Vision Statement 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. Stock Performance & Pattern of Shareholding While largely muted for the most part of the year (September '15 to May '16), NML stock has seen an enormous turnaround with the coming of the new fiscal year. Over 27 percent of NML stock is in the hands of the public, which seems to be mostly local. The company's main associated companies are DG Khan Cement, with Adamjee Insurance holding less than one percent of the total stock and MCB holding nearly nothing. Around a fourth of the total stock is in the hands of the family. Prior Performance A falling topline has plagued the textile mammoth for the past couple of fiscal years, and profits only showed some signs of growth in FY16. The main reasons for the recent increase in profitability were an Page | 5
Analysis of Financial Statements 2017 improvement in the performance of the firm's value-added business, an optimal fuel mix, and cost efficiencies due to better cost controls, as per the FY16 Director's Report. It's no secret that Pakistan's textile industry continues to suffer from a high cost of doing business. The past couple of years have seen the country's textile exports decline due to cut-throat competition from regional players, an overvalued Rupee, energy shortage, various taxes and surcharges, and the slowdown in China and other markets. Nishat Mills would know this; it earns more than half of its revenues from exports. In fact, the company single-handedly contributes around three percent to the textile exports of Pakistan. A segment analysis reveals that the lion's share of the firm's revenues - around 35 percent - comes from the Processing and home textile segment. In terms of gross profit, however, it accounts for 56 percent (Starting FY16, the 'Processing and home textile' segment is reported as two separate segments - 'Dyeing' and 'Home textile.' For the purpose of our analysis, the two segments have been combined). As the graph illustrates, all of Nishat's segments have seen a decline in their sales over the past couple of years, while profitability has taken on a mixed trend. The Processing and home textile segment's gross margins have steadily improved and reached a new high in FY16, in spite of sluggish retail demand in the US and Europe. This was due to a diverse product mix, proactive marketing strategy, addition of new markets, and investment in new technologies, as per the FY16 Director's Report.
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- Winter '16