colony mills limited
TRANSCRIPT
INTRODUCTION OF COLONY MILLS
Colony Mills Limited is a Pakistan-based company. The Company is principally engaged
in the manufacturing and sale of yarn. It offers a variety of yarn including carded and
combed, slab and core yarn, single and double yarn, made from 100% cotton and
synthetic material, catering to the needs of knitting and weaving consumers in domestic
and international markets.
The Colony Group is one of Pakistan's oldest and the most revered business groups. The
Group has grown phenomenally and has become a leading player in all the sectors in
which it operates. The Group has set up different companies whose activities span
various sectors like Textiles, Sugar and Distillery.
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VISSION STATEMENT
Attain highest standards of quality in its all business activities.
Sustained growth in real terms.
Have professionally trained high quality motivated workforce, working as a team in all environments.
Attain past glorious position and be recognized locally as well as internationally as a dynamic, quality conscious and progressive company and industry leader.
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MISSION STATEMENT
To manufacture quality products for customer satisfaction through
Honoring the commitment.
Continuous endeavor for improvement through adoption of most modern technology in production.
Strict adherence to quality control.
Developing a sense of high reliability through fair dealing.
Becoming a part of country’s development and economic prosperity.
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HISTORY OF COLONY MILLS
The Colony Group was founded in 1986 with a focus on providing high net worth
families and individuals with intelligent wealth management and investment guidance.
Since its founding, the firm has grown substantially, attracting corporate and institutional
clients.
Recognizing the importance and success of its investment management capabilities, The
Colony Group established Colony Investment Management as a separate division,
through which it has built an experienced, talented team of Chartered Financial Analysts
and other investment professionals dedicated to delivering out performance over full
market cycles. Our proprietary, research-intensive approach is implemented through a
defined, systematic, and repeatable investment process.
Team of Chartered Financial Analysts and other investment professionals dedicated to
delivering out performance over full market cycles. Our proprietary, research-intensive
approach is implemented through a defined, systematic, and repeatable investment
process.
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OFFICERS AND DIRECTORS
The Board of Directors of CML is comprised of the following individuals:
Mr. Mughis A. Sheikh (Chairman of the CTML)
Mr. Fareed M. Sheikh, (C.E.O)
Mr. Muhammad Azam Barki
Mr. Akram Qureshi
Mr. Malik Sohail
Mr. Bilal Ahmad Khan Niazi
Mr. Muhammad Farooq
Mr. Syed Arif Hussain
Mehboob Ahmad > Chief Financial Officer
Waqar Ibn Zahoor Bandey > Company Secretary
Najeeb Ullah Khan > Head - Internal Audit
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OUR GROUP
The Colony Group is one of Pakistan’s oldest and most revered business groups. With a vision that transcends geographical as well as corporate boundaries, the Group is driven by its deep-rooted values of integrity, commitment and passion to excel. Since its inception in 1946, the Group has displayed a vibrant and credible manufacturing portfolio, and profitability track record. The Group has established different companies with diversified activities spanning to various sectors like Textiles, Sugar, and Distillery etc.
The formation of the Group lies in the division of Muhammad Ismail Maula Baksh Group(MIMB), one of the largest groups of Pakistan, into two-companies- The Colony Group and The Sunshine Group. The MIMB group set up its first factory in 1889 and first flour mill in 1908. In 1946, Colony Group was established as an entity in itself when Colony Mills Limited (formerly Colony Textile Mills Limited) started manufacturing. The Group is considered to be a pioneer in textile industry in Pakistan. Colony Mills Limited also has the distinction of being one of the very first companies to be listed on Karachi Stock Exchange when KSE started its operations in 1948.
The Group has strengthened its foothold in the textile industry by delivering par excellence performances year after year. It has not only grown into a huge, respected conglomerate but has also created value for its multiple stakeholders. With the advent of globalization, the Group entered into numerous new sectors and proven its potential to secure a leading and credible name in the industry.
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OUR COMPANIES
The past five years have seen tremendous growth in production capacities of Colony Group’s existing plants as well as acquisitions of new plants. The Group has equity stock of around 3.5 billion Pak Rupees and annual turnover is expected to reach more than 12 billion Pak Rupees for the current financial year. Additionally, the Group has assets worth more than 9.5 billion Pak Rupees.
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OUR RESPONSIBILITY
At COLONY, we believe in business with integrity and social responsibility. One of our main corporate objectives is to pursue ethical growth in business.
Effective Waste Management Systems at all the production plantsAwarded Oeko-Tex Standard-100 as recognition for our continued attention for environmental concerns.
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Our policies are not restricted to environment only; therefore, we are engaged in a continuous effort to reduce under age employment from our production facilities. We have established a tradition for Pakistani industry by providing accommodation facilities to COLONY employees, and education for their children.
CONTACT
Head Office
Ismail Aiwan-e-Science Building 205 – Ferozepur Road Lahore - 54600 Pakistan
Phone: +92 42 111 COLONY
Fax: +92 42 576-3247
PRODUCTS OF COLONY MILL
Textile
Sugar
COLONY TEXTILE MILLS LIMITED
Established as a textile manufacturing unit on 24th August, 1946, Colony Mills Limited is engaged in the production and manufacturing of different types of yarns of various
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counts. The company has a healthy portfolio of income generating assets that crossed total revenues of 7.0 billion rupees in the year ending June 2008.
Product Range
100% cotton carded and combed yarns, lycra/spandex core spun and slub yarns 100% polyester and 100% viscose yarns along with various blends, polyester viscose yarn, and yarns of polyester cotton and polyester viscose blends in the range of 6 to 80 Ne (Number English) Counts.
Future Ventures
A state-of-the-art Open-End Spinning production facility is under construction. It will be the first of its kind facility in the country, with 2,880 rotors capable of producing 15,000 Metric Tons of yarn annually, including slub yarns.
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COLONY SUGAR MILLS LTD
In a continued bid to diversify its portfolio, the Colony Group recently acquired two sugar plants in Phalia and Mian Chanu:
Colony Sugar Mills Limited (Mian Channu)
Operations
Conversion of Sugarcane into refined sugar Crushing Capacity
4,500 Metric Tons per day of Sugarcane
Projected Annual Turnover
Over Rs. 1.00 Billion or US$ 15 Million
Colony Sugar Mills Limited (Phalia)
Operations
Conversion of Sugarcane into refined sugar Production of Ethanol from the refined sugar waste
Crushing Capacity
7,500 Metric Tons per day of Sugarcane
Distillery Plant Capacity
125,000 liters per day of Ethanol
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CAREER
People policy (working with us)
We, at Colony Group, believe in our established values of
Team-work
Integrity
Diversity
Equality
We believe in individual growth and respect. Our employment and HR policies develop individuals without race, religion, gender or any other bias. We are an equal opportunities employer, strongly following a team based working environment in order to foster cooperation and enhancing the value of each individual’s contribution.
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INTERNAL STRUCTURE/COMMITIES
The different comities of colony mills are as follows:
Audit Committee
This is the most effective and prime committee of the board, it has the ital role in the compliance of the internal controls so as to safeguard he interests of company through monitoring of internal audit functions and risk management policies.
Executive Committee
This committee is responsible for setting overall corporate objectives and strategies, Identification of opportunities, monitoring the business strategies and plans and there after the successful implementations of those plans.
Human resource committee
This committee determines the compensation package for all cadres of the company s employee. The committee is also responsible to create and maintain conductive working environment that instill trust & ensure respect, fair treatment and development opportunity.
Technical Committee
The technical committee acts in an advisory capacity to the CEO, Provides recommendations relating to technical affairs to the company, formulation of technical policies required under the code of corporate governance.
Finance committee
The role of finance committee is to review and recommend the financial targets, annual and quarterly budgets, approval of expenditures for amounts with in its limits, investment of the surplus funds of the company and financial policies.
