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Report No. : |
350900 |
|
Report Date : |
24.11.2015 |
IDENTIFICATION DETAILS
|
Name : |
NISHAT MILLS LIMITED |
|
|
|
|
Registered Office : |
Nishat House, 53 A, Lawrence Road, Lahore |
|
|
|
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Country : |
Pakistan |
|
|
|
|
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 |
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|
|
|
Line of Business : |
Subject 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 |
|
|
|
|
No. of Employee : |
17,738 |
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 : |
Good |
|
|
|
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Payment Behaviour : |
Regular |
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|
|
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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 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
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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 |
|
Business Name |
NISHAT MILLS LIMITED |
|
Registered
Address |
|
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 |
|
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 |
|
b. |
Incorporated |
1960 |
|
c. |
Registration No. |
0001053 |
|
Address |
7-Main Gulberg, Lahore, Pakistan |
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Tel # |
92 (42) 35716351, 35716359 |
|
Fax # |
92 (42) 35716349, 50 |
|
Address |
1st Floor, Karachi Chambers,
Hasrat Mohani Road, Karachi, Pakistan. |
|
Tel # |
92 (21) 32414721, 722, 723 |
|
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)
|
Riaz Ahmad & Company (Chartered Accountants) |
|
Public Limited Company (Listed at stock
exchanges of Pakistan) |
|
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 |
|
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.66.35 |
|
|
1 |
Rs.100.66 |
|
Euro |
1 |
Rs.70.47 |
INFORMATION DETAILS
|
Analysis Done by
: |
HNA |
|
|
|
|
Report Prepared
by : |
ANK |
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%)
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.