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Report No. : |
351500 |
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Report Date : |
05.12.2015 |
IDENTIFICATION DETAILS
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Name : |
NISHAT MILLS LIMITED |
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Registered Office : |
Nishat House, 53 A, Lawrence Road, Lahore |
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Country : |
Pakistan |
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Financials (as on) : |
30.06.2015 |
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Date of Incorporation : |
1960 |
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Com. Reg. No.: |
0001053 |
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Legal Form : |
Public Limited Company (Listed at Stock Exchanges of Pakistan) |
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Line of Business : |
The Company is
engaged in the business of textile manufacturing and of spinning, combing,
weaving, bleaching, dyeing, printing, stitching / apparel, buying, selling and
otherwise dealing in yarn, linen, cloth and other goods and fabrics made from
raw cotton, synthetic fibre and cloth and to generate, accumulate,
distribute, supply and sell electricity |
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|
|
|
No. of Employees : |
17,738 |
RATING & COMMENTS
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MIRA’s Rating : |
A |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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|
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 |
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Status : |
Good |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
NOTES:
Any query related to this report can be made
on e-mail: infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – March 31, 2015
|
Country Name |
Previous Rating (31.12.2014) |
Current Rating (31.03.2015) |
|
Pakistan |
B1 |
B1 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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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-fourth of output and two-fifths of
employment. Textiles account for most of Pakistan's export earnings, and
Pakistan's failure to diversify its exports has left the country vulnerable to
shifts in world demand. Official unemployment was 6.9% in 2014, but this fails
to capture the true picture, because much of the economy is informal and
underemployment remains high. Pakistan's human development continues to lag
behind most of the region.. As a result of political and macroeconomic
instability, the Pakistani rupee has depreciated more than 40% since 2007. The
government agreed to an International Monetary Fund Standby Arrangement in
November 2008 to preventa balance of payments crisis, but the IMF ended the
Arrangement early because of Pakistan's failure to implement required reforms.
The economy has stabilized, it continues to underperform and foreign investment
has not returned to levels seen during the mid-2000s, due to investor concerns
related to governance, electricity shortages, , and a slow-down in the global
economy. Remittances from overseas workers, averaging more than$1 billion a
month, remain a bright spot for Pakistan. After a small current account surplus
in fiscal year 2011 (July 2010/June 2011), Pakistan's current account turned to
a deficit where it remained through 2014, spurred by higher prices for imported
oil and lower prices for exported cotton. In September 2013, after facing
balance of payments concerns, Pakistan entered into a three-year, $6.7 billion
IMF Extended Fund Facility. The Sharif government has since made modest
progress implementing fiscal and energy reforms, and in December 2014 the IMF
described Pakistan's progress as "broadly on track." Pakistan remains
stuck in a low-income, low-growth trap, with growth averaging about 3.5% per
year from 2008 to 2014. Pakistan must address long standing issues related to
government revenues and the electricity and natural gas sectors 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 |
NISHAT MILLS LIMITED
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Registered
Address |
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Nishat House, 53 A, Lawrence Road, Lahore, Pakistan |
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Tel # |
92 (42) 36367812, 36367816 |
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Fax # |
92 (42) 36367414 |
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a. |
Nature of Business |
The Company is
engaged in the business of textile manufacturing and of spinning, combing, weaving,
bleaching, dyeing, printing, stitching / apparel, buying, selling and
otherwise dealing in yarn, linen, cloth and other goods and fabrics made from
raw cotton, synthetic fibre and cloth and to generate, accumulate,
distribute, supply and sell electricity |
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b. |
Incorporated |
1960 |
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c. |
Registration No. |
0001053 |
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Address |
7-Main Gulberg, Lahore, Pakistan |
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Tel # |
92 (42) 35716351, 35716359 |
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Fax # |
92 (42) 35716349, 50 |
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Address |
1st Floor, Karachi Chambers,
Hasrat Mohani Road, Karachi, Pakistan. |
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Tel # |
92 (21) 32414721, 722, 723 |
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Fax # |
92 (21) 32412936 |
(1) Nishatabad, Faisalabad.(Spinning, Processing, Stitching Units &
Power Plant)
(2) 12 Km, Faisalabad Road, Sheikhupura.(Weaving Units & Power
Plants)
(3) 21 Km, Ferozepur Road, Lahore.(Stitching Unit)
(4) 5 Km, Nishat Avenue Off 22 Km Ferozepur Road, Lahore.
(5) 20 Km, Sheikhupura Faisalabad Road, Feroze Watwan.(Spinning Unit)
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Riaz Ahmad & Company (Chartered Accountants) |
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Public Limited Company (Listed at stock
exchanges of Pakistan) |
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Names |
Designation |
|
Mr. Mian Hassan Mansha Mr. Mian Umer Mansha Mr. Khalid Qadeer Qureshi Mr. Syed Zahid Hussain Ms. Nabiha Shahnawaz Cheema Mr. Maqsood Ahmad Mr. Saeed Ahmad Alvi |
Chairman Chief Executive Director Director Director Director Director |
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Categories |
Percentage (%) |
|
Directors, CEO, their spouses and minor children Associated Companies, Undertakings & related parties NIT & ICP Banks, Development Financial Institutions, Non Banking Financial
Institutions Insurance Companies Modarbas & Mutual Funds General Public Others |
25.22 8.97 0.06 3.41 3.84 10.10 45.52 11.89 |
A. Subsidiary
None
B. Associated Companies
|
(1) D.G. Khan Cement
Limited, Pakistan. (2) Mansha Brothers
(Pvt) Limited, Pakistan. (3) Nishat Chunian
Limited, Pakistan. (4) Umer Fabrics
Limited, Pakistan. (5) MCB Bank Limited,
Pakistan. (6) Genertech
Pakistan Limited, Pakistan. (7) Nishat Finishing Mills. (8) Nishat Capital Management. (9) Trust Management Services. (10) Chunian Fibre. (11) Nishat Europe. (12) Newbery Mansha. (13) D.G. Khan Electric Company. (14) Gulf Nishat Apparel Limited. (New
Company) (15) Nishat Shuaiba Paper Products Co.
Limited. (16) Nishat Power Limited, Pakistan. (17) Nishat USA Incorporation, U.S.A. (18) Nishat Linen Trading LLC, U.A.E. (19) Nishat Hospitality (Pvt) Limited,
Pakistan. (20) Nishat Linen (Pvt) Limited, Pakistan. |
The Company is engaged
in the business of textile manufacturing and of spinning, combing, weaving,
bleaching, dyeing, printing, stitching / apparel, buying, selling and otherwise
dealing in yarn, linen, cloth and other goods and fabrics made from raw cotton,
synthetic fibre and cloth and to generate, accumulate, distribute, supply and
sell electricity
17,738
|
Years |
In Pak Rupees |
|
2014 2015 |
54,444,091,000/- 51,177,577,000/- |
|
Description |
2015 (Figures in Thousand) |
2014 (Figures in Thousand) |
|
Spinning 100 % plant capacity converted to 20s count based on 3 shifts per day
for 1,095 shifts (30 June 2012: 1,098 shifts) (Kgs.) Actual production converted to 20s count based on 3 shifts per day
for 1,095 shifts (30 June 2012: 1,098 shifts) (Kgs.) Weaving 100 % plant capacity at 50 picks based on 3 shifts per day for 1,095
shifts (30 June 2012: 1,098 shifts) (Sq.Mt.) Actual production converted to 50 picks based on 3 shifts per day for
1,095 shifts (30 June 2012: 1,098 shifts) (Sq.Mt.) Dyeing and finishing Production capacity for 3 shifts per day for 1,095 shifts (30th
June 2012 : 1,098 shifts) (Mt.) Actual production on 3 shifts per day for 1,095 shifts (30th
June 2012 : 1,098 shifts) (Mt.) Power Plant Generation capacity (MWH) Actual generation (MWH) |
76,412 66,668 292,757 279,676 54,000 49,921 698 340 |
66,468 58,225 258,162 248,256 54,000 49,390 447 287 |
Subject import globally from Companies belongs to China, Korea, Japan, Singapore, Taiwan &
European Countries
|
(1) Albaraka
Bank (Pakistan) Limited, Pakistan. (2) Allied Bank
Limited, Pakistan. (3) Askari Bank
Limited, Pakistan. (4) Bank
Alfalah Limited, Pakistan. (5) Bank Islami
Pakistan Limited, Pakistan. (6) Barclays
Bank PLC, Pakistan. (7) Burj Bank
Limited, Pakistan. (8) Citibank
N.A., Pakistan. (9) Deutsche
Bank AG, Pakistan. (10) Dubai Islamic
Bank Pakistan Limited, Pakistan. (11) Faysal
Bank Limited, Pakistan. (12) Habib Bank
Limited, Pakistan. (13) Habib
Metropolitan Bank Limited, Pakistan. (14) HSBC Bank
Middle East Limited, Pakistan. (15) JS Bank
Limited, Pakistan. (16) Meezan
Bank Limited, Pakistan. (17) National
Bank of Pakistan. (18) NIB Bank
Limited, Pakistan. (19) Samba Bank
Limited, Pakistan. (20) Silk Bank
Limited, Pakistan. (21) Soneri
Bank Limited, Pakistan. (22) Summit
Bank Limited, Pakistan. (23) Standard Chartered
Bank (Pakistan) Limited, Pakistan. (24) The Bank
of Punjab, Pakistan. (25) United
Bank Limited, Pakistan. |
Sales recorded a
decrease of Rs. 3,267 million (6.00%) in the current year as compared to sales
in the previous year ended 30 June 2014 mainly due to sluggish demand and stiff
competition. However, because of persistent efforts and dedication of our team,
sales of the Company crossed the mark of Rs. 50,000 million despite
difficulties in local and international markets. A glance over the sales of
last five years shows that the Company is able to maintain a steady trend in
the sales due to its adequate product mix. Gross profit of the Company
decreased by Rs. 1,840 million (23.39%) in the current year as compared to gross
profit of the last year. As compared to decrease in sales by 6.00%, cost of
sales decreased only by 3.06%. The main reason for this disproportionate
decrease was enhanced cost of production as a result of increase in minimum
wages and increase in depreciation charge due to commissioning of new projects.
Cotton prices
fell sharply at the start of financial year 2014-15 on the news of surplus
cotton crop in the local and international markets because huge stocks of
cotton were already available with the buyers. In fact, during the financial
year under review, trading of cotton in international markets was done at the
rates which were the lowest in the past four years. The Company started the
procurement of cotton at the start of the cotton season and completed its
purchase at optimal price level. Cotton prices had a bearish sentiment
throughout this period. China played a key role in keeping cotton prices low as
their international cotton buying had reduced. Polyester fiber prices also
decreased due to sharp dip in oil prices. Prices of cotton yarn also witnessed
a fall which was relatively greater than the decrease in cotton prices as the
customers were aware of the cotton market scenario and expected further
reduction in cotton prices. Moreover, high cost of production mainly due to
expensive electricity and increased wages of workers, made selling yarn in
local and international market a challenge but our marketing team successfully
secured a satisfactory sale of yarn mix. Hong Kong and China once again
remained main markets for our Company’s yarn while our marketing team worked
very hard to get business from Malaysia, Japan and Korea as well. Demand of
cotton yarn from Europe and the USA remained negligible
Financial year
2014-15 was one of the toughest period for textile industry. Cotton prices had
a bearish trend. Similarly, polyester fiber prices also fell due to sharp dip
in oil prices. Both of these factors created a sentiment for decline in the
prices of grey fabric. Our Weaving Segment faced a difficult time during the
financial year under review. Our primary export market has always been Europe
but due to strengthening of US Dollar against Euro, our cloth sales volumes
decreased. Economic slowdown of some major European nations such as Italy and
Spain also worsened the situation. This year, winter season in Europe was mild
and short. Most of the big retailers in Europe had their shops full of winter
clothes and even some of them offered discounts during the season. Corduroy, which
has always been our major product in winters, experienced a sharp decrease in
volume. Rise in sales was recorded in summer season but we faced price
pressure. Our business in Japan also decreased. The reason for decline was
again the decrease in the value of Japanese Yen against US Dollar during the
year. Export sales to China has also slowed down during the last two months.
Turmoil in Middle East and war between Ukraine and Russia caused our work wear
business to slow down. Most of our customers for work wear were selling their
products in these markets. However as always, we have tried to diverse our
product mix further by venturing into product range like abrasive and technical
fabrics. We are hopeful that by end of financial year 2015-16, we shall be doing
bulk business in these products.
Despite stiff
competition due to low demand in local and international market, our Processing
Segment performed remarkably well. In fact, the Division created history by
achieving apparently unattainable profit targets. We were able to sell our
capacities at reasonable profit margins in highly adverse market conditions
mainly because of our marketing strategy and right product mix. The Performance
of Home Textiles was also encouraging and growth of 28% in sales volume was
recorded in year on year basis.
Financial year
2014-15 was difficult for Garments Segments too. Consistent increase in wages
and strengthened Rupee has put a dent on our profitability. The demand for garments
remained weak throughout the year. European businesses also struggled due to a
weak Euro. To counter the industry challenges and achieve production
efficiency, Garments Segment has taken drastic steps in order to be a lean
manufacturing unit. The brand new RFID technology which we installed for sewing
lines is the latest and most advanced method of calculating efficiencies and
wages. This will help in reducing precious down time and increase productivity
and lower wastage. The latest technology will facilitate shop floor management
with real time important data to streamline processes and manage issues on a
fast track. The installation has completed and the system is in operation. Our
aim for future is to remain competitive by bringing costs down through
increased efficiencies and focusing on large brands and retailers.
The Company
invested in many projects in Power Division during the financial year 2014-15
to achieve key strategic objective of cost efficiency. Three tri fuel and
highly efficient Wartsila Generators were commissioned at Bhikki, Ferozewatwan
and Lahore. A 22 ton Coal Fired Steam Boiler to meet the enhanced steam
requirements of Weaving Division at Bhikki has been commissioned. This boiler
generates low cost steam as compared to the steam generated on furnace oil and
rice husk based boilers. The 9 MW extension of coal fired power plant is in
progress and will be completed soon. In addition to electricity, it will also
produce 25 tons of steam per hour.
Textile industry
is the most essential manufacturing sector of Pakistan as it serves as the
backbone of Pakistan’s economy. It has the longest production chain, with
inherent potential for value addition at each stage of processing, from cotton
to ginning, spinning, fabric, dyeing and finishing, made-ups and garments.
Critical success factors of the textile industry are availability of cheap and
subsidized credit facilities, uninterrupted supply of gas and electricity at
low rates, consistent and industry friendly tax policies and establishment of
new textile units in less developed areas by giving incentives to the investors
i.e. tax holiday. Due to unavailability of these factors, negligible growth of
0.5 percent has been recorded in the current financial year 2014-15 as compared
to the last year in Pakistan.
As an export
oriented entity, the Company has earned precious foreign exchange of US$
393.683 million during the current year. In addition to that, the Company
contributed Rs. 1,419 million towards national exchequer by way of income
taxes, sales taxes, custom duties, export development surcharge, education
cess, cotton cess, social security contribution, EOBI contribution etc. The
Company is also acting as withholding agent for FBR.
KCCI
LCCI
FPCCI
APTMA
|
Currency |
Unit |
Pakistani Rupee |
|
US Dollar |
1 |
Rs. 105.90 |
|
UK Pound |
1 |
Rs. 161.50 |
|
Euro |
1 |
Rs. 113.50 |
Mansha Group of Companies enjoys excellent credibility in Pakistani as well as in abroad.
Directors of the Company are reported as qualified, experienced and resourceful
businessmen. Payments are usually correct and as per commitments. Company can
be considered for normal business dealings at usual trade terms and conditions.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.66.84 |
|
|
1 |
Rs.101.04 |
|
Euro |
1 |
Rs.73.05 |
|
PKR |
1 |
Rs.0.63 |
Note :
Above are approximate rates obtained from sources believed to be correct
INFORMATION DETAILS
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Analysis Done by
: |
DIV |
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Report Prepared
by : |
TPT |
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 |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
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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 |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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|
-- |
NB |
New Business |
-- |
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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%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or
its officials.