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By SHABBIR H. KAZMI
Updated Mar 12, 2001

The market remained under pressure due to selling by foreign funds. One may not get worried by this for two reasons: this was in line with the declines witnessed in many other markets and that selling was absorbed to a large extent by the local investors. However, it must be kept in mind by foreign fund managers that most of their portfolio is immune to the impact of recession in the USA and Europe. While the selling pressure may continue in the coming weeks the prices are very attractive. There is also a piece of advice for local brokers that they should not get panicky about implementation of T+3 trading regime. As the probability of volatility reduces and prices stabilize active participation by smaller investors is expected to increase. With the introduction of T+3 regime the activities of 'market manipulators' will be curbed to a large extent.

COLONY TEXTILE MILLS

The Company seems to have witnessed a windfall profit of Rs 138 million from operations for the year ending September 30, 2000. This was the result of a colossal improvement in sales from Rs 395 million for the previous year to Rs 683 million for the year 2000. This enabled the Company to reduce its accumulated loss from Rs 159 million at the beginning of year to Rs 11 million at the end of accounting year. Although, the Company did not declare any dividend, the performance appears to be remarkable. Will the management be able to repeat this next year?

DEWAN TEXTILE MILLS

The Company paid Rs 50 million dividend out of a profit after tax of Rs 121.6 million for the year ending September 30, 2000. The Company was able to reap the benefit of low prices of raw material during the year but could not contain its administrative, general, selling and distribution expenses. Taking the advantage of higher profit the Company was able to improve its dividend payout from 25 per cent for the year 1999 to 60 per cent for the year under review. The Company seems to fully enjoy the benefit of retained earnings as its financial charges are less than a million rupee.

DEWAN KHALID TEXTILE MILLS

The Company was able to improve its dividend payout from 12.5 per cent for the year 1999 to 40 per cent for the year ending September 30, 2000. Two factors seems to be responsible for this: higher profit from operations for the year and other income touching Rs 12 million. Out of Rs 31.88 million profit after tax for the year 2000, the dividend payout amounted to Rs 14 million. Financial cost of the Company was also at a relatively lower level. While administrative and general expenses for the year 2000 were more or less at the level of previous year, there was substantial reduction in selling and distribution expenses from Rs 6.987 million for the year 1999 to Rs 3.731 million for the year under review.

SUNSHINE COTTON MILLS

The Company managed to increase its sales but seems to have failed in exploiting the benefit of low cost cotton fully. However, it was able to contain its gross loss from Rs 31 million for the year 1999 to Rs 18 million for the year ending September 30, 2000. Last year, the Company posted Rs 74 million as miscellaneous reveue which reduced to Rs 2 million only for the year 2000. Therefore, the loss before tax was Rs 24 million as against a profit of Rs 8.3 million for the previous year. An interesting observation was a substantial reduction in financial charges from Rs 29 million to Rs 6,117 only. The Company was also able to contain administrative, selling and distribution expenses.

FATIMA ENTERPRISES

The Company belongs to the category of those textile mills which often end up incurring losses due to exorbitant financial charges. The Company posted Rs 315 million gross profit but almost Rs 141 million of this was eaten up by financial charges for the year ending September 30, 2000. The Company was able to reap the benefit of low cost of raw cotton and posted Rs 116 million profit before tax. However, the Company did not declare any cash dividend. Out of current year's profit Rs 71.155 million was used for issue of 100 per cent bonus shares. It will be interesting to note that how the increase in paid-up capital helps in reducing financial charges and shareholders must look into where the money is being used.

LUCKY CEMENT

Half yearly results of the Company, for the six-months period ending December 31, 2000, indicates substantial reduction in profit after tax. During the corresponding period of the previous year the Company had posted Rs 122 million profit which reduced to about Rs 70 million for the period under review. While the Company was able to reduce its financial charges from Rs 66 million to Rs 34.9 million cost of sales and selling and distribution expenses went up during this period. There was an increase in net sales from Rs 958 million to Rs 1,097 million. The increase in cost of sales created the real problem an increase from Rs 733 million to Rs 949 million. Although, the details are not available but the increase can be attributed to hike in fuel cost.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

HUBCO

22.20

21.45

21.85

179,725,500

PTCL

19.45

18.9

19.30

125,893,500

ICI

9.75

9.20

9.35

17,061,000

MCB

27.75

25.80

26.20

9,845,500

Nishat Mills

20.30

19.10

19.30

4,016,000

Gulf Comm. Bank

8.75

8.10

8.50

32,500

Source: Invest Capital & Securities