Complete Report I.T

8/3/2019 Complete Report I.T

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University of central Punjab

UNIVERSITY OF CENTRALPUNJAB

Company:

Nishat Textile Limited.Product:

Nishat Production Analysis.Submitted To:

PROF. AZFAR ALI.

Submitted By:

Ali Murtaza Qureshi (L1F10MBAM0094)

Malik Kashif (L1F10MBAM2113)

Arslan Javed (L1F10MBAM0106)

M. Saleem (L1F10MBAM2200)

Ahmad Noman (L1S10MBAM2185)

Section:

M

Submission Date:

7 June , 2011


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ACKNOWLEDGEMENTS

We feel very lucky that ALLAH give us a chance to

show our abilities in the field of reporting .After

ALLAH we are thankful to our kind Prof. Azfar Ali

for helping us to make this report. He guided us very

sincerely for the completion of this report.

We are also very much thankful to Mr.Badar-ul-

Hassan (Chief Financial Officer) for giving us their

precious time, very useful advices and information for

the completion of this report. We worked very hard for

completion of this report and finally by the Grace ofGOD we have been able to complete our report on

NISHAT TEXTILES LIMITED.


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MISSION STATEMENT:

To provide quality products to customers and explore new marketsto promote and expand sales of the company through good governance

and foster a sound and dynamic team, so as to achieve optimim pice of

product of the company for sustainable and equitable growth and

prosperity of the company.

Vision Statement of Nishat Textiles Limited:

To transform the company into a modern and dynamic

yarn, cloth and processed cloth and finished products

manufacturing company that is fully equipped to play a

meaningful role on sustainable basis in the economy of

Pakistan.

To transform the company into modern and dynamic

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


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History of Company:

NISHAT MILLS LIMITED (NML) commenced business in 1951 as apartnership concern, which was converted into private limited company in 1959.In 1961, the company went public and was lis ted on the Karachi stockexchange, the only stock exchange in the country at that time.NML started out as a weaving unit with 500 semi-automatic looms; later10000spindles were added, laying the foundation on nations biggest textiles

composite project. Composite project at Nishat mills limited Faisalabad covering 98acre of land is providing all production process under one roof i.e.

spinning, weaving, processing, stitching and power generation.

The Founder

A man of vision, courage and integrity, Mohammad Yahiya was born in 1918 inChinio t . In 1947 when he was running a l ea ther bus iness inCalcut t a , he witnessed the momentous that swept the indo-Pak sub-continentand resulted in t he emergence of Pakistan. Like many of his contemporaries, he alsomigrated to the new country to help es tablish its industria l base. His is astory of success through sheer hard work and an undaunted spirit of

enterprise. Beginning with a cotton export house, he soon branched out intoginning, cotton and jute textiles, chemicals and insurance. He was electedChairman of All Pakistan textile Mills Association (APTMA), the prime textilebody in the country. He died in 1969, at the age of 51 having achieved so muchsuccess in so short period.

The Chairman

Today Main Mohammad Mansha, the chairman of Nishat Group, like his father,

continues the spirit of entrepreneurship and has led the group to become a multidimensional corporation, with wide ranging interests.Nishat has grown from a cotton export house into the premier business groupof the country with 5 listed companies, concentrating on 5 core business,Textiles, Cement, Banking, and Power Generation & Insurance companies.Today, Nishat is considered to be a part with multinationals operatinglocally in terms of its quality products and management skills.Firmly believing in Growth through Professional Management the

corporate culture of NML is based on decentralization, delegation of authority,

encouraging the acceptance of responsibility and inculcating quality consciousness.


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COMPANY INFORMATION

BOARD OF DIRECTORS:

Main Umer Mansha (Chairman/ Chief Executive Officer)

Mian Hassan Mansha

Mr. Khalid Qadeer Qureshi

Mr. Muhammad Azam

Mr. Muhammad Ali Zeb

Mr. Syed Zahid Hussain

Ms. Nabiha Shahnawaz Cheema

AUDIT COMMITTEE:

Mr. Khalid Qadeer Qureshi (Chairman/ Member) Mr. Muhammad Azam (Member)

Ms. Nabiha Shahnawaz Cheema (Member)

CHIEF FINANCIAL OFFICER:

Mr. Badar-Ul-Hassan

COMPANY SECRETARY:

Mr. Khalid Mehmood ChohanAUDITORS:

Riaz Ahmad & Company (Chartered Accountants)

LEGAL ADVISOR:

Mr. M Aurangzeb Khan, Advocate, Chamber No 6, District CourtFaisalabad.