Corporate Governance.
The management ensured that all requirements of the code of corporate governance were compiled with the statement of compliance with best practices of code of corporate governance is annexed.
Acknowledgment.
Our team of workers, supervisors and managers is greatly appreciated for their commitment, dedication and consistent hard work.
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Colony Mills LimitedSummarized Balance Sheet
As on 30 June, 200___
2006 2007 2008 2009Rs (000) Rs (000) Rs (000) Rs (000)
ASSETS
CURRENT ASSETS
Cash & Bank Balance 65352792 4419673 4414338 32066725Short term Investments 146685782 812209813 433627562 466030145Trade Debts 192852006 166085822 305086776 331929726Loans & Advances 126920420 Short Term Deposits 479330738 Other Receivable 12082974 174612533 504451730 793984464Stores & Spares 29631906 64802911 73473064 120827747Tax Refunds Due from Govt. 11560127 42140864 83795404 122130069Stock in Trade
Raw Material 6100612647 869248471 1092423524 1606823241Work in Process 71558000 80378369 89887439 87496286Finish Goods 308959531 284348296 210140198 265973244
Assets held for Disposal 318422562 484822562 Real Estate property held for trading
491215801
TOTAL CURRENT ASSETS 2055546922 2816669314 3282122597 4318477448
FIXED ASSETS
Work in Progress 415822597 281606595 267457672 1284218441Plant & Machinery at cost 2829766453 2565266237 3946861781 4705633505Less: Depreciation 471957286 471957286 775926523 926890172
2357809167 2093308951 3170935258 3778743333Others 471957286 2578278895 2385825526 2463964046
TOTAL FIXED ASSETS 3245589050 4953194441 5824218456 7526925820
Long term Security Deposit 16716122 2451716 18576122 787243175Long term Investment 3133116 18111122 4525998 18576123
TOTAL ASSETS 5320985210 7790426593 9129443173 12651222566
LIABILITIES & EQUITY
CURRENT LIABILITIES
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Trade & Other PayablesCreditor 55732274 203703650 557745562 1965521987Bills Payable 721273762 155321385 606225694 Advance Payments
7709133 27891258 2211614 19486443
Other 87102659 85230590 95733842 113093543Total Trade & Other Payables 871817828 472146883 1261916712 2098101973Accrued Interest & Markup 68832214 88489407 96132098 167589397Short term Borrowing 799537736 1866403904 1592203909 2264788587Tax 64786639 48290819 28999380 35907313Current Portion of Non-Current Liabilities
208404027 291884397 262529592 539916788
Provision against Contingent Liabilities
31417382
TOTAL CURRENT LIABILITIES 2013378444 2798632792 3241781691 5106304058
NON CURRENT LIABILITIES
Loan from related parties 45454920 Liabilities against assets 12099318 44019429 74154515 132569317Long term Financing 1089550531 1974621760 2415894313 4179440783Other 912529335 340051740 248050727 326557758
TOTAL NON CURRENT LIABILITIES
2059634104 2358692929 2738099555 4638567858
STOCK HOLDER EQUITY
Issued Capital 250000000 2441763000 2441763000 2441763000Capital Reserve 157738584 191337872 707298927 464587650Unappreciated profit 338622672
TOTAL EQUITY 746361256 2633100872 3149061927 2906350650 Surplus on Fix Asset 501611406
TOTAL LIABILITIES & EQUITY 5320985210 7790426593 9128943173 12651222566
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RATIO ANALYSIS
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Ratio analysis is a widely used tool of financial analysis. It is defined as the systematic use of ratio to interpret the financial statements so that the strengths and weaknesses of a firm, as well as its historical performance and current financial condition can be determined.
A complete ratio analysis shows a whole snap of the whole activities of the company during the year. A ratio becomes meaning full when compared with other standard and the ratio of the other years. So for this purpose we have calculated the ratio of COLONY MILLS and compare it with the previous year and brief them according to our knowledge.
PURPOSES
The recommendation of ratio analysis depends upon the stake holder’s position and relation to the company for which the analysis is done. The following paragraph briefly explains the purpose of ratio analysis stage by stage.
MANAGEMENT
Would like to know the operational efficiency during the year and would think of such ratios as return on investment, turnover of fixed assets and net profit to sales etc.
CREDITORS
Would like to know the ability of the company to meet its current obligations and, therefore, would think of current and liquid ratios, turnover of receivables, coverage of interest by the level of earnings, etc
INVESTORS
Will be interested in such ratios as earnings per share, book value per share and dividends per share etc
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CLASSIFICATION OF RATIOS
Ratios may be classified in a number of ways keeping in view the particular purpose. To achieve the above purposes effectively ratios may be classified as:
1. Liquidity ratios:
Working Capital
Current Ratio
Account Receivable Turnover
Accounts Receivable Turnover in days
Inventory Turnover
Inventory Turnover in day
Sales to Working Capital
Operating Cycle
Acid -Test Ratio
2. Leverage /Solvency Ratios.
Debt ratio
Debt Equity Ratio
Time Interest Earned Ratio
Fixed Coverage Ratio
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3. Profitability ratios.
Gross Profit Margin
Operating Profit Margin
Net Profit Margin
Total Asset Turnover
Return on Assets
Operating Asset Turnover
Return on Operating Assets
Sales to Fixed Assets
Return on Total Equity
Return On investment
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2006 2007 2008 2009
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Current Ratio = Current Assets / Current Liabilities
Current Assets 2055546922 2816669314 3281622597 4318477448Current Liabilities 2013378444 2798632792 3241781691 5106304058Current Ratio 1.020944139 1.006444762 1.012289818 0.845714904
Quick Ratio = Quick Assets / Current Liabilities
Quick Assets 1064416744 1582694178 1889171436 23581846772013378444 2798632792 3241781691 5106304058
Quick Ratio 0.528671968 0.56552406 0.582757143 0.461818303
Working Capital = Currents Assets – Current Liabilities
Current Assets 2055546922 2816669314 3281622597 4318477448Current Liabilities 2013378444 2798632792 3241781691 5106304058Working Capital 42168478 18036522 39840906 -787826610
Cash Raio = Cash + Mrk Securities / Current Liabilities
Cash 65352792 4419673 4414338 32066725Mrk Securities 146685782 812209813 1336742 466030145Current Liabilities 2013378444 2798632792 3241781691 5106304058Cash Ratio 0.105314813 0.291795868 0.001774049 0.097545478
A/R Turnover = Annual Credit Sales / Avg. A/R
Annual Credit Sales 3349406752 2055880694 578505405 7020729542Avg. A/R 150073976 2055880694 575118430 979371758A/R Turnover 22.31837152 8.571495493 1.005889178 7.168605266
Avg. Collection Period = 360 / A/R Turnover
360 360 360 360A/R Turnover 22.31837152 8.571495493 1.005889178 7.168605266Avg. Collection Period 16.13020913 41.9996721 357.8923078 50.21897377
Inventory Turnover = CGS / Avg. Inventory
CGS 2979269220 1776104503 5046353813 6026504807Avg. Inventory 990382399 1112552657 1313213149 1676371966Inventory Turnover 3.008200896 1.596422868 3.842753034 3.594968736
Avg. Age of Inventory = 360 / Inventory Turnover
360 360 360 360Inventory Turnover 3.008200896 1.596422868 3.842753034 3.594968736Avg. Age of Inventory 119.6728584 225.5041611 93.6828551 100.1399539
Sales to Working Capital = Sales / Working Capital
Sales 3349406752 2055880694 5784505405 100.1399539Working Capital 42168478 18036522 39840906 -787826610Sales to Working Capital 79.42915919 113.9843199 145.190107 -8.91151613
Operating Cycle = A/R Turnover in days + Inventory Turnover in days
A/R Turnover in days 16.13020913 41.9996721 357.8923078 50.21897377Inventory Turnover in days 119.6728584 225.5041611 93.68283551 100.1399539Operating Cycle 135.8030675 267.5038332 451.5751433 150.3589277
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RATIOS OF SHORT TERM DEBT PAYING ABILITY
Current Ratio
2006 2007 2008 20091.020944139 1.00644476 1.012289818 0.8457149
Interpretation
The current ratio is the ratio of total current assets and total current liabilities. The
current ratio of a firm measures its short- term solvency, i.e. its ability to meet short-
term obligations. As a measure of short term/current financial liquidity, it indicates
the rupees of current assets available for each rupee of current liability / obligation.
