Introduction

Overview
Nishat Mills Limited is a public limited Company incorporated in Pakistan under the Companies
Act, 1913 (Now Companies rdinance, 19!"# and listed on all $tock %&chan'es in Pakistan( )ts
re'istered o**ice is situated at +3,A Lawrence -oad, Lahore( .he Company is en'a'ed in the
business o* te&tile manu*acturin' and o* spinnin', combin', wea/in', bleachin', dyein',
printin', stitchin', apparel, buyin', sellin' and otherwise dealin' in yarn, linen, cloth and other
'oods and *abrics made *rom raw cotton, synthetic *iber and cloth and to 'enerate, accumulate,
distribute, supply and sell electricity(
)t is one o* the most modern, lar'est /ertically inte'rated company in Pakistan( Nishat Mills
Limited has 19!,101 spindles, 2++ .oyota air 3et looms( .he Company also has the most modern
te&tile dyein' and processin' units, 0 stitchin' units *or home te&tile, one stitchin' unit *or
'arments and Power 4eneration *acilities with a capacity o* !9 M5( .he Company6s total
e&port *or the year 0111 was -s( 32(11+ billion (7$8 "12 million#( 9ue to the application o*
prudent mana'ement policies, consolidation o* operations, a stron' balance sheet and an
e**ecti/e marketin' strate'y, the 'rowth trend is e&pected to continue in the years to come( .he
Company:s production *acilities comprise o* spinnin', wea/in', processin', stitchin' and power
'eneration(
Our Vision
.o trans*orm the Company into a modern and dynamic yarn, cloth and processed cloth and
*inished product manu*acturin' Company that is *ully e;uipped to play a meanin'*ul role on
sustainable basis in the economy o* Pakistan( .o trans*orm the Company into a modern and
dynamic power 'eneratin' Company that is *ully e;uipped to play a meanin'*ul role on
sustainable basis in the economy o* Pakistan(
Our Mission
.o pro/ide ;uality products to customers and e&plore new markets to promote<e&pand sales o*
the Company throu'h 'ood 'o/ernance and *oster a sound and dynamic team, so as to achie/e
optimum prices o* products o* the Company *or sustainable and e;uitable 'rowth and prosperity
o* the Company(
Ratio Analysis
0113 0110
Pro*itability
Net Pro*it Mar'in
1+(011!
3 13(11""
-A
9(!!9+9
" 11(3129"
4PM 1=(0+19 1+(110+!
Assets turn o/er
1(11012
2 1(119!9"
Li;uidity -atios
Current -atio
1("91!"
0 1(310191
>uick -atio
1(!1390
2 1(213=9!
4earin'
9ebt to e;uity ratio
"(9=301
2 !(1131""
)nterest co/era'e ratio
"(909!+
1 3(31!3+=
%**iciency -atios
stock turno/er
!2(!319
2 93(+0111
9ebt collection period
"3("2!2
! 0!(3"!1+
Credit $ettlement Period
31(!+11
3 30(+19==
Interpretation of Ratios
Profitability Ratios
Net profit margin
)t measures the percenta'e earned on each sales o* rupee( .he pro*it mar'in o* Nishat Mills is
increases by 1=?( )n 0113 the pro*it mar'in is increase *rom 13? to 1+(01?( .he sale *or 0113
is increases by 12(22? which help to increase to pro*itability o* the company( .he mana'ement
works e**iciently because the cost o* sale and sellin' and admin e&penses are increases less than
the sale increases( .he cost o* sale is increases by 13(=+? and sellin' and admin e&penses by
"(91?( .he pro*itability is mainly increases due to increases in sales and decrease in sellin' and
admin e&penses(
Return on assets
)t measures the o/erall e**ecti/eness o* mana'ement in 'eneratin' pro*its with its a/ailable
assets( 7sin' one rupee o* assets company 'et 9(!!? and 11(31? in 0113 and 0110 respecti/ely(
.he return *or the year 0113 is decreases e/en the pro*it mar'in is increases by about 1=?( this
decrease in return on assets is because o* 3=(12?, but the sale is only increase by 12(22?(
Gross profit margin
.he 'ross mar'in *or the year 0113 and 0110 is 1=(0+? and 1+(11? respecti/ely( .he 'ross
mar'in is increases by about 1+?( .his increase is due to increase in sale *or year 0113( .he sale
*or the year 0113 is increase about 12(22? which pull the 'ross mar'in( .he cost o* sale is also
helps it to increase mar'in( .he cost o* sale is increases but comparati/ely less than the sales(
Liuidity ratios
!urrent ratio
.he company currently has su**icient current assets a/ailable *or payin' the short term liabilities(
@or one rupee o* liability, company has assets o* -s1("9 a/ailable which shows that it can pay its
all maturin' liabilities in 0113( .he current ratio impro/ed *rom 1(31 to 1("9( the current assets
rose by 3+(=1? *or 0113 whereas current liabilities rose by 1+(10?, thus causin' a rise in current
ratio(
"uic# ratio
.he ;uick ratio impro/ed *rom 1(21 to 1(!1( the ;uick assets rose by 21? compare to liabilities
which rose by 3ust 1+(10?( Althou'h cash balances *ell by +0?, yet the trade debts rose by =!?(
.his was due to more sales on credit(
Gearing Ratios
$ebt to %uity Ratio
.he debt to e;uity ratio has decreased by 3=(93?, *rom !(11 to ",9=( .his indicate that company
relay on debt as compare to e;uity little(
Interest coverage ratio
.his ratio has increased *rom 3(31 to "(90( .his is because o* company pro*itability is increases
by 32("9? while at the same time *inancin' cost also reduced by !(10?(
%fficiency Ratios
&toc# turnover period
.he in/entory turno/er in days has decreased *rom 93 days to != days( .his is due to sale which
increases by 12(22? in 0113(
$ebtor collection period
.he collection period o* cash *rom customers is increased *rom 0! days to "3 days( .he company
sales too much on credit bases which cause to increase debtor collection period(
!redit settlement period
.he payment period to creditors is almost same( .his shows that company ha/e 'ood relation
with its suppliers and pay all the payment at time( 5hich help to mentain relation with suppliers
as last year(
!onclusion
.he company per*ormance is impro/ed *rom last year( .he sales, pro*it, and assets are increased
*rom the last year( .he return on assets is a**ected because o* increase in sales is more than the
assets increased( .he company also in a position to pay its all short term obli'ation because it has
su**icient current assets( peratin' cycle is increases because o* the ine**icient credit policy with
debtors( .he o/erall company per*ormin' well(
Recommendation
.he company needs to *ocus on its sales because the rate o* assets increases is more than the
sales and pro*its( .o increase sales its need to in/est in marketin' sector( .he company also need
to chan'e its credit policy toward the debtors to minimiAe the operatin' cycle time(
References
NML( (0113#( Annual Report of Nishat Mills Limited for the year ended june 30, 2013. LahoreB
Nishat Mills Limited(
Appendi&es
Profit and Loss Account
'or t(e )ear ended *une +,- .,/0
1alance &(eet
As at *une +,- .,/+
.,/+ .,/.
