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Industrial capacity
The textile industry of Pakistan has a total established spinning capacity of 1550 million KGs of yarn, weaving capacity of 4368 million square metes of fabric and finishing capacity of 4000 million square meters. The industry has a production capacity of 670 million units of garments, 400 million units of knitwear and 53 million KGs of towels.
Exports
In Asia, Pakistan is the 8th largest exporter of textile products. According to recent figures, the Pakistan textile industry contributes more than The contribution of this industry to the total GDP is 8.5%. It provides employment to 38% of the work force in the country, which amounts The world demand for textiles is rising at around 2.5%, due to which there is a The Pakistani Textile industry's biggest competitors are China, India, Indonesia
60% to the country's total exports, which amounts to around 5.2 billion US dollars.
to a figure of 15 million. greater opportunity for rise in exports from Pakistan. and Turkey.
Review
Fazal Textile Mills Ltd was taken over by the Younas Brothers group in March 1987. Younas Brothers took over FTML when it was a closed down unit since 1984 due to heavy losses. The new Management of FTML took prompt and comprehensive actions to revitalize the unit by discarding the old machinery and imported and installed the latest machinery within a year time. Only in 4 years time FTML got positive results, and in the year 1991 the new management cleared the deficit of previous years and got a net profit. At present total installed Spindles in FTML are 60,000.
KNITTING
Production capacity utilization remained almost at same levels as in year June30, 2009 with huge increase of 11.84% (49.90% to 61.74%). There are so many problems in the country i.e. Load shedding of energy (Electricity & Gas) but the company not just tackle these problems but also increased his actual capacity. A major reasons is increase in the working days of the organization
Sales
In the recent year the company records the significant growth in sales of 44%.This is due to the reasons of
Inflation. Increase in Export sales (Exchange rate effect & due to increase in world demand by 2.5%).
Export sales
In the recent year the export increased by 6% which result in higher sales & another reason for increase in sales is increase in exchange rate.
Local sales . In the recent year the local sales decreased by 7% (40% to 33%). The basic reason is increased in export sales by increasing in the exchange rate & world increasing demand & increasing economic instability.
Cost of Sales
In textile sector (spinning/weaving) cost of sales occupies major share of income statement volume. Cost of sales has been 79.41% of the sales volume in 2009-2010; major factors contributing to the higher CGS are as follows: Increase in the prices of raw material, the political instability Another major difference in Pakistan can be the alternate cost of Energy.
Financial cost
Short term finance;
The financial cost of the company hugely decreases with respect to sales by 4.19 % ( 4.29% to 0.10%). This is happen because of decrease in KIBOR rate from 12.18% to 12.12% & decrease in short term borrowing from 120 M to 37 M.
There is an increase of 56.20% in the current asset from the previous year. From 867 M to 1354M. There are so many factors for this growth. Some of them are. Trade debts Stock-in-trade Loans & deposits.
Trade debts;
Trade debts increased from 7.23% to 11.26%. Sales include export & local sales. There is a increase in export sales which result in higher trade debts from 4.71% to 10%. But there is a huge decline in the local sales (40% to 33%). Which result in decline of local debts & the other reason of increased in bad debts by 0.93%.
Stock-in-trade;
2010 2009 72.29% 27.72% 4.97%
The contribution of each type of inventory on the total inventory is Raw material Finished goods Stores spares & loose tools
.
2.78%)
There is a minor change in shape of decrease with respect to T.ASSET from (3.70% to Reasons for this Advances to employees is eliminated Advances to supplier are reduced.
Fixed Assets
In the previous year the company record the changes decreased by 50 M (679 M to 629 M) in the fixed asset in the shape of deprecation & purchased of new Asset worth; Plant & machinery 8.4 M
Current Liabilities
The major components of current liabilities in the Short-term borrowings, Current maturities of long term debts, Trade payables.
In the last year there was no long term borrowing by the company & in this year it increased by 1000 M. The company received the loan of Rs 1000 M from the N.B.P to finance the BMR of the company which is payable in 4 equal installment of Rs 250 M quarterly. This increased due to the requirement of working capital as the company achieved the 99..73% of spinning & 61.74% of knitting capacity.
Creditors/ Account payable decreased by 27 M in the previous year there can be many reasons for this Higher opening inventory
Other current liabilities includes markup accrued on short term borrowings and long term finances for 38 M.
Running finance almost remains the same as in the previous year. But there is a huge increase in Export finance & import bills from 316 M to 520 M
In the last year there was no long term borrowing by the company & in this year it increased by 1000 M. The company received the loan of Rs 1000 M from the N.B.P to finance the BMR of the company which is payable in 4 equal installment of Rs 250 M quarterly.
Deferred taxation
The tax liability increase from 44 M to 62 M due to the income for the year but there was a loss in the last year
Net Worth
The net worth of the company increase due to the net income & change of equity as 83% increase from 735 M to 1351 M.
All above are good sign for the company to be successful in the future.
But there are certain other things on which the company has to control. Increasing Trade Debts Increasing inventory in the shape of finished goods means the company is not efficient to sell his inventory in time. It is not the thing that on which side the company goes but the thing is that on which side the industry goes. But the management has to show his maximum effort for the betterment of the company.