The higher the current ratio, the large the amount of rupees available per rupee of
current liability, the more the firm’s ability to meet current obligations and the greater
the safety of funds of short term creditors .And in Colony Textile mills ltd the current
ratio is decreasing from 2006 to 2009.it shows that co has poor short term debt paying
ability.
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Acid Test Ratio
2006 2007 2008 20090.528671968 0.56552406 0.582757143 0.4618183
Interpretation
The term quick assets refers to current assets which can be converted into cash
immediately or at a short notice without dimension of value. Thus, the quick assets =
current assets -inventory. This ratio is used to check that how much inventory is unsold
and includes in current assets. Because current assets may include inventory in large
amount which would increase the current assets. This ratio shows a minor increase from
2006 to 2007 and 2008, but in 2009 it decreases.
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Working Capital Ratio
Working Capital = Current Assets – Current Liabilities
2006 2007 2008 200942168478 18036522 39840906 787826610
Interpretation
Working capital indicates the short run solvency position of the business. As shown
above the net working capital decreases from 2006 to 2007 but improves in 2008, but
goes negative in 2009 which gives a warning to company.
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Cash Ratio
Cash Ratio = Cash + Mrk Securities / Current Liabilities
2006 2007 2008 20090.105314813 0.29179587 0.01774049 0.09754548
Interpretation
Cash ratio indicates that how much mot liquid assets a company have to fulfill its current
liabilities. Increasing trend is favorable and vive versa. In Colony textile this ratio
increases from year 2006 to 2007 but it’s a minor increase and in 2008 it shows a minor
decrease and it increases in 2009.
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Account Receivable Turnover Ratio
Interpretation
This ratio shows the proportion of sales to receivable. It means that how many times in a
year our receivables are collected. It shows the credit management and collection
management ability that how much they are efficient to collect the receivables. There is a
decrease in A/R Turnover from year 2006 to 2008 but in 2009 it improves and increases.
2006 2007 2008 200922.31837152 8.57149549 1.00588917 7.16860527
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Account Receivable Turnover in Days
2006 2007 2008 200916.13020913 41.9996721 357.8923078 50.2189738
Interpretation
This ratio indicates that how many days’ receivables are collected. It shows credit
collection management ability that how much they capable to get receivables. In Colony
Textile in increases from 2006 to 2008 but it decreases in 2009.
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Inventory Turnover
2006 2007 2008 20093.008200896 1.59642287 3.842753034 3.59496874
Interpretation
This ratio reveals the number of times finished stock is turned over during a given
accounting period. In other words this ratio indicates that how many times in a year
inventory can be converted into sales. High inventory turnover ratio is better than a low
ratio. A high ratio implies good inventory management. In Colony textile inv turnover
decreases from year 2006 to 2007 but in 2008 it improves and in 2009 there is a minor
decrease in inv turnover.
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Inventory Turnover in Days
2006 2007 2008 2009119.6728584 225.504161 93.62883551 10.139954
Interpretation
This ratio shows us that for how many days the inventory remains with the company after
its conversion from raw material and work in process to finished goods. The lower the
ratio better it is. This is calculated by dividing the 365 by inventory turnover. The
standard of day inventory in stock is that lower the days the higher the performance. In
Colony textile the inventory turnover in days first increases from 2006 to 2007 but it
decreases in 2008, and in 2009 it again shows an increase.
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Sales to Working Capital
2006 2007 2008 20091.020944139 1.00644476 1.012289818 0.8457149
Interpretation
Sales to working give an indication of the turnover in working capital per year. A low
working capital turnover ratio indicates an unprofitable use of working capital. In other
words sales are not adequate in relation to the available working capital. In Colony textile
this ratio shows a rapid increasing trend from year 2006 to 2008 but shows a sharp
decrease in 2009 even it goes to negative.
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Operating Cycle
Operating Cycle = A/R Turnover in days + Inventory Turnover in days
2006 2007 2008 2009135.8030675 267.503833 451.5751433 150.358928
Interpretation
The operating cycle represents the period of time elapsing between the acquisition of
goods and the final sash realization resulting from sales and sub sequent collections. The
operating cycle should be helpful when comparing a firm from period to period. In the
company this ratio first shows increase from 2006 to 2008 but it decreases in 2009.
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.
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LONG-TERM DEBT PAYING ABILITY
2006 2007 2008 2009
Debt ratio=Total Liabilities/Total Assets
Total Liabilities 4073012548 5157325721 5979881246 9744871916Total Assets 5320958210 7790426593 91289443173 12651222566Debt Ratio 0.765465991 0.662008127 0.655046387 0.770271163
Debt to Equity ratio=Total liabilities/shareholder’s equity
Total liabilities 4073012548 5157325721 5979881246 9744871916Shareholder’s equity 746361256 2633100872 3149061927 2906350650Debt to Equity ratio 5.457159673 1.958651025 1.898940505 2906350650
Debt to tangible net worth ratio=T.liabilities/O.E-Intangible assets
Total liabilities 4073012548 5157325721 5979881246 9744871916Shareholder’s equity 746361256 2633100872 3149061927 2906350650Intangible assets 0 0 0 0Debt to tangible net worth ratio 5.457159673 1.958651025 1.898940505 2906350650
Current debt to net worth ratio=current liabilities/O.E
Current liabilities 2013378444 2798632792 3241781691 5106304058Shareholder’s equity 746361256 2633100872 3149061927 2906350650Current debt to net worth ratio 2.697592389 1.062865772 1.029443614 1.756947001
Total Capitalization ratio=LTD/LTD+equity
LTD 2059634104 2358692929 2738099555 4638567858Equity 746361256 2633100872 3149061927 2906350650Total Capitalization ratio 0.734011942 0.472514095 0.46509673 0.614793633
Fixed asset to equity ratio=Fixed asset/Shareholder’s equity
Fixed assets 3245589050 4953194441 5824218456 7526925820Shareholder’s equity 746361256 2633100872 3149061927 2906350650Fixed asset to equity ratio 4.348549746 1.881125973 1.849509026 2.589820268
Time Interest earned ratio=EBIT/Interest
EBIT 2646676555 212720950 530687771 674774732Interest 129235123 178660925 371807572 491568948Time interest earned ratio 20.47954529 1.190640595 1.427318352 1.372696007
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Fixed charge coverage ratio
EBIT 2646676555 212720950 530687771 674774732Lease Pmt 23443822 18219485 34889562 36416568Tax rate 40% 40% 40% 40%Principle Interest 0 0 0 0Preferred dividend 1292351230 1786609250 3718075720 4915689480Fixed Charge Coverage ratio 10.49307897 0.703799129 0.834395848 0.808194102
T.Asset Turnover ratio=Net Sales/T.Assets
Net Sales 3349406752 2055880694 5784505405 7020729542Total Assets 532098210 7790426593 9128943173 12651222566Total Asset Turnover ratio 0.629471164 0.263898346 0.633644585 0.55494475
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RATIOS OF LONG TERM DEBT PAYING ABILITY
Debt Ratio
2006 2007 2008 20090.765465991 0.662008127 0.655046387 0.77027116
Interpretation
Debit ratio is calculated to check the total asset financed by the firm creditors. This ratio
shows relation between total assets and total liabilities. In Colony textile this ratio shows
a minor decrease from 2006to 2007 and in 2008it also decreases, but in 2009it improves
or increases.