%uity and liability
$hare capital and reser/es
AuthoriAe $hare Capital 1111111111 ordinary share o* -s
11 each 11111111 11111111
)ssues , subscribed and paid up share capital 3+1+999 3+1+999
-eser/es ++"11132 3"0"2=+1
2otal euity 345/6,+3 +667.605
Liabilities
Noncurrent liabilities
Lon' term *inancin' 31!3"11 30!9+3!
Liabilities a'ainst assets sub3ect to *inance lease 22300 13=1"1
9e*erred income ta& liability "99"1+ 31131+
32"91"= 3=32!!3
!urrent liabilities
.rade and other payable 3=!++11 339=2"1
Accrued markup 311=++ 029+=9
short term borrowin' 1193910! 922+!"9
Current portion o* noncurrent liabilities 1311=29 1112910
Pro/ision *or ta&ation =303+9 2!2=!1
1!12!"10 1+102=+1
2otal Liabilities 01=1=++9 1!!2323"
.,/+ .,/.
$ales +0"02131 ""90"111
Cost o* $ales ("33!1+"+# (3!13"911#
Gross Profit 5,00043 7645/5/
9istribution Cost 0+09"++ 0+++30=
Admin %&penses !=1029 =31="1
ther %&penses "19"09 3"3299
(3!191+3# (3231=22#
+03+330 31+!"0+
other )ncome 0=39110 02!32!+
Profit form operation 65600+0 340.//,
@inance Cost (121=+!1# (1=21+"3#
Profit before ta8ation 7+3743+ 0,4/376
.a&ation (+11111# (++3111#
Profit after ta8ation 340743+ +3.4376
%arnin's per share basic and diluted (-upees# 12(23 11(1"
2otal liabilities and euities 4,7+0350 377.7+4+
Assets
Noncurrent Assets
Property plant and e;uipments 1++31301 1"31!239
)n/estment properties 39"="+ 0"1929
Lon' term in/estment 3=3=!00" 01910=91
Lon' term loans !"99= 02!331
lon' term deposits and prepayments "1="! 329!"
+3"3113" 32==!=10
!urrent assets
stores spare parts and loose tools 10!+3=1 11191"1
stock in trade 119"+"39 929+133
.rade debts 20"3+3+ 3"!91=1
Loan and ad/ances 1!9!33" !2=231
$hort term deposits and prepayments "111! "111!
other recei/ables 111912" =+!1==
Accrued )nterest 13++1 31120
$hort term in/estments "320!!1 1+!9193
Cash and bank balances 110!!20 03+!++2
0293=1+3 19!"=2=1
Noncurrent Assets held *or sale 02="1=
0=01"+21 19!"=2=1
2otal Assets 4,7+0350 377.7+4+
Increase and decrease from t(e last year
.,/+ .,/. $ifferences
$ales +0"02131 ""90"111 12(29911!!1
Cost o* $ales "33!1+"+ 3!13"911 13(=+!1!93=
Gross Profit 5,00043 7645/5/ ++9./445/7.
peratin' e&penses 3!191+3 3231=22 "(91301+2"3
+03+330 31+!"0+ 2+(=+=2=9!2
other )ncome 0=39110 02!32!+ 0(12"9+91!9
Profit form operation 65600+0 340.//, +79055./,,3
@inance Cost 121=+!1 1=21+"3 ,!(10133+211
2otal euity 345/6,+3 +667.605 379,/45.045
Lon' term *inancin' 31!3"11 30!9+3! ,2(02212!2!"
.rade and other payable 3=!++11 339=2"1 11("1+2110"
Current Liabilities 1!12!"10 1+102=+1 19(""2="=10
2otal Liabilities 01=1=++9 1!!2323" 1+(1090"0!2
stock in trade 119"+"39 929+133 10(!9200309
.rade debts 20"3+3+ 3"!91=1 =!(9"++3+23
Cash and bank balances 110!!20 03+!++2 ,+0(13=+=91
2otal Assets 4,7+0350 377.7+4+ 0.9+5636///