1.

THE CRESCENT TEXTILE MILLS

LIMITED
INDUSTRY REVIEW
Dismal year for textile industry on bleak export performance -
The downtrend of textile exports continued throughout the year
and total drop in FY 16 exports was 7.7% to US$12.50 billion.
Multiple factors including lower cotton crop, high input cost,
slow yarn demand from China and slump in commodity prices
rounded off the disappointing year for industry. It had a
troublesome year with global economic slowdown affecting
demand, high tariff and shortage of energy causing cost
escalation and halts in production and problem in liquidity
because of blockade of tax refunds and rebates. Local cotton
prices rose 19% as compared to 3% increase in international
prices on account of shortage of crop. In overall weak backdrop
exports of non value added segments was significantly low as
against value added which held up ground and witnessed 2%
decline.
Performance of spinning segment was abysmal as yarn prices
weakened more than realized prices of cotton which squeezed its
spreads and resultantly the drop in both of its volumes and unit
prices was significant.

VISION AND CORE VALUES

VISION
To be the preferred choice of customers through innovative
products and solutions and be a leading contributor to the
economy by enhancing value for stakeholders.
CORE VALUES
Our core values are at the heart of our business because they
define who we are, how we work, what we believe in a what we
stand for. Our core values set out how we act and how we expect
to be treated as part of The Crescent Textile Mills Limited.

FINANCIAL PERFORMANCE
Comparison of the financial performance of company with
previous year is as below:

FY 16 FY 15

10,578. 11,778.
Sales 81 82
1,340.1 1,457.0
GP 7 9
Operating 942.81 944.99
costs 6 5
Finance 360.00 428.51
cost 6 5
Operating
profit 37.35 83.579
Other 376.30 249.27
income 5 2
Reversal of
CBL's
profit (net) -66.98 25.521
138.07
Taxation 96.132 2
 250.54
NPAT 3 220.3
EPS (Rs) 3.57 3.89

Net sales revenues of the company during year were down by

10.19% over Same Period of Last Year (SPLY) mainly due to
lower yarn sales by Rs.1, 045.246 million (declined by 23.35%
over SPLY). Similarly cost of sales was down by 10.49% over
SPLY and company was able to earn improved gross margins by
0.30% on comparative basis. This was attributable mainly due to
decrease in fuel and power cost (down by 21.79%) along with
some decline in material costs.

2. KOHINOOR TEXTILE MILLS

Kohinoor Mills Limiteds vision is to achieve and then remain as
the most progressive and profitable textile organization in
Pakistan. Incorporated in 1987 as a small weaving mill, today
Kohinoor Mills broadly undertakes three major businesses,
weaving, dyeing and power generation. It has, and continues to
develop, a portfolio of businesses that are major players within
their respective industries. Bringing together outstanding
knowledge of customer needs with leading edge technology
platforms your Company undertakes to provide superior
products to its customers.
With an annual turnover of over Rs. 8.5 billion, today Kohinoor
Mills Limited employs about 1,700 employees. It aims to create
superior value for Kohinoors customers and stakeholders
without compromising its commitment to safety, environment
and health for the communities in which it operates. Its products
range is from greige fabric to processed fabric.

Textile Industry Outlook

The continuing slide in the overall exports, both in value and
quantity terms, is an alarming sign for the countrys economy.
Although, reduction in import bills due to reduced oil prices
have partially offset huge negative impact on the aggregate
balance of trade, but the Government has failed to take on
serious steps to curb its repercussions on macro- economic
situation. The total textile exports for FY
2015-16 stands at US$ 12.7 Billion, the lowest level since FY
2009-10.
Earnest steps are needed from the Government to reverse this
negative trend. Reducing the ERF rate, zero rating of sales tax
and assured supply of RLNG are some of the encouraging recent
steps.
Nonetheless, much more needs to be done by the Government to
enhance exports of textiles and clothing sector.

Operating & Financial Results

During the financial year ended June 30, 2016, your company
earned a gross profit of Rs. 1,393 million on sales of Rs. 8,551
million compared to gross profit of Rs. 1,299 million on sales of
Rs. 7,906 million for the previous financial year 2014-15.
During FY 2015-16, your company recorded a net profit of Rs.
119 million (EPS: Rs. 2.33 per share), compared to net profit of
Rs. 123 million (EPS: Rs. 2.42 per share) in the previous
financial year. Net profit for the FY 2015-16 includes net
notional interest expense of Rs. 242 million as per IAS: 39, due
to restructuring of financial liabilities of the company in an
earlier period and conversion of some of the facilities to SBP
ERF scheme to benefit from lower mark-up rates, compared to
expense of Rs. 135 million recognized in FY 2014-15. Had there
been no such notional adjustment, net profit for FY 2015-16
would have been Rs. 360 million (EPS: Rs. 7.08 per share) and
net profit of Rs. 258 million for FY 2014-15 (EPS: Rs. 5.07 per
share).
Better capacity utilization, continued savings in fuel and power
costs resulted in some improvement in the overall operating
performance of the company.

Dividend
Owing to significant principal and deferred markup payments to
banks, your directors have regrettably decided to omit dividend
this year.

3. NISHAT TEXTILE MILLS

Balance Sheet
Assets
Non-Current Assets
A vertical review of the non-current assets for the last six years
shows that share of non-current assets has increased from
65.90% in financial year 2011 to 75.75% mainly on account of
regular long term investments and continuous additions in
property plant and equipments. The portion of long term
investments to total assets has increased from 39.45% to 51.97%
during the same period.
Current Assets
The ratio of current assets to total assets has also decreased
gradually from 34.10% to 24.25% over the last six years as a
result of efficient financial management of the company whose
focus is to reduce stocks level and decrease accounts
receivables.
Equity & Liabilities
Equity
During the last six years, share of equity has increased from
65.44% in the financial year 2011 to 77.07% in the financial
year 2016 due to increase in profitability and fair value reserves
on investments.
Liabilities
Both the non-current and current liabilities have decreased
during the last six year in relation to equity due to continuous
improvement in profitability.
Profit and Loss
Cost of Sales
Cost of sales as a percentage of sales has decreased by 1.24% as
compared to financial year 2015. Reason for decrease in this
percentage is attributable to the use of optimal fuel and power
mix and better cost control.
Distribution Expenses
Distribution expenses as a percentage of sales has been at a
lowest level in current financial year as compared to preceding
five financial years. Distribution expenses of the company have
remained consistent during the last six financial years i.e.
between 4.45% to 5.69%.
Administrative expenses
Increase in administrative expenses is consistent during the last
six years. The increase is due to the inflation impact and
expansion in operations of the company during last six financial
years.
Other Income
Other income as a percentage of sales has increased
considerably during the last six financial years. This is due to
optimum utilization of surplus funds of the Company by
investing in lucrative and diversified investment portfolio which
is the source of regular dividend income and capital gain.
Profit after Tax
Profit after tax as a percentage of sales for the current financial
year (10.26%) was at second highest level as compared to last
six years. The highest profit percentage of 11.15% was achieved
in financial year 2013. Increase in profit after tax is mainly due
to the decrease in fuel and power expenses and financial cost
along with increase in other income.