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.

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.

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 countrys development and economic prosperity.

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.

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
Waqar Ibn Zahoor Bandey

>
>

Chief Financial Officer

Company Secretary

Najeeb Ullah Khan

>

Head - Internal Audit

OUR GROUP
The Colony Group is one of Pakistans 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.

OUR COMPANIES
The past five years have seen tremendous growth in production capacities of Colony Groups 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.

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 plants Awarded Oeko-Tex Standard-100 as recognition for our continued attention for environmental concerns. 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 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.

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

10

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

CAREER
People policy (working with us) We, at Colony Group, believe in our established values of

Team-work Integrity Diversity Equality

11

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 individuals contribution.

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 12

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.

13

Colony Mills Limited Summarized Balance Sheet

As on 30 June, 200___
2006 Rs (000) ASSETS CURRENT ASSETS Cash & Bank Balance Short term Investments Trade Debts Loans & Advances Short Term Deposits Other Receivable Stores & Spares 65352792 146685782 192852006 126920420 479330738 12082974 29631906 4419673 812209813 166085822 4414338 433627562 305086776 32066725 466030145 331929726 2007 Rs (000) 2008 Rs (000) 2009 Rs (000)

174612533 64802911

504451730 73473064

793984464 120827747

14

Tax Refunds Due from Govt. Stock in Trade Raw Material Work in Process Finish Goods Assets held for Disposal Real Estate property held for trading TOTAL CURRENT ASSETS FIXED ASSETS Work in Progress Plant & Machinery at cost Less: Depreciation Others TOTAL FIXED ASSETS Long term Security Deposit Long term Investment TOTAL ASSETS

11560127 6100612647 71558000 308959531

42140864 869248471 80378369 284348296 318422562

83795404 1092423524 89887439 210140198 484822562

122130069 1606823241 87496286 265973244 491215801

2055546922 415822597 2829766453 471957286 2357809167 471957286 3245589050 16716122 3133116 5320985210

2816669314 281606595 2565266237 471957286 2093308951 2578278895 4953194441 2451716 18111122 7790426593

3282122597 267457672 3946861781 775926523 3170935258 2385825526 5824218456 18576122 4525998 9129443173

4318477448 1284218441 4705633505 926890172 3778743333 2463964046 7526925820 787243175 18576123 12651222566

LIABILITIES & EQUITY CURRENT LIABILITIES Trade & Other Payables Creditor Bills Payable Advance Payments Other Total Trade & Other Payables Accrued Interest & Markup Short term Borrowing Tax Current Portion of Non-Current Liabilities Provision against Contingent Liabilities TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES Loan from related parties Liabilities against assets Long term Financing 45454920 12099318 1089550531 44019429 1974621760 74154515 2415894313 132569317 4179440783 55732274 721273762 7709133 87102659 871817828 68832214 799537736 64786639 208404027 203703650 155321385 27891258 85230590 472146883 88489407 1866403904 48290819 291884397 31417382 2013378444 2798632792 3241781691 5106304058 557745562 606225694 2211614 95733842 1261916712 96132098 1592203909 28999380 262529592 1965521987 19486443 113093543 2098101973 167589397 2264788587 35907313 539916788

15

Other TOTAL NON CURRENT LIABILITIES STOCK HOLDER EQUITY Issued Capital Capital Reserve Unappreciated profit TOTAL EQUITY Surplus on Fix Asset TOTAL LIABILITIES & EQUITY

912529335 2059634104

340051740 2358692929

248050727 2738099555

326557758 4638567858

250000000 157738584 338622672 746361256 501611406 5320985210

2441763000 191337872

2441763000 707298927

2441763000 464587650

2633100872

3149061927

2906350650

7790426593

9128943173

12651222566

16

RATIO ANALYSIS
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

17

The recommendation of ratio analysis depends upon the stake holders 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

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

18

 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

3. Profitability ratios. Gross Profit Margin Operating Profit Margin Net Profit Margin Total Asset Turnover Return on Assets

19

 Operating Asset Turnover Return on Operating Assets Sales to Fixed Assets Return on Total Equity Return On investment

20

2006
Current Assets Current Liabilities Current Ratio Quick Assets Quick Ratio 2055546922 2013378444 1.020944139 1064416744 2013378444 0.528671968

2007
2816669314 2798632792 1.006444762 1582694178 2798632792 0.56552406

2008
3281622597 3241781691 1.012289818 1889171436 3241781691 0.582757143

2009
4318477448 5106304058 0.845714904 2358184677 5106304058 0.461818303

Current Ratio = Current Assets / Current Liabilities

Quick Ratio = Quick Assets / Current Liabilities

Working Capital = Currents Assets Current Liabilities

21

Current Assets Current Liabilities Working Capital Cash Mrk Securities Current Liabilities Cash Ratio Annual Credit Sales Avg. A/R A/R Turnover

2055546922 2013378444 42168478 65352792 146685782 2013378444 0.105314813 3349406752 150073976 22.31837152

