Mission Statement

The mission of Allawasaya Textile & Finishing Mills Limited is to contribute positively to the Socio Economic Growth of Pakistan through business and industrial pursuits endeavoring to achieve excellence in all spheres of such activity with effective and efficient management.

Vision Statement

Allawasaya Textile and Finishing Mills Limited become a truly professional organization, achieves high quality standards, utilize maximum capacity, capture expansion opportunities and become a least cost operator among its competitors. We will strive to continue as a successful company, make profit and thus create value for our shareholders without high risk to them ,our customers or employees

Company Profile

Board of Directors

1. Mian Muhammad Jamil - Chairman2. Mian Tanvir Ahmad Sheikh - Chief Executive3. Mrs. Nusrat Jamil - Director4. Mian Anis Ahmad Sheikh - Director5. Mian Sarfraz Ahmad Sheikh - Director6. Mian Tauqir Ahmad Sheikh - Director7. Mian Muhammad Bilal Ahmad Sheikh - Director8. Mian Muhammad Alamgir Jamil Khan - DirectorAUDIT COMMITTEEMian Muhammad Jamil - ChairmanMian Tanvir Ahmad Sheikh - MemberMian Muhammad Alamgir Jamil Khan - MemberHUMAN RESOURCE & REMUNERATION COMMITTEE (HR&R)Mian Muhammad Jamil - ChairmanMian Tanvir Ahmad Sheikh - MemberMrs. Nusrat Jamil - MemberCHIEF FINANCIAL OFFICER & COMPANY SECRETARYMuhammad IsmailAUDITORSM. Yousuf Adil Saleem & Company,Chartered Accountants, Lahore.LEGAL ADVISOR Sheikh Muhammad Farooq Advocate 5-Nusrat Road, Multan Cantt.BANKERSM/s Habib Bank LimitedM/s Bank Al Habib LimitedM/s Habib Metropolitan Bank Limited

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M/s United Bank LimitedREGISTERED OFFICEAllawasaya Square, Mumtazabad Industrial Area,Vehari Road, Multan.SHARES REGISTRAR M/s Hameed Majeed Associates (Pvt.) LimitedH.M. House, 7-Bank Square, Lahore

Director’s Report

Dear Shareholders,

Your Directors are pleased to present before you their 55 Annual Report on the affairs of your Company along with the Audited Accounts for the financial year ended June 30, 2012.

Performance:

By the grace of Almighty Allah, the performance of your Company was satisfactory during the year under report. The Mills produced Polyester-Cotton blended yarn throughout the year. The total sales for the year amounted to Rs.2,066,231,736 (8,302,376.88 Kgs) as compared to Rs.2,195,228,720 (7,666,171.13 Kgs) last year. The gross profit for the year was Rs.162,755,672 and the Net Profit after providing for Tax amounted to Rs. 41,577,141.The financial results for the year ended June 30, 2012 along with the comparative figures of the last year are summarized under the respective heads of Accounts below:

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Accounts:

Nature of operationsNature of Product

M/S Allawasaya Textile & Finishing Mills Limited is capable of producing Yarn count range Ne 10 to 40 in both PC & CVC. These qualities of Yarn are produced by using Pakistani Cotton and Polyester in accordance with customer satisfaction. Our Spinning unit is equipped to produce regular Ring Spun Yarn. The Spinning capacity in 20s count based on 3 shifts per day is 12 Million kgs per year.  Our Brand Name is “GUMBAD”. 

Product Range

COUNT BLEND10/1 PC POLYESTER 52% COTTON 48%16/1 PC POLYESTER 52% COTTON 48%20/1 PC POLYESTER 52% COTTON 48%22/1 PC POLYESTER 52% COTTON 48%24/1 PC POLYESTER 52% COTTON 48%30/1 PC COTTON 60% POLYESTER 40%

30/1 PCH POLYESTER 52% COTTON 48%31/1 PC COTTON 60% POLYESTER 40%38/1 PC POLYESTER 52% COTTON 48%

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40/1 PC POLYESTER 52% COTTON 48%24/1 CVC POLYESTER 52% COTTON 48%30/1 CVC POLYESTER 52% COTTON 48%40/1 CVC COTTON 60% POLYESTER 40%

Nature of manufacturing process

Statement of Ethics and Business Practices

Introduction:

Allawasaya Textile and Finishing Mills Limited is committed to all round excellence in the sphere of business activity. As in the past, we strive to maintain sound ethical, business, and legal standards. Allawasaya Textile affirms to observe all prevailing and applicable laws & regulations of the country.