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BANKERS OF THE COMPANY:

Albarka Islamic Bank

Allied Bank Limited

Askari Bank Limited

Bank Alfalah Limited

Barclays Bank PLC

Bank Islamic Pakistan Limited

Citibank N.A

Deutsche Bank

Faysal Bank Limited

Habib Bank Limited

Habib Metropolitan Bank

HSBC Bank Middle East

JS Bank Limited KASB Bank Limited

Meezan Bank Limited

National Bank Limited

NIB Bank Limited

Pakistan Kuwait Investment Company Limited

Samba Bank Limited

Saudi Pak Industrial & Agricultural Investment Company

Silk Bank

Standard Chartered Bank (Pakistan) Limited

The Royal Bank of Scotland

United Bank Limited


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NISHAT TEXTILES (LTD.)

The Textile Industry:

Over the years, Pakistan is said to be the single crop economy i.e. cotton and textile thatclaims the lion's share in terms of the contribution in the national economy of Pakistan.

Despite efforts to bring in diversification in country's overall economic get-up the textilesector continues to be the most important segment of the national economy. Its share in theeconomy, in terms of GDP, exports, employment, foreign exchange earnings, investment and

revenue generation altogether placed the textile industry as the single largest determinant ofthe economic growth of the country.

Despite harsh and hard international economic conditions, Pakistan's textile industry hasweathered the storm by coming out of the international crisis in a very positive manner.

During the year exports were controlled from falling and significant investment was made invalue-added expansion and in Balancing-Modernization- Replacement (BMR).

Besides fall out of the events of September 11, the implementation of WTO's agreement,

various bilateral agreements have been signed and implemented.

As a result global scenario has changed. Government and the corporate textile sector adjustedtheir policies to achieve maximum benefits of free trade. So, local structure of the corporateculture, investment pattern and fiscal and monetary policies were significantly changed.

IMPORTS textile machinery:

Import of textile machinery and equipment has picked up since 1997-98 when a bumpercotton crop was harvested and the Textile Industry reaped massive profits due to lower inputcost. In the last five years more than Rs9 billion have been invested for the import of spinning

machinery. Nishat is one of the major customers in terms of importing Textile Machineryfrom almost all developed countries.

It is expected that an additional Rs10 billion would be required for Balancing, Modernizationand Replacement (BMR) in the spinning sector during the next three years for producingsuperior quality yarn besides several units are in various stages of installation in Karachi also.

These facilities would improve value-addition in fabrics, besides increasing the volume offabrics and quality garments exports from the country.

Textile is the only sector where investment has been substantial and regular during past threeyears. The most encouraging factor of this investment is diversity.


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University of central PunjabThe entrepreneurs, who earlier concentrated on Spinning and Weaving, have now establishedcompact units adding state-of-the-art finishing units and knitting machines to add value totheir products. The latest addition to this is the setting up of denim cloth producing units.

At present, the export competitiveness of the textile industry can be improved by aggressive

marketing techniques and quality improvements which have to be taken care of micro-levelthat is each textile unit should make its own independent efforts to sell its products indifferent international markets.

All the individual textile units should implement the ISO 9001 program for quality standardand ISO 14000 for environmental standards to counter the threat of globalization.

EXPORTS of Textile:

Despite sluggish trends in the international markets, exports of textile manufactures increased

from $5.75 billion in 2000-2001 to $5.8 billion in 2001-02. The encouraging factor was theincrease in the exports of value-added items. The share of value-added products in totaltextile exports from Pakistan this year was 57.13 per cent as compared to 54 per cent lastyear.

Cotton cloth export also increased to $1.13 billion during this period as compared to $1.03billion in 2000-01, indicating an increase of 9.7 per cent. The exports of bed-wear fetched$918 million against $745 million; showing growth of 23 per cent, while towels exportsincreased by 12 per cent to $270 million against 242 million.

Readymade Garments improved by 7 per cent to $882 million from$827 million, whereas

Made-up articles increased by 6 per cent to $351 million as compared to $331 million.