2816669314 2798632792 18036522 4419673 812209813 2798632792 0.291795868 2055880694 2055880694 8.571495493

3281622597 3241781691 39840906 4414338 1336742 3241781691 0.001774049 578505405 575118430 1.005889178

4318477448 5106304058 -787826610 32066725 466030145 5106304058 0.097545478 7020729542 979371758 7.168605266

Cash Raio = Cash + Mrk Securities / Current Liabilities

A/R Turnover = Annual Credit Sales / Avg. A/R

Avg. Collection Period = 360 / A/R Turnover

A/R Turnover Avg. Collection Period CGS Avg. Inventory Inventory Turnover 360 22.31837152 16.13020913 2979269220 990382399 3.008200896 360 3.008200896 119.6728584 3349406752 42168478 79.42915919 16.13020913 119.6728584 135.8030675 360 8.571495493 41.9996721 1776104503 1112552657 1.596422868 360 1.596422868 225.5041611 2055880694 18036522 113.9843199 41.9996721 225.5041611 267.5038332 360 1.005889178 357.8923078 5046353813 1313213149 3.842753034 360 3.842753034 93.6828551 5784505405 39840906 145.190107 357.8923078 93.68283551 451.5751433 360 7.168605266 50.21897377 6026504807 1676371966 3.594968736 360 3.594968736 100.1399539 100.1399539 -787826610 -8.91151613 50.21897377 100.1399539 150.3589277

Inventory Turnover = CGS / Avg. Inventory

Avg. Age of Inventory = 360 / Inventory Turnover

Inventory Turnover Avg. Age of Inventory Sales Working Capital Sales to Working Capital A/R Turnover in days Inventory Turnover in days Operating Cycle

Sales to Working Capital = Sales / Working Capital

Operating Cycle = A/R Turnover in days + Inventory Turnover in days

RATIOS OF SHORT TERM DEBT PAYING ABILITY

Current Ratio
2006 1.020944139 2007 1.00644476 2008 1.012289818 2009 0.8457149

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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 shortterm 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 firms 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.

Acid Test Ratio

2006 0.528671968 2007 0.56552406 2008 0.582757143 2009 0.4618183

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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.

Working Capital Ratio

Working Capital = Current Assets Current Liabilities
2006 42168478 2007 18036522 2008 39840906 2009 787826610

24

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.

Cash Ratio
Cash Ratio = Cash + Mrk Securities / Current Liabilities
2006 0.105314813 2007 0.29179587 2008 0.01774049 2009 0.09754548

25

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 its a minor increase and in 2008 it shows a minor decrease and it increases in 2009.

Account Receivable Turnover Ratio

2006 22.31837152 2007 8.57149549 2008 1.00588917 2009 7.16860527

26

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.

Account Receivable Turnover in Days

2006

2007

2008

2009

27

16.13020913

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.

Inventory Turnover
2006 3.008200896 2007 1.59642287 2008 3.842753034 2009 3.59496874

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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.

Inventory Turnover in Days

2006 119.6728584 2007 225.504161 2008 93.62883551 2009 10.139954

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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.

Sales to Working Capital

2006 1.020944139

2007 1.00644476

2008 1.012289818

2009 0.8457149

30

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.

Operating Cycle Operating Cycle = A/R Turnover in days + Inventory Turnover in days
2006 135.8030675 2007 267.503833 2008 451.5751433 2009 150.358928

31

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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LONG-TERM DEBT PAYING ABILITY

2006
Debt ratio=Total Liabilities/Total Assets Total Liabilities 4073012548 5157325721 5979881246 9744871916

2007

2008

2009

33

Total Assets Debt Ratio

5320958210 0.765465991

7790426593 0.662008127

91289443173 0.655046387

12651222566 0.770271163

Debt to Equity ratio=Total liabilities/shareholders equity Total liabilities Shareholders equity Debt to Equity ratio 4073012548 746361256 5.457159673 5157325721 2633100872 1.958651025 5979881246 3149061927 1.898940505 9744871916 2906350650 2906350650

Debt to tangible net worth ratio=T.liabilities/O.E-Intangible assets Total liabilities Shareholders equity Intangible assets Debt to tangible net worth ratio 4073012548 746361256 0 5.457159673 5157325721 2633100872 0 1.958651025 5979881246 3149061927 0 1.898940505 9744871916 2906350650 0 2906350650

Current debt to net worth ratio=current liabilities/O.E Current liabilities Shareholders equity Current debt to net worth ratio 2013378444 746361256 2.697592389 2798632792 2633100872 1.062865772 3241781691 3149061927 1.029443614 5106304058 2906350650 1.756947001

Total Capitalization ratio=LTD/LTD+equity LTD Equity Total Capitalization ratio 2059634104 746361256 0.734011942 2358692929 2633100872 0.472514095 2738099555 3149061927 0.46509673 4638567858 2906350650 0.614793633

