“State Bank of Pakistan made this stunning disclosure in its third quarterly report at a time when the entire industry, including textile, is facing a recession due to global crisis and energy shortages in the country…SBP said the independent power supply arrangements by almost all large textile firms are resulting in efficient cost management during countrywide power supply shortages. Out of the country’s five largest textile companies, Nishat Mills and Azgard Nine Limited earned 10pc return on equity (ROE) in Oct- Dec 2008, while Gul Ahmed Textiles and Colony Mills, earned two and fourpc ROE respectively. Only Kohinoor Mills’ were doing badly in this period, with all their spinning, weaving and composite units registering losses, despite having a power plant facility…The earnings before interest and tax (EBIT) margin of the textile sector in HI-FY09 was 13.0pc compared to 9.5pc in HI-FY 08, indicating higher earnings per unit of sale. On this scale, textile composite sector was the best performer with 15.6pc EBIT margin while weaving and spinning reported a margin of around 7.8pc…These results seem more impressive given a 100pc rise in financial costs during HI-FY09, over the same period last year. While textile composite and weaving sectors have managed to still come up with 61 and 43pc increase in net profits, respectively, the spinning sector has taken a blow, with the losses of 31 spinning mils amounting to Rs 783m against Rs 343m profits earned last year…It may be noted here that this data is only representative of large registered companies, while big companies have apparently found ways to get through the power crisis and are now dealing with their financial costs. .
Date:6/7/2009
Source:The Nation