examining financial assertion of gul ahmed fabric
GOAL:
Objective of the analysis is the fact we are a bank and we will provide mortgage to Gul Ahmed because Gul Ahmed has requested a loan, therefore we are going to examine the credit worthiness of Gul Ahmed by analyzing their monetary statements in detail to see if providing loan to Gul Ahmed will be appropriate or not.
BUSINESS PROFILE:
Gul Ahmed is one of the largest home textile manufacturing companies in Pakistan. Since its beginning in 1953, the company has been a trend-setter inside the Pakistani linen industry and has serviced a diverse variety of customers around the world.
Gul-Ahmed is a totally vertical fabric mill composed of ofstate-of-the-art spinning, weaving, yarn-dyeing, piece-dyeing, printing (pigment and reactive upon rotary along with flat bed), stitching, embroidery and quilting facilities. The vertical structure gives Gul Ahmed greater control over the standard of its products when compared with other mills.
Apart from the state-of-the-art production services, Gul Ahmed is also equipped with the latest effluent treatment grow, caustic recovery, steam recovery and squander heat recovery plants.
This makes Gul Ahmed one of many greenest and a lot socially liable textile mills in the region.
Gul-Ahmed’s product range is quite diverse, and includes linens, comforters, multi needle quilts/duvets, decorative pillows, window hangings, table & Kitchen Bed and bath etc . Gul Ahmed has the capability to perform foam-back/black-out draperies and liner, as well as fat coating and flocking.
FABRIC INDUSTRIES OF PAKISTAN:
The Pakistan fabric industry total export is around 9. six billion US dollars. The textile industry contributes roughly 46 percent to the total output or perhaps 8. 5 percent of the region GDP. In Asia, Pakistan is the 9th largest vendre of fabric products providing employment to 38 percent of the employees in the country. Yet , the fabric industry presently faces massive challenges. The textile sector enjoys a pivotal situation in the exports of Pakistan. In Asia, Pakistan is a 8th largest exporter of textile goods. The contribution of this industry to the total GDP is definitely 8. five per cent. It provides work to regarding 15 , 000, 000 people, 30% of the nation work force of around 49million. The annual volume of total globe textile operate is US$18 trillion which is growing for 2 . 5 percent. Out of it, Pakistan’s share is less than one %. The development of the Manufacturing Sector has been given the best priority as Pakistan’s founding with major stress on Agro-Based Industrial sectors.
For Pakistan which was one of the leading producers of cotton on the globe, the development of a Textile Industry making complete use of it is abundant methods of cotton has been a top priority area to industrialization. At present, there are 1, 221ginning models, 442 rotating units, 124 large spinning units and 425 little units which in turn produce textile products. Pakistan’s textile sector earned US$5. 77 billion during the 2003 year, compared to US$5. 577 BILLION OF 2000-2001 indicating a growth of 0. 69%. The total exports of textile sector in 2004 had been US your five. 7 billion which displays 2 . 5% growth this increase to 4% expansion in june 2006 as compared to 2005. The textile sector displays 8% bad growth in 2006. The negative growth continue in 2007 aslo together with the value of 5%. The textile sector shows 15% growth in 2008. Now we is going to discuss the primary reasons of crisis in textile industry step by step in greater detail.
a. Lack of Modernize Equipment
Moreover, authorities argue that the textile market has outdated equipment and machinery. The shortcoming to well-timed modernize the device and equipment has led to the decline of Pakistani fabric competitiveness. As a result of obsolete technology the cost of creation is higher in pakistan as compared to additional countries just like India, Bangladesh & cina.
b. Raw material Rates
Prices of cotton & other natural material used in textile industry fluctuate swiftly in Pakistan. The quick increase in the cost raw materials effect the cost of production badly. The increase in raw material prices fluctuate rapidly because of double digit pumpiing. Sealand Strategies Solutions can be helping linen oriented comanies with the help of strategies solutions in importing contemporary equipment and make useful connections with reliable leading raw material provider at very competitive prices.
MARKET OVERVIEW
Textile industry has the biggest share of Pakistan exports coming from raw materials to completed goods in different global markets. During FY 2011-12 the country’s linen exports possess drastically decreased by 10% to $12. 529 billion dollars against $13. 975 billion dollars of FY 2010-11. One of the major causes of underperformance is the continual electricity and gas fill shedding tormenting the sector which has impeded the functionality and competition of the linen industry. The consumer sentiments in US and EU remained bearish, creating a drop in textile related acquisitions. Up till March 2012, global fabric exports dropped by being unfaithful. 4 %. A major reason behind this was excessive stocks built up by the retailers and trapped up in the supply cycle. It took practically a year intended for the supply string to cost-free itself by legacy stocks and options. Finally activity has started to pick up across significant retailers in the west and we be ready to see significant improvements this season.
