
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Established as a textile manufacturing unit on 24th August, 1946, Colony Mills
generating assets that crossed total revenues of 7.0 billion rupees in the year
Product Range:
100% cotton carded and combed yarns; lycra/spandex core spun and slob yarns.
100% polyester and 100% viscose yarns along with various blends, polyester
viscose yarn, and yarns of polyester cotton and polyester viscose blends in the
Future Ventures:
A state-of-the-art Open-End Spinning production facility is under construction. It
will be the first of its kind facility in the country, with 2,880 rotors capable of
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Cost of Sales 454,800,09 831,275,710 748,525,643 374,101,001 132,840,354
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Operating Expenses:
Provision for taxation for current year 5,990,687 -3,134,440 -2,971,593 -1,874,562 0
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Loans and advances 929,889 2,389,556 4,303,149 2942303 3,396,075
Trade Deposits, prepayments and 9,631,372 13,784,760 15,020,068 6,172,949 6,104,474
other receivables
Cash and bank balances 7,076,799 3,928,220 1,591,438 3,251,652 3,956,283
Total Current Assets 120,150,745 132,186,941 138,056,671 101,264,049 104,175,719
Non current assets
Assets at cost less accumulated 390,659,088 377,053,935 380,762,927 368,221,228 322,227,851
Depreciation
Asset Subject to Finance Lease 12,621,396 0 0 0 27,642,664
Long term deposits 2459199 2454443 2454443 2454443 2,454,443
Total Non Current Assets 405,739,683 379,508,378 383,217,370 370,675,671 352,324,958
Total Assets 525,890,428 511,695,319 521,274,041 471,939,720 456,500,677
LIABILITIES:
Current liabilities
Current portion of long term liabilities 20,642,110 25,718,177 5,947,568 0 0
Short term Financing 68,403,096 83,225,227 84,339,492 73,290,193 78,461,577
Accrued markup on secured loan 2,308,729 1,442,303 5,202,204 4,273,136 31,409,537
Trade and other payables 95,555,248 79,090,989 115,384,208 65,096,685 61,359,625
Provision for taxation 10,072,361 7,888,244 11775200 9364411 8,264,411
Total Current Liabilities 196,981,544 197,364,940 222,648,672 152,024,425 179,495,150
Non Current liabilities
Long term Loans 191,047,730 187,574,976 188,418,710 245580525 242,606,225
Deferred liability 2,772,925 1,938,249 1987123 546,429 212,749
Total Non Current Liabilities 193,820,655 189,513,225 190,405,833 246,126,954 242,818,974
Share capital and Reserves
Share capital 55,687,500 55,687,500 55,687,500 55,687,500 55687500
Surplus on Revaluation of Fixed 164,621,453 142,152,989 139593015 133,512,117
Assets 140,841,725
Reserves 17,887,309 17,887,309 17887309 17,887,309 17,887,309
Accumulated loss - -90,910,644 - -139379483 -
103,108,033 106,196,998 172,900,373
Total Share Capital and Reserves 135,088,229 124,817,154 108,219,536 73,788,341 34,186,553
Total Liabilities & Equity 525,890,428 511,695,319 521,274,041 471,939,720 456,500,677
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Operating Expenses:
Administrative Exp.
100% 154.94% 139.88% 96.89% 89.71%
Distribution Exp.