Fixed asset to equity ratio=Fixed asset/Shareholders equity Fixed assets Shareholders equity Fixed asset to equity ratio 3245589050 746361256 4.348549746 4953194441 2633100872 1.881125973 5824218456 3149061927 1.849509026 7526925820 2906350650 2.589820268

Time Interest earned ratio=EBIT/Interest EBIT Interest Time interest earned ratio 2646676555 129235123 20.47954529 212720950 178660925 1.190640595 530687771 371807572 1.427318352 674774732 491568948 1.372696007

Fixed charge coverage ratio EBIT Lease Pmt Tax rate Principle Interest Preferred dividend 2646676555 23443822 40% 0 1292351230 212720950 18219485 40% 0 1786609250 530687771 34889562 40% 0 3718075720 674774732 36416568 40% 0 4915689480

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Fixed Charge Coverage ratio

10.49307897

0.703799129

0.834395848

0.808194102

T.Asset Turnover ratio=Net Sales/T.Assets Net Sales Total Assets Total Asset Turnover ratio 3349406752 532098210 0.629471164 2055880694 7790426593 0.263898346 5784505405 9128943173 0.633644585 7020729542 12651222566 0.55494475

RATIOS OF LONG TERM DEBT PAYING ABILITY

Debt Ratio
2006 2007 2008 2009

35

0.765465991

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.

Debt To Equity Ratio

36

2006 5.457159673

2007 1.958651025

2008 1.898940505

2009 3.35295809

Interpretation
The debt equity ratio indicates the relationship between the long-term funds provided by creditors and those provided by the firms 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.

Debt To Tangible Net Worth Ratio Debt to Tangible net worth ratio = Total liabilities / Shareholders equity Intangible Assets

37

2006 5.457159673

2007 1.958651025

2008 1.898940505

2009 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.

Current Debt to Net Worth Ratio Current debt to net worth ratio = Current liabilities / Shareholders equity
2006 2007 2008 2009

38

2.697592389

1.062865772

1.029443614

1.756947

Interpretation
This ratio shows that how much contribution of shareholders 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.

Total Capitalization Ratio Total capitalization ratio = LTD / LTD + equity

2006 2007 2008 2009

39

0.734011942

0.472514095

0.46509673

0.61479363

Interpretation
LTD represents a companys huge investment so through this ratio we check that whether companys 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.

Fixed Asset to Equity Ratio Fixed asset to equity ratio = Fixed asset / Shareholders equity

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2006 4.348549746

2007 1.881125973

2008 1.849509026

2009 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.

Time Interest Earned Ratio

2006 20.47954529 2007 1.190640595 2008 1.427318352 2009 1.37269601

41

Interpretation
This ratio measures the firms ability to make contractual payments this ratio is also calculated to know about long- term solvency position of the business. This ratio indicates the companys 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.

Fixed Charge Coverage Ratio

Fixed Charge Coverage Ratio = EBIT + Lease Pmt / Interest + Lease Pmt + (Principle + Preferred dividend) * (1 / 1-T) 42

2006 10.49307897

2007 0.703799129

2008 0.834395848

2009 0.8081941

Interpretation
This ratio shows a major decrease in 2007 but it improves in 2008, and in 2009 it again decreases.

Total Asset Turn over Ratio

2006

2007

2008

2009

43

10.49307897

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 companys 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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INVESTORS ANALYSIS 2006

Financial Leverage=EBIT/EBT EBIT EBT Financial Leverage 310183157 180948234 1.71420936 291991853 119330928 2.44690842 830067779 458269207 1.81131039 85491799 363372851 2.3527959

2007

2008

2009

45

EPS=net Income-Preferred Dividend / No. of C/S Outstanding Net income Preferred Dividend C/S Outstanding EPS 106792352 0 10410959 104917000 0 135653589 513886773 0 244176300 2.10457269 281497826 0 245000000 1.1489707

10.2576863 0.77341853 Note: There is no dilutive effect on the basic EPS of a company. Price Earning Ratio= Market Price per Share/ EPS Market Price/Share EPS P/E ratio 12 10.25786 1.16983464 13 0.774185 16.8084937

12 2.1045727 5.70187002

14 1.1489707 12.184819

% of earning retained= Net income All dividends/net Net income All dividends % earning retained 106792352 106792352 0 104917000 104917000 0 513886773 513886773 0 281497826 281497826 0

Dividend Payout Ratio = Dividend per share / EPS Dividend per share Earning per share Dividend Payout Dividend per share Market price of share Dividend yield Shareholders equity Preferred Equity C/S outstanding Book Value 10.26 10.26 1 10.26 12 0.855 0.77 0.77 1 0.77 13 0.05923076 2.1045727 2.1045727 1 2.1045727 12 0.17538105 1.1489707 1.1489707 1 1.1489707 14 0.0820693

Dividend Yield=Dividend per share / Market price of share

Book value=Total Shareholders equity Preferred equity/ Total no. of C/S outstanding 746361256 0 10410959 71.689962 2633100872 135653589 19.4104770 19.4104770 3149061927 0 244176300 12.8966731 2906350650 0 245000000 11.862655

Financial Leverage
Financial Leverage= EBIT / EBT
2006 2007 2008 2009

46

1.714209

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.

