MIRA INFORM REPORT

Report Date :

04.02.2014

IDENTIFICATION DETAILS

Name :	J. K. SPINNING MILLS LIMITED (JKSM)
Registered Office :	29 KM Shiekhupura Road Durman Wala More Near Khurrianwala Faisalabad
Country :	Pakistan
Financials (as on) :	30.06.2013
Date of Incorporation :	07.01.1987
Com. Reg. No.:	0015482
Legal Form :	Public Limited Company
Line of Business :	Manufacturer, Spinning and Exporters of textiles
No. of Employees :	5,000

RATING & COMMENTS

MIRA’s Rating :

Ba

RATING		STATUS	PROPOSED CREDIT LINE
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory

Status :	Satisfactory
Payment Behaviour :	No complaints
Litigation :	Clear

NOTES :

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ECGC Country Risk Classification List – September 30, 2013

Country Name	Previous Rating (30.06.2013)	Current Rating (30.09.2013)
Pakistan	B2	B2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

PAKISTAN - ECONOMIC OVERVIEW

Decades of internal political disputes and low levels of foreign investment have led to slow growth and underdevelopment in Pakistan. Agriculture accounts for more than one-fifth of output and two-fifths of employment. Textiles account for most of Pakistan's export earnings, and Pakistan's failure to expand a viable export base for other manufactures has left the country vulnerable to shifts in world demand. Official unemployment is under 6%, but this fails to capture the true picture, because much of the economy is informal and underemployment remains high. Over the past few years, low growth and high inflation, led by a spurt in food prices, have increased the amount of poverty - the UN Human Development Report estimated poverty in 2011 at almost 50% of the population. Inflation has worsened the situation, climbing from 7.7% in 2007 to almost 12% for 2011, before declining to 10% in 2012. As a result of political and economic instability, the Pakistani rupee has depreciated more than 40% since 2007. The government agreed to an International Monetary Fund Standby Arrangement in November 2008 in response to a balance of payments crisis. Although the economy has stabilized since the crisis, it has failed to recover. Foreign investment has not returned, due to investor concerns related to governance, energy, security, and a slow-down in the global economy. Remittances from overseas workers, averaging about $1 billion a month since March 2011, remain a bright spot for Pakistan. However, after a small current account surplus in fiscal year 2011 (July 2010/June 2011), Pakistan's current account turned to deficit in fiscal year 2012, spurred by higher prices for imported oil and lower prices for exported cotton. Pakistan remains stuck in a low-income, low-growth trap, with growth averaging about 3% per year from 2008 to 2012. Pakistan must address long standing issues related to government revenues and energy production in order to spur the amount of economic growth that will be necessary to employ its growing and rapidly urbanizing population, more than half of which is under 22. Other long term challenges include expanding investment in education and healthcare, adapting to the effects of climate change and natural disasters, and reducing dependence on foreign donors

Source : CIA

Company name

J. K. SPINNING MILLS LIMITED (JKSM)

GENERAL INFORMATION

Business Name	J. K. SPINNING MILLS LIMITED (JKSM)
Address	Registered Address: 29 KM Shiekhupura Road Durman Wala More Near Khurrianwala Faisalabad Inquiry/ Mill Address: 3-1 /A Peoples Colony Jaranwala Road Faisalabad
Telephone	0092-41-8714434-7 0092-41-8713916
Fax	0092-41-8711899
Email	jkgroup@jkgroup.net
Website	www.jkgroup.net
Business activities	Manufacturer, Spinning and Exporters of textiles

Registry Details

CRO Registration Number	0015482
Date of Registration	January 07, 1987

Other registry & certification details:

Current Legal Form	Public Limited Company
National Tax Registration Number	0658695-3
Date of Registration	October 23, 1995
GST Registration Number	0404520200982
Date of Registration	May 31, 1999
Chamber of Commerce & Industry	Faisalabad Chamber Of Commerce & Industries Membership No. 1501888-527
ISO Certification	None

Capital

Type	No. of Shares	Par Value	Total Value
Authorized	96,000,000	Rs. 10/-	Rs. 960,000,000/-
Issued, Subscribed & Paid-Up	60,903,275	Rs. 10/-	Rs. 609,032,750/-

History

Who started	Mr. Javed Anwar
When started	January 07, 1987
Change in management	None
Year of change	N/A
Change in legal status	None
Year of change	N/A
Change in business name	Zeeshan Textile Mills Limited to J.K Spinning Mills Limited
Year of change	Undetermined

PRINCIPALS (SPONSORS)

Name	Number of Shares	Nationality	Appointment Date (Last)
Mr. Jawed Anwar	Undetermined	Pakistani	March 28, 2009
Mr. Faiq Jawed	Undetermined	Pakistani	March 28, 2009
Mr. Shaiq Jawed	Undetermined	Pakistani	March 28, 2009
Mrs. Farhat Jehan	Undetermined	Pakistani	March 28, 2009
Syed Hussain Shahid Mansoor Naqvi	Undetermined	Pakistani	March 28, 2009
Mr. Qayum Mohsin	Undetermined	Pakistani	March 28, 2012
Mr. Ghulam Muhammad	Undetermined	Pakistani	March 28, 2012

