Nishat Mills Limited

Corporate Briefing
Lahore Stock Exchange
March 24, 2011

AL - QURAN
Surah: An-Najm (The Star)

That man can have nothing but what he strives for; 39 That
(the fruit of) his striving will soon come in sight. 40

Presenters:
Badar ul Hassan
Imran Javed

Chief Financial Officer

Assistant GM Finance

AGENDA

Introduction
Our Mission and Vision
Corporations Management
Business Segments
Investments Portfolio
Growth Plans
Financial Performance Highlights
Share Price Analysis
Corporations Assets
Latest Financial Results
Future Outlook
Questions & Answers

Introduction
Nishat Mills Limited (Nishat), a flagship company of Nishat Group, ranks
amongst the largest and most successful textile exporters of the country.
It commenced business as a partnership firm in 1951 and was
incorporated as a private limited company in 1959. Later it was listed on
stock exchange in 1961.
Initially Nishat started with weaving business and over the years it has
become one of the premier composite textile mills in the country with the
largest production facilities in spinning, weaving, processing, stitching and
power generation. It has more than 15,000 employees.
Overall Nishat has 28 manufacturing units each specializing in a specific
product range located at Faisalabad, Sheikhupura, Ferozewatwan and
Lahore.

Excellent research and development functions are developed with focus

on dyeing, finishing and garments businesses. Hence, major focus is on
value addition which represents around 50% of total turnover.

Introduction (continued)
Nishat has a very broad base of customers for its products both in and
outside Pakistan. The company has long working relationship with top
brands of the world such as J.K.N. International, Levis, Next, Pincroft
Dyeing, Ocean Garments, Arnold Kock, Gap, Carreman and Sinha
Fashion.
Major portion of Companys earnings is export based. Nishat has
achieved significant geographical diversification in its export sales mix
over the years.
Geographical Spread
2010

2009
Rupees in thousands

Europe

8,759,128

7,051,422

Asia, Africa & Australia

11,803,566

9,723,826

USA & Canada

3,660,713

1,938,695

24,223,407

18,713,943

Export sales are expected to be more than Rs 31 billion for the financial
year 2010-2011.

Introduction (continued)
Nishat has an excellent product mix of sales.

8%

2%

Product Mix
28%

13%

18%
27%

4%

Yarn

Processed fabric

Waste Sales

Grey Cloth

Made - ups

Garments

Miscellaneous

Introduction (continued)
In recognition of its outstanding performance Nishat has been
awarded FPCCI President of Pakistan Trophy for number of years.
Nishat has established its own power generation facilities at all
plant locations that fulfill the internal demand as well as generate
surplus for supply to WAPDA. The combined capacity of power
generation is 85 MWH.
The strength of the company also includes top quality and highly
competent professional resources to manage the affairs.
Nishat is a Green Company and has got certificates of ISO-9001,
IKO-TEX 100, SA-8000 and Citypad.

Over the years Nishat has established Nishat USA, Nishat Linen
Trading LLC UAE and Nishat Power Limited as its subsidiary
companies to further strengthen its textile business in new markets
and diversifying into growing electricity sector.

Introduction (continued)
Nishat has got excellent credit ratings of AA- for long term and A1+ for
short term from PACRA which reflects its ability to maintain its position in
the key markets despite tough economic times. Over the years it has not
only maintained but improved its long term credit rating.

Introduction (continued)
Pattern of shareholding at 30 June 2010
Category

Number of
holders

Shares held

Percentage

Individuals

13,424

187,605,624

53.36

Investment Companies

13

23,019

0.01

Insurance Companies

21

15,332,357

4.36

Joint Stock Companies

220

50,391,708

14.33

Financial Institutions

47

35,481,497

10.09

Modaraba Companies

65

22,576,954

6.42

Foreign Investors

29

38,372,832

10.91

Miscellaneous

30

1,815,857

0.52

13,849

351,599,857

100.00

Total

Our Mission & Vision

Mission
To provide quality products to customers and explore new markets to
promote/expand sales of the Company through good governance and
foster a sound and dynamic team, so as to achieve optimum prices of
products of the Company for sustainable and equitable growth and
prosperity of the Company.