The exports of five sub-groups i.e. Cotton Yarn, knitwear, Tents, Canvas/Tarpaulin, Art,Silk/Synthetic Textile and other manufactures declined during the period. Cotton yarn, whichearned $1.1 billion during 2000-2001, earned $ $911 million.

The textile quota exports to the United States, European Union, Canada and Turkey grew byover 18 per cent with nominal increase in value during the first seven months of the calendaryear 2002 compared to the same period last year.

The highest amount of increase of 55 per cent in quota exports followed by US 29 per cent

and EU 12 per cent. Exports to Canada declined by 21 per cent in quantity.

In terms of value, exports grew by 30 per cent to Turkey and 13 per cent to the EU. Exportsdeclined in case of Canada by 29 per cent and 9 per for the US. The total exports to the USwere 420 million square meters worth $481 million; European Union imported 1058-millionsquare meter worth $509 million. Canada imported 16 million square meters worth $18million and Turkey, 101 million square meters worth $28 million.

The average unit price of Pakistan's textile quota exports dropped considerably i.e. 30 percent in case of US, 9.6 per cent for the EU and 16 per cent in case of Turkey. The onlyincrease 0.21 per cent was recorded in average unit price of exports to EU. The WTOagreement provides for making textile trade completely free from 2005.


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University of central PunjabThe textile export figures for the first ten months of the current year released by the ExportPromotion Bureau revealed that the textile quota exports to the US improved by 24 per centwhile the increase in exports to EU countries at the end of October 2002 registered anincrease of 16.6 per cent in terms of value and 13 per cent in terms of quantity.

CHALLENGE:

To get maximum benefit from quota free regime, all out efforts are needed to boost textileexports and increase access to the international markets. To boost the exports, the State Bankof Pakistan has introduced three facilitating schemes for the exporters namely, ForeignCurrency Export Financing Scheme (FCEFS), Political Risk Guarantee Scheme (PRGS) andthe Export Guarantee Scheme (EGS). The bank would provide 210 days credit facility toexporters for South America as compared to 120 days credit facility to other markets.

Quality Policy:

We work together as a team for implementation and continual improvement oftotal quality system in order to achieve satisfaction of our internal and external

customers.

Textile Vision 2006:

An open market driven, innovative & dynamic Textile Sector which is:-

Internationally Integrated.

Globally Competitive

Fully equipped to exploit the opportunities created by the MFA Phase out and thisenables Pakistan to be amongst the Top Five Textile Exporting Countries not only inAsia all over the world with the tremendous Textile companies

Low Road Scenario represented a situation where only the historic export growth rates intextile sub-sectors were maintained. The overall average export growth for the textile sectorafter analysis was finalized at 6% per annum.

Do-AbleScenario envisaged increase in unit price realization of yarn, fabric, textile made-ups and garments with an attempt to maintain the market share in each individual market. Italso suggested penetration in the non-quota markets along with increased share of syntheticand blended yarns, fabrics and garments. The overall export growth in this scenario wasestimated at 12% per annum.

High Road Scenariothe most ambitious of the scenarios that not only adopted the apparelsector as the engine of textile export growth but also recommended diversification in

products that hold greatest potential but unfortunately have been neglected e.g. wovengarments, sportswear, specialized industrial garments, and women wear. Besides broadening


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University of central Punjabof export product portfolio with extra push in synthetic and man-made fibers, fabrics andgarments,

NISHAT GROUP OF COMPANIES:

NISHAT MILLS LTD, FAISALABAD

NISHAT DYEING AND FINISHING, LAHORE

NISHAT FABRICS, BHIKHI

NISHAT SPINNING, FEROZE WATTOAN

NISHAT SEWING, LAHORE

PRODUCT LINE :

Products line of Nishat mills limited consists of following items,

BEDDING

Sheet sets

Quilt cover sets

Bed spreads

Comforters

Bed skirts

Oxford pillow cases

Blanket covers

Sleeping bags


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CURTAINS & ACCESSORIES

Embroidered curtains

Pencil pleat tape curtains

Pinch pleat lined & unlined curtains

Tab top & rod pocket curtains

Assorted pelmets and window dressings

Oxford cushion covers

Frilled and piped cushion covers

Frilled, piped and pleated tie backs

TABLE, FURNITURE & KITCHEN ACCESSORIES

Tea cozy

Table mats

Table cloth and napkins

Aprons

Kitchen gloves

Pot holders

Chair pads with circle tacks

Couch cove


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TEXTILE CAPACITY:

Production process consists of spinning, weaving, processing, and finishing. The processing

includes dyeing, engraving. The textile capacity of the group is the largest in the country. Anaddition of 20000 new spindles, 100 new air jets looms and new dyeing plant has increasedthe existing capacity of 24000 spindles, 740 looms and dyeing and finishing capacity of 5million meters. The group is the largest exporter of textile products from Pakistan for morethan a decade.

