Financial statement analysis of

MTM

Presented to:
SIR HAMZA MUKHTAR.
Presented by:
 Muhammad Aamir (2006-ag-3498)
 Zahid Farid (2008-ag-153)
Brief Introduction
Founded 1994

Founder M.Nazir Ahmad

Key people Mr.shahid Nazir &Mr Muhammad Nawaz Tishna

Industry Textile

Products Fabric, yarn,

loungewear,activewear,sleepwear,athletic,sportswear,et
c etc
Registered office West canal road, Faisalabad

Area served World wide

Web site www.masoodtextile.com

 DIVISONS OF MTM

 Spinning
 Knitting
 Fabric Dying Mills MTM Divisions
 Processing
 Laundry
 Cutting

 Stitching
 Finishing Apparel Division
 Packing
 Shipping
 PLANT CAPACITY
Capacity(000) Machines

Spinning: production at normal capacity converted 4762 kgs 91

to 20s count based on 3 shifts per day

Knitting: production at normal capacity converted 19216 kgs 272

to 30s count based on 3 shifts per day

Dyeing/Finishing: production at normal capacity 11880 kgs -

on reactive dyeing basis at 3shifts per day

Garments: production at normal capacity 2253 dzn 3059 including cutting

converted on normal garments capacity based on stitching and other
single shift per day machines
HIERARCHY
 Swot analysis
Strength:
• Vertically integrated.
• High quality products.
• Back Track System.
Weakness:
• Rely on foreign customers.
• Communicational gap among different departments.
Opportunity:
• To Capture Global Market
• Can introduce its own label in domestic as well in international market.
• Full potential of entertaining the local market .

Threats:
• Tough competitors just like China & India.
• Change of government policies
Economy analysis

•Inflation
•Discountrate
•Exchange rates parity
Economy analysis
Inflation

rates and changes in inflation has been studied and compared the
effects in different ways
•effectof such inflation on CGS & Sales price.
•Low product demand customer will move towards other courtiers.
•competitors will improve and grows up.( India man to machine ratio goes
down)
•to cop up the inflation cost quality have to sacrifice.
•Govt. while to control inflation  tightened the monetary policy. by last 3
years.
Exchange rate

 Foreign currency rate plays an important role while the foreign income
converted into national currency
 if any firm or industry is dealing with international market then it has to
face the day to day change in currency rates.
 higher the $ price higher the cost of import of raw material or payment of
foreign debts.
 Today $ price is trading at peak Rs.84.10.(07-12-2009)
Discount rate

 Discount rate has been studied and observed through out the
analysis during different time periods because it has positive
relation with cost of financing
 Effect of discount rates during periods are observed according to
the borrowing in short
Industry analysis
•Textile industry is main source of our export income
•Competition(less competition is observed due to major
sales as exports not local)
•Rules and regulations(effect of yarn export is studied)
•Saturation position market share
•GDP($452.7 billion in 2008) growth and contribution in
GDP(26.8% share of textile industry in GDP)
•Markets shares and trends are observed
GDP growth.
 Textile sector's contribution to total GDP is 8.5%.

Real GDP growth rate

7.00% 6.60%
6.60%
6.00% 6.10%
5.50% 5.30%
5.00%
4.50%
4.00%
3.00% 2.70% GDP
2.00%
1.00%
0.00%
2003

2004
2005
2006

2007
2008

2009
Rules and regulations.

 Govt. to discourage the export of yarn has imposed the 5%

duty
 Due to export cotton/40kg price high Rs.4708(04-12-09)
 rebate on export is 2.5%

 compensation on R&D is 6% to encourage the export.

Competition
•There is very low competition for MTM in Pakistan
although in eastern group as India and somehow
china.
• China has closed its spinning sector (yarn making)&
India is going to close till end2010..
•So they will be new yarn importer customer of
Pakistan
FIRM ANALYSIS
 
Sponsors
Allied bank, MCB, Habib Bank, HB ag Zurich, UBL
PICIC Major sponsor bank is HBL,
Net Worth (2008)=Total assets –Total liabilities
=Rs82,34,421,000-60,38,810,000
=Rs.21,95,611,000
Family based business
Political family background
 BALANCE SHEET 2008 2007 2006
AT 30 JUNE 2006,2007,2008
(RUPEES IN THOUSAND)

EQUITY AND LIABILITY

SHARE CAPITAL AND RESERVES
Authorized capital.
40,000,000 ordinary shares of rupees 10 each 400,000 400,000 400,000
60,000,000 preference shares of rupees 10 each 600,000 600,000 600,000