Vision
To transform the Company into a modern and dynamic yarn, cloth and
processed cloth and finished product manufacturing company that is
fully equipped to play a meaningful role on sustainable basis in the
economy of Pakistan.

Also to transform the Company into a modern and dynamic power

generating company that is fully equipped to play a meaningful role on
sustainable basis in the economy of Pakistan.

Corporations Management

Board of Directors

Mian Umer Mansha

Mian Hassan Mansha
Mr. Khalid Qadeer Qureshi
Mr. Muhammad Azam
Mr. Syed Zahid Hussain
Mr. Maqsood Ahmed
Ms. Nabiha Shahnawaz Cheema

Chairman
Director
Director
Director
Director
Director
Director

Corporations Management (continued)

Audit Committee
Mr. Khalid Qadeer Qureshi
Mr. Muhammad Azam
Ms. Nabiha Shahnawaz Cheema

Chairman
Member
Member

Executive Management
Mian Umer Mansha
Mr. Badar ul Hassan
Mr. Khalid Mahmood Chohan

Chief Executive Officer

Chief Financial Officer
Company Secretary

Business Segments
Nishat has the following five reportable business segments. Each segment
has production facilities located at various locations.
Spinning:

Production of different qualities of yarn (more than 100 different counts)

using natural and artificial fibers with production capacity of 64.713 million
kgs of yarn per annum. There is average daily consumption of 138,000 kgs
of local cotton and 20,000 kgs of imported cotton. We have an average PC
yarn mix of 80% cotton and 20% polyster. Out of total cotton purchases
around 90% purchase is from local market and 10% is imported.
Weaving:
Production of different qualities of greige fabric using yarn and having
production capacity of 307.971 million square meters of fabric per annum.
Out of total yarn requirement approximately 70% of yarn is purchased from
external parties and 30% is received from Companys own spinning units.

Business Segments (continued)

Processing and Home Textiles (including Nishat Linen retail shops):
Processing of greige fabric for production of printed and dyed fabric and its
further use in manufacturing variety of home textile articles. It has processing
capacity of 84 million meters of fabric per annum. Approximately 55% of total
fabric demand is met from Companys own weaving units and 45% is
purchased from external parties.
Garments:
Manufacturing of garments using processed fabric with capacity of producing
600,000 garments per month. Approximately 25% of total demand of fabric is
met from Companys own facilities and 75% is purchased from external
suppliers.
Power Generation:
Generation and distribution of power using gas, furnace oil, diesel and
steam. We have power generation capacity of 85 MW whereas our average
consumption is approximately 40 MW. In power plants are installed engines
from Mak, Jenbacher, Caterpillar, Wartsila, Dai Hatsu and Cummins.

Business Segments (continued)

Segment

Plant Location

Machinery

Spinning

Faisalabad
Ferozewatwan

167,624 spindles
32,376 spindles

Weaving

Bhikki
Lahore

Air Jet Looms 602

Sulzer Looms 40

Processing & Home Textile

(including Nishat linen)

Lahore

5 dyeing machines
3 printing machines
938 sewing machines

Shops all over Pakistan

Faisalabad (3), Bhikki (1)
Lahore (10), Sialkot (1), Gujrat (1),
Gujranwala (1), Sargodha (1), Multan (1),
Islamabad (2), Pindi (1), Mirpurkhas (1),
Karachi (3)

Garments

Lahore

1627 sewing machines

Power

Faisalabad
Ferozewatwan
Lahore
Bhikki

6 power plants at each

production facility using
Wartsila , Caterpiller ,
Cummins , Diahatsu ,
Jenbacher & Mak

Business Segments (continued)

8%

Revenue

1%

30%

42%
19%

Spinning

Weaving

Processing & home textile

Garments

Power

Investment Portfolio

Long term investments

Nishat Power Limited
DG Khan Cement Company Limited
Nishat Paper Products Company Limited
Nishat USA Incorporation
LAL PIR Power Limited
Pak Gen Power Limited
Subsidiaries and associates
Adamnjee Insurance Company Limited
Habib Bank Limited
MCB Bank Limited

Relationship

Holding

No of shares

31-Dec-10

31-Dec-10

Status

Percentage

held

Market/ Fair value

Rupees '000'

Cost
Rupees '000'

51.01
31.40
25.00
100.00
32.00
28.80

180,632,955
114,645,168
11,634,199
200
110,498,540
107,159,499

0.03
0.00
7.03

36,337
145
53,411,266

Subsidiary
Associate
Associate
Subsidiary
Associate
Associate
Related Co.
Investee
Related Co.