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Debt To Equity Ratio
2006 2007 2008 20095.457159673 1.958651025 1.898940505 3.35295809
Interpretation
The debt equity ratio indicates the relationship between the long-term funds provided by
creditors and those provided by the firm’s owners. The standard debt equity ratio is
60:40. The lower the debt equity ratio that is preferable. This ratio decreases from year
2006 to 2008 but it improves/increases in 2009.
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Debt To Tangible Net Worth Ratio
Debt to Tangible net worth ratio = Total liabilities / Shareholder’s equity – Intangible Assets
2006 2007 2008 20095.457159673 1.958651025 1.898940505 3.35295809
Interpretation
This ratio tells that how much the equity portion contributes to total liabilities. In Colony
textile it decreases from 2006 to 2008, but further it does not decrease but shows an
increase in 2009.
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Current Debt to Net Worth Ratio
Current debt to net worth ratio = Current liabilities / Shareholder’s equity
2006 2007 2008 20092.697592389 1.062865772 1.029443614 1.756947
Interpretation
This ratio shows that how much contribution of shareholder’s equity is in the current
portion of liabilities. In this company it shows a gradual decrease from year 2006 to 2008
but it improves in minor in 2009.
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Total Capitalization Ratio
Total capitalization ratio = LTD / LTD + equity
2006 2007 2008 20090.734011942 0.472514095 0.46509673 0.61479363
Interpretation
LTD represents a company’s huge investment so through this ratio we check that whether
company’s capital is capable of paying the interest on long term debts. In Colony textile
shows a decrease from 2006 to 2007 and in 2008 it minor decreases and in 2009 it
improves/increases.
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Fixed Asset to Equity Ratio
Fixed asset to equity ratio = Fixed asset / Shareholder’s equity
2006 2007 2008 20094.348549746 1.881125973 1.849509026 2.58982027
Interpretation
It shows that in fixed assets how much contributed or owned by the shareholders equity
and remaining by creditors. And in Colony textile this ratio decreases from year 2006 to
2008, but a minor increase also comes in 2009.
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Time Interest Earned Ratio
2006 2007 2008 200920.47954529 1.190640595 1.427318352 1.37269601
Interpretation
This ratio measures the firm’s ability to make contractual payments this ratio is also
calculated to know about long- term solvency position of the business. This ratio
indicates the company’s ability to pay interest this company this ratio shows a rapid
decrease from 2006 to 2007 and a minor increase in 2008, and in 2009 it also decreases.
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Fixed Charge Coverage Ratio
Fixed Charge Coverage Ratio = EBIT + Lease Pmt / Interest + Lease Pmt + (Principle + Preferred dividend) * (1 / 1-T)
2006 2007 2008 200910.49307897 0.703799129 0.834395848 0.8081941
Interpretation
This ratio shows a major decrease in 2007 but it improves in 2008, and in 2009 it again decreases.
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Total Asset Turn over Ratio
2006 2007 2008 200910.49307897 0.703799129 0.834395848 0.8081941
Interpretation
This ratio is based on the relationship between the sales and assets of a firm indicate that
how much is contributed by assets towards our sales. The higher the turnover ratio, the
more efficient the management and utilization of the assets while low turnover ratios are
indicate of under utilization of available resources and presence of idle capacity. If turn
over increases it means that assets are properly used to generate sales and company’s
position is very good. In Colony textile ratio decreases from year 2006 to 2007 but
improves in 2008 and also shows decreases in 2009.
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INVESTOR’S ANALYSIS
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2006 2007 2008 2009Financial Leverage=EBIT/EBT
EBIT 310183157 291991853 830067779 85491799EBT 180948234 119330928 458269207 363372851Financial Leverage 1.71420936 2.44690842 1.81131039 2.3527959
EPS=net Income-Preferred Dividend / No. of C/S Outstanding
Net income 106792352 104917000 513886773 281497826
Preferred Dividend 0 0 0 0
C/S Outstanding 10410959 135653589 244176300 245000000
EPS 10.2576863 0.77341853 2.10457269 1.1489707
Note: There is no dilutive effect on the basic EPS of a company.
Price Earning Ratio= Market Price per Share/ EPS
Market Price/Share 12 13 12 14EPS 10.25786 0.774185 2.1045727 1.1489707P/E ratio 1.16983464 16.8084937 5.70187002 12.184819
% of earning retained= Net income – All dividends/net
Net income 106792352 104917000 513886773 281497826
All dividends 106792352 104917000 513886773 281497826
% earning retained 0 0 0 0
Dividend Payout Ratio = Dividend per share / EPS
Dividend per share 10.26 0.77 2.1045727 1.1489707Earning per share 10.26 0.77 2.1045727 1.1489707Dividend Payout 1 1 1 1
Dividend Yield=Dividend per share / Market price of share
Dividend per share 10.26 0.77 2.1045727 1.1489707Market price of share
12 13 12 14
Dividend yield 0.855 0.05923076 0.17538105 0.0820693
Book value=Total Shareholder’s equity – Preferred equity/ Total no. of C/S outstanding
Shareholder’s equity 746361256 2633100872 3149061927 2906350650
Preferred Equity 0 135653589 0 0
C/S outstanding 10410959 19.4104770 244176300 245000000
Book Value 71.689962 19.4104770 12.8966731 11.862655
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Financial Leverage
Financial Leverage= EBIT / EBT
2006 2007 2008 20091.714209 2.446908 1.81131 2.352795
Interpretation
This ratio tells that how much change comes in EBIT due to change in net income, as the
interest increases or decreases he financial leverage increases and decreases with the
same aspect from year 2006 to 2007 this ratio increases but in 2008 it shows a decrease
and it 2009 again improves.
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Earning per Share
EPS = (Net Income – Preferred Dividend) / No. of Common Stock Outstanding
2006 2007 2008 200910.2576 0.7734 2.1045 1.148
Interpretation
IT tells that what a single share earns, it is a mandatory /compulsory part of I/S. this ratio
is in a good position in 2006 but it goes to much down in 2007 and in 2008 it improves
but again shows a decreasing trend in 2009.
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Price Earning Ratio
Price Earning Ratio = Market price per share / EPS
2006 2007 2008 20091.1698 16.8084 5.7018 12.1848
Interpretation
This ratio basically tells about the increase or decrease in the market prices for good sign
the market prices should increases from EPS this ratio first shows an increasing trend
from year 2006 to 2007 but in 2008 it goes down and in 2009 it increases.
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PROFITABILITY RATIOS
50
Gross Profit Ratio = *100
2006 2007 2008 200911.050838 13.608581 12.76084194 14.16127383
Interpretation
The gross profit ratio indicates the proportion of gross profit to sales. Gross profit is
calculated by deducting the cost of good sold from sales. Higher the ratio, the better it is,
and the lower the relative cost of merchandise sold and better would be the company’s
position. A low ratio indicates unfavorable trends in the form of reduction in selling
prices or increase in cost of production this ratio increases from year 2006 to 2007 but a
minor decrease appeared in 2008 and in 2009 it also increases.
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Operating Profit Ratio = *100
2006 2007 2008 20097.901926359 10.34695012 9.174298127 9.611176844
Interpretation
This ratio measures the percentage of profit earned on sale after deducting operating
expenses from the Gross Profit. This ratio indicates that how efficiently the expenses are
being controlled by management. The higher the margin the lower would be the operating
expenses and better would be management ability to control expenses this ratio increases
from year 2006 to 2007 and in 2008 it decreases but recovered or increased in 2009.
