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By SHABBIR H. KAZMI
Updated Mar 26, 2001

The market lost 46 points this week. However, one must say that despite a large-scale selling by foreign portfolio managers the market did take a nose dive. Nearly Rs 2.5 billion selling, over the months, has been absorbed by the local investors. The weak holders also liquidated their long-positions during the week. This is evident from the surge in daily trading volume for this week from 50 million shares to 128 shares .

Saying this much, when one look at economic fundamentals, the market seems to be ripe for enhanced activity by retail investors. The basis of this optimism are: country risk is likely to go down and corporate earnings are expected to stabilize. However, investors must follow disciplined investment strategy depending on the time horizon of their investment. Equities market offer higher return as compared to bank deposits.

NISHAT MILLS

The Company posted over Rs 700 million profit after tax for the year ending September 30, 2000 as compared to a profit of Rs 380 million for the previous year. On the face value, it may look strange that the Company decided to pay 25.5 per cent dividend amounting to Rs 283.928 million only to shareholders. However, the decision seems prudent if one looks at the expansion/BMR being undertaken by the Company. The Company is under intensive debt burden as financial charges for the year 2000 amounted to nearly Rs 870 million. However, it is estimated that when expanded/revamped capacity is fully operational, not only sales will increase substantially, but financial cost will also come down due to improved cashflow.

GADOON TEXTILE MILLS

The Company has announced to pay 83 per cent dividend for the year ending September 30, 2000. Last year it had paid 30 per cent to shareholders. For the year 2000 profit after tax was Rs 485 million as compared to that of Rs 159 million for the previous year. The Company also seems to be under extensive debt burden because out of an operating profit of Rs 631.681 million, an amount of Rs 128.313 million went towards financial charges. Another important observation was that administrative and selling expenses went up from Rs 58.5 million for the year 1999 to Rs 104.6 million for the year under review.

MODERN TEXTILE MILLS

The Company has posted Rs 1.4 million gross profit for the year ending September 30, 2000. However, loss before tax for the year amounted to Rs 2.54 million as compared to a loss of Rs 9.2 million for the previous year. This was due to other income of Rs 6.6 million during the year 2000. The Company seems to face some problems which caused decline in sales from Rs 104.9 million for the year 1999 to Rs 69.9 million for the year under review. Accumulated losses of the Company have exceeded Rs 82 million as at September 30, 2000.

RECKITT BENCKISER

It may not be wrong to say that the Company has gone through a major restructuring. It was able to post Rs 12 million profit after tax for the year ending December 31, 2000 as against a loss of Rs 215.7 million for the previous year. The sales increased from Rs 1,774 million for the year 1999 to Rs 2,081 for the year under review a growth of 17 per cent. Whereas cost of sales increased by 3.66 per cent only. Another important factor which helped in improving profit was substantial decrease in financial cost from Rs 34.857 million to Rs 3 million during this period. Other income also increased from Rs 6.8 million for the previous year to Rs 23.581 million for the year 2000. However, accumulated losses amounting to Rs 213.198 million as at December 31, 2000 will not allow the company to pay any dividend for a number of years to come.

D. G. KHAN CEMENT

This is a unit of Nishat Group. The accounts for the six-months period ending December 31, 2000 is a shining example of continued crisis faced by cement industry. The Company has posted Rs 228.756 million profit after tax for the six-months period of 2000 as compared to a profit of Rs 38.171 million for the corresponding period of the year 1999. While sales went down the cost of goods sold increased and gross profit reduced from Rs 212.755 million at the end of December 1999 to Rs 76.825 million at the end of December 2000. Similarly all other expenses: administrative, general, selling and distribution expenses and financial charges increased. Financial charges seems to be the real culprit. These were Rs 260.866 million for the year 1999 and went up to Rs 302.933 for the year 2000. Accumulated losses as at December 31, 2000 stood at Rs 967.773 million.

FAUJI CEMENT COMPANY

The shareholders must be jittery when they looked at the half-yearly results of the Company. As at December 31, 2000 its accumulated losses were Rs 1,577 million. It may take ages to wipe these losses. The Company has posted over Rs 214 loss before tax for the six-months period. The Company is also a victim of high financial charges which amounted to Rs 370.8 million as against operating profit of about Rs 167 million. It is believed that the Company has very high project cost and under severe debt burden. Its problems have further aggravated due to over supply of cement in the region as well as colossal increase in fuel cost.

MOVEMENT AT A GLANCE

SCRIP

HIGH
(Rs.)

LOW
(Rs.)

CLOSING 
PRICE

TURNOVER
 (SHARE MN)

Hubco

22.00

21.35

21.50

92,426,500

PTCL

19.50

18.40

18.45

87,325,500

ICI

9.35

8.75

8.85

20,766,000

DG Khan Cement

6.45

5.75

5.85

272,000

Nishat Mills

19.50

18.80

19.35

214,500

Gadoon Textile

33.55

32.20

32.50

174,500

Fauji Cement

2.40

2.10

2.10

93,500

Reckit & Colman

21.10

20.00

20.00

 

Modern Textile

4.05

4.05

4.05

Source: Invest Capital & Securities