Sapphire Fibres Limited

For the year-ending September 30, 2000
Estimated F&J Financial Performance Ranking

          1996          1997          1998          1999          2000

              A+            A++           A++           A++          A++

Corporate Profile

Sapphire Fibres Limited (SFL) remained high performer in the 'Textile Spinning' sector of KSE. SFL was incorporated as a public limited company in June 1979. The shares of the company are listed on all the Stock Exchanges functioning in Pakistan. The main business of the company is the manufacture and sale of yarn and fabrics.

Company's core production activities are based in Kharianwala, Feroze Wattoan and Raiwind.

Mr. Mohammad Abdullah is the Chairperson of the company, while Mr. Shahid Abdullah serves as the Chief Executive of the Company.

Mushtaq & Company, the auditors of the company have presented a clean report for FY99/00.

BMR and Expansion Plan

The Company has planned for an Expansion & BMR for the current year amounting to Rs. 340m. The plan comprises of expansion in spinning capacity by addition of 5040 spindles with most modern state of art, back process and finishing machinery and addition of machinery in Knitted unit, dyeing plant and Balancing, Modernizing and Replacement of machinery. The said expansion plan is being financed through issue of Right Shares, Medium term bank loan and internal generation of funds.

Capital Expenditure

The Company has made Capital Expenditure during the year in Plant & Machinery and Building for about Rs. 318m in order to maintain and improve the quality standards and to upgrade the mills with latest technology. The Management of the Company is well aware that the Spinning Industry has become highly competitive and has continued to follow its policy of acquiring latest technology by up-gradation of its plant & machinery through balancing, modernizing and replacement of its spinning facilities.

The Balance Sheet

The balance sheet footing of SFL ascended by 21 per cent to Rs. 2.3bn from Rs. 1.9bn last year. Out of the total operating assets of Rs. 851.8m a net addition of Rs. 142.2m were made in the Plant & Machinery. Thus solvency ratio slightly deteriorated to 0.68x from 0.66x in the comparative last year (industry average1996-99: 1.03).

Long-term investment was up by 28 per cent to Rs. 191.7m as against Rs. 149.5m last year.

Current assets improved by 10.6 per cent to Rs. 1,176.6m, this was mainly accounted for 21 per cent rise in trade debts to Rs. 671.1m from Rs. 558.7m, thus raising the collection period to 96 days from 88 days last year (industry average 1996-99: 28days):). Other significant increase was recorded in cash and bank balances, which rose to Rs. 104.6m from Rs. 97.4m. SFL also undertaken short-term investment, which raised to Rs. 7.7m from Rs. 6.3m, while stock-in-trade descended to Rs. 245.0m from Rs. 262.4m, this reduced the inventory age to 47 days from 50 days compared to last year (industry average 1996-99: 43 days).

Long-term liabilities rose to Rs. 124.9m from Rs. 89.4m mainly on account of redeemable capital of Rs. 66.6m, while loans from banks and other financial institutions declined to Rs. 58.3m from Rs. 88.5m in the preceding year.

Current liabilities rose to Rs. 903.4m from Rs. 829.3m, representing current maturity of long term liabilities. Net working capital improved to Rs. 273.3m from Rs. 234.6m thus improving the current ratio to 1.30x from 1.28x witnessed last year (industry average 1996-99 0.96x). Payable to Receivable ratio stood flat at 0.02x as was in the last year (industry average 1996-99: 0.26x).

Paid-up capital of Rs. 140.0m remained the same as in the corresponding last year. However, the company by way of general reserves, which rose significantly by 34.3 per cent, has retained an amount of Rs. 1,165.6m. Shareholder's equity rose to 1,305.6m from Rs. 1,007.8m. During the FY99/00 higher net worth against the total liabilities improved the debt leverage to 0.82x from 0.94x (industry average 1996-99: 2.38x). Thus break-up value rose to Rs. 93.26 from 71.99 recorded in comparative last year.

The Profit & Loss Account

During the year under review company generated net revenue of Rs. 2,499.6m as against Rs. 2,261.04m last year. Despite an increase in the raw cotton prices in local as well as international market cost of sales reduced negligently by 0.09 per cent. Thus asset turnover ratio improved slightly to 2.28x from 2.26x last year (industry average 1996-99: 2.12x).

SFL made a gross profit of Rs. 647.7m, being 65.7 per cent higher then the last year marking it the highest gross profit ever made by the company. Thus gross profit margin rose to 25.9 per cent as against the 17.28 per cent last year.

Financial charges were reduced to Rs. 110.2m from Rs. 128.6m, improving the times interest earned to 5.33x as against the 2.89x last year (industry average 1996-99: 1.51x). Diminution in the value of investment of Rs. 43.7m was made during the year.  

After deducting Rs. 20.5m, which has been provided for taxation, SFL made a net profit of Rs. 500.8m as against Rs. 213.4m last year. Therefore, profit margin rose to 20.0 per cent from 9.4 per cent as registered last year. 

Out of the total profit of Rs. 760.4m available for appropriation, company has proposed a cash dividend at the rate of 145 per cent, which was considerably higher than the last year (Rs.14.5 per share). SFL has also issued right shares to the existing shareholders in the ratio of 25 shares of the hundred shares held, at Rs. 35/- per share including premium of Rs. 25/- per share.

Higher net worth improved the return on investment and return on equity that lead to the significant rise in earnings per share to Rs. 35.78 compared to Rs. 15.24 last year.

Cash Flow Statement

SFL earned cash from operation of Rs. 557.1m, reflecting sound liquidity position as cash flow to total debt stood at 88.08 per cent as against 42.0 per cent during the corresponding last year.