Export Oriented Organization

Nishat mills limited is an export oriented organization. Nishat mills limited exports more than90% of its products mainly to the Far East, Europe and United States.

D.G khan Cement Company limited

In 1992, Nishat group acquired D.G Khan Cement Company LIMITED from the governmentof Pakistan. DGKCC is the second largest project of the group and is ideally located in theheart of the Pakistan. DGKCC Unit No I has a capacity of 2,200 tons per day, a new unithaving the capacity of 3,300 ton was established in 1997, international Finance Corporationand Common Wealth Development Corporation have finance this unit. With addition of unitNO 2, DGKCC has become the largest manufacture cement of Pakistan.

Muslim commercial bank

In 1991, Nishat Group ventured into the financial sector through the acquisition of MuslimCommercial Bank. MCB has the grown ever since and is now the largest in the private sector.MCB has a network of over 1500 branches employing over 12,000 people.

Management of Nishat Mills Limited

Nishat Mills Limited employees are highly qualified professionals and have a young,energetic and dedicated team of professionals who have a lot of knowledge to their credit.

Managers are responsible for the task assigned to them in their departments and also have to

match whether their respective department is achieving the desired efficiency level or not.

There are at least three basic requirements for a successful company and the managers ofNishat Mill Limited are made to think on these lines:

1. It must provide a product (good or service) that suits best to thecompanys capabilities and for which there is a sufficient market.


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University of central Punjab2. It must provide the product with consistent quality at a level thatappeals to intended customers and satisfy their needs.

3. It must provide a product at a cost that always an adequate profit anda reasonable sale price.

INTERNATIONAL STANDARD OF ORGANIZATION (ISO)

Nishat mills limited have achieved ISO 9001 and ISO 9002 certificate in 1997. In order toachieve this certificate following requirements should be fulfilled,

(1) MANAGEMENT RESPONSIBILITIES

Management responsibilities includes the following,

i. Quality policy

According to the ISO 9001 and ISO 9002, it is utmost responsibility of management to devisepolicies that provide quality products to customers. Nishat is working hard to ensure that theyproduce quality products.

ii. Customer expectation

It is essential that customer expectation should be fulfilled. It is the responsibility ofmanagement to do so. Since Nishat is an export-oriented organization so utmost attention is

paid to meet customers need and requirements.

iii. Resource management

Utilization of resources play crucial role in the success or failure of organization. If resourcesare effectively utilized, they become cause of success for organization. Nishat is effectivelyusing its resources and thus has achieved ISO 9001 and ISO 9002. In the financial year of1999-00, it declared dividend of 26%, which is highest so far. This performance shows thatNishat mills limited have sky-high goals. Human resource management also exists. Theyhave ensured that, right man is placed at right job and also at the right time. Various trainingprograms are offered for upgrading the skills of staff.

iv. Responsibility and authority

Nishat is fairly decentralized organization. Middle level management makes most ofdecisions and matters are decided in a friendly environment. Nishat cares a lot for its staff.Orders are not dictated but they are made with effective participation from staff.

v. Management representatives

Nishat governing body is highly talented. Board of directors include professional of great

repute. They are committed toward achieving a good name for Nishat mills limited.


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General market review and future prospects

Worldwide businesses were adversely affected by onset of global economicrecession in financial year 2008-2009. There has been some recovery ofeconomies from the recession in financial year 2009-2010; however, its effect isstill far from over. Global recession is not the only cause of our concern.Serious internal issues also affected our textile industry quite badly. The highcost of production resulting from higher cotton prices, rising energy costs,increasing prices of imported inputs due to depreciationof Pakistani rupee, double digit inflation and prolonged power cuts are posing

serious threats to textile sector. On these fronts the situation is expected toremain volatile in the future.Our company did extremely well during the current financial year and achieved32.11% growth in total net revenue from the corresponding previous year.Despite all the challenges faced by our textileSector, Nishat achieved this success through full utilization of its productioncapacity, timely investments, effective business planning, aggressive marketingstrategy, strong customer base and diversified productRange.