Earning per Share

EPS = (Net Income Preferred Dividend) / No. of Common Stock Outstanding
2006 2007 2008 2009

47

10.2576

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.

Price Earning Ratio Price Earning Ratio = Market price per share / EPS
2006 2007 2008 2009

48

1.1698

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.

49

PROFITABILITY RATIOS Gross Profit Ratio = *100

2006 11.050838 2007 13.608581 2008 12.76084194 2009 14.16127383

50

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 companys 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.

Operating Profit Ratio = *100

2006 7.901926359 2007 10.34695012 2008 9.174298127 2009 9.611176844

51

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.

Net Profit Ratio = *100

2006 3.18839603 2007 5.103263059 2008 6.960817364 2009 4.009523858

52

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.

Total Asset Turnover = *100

53

2006 62.94711637

2007 26.38983462

2008 63.36445876

2009 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

2006 2.007003361

2007 1.346742682

2008 4.410714728

2009 2.225064215

54

Interpretation
The purpose of this ratio is to calculate the return that the business is providing on total assets. This is important from owners 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.

Operating Asset Turnover

55

2006 103.1987322

2007 67.4893248

2008 126.195727

2009 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.

Return on Operating Assets

56

2006 8.154687822

2007 6.983086776

2008 11.57757222

2009 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.

Sales to Fixed Asset

57

2006 103.20

2007 67.49

2008 126.20

2009 118.85

Interpretation
This ratio measures the firms 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.

Return on Investment 58

Return on Investment = Net Income / LTD + Equity

2006 3.805863 2007 0.4428402 2008 6.839487 2009 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.

59

PEST ANALYSIS
Political Instability

60

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 socioeconomic environment. Especially in the textile sector there is a lot of technological development. CTMLs excellent computerized machines and devices have made extension in its present setup of well advanced technology imported from Japan, Germany and France.

61

SWOT ANALYSIS

62

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.

Strength
Colony mills have a very stable yarn market with good brand image in the eyes of customers.

63

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.

Weaknesses H u g e v o l u m e o f p r o d u c t i o n w h i c h m a y b e d i f f i c u l t t o handle in future.

64

M o n e t a r y s e ns i t i v e n e s s t o f o r e i g n e x c h a n g e m a r k e t . I t h a s b e c o m e m o r e c h a l l e n g i n g f o r t h e c o m p a n y t o maintain competitive edge due to WTO regime. Limitations in meeting up the demand of textile. Too much centralization bureaucratic control effects timely decision making. Not strong marketing or advertisement. Company cannot convert account receivables into cash quickly. Mostly sales are on credit basis. Lack of long term 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 documentations.

Opportunities
A gas plant is establishing to overcome the shortage of electricity. 65

Yarn and Sugar is exported. Improve the quality of textile and sugar. Expand the plant to meet the demand more efficiently. Trying to get opportunities for joint ventures with other international companies. E x p a n d i n g t h e b us i n e s s f o r g l o b a l i z a t i o n . Having two sugar producing plants. Delegation of authority so that decisions can be made at the spot without any delay. May diversify the business in allied services. May be cost leaders by cutting down the unnecessary expenditures. Adding the new and encourage the work. fresh staff in the company to

A f t e r t e x t i l e a n d s u g a r n ow m o v i n g t o w a r d s p a p e r m a k i n g industry. Company is focused on reducing cost to maintain and enhance its local as well as its global position.

Threats

66

Water crisis is gone up in the country which may result in the serious problem of low growth in cotton, yarn and sugar cane. A free trade policy of WTO is a major threat to the company. Maintaining its leadership in future after implementation of free trade zones. Threat of entry of new competitors. A trade free policy can be the threat of the company as new entry is easy. Threat of water and gas crisis in it high consumption potential market. Now a days electricity shortage is the big threat that can b e r es u l t e d i n t h e l o w p r o d u c t i o n . Due to political instability the bad condition of stock exchange is a threat of company that results in low share prices. Due to high trade tariff export and cotton 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 1970s 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:

67

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.

68

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 firms 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 i n t o Q u e s t i o n M a r k . (High Growth, Low Market Share) Justification High Growth Industry
C o l o n y T e x t i l e i n d u s t r y i s g r ow i n g a t v e r y h i g h r a t e . T h e b a s i c reasons behind this are:

69

The operational results in both spinning units were encouraging and investment in these units leads to increase in profitability. Pakistans industry depends on textile industry most of exports of Pakistan are from this sector. Pakistan economy disturbs due to political instability but textile i n d u s t r y g r ow s a t f as t e r r a t e b y i n c r e a s i n g i n v e s t m e n t .