100% 1537.41% 433.05% 22.65% 35.33%
Total Operating Expenses
100% 172.50% 143.61% 95.95% 89.02%
Operating Loss / Profit
100% 202.97% 90.09% -53.45% -129.38%
Other Charges
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Administrative Exp. 2.03% 1.72% 1.76% 2.53% 7.27%
Provision for taxation for current year 1.25% -0.36% -0.38% -0.50% 0.00%
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Assets at cost less accumulated
Depreciation 100% 97% 97% 94% 82%
Asset Subject to Finance Lease 100% 0% 0% 0% 219%
Long term deposits 100% 100% 100% 100% 100%
Total Non Current Assets 100% 94% 94% 91% 87%
Total Assets 100% 97% 99% 90% 87%
LIABILITIES:
Current liabilities
Current portion of long term liabilities 100% 125% 29% 0% 0%
Short term Financing 100% 122% 123% 107% 115%
Contingencies 100% 62% 225% 185% 1360%
Trade and other payables 100% 83% 121% 68% 64%
Provision for taxation 100% 78% 117% 93% 82%
Total Current Liabilities 100% 100% 113% 77% 91%
Non Current liabilities
Long term finance - secured 100% 98% 99% 129% 127%
Deferred liability 100% 70% 72% 20% 8%
Total Non Current Liabilities 100% 98% 98% 127% 125%
Share capital and Reserves
Share capital 100% 100% 100% 100% 100%
Share premium 100% 86% 86% 85% 81%
Reserves 100% 100% 100% 100% 100%
Accumulated loss 100% 88% 103% 135% 168%
Total Share Capital and Reserves 100% 92% 80% 55% 25%
Total Liabilities & Equity 100% 97% 99% 90% 87%
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2005 2006 2007 2008 2009
ASSETS:
Current Assets
Stock-in-trade 12.40% 16.48% 16.34% 11.14% 12.46%
Stores and spares 1.94% 2.26% 2.51% 2.91% 2.95%
Trade debtors 5.15% 3.16% 3.62% 4.78% 4.47%
Loans and advances 0.18% 0.47% 0.83% 0.62% 0.74%
Trade Deposits, prepayments and other 1.83% 2.69% 2.88% 1.31% 1.34%
receivables
Cash and bank balances 1.35% 0.77% 0.31% 0.69% 0.87%
Total Current Assets 22.85% 25.83% 26.48% 21.46% 22.82%
Non current assets
Assets at cost less accumulated 74.29% 73.69% 73.04% 78.02% 70.59%
Depreciation
Asset Subject to Finance Lease 2.40% 0.00% 0.00% 0.00% 6.06%
Long term deposits 0.47% 0.48% 0.47% 0.52% 0.54%
Total Non Current Assets 77.15% 74.17% 73.52% 78.54% 77.18%
Total Assets 100% 100% 100% 100% 100%
LIABILITIES:
Current liabilities
Current portion of long term liabilities 3.93% 5.03% 1.14% 0.00% 0.00%
Short term Financing 13.01% 16.26% 16.18% 15.53% 17.19%
Accrued markup on secured loan 0.44% 0.28% 1.00% 0.91% 6.88%
Trade and other payables 18.17% 15.46% 22.14% 13.79% 13.44%
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Days’ Sales in Receivable = Gross Receivables / Net Sales per Day
Years 2005 2006 2007 2008 2009
Gross receivables 27,058,144 16,145,519 18,873,802 22,566,958 20,384,462
Net Sales per Day 1,317,696 2,414,668 2,129,839 1,027,157 330,465
Ratio (days) 21 7 9 22 62
The days’ sale in receivables gives an indication of the length of time that the
receivables have been outstanding at the end of the year. As there is increasing
trend in the years preceding. Its mean the company is becoming less efficient
Account receivable turnover indicates the liquidity of the receivables. This is the
throughout the year. High accounts receivable turnover ratio indicates a tight
credit policy.