Our textile industry has been going through one of the toughest periods indecades. It has been facing tough challenges but the worse can be expected inthe next year when the loss of cotton crop resultingfrom unprecedented rains and floods in the Country will adversely affect thetextile sector. Currently, the impact of this huge natural calamity cannot beassessed. All the sectors of our economy in generaland the agriculture dependant business such as textile sector in particular willhave to face extremely tough challenges including but not limited to rawmaterial shortages causing prices of supplies to

increase, higher cost of imported raw material, expected devaluation of Rupeeand higher inflation.In this need of hour, the Government is required to introduce very effectivemeasures to protect our export businesses of which textile sector is the biggestcontributor. Besides the disastrous effect of floods in the future, we foreseemore challenges which include toughcompetition from neighboring countries and continuing trend of slower sales oftextile products in US and European markets. As evident from our excellentresults in the current year we are keeping close


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University of central Punjabeye on market situation and taking proactive measures to mitigate the impact ofemerging challenges. As a part of our future marketing strategy we areexploring new avenues and particularly focusing ondeveloping work wear business. We believe that addition of this business will

enable us to fill our capacities in the lean months and will result in consistentgrowth of business throughout the year. We are actively analyzing the marketsituation and damage to the cotton crop caused by the floods in thecountry and hopeful that we will be able to develop an effective strategy toensure ample supply of cotton and other resources at minimum costs possible.Our strength lies in our strategic planning and marketing capabilities along withour vertically integrated production facilities that can turn raw cotton to a finalfinished consumer product that always attract attention of customers all over theworld. Our intentions are much focused to add further value addedproducts and systems and to further diversify our product range.

Spinning

In financial year 2009-2010, cotton prices have significantly increased owingmainly to reduction in cotton imports, reduced cotton crop of China andincreasing demand of cotton yarn in the Far East. China has appeared as themajor importer of cotton. Consequently, cotton prices had increased by 75%by the end of the current year. This increase in cotton prices caused significant

increase in yarn prices and resulted in higher sales for spinning business and anincrease in margins. Increased cotton prices, prolonged power shortages, highborrowing rates and high rate of inflation have forced a number ofspinners to close down the business. In third quarter of the current year theGovernment of Pakistans measure to control the cotton yarn prices in thedomestic market through restrictions on export of yarn such as imposition ofquantitative quota and regulatory duty on cotton yarn export further affected thespinning business. Despite all these challenges, overall increase in demand ofcotton yarn and higher selling prices increased the profitability for spinners.

Our spinning business in Nishat has successfully overcome all these challengesand has shown positive growth through close monitoring of the market situationand with timely measures. We achieved growth in our sale quantities as well assale prices and increased our profitability with timely investmentin cotton to stabilize fluctuations in the cotton prices. In the current year ourlocal cotton purchase price was Rs 4,016 per maund and imported cottonpurchase price was Rs. 6,004 per maund.Furthermore, continuous diminution in Pak Rupee, increasing demand of cottonyarn, slight improvement in global economic scenario favorably supported

export of cotton yarn. Furthermore, during the current financial year Nishat hasupgraded its spinning machinery with erection


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University of central Punjabof most modern and efficient Ring Frames and Cone Winding machines in twospinning units and replacement of similar machines of other units to helpincrease automation, reduce labor cost and produce better quality yarn. Theinstallation of our Yarn Dyeing facility of 7 Tons / day is in progress

This is expected to start operating from July 2010.

Weaving

Financial year 2009-2010 was a very turbulent year for our weaving business.Sharp increase in cotton prices, high volatility in yarn prices together withcontinued effects of global economic recession started during the previous yearmade the current year extremely challenging. We did extremely well inachieving 9.27% increase in our sales over the previous year through our widerange of customers and specialized products. We managed to increaseour work wear and military uniform business together with increasing theabrasive fabric business mainly due to revival of the car industry, however,fashion business is still slow owing to immense pressure on prices. However,sharp increase in cotton and yarn prices and pressure on selling prices in Europeand America has squeezed our profit margins since this sharp rise in cotton andyarn prices could not be fully passed on to our customers. It has been verydifficult for us to get appropriate price increase particularly from the customersin Europe.In the next year timing of purchase of yarn will be of particular importance as it

was this year. A drop and more stability in cotton and yarn prices next year willconsequently decrease our selling prices but result in better margins for us. Ourcustomers are currently wary of volatility in cotton and yarn prices and thus arecareful of placing orders in advance. However, overall sentiment amongcustomers is positive for the coming year and we will continue focusing on ourexcellent customer relationships. Recently we have installed 50 new state of theart Toyota air jet looms to expand our productioncapacity at one of our units. Focus on reducing our production costs throughbetter production facilities, effective strategy for yarn purchases and new

products and niche marketing are keys to success goingforward.