Total long term investments

Short term investments
Pak Gen Power Limited
Nishat Chunian Limited
Pakistan Strategic Allocation Fund
Security General Insurance Company Limited
Total shore term investments
Total investments

1,806,330
3,458,845
116,342
3,218
2,686,220
2,036,030
10,106,985
3,179
17
12,206,611
22,316,792

Associate
Related Co.
Investee
Related Co.

3.20
14.20
0.17
15.02

11,906,611
22,513,321
500,000
10,226,244

1,806,330
2,959,565
116,342
2,939
1,648,444
1,486,472
8,020,092
2,775
11
8,122,094
16,144,972

226,225
511,503
4,195
1,174,893
1,916,816

165,163
242,750
1,715
11,187
420,815

24,233,608

16,565,787

Growth Plans

A new wholly owned subsidiary with the name of Nishat Linen Trading
LLC has been incorporated in Dubai, United Arab Emirates and it is
expected to open its first retail outlet in Dubai Festival City Mall by May
2011. We are expecting to open six retail outlets in UAE with a total
investment of US $ 2.75 million.

Installation of a new Combined Heat and Power Plant having a

production capacity of 6.25 MW of electricity and 65 tonne of steam
through use of 30% coal and 70% agricultural and municipal wastes,
that is expected to be operational later in financial year 2011-2012.

The Company has earned revenue of Rs 21.345 billion during the half
year ended 31 December 2010 and is expected to increase its revenue
for the financial year 2010-2011 over Rs 40 billion with an approximate
increase of 30% from the previous financial year.

Financial Performance Highlights

Over the last ten financial years Nishat has been able to show excellent
financial performance and has maximized the value for its shareholders
through payment of dividends and increasing net worth of company.
The stakeholders trust in the company has allowed the company to
maintain growth in its revenue, gross profit, net profit and total assets.
The trend analysis of financial performance in last ten financial years
are mentioned in the next slides.
Nishats strength lies in its focus on organic growth through
development of its productions facilities, expansion of business to new
markets, search of new customers and maintaining excellent
investment portfolio.

Financial Performance Highlights (continued)

At a Glance
Description
Revenue
Gross Profit
Net Profit
Gross Profit Ratio
Net Profit Ratio
Dividend
Dividend per share
Earning per share
Interest Cover
Current Ratio
Gearing Ratio
Shareholders' equity
Return on equity
Market Price
Break-up Value
Total Assets

Rs. (million)
Rs. (million)
Rs. (million)
%
%
%
Rs.
Rs.
Times

Rs. (million)
%
Rs.
Rs.
Rs. (million)

2001
11,662
2,057
315
17.6%
2.7%
15%
1.5
2.83
1.37
0.97 : 1
63.89
4,730
6.66%
11
42.48
14,222

2002
11,948
2,028
202
17.0%
1.9%
0%
1.65
1.34
1.04 : 1
63.59
4,267
4.72%
14
38.33
12,796

2003
13,209
1,888
411
14.3%
3.1%
15%
1.5
3.35
1.86
1.03 : 1
57.15
6,118
6.71%
26
49.95
15,455

2004
14,876
1,934
751
13.0%
5.1%
20%
2
5.17
3.13
1.22 : 1
53.54
7,851
9.57%
43
64.1
19,582

2005
11,375
2,135
1,867
18.8%
16.4%
25%
2.5
12.86
5.99
1.24 :1
38.02
12,806
14.58%
75
88.16
21,918