Code of Conduct:

Allawasaya Textile and Finishing Mills Limited steadfastly adheres to implementing transparent, ethical and professional lines of conduct in all business interfaces with our stakeholders which include government departments, textile manufacturing associations, stockists and traders, and so forth.

Employees:

Allawasaya Textile and Finishing Mills Limited have a historical track record of outstanding employees management relations. In the past over thirty years, there has never been any incident of Employees-Management tension. The Company is committed to provide a safe, secure, and congenial working environment to all its employees, regardless of rank, caste, or creed, thereby maximizing the employees' output and the Company's prosperity.

Community:

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Allawasaya Textile and Finishing Mills Limited observe and pursues good community relations. The Company provides Staff Residence within the Mills premises.

Quality Assurance:

Allawasaya Textile and Finishing Mills Limited produces good quality "Gumbad" brand (Yarn, 10 Count to 40 Count) which conforms to the high standards and quality. Our product is backed up with over 48 years of yarn manufacturing experience and continuous process of BMR.

Financial Reporting:

Our accounting practices and finance policies are guided by prevailing corporate regulations, Companies Ordinance, 1984 and the Code of Corporate Governance. Further, we aim to fully comply with International Accounting Standard (IAS) in the preparation of financial statements. Departure if any from the standards is adequately disclosed.

Conclusion:

Allawasaya Textile and Finishing Mills Limited shall ensure that this statement of ethics and business practices is understood and implemented by all concerned in letter and spirit.

Two years key Operating and Financial Data

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PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED JUNE, 30, 2012

TYPES OF RATIOS:

Inventory Turnover :

Inventory turnover is represented by a calculated number of how many times a company cycles through its inventory during a given financial reporting period. It can be measured for manufacturing materials and supplies, work in progress, finished products or everything combined. The higher the inventory turnover number, the more positive the indication that the company is operating efficiently. A low ratio means the company has not profited as much, because the inventory in house is not generating revenue and also must be maintained, which imposes additional costs for the company.

Gross profit ratio :

Gross margin is calculated by subtracting all cost of goods sold from the sales revenue of a company, then dividing the result by total sales revenue. This figure is expressed as a percentage, according to the website Investopedia. To increase your gross margin, you need to decrease your

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cost of goods sold. When your expenses decrease, it means a company can retain more of its sales revenue in the form of profit. A number of categories make up cost of goods sold.

Net Profit Margin :

Net profit margin is a measurement of your business' net profits after taxes, divided by sales. It is used to compare profit with sales. The net profit is the amount left for shareholders and owners. The net profit margin is also a measure of efficiency. If activities such as administration, production and selling are inefficient, they will cost more and lead to a lower net profit margin. The key to increasing net profit margin is to increase efficiency.

ANALYSIS OF COMPANY'S RATOS:

INVENTORY TURNOVER

IN TIMES :

CGS/Average Inventory

2011 2012

2,013,064,580 / 157,443,206 1,903,476,064 / 181,163,357

12.78 times 10.5 times

IN DAYS :

(Inventory*Days in a Year)/CGS

2011 2012

(157,443,206*365)/Rs.2,013,064,580 (181,163,357*365)/1,903,476,064

29 days 35 days

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Analysis :

There is no improvement as Allawasaya is converting its inventory into cash and accounts receivables later than last year. It has increased from 29 days to 35 days. This means that Allawasaya has become inefficient and unsuccessful in selling its inventory; which indicates that its sales department is not effective.

How to Improve Inventory Turnover :

First, take an end-to-end view in addressing inventory. You need to optimize your supply chain, make your production processes lean, and optimize your relationship to your customers. When you solve the inventory turnover issue correctly from a Lean perspective, everyone benefits in real terms. Your supplier is enabled to produce and deliver materials in a timely, low cost fashion that allows you to minimize your inventory and cost of materials while elevating your supplier’s competitiveness as a business. When you establish partnering relationships with your customers, you can enable them to make their demand for products more predictable thereby allowing you to minimize finished product inventory without failing to meet their needs for volume and timeliness.