AUDITORS:
The present auditor is Hyder Bhimji & Co. Chartered Accountant to get Gul ahmed Textile stop working and await other appointment, they have been successful the trust of Gul ahmed via 2009 to till today before that till 3 years ago were Gardezi & Co. Chartered Accountant. The Auditor statement for 2012 was as Balance sheet, S & T, Cash flow and also other comprehensive cash flow statement had been in accordance with the corporation Ordinance 1984, in our judgment proper books of bank account have been retained by the industry’s ordinance, 1984.
CRUCIAL KEY POINTS:
Mr. Zain Basheer, Director of GAMT and son of Muhommad Ali Basheer Leader of GAMT when found that cost of wool was about to increase at the start in the 2012 year, realized that getting yarn to conserve quantity can result in big profits.
So , this individual decided to order yarn in big amount and as this individual planned GAMT invest a large amount in buying wool.
But good luck was not really in their benefit and the price of yarn falls straight down with a big margin plus they face an actual difficult time and as a result their Cost of Sales boosts which results in big losses news as compared to 2011 in which they will hit the gigantic mark of 26 billion Rupee which usually made them the best fabric in this age.
Their Expenses also increase because they paid out the big quantity in Murabaha also this year.
Interest Bills and Taxation also reveals the obvious difference this year from 2011 that as well was one of many reason of losses.
Should you see for the vertical research Equity section their Capital and Stores increase for this reason , the loss which will fall to -1. 25 from confident figure 5. 23 hard to figure in overall collateral section however the reserves just visited the beginning of 2012, which means it absolutely was covered this year and by the final of 2012 their reserves are less due to huge damage.
PERFORMANCE EXPECTATIONS:
Performance expectation after examining the financial statement of Gul ahmed is very great compared to other textiles mill. The Company’s sales amounting to Rs. 25, 064 million is declined by simply 1 . 46% a compared to the corresponding season. Drop in exports have been completely compensated by increase in neighborhood sales. Decrease in major profit is because of the pumpiing without any related increase in selling prices. During the monetary year (FY) 2012 limited financial circumstances, weak assurance and fiscal consolidation in various advanced economies affected the monetary progress. Various emerging economies were also struck by reduced investment and anticipated expansion uncertainty, which will led to value price declines, capital outflows and money depreciation. While perth Universe Economic Forum, the world GDP growth in YoY basis will drop from 4% in 2011 to about 3. 5% this year.
Domestically, GROSS DOMESTIC PRODUCT for FY 2012 was 3. 7% (FY 2011: 3%) as per Economic Review of Pakistan 2012. The rise was generally due to the expansion in commodity producing sectors, specially the agriculture sector in the country. Total investment and exports showed a significant contraction. The total expense, as a percentage of GDP, has decreased to 12. 5% in FY 2012 (FY 2011: 13. 1%), which does not bode very well for the future successful capacity from the economy.
Pumpiing in June 2012 was 11. 3% (June 2011: 13. 1%) on YoY basis that has been due to increase in energy and oil rates, supply interruptions due to large rains before at the start in the fiscal 12 months and increased borrowings by the government. Throughout the first half of the year 2012, State Financial institution of Pakistan (SBP) lowered the plan rate simply by 200 basis point lowering it to 12% and kept the interest rate unchanged through the second 50 percent. The reduction of 2 hundred basis point was made to improve the dropping private purchase which is diminishing the channel term productive capacity with the economy, and also to control upcoming inflation. After assessing the impact of decrease in thefirst fifty percent, SBP noticed that continued strength shortage can be described as major element behind low demand for non-public credit to get fixed purchase.
Return in Equity reveals also a obvious increasing pattern for GATM, Equity is growing as it is an expanding industry in addition to 2011 that shows an excellent impact in equity when it was the year which will change the record for GATM they cossed the gigantic mark of 25 billion rupee then this year it is a little bit decreasing.
Revenue in Thousands
Lawsuits and contingencies:
The Group owns and possesses a plot of land measuring 44 acres in Deh Khanto, which is appearing in the catalogs at an expense of Rs. 64 mil. The Group holds name deeds of the land that happen to be duly registered in its name. Ownership of the land has become challenged in the Sindh Substantial Court by some persons who claims to be the owners, because this terrain was previously acquired by them and subsequently resold to the Group. The claim of the alleged owners is fictitious. The Group is assured that its title towards the land is secure and consequently no supply has been made in these economical statements. The Group provides filed a suit in the Sindh Large Court pertaining to recovery of Rs. 33. 409 , 000, 000 (2011: Rs. 33. 43 million) a part of other receivables. The Group’s management and its legal counsel will be of the view that the case will be made a decision in the Group’s favour and therefore no dotacion has been produced there against.