Low Market Share

Colony textile industry has low market share. The basic reasons behind this are: Employees are not motivated thats why they are getting off and putting their resigns in front of managers and executives. This is the responsibility of HR Department to find out at to see at the time of hiring them that what the thing is that their employees can be motivated. A l w a y s o r g a n i z a t i o n h a s t o r e l y o n f o r e i g n c us t o m e r s a n d i t w o u l d b e c o m e r i s k e s p e c i a l l y i n f i n a n c i a l m a t t e r s a n d p os s i b i l i t y of fraud would be their. CTML is too much depending upon their foreign customers. They have limited number of foreign customers but these are losing by lacking of quality and little bit high cost. A major problem is team building. There is almost no concept of team. Each person is doing individually and performing his/her activities.

70

SUGGESTIONS AND RECOMMENDATIONS

Jobs should be assigned according to interest in work, output and to enhance a l s o o bs e r v e d t h a t i n s o m e c a s e s m o r e the same record. This is done all of d i s t r i b u t i o n o f w o r k , w h i c h r es u l t s i n and decrease in efficiency. their caliber to develop their the efficiency of workers. It is than one department maintains over staffing and unbalanced de-motivation of the employee

71

In colony mills there is lot of documentation and lengthy procedure of paper work involved, which results in wastage of time and deficiency so each system should be computerized through intranet work. C o m p a n y m u s t t a k e i n i t i a t i v e s t e ps t o m a i n t a i n t h e h u g e orders. Workers must be trained to follow the safety rules. Management should take necessary action to implement the safety rules in the organization. Job variety must be added to change the atmosphere, to develop the interest to employees and to increase their performance. So proper analysis should be done and explore those employees who can do better work in the organization. People working in one section or department from years a r e s t i l l w i t h t h e s a m e k n ow l e d g e a n d s t y l e o f d o i n g j o b . There should be proper career planning of employee that not only sharpens the skills of the employee & improve its e f f i c i e n c y b u t a l s o r es u l t s i n b e t t e r a n d i m p r o v e d o u t p u t for the organization. Proper advertisement must be planned to increase the sales, to stay in touch with customers.

There should be delegation of authority up to certain extent that enables manager to take timely decisions at the spot with confidence. Involvement of top management and reaching at the final decisions is time consuming and some times result in heavy losses. Colony mills must adopt the new technology. Promotion campaigns and sales promotions must be for sugar mills also.

72

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 74

Investors 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. Companys 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 investors analysis in investors 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.

75

COLONY MILLS LIMITED Summarized Income Statement Vertical Analysis

As on
2006 Rs (000) Sales Cost of Good Sold 100% 2007 Rs (000) 100% 2008 Rs (000) 100% 2009 Rs (000) 100%

76

Raw material Salary Wages FOH Total Manufacturing Cost Less Excess Closing Cost W.I.P Cost of Goods Manufactured Others Cost of Goods Sold Gross Profit Less Operating Expenses Distribution Cost Product Transport Salary & Wages Export Sales Expenses Others Total Distribution cost Administrative Expenses Salaries & Benefits Repair & Maintenance Others Total Administrative Expenses Other Operating Expenses Operating Profit (EBIT)

63.45 7.22 18.21 88.87 0.04 88.83 0.12 88.95 11.05

68.80 7.11 16.05 91.96 1.79 90.18 3.78 86.39 13.61

66.82 5.67 13.63 86.12 0.16 85.96 1.28 87.24 12.76

67.67 4.96 13.96 86.60 0.03 86.63 0.80 85.84 14.16

0.10 0.04 1.56 0.19 1.89

0.17 0.05 1.40 0.54 2.16

0.11 0.05 2.05 0.14 2.35

0.15 0.05 3.01 0.33 3.54

0.58 0.08 0.27 100.00 0.34 7.90

0.59 0.14 0.37 100.00 0.00 10.35

0.63 0.09 0.52 100.00 0.00 9.17

0.40 0.11 0.50 100.00 0.00 9.61

Less Finance Cost Interest on Long Term Loan Interest on Short Term Loan Bank Charges & Other Finance Cost Other Expenses Other Income EBT Tax Net Profit 1.78 1.50 0.08 0.49 1.36 5.40 2.21 3.19 0.13 4.19 0.37 4.01 4.15 5.80 0.70 5.10 3.07 1.87 0.36 1.14 5.18 7.92 0.96 6.96 1.67 5.16 1.65 1.48 2.57 5.18 1.17 4.01

77

COLONY MILLS LIMITED Summarized Income Statement Horizontal Analysis

As on
2006 Rs (000) Sales Cost of Good Sold Raw material 100.00 66.56 181.89 223.58 100.00 2007 Rs (000) 61.38044 2008 Rs (000) 172.70239 2009 Rs (000) 209.61114