Second, perfect your value stream operation by following the precepts of Lean. Define value from your customer’s perspective, map your value stream, flow the process, establish pull by the customer, and perfect all operations by eliminating waste from the value stream. These steps shrink lead-time, minimize inventory at every point, and drive wastage out. Margins improve, not shrink, as unit cost is reduced. If you follow these guidelines, your improvements in inventory turnover will truly reflect efficient management and the emergence of a Lean enterprise.

RAW MATERIAL:

Major Raw material used by Allawasaya are cotton, Polyester and viscose. We can see changing trend in the purchase of raw material because the company has stopped the use of viscose and is focusing more on cotton. A bird eye view analysis indicates our trend of shifting our operations from viscose and polyester to cotton.

RAWMATERIAL INVENTORY TURNOVER

(Opening Inventory + purchases - Closing Inventory)/Average

2011 2012

(35,827,000 + 1,799,395,683 - 74,336,812) /

55,081,906

(74,336,812 + 1,455,936,208 - 95,794,794) /

85,065,803

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32 17

Analysis:

There is improvement as Allawasaya is converting its raw material inventory into finished goods earlier than last year. It has decreased from 32 times to 17 times. This means that Allawasaya has become efficient and successful in converting its raw material inventory to finished goods.

NUMBER OF UNITS MANUFACTURED :

2011 2012

12,417,636 12,907,697

Analysis:

We can see that there is a small increase in units manufactured. This indicates that its manufacturing department is efficient and effective.

Gross Profit Per Unit :

2011 2012

( 182,164,140 /7,666,171.13 ) (162,755,672) / 8,302,376.88

23.76 per unit 19.60 per unit

GROSS PROFIT MARGIN :

Gross Profit/Net Sales *100

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2011 2012

Rs.182,164,140/Rs.2,145,228,220 *100 Rs.162,755,672/Rs.2,066,231,736 *100

8.5% 7.8%

Analysis :

The company worked efficiently at 8.5% ratio in the year 2011 but in 2012 ratio decreased to

7.8%, this is because their efficiency was reduced at producing and selling products above the

cost.

How to Improve Gross profit ratio :

Determine all expenses that make up your cost of goods sold. Cost of goods sold can consist of material costs, manufacturing costs and direct labor costs. The cost of the material used for production contributes to your cost of goods sold. Wages paid to laborers during the production of goods also contributes to costs of goods sold. Reduce the costs associated with goods sold. Start using a vendor or supplier with cheaper costs. You will be able to purchase materials for a lower cost. Reduce labor costs by implementing wage freezes, layoffs and minimal salary increases.

Net Profit Per Unit :

2011 2012

( 32,497,322 /7,666,171.13 ) (41,577,141) / 8,302,376.88

4.23 per unit 5.007 per unit

NET PROFIT MARGIN ON SALES

Net Income (or net profit after taxes)/Sales *100

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2011 2012

Rs. 32,497,322/Rs.2,195,228,720 *100 Rs. 41,577,141/Rs.2,066,231,736 *100

1.48% 2.01%

Analysis :

We can see that there is an increase in the net profit margin which shows that the firm is maintaining it's expenses effectively . There is an increase in profitability after 2011 which means the company is performing well.

How to Improve Net Profit Margin :

Use the 80/20 Pareto Rule. This principle was developed in the 1940s by quality management expert Joseph Juran, who named it after the Italian economist Vilfredo Pareto, who first noticed it. The 80/20 rule states that 80 percent of a business problems or inefficiencies have just a few key causes. Focus your time on the 20 percent of problems that are causing the greatest decrease in profit. License your products or processes where possible. Royalties from licensing or franchising can earn you money without adding to your workload or using additional resources. Focus on developing products or services that are unique, profitable and that give you a competitive edge. For example, if you are selling a large range of products that earn only a very small net profit, consider reducing the number of products to those that sell best. Or, if others in your industry do not offer good service, then focus on improving service to your customers. Increase efficiency by continually evaluating your processes. Move employees from projects that do not add value to those that do. Automate or outsource processes that do not add value to free up time for employees to work on more profitable areas. Create new opportunities. Seek out and develop new products and services that will grow your business in the most efficient way. This can include developing new uses for your products.

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