Why Nishat Mills Ltd Does Not Adapt Marketing Essay

Published Date: 23 Mar 2015

Nishat Mills Limited is the flagship company of Nishat Group. It was established in 1951. It is one of the most modern, largest vertically integrated textile company in Pakistan. Nishat Mills Limited has 198,120 spindles, 655 Toyota air jet looms. The Company also has the most modern textile dyeing and processing units, 2 stitching units for home texitle, one stitching unit for garments and Power Generation facilities with a capacity of 89 MW. The Company's total export for the year 2011 was Rs. 36.015 billion (US$ 416 million). Due to the application of prudent management policies, consolidation of operations, a strong balance sheet and an effective marketing strategy, the growth trend is expected to continue in the years to come. The Company's production facilities comprise of spinning, weaving, processing, stitching and power generation.(Nishat Mills Website)

Nishat Mills is listed on all the three stock exchanges of Pakistan; Lahore Stock Exhange, Karachi Stock Exchange and Islamabad Stock Exhange. The company has shown constant over the last few decades and is among the top textile exporting and manufacturing companies in Pakistan.  It deals in yarn, linen, cloth and other goods andfabrics made from raw cotton, synthetic fibre and cloth and generate, accumulate,distribute and supply electricity.(Nishat Mills Website)

Events in History

Table Showing the Main Events in the History of Nishat Mills (Main Events in History)

Vision

To transform the Company into a modern and dynamic yarn, cloth and processed cloth and finished product manufacturing Company that is fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan. To transform the Company into a modern and dynamic power generating Company that is fully equipped to play a meaningful role on sustainable basis in the economy of Pakistan.(Vision of NML)

Mission Statement

To provide quality products to customers and explore new markets to promote/expand sales of the Company through good governance and foster a sound and dynamic team, so as to achieve optimum prices of products of the Company for sustainable and equitable growth and prosperity of the Company.(Mission NML)

Businesses and Products

Spinning

Nishat Mills Spinning Division has over 198,120 spindles, which are operationally organized into 8 spinning units. The entire machinery is from world-renowned manufactures. All yarns made at Nishat are Ring Spun suitable for both knitting and weaving. Besides the best Pakistani cotton, long stapled American, Egyptian and US Pima cotton is also used for fine counts. For Nishat strong belief in product development and innovation we have Nishat own in house state of the art cotton and yarn testing laboratories. Nishat spinning is one of the most trusted brands in the market due to its efficient production and quality.

Spinning production capacity for both Cotton and Blended Yarns is 185 Tons / Day.

(Nishat Mill Annual Report, 2011)

Cotton Range

100% Cotton Carded

From Ne 05/1 to Ne 40/1

From Ne 05/2 to Ne 40/2

All double yarn in 100% knotless / auto splice

Blended Yarn

Poly Cotton 

Poly 52%

Carded Cotton 48%

Ne 10/1 to Ne 40/1

Poly 52%

Combed Cotton 48%

Ne 10/1 to Ne 80/1

Poly 65%

Carded Cotton 35%

Ne 10/1 to Ne 40/1

Poly 65%

Combed Cotton 35%

Ne 10/1 to Ne 80/1

Cotton Rich (CVC) 

Poly 45%

Carded Cotton 55%

Ne 10/1 to Ne 40/1

Poly 45%

Combed Cotton 55%

Ne 10/1 to Ne 80/1

Poly 40%

Carded Cotton 60%

Ne 10/1 to Ne 40/1

Poly 40%

Combed Cotton 60%

Ne 10/1 to Ne 80/1

Core Spun Yarn: 

20 D Lycra

Ne 8/1 to Ne 80/1

40 D Lycra

Ne 8/1 to Ne 60/1

70 D Lycra

Ne 8/1 to Ne 40/1

140 D Lycra

Ne 8/1 to Ne 16/1

 SNishat ce: (Nishat Mills Website)

Yarn Dyeing

 Nishat Yarn Dyeing is one of the latest exhaust dyeing units in Pakistan having installed production capacity of 5.0 tons per day. We are processing yarn and sewing thread in package. Also, we have set up facility for Beam Dyeing which is first of its kind in Pakistan.(Product Spinning)

Weaving

Nishat Mills Weaving division has 670 modern Air Jet and projectile looms which produce approximate 9.0 million meters of fabric per month and makes it the largest weaving facility of Pakistan catering to home textile and apparel fabrics.

Processing

Nishat fabric processing facility is one of the largest and most modern factories of Pakistan. With an array of custom-made machinery, it has the capacity to produce 90 million meters of fabric per annum. It is specially designed to handle heavy weight fabrics like twills, drills, canvases / poplins, fabrics with minimum tension such as stretch fabrics and all high density weaves. The advantage achieved by the customized design of its machines is the result of an extensive research work with the help of world renowned machine makers. To ensure that Nishat customers get the very best we use more than 75% dyes and chemicals of European origin.

The standards are higher than ever, dedicated by fashion, efficient productivity and further automation is engineered in the plant. To maintain quality and international standards, an on-line Quality Control (QC) Department has been setup. The QC department is augmented by a fully equipped Laboratory, which scrutinizes the fabric process flow at all levels. Nishat extra ordinary Research & Development work and highly trained marketing personal are pivotal to sustain long term business relationships.(Prouct Processing)

Home Textile

With an array of 938 modern new generation sewing machines, the Home Textile Division consists of 2 stitching facilities. The two facilities combined have an average production capacity of approximately 24 million meters per annum. The product line is customized to manufacture products of various styles and sizes according to the requirements of Nishat customers, wholesalers, retailers and contract textile business.(Nishat Mill Annual Report, 2011)

Nishat  Product Range:

Quilt Covers

Quilted Throw-over

Flat Sheet

Fitted Sheet

Pillow Cases

Cushions

Valances

Curtains

Baby Sets

Table Linen

Embroidery

(Product Home Textile)

Garments

Nishat Mills Limited has state of art garment manufacturing facility both for men and women. The Apparel division has deployed 1627 high end sewing machines such as Vibe Mac, Juki, Mitusibishi and Brother. The Division has the capacity to produce 7.20 million garments per annum.