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Net Profit Ratio = *100
2006 2007 2008 20093.18839603 5.103263059 6.960817364 4.009523858
Interpretation
The net profit margin shows the net percentage of sales after payment of interest and
taxes from operating profit this ratio increases from year 2006 to year 2007 and also
increases in 2008 but in 2009 it decreases.
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Total Asset Turnover = *100
2006 2007 2008 200962.94711637 26.38983462 63.36445876 55.49447501
Interpretation
Total asset turnover measures the activity of the assets and the ability of the firm to
generate sales through the use of sales there is a decreasing trend from year 2006 to 2007
but in 2008 it increases and in 2009 it again shows a decreasing position.
Return on Assets = *100
54
2006 2007 2008 20092.007003361 1.346742682 4.410714728 2.225064215
Interpretation
The purpose of this ratio is to calculate the return that the business is providing on total
assets. This is important from owner’s point of view that what the business is earning on
its assets, how their funds are being utilized. This ratio also provides an indicator of
overall effectiveness of management in generating profit with the available assets .If
utilization of assets is productive the return would be high and position would be good
this ratio from 2006 to 2007 decreases but in 2008 it improves and in 2009 it again shows
a decrease.
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Operating Asset Turnover
2006 2007 2008 2009103.1987322 67.4893248 126.195727 11.8852923
Interpretation
This ratio measures the ability of operating assets to generate sales .If this ratio is high
then it is in favor of company. It shows the effective use of assets. It goes down in 2007
but increment comes in 2008 but in 2009 it again goes down.
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Return on Operating Assets
2006 2007 2008 20098.154687822 6.983086776 11.57757222 11.42323872
Interpretation
This ratio gives the operating efficiency of management. This ratio indicated how
Operating assets are utilized. In other words how much assets are used in operating
activities. High Return on Operating Asset ratio shows the efficient use of operating
assets. This ratio shows a min or decrease in 2007 but improves in 2008 and in 2009 it
again shows a minor decrease.
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Sales to Fixed Asset
2006 2007 2008 2009103.20 67.49 126.20 118.85
Interpretation
This ratio measures the firm’s ability to make productive use of its fixed assets to
generate sales. High ratio is favorable for the Company than that of low ratio this ratio
goes down from year 2006 to 2007 but increase comes in 2008 and in 2009 it also shows
a minor decrease.
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Return on Investment
Return on Investment = Net Income / LTD + Equity
2006 2007 2008 20093.805863 0.4428402 6.839487 3.730959
Interpretation
The net profit margin ignores the utilization of assets and the total asset turnover ratio
ignores profitability on sales. The return on investment ratio or earning power resolve
these short come. Return investment measures the overall effectiveness in generating
profits with available assets. It shows a decrease from year 2006 to 2007 but in 2008 it
shows a good position and improves but in 2009 it again goes down.
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PEST ANALYSIS
60
Political Instability
The political situation of Pakistan is not satisfactory. Due to the rapid change in the government every government sets its own new trade policies.
Government should apply sustainable policies for the beneficial of the exporters as well as the investors.
Economic Situation
The economic condition of Pakistan can also affect the foreign investors increasing inflation rate make the cost of production high and thus reduce the profit margin of investors.
Social Situation
The change in the lifestyle of the people affects the growing demand of the growing demand of the CTML products. The change in the lifestyle and needs in different demographics also affect the demand of the customers.
Technological Factors
Technological advancement in all the sectors of the country has changed the entire socio-economic environment. Especially in the textile sector there is a lot of technological development.
CTML’s excellent computerized machines and devices have made extension in its present setup of well advanced technology imported from Japan, Germany and France.
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62
SWOT ANALYSIS
Each organization existing in the market analyzed though external and internal
environment has some Strengths, Weaknesses, Opportunities and Threats called SWOT
analysis. SWOT analysis gives the overall competitive position of industry. The basic
purpose of this analysis is to identify the current strategies of the organization and its
potentials of competing in the competitive market and capability of dealing with those
changes, which are taking place in the business environment sharply. It gives the scenario
regarding weaknesses and threats to the company and offers the company that these
should be eliminated or reduced at least as compared to other competitors.
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Strength
Colony mills have a very stable yarn market with good brand image in the eyes of customers.
Colony has a strong dealer ship network and a large sales force to cater to its needs.
Certified by ISO.
WIDE production range.
Top player of TEXTILE business with max. Production capacity.
Having a strong good will.
Significant contribution towards the economic development of the country.
Excellent environmental & working conditions.
Safety measures of international standards are exercised.
Sales growth is very high.
Export sales especially show a tremendous boost as it increased from RS 744 MILLION last year to 2.40 BILLION.
Company maintained its position against its competitors very successfully.
Company has strong resources to get the raw material.
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Weaknesses
Huge volume of product ion which may be d i f f icul t to handle in future.
Monetary sens i t iveness to fore ign exchange market .
I t has become more chal lenging for the company to maintain competitive edge due to WTO regime.
Limita t ions in meet ing up the demand of tex t i le .
Too much centralization bureaucratic control effects timely decision making.
Not s t rong market ing or adver t i sement .
Company cannot conver t account rece ivables in to cash quickly. Mostly sales are on credit basis.
Lack of long te rm planning.
Colony mill has no proper framework and policy for the recruitment of employees which result inefficiency. All the Directors and audit committee of the Company are close relative of the Chief Executive.
Lengthy procedures in documenta t ions .
Opportunities
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A gas p lant i s es tabl i sh ing to overcome the shor tage of e lec t r ic i ty .
Yarn and Sugar i s expor ted .
Improve the qual i ty of tex t i le and sugar .
Expand the p lant to meet the demand more ef f ic ient ly .
Trying to ge t oppor tuni t ies for jo in t ventures wi th o ther in terna t ional companies .
Expanding the bus iness for g lobal iza t ion .
Having two sugar producing p lants .
Delegat ion of author i ty so tha t dec is ions can be made a t the spot wi thout any de lay .
May divers i fy the bus iness in a l l ied serv ices . May be cos t leaders by cut t ing down the unnecessary expendi tures .
Adding the new and f resh s ta f f in the company to encourage the work .
After tex t i le and sugar now moving towards paper making indus t ry .
Company i s focused on reducing cos t to mainta in and enhance i t s loca l as wel l as i t s g lobal pos i t ion .
Threats
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Water c r i s i s i s gone up in the count ry which may resul t in the ser ious problem of low growth in cot ton , yarn and sugar cane .
A free t rade pol icy of WTO is a major threa t to the company.
Mainta in ing i t s leadership in fu ture a f te r implementa t ion of f ree t rade zones .
Threat of ent ry of new compet i tors .
A t rade f ree pol icy can be the threa t of the company as new ent ry i s easy .
Threat of water and gas cr i s i s in i t h igh consumpt ion potent ia l market .
Now a days e lec t r ic i ty shor tage i s the b ig threa t tha t can be resul ted in the low product ion .
Due to pol i t ica l ins tabi l i ty the bad condi t ion of s tock exchange i s a threa t of company tha t resul t s in low share pr ices .
Due to h igh t rade ta r i f f expor t and cot ton and yarn can be low.
BCG GROWTH-SHARE MATRIX
Companies that are large enough to be organized into strategic business units face the challenge of allocating resources among those units. In the early 1970’s the Boston Consulting Group developed a model for managing a portfolio of different business units (or major product lines). The BCG Growth-share matrix displays the various business units on a graph of the market growth rate vs. market share relative to competitors:
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Resources are allocated to business units according to where they are situated on the grid as follows:
Cash Cow- A business unit that has a large market share in a mature, slow growing industry. Cash cows require little investment and generate cash that can be used to invest in other business units.
Stars- A business unit that has a large market share in a fast growing industry. Stars may generate cash, but because the market is growing rapidly they require investment to maintain their lead. If successful, a star will become a cash cow when its industry matures.