2006
16,660
2,958
1,633
17.8%
9.8%
15%
1.5
10.22
3.33
1.38 : 1
29.64
20,594
7.93%
105
141.78
30,661

2007
17,180
2,845
1,211
16.6%
7.5%
25%
2.5
7.58
2.66
1.74 : 1
21.24
30,164
4.02%
130
188.78
39,587

2008
19,590
2,812
5,858
14.4%
29.9%
25%
2.5
36.86
7.44
0.73 : 1
29.62
26,492
22.11%
86
165.8
40,277

2009
23,870
4,352
1,268
18.2%
5.3%
20%
2
6.23
2.08
0.86 : 1
34.34
19,331
6.56%
38
79.72
31,513

2010
31,536
5,980
2,915
19.0%
9.2%
25%
2.5
10.5
3.92
1.11 : 1
25.53
31,376
9.29%
43
89.24
46,182

Financial Performance Highlights (continued)

Net revenue
35,000

Rupees (millions)

30,000
25,000
20,000
15,000
10,000
5,000
0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

11,662

11,948

13,209

14,876

11,375

16,660

17,180

19,590

23,870

31,536

Years

270% growth in net revenue in last ten years.

Financial Performance Highlights (continued)

Gross Profit & Net Profit
6,000

Rupees (millions)

5,000
4,000
3,000
2,000
1,000
0
Gross Profit
Net Profit

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2,057

2,028

1,888

1,934

2,135

2,958

2,845

2,812

4,352

5,980

315

202

411

751

1,867

1,633

1,211

5,858

1,268

2,915

Years

925% growth from net profit in 2001 to net profit in 2010.

Financial Performance Highlights (continued)

Gross Profit & Net Profit Ratios to Revenue
35%

Percentage

30%
25%
20%
15%
10%
5%
0%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Gross Profit 17.64% 16.97% 14.29% 13.00% 18.77% 17.76% 16.56% 14.35% 18.23% 18.96%
Net Profit

2.70%

1.90%

3.10%

5.10% 16.42% 9.80%

Years

7.50% 29.90% 5.30%

9.20%

Financial Performance Highlights (continued)

Dividend Payout and Dividend Yield
60%

Percentage

50%
40%
30%
20%
10%
0%
Dividend Yield

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

10.71% 0.00% 5.77% 4.65% 3.33% 1.43% 1.92% 2.91% 5.29% 4.64%

Dividend Payout 53.00% 0.00% 44.78% 38.68% 19.44% 14.68% 32.98% 6.78% 32.10% 23.81%

Years

Financial Performance Highlights (continued)

Earnings per share and Dividend per share
40
35

Rupees

30
25
20
15
10
5
0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

EPS

2.83

1.65

3.35

5.17

12.86

10.22

7.58

36.86

6.23

10.5

Dividend

1.5

1.5

2.5

1.5

2.5

2.5

2.5

Years

Financial Performance Highlights (continued)

Interest Cover Ratio
8
7
6

Times

5
4
3
2
1
0
Interest Cover

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

1.37

1.34

1.86

3.13

5.99

3.33

2.66

7.44

2.08

3.92

Years

Able to generate sufficient profits to meet the interest expenses.

Strong cash flows, lower rate SBP export refinance facility and dividends
on investments has resulted in improved financial coverage.

Financial Performance Highlights (continued)

Current Ratio
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
Current Ratio

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0.97

1.04

1.03

1.22

1.24

1.38

1.74

0.73

0.86

1.11

Years

Financial Performance Highlights (continued)

Gearing Ratio
70
60
50
40
30
20
10
0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Gearing 63.89

63.59

57.15

53.54

38.02

29.64

21.17

30.62

34.34

25.53

Years

Steady decline in gearing ratio and improved equity of company.

Financial Performance Highlights (continued)

Shareholders' Equity
35,000

Rupees (000)

30,000
25,000
20,000
15,000
10,000
5,000
0

2001

2002

2003

2004

2005

2006

2007

2008

SHE 4,718

4,255

6,118

9,502 12,806 20,594 30,164 26,492 19,331 31,376

Years

665% growth in shareholders equity in last ten years.