The Garment wet process utilizes the modern techniques of Rinse, Enzyme Stone, Enzyme Wash, Super Bleach, Reducer Wash, Tint Wash and Raisin Wash. In order to obtain best results, Nishat facility is geared with Tonello Washing machines, Maino dryers, Wrinkle Curing Hangers and Barrel washing machines and Dryers for sampling. Nishat qualified team members utilize the equipment to obtain optimal results and cater to the specific needs of the client.(Product Garments)

Generation Facilities

Nishat Mills has established state of the art, modern, highly reliable and extremely efficient captive co-generation power plants to cater in house energy requirements at all its spinning, weaving, processing, stitching and apparel units. These facilities are using Wartsila, Caterpillar, Cummins, Daihatsu, Jenbacher & Mak engines for power generation. Gas, Furnace Oil, Diesel and Steam is being used as fuel for power generation.(Nishat Mill Annual Report, 2011)

Combined Heat and Power Plant

Nishat Mills Limited has lived up to its promise to be a vanguard in use of alternative fuels for energy requirements in the absence of fossil fuels. We have put up a new Combined Heat and Power plant at Nishat site in Lahore which will produce 6 M.W. of electricity and 65 tons/hNishat of steam. Coal will be the primary fuel but special aspect of this plant is its flexibility to use alternative input mix up-to 70% of bio-mass with 30% of coal. The plant is expected to be commissioned by May/June 2012. Two high performance, high efficiency, low pressure steam generating boilers are already in operation using rice husk, wood chips and corn cobs etc as main sNishat ce of locally available agri-waste fuels at two sites of Nishat company.

The Company is now planning to establish similar projects for Nishat spinning division at Faisalabad and Nishat weaving division at Sheikhupura. These plants will have the production capacity to cater for entire power and energy requirements of these divisions.(Nishat Mill Annual Report, 2011)

Synthetic Natural Gas Plant

Installation of Synthetic Natural Gas (SNG) Plant is nearing its completion phase. This plant will use LPG as raw material to produce synthetic gas. This synthetic gas will be used to run processing machines which are solely dependent on natural gas for their running and are non operational during gas load shedding days. A sizeable storage of LPG has also been established in the Company.(Power Generations)

Nishat Linen

Nishat Linen is a concern of Nishat Mills, the textile and home fashion retail chain that has redefined the industry with acute attention paid to quality, design and affordability. Nishat Linen prides itself on being the brand of preference for discerning customers who are in search of things, unique and chic without compromising on aesthetics or price. Unsurpassed customer service, including tailor-made orders, ensures Nishat clientele remains loyal to the Nishat family.

From bed linen to kitchen coordinates, upholstery to apparel, Nishat Linen has become a household name as a creator of stunning, high-quality designs at reasonable prices; a feat achieved by few.(Nishat Linen)

Revenue by Product Mix

Source: (Mills, 2011)

Overview Of Textile Industry

Textile industry contributes about 60% to the totalexport earnings of the country, accounts for 46% of the total manufacturing and provides employment to 38% of the manufacturing labNishat force. The availability of basic raw material for textile industry, cotton, has played a principal role in the growth of the industry. Pakistan is 4thlargest producer and 3rd largest consumer of cotton. The textile and clothing industry willcontinue to be the driving force of Pakistan's economic growth; as there is no substitute industry or service sector that has the potential to benefit the economy with foreign currency earnings and new jobs creation. Pakistan's textile industry had proved its strength in the global market during the last four decades. It has proved its strength in post-quota era by sustaining its position and growth.(Economics Survey of Pakistan, 2010-2011)

Global Overview

The textile and clothing trade has increased from US$ 355 billion in 2000 to $613 billion in 2008, but it shrank to $527 billion in 2009 due to global financial meltdown. Moreover, the clothing trade is growing at a faster rate than other textiles as world clothing export grew from $197 billion in 2000 to $316 billion in 2009. On the other hand world textile export expanded from $157 billion in 2000 to $211 billion in 2009. The global financial crisis since late 2007 adversely impacted the trade in textiles. The weaker demand in the developed economies limited the expansion of global trade, however, following series of economic stimulus packages, world trade started to pick-up again since March 2009 but world merchandise trade dropped by 23 per cent in 2009 (in nominal terms) which is the highest ever decline in more than 50 years. The recovery in world trade is currently fueling optimism for trade prospects for Pakistan. Pakistan exported textiles worth $ 6.5 billion and clothing worth $3 billion in 2009 as compared to textiles worth $ 7.4 billion and clothing worth $ 3.9 billion in 2008.

(Economics Survey of Pakistan, 2010-2011)

Domestic Overview:

The power and gas outages and ever-rising cost of doing business have deteriorated capacity utilization in domestic textile and clothing industry. The global shortage in availability of cotton was caused by the shortfall due to floods driven crop failures in China and Pakistan, which are the biggest producers and consumers of cotton in the world. However, demand for imported cotton soared after floods damaged crops in big producers China, Pakistan and Australia. Besides the foreign demand for Pakistan's cotton yarn has risen exceptionally. Chinese, in particular, have procured huge quantities of yarn from Pakistan, even though they are the fiercest competitor of Pakistan in the world market. Therefore, the increased demand of yarn export created problem of yarn availability in the local market. To stay in the market, industry is making distress efforts. Closure, low capacity utilization and losses are the norms of the day. Resultantly the production and export performance of Textile sector had shown a mixed trend.(Economics Survey of Pakistan, 2010-2011)

Performance of Textile Industry

The prices of the raw cotton globally have increased and touched $2/Lb, the raw cotton prices as per KCA spot rate have varied from Rs. 7,116 /40 Kg minimum to Rs. 12,475 /40Kg maximum. Currently the prices range is of the Rs.10,500 to Rs.11,500, or around US$1.5/Lb. Based on the high cost of the cotton all the textile products have fetched higher unit prices and resultantly the export earnings of the textile products have increased from US$7,663.8 in 2009-10 to $9,956.5 million in 2010-11 implying an increase of 29.9 percent. Textile industry is a pre-dominantly export oriented industry and about 75-80 percent of total produce of cotton and synthetic textiles are exported in the form of yarn, fabric, readymade garments, bed wear and made Manufacturing and Mining 39 ups.