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University of central PunjabProcessing and Home Textile

During the current financial year the markets had been very volatile owing to

impact of continued global economic recession, significant increase incotton, yarn and grey fabric prices and lower demand in international marketsthat had resulted in negative impacts on processing and home textile businessalso. However, during the current year, global economicRecession in American and European markets slightly eased out. Despite thesechallenges, Nishat has once again proved its ability to survive in the difficulttimes and it has achieved growth of 25.76% in sales volumes, however, with thesignificant increase in prices of our raw material we could only maintainour profitability levels of the previous year. Our proactive marketing approach,strong relationship with customers, large production facilities, own powergeneration facilities, ability to utilize alternativeenergy sources and vertical integration of entire textile process made thispossible for us. Furthermore, some more businesses were developed by us thatimproved our exports. In particular Turkish and Spanish markets and newcustomers like Angora, Next, Kohl, HLL etc have significantlycontributed towards enabling us to utilize our optimum production and stitchingcapacities. We have been able to maintain our position as one of the largestexporters of Pakistans textile industry.We expect that in future there will be more challenges due to tough competition

from neighboring countries and highly volatile cotton, yarn and grey pricesespecially after the damages to cotton crop caused by the floods in our country.In order to cope with these circumstances we are taking allnecessary measures, which include ensuring timely sufficient and cheappurchase of grey cloth, negotiating prices with all customers based on prevailingmarket conditions, focusing on maintaining certain contribution margins andretaining key customers. Furthermore, we have already started focusingon further developing our business in up-market brands over and above theregular mill-runner articles.

Nishat is becoming a stronger player with regard to special fabric supplies toseveral European armed forces that requires extraordinary quality requirementsand consistency throughout the production.Our local retail business of Nishat Linen shops has also expanded during thecurrent year. Moving to the next year, the prices of cotton, yarn and grey willlargely affect the volumes and profitability of ourbusiness. Moreover, we have upgraded our processing plant with the narrowwidth printing machine. One hundred stitching machines were also installedalong with the switch-track system that will enhance the working efficiency

enormously besides the improved product quality. We are further focusing on


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University of central Punjabto improve our production capacities as well as production efficiencies alongwith optimum utilization of human resources. We have also planned installationof a new bleaching plant and increasing our sewing capacity with the purchaseof number of new sewing machines which will help us further enhance our

ability to handle large volumes and on time deliveries.

Garments

Our garments sector has shown tremendous improvement in financial 2009-2010 over the corresponding previous year which is attributable to ourcommitment to provide world class products to our high end customers. Thecurrent financial year started with challenges of high prices of cotton andfrequent electricity and gas shut downs. Our energy bills are much highercompared to the previous years. However, with strong commitment, effectivemanagement planning and better business strategies towards facing thesechallenges we have been successful in achieving excellent results. NishatApparel produces close to half a million garments every month making it one ofthe largest export oriented apparel units of the country under one roof.Professionalism, systematic approach, clear cut future strategies andinvestments in human resource are our hallmarks. This labor intensive projectprovides a great employment opportunity to a large number of households in thearea.Our future strategies include investments in building and machineries, thus

increasing the capacities to well over 600,000 units per month. For this purposewe have already ordered worlds best laundry machines and are in process ofacquiring modernized equipment to add two new production lines. With thesechanges, continuous growth and tremendous customer support, we believeNishat Apparel is now set to show even better results in future. Furthermore,during the current year, we have launched a fully operational productdevelopment department to create a client focused development processthrough research.