Question Mark (or Problem Child) - A business unit that has a small market share in a high growth market. These business units require resources to grow market share, but whether they will succeed and become stars is known.
Dog- A business unit that has a small market share in a mature industry. A dog may not require substantial cash, but it ties up capital that could better be deployed elsewhere. Unless a dog has some other strategic purpose, it should be liquidated if there is little prospect for it to gain market share.
The BCG matrix provides a framework for allocating resources among different business units and allows one to compare many business units at a glance.
Under the growth-share matrix model, as an industry matures and its growth rate declines, a business unit will become either a cash cow or a dog, determined soley by whether it had become the market leader during the period of high growth.
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While originally developed as a model for resource allocation among the various business units in a corporation, the growth-share matrix also can be used for resource allocation among products with in a single business unit. Its simplicity is its strength – the relative positions of the firm’s entire business portfolio can be displayed in a single diagram.
Negative Criticisms
However, the approach has received some negative criticism for the following reasons: The link between market share and profitability is questionable since increasing
market share can be very expensive. The approach may overemphasize high growth, since it ignores the potential of
declining markets. The model considers market growth rate to be a given. In practice the firm may be
able to grow the market.
COLONY TEXTILE MLLS LIMITED f i t s into Quest ion Mark. (High Growth, Low Market Share)
Justif ication
High Growth Industry
Colony Text i le indus t ry i s growing a t very h igh ra te . The bas ic reasons behind th is a re :
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The opera t ional resul t s in both sp inning uni t s were encouraging and inves tment in these uni t s leads to increase in prof i tabi l i ty .
Pakis tan’s indus t ry depends on text i le indus t ry most of expor ts of Pakis tan are f rom th is sec tor .
Pakis tan economy dis turbs due to pol i t ica l ins tabi l i ty but tex t i le indus t ry grows a t fas te r ra te by increas ing inves tment .
Low Market Share
Colony text i le indus t ry has low market share . The bas ic reasons behind th is a re :
Employees are not mot iva ted tha t ’s why they are ge t t ing of f and put t ing the i r res igns in f ront of managers and execut ives . This i s the responsib i l i ty of HR Depar tment to f ind out a t to see a t the t ime of h i r ing them tha t what the th ing i s tha t the i r employees can be mot iva ted .
Always organiza t ion has to re ly on fore ign cus tomers and i t would become r i sk especia l ly in f inancia l mat te rs and poss ib i l i ty of f raud would be the i r . CTML is too much depending upon the i r fore ign cus tomers . They have l imi ted number of fore ign cus tomers but these are los ing by lacking of qual i ty and l i t t le b i t h igh cos t .
A major problem is team bui ld ing . There i s a lmost no concept of team. Each person i s doing indiv idual ly and per forming h is /her ac t iv i t ies .
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SUGGESTIONS AND RECOMMENDATIONS
Jobs should be ass igned according to the i r ca l iber to develop the i r in teres t in work , output and to enhance the ef f ic iency of workers . I t i s a l so observed tha t in some cases more than one depar tment mainta ins the same record . This i s done a l l of over s ta f f ing and unbalanced d is t r ibut ion of work , which resul t s in de-mot iva t ion of the employee and decrease in e f f ic iency.
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In colony mi l l s there i s lo t of documenta t ion and lengthy procedure of paper work involved, which resul t s in was tage of t ime and def ic iency so each sys tem should be computer ized through in t ranet work .
Company must take in i t ia t ive s teps to mainta in the huge orders .
Workers must be t ra ined to fo l low the safe ty ru les .
Management should take necessary ac t ion to implement the safe ty ru les in the organiza t ion .
Job var ie ty must be added to change the a tmosphere , to develop the in teres t to employees and to increase the i r per formance . So proper ana lys is should be done and explore those employees who can do be t te r work in the organiza t ion .
People working in one sec t ion or depar tment f rom years a re s t i l l wi th the same knowledge and s ty le of doing job . There should be proper career p lanning of employee tha t not only sharpens the sk i l l s of the employee & improve i t s e f f ic iency but a l so resul t s in be t te r and improved output for the organiza t ion .
Proper adver t i sement must be p lanned to increase the sa les , to s tay in touch wi th cus tomers .
There should be de legat ion of author i ty up to cer ta in extent tha t enables manager to take t imely dec is ions a t the spot wi th conf idence . Involvement of top management and reaching a t the f ina l dec is ions i s t ime consuming and some t imes resul t in heavy losses .
Colony mi l l s must adopt the new technology.
Promot ion campaigns and sa les promot ions must be for sugar mi l l s a l so .
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73
CONCLUSION
We financially analyzed the four years annual reports of Colony Textile limited, by making following analysis
Short term liquidity analysis
Long term liquidity analysis
Profitability analysis
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Investor’s analysis
By analyzed its short term liquidity, we concluded that the short term liquidity position of this company is going down with the passage of time. Besides this, company short term ratios are less as compare to benchmark ratios. So as a short term creditor, we cannot make the decision to give short term loan to colony textile mills limited.
Company’s long term debt paying ability is also going down .It means that company has no ability to pay its long term debts. So as a long term creditor, we cannot make the decision to give long term loan to colony textile mills limited.
Profitability ratios are improving day by day. Although this increase is not so much high, but increase in profitability ratios tells us that company is earning good profits and utilizing its assets in an excellent way. So as an investor, we can take decision to invest in colony textile mills limited.
After that we make the investor’s analysis in investor’s analysis degree of financial leverage is improving. It means that risk in the business is increasing. But when risk is increasing return will also go to increase. Because where there is risk, there is return.
After that we observed that the earning per share of colony textile mills limited is going to improve day by day, and that is a positive sign. So we conclude that as an investor, we make investment in colony textile mills limited.
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COLONY MILLS LIMITEDSummarized Income Statement
Vertical AnalysisAs on ………
2006 2007 2008 2009Rs (000) Rs (000) Rs (000) Rs (000)
Sales 100% 100% 100% 100%
Cost of Good Sold
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Raw material 63.45 68.80 66.82 67.67Salary Wages 7.22 7.11 5.67 4.96FOH 18.21 16.05 13.63 13.96Total Manufacturing Cost 88.87 91.96 86.12 86.60Less Excess Closing Cost W.I.P 0.04 1.79 0.16 0.03
Cost of Goods Manufactured 88.83 90.18 85.96 86.63Others 0.12 3.78 1.28 0.80
Cost of Goods Sold 88.95 86.39 87.24 85.84
Gross Profit 11.05 13.61 12.76 14.16
Less Operating Expenses
Distribution Cost
Product Transport 0.10 0.17 0.11 0.15Salary & Wages 0.04 0.05 0.05 0.05
Export Sales Expenses 1.56 1.40 2.05 3.01Others 0.19 0.54 0.14 0.33Total Distribution cost 1.89 2.16 2.35 3.54
Administrative Expenses
Salaries & Benefits 0.58 0.59 0.63 0.40Repair & Maintenance 0.08 0.14 0.09 0.11Others 0.27 0.37 0.52 0.50Total Administrative Expenses 100.00 100.00 100.00 100.00
Other Operating Expenses 0.34 0.00 0.00 0.00
Operating Profit (EBIT) 7.90 10.35 9.17 9.61
Less Finance Cost
Interest on Long Term Loan 1.78 0.13 3.07 1.67Interest on Short Term Loan 1.50 4.19 1.87 5.16
Bank Charges & Other Finance Cost
0.08 0.37 0.36 1.65
Other Expenses 0.49 4.01 1.14 1.48
Other Income 1.36 4.15 5.18 2.57EBT 5.40 5.80 7.92 5.18Tax 2.21 0.70 0.96 1.17
Net Profit 3.19 5.10 6.96 4.01
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COLONY MILLS LIMITEDSummarized Income Statement
Horizontal AnalysisAs on ………
2006 2007 2008 2009Rs (000) Rs (000) Rs (000) Rs (000)
Sales 100.00 61.38044 172.70239 209.61114
Cost of Good Sold
Raw material 100.00 66.56 181.89 223.58
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Salary Wages 100.00 60.48 135.61 144.15 FOH 100.00 54.12 129.33 160.76 Total Manufacturing Cost 100.00 63.52 167.36 204.26 Less Excess Closing Cost W.I.P 100.00 (3028.98) (783.78) (197.09)
Cost of Goods Manufactured 100.00 62.31 167.11 204.42 Others 100.00 1987.02 (1895.03) 1425.79
Cost of Goods Sold 100.00 75.59 169.38 202.28
Gross Profit 100.00 13.61 199.43 268.61
Less Operating Expenses
Distribution Cost
Product Transport 100.00 108.58 185.31 230.21 Salary & Wages 100.00 75.61 216.80 287.07
Export Sales Expenses 100.00 55.37 228.11 405.39 Others 100.00 174.18 125.61 365.42 Total Distribution cost 100.00 70.48 215.37 394.42
Administrative Expenses
Salaries & Benefits 100.00 62.47 187.79 143.82 Repair & Maintenance 100.00 107.43 187.57 295.37 Others 100.00 85.02 337.37 389.00 Total Administrative Expenses 100.00 72.95 231.16 228.20
Other Operating Expenses 100.00 0.00 0.00 0.00
Operating Profit (EBIT) 100.00 80.37 200.51 254.95
Less Finance Cost
Interest on Long Term Loan 100.00 4.32 297.04 196.08 Interest on Short Term Loan 100.00 171.02 214.65 719.36
Bank Charges & Other Finance Cost
100.00 275.11 742.82 4182.24
Other Expenses 100.00 502.18 400.85 (631.54)
Other Income 100.00 187.34 657.77 395.91 EBT 100.00 65.95 253.26 200.83 Tax 100.00 19.44 75.00 110.45
Net Profit 100.00 98.24 377.04 263.59
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COLONY MILLS LIMITEDSummarized Balance Sheet
Vertical AnalysisAs on …….