The Pakistan Textile Industry has an inbuilt potential for performing better both in production as well as in exports by virtue of its inherent competitiveness in the international market for its conventional products. However, to sustain its position and to move in high value added products as well as for the increased market share, a large investment in machinery and BMR of existing and embracing new technology is critically important. Investment in awareness of virgin markets, training of labor force, improvement in labor productivity, marketing, product and brand development are the immediate areas to expand the export base. (Economics Survey of Pakistan, 2010-2011)

General Market Review and Future Prospects

Globally 2010 - 2011 was marked as year of recovery from the worst economic recession seen

in decades. Road to recovery is slow but steady because of sheer intensity of the downfall.

Domestically, nothing changed for the textile industry as compared to previous years. Industry

had been compelled to put up with high cost of production resulting from higher cotton prices,

rising energy costs, increased prices of imported inputs due to depreciation of Pakistani rupee,

double digit inflation and prolonged power cuts. We have witnessed extinction of small and cottageindustry fighting these demons and if the situation prolongs another year or two, medium sizedentities will also start to disappear.

Nishat company did extremely well during the current financial year and achieved 54 % growth in

total net revenues from the corresponding previous year. As we have stated on many occasions

previously, Nishat's vertical integration, mass and modern production capability, effective marketing policies and campaigns, strong customer base and diversified product range allows us to grow even more when everyone else is facing decline.

We are keeping a close eye on the unfolding of events and devise strategy accordingly. We have

formulated a multi-dimensional strategy to tackle all these issues. In house power production and exploration into alternative fuels e.g. coal, rice husk, biomass and LNG will help us take care of energy shortage problem. We are focusing on diversification of Nishat's product range and consolidating good business done in work wear fabric is another dimension of this strategy.

Nishat strength lies in Nishat strategic planning and marketing capabilities along with Nishat's vertically

integrated production facilities that can turn raw cotton to a final finished consumer product which has always attracted customers' attention all over the world. Nishat strategy is to expand and diversify Nishat's product range by adding value added products and systems.(Nishat Mill Annual Report, 2011)

Share of Textiles in Pakistan's Economy

Generates

54 % of exports

Constitutes

46 % of Manufacturing Industry

Employs

38 % of country's working force

Contributes

8.5% to the total GDP

Drives

Banking, Shipping ,Transport , Insurance, Machinery &the ancillary industry.

Source: TCO

Share of Textiles in Pakistan's Exports

Source: TDAP

Financial Analysis

Financial Highlights

2011

2010

Increase %

Net sales (Rs. '000')

48,565,144

31,535,647

54.00

Gross profit (Rs. '000')

7,846,447

5,980,185

31.21

Pre-tax profit (Rs. '000')

5,411,912

3,286,069

64.69

After tax profit (Rs. '000')

4,843,912

2,915,461

66.15

Gross profit ratio to sales (%)

16.16

18.96

After tax profit ratio to sales (%)

9.97

9.24

Earnings per share (Rs.)

13.78

10.50

Source: (Nishat Mill Annual Report, 2011)

During the year, the Company has achieved excellent growth in its revenues and profits. Aftertax profit of Nishat Company for the year ended 30 June 2011 has significantly increased toRs. 4,843.912 million as compared to Rs. 2,915.461 million for the corresponding previous yearended 30 June 2010, showing an increase of 66.15 %. Similarly, the gross profit for the currentyear has significantly increased to Rs. 7,846.447 million as compared to Rs. 5,980.185 million forthe corresponding previous year.(Nishat Mill Annual Report, 2011)

The significant increase in gross profit and net profit is mainly attributable to increase in sale quantities, good sales mix of products and increase in sale prices of the products manufactured and sold by the Company. All business segments of the Company have been able to realize benefit during the current yearand have contributed towards the excellent results. In particular spinning and weaving businesses of the Company have performed tremendously well in the current year by generating higher profits. Nishat spinning business through effective planning, timely investment in cotton and modern production facilities has grasped optimum benefits offered by the sharp rise in demand of cotton yarn and its selling prices even though later in the year the sales margins were negatively affected because of decline in cotton prices.

The significant increase in sales in 2011 by 54% over 2010 is in line with the Company's policy of yearly growth trend in sale quantities together with the significant increase in sale prices.(Nishat Mill Annual Report, 2011)

SNishat ce: (Nishat Mill Annual Report, 2011)

However, the gross profit margin of the Company has decreased to 16.16 % in the current year from 18.96 % in the previous year. The decrease in gross profit margin is mainly due to increase in raw material prices for Nishat value added business which could not be fully passed on to Nishat value added business customers and increase in electricity generation cost due to excessive use of diesel and furnace oil during the frequent shutdown of gas supply.

SNishat ce: (Nishat Mill Annual Report, 2011)

The finance cost of the Company has increased by 42.07% (June 2010: Rs. 1,126.922 million, June 2011:Rs. 1,601.048 million) in the current year compared to the corresponding previous year owing to increase in borrowing rate of the Company which is due to increase in export refinance rates by the State Bank of Pakistan and excessive borrowing of the Company to meet the need of increased working capital requirement due to hike in raw material prices.

The board of directors of the company has reommended 33% cash dividend (2010: 25%) and treansfering of Rs. 3.863 Billion (2010 : 2.063 Billion) to general reserves. (Nishat Mill Annual Report, 2011)

Earning Per Share

Source:(Nishat Mill Annual Report, 2011)

The earning per share of the compnay has increased from 10.5 to 13.58 Rupees per share in 2011 as compared to 2010. (Nishat Mill Annual Report, 2011)

Analysis of Financial Statements

Profit & Loss Statement

Profit &Loss

(Rupees in Thousands)

 

2011

2010

2009

2008

2007

Net Sales

48,565,144

31,535,647

23,870,379

19,589,804

17,180,192

Gross Profit

7,846,447

5,980,185

4,351,541

2,811,746

2,844,938

Profit before tax

5,411,912

3,286,069

1,561,501

6,118,687

1,356,208

Profit after tax

4,843,912

2,915,461

1,268,001

5,857,587

1,211,208

SNishat ce: (Nishat Mill Annual Report, 2011)

Cash Outflows

Cash Outflows

(Rupees in Thousands)

 

2011

2010

2009

2008

2007

Tax paid

(561,819)

(343,036)

(257,289)

(238,252)

(146,751)

Financial Charges Paid

(1,474,841)

(1,096,389)

(1,458,602)

(875,636)

(838,759)

Fixed capital expenditure

2,848,115

1,955,542

917,312

1,239,492

1,076,493

SNishat ce: (Nishat Mill Annual Report, 2011)

The most major factor in the cash outflow in the amount of financial charges paid by the company. This is consistently on the rise from 2006 to 2011.