2009

2010

Financial Performance Highlights (continued)

Return on Equity
25%

Percentage

20%
15%
10%
5%
0%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

ROE 6.66% 4.72% 6.71% 9.57% 14.58% 7.93% 4.02% 22.11% 6.56% 9.29%
Years

Share Price Analysis

200.00

Rupees

150.00

100.00

50.00

0.00
Market Price

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

10.95 14.00 26.00 43.00 75.00 105.00 130.00 86.00 38.00 43.00

Break-up Value 42.48 38.33 49.95 64.10 88.16 141.78 188.78 165.80 79.72 89.24

Years

Break up value per share has always been higher than market value per

share in last ten years. Market price at 21 March 2011 was Rs 62.92 per
share.

Corporations Assets

Rupees (millions)

50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

2001

Total Assets 14,222

2002

2003

2004

2005

2006

2007

2008

2009

2010

12,796

15,455

19,582

21,918

30,661

39,587

40,277

31,513

46,182

Years
325% growth in total assets in last ten years.

Latest Financial Results

for half year ended 31 Dec 2010 (continued)
Income Statement for half year
Half Year
ended
31-Dec-10
Rupees'000
Sales
Cost of sales
Gross profit
Distribution cost
Administrative expenses
Other operating expenses
Other operating income
Profit from operations
Finance cost
Profit before taxation
Provision for taxation
Profit after taxation
Earnings per share
Gross profit margin (% of sales)
Profit after taxation (% of sales)

Half Year
ended
31-Dec-09
Rupees'000

Variance
Amount
Rupees'000

Percentage
%

21,344,751
(18,062,291)
3,282,460

14,152,293
(11,662,819)
2,489,474

7,192,458
(6,399,472)
792,986

50.82
(54.87)
31.85

(924,541)
(316,113)
(189,039)
1,207,103
3,059,870
(705,501)
2,354,369
(296,000)
2,058,369

(743,786)
(260,766)
(127,685)
335,582
1,692,819
(546,828)
1,145,991
(135,500)
1,010,491

(180,755)
(55,347)
(61,354)
871,521
1,367,051
(158,673)
1,208,378
(160,500)
1,047,878

(24.30)
(21.22)
(48.05)
259.70
80.76
(29.02)
105.44
(118.45)
103.70

5.85
15.38%
9.64%

3.82
17.59%
7.14%

2.03
-2.21%
2.50%

53.14
(12.58)
35.01

Latest Financial Results

for half year ended 31 Dec 2010 (continued)
Cost of sales

31 Dec
2010

Raw materials consumed

Cloth and yarn used
Processing charges
Salaries, wages and other benefits
Stores, spare parts and loose tools
Packing materials
Repair and maintenance
Fuel and power
Insurance
Other factory overheads
Depreciation

6,366,511
7,952,142
117,666
1,153,945
1,676,782
365,190
125,976
1,440,301
15,177
121,682
533,127
19,868,499

Work-in-process:
Opening stock
Closing stock
Cost of goods manufactured
Finished goods:
Opening stock
Closing stock

2,921,946
(4,102,049)
(1,180,103)
18,688,396
1,545,610
(2,171,715)
(626,105)
18,062,291

Percentage
%
32.04
40.02
0.59
5.81
8.44
1.84
0.63
7.25
0.08
0.61
2.68
100

Latest Financial Results

for half year ended 31 Dec 2010 (continued)
Distribution Expenses
Salaries, wages and other benefits
Outward freight and distribution
Commission to selling agents
Rent, rates and taxes
Insurance
Travelling and conveyance
Vehicles running
Entertainment
Advertisement
Postage, telephone and telegrams
Electricity and suigas
Printing and stationery
Repair and maintenance
Fee and subscription
Depreciation

31-Dec
2010
70,071
450,724
286,514
11,476
7,883
28,507
7,284
1,408
19,808
34,977
1,468
835
1,903
30
1,654

Percentage
%
7.58
48.75
30.99
1.24
0.85
3.08
0.79
0.15
2.14
3.78
0.16
0.09
0.21
0.00
0.18