2006 2007 2008 2009Rs (000) Rs (000) Rs (000) Rs (000)
ASSETS
CURRENT ASSETS
Cash & Bank Balance 1.23 0.06 0.05 0.25 Short term Investments 2.76 10.43 4.75 3.68 Trade Debts 3.62 2.13 3.34 2.62 Loans & Advances 2.39 0.00 0.00 0.00
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Short Term Deposits 9.01 0.00 0.00 0.00 Other Receivable 0.23 2.24 5.53 6.28 Stores & Spares 0.56 0.83 0.80 0.96 Tax Refunds Due from Govt. 0.22 0.54 0.92 0.97 Stock in Trade
Raw Material 11.48 11.16 11.97 12.70 Work in Process 1.34 1.03 0.98 0.69 Finish Goods 5.81 3.65 2.30 2.10
Assets held for Disposal 0.00 4.09 5.31 0.00 Real Estate property held for trading
0.00 0.00 0.00 3.88
TOTAL CURRENT ASSETS 38.65 36.16 35.95 34.13
FIXED ASSETS
Work in Progress 7.81 3.61 2.94 10.15 Plant & Machinery at cost 53.17 32.93 43.23 37.20 Less: Depreciation 8.87 6.06 8.50 7.33
44.31 26.87 34.73 29.87 Others 8.86 33.10 26.13 19.48
TOTAL FIXED ASSETS 60.98 63.58 63.80 59.50
Long term Security Deposit 0.31 0.03 0.20 6.22 Long term Investment 0.06 0.23 0.05 0.15
TOTAL ASSETS 100.00 100.00 100.00 100.00
LIABILITIES & EQUITY
CURRENT LIABILITIES
Trade & Other Payables Creditor 1.05 2.61 6.11 15.54 Bills Payable 13.56 1.99 6.64 0.00 Advance Payments 0.14 0.36 0.02 0.15 Other 1.64 1.09 1.05 0.89
Total Trade & Other Payables 16.39 6.05 13.82 16.58 Accrued Interest & Markup 1.29 1.14 1.05 1.32 Short term Borrowing 15.03 23.96 17.44 17.90 Tax 1.22 0.62 0.32 0.28 Current Portion of Non-Current Liabilities
3.92 3.75 2.88 4.27
Provision against Contingent Liabilities
0.00 0.40 0.00 0.00
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TOTAL CURRENT LIABILITIES 37.85 35.92 35.51 40.35
NON CURRENT LIABILITIES
Loan from related parties 0.85 0.00 0.00 0.00 Liabilities against assets 0.23 0.57 0.81 1.05 Long term Financing 20.48 25.35 26.46 33.05 Other 17.15 4.36 2.72 2.58
TOTAL NON CURRENT ASSETS 38.71 30.28 29.99 36.68
STOCK HOLDER EQUITY
Issued Capital 4.70 31.34 26.75 19.30 Capital Reserve 2.95 2.46 7.75 3.67 Unappreciated profit 6.36 0.00 0.00
TOTAL EQUITY 14.01 33.80 34.50 22.97
Surplus on Fix Asset 9.43
TOTAL LIABILITIES & EQUITY 100.00 100.00 100.00 100.00
COLONY MILLS LIMITEDSummarized Balance Sheet
Horizontal AnalysisAs on ………
2006 2007 2008 2009Rs (000) Rs (000) Rs (000) Rs (000)
ASSETS
CURRENT ASSETS
Cash & Bank Balance 100.00 6.76 6.75 49.07 Short term Investments 100.00 553.71 295.62 317.71 Trade Debts 100.00 86.12 158.20 172.12 Loans & Advances 100.00 0.00 0.00 0.00 Short Term Deposits 100.00 0.00 0.00 0.00 Other Receivable 100.00 1445.11 4174.90 6571.10
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Stores & Spares 100.00 218.69 247.95 407.76 Tax Refunds Due from Govt. 100.00 364.54 724.87 1056.48 Stock in Trade
Raw Material 100.00 142.36 178.91 263.15 Work in Process 100.00 112.33 125.61 122.27 Finish Goods 100.00 92.03 68.02 86.09
Assets held for Disposal Real Estate property held for trading
TOTAL CURRENT ASSETS 100.00 137.03 159.65 210.09
FIXED ASSETS
Work in Progress 100.00 67.72 64.32 308.84 Plant & Machinery at cost 100.00 90.65 139.48 166.29 Less: Depreciation 100.00 100.00 164.41 196.39
100.00 88.78 134.49 160.27 Others 100.00 546.29 505.52 522.07
TOTAL FIXED ASSETS 100.00 152.61 179.45 231.91
Long term Security Deposit 100.00 14.67 111.13 4709.48 Long term Investment 100.00 578.05 144.46 592.90
TOTAL ASSETS 100.00 146.41 171.56 237.76
LIABILITIES & EQUITY
CURRENT LIABILITIES
Trade & Other Payables Creditor 100.00 365.50 1000.76 3526.72 Bills Payable 100.00 21.53 84.05 0.00 Advance Payments 100.00 361.80 28.69 252.77 Other 100.00 97.85 109.91 129.84
Total Trade & Other Payables 100.00 54.16 144.75 240.66 Accrued Interest & Markup 100.00 128.56 139.66 243.48 Short term Borrowing 100.00 233.44 199.14 283.26 Tax 100.00 74.54 44.76 55.42 Current Portion of Non-Current Liabilities
100.00 140.06 125.97 259.07
Provision against Contingent Liabilities
TOTAL CURRENT LIABILITIES 100.00 139.00 161.01 253.62
NON CURRENT LIABILITIES
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Loan from related parties 100.00 0.00 0.00 0.00 Liabilities against assets 100.00 363.82 612.88 1095.68 Long term Financing 100.00 181.23 221.73 383.59 Other 100.00 37.26 27.18 35.79
TOTAL NON CURRENT ASSETS 100.00 114.52 132.94 225.21
STOCK HOLDER EQUITY
Issued Capital 100.00 976.71 976.71 976.71 Capital Reserve 100.00 121.30 448.40 294.53 Unappreciated profit 100.00 0.00 0.00 0.00
TOTAL EQUITY 100.00 352.79 421.92 389.40
Surplus on Fix Asset 100.00 0.00 0.00 0.00
TOTAL LIABILITIES & EQUITY 100.00 146.41 171.56 237.76
PROFIABILITY RATIOS
Years 2006 2007 2008 2009G.M.P 11.050838 13.608581 12.76084194 14.16127383
Years 2006 2007 2008 2009O.I.M 7.901926352 10.34695012 9.174298127 9.611176844
Years 2006 2007 2008 2009Net Profit
Margin3.188396033 5.103263059 6.960817364 4.009523858
Years 2006 2007 2008 2009T.A.T.R 62.94711637 26.38983462 63.36445846 55.49447501
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Years 2006 2007 2008 2009ROA 2.00700336 1.346742682 4.410714728 2.225064215
Years 2006 2007 2008 2009R.O.A 8.154687822 6.983086776 11.57757222 11.42323872
Years 2006 2007 2008 2009Operating
Asset Turnover
103.1987322 67.4893248 126.195727 11.8852923
Years 2006 2007 2008 2009Sales to Fixed Assets Ratio
103.20 67.49 126.20 118.85
Years 2006 2007 2008 2009ROI 3.805863 0.4428402 6.839487 3.730959
SHORT TERM DEBT PAYING ABILITY
