Textile Spinning: AZAM TEXTILE MILLS LIMITED - Year Ended 30-09-2003

During the year under review, the company achieved sales at Rs 735.96 million as compared to previous year's sales of Rs 540.80 million. This shows 36.09% growth in sales.
The sales figure is also record highest of the last six years. Export sales increased to Rs 212.99 million from Rs 152.86 million in the preceding year.
Export sales increased by 39.3% over the preceding year's and constituted 28.9% of net sales.
The manufacturing facilities of the company include 18,240 spindles. The installed capacity of the plant has been rated on the basis 20's count at 6.242 million kgs per annum.
During the year under review its actual production of various counts of yarn was recorded at 4.463 million kgs (2001-02: 4.621 million kgs). But the actual production when converted into 20's count works out to 6.148 million kgs (2001-02: 6.208 million kgs).
The company achieved 98.5% utilised capacity. It booked net loss at Rs 55.60 million (2001-02 Rs 22.71 million).
Azam Textile Mills Limited is a public limited company. It was incorporated in the province of Punjab in March 1987.
The company is primarily engaged in the manufacture and sale of yarn. Its manufacturing facilities are located in Bhai Pheru District Kasur.
Its shares are quoted on stock exchanges of the country. At present the share in the company is trading at Rs 4.30 per share at 57% discount over the par value of Rs 10.
During the last 52 weeks the market value of the share moved up from Rs 1.20 per share to Rs 6.30 per share.
According to the Form 34, pattern of shareholding dated September 30, 2003, the majority shareholding remained with the company's directors and their spouses.
They held 67.60% of the company's total 13.27 million shares of Rs 10 each. Its 734 individual shareholders held 11.61% of the company's stock.
The shareholdings of the 21 financial institutions aggregated to 16.26% of the company's stock.
Another institutional shareholders which comprised 22 joint stock companies held 3.14% stock of the company.
The paid up capital of the company at Rs 132.75 million has remained constant since 1998.
The company booked losses during the last 5 years out of 6 years and that exceptional year is year 2000 when it earned profit at Rs 33.14 million.
The accumulated deficit has swelled to Rs 222.02 million during the year under review. Since the last six years it continued to have capital deficiency.
During the year under review the amount of capital deficiency decreased to Rs 89.27 million from Rs 92.27 million in the preceding year.
On the other hand other long term debts sharply reduced to Rs 94.99 million from Rs 126.41 million in the preceding year.
Further more the directors had injected Rs 41.33 million as long term loans which had remained unchanged since last year.
This represent interest free loans provided by the company's Chief Executive and a director. It is stated that these loans, were being considered by the company's management as long term.
It is also as per rescheduling/restructuring package of NBP the Director's loans to the company shall be subordinated to NBP loan and shall not be withdrawn till adjustment of total liabilities.
Despite the shareholders equity in the red, the long term debt coverage position was good. This was mainly due to the amount of Rs 255.13 million posted in the account of surplus on revaluation of fixed assets.
The directors loan also provided support in the long term debt coverage.
But the liquidity crunch is visible in the current ratio of 0.54 compared to the benchmark ratio of one. The current ratio further deteriorated from 0.73 in the preceding year.
Despite negative equity, and the liquidity crunch, the company has fully paid the overdue portion of DF-1 (Demand Finance-1 of NBP) outstanding as at September, 2003 by December 31, 2003.
The auditors report to the members contains observation about notes Nos. 8.1, 8.2, 8.3. These are about sales tax.
They also referred to Notes 15.1 and 15.2 which are about receivables outstanding for more than three years.
The directors in their report have responded to the Auditor's observations point by point.

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Performance Statistics                (Million Rupees)
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30 September                         2003         2002
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Share Capital-Paid-up:             132.75       132.75
Accumulated (Loss):               (222.02)    (225.02)
Shareholders Equity:               (89.27)     (92.27)
Surplus on Revaluation of F/A:     255.13       313.74
L.T. Loan From Directors:           41.33        41.33
Other L.T. Debts:                   94.99       126.41
Deferred Liabilities-Gratuity:       5.09         4.63
Current Liabilities:               264.45       206.49
Operating Fixed Assets:            426.68       449.67
Security Deposits:                   0.32         0.17
Current Assets:                    144.72       150.49
Total Assets:                      571.72       600.33
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Sales, Profit & Pay Out
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Sales-Net:                         735.96       540.80
Gross Profit:                        5.36        38.69
Operating/(Loss) Profit:           (21.23)       11.88
Other Income:                        2.12         1.96
Financial (Charges):               (32.70)     (31.33)
(Depreciation):                    (22.67)     (24.07)
(Loss) Before Taxation:            (51.82)     (21.68)
(Loss) After Taxation:             (55.60)     (22.71)
(Loss) Per Share (Rs):              (4.19)      (1.71)
Share Price (Rs) Dated 12.03.2004:   4.30            -
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Financial Ratios
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Price/Earning Ratio:                   (-)           -
Book Value Per Share:               (6.72)        6.95
Price/Book Value Ratio:                (-)           -
Debt/Equity Ratio:                  31:69        32:68
Current Ratio:                       0.54         0.73
Asset Turn Over Ratio:               1.29         0.90
Days Receivables:                       5           13
Days Inventory:                        35           48
Gross Profit Margin (%):             0.72         7.15
Net Profit Margin (%):              (7.55)      (4.20)
R.O.A. (%):                         (9.72)      (3.78)
R.O.C.E. (%):                      (18.09)      (5.77)
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Plant Capacity & Production (Million Kgs)
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A) Yarn 20's Count
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Installed Capacity:                 6.242        6.242
Production 20's Count:              6.148        6.209
Capacity Utilisation (%):           98.49        99.47
B) Number of Spindles Installed:   18,240       18,240
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