KEY MANAGEMENT

Name	Position in organization	Qualification	Years in employment
Mr. Jawed Anwar	Chief Executive	Undetermined	Undetermined
Mr. Faiq Jawed	Director	Undetermined	Undetermined
Mr. Shaiq Jawed	Director	Undetermined	Undetermined
Mrs. Farhat Jehan	Director	Undetermined	Undetermined
Mr. Qayum Mohsin	Director	Undetermined	Undetermined
Mr. Ghulam Muhammad	Director	Undetermined	Undetermined
Syed Hussain Shahid Mansoor Naqvi	Director	Undetermined	Undetermined

Statutory offices	Name of service provider
Statutory Auditors	M/s. Riaz Ahmad & Company (Chartered Accountants)
Legal Advisory Services	M/s Atif & Atif Law Associates

BANKERS

Bank name	Approved financing limits PKR
Askari Bank Limited	200,000,000
The Bank of Punjab	44,000,000
Standard Chartered Bank Pakistan Limited	140,000,000
The Bank of Punjab	28,000,000
Askari Bank Limited Albaraka Bank Pakistan Limited The Bank of Punjab United Bank Limited Standard Chartered Bank Pakistan Limited National Bank of Pakistan	1,240,000,000
Albaraka Bank Pakistan Limited Askari Bank Limited The Bank of Punjab Standard Chartered Bank Pakistan Limited Summit Bank Limited National Bank of Pakistan	2,673,333,000
Standard Chartered Bank Pakistan Limited	110,000,000

DETAILS OF BUSINESS ACTIVITIES

The core business focus of M/s. J. K. Spinning Mills Limited is manufacturing and export of home textiles products.

M/s. J. K. Spinning Mills Limited commenced operations in Pakistan in 1987.

Products:

Textile made ups like Polyester comforters

Textile Fabrics

Cotton Yarn

Purchases (Incl. Imports)

Imports from	30% from Korea, China, Taiwan
Importing terms	L/C , Cash
Local %	70%
Local buying terms	Cash and Credit

Sales (Incl. Exports)

Exports to	70% to England, Ireland, Canada
Exporting terms	L/C, Cash
Local %	30%
Local selling terms	Cash and Credit

NUMBER OF EMPLOYEES

Nature of employment	Current Year	Previous Year
All Staff (Approximately)	5,000	Undetermined
Total	5,000	Undetermined

BUSINESS FACILITIES

Head Office Address Owned / Rented Area (approx)	29 KM Shiekhupura Road Durman Wala More Near Khurrianwala Faisalabad Owned Undetermined
Factory Address Owned / Rented Area (approx)	3-1 /A Peoples Colony Jaranwala Road Faisalabad Owned (area not disclosed) Undetermined

MARKET REPUTATION

Four buyers were contacted to get a feedback about JKSM and its products. All the feedback was found Satisfactory and no disputes or untoward events including complaints about quality of products were reported/ identified during inquiry. We further got to know that J. K. Spinning Mills Limited holds a very good market share and reputation.

DETAILS OF RELATED BUSINESSES

Business Name	City	Line of Business	Percentile of Shareholding
M/s. J. K Sons (Pvt.) Limited	Faisalabad	Manufacturing of Textile products	Undetermined
M/s. J. K Fine Fabrics (Pvt.) Limited	Faisalabad	Textile Fabrics	Undetermined
M/s. J. K Tech (Pvt.) Limited	Faisalabad	Information Technology Solutions providers	Undetermined
M/s. J. K. Agriculture Farms (Pvt.) Limited	Faisalabad	Agriculture Farming	Undetermined

BUSINESS PERFORMANCE

Particulars	30-Jun-13	30-Jun-12	% Change
	(Rupees in Thousand)
Current assets	2,630,237	2,137,382	23.06
Current liabilities	(1,764,128)	(1,491,416)	18.29
Working capital	866,109	645,966	34.08
Non-current assets	2,832,268	2,842,436	(0.36)
Long term liabilities	(690,517)	(758,379)	(8.95)
Net worth	3,007,860	2,730,023	10.18
Turnover	8,918,973	7,193,895	23.98
Gross Profit	1,442,705	1,017,273	41.82
EBIT	866,712	605,624	43.11
Profit / (Loss) before tax	599,355	281,585	112.85
Provision for taxation	-	-	#DIV/0!
Profit / (Loss) after tax	599,355	281,585	112.85
Creditors	385,151	227,006	69.67
Debtors	59,014	45,217	30.51
Cash & bank balances	59,014	45,217	30.51
Growth trend
Sales growth (%)	23.98%
Gross profit growth (%)	41.82%
Solvency
Current ratio	(1.49)	(1.43)
Quick ratio	(0.59)	(0.58)
Total liabilities to net worth ratio (%)	(81.61)	(82.41)
Profitability
Return on sales (%)	6.72	3.91
Return on net worth (%)	19.93	10.31

INTERVIEW & REPORTER COMMENTS

Contact person	Mr. Amjad
Position	Head Internal Audit
Contact Person Comments	Mr. Amjad confirmed business operations and business information.
Analyst’s Observations/ comments	Sign board observed. Labor force was found working during visit. Subject’s office is situated in posh area of the city. Neighbor’s comments regarding subject are satisfactory.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.62.69
UK Pound	1	Rs.102.97
Euro	1	Rs.84.58

INFORMATION DETAILS

Report Prepared by :

NIS

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
--	NB	New Business	--

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

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This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.