Financial Analysis of Nishat Textile Mills Limited

Topics: Financial ratio, Balance sheet, Financial ratios Pages: 73 (13756 words) Published: June 22, 2012
financial interpetation of nishat mills limited

Project on: Nishat Mills Limited

Subject: Analysis Of Financial Statements

Group Members: Abrar Ali

Raja Hamid Kashif

Umer Riaz

Submitted to: Mr. Ahmed Nouman Anees



The Textile Industry:

General market review and future prospects

Worldwide businesses were adversely affected by onset of global economic recession in financial year 2008-2009. There has been some recovery of economies from the recession in financial year 2009-2010; however, its effect is still far from over. Global recession is not the only cause of our concern.Serious internal issues also affected our textile industry quite badly. The high cost of production resulting from higher cotton prices, rising energy costs, increasing prices of imported inputs due to depreciation of Pakistani rupee, double digit inflation and prolonged power cuts are posing serious threats to textile sector. On these fronts the situation is expected to remain volatile in the future.

Nishat mills limited did extremely well during the current financial year and achieved 32.11% growth in total net revenue from the corresponding previous year. Despite all the challenges faced by our textile sector, Nishat achieved this success through full utilization of its production capacity, timely investments, effective business planning, aggressive marketing strategy, strong customer base and diversified product range.

Our textile industry has been going through one of the toughest periods in decades. It has been facing tough challenges but the worse can be expected in the next year when the loss of cotton crop resulting from unprecedented rains and floods in the Country will adversely affect the textile sector. Currently, the impact of this huge natural calamity can not be assessed. All the sectors of our economy in general and the agriculture dependant business such as textile sector in particular will have to face extremely tough challenges including but not limited to raw material shortages causing prices of supplies to increase, higher cost of imported raw material, expected devaluation of Rupee and higher inflation.In this need of hour, the Government is required to introduce very effective measures to protect our export businesses of which textile sector is the biggest contributor.

Besides the disastrous effect of floods in the future, we foresee more challenges which include tough competition from neighboring countries and continuing trend of slower sales of textile products in US and European markets. As evident from our excellent results in the current year we are keeping close eye on market situation and taking proactive measures to mitigate the impact of emerging challenges. As a part of our future marketing strategy we are exploring new avenues and particularly focusing on developing 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 consistent growth of business throughout the year. We are actively analyzing the market situation and damage to the cotton crop caused by the floods in the country and hopeful that we will be able to develop an effective strategy to ensure ample supply of cotton and other resources at minimum costs possible.

Our strength lies in our strategic planning and marketing capabilities along with our vertically integrated production facilities that can turn raw cotton to a final finished consumer product that always attract attention of customers all over the world. Our intentions are much focused to add further value added products and systems and to further diversify our product range.

Textiles Exports from Pakistan

Textiles constitute a major exporting sector for Pakistan, which accounts for about 60%of the country’s total foreign exchange earnings. The major...
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