Balance Sheet

Balance Sheet

(Rupees in Thousands)

 

2011

2010

2009

2008

2007

Current assets

18,441,959

11,732,928

8,294,838

8,818,379

13,309,087

Current liabilities

15,322,349

10,568,415

9,602,265

12,053,926

7,649,373

Operating fixed assets - Owned

12,107,389

11,476,005

11,102,355

11,188,560

10,309,611

Total assets

54,088,904

46,182,314

31,512,686

40,277,289

39,587,091

Long term loans and finances

2,861,956

2,980,694

2,334,411

1,321,912

1,773,820

Shareholders'Equity

35,393,959

31,376,313

19,330,767

26,492,070

30,163,898

SNishat ce: (Nishat Mill Annual Report, 2011)

Horizontal Analysis

Horizontal Analysis

 

2011

2010

2009

2008

2007

Balance Sheet

Total Equity

172%

152%

94%

122%

146%

Non-current Liabilities

112%

141%

86%

35%

59%

Current Liabilities

217%

150%

136%

166%

108%

Total Liabilities

186%

147%

121%

127%

94%

Total Equity And Liabilities

176%

151%

103%

124%

129%

Assets

Non-current Assets

170%

165%

111%

115%

126%

Current Assets

189%

120%

85%

143%

137%

Total Assets

176%

151%

103%

124%

129%

Profit And Loss Account

Sales

292%

189%

143%

116%

103%

Cost Of Sales

297%

187%

142%

119%

105%

Gross Profit

265%

202%

147%

100%

96%

Distribution Cost

242%

189%

145%

106%

103%

Administrative Expenses

248%

206%

164%

151%

121%

Other Operating Expenses

548%

367%

244%

141%

117%

 

262%

204%

155%

118%

107%

267%

201%

141%

88%

88%

Other Operating Income

304%

122%

74%

721%

83%

Profit From Operations

279%

176%

120%

291%

87%

Finance Cost

212%

149%

192%

120%

109%

Profit Before Taxation

308%

187%

89%

364%

77%

Provision For Taxation

451%

294%

233%

205%

115%

Profit After Taxation

297%

179%

78%

376%

74%

There are a few important to look here which have increased by a significant factor

In the liabilities, current liabilites have been increased by the most significant number and after that total liabiliteis which is not a good sign for the company.

In the asset sides, current assets have been increased over the year but not in the same percentage as current liabilities did.

In the profit and loss account, the most allarming thing for the company is the amount by which operating expenses have increased. In a very high proportion as compared to all other accounts.

Other operating also went well by a pretty good value which is a good sign for the company.

Sales and cost of sales have increased by the pretty much same factor but need to lower its cost of sales in order to increase the profit for the company.

Financing cost is looking not so good, company need to do well on that.

Income and profits have increased by pretty good percentages which is a pretty good sign for the company.

Vertical Analysis

Vertical Analysis

 

2011

2010

2009

2008

2007

Balance Sheet

Total Equity

65%

68%

61%

66%

76%

Non-current Liabilities

6%

9%

8%

3%

4%

Current Liabilities

28%

23%

30%

31%

19%

Total Liabilities

35%

32%

39%

34%

24%

Total Equity And Liabilities

100%

100%

100%

100%

100%

Assets

Non-current Assets

66%

75%

74%

63%

66%

Current Assets

34%

25%

26%

37%

34%

Total Assets

100%

100%

100%

100%

100%

Profit And Loss Account

Sales

100%

100%

100%

100%

100%

Cost Of Sales

84%

81%

82%

85%

83%

Gross Profit

16%

19%

18%

15%

17%

Distribution Cost

5%

5%

6%

5%

5%

Administrative Expenses

1%

2%

2%

2%

2%

Other Operating Expenses

1%

1%

1%

1%

1%

 

7%

8%

8%

8%

8%

9%

11%

10%

8%

9%

Other Operating Income

5%

3%

3%

30%

4%

Profit From Operations

14%

14%

13%

38%

13%

Finance Cost

3%

4%

6%

5%

5%

Profit Before Taxation

11%

10%

7%

33%

8%

Provision For Taxation

1%

1%

1%

1%

1%

Profit After Taxation

10%

9%

5%

32%

7%

Ratio Analysis

Profitability Ratios

Gross Profit Margin

Gross Profit Margin

 

2011

2010

2009

2008

2007

Net Sales

48,565,144

31,535,647

23,870,379

19,589,804

17,180,192

Gross Profit

7,846,447

5,980,185

4,351,541

2,811,746

2,844,938

GP Margin

16.157%

18.963%

18.230%

14.353%

16.559%

Chenab Group

-26.68%

-2.23%

21.83%

19.74%

18.96%

Sapphire

21.42%

20.68%

18.45%

16.75%

16.89%

Company is under performing as compared to its competitors primarily because of the reason that the cost of sales of the company is pretty high as compared to its competitors. Company need to cut down its cost of sales in order to do well in the long run.

Operating Profit Margin:

Operating Profit Margin

 

2011

2010

2009

2008

2007

Net Sales

48,565,144

31,535,647

23,870,379

19,589,804

17,180,192

EBIT

5,411,912

3,286,069

1,561,501

6,118,687

1,356,208

OP Margin

11.144%

10.420%

6.542%

31.234%

7.894%

Chenab Group

-65.33%

-21.90%

-0.15%

-0.18%

1.97%

Sapphire

13.43%

8.95%

6.13%

19.91%

9.74%

As far as the operating profit margin is concerned the company is performing better by the competitors. The company is beating its major competitors chenab group by all means which is a very good sign for the company.