Cash flow from investing activities recorded the highest outflow of Rs. 331.4m, which was mainly attributed to the mounting fixed capital expenditure recorded in FY99/00.   Financing activities witnessing net cash inflow of Rs. 16.4m, whereas Rs. 33.9m paid for repayment of long term loans and outflow of Rs. 86.4m was accounted for payment of dividend to the shareholders.

Share Price & Turnover

During the year 2000 share price fluctuates in a very wide range of Rs. 34.20 to Rs. 9,999.0. Currently the share price of the company is being traded at Rs. 42.0 and 41.35 per share.

Future Outlook

In order to compete in a highly commoditized industry, efforts are being made to explore new market for knitted dye products. In this regard management plans to grow in to two directions first, horizontal integration, "Balancing" through installation of new spindles to enhance the utilization of the existing plant and secondly through Modernization of old equipment to produce better quality products.

Considering the increase in the prices of cotton and general slowdown in the international market, it appears that the profitability of the company may substantially decline.      

Shabbir Tiles & Ceramics Limited

For the Year Ended June 30, 2000
Estimated F&J Financial Performance

          1996          1997          1998          1999          2000

           A++          A++             A+             A+            A+

Corporate Profile

Shabbir Tiles & Ceramics Limited (STCL) is the leading companies in the ' Ceramics' sector of KSE. The Company was incorporated in 1978 as public limited company and is listed on all the stock exchanges operating in a country. The main activity of the company is the manufacture and sale of Tiles.

STCL is functioning under the Chairmanship of Rafiq M. Habib, while Alireza M. Alladin is the Chief Executive of the Organization. Company has achieved significant improvement despite a continuing economic recession in a country. Management Association of Pakistan awarded certificate of Corporate Excellence 1998 in the Miscellaneous Sector consecutively for the second year to the company.

Out of 14.9m shares, individual holds 40 per cent shares, which is the highest among all the categories.

Ford, Rhodes, Robson, Morrow, the auditors of the company, have presented a clean report for FY99/00.

Production Capacity

During the year the capacity attained was 1.601msq.metres of tiles (1999: 1.371m ss. Metres) against the rated capacity increased to 1.800m sq. metres (1999: 1.2m sq. metres) on account of balancing, modernization and replacement in old plant and installation of the second fast firing line.

The Balance Sheet

The balance sheet size has ascended to Rs. 431.5m from Rs. 372.5m. Total operating fixed assets were up by 33.6 per cent to Rs. 188.9m, while Plant & Machinery registered a net addition of 18.7 per cent and stood at Rs. 228.5m. Thus solvency ratio hampered a bit and stood at 0.57x as against the 0.52x last year.

During the year under review company made no long term and short terms investment.

Current assets improved slightly to Rs. 237.8m from Rs. 225.9m, out of which stock-in-trade registered a 7.3 per cent rise to Rs. 71.16m. However, inventory age improved to 82 days compared to 88 days last year. Trade debtors rose to Rs. 88.83m from Rs. 72.75m, thereby, increasing the collection period to 70 days from 66 days last year.

Total current liabilities during the review year descend to Rs. 97.2m from Rs. 99.1m last year. Consequently, current ratio improved to 2.45x from 2.28x last year.

Long term liability against assets subject to finance lease rose to Rs. 42.2m from Rs. 10.2m in the corresponding last year. However, there is an option to obtain ownership of the assets at the end of the lease period. The liability is partly secured by deposits of Rs. 4.27m. Debt leverage hampered slightly to 0.62x from 0.54x last year.

Paid-up capital remains un-changed to Rs. 100.0m; a sum of Rs. 266.9m has been retained in the business by way of general reserve.

The Profit & Loss Account

Turnover of the Company for the year under review was Rs. 453.5m. This reflects a growth of 15.68 per cent over the same period last year. Cost of goods sold remained in the line of sales, resulting in a gross profit of Rs. 144.4m compared to Rs. 123.7m in the comparative last year. The gross profit margin stood flat at the last year's level.

STCL made an operating income of Rs. 1.5m, which is attributed to the profit on the sale of fixed assets and return on bank deposits. After deducting selling, administration and other expenses operating profit for the FY99/00 grew by 15.4 per cent to Rs. 82.2m.

Financial charges for the year reduced slightly to Rs. 7.38m from 7.48m last year, thus improving the time interest earned to 11.14x as against the 9.33x in the preceding last year. Company reported a pre-tax profit of Rs. 74.8m, while a provision of Rs. 28.8m was provided for taxation. The profit available for appropriation amounted to Rs. 46.5m. Board of Directors, therefore announced a cash dividend of Rs. 2.75 per share and also issue bonus shares in the ratio of 1:6. A sum of Rs. 11.2m of the company's profit has been capitalized and applied for the issue of 2,249,768 ordinary shares of Rs. 5 each and allotted as fully paid-up bonus shares.

Earning per share rose to Rs. 3.06 from Rs. 2.35 of previous year.

Cash Flow Statement

Company recorded cash from operation of Rs. 94.03m, while STCL has invested Rs. 19.1m out of net cash inflow from operating activities mainly accounted for the purchase of fixed assets.

Financing activities reflects the net cash outflow of Rs. 33.5m on account of payment of liabilities against asset subject to finance lease and dividend payment to the shareholders.

Share Price & Turnover

Share price of STCL moves between Rs. 15.0 and Rs. 9.0. Currently the shares of the company are traded at Rs. 10.5.

Future Prospects

The pressure on the profitability of the company would become more severe due to the current economic conditions. Management will closely monitor the situation and take appropriate and timely measure that company's operation continue to remain profitable.

Home