This Project Documentation and Report is a part of my “Analysis of Financial Statements”, whereby this course has proved to be a great enlightening and embarking experience. I would like to express my gratitude to and I am also extremely grateful to the Instructor; Mr. Shuja Ali Khan who gave me the opportunity to explore my inner capabilities, inner depth bounds of accounting and financial analysis, compilation, documentation and reporting, as well as implementation of academic acquisition of Enhanced Accounting and Financial Reporting Skills in Real Life. I would again express gratitude to him for his guidance and useful support in this project.
Table of Contents| Page No|
Textile Sector - Industry Overview| 4|
Pakistan Textile Industry – SWOT | 9|
Textile Value Chain| 10|
Crescent Textile Mills Limited – Crestex Overview| 27|
Vertical Common - Size Analysis of theFinancial Statements| 34| Horizontal Analysis of the Financial Statements| 61|
Financial Ratio Analysis of the Financial Statements| 69| Future Prospects of Crestex| 81|
Future Outlook of Textile Sector – Industry Stance| 82|
Textile Sector - Industry Overview
The share of textile industry in the economy along with its contribution to exports, employment, foreign exchange earnings, investment and value added makes it the single largest manufacturing sector for Pakistan. It contributes around 8.5 percent to GDP, employs 38 percent of the total manufacturing labor force, and contributes between 60-70 percent to total merchandise exports. Indeed, with exports reaching about $8.6 billion in 2004-05, Pakistan is one of the largest textile exporters in the world.
The variety of products ranges from cotton yarn to knitwear. Garment made-ups and bed wear are the most important export products with an export value of about $1.35 billion each. Knitwear, ready-made garments and cotton yarn also have important shares in total exports. Overall, the US and the EU are Pakistan’s largest trading partners accounting for 25 percent and 20 percent share of Pakistani exports respectively. Other major importers include China, UAE and Saudi Arabia. Textile trade is classified into two broad categories i.e. textile which include yarn, fabric and made-ups, and clothing which represents readymade garments.
Investment in Textile Sector
Textile industry has made an investment of about $6.0 billion during the last six years. This investment includes both investments through bank loans as well as own sources. This investment has been made in the form of BMR expansion and new capacity. Textile machinery worth US$ 0.6 billion has been imported during 2005-06. the import of textile machinery for the last seven years are documented in Table and Sector wise Investment is shown in figure
Table- 3.4 Import of Textile Machinery|
Year| Million US $| % Change|
1999-2000| 210.9| 28.6|
2000-01| 370.2| 75.5|
2001-02| 406.2| 9.9|
2002-03| 531.9| 30.7|
2003-04| 597.9| 12.4|
2004-05| 700| 17|
2005-06 (Jul-Mar)| 654.2| -6.5|
Total| 3472| |
Source: Federal Bureau of Statistics|
Reforms in the Textile Sector
The government is providing support for the local production of textile machinery. A wide ranging campaign to produce contamination free cotton in the country with a view to promoting value addition has already been started. As a result, the cotton prices are now being quoted on a PSCI grade standard basis. To ensure an abundant supply within the country, cotton is allowed to be imported and exported freely. To stabilize prices in the domestic market, the Trading Corporation of Pakistan (TCP) has been intervening as and when required.
In order to prepare the textile industry in the post quota regime the government has set up a high level Federal Textile Board with Textile Commissioner’s Organization serving as its Secretariat. The Board has been entrusted the task of...