Net Profit Margin:

Net Profit Margin

 

2011

2010

2009

2008

2007

Net Sales

48,565,144

31,535,647

23,870,379

19,589,804

17,180,192

Profit After Tax

4,843,912

2,915,461

1,268,001

5,857,587

1,211,208

Net Profit Margin

9.974%

9.245%

5.312%

29.901%

7.050%

Chenab Group

-66.02%

-22.89%

-1.06%

-1.13%

0.92%

Sapphire

12.45%

7.83%

5.20%

18.62%

8.01%

Company is performing below sapphires but performing pretty well against the chenab group. The company net profit has followed a mixed trend over the last 5years it has its ups and downs.

Return to Stockholders:

Return on Total Assets:

Return on Total Assets

 

2011

2010

2009

2008

2007

Total Assets

54,088,904

46,182,314

31,512,686

40,277,289

39,587,091

Profit After Tax

4,843,912

2,915,461

1,268,001

5,857,587

1,211,208

ROA

8.955%

6.313%

4.024%

14.543%

3.060%

Chenab Group

-16.79%

-10.46%

-0.57%

-0.59%

0.50%

The company is beating chenab group by a comprehensive margin in the return on assets, it means that the company is utilizing its assets in a better way as compared to its competitors. But the trend is not on the rise in the last 5years it has its slumps.

Return on Stockholders Equity before Tax:

Return on Stockholders Equity Before Tax

 

2011

2010

2009

2008

2007

Shareholders'Equity

35,393,959

31,376,313

19,330,767

26,492,070

30,163,898

Profit before tax

5,411,912

3,286,069

1,561,501

6,118,687

1,356,208

ROE Before Tax

15.290%

10.473%

8.078%

23.096%

4.496%

Sapphire

24.07%

12.40%

8.79%

19.31%

7.20%

Sapphir group is performing pretty well on return on stockholders equity before tax; it means that the company is not using its equity as effectively as the competitors are. Only is 2008 the company ahs beaten sapphire but over all sapphire is outperforming Nishat Mills.

Return on Stockholders Equity After Tax:

Return on Stockholders Equity After Tax

 

2011

2010

2009

2008

2007

Shareholders'Equity

35,393,959

31,376,313

19,330,767

26,492,070

30,163,898

Profit After Tax

4,843,912

2,915,461

1,268,001

5,857,587

1,211,208

ROE After Tax

13.686%

9.292%

6.559%

22.111%

4.015%

Chenab Group

125.78%

-364.17%

-3.88%

-3.70%

2.71%

Sapphire

22.32%

10.86%

7.45%

18.62%

5.92%

The company is matching its competitots in this ratio. Over the last 3years the company has shown pretty smooth growth which is good for the company but the growth of sapphire is more roboust as compared to Nishat mills.

Activity Ratios:

Fixed Asset Turnover:

Fixed Asset Turnover

 

2011

2010

2009

2008

2007

Sales Revenue

48,565,144

31,535,647

23,870,379

19,589,804

17,180,192

Fixed Assets

12,107,389

11,476,005

11,102,355

11,188,560

10,309,611

Fixed Asset Turnover

4.01

2.75

2.15

1.75

1.67

Sapphire

5.42

3.32

2.68

2.25

2.07

Company is perfroming below the competitors; which shows that company is not utilizing its fixed assets properly to generate sales. But the good things is that over the last 5 years it is continuously on the rise.

Total Asset Turnover:

Total Asset Turnover

2011

2010

2009

2008

2007

Sales Revenue

48,565,144

31,535,647

23,870,379

19,589,804

17,180,192

Total assets

54,088,904

46,182,314

31,512,686

40,277,289

39,587,091

Total Asset Turnover

0.90

0.68

0.76

0.49

0.43

Sapphire

1.21

0.77

0.73

0.56

0.51

The company is performing pretty well on this ratio and its continously on the rise but still the competitors are doing well in comparison.

Liquidit/ Leverage Ratios:

Current Ratio

Current Ratio

2011

2010

2009

2008

2007

Current assets

18,441,959

11,732,928

8,294,838

8,818,379

13,309,087

Current liabilities

15,322,349

10,568,415

9,602,265

12,053,926

7,649,373

Curent Ratio

1.20

1.11

0.86

0.73

1.74

Chenab Group

0.45

0.67

0.92

0.86

0.90

Sapphire

1.41

1.08

1.16

0.99

1.04

The company liquidity is in pretty good condition as compared to the competitors as the company is performing well on its financial resNishat ces.

Long Term Debt to Equity:

Long Term Debt to Equity

2011

2010

2009

2008

2007

Long Term Debt

2,861,956

2,980,694

2,334,411

1,321,912

1,773,820

Shareholders'Equity

35,393,959

31,376,313

19,330,767

26,492,070

30,163,898

Debt to Equity

0.08

0.09

0.12

0.05

0.06

Chenab Group

(1.43)

5.73

1.34

1.29

1.21

Sapphire

0.09

0.21

0.35

0.16

0.08

The company debt to equity ratio is low which compan is rellying more on its equity as compared to ecternal sNishat ces of debt; but lately the finacing cost of the company is pretty high.

Debt to Total Assets:

Debt toTotal Asset

2011

2010

2009

2008

2007

Total Debt

2,861,956

2,980,694

2,334,411

1,321,912

1,773,820

Total Assets

54,088,904

46,182,314

31,512,686

40,277,289

39,587,091

Debt to Asset

0.05

0.06

0.07

0.03

0.04

Chenab Group

0.19

0.16

0.20

0.20

0.22

The company is also matching up its biggest competitor in this sector.