78

Salary Wages FOH Total Manufacturing Cost Less Excess Closing Cost W.I.P Cost of Goods Manufactured Others Cost of Goods Sold Gross Profit Less Operating Expenses Distribution Cost Product Transport Salary & Wages Export Sales Expenses Others Total Distribution cost Administrative Expenses Salaries & Benefits Repair & Maintenance Others Total Administrative Expenses Other Operating Expenses Operating Profit (EBIT)

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

60.48 54.12 63.52 (3028.98) 62.31 1987.02 75.59 13.61

135.61 129.33 167.36 (783.78) 167.11 (1895.03) 169.38 199.43

144.15 160.76 204.26 (197.09) 204.42 1425.79 202.28 268.61

100.00 100.00 100.00 100.00 100.00

108.58 75.61 55.37 174.18 70.48

185.31 216.80 228.11 125.61 215.37

230.21 287.07 405.39 365.42 394.42

100.00 100.00 100.00 100.00 100.00 100.00

62.47 107.43 85.02 72.95 0.00 80.37

187.79 187.57 337.37 231.16 0.00 200.51

143.82 295.37 389.00 228.20 0.00 254.95

Less Finance Cost Interest on Long Term Loan Interest on Short Term Loan Bank Charges & Other Finance Cost Other Expenses Other Income EBT Tax Net Profit 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 4.32 171.02 275.11 502.18 187.34 65.95 19.44 98.24 297.04 214.65 742.82 400.85 657.77 253.26 75.00 377.04 196.08 719.36 4182.24 (631.54) 395.91 200.83 110.45 263.59

79

COLONY MILLS LIMITED Summarized Balance Sheet Vertical Analysis

As on .
2006 Rs (000) ASSETS CURRENT ASSETS Cash & Bank Balance Short term Investments Trade Debts Loans & Advances 1.23 2.76 3.62 2.39 0.06 10.43 2.13 0.00 0.05 4.75 3.34 0.00 0.25 3.68 2.62 0.00 2007 Rs (000) 2008 Rs (000) 2009 Rs (000)

80

Short Term Deposits Other Receivable Stores & Spares Tax Refunds Due from Govt. Stock in Trade Raw Material Work in Process Finish Goods Assets held for Disposal Real Estate property held for trading TOTAL CURRENT ASSETS FIXED ASSETS Work in Progress Plant & Machinery at cost Less: Depreciation Others TOTAL FIXED ASSETS Long term Security Deposit Long term Investment

9.01 0.23 0.56 0.22 11.48 1.34 5.81 0.00 0.00 38.65

0.00 2.24 0.83 0.54 11.16 1.03 3.65 4.09 0.00 36.16

0.00 5.53 0.80 0.92 11.97 0.98 2.30 5.31 0.00 35.95

0.00 6.28 0.96 0.97 12.70 0.69 2.10 0.00 3.88 34.13

7.81 53.17 8.87 44.31 8.86 60.98 0.31 0.06

3.61 32.93 6.06 26.87 33.10 63.58 0.03 0.23

2.94 43.23 8.50 34.73 26.13 63.80 0.20 0.05

10.15 37.20 7.33 29.87 19.48 59.50 6.22 0.15

TOTAL ASSETS

100.00

100.00

100.00

100.00

LIABILITIES & EQUITY CURRENT LIABILITIES Trade & Other Payables Creditor Bills Payable Advance Payments Other Total Trade & Other Payables Accrued Interest & Markup Short term Borrowing Tax Current Portion of Non-Current Liabilities Provision against Contingent Liabilities

1.05 13.56 0.14 1.64 16.39 1.29 15.03 1.22 3.92 0.00

2.61 1.99 0.36 1.09 6.05 1.14 23.96 0.62 3.75 0.40

6.11 6.64 0.02 1.05 13.82 1.05 17.44 0.32 2.88 0.00

15.54 0.00 0.15 0.89 16.58 1.32 17.90 0.28 4.27 0.00

81

TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES Loan from related parties Liabilities against assets Long term Financing Other TOTAL NON CURRENT ASSETS STOCK HOLDER EQUITY Issued Capital Capital Reserve Unappreciated profit TOTAL EQUITY Surplus on Fix Asset TOTAL LIABILITIES & EQUITY

37.85

35.92

35.51

40.35

0.85 0.23 20.48 17.15 38.71

0.00 0.57 25.35 4.36 30.28

0.00 0.81 26.46 2.72 29.99

0.00 1.05 33.05 2.58 36.68

4.70 2.95 6.36 14.01 9.43 100.00

31.34 2.46 0.00 33.80

26.75 7.75 0.00 34.50

19.30 3.67

22.97

100.00

100.00

100.00

COLONY MILLS LIMITED Summarized Balance Sheet Horizontal Analysis

As on
2006 Rs (000) ASSET S CURRENT ASSETS Cash & Bank Balance Short term Investments Trade Debts Loans & Advances Short Term Deposits Other Receivable 100.00 100.00 100.00 100.00 100.00 100.00 6.76 553.71 86.12 0.00 0.00 1445.11 6.75 295.62 158.20 0.00 0.00 4174.90 49.07 317.71 172.12 0.00 0.00 6571.10 2007 Rs (000) 2008 Rs (000) 2009 Rs (000)

