BASIC INFORMATION REPORT

Account Name: Indus Dyeing & Manufacturing Company Limited

Parent or Group Name: Indus Group
Industry: Textile -Spinning
Date Established: 15-Nov-1966
Legal Status: Public Limited company
CIF Number: 20003424
Auditors Deloitte / M.Yousuf Adil Saleem & Company
Type of Accounts (at opening):
Key Contact(s):
508 5TH FLOOR BEAUMONT PLAZA, BEAUMONT ROAD
Mailing Address:
CIVIL LINES QUARTERS, KARACHI
Telephone # / