MIRA INFORM REPORT

Report No. :	354946
Report Date :	19.12.2015

IDENTIFICATION DETAILS

Name :	AMER COTTON MILLS (PVT.) LIMITED

Registered Office :	173-174, Cotton Exchange Building, I.I. Chundrigar Road, Karachi

Country :	Pakistan

Year of Establishment :	1985

Com. Reg. No.:	0013860

Legal Form :	Public Limited Company

Line of Business :	Manufacture & Sale of Yarn.

No. of Employees :	1,324

RATING & COMMENTS

MIRA’s Rating :

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

Status :	Good

Payment Behaviour :	No Complaints

Litigation :	Clear

NOTES:

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ECGC Country Risk Classification List – March 31, 2015

Country Name

Previous Rating

(31.12.2014)

Current Rating

(31.03.2015)

Pakistan

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-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

Company Name

Business Name

AMER COTTON MILLS (PVT.) LIMITED

Full Address

Registered Address

173-174, Cotton Exchange Building, I.I. Chundrigar Road, Karachi, Pakistan

Tel #	92 (21) 32410930, 32410961
Fax #	92 (21) 32416705

Short Description Of Business

a.	Nature of Business	Principally engaged in manufacture & sale of Yarn
b.	Year Established	1985
c.	Registration No.	0013860

Branches

Address	7 A-K, Main Boulevard, Gulberg II, Lahore, Pakistan
Tel #	92 (42) 35750410, 35758783
Fax #	92 (42) 35758783

Mills Location

Jumber Khurd Bhai Phero,

Tehsil Chunian, District

Kasur, Punjab, Pakistan

Auditors

BDO Ebrahim & Co.

(Chartered Accountants)

Legal Status

Subject Company was established as a Public Limited Company in 1985

Capital

Authorized Capital	Rs. 50,000,000/- divided into 5,000,000 shares of Rs. 10/- each
Issued & Paid up Capital	Rs. 40,000,000/- divided into 4,000,000 shares of Rs. 10/- each

Details of Management

Names

Designation

Mr. Mohammad Abdullah

Mr. Amer Abdullah

Mr. Yousuf Abdullah

Mr. Hasan Abdullah

Mr. Nabeel Abdullah

Chief Executive

Director

Shareholders

Names

No. of Shares

Mst. Shamshad Begum

Mr. Shahid Abdullah

Mr. Nadeem Abdullah

Mr. Mohammad Abdullah

Mr. Amer Abdullah

Mr. Yousuf Abdullah

Mrs. Shireen Shahid

Mrs. Noshaba Nadeem

Mr. Abdul Sattar

SFL Limited, Pakistan

Mr. Nabeel Abdullah

Mr. Hasan Abdullah

Mrs. Ambareen Amer

Mrs. Usma Yousuf

Mr. Shayan Abdullah

Mrs. Sumra Naim

358,394

33,500

36,520

302,570

252,986

852,972

674,953

669,243

320

336,000

500

470,555

8,987

1,000

Associates

A. Subsidiary

None

B. Associated Companies

(1) Reliance Cotton Spinning Mills Limited, Pakistan.

(2) Sapphire Electric Company Limited, Pakistan.

(3) Sapphire Fibers Limited, Pakistan.

(4) Sapphire Finishing Mills Limited, Pakistan.

(5) Sapphire Dairies (Pvt) Limited, Pakistan.

(6) Sapphire Holding Limited, Pakistan, Pakistan.

(7) SFL Limited, Pakistan.

(8) Sapphire Textile Mills Limited, Pakistan.

(9) Amer Tex (private) Limited, Pakistan.

(10) Creadore A/s, Pakistan.

(11) Corus Power (private) Limited, Pakistan.

(12) Crystal Enterprises (private) Limited, Pakistan.

(13) Diamond Limited, Pakistan.

(14) Diamond Fabrics Limited, Pakistan.

(15) Galaxy Agencies (private) Limited, Pakistan.

(16) Hermes Power (private) Limited, Pakistan.

(17) Nadeem Enterprises (private) Limited, Pakistan.

(18) Neelum Textile Mills Limited, Pakistan.

(19) Sapphire Wind Power Company Limited, Pakistan.

(20) Sapphire Agencies (private) Limited, Pakistan.

(21) Sapphire Enterprises (private) Limited, Pakistan.

(22) Reliance Textiles (private) Limited, Pakistan.

(23) Sapphire Power Generation Limited, Pakistan.

(24) Sapphire Finishing Mills USA Inc, U.S.A.

(25) Salman Ismail (SMC-private) Limited, Pakistan.

(26) STM Corporation (private) Limited, Pakistan.

(27) SFL Corporation (private) Limited, Pakistan.

(28) Sapphire Home Inc. USA

(29) Yousaf Agencies (private) Limited, Pakistan.

Business Activities

Subject Company is principally engaged in manufacture & sale of Yarn by its brand names of “BLUE BELL”.

Its mainly import Textile Raw Materials, Textile Machineries through L/C, D/P basis.

It sells its finished products through L/C, D/P basis to its domestic as well as international customers.

Its exporting countries are European Countries, U.S.A. & Far East Countries.

Its importing countries are China, Taiwan, Korea, Japan, Hong Kong & European Countries.

Its major customers are Buying Agencies, Private Companies, International Buyers etc.

Subject operates from caption leased office & factory premises situated at commercial & industrial centers of Karachi & Punjab.

Subject employs about 1,324 persons in its set up.

Annual Sales Volume

Years

In Pak Rupees

2014

2015

4,577,870,451/-

4,725,907,281/-

Plant Capacity & Actual Production

2015 2014

Number of spindles installed 41,616 41,616

Number of spindles worked 41,515 37,690

Number of shifts worked per day 3 3

Total days worked 362 365

Installed capacity after conversion into

20/s count (Lbs) 25,639,695 24,657,715

Actual production after conversion into 20/s

Count (Lbs) 25,425,027 22,337,104

Bankers

(1) Allied Bank Limited, Pakistan.

(2) Bank Alfalah Limited, Pakistan.

(3) Faysal Bank Limited, Pakistan.

(4) Habib Bank Limited, Pakistan.

(5) MCB Bank Limited, Pakistan.

(6) National Bank of Pakistan.

(7) Soneri Bank Limited, Pakistan.

(8) Meezan Bank Limited, Pakistan.

(9) Standard Chartered Bank, Pakistan.

(10) Habib Metropolitan Bank Limited, Pakistan.

(11) Askari Bank Limited, Pakistan.

(12) JS Bank Limited, Pakistan.

(Total Mortgage obtained PKR: 4,412,000,000/-)

Future Outlook

The raw material prices are under pressure due to surplus global production. The increase in production of raw cotton in countries like India and china is more than Pakistan; therefore, these countries will have a competitive advantage over Pakistan. In addition, these countries are also giving tremendous incentives to their local industry for capacity expansion which is a challenge for Pakistani Industry, especially in a scenario where cost of power and other inputs have increased substantially in Pakistan. In spite of these challenges, the management is making its best efforts to make the operation as efficient as possible.

Memberships

· All Pakistan Textile Mills Association.(APTMA)

· Karachi Chamber of Commerce & Industry.(KCCI)

· Lahore Chamber of Commerce & Industry.(LCCI)

Foreign Exchange Rates

Currency	Unit	Pakistani Rupee
US Dollar	1	Rs. 106.10
UK Pound	1	Rs. 159.75
Euro	1	Rs. 116.00

Comments

Subject Company was established in 1985 and is engaged in manufacture & sale of Yarn. Directors of the Company are reported as qualified, experienced and resourceful businessmen. Subject can be considered for normal business dealings at usual trade terms and conditions.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.66.42
UK Pound	1	Rs.99.17
Euro	1	Rs.72.14
PAK	1	Rs.0.63

Note : Above are approximate rates obtained from sources believed to be correct

INFORMATION DETAILS

Analysis Done by :	DIV

Report Prepared by :	NIT

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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