Literature Review

The world is becoming a Global village and marketers are looking to explore new ways to market their products. TV, radio, billboards etc. has been used extensively by firms to promote their products however the marketing opportunities does not end with these mediums. Internet is a new medium for marketing. The superhighway of information "is being shaped by advances in digital telephone networks, interactive cable television, personal computers, and online services and, finally, the Internet. These advances in technology will inevitably change the face of business as we know it today"(Paul, 1996). Marketers like those places for their marketing where they can reach as much people as possible and internet "represents a $300 billion market. Over 30 million companies and households around the world use the Internet as a communications link through e-mail, interactive advertisement, bulletin boards, research and online discussion groups" (Paul, 1996). Few years back one has to be a computer literate to use even the email facility of internet but now even small businesses are investing to use internet for marketing. Internet is being called as a tool for "guerrilla marketing" by the Marketers (Paul, 1996).

For more than ten years the potential influence of internet on business and marketing has made the internet marketing a very common subject in the academic and professional discussions (Bridgewater & Egan, 2001). Many believe that we are in the middle of a revolution. Hoffman (2000) defined internet as "the most important innovation since the development of the printing press, that may radically transform not just the way individuals go about conducting their business with each other, but also the very essence of what it means to be a human being in society." Joseph et al. (2001) pointed out:

... "The last decade of the 20th century will be remembered as a watershed for global communication and commerce. The internet entered the dictionary of daily conversation and, almost overnight, became a dominant ubiquitous presence on the business landscape". That:

... "In its seemingly myriad appearances, the internet began to transform domestic and global markets by structuring and restructuring relationships in the supply chain and by creating systemic changes in the way consumers shop, organizations buy, prospects are reached, transactions are completed, customers are serviced, and business is conducted". On the other hand others like Coltman et al. (2001) and Castells (1996) argue that "the internet-business revolution is a legend". They suggest that "we are not seeing a revolutionary internet-business change but the result of an evolutionary integration of IT into work practices".

According to the Internet World Stats (2010), the internet user population reached 1.90 billion worldwide, an increase of 444 percent in the period from 2000 to 2010. Many practitioners and academics have highlighted that the internet is a major platform for e-marketing to deal with marketing mixes, which include global accessibility (Laudon and Laudon, 2002), convenience in updating (Sandeep and Singh, 2005), real-time information services (Harridge-March, 2004),interactive communications features (Chaffey, 2004), and unique customization and personalized capabilities (Teo and Tan, 2002). Moreover, e-marketing also refers to the electronic methods and media to build and maintain the electronic client platforms (eg, B2B e-marketplace), which will help the exchange of ideas, products and services to meet both buyers and sellers (Ngai, 2003). Strauss and Frost (2001) are of the same view and suggested that, sales, public relations, direct marketing, and advertising are marketing communication that comprises the crucial components of e-marketing strategy.

B2B e-marketplace, as one of the main trading platforms brought by the internet technology has made a great contribution to the e-marketers. The larger organizations are taking advantages from the vast array of suppliers/buyers via theB2B e-market place (Stockdale and Standing, 2004). However, small and medium size enterprises (SMEs) are also keen to compete in the electronic environment remain concerns as how their businesses can gain benefits from B2B e-marketplace. With more online and offline publications from both industry and academia (Sandeep, 2005; Brady, Fellenz, & Brookes, 2008; Chaffey, 2004; Strauss & Frost, 2001), there is a growing awareness of the impact of the e-marketing in the global environment. Nonetheless, there is limitation on how to discover the opportunities for SMEs in benefiting from the emergent e-marketing practices, derive from the B2B e-marketplace.

Most of the B2B e-marketplace studies utilize a business perspective to explore; their development (Albrecht et al., 2005), role and classification (Bakos, 1998; Angeles, C.L., Basu, & Nath, 2001; Kandampully, 2003), their operation (Murtaza, M.B., Gupta, et al.), benefits and barriers (Stockdale & Standing, 2004), their key success factors (Yu, 2007), and so on. However, the current literatures do not fully explore the issues relating to the performances of B2B e-marketplace from an e-marketing perspective. In addition, research is more emphasized on particular research areas of interest often ignoring the links to others dimensions in particular e-marketing services. Hence, there has been done a lot of effort to promote B2B marketplace but still the small medium enterprises are not going for it because they are still not very much aware of the opportunities and benefits of B2B marketplace (Stockdale and Standing, 2004).

The literature provides an overview of the current level of the Internet enabled commercialization of technology for B2B e-market retailers. Publications online and offline noted that B2B e-marketing via e-market is a modern marketing practice of buying and selling goods and services, exchange information and ideas associated with the Internet communication and promotion. The framework suggested by different authors including (Chaffey, 2004; Gloor, 2000; Kierzkowski, McQuade, Waitman, & Zeisser, 1996)creates a significant input to knowledge in the study of e-marketing that has the capability to add competitive advantages and enhance customer value. However, it appears that there is limited exploitation of such frameworks by business professional. So as to develop an enhanced understanding of the topic under study, this paper will adapt a multidisciplinary approach by integrating; traditional SMEs marketing, e-marketing, IS/IT, and B2B e-marketplace to develop an e-marketing framework that will offer a greater value for SMEs.

Internet marketing is a progressively significant part of communication. Supported by services companies and orders and communicate with each other in the world on the Internet. To capture this market, and the speech technology company must make decisions, pricing, branding, marketing, planning and organizational structure, in particular.

Variation in price worldwide

"Internet means global presence" (Sterne, 1996). This means if the company in Pakistan has a website which displays prices of products and services then these prices would be visible to the visitors of that website in developed countries like USA and England. "One way to prevent this situation is to display a product's price based on the buyer's locality" (Sterne, 1996).

Territory

If the sales force is organized by region, the company has adopted several new sales policies because the territory is meaningless on the Internet. So you can plan to close the deal and take the company to pay the site and then send it to a distributor or dealer nearest to the customer. Or one could take into account a list of the distributors' site. (Palumbo & Herbig, 1998). Thus, the "Web site promotes the company's products as well as shows where they can be acquired" (Sterne, 1996).

Channel struggle

If you sell through the distribution chain acquired, a company may be competing with them by selling directly via the Internet. (Palumbo & Herbig, 1998) Therefore, "one need to explore a way to work with them that allows a company to trade directly without cutting distributors out of any business" (Sterne, 1996).