Power Generation

Nishat Mills has installed most modern captive power plants at all its sites tokeep running with a low cost power at all the divisions like Spinning, Weaving,Processing and Stitching and Garment units without any failures. Our ownpower generation facility has provided us with a huge competitive edgein the times of frequent power outages. This also played a vital role to maintainan extra ordinary record of timely shipments. The plants are based on natural

gas fired generators which besides generating electricity, efficiently producesteam through exhaust gas and chilling through hot water from engine cooling


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University of central Punjabsystem. This concept utilizes the fuel to the fullest. In order to mitigate thepower crises being faced by the country, Nishat Mills is supplying surpluspower from its different sites to PEPCO distributioncompanies.

POWER

PLANTS

GENERATION

CAPACITY

(MW)

DIESEL/

FURNACE

OIL

ENGINE

GAS

ENGINES

GAS/

STEAM

TURBINES

FAISALABAD 31.38 2 5 -

BHIKKI 14.71 3 4 1

LAHORE 29.17 7 8 4

FEROZEWATWAN 9.7 4 4 -

Information technology

We are fully focused to develop this key resource of the Company in line withthe increasing requirements of the business. During the current year ourInformation Technology Division have concentrated on further extending andupgrading various parts of the IT infrastructure including upgrading computersystems and improving procedures. Our data management group spentsignificant time on introducing new IT systems in various processes as well asupgrading integration of running applications at various locations. We alsointroduced time management system and new costing systems at variouslocations.The network was expanded to new locations including Nishat Linen Shops.Network equipment was sufficiently upgraded and firewalls were replaced.During the year formal IT Policy including Disaster Recovery Plan wasdeveloped which was also approved by the Board of the Directors of theCompany. Our entire IT division continues to work towards improving ITservices and providing the best secure and stable technology environment to theCompany.


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N I S H A T

FINANCIAL STATEMENTS

STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2010

(RUPEES IN THOUSANDS)

Year-2010 Year-2009

SALES 31,535,647 23,870,379

COST OF SALES (25,555,462) (19,518,838)

GROSS PROFIT 5,980,185 4,351,541

DISTRIBUTIONCOST

(1,714,598) (1,315,630)

ADMINISTRATIVEEXPENSES

(545,166) (435,012)

OTHER

OPERATINGEXPENSE

(289,080) (191,608)

(2,548,844) 1,942,250

3,431,341 2,409,291

OTHEROPERATINGINCOME

981,650 599,006

PROFIT FROMOPERATIONS

4,412,991 3,008,297

FINANCE COST (1,126,922) (1,446,796)

PROFIT BEFORETAXATION

3,286,069 1,561,501

PROVISION FORTAXATION

(370,608) (293,500)

PROFIT AFTER

TAXATION

2915461 1,286,001


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University of central PunjabEARNING PERSHARE

10.50 6.23

OTHERCOMPREHENSIVEINCOMESSurplus/deficitarising onremeasurement ofavailable for saleinvestment

6,314,129 (10,191,299)

Reclassificationadjustments forgains included inprofit or loss

(52,118) -

Deffered income taxrelating to surpluson available for saleinvestment.

(1,011,649) 164,138

Othercomprehensive

income/loss for theyear-net of tax

5,250,362 (10,027,161)

Total comprehensiveincome/loss for theyear

8,165,823 (8,759,160)


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FINANCIAL HIGHLIGHTS

(RUPEES IN THOUSANDS)

YEAR-2010 YEAR-2009Profit & LossNet sales 31,535,647 23,870,379Gross profit 5,980,185 4,351,541Profit before tax 3,286,069 1,561,501profit after tax 2,915,461 1,286,001

Cash OutflowsTax paid 343,036 257,289Financial chargespaid

1,096,389 1,458,602

Fixed capitalexpenditure

1,955,703 917,312

Balance SheetCurrent assets 11,732,928 8,294,838Current liabilities 10,568,415 9,602,265Operating fixedassets

11,476,005 11,102,355

Total assets 46,182,314 31,512,686Long term loansand finances

2,980,694 2,334,411

Share holdersequity

31,376,313 19,330,767

Ratios

Current ratio 1.11:1 0.86:1


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University of central PunjabGearing ratio 25.53 34.34Gross profit% 18.96 18.23Net

profit%(beforetax)

10.42 6.54

Earning per share 10.50 6.23Proposeddividend %

25 20

Bonus % - -

ProductionMachinesNo. of spindles 199,502 198,120No. of Sulzarlooms

44 64

No. of Airjetlooms

619 565

No. ofThermosoleDyeing machines 5 5No. of RotaryPrinting machines 3 3

Documents

Complete Report I.T