Tata Textile Mills Limited - Annual Reports 2003

TATA TEXTILE MILLS LIMITED

Annual Reports 2003

CONTENTS

COMPANY INFORMATION

BOARD OF DIRECTORS

CHAIRMAN:

Mr. Anwar Ahmed Tata

CHIEF EXECUTIVE OFFICER:

Mr. Shahid Anwar Tata

DIRECTORS:

Mr. Arshad Alam

Mr. M.Waris Magoon

Mr. Muhammad Ayub (NIT)

Mr. Hasan Mehmood (NIT)

Mr. Farooq Advani

AUDIT COMMITTEE

CHAIRMAN:

Mr. Anwar Ahmed Tata

MEMBERS:

Mr. Arshad Alam

Mr. M.Waris Magoon

COMPANY SECRETARY &

Mr. Farooq Advani

CHIEF FINANCIAL OFFICER:

BANKERS:

National Bank of Pakistan

Soneri Bank Limited

Metropolitan Bank Limited

Saudi Pak Commercial Bank Limited

Bank AI-Falah Limited

Habib Bank A.G. Zurich Limited

AUDITORS:

M/s. M.Yousuf Adil Saleem & Co.

Chartered Accountants

LEGAL ADVISOR:

Fazle Ghani Advocates.

SHARE REGISTRAR:

Syed Husain & Co.

(Chartered Accountants)

Share Registration Department

1^st Floor, Modern Motors House, Beaumont

Road, Karachi-75530

Tel# 5210516 ,5210517 ,5210736 ,55210765

REGISTERED OFFICE:

8,8^th Floor Textile Plaza,

M.A. Jinnah Road Karachi.

Tel#241 2955-3 Lines 2426761-2-4

Fax#2417710

MILLS:

10^th K.M. M.M. ROAD

Khanpur-Baggasher,

Distt. Muzaffargarh

VISION STATEMENT

While keeping our fundamentals correct we shall build upon our

recognition as a very good company known and established for our

principled and honest business practices and higher quality standards

with niche products and specialty items with a sustained growth in

our capacities.

MISSION STATEMENT

We are committed to the higher expectations of our customers. We

strive for the production of best quality yarns for high value products.

CHAIRMAN'S REVIEW

Assalam-o-Alaikum,

Welcoming the shareholders of the company to the 17th Annual General Meeting gives me great pleasure

for consideration of the operational and financial results for the year ended September 30, 2003.

We bow our heads in front of Almighty Allah for again guiding us to the right path and enabling our company

to make profits.

During the period under review the company has made a pre-tax profit of Rs.50.748 Million as compared

to a pre-tax profit of Rs. 10.447 Million during the preceding year.

YEAR UNDER REVIEW:

The philosophy of the company's management is to grow on the strength of confidence and quality. With

this prime objective, we are maintaining a well-equipped set-up of latest machines thus ensuring ever-

improving quality of our yarn.

During the year under review the company performed very consistently on the fronts of production, efficiency,

quality, yarn sales and marketing.

For the last many years we are operating under a free trade regime of cotton due to which the price of cotton

in the local market is affected by prevailing prices in the international market. During the year under review

the cotton prices in the international market were low thus resulting in cotton procurement by us at a low

price.

The prices of yarn during the year remained subdued mainly on account of the following reasons:

Initially the situation had worsened due to the war in Iraq, which led to shattering of confidence that is the

pre-requisite for business and economic progress. The textile made-ups and value added products

manufacturers faced tremendous difficulties in obtaining orders from foreign buyers thus resulting in lesser

demand of yarn.

Furthermore the crisis in Far Eastern countries due to SARS (Severe Acute Respiratory Syndrome) aggravated

the situation for the spinning industry in Pakistan in the form of lack of demand for our yarn in the export

market.

However; since textile is a cyclical business and there are difficult times which have to be encountered and

survived with patience & sustained efforts. We hope and pray to Almighty Allah for giving us the strength

thus enabling us to sustain our profitability level.

Also it is unfortunate that having a long history of cotton growth in Pakistan we have not been able to come

up with a grading system. As a result; we have to purchase cotton during a very limited period of time, which

can be termed as prime cotton picking duration (i.e. between 15th October to 30th December).

Salient feature of the year's accounts are as under:

Sales, both in Rupees as well as in quantitative terms have increased by Rs.51.032 million (6.46%)

and 25,900 kgs (0.38%). The average selling price has also registered an increase of Rs.6.98/kg

(6.06%).

The Raw material cost has increased by Rs. 19.401 million or Rs.3.17/kg (6.06%) due to increase

in purchase rate.

The Actual Production in quantitative terms has decreased by 9,072kgs (0.13%).

The cost of manufacturing overheads has enhanced from Rs.26.59/kg to Rs.27.20/kg an increase

ofRe.0.61/kg(2.29%).

The Gross Profit amount has increased from Rs.115.140 million to Rs.139.365 million, the G.P rate

to sales has also increased i.e. from 14.57% to 16.57%.

The Administrative expenses have enhanced by Rs.1.976 million, when translated on per Kg basis

the same has increased by Re.0.27/kg (8.08%).

The Selling and Distribution expenses have decreased by Rs.0.587 million, when translated on per

kg basis have the same had decreased by Re.0.10/kg (2.06%)

The other income has increased by Rs.11.205 million. (673.38%) mainly due to exchange gain on

export.

The Financial charges have decreased by Rs.8.386 million (18.33%)

The contribution to "Workers Profit Participation Fund" has increased by Rs.2.081 million or 0.30/kg

due to increase in pre-tax profit.

The Contribution to "Worker Welfare Fund" have also increased by Rs.0.045 million, due to increase

in taxable income.

The net profit amount before tax has increased by Rs.40.301 million (385.76%)

The net profit amount after tax has increased by Rs.27.939 million (310.18%)

The period of Trade Debts (receivable) has decreased from 63 to 44 days.

The inventory of Raw material has increased from 49 days to 57 days.

The inventory of finished goods has increased from 13 days to 20 days.

FUTURE PROSPECTS:

During the beginning of the cotton season we had good news that our cotton crop shall exceed 11 Million

bales but with the passage of time it was revealed that cotton produced in our country shall not even be

sufficient to meet our domestic requirements. Due to the shortfall created, the price of raw cotton has gone

up even higher than the international parity.

As such the next year will see an erosion of profits, tougher and severe competition and we shall not be

able to increase the price of yarn correspondingly with the high price of cotton procured during the cotton

season. The average purchase price of the Mills is approximately Rs. 1300/- higher per mound than cotton

procured during the year under review.

In the coming year, we are planning to add 14,112 spindles and other plant & machineries and the estimated

project cost is around Rs. 520.000 million. Three Gas Caterpillar Generators of 1387 KVA each for self-

generation of power have already been installed and expected to commence the operation by the first week

of December 2003.

Let us pray to Almighty Allah for guiding us on the correct path and towards achievement of better results.

ACKNOWLEDGMENT

I am pleased to place on record my appreciation for our entire Team consisting of General Managers,

Managers, Staff Members and Workers for their cohesive efforts and sincerity.

ANWAR AHMED TATA

Chairman

Karachi

Dated: November 22, 2003

DIRECTOR'S REPORT TO THE SHAREHOLDERS