International distribution

When a firm uses the Internet and creates its web presence of use any B2B site than it is in the international market and it may receive plenty of orders from all over the international market. But if the company has no international channels to distribute its products or service than this can be dissatisfaction at the customer side. Thus, it is very vital to develop a fast logistic system to utilize the international presence of the company to its full and gain maximum competitive advantage over the competitors. (Palumbo & Herbig, 1998)

Changes in the Structure of organization

Following alterations are suggested by few authors for a company to adapt to the e-marketing:

A small business requires someone to share the task of monitoring the company's efforts. Be leased to another of their ads and to coordinate the electronic promotional materials (Palumbo & Herbig, 1998);

As the company grows it also create department of internet market which helps to develop corporate identity and brand building of company. In both cases it is important that the person to update the website prices, promotions, and check yNishat e-mail regularly. Internet community is very impatient. If someone makes users wait for an e-mail, you may miss them. (Palumbo & Herbig, 1998)

Increase of competition

It is difficult to maintain market leader position in e-market because when if you are already doing e-marketing than it does not mean that no new competitor will bother you. YNishat E-marketing has always threat from not only existing e-marketer but also the new comers because there are no entry costs, internet reduces the competitive advantage of economies of scale, and it is easier for small businesses to compete globally. (Quelch & Klein, 1996). Thus, "it is important to anticipate these changes in the market so suitable strategies will be in place to meet competition and position the firm in its foreign market(s) adequately before new competitors arrive".

Means of payment

For doing business on internet we need letter of credit but it pretty expensive for a customer to starting buying products on internet. There are other means of payments also like credit cards, debit cards and online shopping sites like PayPal and money booker that are less expensive but bit riskier. So with so many options available one have to decide which method should be considered. Author identified following determinants for payment mean:

"It should have worldwide use and recognition" (Palumbo & Herbig, 1998);

"It should be easy to obtain for a customer" (Palumbo & Herbig, 1998);

"It should be simple to use" (Palumbo & Herbig, 1998);

"It should be secured" (Palumbo & Herbig, 1998).

"While one of the best methods for international payments is the credit card, it still possesses some inhibitions and problems for international trade." (Palumbo & Herbig, 1998)

Due to so many benefits internet is now the commonly used marketing tool especially in western countries. But in Pakistan, internet marketing is still a new phenomenon for people and organizations. Few industries use internet in their daily tasks and processes and very few of them use internet for marketing. Mostly, software companies use internet for their operations and telecom industry uses internet for marketing. There are many industries that have businesses related to international market but they are not using internet for their global marketing. "Internet offers organizations inexpensive, and sophisticated tools for advertising, taking and placing orders, promoting their philosophies, and communicating with their customers all over the world. These Internet tools are: e-mail, mailing list, newsgroup, World Wide Web (WWW), and indirectly cybermall" (Palumbo & Herbig, 1998). But still due to lack of awareness, lack of computer literacy and many other unknown factors Pakistan is far beyond in internet marketing. This research would be helpful in exploring the problems in the path of e-marketing.

Problems in Internet marketing

"The Internet presents a more global view". The individual is able to discover a website looking for a supplier to Pakistan, Japan Exchange e-mail client, and facilitate trade in China. This creates a number of international visibility of this new challenge or an obstacle, because the Internet has increased sales for the company achieve a number of potential new markets around the world, where cultural systems, legal Social and different from those of a routine. The major troubles in this latest situation are as follows:

Cultural problems

Customs of diverse countries should be considered while marketing on the Web, among these countries variation is:

Some academics (Bridgewater & Egan, 2001; Richerdson, 2001) purpose that, "the internet can serve to facilitate organization knowledge of cultural barriers through the use of discussion groups, to learn about local customers, trends and laws. Additionally argue that internet based transactions are increasingly being seen as a cultural free, thereby removing any connotations associated with the country of origin of product s and services which traditionally exist in international marketing".

One cultural aspect that might have an effect on Internet shopping manners is improbability evading (Hofstede, 1991). High level of uncertainty avoidance cultures, citizens have less tolerance for uncertainty, the demands of high-quality structure (the prescribed rules and regulations), and a stronger belief institutions (e.g. the government) than the population in the cultures through a small uncertainty avoidance level. (Hofstede, 1991; Doney, Cannon, & Mullen, 1998). Research has recognized the impact of uncertainty avoidance in a variety of behaviors.

Internet shopping intrinsically engages further suspicions than shopping in conventional substantial stores. Past researches shows that in high uncertainty avoidance cultures, people show a strong resistance to change, uncertainty avoidance cultures, while the poor do not panic in the future, and the evidence is less resistance to change. In all likelihood, it is because change often involves uncertainty. (Lim, Leung, Sia, & Lee, 2004).

Language

The other major concern in the order of global communication is language. As the Internet has its foundation in the USA, it has developed as a mainly English communication medium. Internet becomes a more popular tool for global communication, especially those who do not speak English can be a disadvantage. Therefore, a comprehensive approach to language can be a problem to expand business in international markets. The problem of language, the companies build their own multi-lingual web based options. Also search engines like Google are providing options to translate the web page to different language. It describes that it is likely for the consumer or client to choose a language by clicking on an icon.

Further hurdles are associated to the ability of language to communicate various styles of meaning and how various cultures interpret. "Although computer companies are now advancing in technology which automatically translates contents into the receiver's language (Croft, 1995), dealing with the language problem invariably requires the use of local assistance. One of the simplest ways of checking and control is back translation": the translation of the other languages back to Nishat own language is by any other person who has not translated it earlier.

Colors:

Colors crosswise nations have diverse representative standards. For instance, in America "blue ribbon is awarded for first place. In England, first place gets a red ribbon. Black is the color of mNishat ning in America, while white is the color of mNishat ning in the Orient" (Sterne, 1996). Therefore if a company is growing across the borders from its home business by the Internet, it has to consider in a further international way.