82

Stores & Spares Tax Refunds Due from Govt. Stock in Trade Raw Material Work in Process Finish Goods Assets held for Disposal Real Estate property held for trading TOTAL CURRENT ASSETS FIXED ASSETS Work in Progress Plant & Machinery at cost Less: Depreciation Others TOTAL FIXED ASSETS Long term Security Deposit Long term Investment

100.00 100.00 100.00 100.00 100.00

218.69 364.54 142.36 112.33 92.03

247.95 724.87 178.91 125.61 68.02

407.76 1056.48 263.15 122.27 86.09

100.00

137.03

159.65

210.09

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

67.72 90.65 100.00 88.78 546.29 152.61 14.67 578.05

64.32 139.48 164.41 134.49 505.52 179.45 111.13 144.46

308.84 166.29 196.39 160.27 522.07 231.91 4709.48 592.90

TOTAL ASSETS

100.00

146.41

171.56

237.76

LIABILITIES & EQUITY CURRENT LIABILITIES Trade & Other Payables Creditor Bills Payable Advance Payments Other Total Trade & Other Payables Accrued Interest & Markup Short term Borrowing Tax Current Portion of Non-Current Liabilities Provision against Contingent Liabilities TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES

100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

365.50 21.53 361.80 97.85 54.16 128.56 233.44 74.54 140.06

1000.76 84.05 28.69 109.91 144.75 139.66 199.14 44.76 125.97

3526.72 0.00 252.77 129.84 240.66 243.48 283.26 55.42 259.07

100.00

139.00

161.01

253.62

83

Loan from related parties Liabilities against assets Long term Financing Other TOTAL NON CURRENT ASSETS STOCK HOLDER EQUITY Issued Capital Capital Reserve Unappreciated profit TOTAL EQUITY Surplus on Fix Asset TOTAL LIABILITIES & EQUITY

100.00 100.00 100.00 100.00 100.00

0.00 363.82 181.23 37.26 114.52

0.00 612.88 221.73 27.18 132.94

0.00 1095.68 383.59 35.79 225.21

100.00 100.00 100.00 100.00 100.00 100.00

976.71 121.30 0.00 352.79 0.00 146.41

976.71 448.40 0.00 421.92 0.00 171.56

976.71 294.53 0.00 389.40 0.00 237.76

PROFIABILITY RATIOS
Years G.M.P Years O.I.M Years Net Profit Margin Years T.A.T.R 2006 11.050838 2006 7.901926352 2006 3.188396033 2007 13.608581 2007 10.34695012 2007 5.103263059 2008 12.76084194 2008 9.174298127 2008 6.960817364 2009 14.16127383 2009 9.611176844 2009 4.009523858

2006 62.94711637

2007 26.38983462

2008 63.36445846

2009 55.49447501

84

Years ROA Years R.O.A Years Operating Asset Turnover Years Sales to Fixed Assets Ratio Years ROI

2006 2.00700336 2006 8.154687822 2006 103.1987322

2007 1.346742682 2007 6.983086776 2007 67.4893248

2008 4.410714728 2008 11.57757222 2008 126.195727

2009 2.225064215 2009 11.42323872 2009 11.8852923

2006 103.20

2007 67.49

2008 126.20

2009 118.85

2006 3.805863

2007 0.4428402

2008 6.839487

2009 3.730959

SHORT TERM DEBT PAYING ABILITY

2006 Current Assets Current Liabilities Current Ratio 2055546922 2013378444 1.02094413 9 1064416744 2013378444 0.52867196 8 2055546922 2007 2816669314 2798632792 1.00644476 2 1582694178 2798632792 0.56552406 2008 3281622597 3241781691 2009 4318477448 5106304058

1.012289818 0.845714904

Quick Assets Current Liabilities Quick Ratio

1889171436 3241781691

2358184677 5106304058

0.582757143 0.461818303

Current Assets

2816669314

3281622597

4318477448

85

Current Liabilities Working Capital Cash Mrk Securities Current Liabilities Cash Ratio

2013378444 42168478 65352792 146685782 2013378444 0.10531481 3 3349406752 150073976 22.3183715 2 22.3183715 2 16.1302091 3 2979269220 990382399 3.00820089 6 3.00820089 6 119.672858 4

2798632792 18036522 4419673 812209813 2798632792 0.29179586 8 2055880694 2055880694 8.57149549 3 8.57149549 3 41.9996721