problem, part of which may be due to bad debts. There is increasing decreasing
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A/R Turnover in Days = Avg. Gross Receivables / Net Sales per Day
Years 2005 2006 2007 2008 2009
Average Gross
Receivables 88,721,315 77,970,741 61,825,222 42,951,420 20,384,462
1,317,69 2,414,6 2,129,83 1,027,1 330,46
Net Sales per Day 6 68 9 57 5
3 2
Ratio (days) 67 2 9 42 62
This ratio tells us about the time period to collect the account receivable. It is
less time. In above case there is a mixture of decrease and then increasing
The days’ sales in inventory tells you the average number of days that it took to
sell the average inventory held during the specified one-year period. You can
also think of it as the number of days of sales that was held in inventory during
the specified year. In the case of colony textiles there is increasing trend from
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Inventory Turnover = CGS / Avg. Inventory
Years 2005 2006 2007 2008 2009
CGS 454,800,091 831,275,710 748,525,643 374,101,001 132,840,354
Average Inventory 65,229,367 84,351,245 85,175,280 52,575,116 56,873,008
9.8 7.1
Ratio (times) 6.97 5 8.79 2 2.34
Inventory turnover indicates the liquidity of the inventory. A low turnover implies
poor sales and, therefore, excess inventory. A high ratio implies either strong
sales or ineffective buying. In the above case it increases in 2006 and then
High inventory levels are unhealthy because they represent an investment with a
rate of return of zero. It also opens the company up to trouble should prices
begin to fall.
inventory turnover in days the decreasing trend is favorable. In the above case
there is rapid change in the inventory turnover in days and also there is
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Years 2005 2006 2007 2008 2009
accounts receivable to cash. The operating cycle reveals how long cash is
A long operating cycle means that less cash is available to meet short term
obligations. In the above case there is positive trend in beginning and then
Some use the term working capital ratio to mean working capital or net working
When used in this manner, working capital ratio is not really a ratio. Rather, it is
simply a dollar amount. In the above case there is negative trend which shows
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Current Ratio = Current Assets / Current Liabilities
Years 2005 2006 2007 2008 2009
C.A 120,150,745 132,186,941 138,056,671 101,264,049 104,175,719
C.L 196,981,544 197,364,940 222,648,672 152,024,425 179,495,150
Ratio 0.61 0.67 0.62 0.67 0.58
higher the ratio, the more liquid the company is. Current ratio is equal to current
assets divided by current liabilities. If the current assets of a company are more
than twice the current liabilities, then that company is generally considered to
assets, then the company may have problems meeting its short-term
An acid test ratio indicates whether a firm has enough short-term assets to
cover its immediate liabilities without selling inventory. The acid-test ratio is far
more strenuous than the working capital ratio, primarily because the working
capital ratio allows for the inclusion of inventory assets. There is rapid negative
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Cash Ratio = Cash Equivalent + M.Securities / Current Liabilities
Years 2005 2006 2007 2008 2009
C.E +M.S 120,150,745 132,186,941 138,056,671 101,264,049 104,175,719
C.L 196,981,544 197,364,940 222,648,672 152,024,425 179,495,150
0.6 0.6
Ratio 0.61 7 0.62 7 0.58
The cash ratio measures the extent to which a corporation or other entity can
interest to short-term creditors. In the above case there is increasing trend that
This ratio shows the amount of cash required to maintain a certain level of
can see if there is a long term change in the amount of cash required by the
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Times Interest Earned = Operating Income + Other Income / Intr. Exp.
Years 2005 2006 2007 2008 2009
Oprt.I + O.I 23,258,910 33,174,880 14,659,784 -8,689,118 -6,593,343
Interest
Exp. 10,765,653 -19,704,199 -25,931,296 -23,867,515 -28,116,755
(1.6 0.3
Times 2.16 8) (0.57) 6 0.23
The times interest earned ratio indicates the extent of which earnings are
means less earnings are available to meet interest payments and that the
This ratio indicates the firm’s long term debt paying ability. Its increasing trend
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S. equity 238,196,262 215,727,798 214,416,534 213,167,824 207,086,926
Percentage 1.64% 1.79% 1.93% 1.87% 2.04%
This ratio indicates the firm’s long term debt paying ability. Its decreasing trend
is positive. It compares the total debt with the shareholders equity means how
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Net Pr. 10,479,617 -9,675,986 -16,597,618 -34,431,195 -34,710,098
Net Sale 480,959,170 881,353,740 777,391,244 374,912,443 120,619,904
% 0.02% -0.01% -0.02% -0.09% -0.29%
This ratio gives a measure of net income Rs. Generated by each Re. of sale.