1,000,000 1,000,000 1,000,000

issued, subscribed and paid up capital 900,000 900,000 900,000

reserves 911,300 695,300 616,469
TOTAL EQUITY 1,811,300 1,595,300 1,516,469

surplus on revaluation of operating fixed assets 379,420 379,420 61,967

deffered income on sale and lease back of operating fixed assets 4,891 5,639 7,700

NON-CURRENT LIABILITIES

Long term financing 1,769,245 265,989 297,933

liabilities against assets subject to finance lease. 219,851 276,138 387,515
deffered liability for gratuity. 107,789 90,180 76,082
2,096,885 632,307 761,350
CURRENT LIABILITIES

Trade and other payable 906,159 674,138 748,578

accrued mark-up 84,911 77,642 64,189
short term finance 2,621,724 3,684,328 2,912,069
current portion of long term liabilities 254,874 220,115 256,596
provision for taxation 74,257 57,243 104,518
3,941,925 4,713,466 4,085,950
total liabilities 3,941,925 4,713,466 4,847,480
CONTINGINCIES AND COMMITMENTS
TOTAL EQUITY AND LIABILITIE 8,234,421 7,326,132 6,433,616
ASSETS

NON CURRENT ASSETS

Property, plant and equipment 3,025,599 2,808,261 2,130,740

long term advances 6,004 6,733 7,466

long term security deposits 16,338 23,918 23,972
3,047,941 2,838,912 2,162,178
CURRENT ASSETS

Stores and spare parts 366,850 286,203 277,923

stock in trade 1,838,707 1,813,977 1,891,260
trade debts 1,933,875 1,611,302 1,414,949
loans and advances 165,391 130,095 115,283
short term deposits and prepayments 166,415 109,201 145,438
other receivables 577,987 460,874 367,351
cash and bank balances 137,255 75,568 59,234
5,186,480 4,487,220 4,271,438
8,234,421 7,326,132 6,433,616
 PROFIT AND LOSS ACCOUNT 2008 2007 2006
FOR THE YEAR ENDEDAT 30 JUNE 2006,2007,2008
(RUPEES IN THOUSAND)

Sales 7,884,785 5,950,366 4,899,190

Cost of Goods Sold 6,428,798 4,963,190 4,000,910
GROSS PROFIT 1,455,987 987,176 898,280

DISTRIBUTION AND SELLING COSTS 348,281 222,101 245,922

ADMINISTRATIVE AND GENERAL EXPENSES 139,577 132,967 123,812
OTHER OPERATING EXPENSES 29,855 31,586 13,766
517,713 600,522 514,780

OTHER OPERATING INCOME 8,700 6,887 2,778

OPERATING PROFIT 946,974 607,409 517,558
FINANCE COST 538,964 416,657 335,266
PROFIT BEFORE TAXATION 408,010 190,752 182,292
PROVISION FOR TAXATION 74,257 57,243 52,329
PROFIT AFTER TAX 333,753 133,509 129,963
Net Worth of the company
Net Worth (2008)=Total assets –Total
liabilities
=Rs82,34,421,000-60,38,810,000
=Rs.21,95,611,000
 ANALYSIS OF BALANCE SHEET ITEMS

BALANCE SHEET INDEX ANALYSIS COMMON SIZE

AT 30 JUNE 2006,2007,2008
(RUPEES IN THOUSAND) 2,008 2,007 2,008 2,007 2,006

EQUITY AND LIABILITY

SHARE CAPITAL AND RESERVES
Authorized capital.
40,000,000 ordinary shares of rupees 10 each 100 100 4.86 5.46 6.22
60,000,000 preference shares of rupees 10 each 100 100 7.29 8.19 9.33

100 100

issued, subscribed and paid up capital 100 100 10.93 12.28 13.99
reserves 131 113 11.07 9.49 9.58
TOTAL EQUITY 114 105 22.00 21.78 23.57

surplus on revaluation of operating fixed assets 100 612 4.61 5.18 0.96
deffered income on sale and lease back of operating fixed assets 87 73 0.06 0.08 0.12

NON-CURRENT LIABILITIES

Long term financing 665 89 21.49 3.63 4.63

liabilities against assets subject to finance lease. 80 71 2.67 3.77 6.02
deffered liability for gratuity. 120 119 1.31 1.23 1.18
332 83 25.46 8.63 11.83
CURRENT LIABILITIES

Trade and other payable 134 90 11.00 9.20 11.64

accrued mark-up 109 121 1.03 1.06 1.00
short term finance 71 127 31.84 50.29 45.26
current portion of long term liabilities 116 86 3.10 3.00 3.99
provision for taxation 130 55 0.90 0.78 1.62
84 115 47.87 64.34 63.51
total liabilities 84 97 47.87 64.34 75.35
CONTINGINCIES AND COMMITMENTS
TOTAL EQUITY AND LIABILITIES 112 114 100.00 100.00 100.00
ASSETS          