3241781691 39840906 4414338 1336742 3241781691

5106304058 -787826610 32066725 466030145 5106304058

0.001774049 0.097545478

Annual Credit Sales Avg. A/R A/R Turnover

578505405 575118430

7020729542 979371758

1.005889178 7.168605266

A/R Turnover Avg. Collection Period

1.005889178 7.168605266 357.8923078 50.21897377

CGS Avg. Inventory Inventory Turnover

1776104503 1112552657 1.59642286 8 1.59642286 8 225.504161 1

5046353813 1313213149

6026504807 1676371966

3.842753034 3.594968736

Inventory Turnover Avg. Age of Inventory

3.842753034 3.594968736 93.6828551 100.1399539

Sales Working Capital Sales to Working Capital

3349406752 42168478 79.4291591 9 16.1302091 3 119.672858

2055880694 18036522 113.984319 9

5784505405 39840906 145.190107

100.1399539 -787826610 -8.91151613

A/R Turnover in days Inventory Turnover in days

41.9996721 225.504161

357.8923078 50.21897377 93.68283551 100.1399539

86

Operating Cycle

4 135.803067 5

1 267.503833 2

451.5751433 150.3589277

LONG TERM DEBT PAYING ABILITY

2006 Total Liabilities 4073012548 2007 5157325721 87 2008 5979881246 2009 9744871916

Total Assets Debt Ratio Total liabilities Shareholders equity Debt to Equity ratio Total liabilities Shareholders equity Intangible assets Debt to tangible net worth ratio Current liabilities Shareholders equity Current debt to net worth ratio LTD Equity Total Capitalization ratio Fixed assets Shareholders equity Fixed asset to equity ratio EBIT Interest Time interest earned ratio

5320958210 0.76546599 1 4073012548 746361256 5.45715967 3 4073012548 746361256 0 5.45715967 3 2013378444 746361256 2.69759238 9 2059634104 746361256 0.73401194 2 3245589050 746361256 4.34854974 6 2646676555 129235123 20.4795452 9

7790426593 0.66200812 7 5157325721 2633100872 1.95865102 5 5157325721 2633100872 0 1.95865102 5 2798632792 2633100872 1.06286577 2 2358692929 2633100872 0.47251409 5 4953194441 2633100872 1.88112597 3 212720950 178660925 1.19064059 5

91289443173 12651222566 0.655046387 0.770271163 5979881246 3149061927 1.898940505 5979881246 3149061927 0 1.898940505 3241781691 3149061927 1.029443614 2738099555 3149061927 0.46509673 5824218456 3149061927 1.849509026 530687771 371807572 1.427318352 9744871916 2906350650 2906350650 9744871916 2906350650 0 2906350650 5106304058 2906350650 1.756947001 4638567858 2906350650 0.614793633 7526925820 2906350650 2.589820268 674774732 491568948 1.372696007

EBIT Lease Pmt Tax rate

2646676555 23443822 40%

212720950 18219485 40%

530687771 34889562 40%

674774732 36416568 40%

88

Principle Interest Preferred dividend Fixed Charge Coverage ratio Net Sales Total Assets Total Asset Turnover ratio

0 1292351230 10.4930789 7 3349406752 532098210 0.62947116 4

0 1786609250 0.70379912 9 2055880694 7790426593 0.26389834 6

0 3718075720 0.834395848 5784505405 9128943173 0.633644585

0 4915689480 0.808194102 7020729542 12651222566 0.55494475

INVESTORS ANALYSIS
2006 2007 2008 2009

89

Financial Leverage=EBIT/EBT EBIT EBT Financial Leverage 310183157 180948234 1.7142093 6 291991853 119330928 2.44690842 830067779 458269207 1.81131039 85491799 363372851 2.3527959

EPS=net Income-Preferred Dividend / No. of C/S Outstanding Net income Preferred Dividend C/S Outstanding EPS 106792352 0 104917000 0 513886773 0 281497826 0 245000000 1.1489707

10410959 135653589 244176300 10.257686 0.77341853 2.10457269 3 Note: There is no dilutive effect on the basic EPS of a company. Price Earning Ratio= Market Price per Share/ EPS Market Price/Share EPS P/E ratio 12 10.25786 1.1698346 4 13 0.774185 16.8084937 12 2.1045727 5.70187002

14 1.1489707 12.184819

% of earning retained= Net income All dividends/net Net income All dividends % earning retained 106792352 106792352 0 104917000 104917000 0 513886773 513886773 0 281497826 281497826 0

Dividend Payout Ratio = Dividend per share / EPS Dividend per share Earning per share Dividend Payout 10.26 10.26 1 0.77 0.77 1 2.1045727 2.1045727 1 1.1489707 1.1489707 1

Dividend Yield=Dividend per share / Market price of share Dividend per share Market price of share Dividend yield 10.26 12 0.855 0.77 13 0.05923076 2.1045727 12 0.17538105 1.1489707 14 0.0820693

Book value=Total Shareholders equity Preferred equity/ Total no. of C/S outstanding

90

Shareholders equity Preferred Equity C/S outstanding Book Value

746361256 0 10410959 71.689962

2633100872 135653589 19.4104770 19.4104770

3149061927 0 244176300 12.8966731

2906350650 0 245000000 11.862655

91