While it is desirable for this ratio to be high. In the above case quick decrease
Total asset turnover measures the activity of the asset and ability of the firm to
generate sales through the use of the assets. In the above case there is
Return on asset measures the firm’s ability to utilize its assets to create
profits by comparing profits with the assets that generate the profits. Return
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The operating income margin include only operating income in the numerator.
In the above case there is continuously decrease 2007 in the operating income
margin percentage.
This ratio measures the ability of operating assets to generate sales rupees. In
In the above case it indicates a decreasing trend from year 2005 to onward.
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Gross Profit Margin = Gross Profit / Net Sales
Years 2005 2006 2007 2008 2009
GP 26,159,079 50,078,030 28,865,601 811,442 -12,220,450
Net Sales 480,959,170 881,353,740 777,391,244 374,912,443 120,619,904
Percentage 0.0544% 0.0568% 0.0371% 0.0022% -0.1013%
This ratio measures the firm’s ability to make productive use of its property,
plant and equipment by generating sales rupees. In the above case the ratio is
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EBT 4,488,930 -6,541,546 -13,626,025 -32,556,633 -34,710,098
0.046
Times 3 (0.0201) (0.0090) 0.0027 0.0019
The degree of financial leverage is the multiplier factor by which the net income
changes as compared to the change in EBIT. In the above case there is decreasing
trend means in the year 2006 & 2007 the ratio is negative while in 2008 & 2009 is
positive.
Operating Cash Flow / Current Maturity of Long Term Debt and Current N/P
Years 2005 2006 2007 2008 2009
Op. cash flow 30,483 -6,443 3,494 -33,691 20,057
C.M. of LTD & CNP. 125,258 121,568 267,914 180,837 181,395
(0.00 0.0 (0.00 0.00
Times 0.0024 05) 001 19) 11
The operating cash flow/current maturities of long term debt and current notes
payable is a ratio that indicates a firm’s ability to meet its current maturities of
debt. The higher this ratio, the better the firm’s ability to meet its current
maturities of debt.
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The Operating cash flow/total debt indicates a firm’s ability to cover total debt
with the yearly operating cash flow. The higher the ratio, the better the firm’s
ability to cover its total debt. In the above case there is significant change in year
2007 then there is decreasing trend in 2008 and 2007 there is considerable
change which shows the firm’s ability to cover its total debt.
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X2 = Retained Earning / Total Assets
Years 2005 2006 2007 2008 2009
R.E. -103,108,033 -90,910,644 -106,196,998 -139,379,483 -172,900,373
T.A. 525,890,428 511,695,319 521,274,041 471,939,720 456,500,677
(0.0018
Times (0.0020) ) (0.0020) (0.0030) (0.0038)
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The overall Performance of Colony Thal Textile mills Limited is not satisfactory.
The company is facing heavy loses from 2006 to onward. After calculating Z-
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If current liabilities exceed current assets, then the company may have
problems meeting its short-term obligations so company should improve its
current ratio.
There is rapid negative trend as the acid test ratio is decreasing company
should also pay attention to improve it.
There is decreasing trend in cash ratio that shows a negative sign.
Company should also focus on its improvement.
The company should improve its investor’s analysis ratios so that the
investors may attract to invest in their company.
The company should cut down its expenses so that it may earn profit and
in the sense would be able to pay dividend which will also help the company
to attract investors.
The company should take some step toward doing advertisement to get
customer attraction and for increasing sales.
Company cannot convert account receivables into cash quickly. Mostly
sales are on credit basis. So company management should take some
corrective steps to improve it.
Overall the colony thal textile is going in loss. But it is very efficient in some key
areas but this efficiency is little in front of industry standards and other key areas.
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As there are good relationship of supplier and this mill so the company should
The result f some ratios are negative which is not good also from the investment
perspective. Colony Thal Textile can improve it just by paying some attention on
As also the Thal textile Mills is taking corrective actions in some key areas which
will lead the company towards the way of Progress & Prosperity.
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