2006 2007 2008 2009
Current Assets 2055546922 2816669314 3281622597 4318477448Current Liabilities 2013378444 2798632792 3241781691 5106304058Current Ratio 1.020944139 1.006444762 1.012289818 0.845714904
Quick Assets 1064416744 1582694178 1889171436 2358184677Current Liabilities 2013378444 2798632792 3241781691 5106304058Quick Ratio 0.528671968 0.56552406 0.582757143 0.461818303
Current Assets 2055546922 2816669314 3281622597 4318477448Current Liabilities 2013378444 2798632792 3241781691 5106304058Working Capital 42168478 18036522 39840906 -787826610
85
Cash 65352792 4419673 4414338 32066725Mrk Securities 146685782 812209813 1336742 466030145Current Liabilities 2013378444 2798632792 3241781691 5106304058Cash Ratio 0.105314813 0.291795868 0.001774049 0.097545478
Annual Credit Sales 3349406752 2055880694 578505405 7020729542Avg. A/R 150073976 2055880694 575118430 979371758A/R Turnover 22.31837152 8.571495493 1.005889178 7.168605266
A/R Turnover 22.31837152 8.571495493 1.005889178 7.168605266Avg. Collection Period 16.13020913 41.9996721 357.8923078 50.21897377
CGS 2979269220 1776104503 5046353813 6026504807Avg. Inventory 990382399 1112552657 1313213149 1676371966Inventory Turnover 3.008200896 1.596422868 3.842753034 3.594968736
Inventory Turnover 3.008200896 1.596422868 3.842753034 3.594968736Avg. Age of Inventory 119.6728584 225.5041611 93.6828551 100.1399539
Sales 3349406752 2055880694 5784505405 100.1399539Working Capital 42168478 18036522 39840906 -787826610Sales to Working Capital 79.42915919 113.9843199 145.190107 -8.91151613
A/R Turnover in days 16.13020913 41.9996721 357.8923078 50.21897377Inventory Turnover in days 119.6728584 225.5041611 93.68283551 100.1399539Operating Cycle 135.8030675 267.5038332 451.5751433 150.3589277
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LONG TERM DEBT PAYING ABILITY
2006 2007 2008 2009
Total Liabilities 4073012548 5157325721 5979881246 9744871916Total Assets 5320958210 7790426593 91289443173 12651222566Debt Ratio 0.765465991 0.662008127 0.655046387 0.770271163
Total liabilities 4073012548 5157325721 5979881246 9744871916Shareholder’s equity 746361256 2633100872 3149061927 2906350650Debt to Equity ratio 5.457159673 1.958651025 1.898940505 2906350650
Total liabilities 4073012548 5157325721 5979881246 9744871916Shareholder’s equity 746361256 2633100872 3149061927 2906350650Intangible assets 0 0 0 0Debt to tangible net worth ratio
5.457159673 1.958651025 1.898940505 2906350650
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Current liabilities 2013378444 2798632792 3241781691 5106304058Shareholder’s equity 746361256 2633100872 3149061927 2906350650Current debt to net worth ratio
2.697592389 1.062865772 1.029443614 1.756947001
LTD 2059634104 2358692929 2738099555 4638567858Equity 746361256 2633100872 3149061927 2906350650Total Capitalization ratio
0.734011942 0.472514095 0.46509673 0.614793633
Fixed assets 3245589050 4953194441 5824218456 7526925820Shareholder’s equity 746361256 2633100872 3149061927 2906350650Fixed asset to equity ratio
4.348549746 1.881125973 1.849509026 2.589820268
EBIT 2646676555 212720950 530687771 674774732Interest 129235123 178660925 371807572 491568948Time interest earned ratio
20.47954529 1.190640595 1.427318352 1.372696007
EBIT 2646676555 212720950 530687771 674774732Lease Pmt 23443822 18219485 34889562 36416568Tax rate 40% 40% 40% 40%Principle Interest 0 0 0 0Preferred dividend 1292351230 1786609250 3718075720 4915689480Fixed Charge Coverage ratio
10.49307897 0.703799129 0.834395848 0.808194102
Net Sales 3349406752 2055880694 5784505405 7020729542Total Assets 532098210 7790426593 9128943173 12651222566Total Asset Turnover ratio
0.629471164 0.263898346 0.633644585 0.55494475
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INVESTOR’S ANALYSIS
2006 2007 2008 2009
Financial Leverage=EBIT/EBT
EBIT 310183157 291991853 830067779 85491799EBT 180948234 119330928 458269207 363372851Financial Leverage
1.71420936 2.44690842 1.81131039 2.3527959
EPS=net Income-Preferred Dividend / No. of C/S Outstanding
Net income 106792352 104917000 513886773 281497826Preferred Dividend
0 0 0 0
C/S Outstanding 10410959 135653589 244176300 245000000EPS 10.2576863 0.77341853 2.10457269 1.1489707
Note: There is no dilutive effect on the basic EPS of a company.
89
Price Earning Ratio= Market Price per Share/ EPS
Market Price/Share
12 13 12 14
EPS 10.25786 0.774185 2.1045727 1.1489707P/E ratio 1.16983464 16.8084937 5.70187002 12.184819
% of earning retained= Net income – All dividends/net
Net income 106792352 104917000 513886773 281497826All dividends 106792352 104917000 513886773 281497826% earning retained
0 0 0 0
Dividend Payout Ratio = Dividend per share / EPS
Dividend per share 10.26 0.77 2.1045727 1.1489707Earning per share 10.26 0.77 2.1045727 1.1489707Dividend Payout 1 1 1 1
Dividend Yield=Dividend per share / Market price of share
Dividend per share 10.26 0.77 2.1045727 1.1489707Market price of share
12 13 12 14
Dividend yield 0.855 0.05923076 0.17538105 0.0820693
Book value=Total Shareholder’s equity – Preferred equity/ Total no. of C/S outstanding
Shareholder’s equity
746361256 2633100872 3149061927 2906350650
Preferred Equity 0 135653589 0 0C/S outstanding 10410959 19.4104770 244176300 245000000Book Value 71.689962 19.4104770 12.8966731 11.862655
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