Textile Spinning: N.P. SPINNING MILLS LIMITED - Year Ended 30-09-2004

This spinning unit of Raiwind District Lahore has been able to post very good performance both in terms of profit and sales. Production by far exceeded its rated capacity. Sales in terms of value at Rs 983.65 million was the record highest figure and 16.2 higher than preceding year's. Its gross profit was substantially high both due to higher volume sales, higher selling price and full capacity utilisation pushing down lower overhead cost per unit. Resultantly its pretax profit boosted to Rs 144.8 million by 144.7% from Rs 59.20 million in the preceding year.
This enabled to keep the company at robust financial health which is evident from excellent current and debt/equity ratios as well as profitability ratio. Most importantly shareholder's confidence rose with enhanced cash dividend at 45%.
N.P. Spinning Mills Ltd was incorporated in the province of Sindh on February 17, 1999. The company is limited by shares and is listed on Karachi and Lahore Stock Exchanges. Its registered office is situated at 702 Uni Tower I.I. Chundrigar Road Karachi and manufacturing facilities are located at Jalalpura, Raiwind District Lahore. It is a textile spinning unit, therefore principally engaged in the manufacture and sale of yarn.
On 2nd March 2005, the closing price of N.P. Spinning shares was quoted at Rs 48.0 per share carrying very high premium over the par value of Rs 10. During the last one month the market value of its share increased substantially from Rs 15.30 per share to Rs 65 per share.
The company is one of the constituent members of N.P. Group and its 1021 individual shareholders hold 99.77% of its equity. Out of these individuals, one shareholder owns 39.46% of its stock. The aggregate shareholding of its other three individual shareholders works out to 45.28% of its total 14.7 million paid-up shares of Rs 10 each. The small shareholders who are holding lots of 10 thousand or less shares own only 4.5% of its stock.
Resultantly the beneficiaries of its attractive dividend payouts comprise mostly large investors. During the year under review the company announced high cash dividend at 45%.
During the year under review the company made substantial additions in the fixed assets. The addition in the fixed assets amounting to Rs 75.65 million whereas it also paid Rs 4.87 million towards advance for purchase of land. Out of these additional fixed assets an amount of Rs 69.2 million was booked for plant and machinery.
The directors emphasised that they would continue improvements in their system and implement quality related objectives including instal capacity power generators to have uninterrupted power supply. The cotton crop is also good so they hopes to make satisfactory performance in the forthcoming year.
The company generated sales at Rs 983.65 million as compared to Rs 846.58 million in the preceding year showing increase by 16.2% over the preceding year. Gross margin was much better than last year as the margins improved by 8.2 percentage points from 11.26 percentage in the previous year to 19.46 percent during the year under review.
The increase in gross profit is because of increase in volume sales as well as better selling price. Gross profit increased by 100.7% to Rs 191.38 million from Rs 95.34 million in the preceding year. The other reason for increase in margin seems to be lower overhead per unit, because of economies scale as the production was much above the capacity utilisation.

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Performance Statistics                (Million Rupees)

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Balance sheet                                  -As At-

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                                  September 30

                                     2004         2003

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Share Capital-Paid-up:             147.00       147.00

Reserves & Surplus:                165.52        64.00

Shareholders Equity:               312.52       211.00

Loan From Directors & Associate:    25.17        25.17

Other L T Debts:                    25.91        57.41

Deferred Liabilities:               46.95        39.14

Current Liabilities:               412.70       636.68

Fixed Capital Expenditure:         296.98       253.33

L T Deposits:                        0.87         0.87

Current Assets:                    525.40       715.20

Total Assets:                      823.25       969.40

Sales, Profit & Pay Out:

Sales:                             983.65       846.58

Gross Profit:                      191.38        95.34

Operating Profit:                  167.51        74.40

Financial (Charges):               (13.18)     (13.72)

(Depreciation):                    (31.62)     (26.86)

Profit Before Taxation:            144.84        59.20

Profit After Taxation:             101.51        36.83

Earnings Per Share (Rs):             6.91         2.51

Dividend Cash Rs 4.5 Per Share

(2003: @ Re 0.75 Per Share):        66.15      (11.02)

Share Price (Rs) on 02-03-05:       48.00            -

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Financial Ratios

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Price/Earnings Ratio:                6.94            -

Book Value Per Share:               21.25        14.35

Price/Book Value Ratio:              2.25            -

Debt/Equity Ratio:                   7:93        20:80

Current Ratio:                       1.27         1.12

Assets Turn Over Ratio:              1.19         0.87

Days Receivables:                      11            9

Days Inventory:                       117          248

Gross Profit Margin (%):            19.46        11.26

Net Profit Margin (%):              10.32         4.35

R O A (%):                          12.33         3.80

R O C E (%):                        24.73        11.06

Plant Capacity & Production (000 Million Kgs)

A) Yarn After Conversion into 20/s Count

Installed Capacity:                 9.240        9.240

Production:                        11.513       10.031

Capacity Utilisation (%):          124.60       108.56

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