The Group has registered a Petition in the Sindh High Court against purchase passed by the Board of Trustees, Employees’ Old-Age Benefits Institution (EOBI) for protecting the unjustified additional require of payment raised simply by EOBI pertaining to accounting years 2000-01 and 2001-02 amounting to Rs. 50. 827 million (2011: Rs. 55. 827 million). This demand has been raised after lapse of more than two years although the records and literature of the Group had been verified by EOBI with their entire pleasure and finalization of all things by EOBI. The Honorable Sindh Large Court has recently restrained EOBI from acquiring any actions or procedures against the Group. No provision has been built there against in these monetary statements since the Group is assured of thefavorable outcome from the Petition. The Group offers filed a Constitution Request in the Sindh High Court docket against the City District Authorities of Karachi for stunning down the unjustified demand of payment of Ground Lease of Rs. 10 million. The Reputable Sindh Substantial Court has recently restrained metropolis District Govt of Karachi from currently taking any coercive action resistant to the Group. No provision has become made generally there against during these financial statements as the Group is definitely confident from the favourable final result of the Petition.
INVESTMENTS:
By looking with the financial assertions of GATM, we avoid find any kind of unwise expenditure made by the corporation. The following details from cash flow gives a crystal clear idea regarding all current cash making from cash flows intended for the following season. Addition to home, plant & equipment.
Do you recommend a buy/sell/hold about stock given on the current price share prices? So why? Price targeted have been revisions at GATM, if you start to see the present state as investor’s overview Making per talk about at yr ended 2012 was (1. 89) and P/E percentage was (11. 17), an adverse EPS amounts are usually reported as “not applicable to get quarter which company reporteda loss. Entrepreneur buying a company with adverse P/E should be aware that they are getting a share of any company that is losing money per share of it’s stock. For now it is difficult to recommend buy of stock unless it is better to support it’s inventory for some time since gulahmed earlier performance had been better in scale.
Precisely what is Company’s key?
Gul-ahmed has usually work on getting innovation towards the product development because they know the dimensions of the importace of being tech-savy and innovative via decades they have been working with the most recent technology of that era. Getting first full automatic larger width Air jet harnesses, 21 color rotatory creating machines and a modern laboratory in entering into 21st century, One more world-class idea came to the mind and retail outlet Tips open in every part of the country. They have always been working on all their U. S i9000. P to create it a lot better than others and it had repaid. At present they may be working on modern saving machines which is fully computerized and functions task of more than twenty men and this machine is only owned by GATM in Pakistan, this kind of played main part in crossing huge mark of 25 billion dollars rupee this year which is certainly the best result by virtually any textile industry in Pakistan. Being tech-savy is the heart implies two opposing causes of providing fast and flexible response to buyers, yet building efficient components and devices that are successful and waste-free.
The concept is to provide the proper product and information, with the right time, in the right amount, in the right manner, while maintaining substantial standards of efficiency and cost control. IMC procedures this contrary idea within our daily activities to control their capital locked in inventory and maintain a wholesome customer marriage. Q7: Could it be a growing/declining industry?
It is a growing industy because if you see their progress by when they start off they have come to the top of textile industry and portion it’s buyer from much more than last 5 decades, they have often come up with new-technology and innovative ideas. One of the current imaginative idea can be, a 136. 17 MW private power plant at Korangi Industrial Area of Karachi. Theproject is a joint venture of Gul Ahmed Group, Toyoda Tsusho Corporation of Japan, International Finance Corporation (IFC) and Wartsila Diesel Oy of Finland. Gul Ahmed Energy Limited is backed by “GUL AHMED GROUP which is certainly one of Pakistan’s leading industrialist as well as business group since 1948 with a very much diversified portfolio of trade, manufacturing, financial, industries, businesses and investments. Business ventures range between Finance, Strength, Beverages, Real-estate, Information Technology and Textile (the Group’s key forte) The Group is usually involved in the making of cotton yarns, off white and finished cloth and textile made ups which is one of the leading exporters of linen products from Pakistan A few of the companies building part of the Group are provided below:
Presentation: Earnings every share is that amount you earn on every single ratio gulahmed is definitely order to pick up them and organization like gulahmed attempts to maintain all their goodwill with investor instead of giving them extra incentives and 2012 they may be negative, which is imposible pertaining to EPS mainly because no one can pay out negative value.
CONCLUSION & FINDINGS:
We as a Lender have strolled upon a decision that we should certainly gave the money to Gul-ahmed after studying their financial statements they are really a very developing organization.
If we see their particular present condition in 2012, they may be in loss but this is due to a single bad decision by Representative of GAMT which was made to amazed the earth once again following 2011 enormous mark revenue in 2012 however it did not paid off.
Financial proportions shows a slight change besides R. To. E, Elizabeth. P. T and P/E Ratios which can be negative news as GAMT was in reduction in present year.
Prior to that At the. P. S was growing and in 2011 it was being unfaithful. 42 the very healthy and balanced earning every share.
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