924,542

100.00

Latest Financial Results

for half year ended 31 Dec 2010 (continued)
Administration Expenses
Salaries,wages and other benefits
Rent, rates and taxes
Legal and professional
Insurance
Travelling and conveyance
Vehicles' running
Entertainment
Auditors' remuneration:
Advertisement
Postage, telephone and telegrams
Electricity and sui gas
Printing and stationery
Repair and maintenance
Fee and subscription
Miscellaneous
Depreciation

31-Dec
2010
204,579
4,014
4,282
2,169
12,612
10,638
6,868
400
37
5,766
9,849
7,358
11,635
1,876
3,591
30,438

Percentage
%
64.72
1.27
1.35
0.69
3.99
3.37
2.17
0.13
0.01
1.82
3.12
2.33
3.68
0.59
1.14
9.63

316,112

100.00

Latest Financial Results

for half year ended 31 Dec 2010 (continued)
Other Operating Expenses

31-Dec
2010

Workers' profit participation fund

Workers' welfare fund
Provision for doubtful debts
Depreciation on investment properties
Donation

121,603
48,048
11,207
2,881
5,300

64.33
25.42
5.93
1.52
2.80

189,039

100.00

Other Operating Expenses

Dividend income
Profit on deposit with banks
Net Exchange gain including loss on forward contracts
Interest income from Nishat Power Limited
Gain on sale of investment
Gain on sale operating fixed assets
Sale of scrap, empties, and inventories
Rental income
Miscellaneous

31-Dec
2010

Percentage
%

Percentage
%

536,290
38,382
402,177
58,056
94,726
10,225
50,907
16,332
8

44.43
3.18
33.32
4.81
7.85
0.85
4.22
1.35
0

1,207,103

100

Latest Financial Results

for half year ended 31 Dec 2010 (continued)
Borrowings and Finance cost
Loan facility

Loan Amount
31 Dec 2010
Rupees

Mark up
for half year
Rupees

3,859,554,588

230,665,644

Overdraft

1,162,448,764

20,274,722

Pre- shipment

2,647,100,000

37,398,256

Export Refinance Part I

2,038,451,000

73,750,440

Export Refinance Part II

6,554,635,000

260,558,551

Total

12,402,634,764

391,981,969

Gross Total

16,262,189,352

622,647,613

Long term loans

Short term loans

Latest Financial Results

for half year ended 31 Dec 2010 (continued)
Balance sheet at half year end
31-Dec-10
Rupees '000
Assets
Non current assets
- Property, plant and equipment
- Long term investments
- Other non current assets
Current assets
- Stores, spares and loose tools
- Stock in trade
- Short term investments
-Other current assets
Total assets
Liabilities
Non current liabilities
- Long term financing
- Deferred tax
Current liabilities
- Short term and current portion of long term borrowings
- Other current liabilities

Share capital and reserves

Total liabilties and equity

30-Jun-10
% of total

Rupees '000

% of total

12,196,151
22,316,792
993,739
35,506,682

22
41
2

11,841,667
21,959,543
648,176
34,449,386

26
48
1

927,690
11,663,474
1,916,816
4,332,285
18,840,265
54,346,947

2
21
4
8

688,832
6,060,441
1,554,543
3,429,112
11,732,928
46,182,314

1
13
3
7

100

100

2,619,874
582,469
3,202,343

5
1

2,980,694
1,256,892
4,237,586

6
3

13,642,315
3,512,886
17,155,201

25
6

7,778,079
2,790,336
10,568,415

17
6

33,989,403
54,346,947

63
100

31,376,313
46,182,314

68
100

Latest Financial Results

for half year ended 31 Dec 2010 (continued)

Latest Financial Results

for half year ended 31 Dec 2010 (continued)

Future Outlook
Maintaining better margins through price revisions for exports
Benefit from the bulk buying of cotton and fabric
Focus on exploring new markets and expanding customer base
Further expansion of export of Garments and Home Textiles
Commercial operations of Nishat Linen Trading LLC

Lower cost alternative of power supply

Investing in new profitable ventures related to textile business as well
as other sectors

Questions & Answers

Thank You