20000126

Brief recordings

BY SCANNER

Synthetic & Rayon

Ibrahim Fibres Limited

Year Ended September 30, 1999

Overview

The Chairman of the Company reported, "during the first half of our financial year, the selling price of Polyester Staple Fibre (PSF) remained depressed due to the dumping at unrealistically low prices by South East Asian countries, but with the start of second half of the year there was a turn around in the market as the international economic recession started fading away. The PSF selling prices in the international market also showed a market improvement. Though, at the same time, the prices of the main raw materials i.e. PTA and MEG also started increasing yet the margins showed a reasonable improvement." The company's net sales in terms of value at Rs 3,460.94 million and sales in terms of volume at 71,640 tonnes improved by 5.7% and 10.2% respectively over the preceding year's. Net profit at Rs 555.73 million shot-up by 422% and the company announced dividend at 10%.

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For the financial year ended September 30, 1999, Ibrahim Fibres Limited, registered gross sales at Rs 3.968 billion. After accounting for sales tax, the net sales was recorded at Rs 3.461 billion.

While the gross sales increased by 7.7% over preceding year's figure of Rs 3.683 billion, the net sales increased by 5.7% over the net sales posted in the last financial year (FY 1997-98) at Rs 3.273 billion. A lower growth rate in net sales compared to gross sales means that the product remained more expensive due to higher sales tax.

However the company's gross margin at Rs 22.68% was much higher than the previous year's gross margin, which would mean that the cost of raw material did not rise proportionate to selling price.

Gross profit at Rs 785.03 million (FY 1997-98: Rs 303.24 million), operating profit at Rs 750.87 million (FY 1997-98: Rs 274.38 million) and miscellaneous income at Rs 7.03 million (FY 1997-98: Rs 6.4 million) posted significant growth by 150%, 174% and 9.8% respectively over the corresponding figures of last year.

On the other hand financial charges remained on the lower side as compared to last year's.

The company's net profit after taxation at Rs 555.73 million works out to the corresponding net earning per share (EPS) at Rs 2.78 as compared to EPS at Rs 0.53.

The company announced dividend at 10% in line with the last year's announcement of cash dividend at 10%.

The share in the company is trading at Rs 14.30 at 43% premium over the preceding year's.

At the ruling price of the share in the company the price to earning ratio (PER) is placed at 5.14x.

The financial position of the balance sheet showed significant strength and exhibited robust health. The long term debt to equity ratio at 8:92 reflected very comfortable debt coverage. The current ratio of 2.87 exhibited easy liquidity position. While the inventory level sharply increased the period of inventory also increased to 102 days from 79 days in the previous year. On the other hand period of receivables decreased to 11 days from the previous year's 16 days.

The company achieved higher growth in production. So capacity utilisation reached 96% as compared to the preceding year's.

The company sold 71,640 tonnes of its products as against 64,699 tonnes in the preceding year. The company produces and manufactures polyester staple fibre.

The directors reported that during the year under review, the focus remained on the marketing of specialised premium products i.e. BRIGHT & TRILOBAL resulting in higher margins due the improved share in the production and sales.

The Chairman mentioned, "I am hopeful that, by the Grace of Almighty Allah, we can further increase our share in the market by continuously following the present marketing strategy, maintaining high product quality, providing specialised customer support and exploiting the locational advantage of the plant."

The management has embarked upon the expansion of plant capacity. The Chairman reported that the company is negotiating contract with the plant suppliers and making financial arrangement. "The letter of credit for the import of machinery for the expansion project will Insha-Allah be opened in the near future. We hope the new capacity would be in operation during the last quarter of the year 2001" Chairman further informed.

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Performance Statistics (Million Rupees)

September 30 1999 1998

Capital & LiabilitiesÉÉÉ

Paid-up Capital: 2,000.00 2,000.00

Capital Reserve Share Premium: 1,000.00 1,000.00

General Reserve & Profit: 415.85 60.12

Equity: 3,415.85 3,060.12

L.T. Debts: 294.37 528.07

Other Non Current Liabilities: 17.88 7.28

Current Liabilities: 552.78 712.23

AssetsÉÉÉ

Fixed Capital Expenditure: 2,693.08 2,985.77

L.T. Deposits & Deferred Costs: 0.92 18.77

Current Assets: 1,586.88 1,303.16

Total Assets: 4,280.88 4,307.70

Sales, Profit & PayoutÉÉÉ

Sales Ñ Net: 3,460.94 3,273.41

Gross Profit: 785.03 303.24

Miscellaneous Income: 7.03 6.40

Operating Profit: 750.87 274.38

Depreciation: 293.40 328.28

Financial Charges: 129.73 136.29

Profit Before Taxation: 573.07 122.95

Profit After Taxation: 555.73 106.55

Dividend Cash 10%: 200.00 60.12

Financial RatiosÉÉÉ

Share Price (Rs) 20/1/2000: 14.30 Ñ

Book Value Per Share (Rs): 17.08 15.30

Price/Book Value Ratio: 0.83 Ñ

Debt/Equity Ratio: 8:92 15:85

Current Ratio: 2.87 1.82

Asset Turnover Ratio: 0.81 0.76

Days Receiveables: 11 16

Days Inventory: 102 79

Gross Profit Margin (%): 22.68 9.26

Operating Margin (%): 21.70 8.38

Net Profit Margin (%): 16.06 3.26

EPS (Rs): 2.78 0.53

Price/Earning Ratio: 5.14 Ñ

R.O.E. (%): 16.26 3.48

R.O.A. (%): 12.98 2.47

R.O.C.E. (%): 16.95 2.96

Plant Capacity & Actual Production ('000 Tonnes)ÉÉÉ

Annual Production Capacity: 70.00 70.00

Actual Production: 67.21 66.11

Capacity Utilisation (%): 96.01 94.44

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Company information: Chairman & Chief Executive: Sheikh Mukhtar Ahmed. Director: Shaikh Mohammad Yaseen. Secretary: Anwarul Haque. Information Technology Consultants: KPMG Peat Marwick Associates (Private) Ltd. Karachi. Registered Office: Ibrahim Centre, 1-A, Ahmed Block, New Garden Town, Lahore. Head Office: Ibrahim Centre, 15-Club Road, Faisalabad. Share Registration Office: Ibrahim Centre, GK-7/59, Bagh-e-Zehra Street, Kharadar, Karachi. Factory: 38-km Faisalabad Ñ Sheikhupura Road.