         

NON CURRENT ASSETS          

         

Property, plant and equipment 108 132 36.74 38.33 33.12

         

long term advances 89 90 0.07 0.09 0.12

long term security deposits 68 100 0.20 0.33 0.37

107 131 37.01 38.75 33.61

CURRENT ASSETS          

         

Stores and spare parts 128 103 4.46 4.81 4.32

stock in trade 101 96 22.33 24.76 29.40

trade debts 120 114 23.49 21.99 21.99

loans and advances 127 113 2.01 1.78 1.79

short term deposits and prepayments 152 75 2.02 1.49 2.26

other receivables 125 125 7.02 6.29 5.71

cash and bank balances 182 128 1.67 1.03 0.92

116 105 62.99 61.25 66.39

TOTAL ASSETS     100.00 100.00 100.00

 ANALYSIS OF INCOME STATEMENT ITEMS

Sales 132.51 121.46 100.00 100.00 100.00

Cost of Goods Sold 129.53 124.05 81.53 83.41 81.66
GROSS PROFIT 147.49 109.90 18.47 16.59 18.34
         
DISTRIBUTION AND SELLING COSTS 156.81 90.31 4.42 3.73 5.02
ADMINISTRATIVE AND GENERAL EXPENSES 104.97 107.39 1.77 2.23 2.53
OTHER OPERATING EXPENSES 94.52 229.45 0.38 0.53 0.28
86.21 116.66 6.57 10.09 10.51
         
         
         
OTHER OPERATING INCOME 126.32 247.91 0.11 0.12 0.06
OPERATING PROFIT 155.90 117.36 12.01 10.21 10.56
FINANCE COST 129.35 124.28 6.84 7.00 6.84
PROFIT BEFORE TAXATION 213.90 104.64 5.17 3.21 3.72
PROVISION FOR TAXATION 129.72 109.39 0.94 0.96 1.07
PROFIT AFTER TAX 249.99 102.73 4.23 2.24 2.65
EARNING PER SHARE-BASIC 250.11 102.77 0.00 0.00 0.00
DILUTED 278.28 110.91 0.00 0.00 0.00
CASH FLOW STATEMENT
 RANA OLYMP
LIQUID RATIOS TEXTILE
MASOOD AHSAN
IA
Current Ratio RATIO 1.65 3.93 1.36 1.43

Quick Ratio Or Acid Test Ratio RATIO 74. 1.27 59. 69.

LEVERAGE RATIOS

Debt To Total Assets Ratio RATIO 48. 52. 46.

Debt To Equity Ratio RATIO 35.67 83.93 25.61 63.69

ACTIVITY RATIOS

Receivable Turnover Ratio RATIO 2.34 3.92 3.54 3.87

/Receivable Turnover In Days
DAYS 75 63 95 88
)Average Collection Period(
Inventory Turnover Ratio (IT) TIME 3.24 4.24 3.10 2.66

Inventory Turnover In Days (ITD) DAYS 85 96 69 57

COVERAGE RATIOS (Time Interest Earned
RATIO 53.57 93.38 65.78 48.75
Ratio)
PROFITABILITY
PROFITABILITY RATIOS RATIOS
)IN TERM OF SALES( )IN TERM OF SALES(
Gross Profit Margin Age % 2.48 3.31 2.10 2.23

Net Profit Margin Age % 1.28 1.74 1.18 1.63

PROFITABILITY RATIOS
)IN TERM OF INVESTMENT(
Return On Assets Age % 1.75 4.35 1.65 1.69

Return On Equity (ROE) Age % 1.02 1.74 1.36 1.65

 Financial Analysis (Ratios)

Liquidity ratios: 2008 2007 2006

Current ratio=C.A/C.L
1.32 0.95 1.05
Acid test ratio=(C.A-Inventory)/C.L
0.85 0.57 0.58
Sale to working capital ratio=sales/(C.A-C.L)
6.33 -26.3 26.41
cash ratio
0.03 0.02 0.01
Profitability ratios: 2008 2007 2006

Gross profit margin=G.P/Sales*100

18.47 16.59 18.34
Net profit margin=N.P/Sales*100
4.23 2.24 2.65
return on equity
18.43 8.37 8.57
Return on assets=N.P/T.A*100
4.05 1.82 2.02
Activity ratios: 2008 2007 2006

fix assets turnover 2.60 2.09 2.26

Total assets turnover 0.95 0.82 0.77

Account receivable turnover 3.80 3.08 2.74

A\R turnover in days 94.4 116.8 131.4

Inventory turnover 3.52 2.67 2.15

Inventory turnover in days 102.27 134.83 167.26