Privacy:

Privacy is spreading concern among the developed countries. In the U.S., there are cases of violation of privacy, which is held by the cNishat t. Telephone Privacy Act 1992 (TCPPA) prohibits a programmed reference "any service which is responsible for calling the call," and it also prohibits unsolicited advertising copy. Similarly, the European Union approved the European Data Protection Directive. Directive on the basis of the "outside" the faith, where data is used to solve, unless the organization has a clear approval of the organization. Sales, so it is important to know what people in society: the invasion of privacy because of the different approaches require different marketing approach to privacy. After one of the best internet marketing tactics of the "soft sell". Refer to the type of activity, one can try.(Bredenberg, 1995):

contributing attentively in news groups as casually let people knows what individual does;

taking a "signature" with contacts information in the last line of the email message;

enlisting direct creating messages in electronic malls (cybermalls) and directories;

making email transaction messages to send out to those who show concern in products or services;

•Creation of a Web site that deals with beneficial information beside with information about a company's business.

Security:

One of the most general doubts with making competent and dependable online commerce concerns the security of economic transactions which happen on the network. "Credit cards" give the most apparent response. However an encrypted message, which includes the card number, can be regarded as principled operator through the embedded packet. Therefore, of cNishat se, a comparative risk is involved in transactions of this type. (Notess, 1995). However, as practice shows, this possibility is small because a large amount of information flowing through the network and the general lack of time available for the system administrator. However, during the reservation transfer consumer safety, there is a dilemma for online sales.

At the same time as David Angell says "Credit cards are the transactional livelihood of today's customer merchant connection, so it is no risk that 90 per cent of the people who shop online use credit cards for their purchases" (Angell, 1996). "Another security dilemma is about verification; when clients put orders via email, it is not possible to inform if they in reality are who they say they are (Resnick, 1994). However, improved software that interprets a "digital ID" can assist firms manage this dilemma in cyberspace.

Intellectual property:

On the World Wide Web, repetition is an intrinsic element of the structure. While someone relates a firm's web page, a duplicate of it has been made on that computer. Therefore, it is so simple to imitate duplicate or "steal" words, graphs, software, or a full appearance from that web page. Even if you changed the mode of making copies through the Internet, the law has not changed. The companies have to take legal action to protect them, and they still show damage legal use of these events. Therefore can be easily reproduced on the internet, its illegal (Sterne, 1996). As the Internet as a means of communication will become more global, many governments including Australia, Canada, France, Sweden and the United States and the European Commission, seeking a global synchronization of property law, the university provides the national structure of information (Hurley, 1995).

Telecommunication infrastructure

The regular utilization of faxes, email, and the Internet is moving the "virtual workplace" near to realism in the United States of America. However many nations, as well as of Western Europe, do not get pleasure from the similar standard of telecommunication services. Therefore, firm should not anticipate finding crosswise countries the similar simple electronic access that exists in the USA. While a consequence, yet an extremely industrialized country like Germany takes an immense contract for telecommunication services, which can be patterned and impulsive (Toops, 1996).

There are many other examples in the sphere of the world. The Czech Republic has not yet been released for the leased lines, and the transmission rate is sufficient outside Prague. Is aware of only 1.7 telephones per 100 inhabitants in Africa, where connectivity is often hindered by a poor telecommunications infrastructure owned by outside major cities. (Danowitz, Nassef, & Goodman, 1995). In Mexico, consumers often wait more than a year to install telephone service. Similar situations in developing countries in Eastern Europe, Asia, Latin America and Africa are dubbed in Western Europe (Quelch & Klein, 1996).

Competition

The adaptation of ICT might also be exaggerated by product market situation below which companies are working, predominantly the pressure by the competitors they are showing to. In those markets where competition is fierce, demand elasticity's can be expected to be higher because of the existence of close substitutes, thus driving firms to innovative activity or quick technology adoption (Majumdar & Venkataraman, 1993). In case of open economies similar to Switzerland, international competition is a predominantly efficient method of forcing firms to adopt the most efficient way of producing or to temporarily escape competitive pressure all the way through product innovations". Practical proof is described by exclusively for ecommerce by (Bertschek & Fryges, 2002).

Firm size, organization age and corporate status

Firm size, organization age and corporate status (the organization being a member of a larger group) are three descriptive variables which are used in lots of studies of adoption behavior. Firm size basically captures size specific variables which are not explicitly modeled, such as advantages of larger organizations with respect to the capacity to absorb risks related technology development, economies of scale, preferential access to capital markets, (Davies, 1979). Therefore, organization size is expected to be positively related to early and intensive adoption. Theoretical arguments with respect to the role of organization age are not conclusive". A encNishat aging effect on adoption in case of old organizations reflecting precise (technological) experience may be balanced by unconstructive impacts for this class of organizations due to minor modification expenses in younger firms with a further up to date principal reserve (Dunne, 1994).

Globalization and technology effects come into view to have "spurred minor firms around the world to embrace e-business practices. Industry sector and firm level factors are analyzed, collectively with owner/manager motivations and attitudes towards e-business adoption. Essential factors range from general macro level dimensions which impinge across businesses of all sizes to specific micro level factors which contact on businesses employing less than ten people" (Fillis, Johannson, & Wagner, 2004).

The smaller firm shares some general characteristics with its larger counterparts, such as "the requirement for long term profitability, but in many respects it behaves in a particularly different manner due to factors such as resNishat ce constraints and the impact of the individual owner/manager exerting a high degree of locus of control in decision making" (Hansemark, 1998).

(Poon & Swatman, 1997) See one of the main benefits to adopting e-business in the small firm "as the ability to access an information infrastructure which is a great deal superior to that owned by many large corporations. In accumulation, these technologies also intensify the ability of the smaller firm to communicate internally and externally to the similar degree as its larger counterpart. Enhanced communication with customers, suppliers, and business partners and competitors can outcome in new value additional products or services, or more prominently in this era of the knowledge economy, rational property and ideas being traded (Leadbeater, 2000). Due to it's a lot more elastic approach to doing business than the larger firm with its hierarchical tiers of decision making, the smaller firm has the prospective for gaining competitive advantage by being much quicker and flexible in connecting to the Internet" (Durkin & McGowan, 2001).

Communications

In the age of set of connections or "relationship marketing and just in time manufacturing, maintaining effectual communications with overseas customers (actual and potential), suppliers, agents and distributors is significantly important to successful internationalization" (Axels