20000419

Brief

recordings

- BY SCANNER -

Textile Spinning

Amin Spinning Mills Limited

(Mirpur A.K.)

Year Ended September 30, 1999

Overview.........

The year under review has again produced discouraging results. The leadership in the enterprise has reasons to lament as they stated, "the affairs remained under the same condition as those in the preceding year i.e. 1998, because the relief package granted by SBP under incentive scheme in August 1997 could not be implemented even in the year under review ...... while the sponsors are striving hard to put the Company on the right track of profitability necessary support from the bankers is not forthcoming." There are so many stakeholders and their stake in the company is quite high. So the hypothesis is that if the stakes are high then chances of revival are also high as every stakeholder will try to resuscitate this organisation which is under siege of working capital finance deficiency. The sponsors have the resolve, the skill to turn the table. Above all cotton is now affordable to help revival.

--------------

Amin Spinning Mills Limited was incorporated as a public limited company in Azad Kashmir under the Companies Ordinance, 1984 as applicable to Azad Government of the State of Jammu and Kashmir. The principal activity of the company is the manufacture and sale of textile yarn. Its registered office as well as its manufacturing facilities are located in Industrial Estate Mirpur A.K.

The company was listed at two stock exchanges i.e. Karachi and Lahore.

During the year under review sales in terms of value at Rs 134.48 million posted 5.62% decline as compared to last accounting year 1997-98 at Rs 142.50 million. But cost of sales at Rs 145.03 million declined by 3.3% as compared to previous year's Rs 147.35 million.

The decline in cost of sales was not in proportion to decline in sales. Resultantly the company suffered gross loss at Rs 10.55 which was more than double of the gross loss of last year. The negative gross margin shot up to 7.84% as compared to 3.40% in the preceding year.

On the other hand operating loss further increased to Rs 19.60 million as compared to Rs 15.12 million operating loss posted last year. Operating loss increased by 29%.

The only redeeming feature of the profit & loss account was the increase in "other" income to Rs 6.3 million from Rs 3.8 million. Most of this earning is on account of interest income generated from advances to associated undertaking Kohinoor Spinning Mills Ltd.

It can be observed that "due from" the associated undertakings is quite substantial amount of Rs 35.57 million. This outstanding balance on 30th September 1999, the date of the balance sheet, was 19.08% higher than previous year's balance in this account in the sum of Rs 29.87 million.

The company's financial charges remained relatively high at Rs 48.5 million. However it remained around last year's Rs 47.7 million. The loss before taxation accelerated and increased by 5.8% to Rs 62.80 million as compared to the preceding year's Rs 59.35 million.

The loss after taxation reached Rs 63.47 million which produced corresponding negative earning per share at Rs 12.27.

Series of losses of prior years had accumulated the deficit to Rs 352.40 million and added to this the loss of the year under review, beefed up the accumulated deficit to Rs 415.87 million and the capital deficiency hit all time high figure of Rs 359.62 million.

The surplus on the revaluation of fixed assets is of considerable amount of Rs 90.64 million. But this could not share up the crumbling equity base.

Long term loans availed from NBP, Askari Bank and Bank Al-Falah as well as Finance Lease aggregated to Rs 221.74 million. Long term debts further increased over the previous year's Rs 207.68 million. In this case these obligations increased by 6.8% over the preceding year's.

In the current liabilities account the scenario is embedded with over dues, these liabilities are overdues, loan from associated undertaking, short term finances obtained from NBP & Askari Bank, Morabaha finance from First Punjab Modaraba, interest and profit payable on various loans as creditors.

The stakeholders' stakes are high and the auditors observations provide scenario of doom and gloom, but they have not qualified their opinion. They observed in their report to the shareholders:

"Without qualifying our opinion, we state that the company has incurred loss of Rs 63.473 million during the year ended September 30, 1999 and as of that date, the company's current liabilities exceeded its current assets by Rs 232.378 million and its total liabilities exceeded its total assets by Rs 268.890 million. These factors raise substantial doubt that the company will be able to continue as a going concern."

The directors lamented, "The affairs remained under the same condition as those in the preceding year i.e. 1998, because the relief package granted by the SBP under incentive scheme in August 1997 could not be implemented even in the year under review."

The directors are happy that cotton prices are now affordable. "The results of the first half will reveal the promising condition of the affairs, he stated.

--------------

Performance Statistics (Million Rupees)

September 30 1999 1998

Capital & Liabilities.........

Paid-up Capital: 51.75 51.75

Reserves Share Money: 4.50 4.50

Accumulated Loss: (415.87) (352.40)

Equity: (359.62) (296.15)

Surplus Rev F/A: 90.65 90.65

L.T. Debts: 221.74 207.68

Current Liabilities: 291.19 256.95

Assets.........

Operating Fixed Assets: 185.14 203.53

Current Assets: 58.82 55.60

Total Assets: 243.96 259.13

Sales, Profit & Payout.........

Sales - Net: 134.48 142.50

Gross (Loss): (10.55) (4.85)

Operating Loss: (19.60) (15.12)

Other Income: 6.28 3.80

Depreciation: 20.58 22.70

Financial Charges: 48.46 47.72

(Loss) Before Taxation: (62.80) (59.35)

(Loss) After Taxation: (63.47) 61.96

(Loss) B/F: (352.40) (290.4)

Financial Ratios.........

Share Price (Rs) 4/4/2000: 1.00 -

Book Value Per Share (Rs): (69.49) 57.23

Price/Book Value Ratio: - -

Debt/Equity Ratio: (-) (-)

Current Ratio: 0.20 0.22

Asset Turnover Ratio: 0.55 0.55

Days Receivables: 6 6

Days Inventory: 32 37

Gross Profit Margin (%): (7.84) (3.40)

Operating Margin (%): (14.57) (10.61)

Net Profit Margin (%): (47.20) (43.48)

EPS (Rs): (12.27) (11.97)

Price/Earning Ratio: (-) -

A) Plant Capacity & Production (Million Kgs).........

Yarn 20's Count.........

Capacity: 3.248 3.248

Production: 5.025 5.276

Capacity Utilisation (%): 154.71 162.43

B) Spindles Installed/Worked: 12,480 12,480

C) No. of Shifts Worked: 1,056 1,077

--------------

Company information: Managing Director/Chief Executive: Kh. Mohammad Jahangir. Directors: Ch. Mohammad Eusaff/Ch. Mohammad Sadiq/Kh. Mohammad Javed/Kh. Mohammad Kaleem/Kh. Mohammad Nadeem/Kh. Mohammad Tanvir/Ch. Khuda Dad/Ch. Waqar Sadiq. Secretary: S.M. Aseer Multani. Factory & Registered Office: Industrial Estate, Mirpur A.K. Phone: NA. Fax: NA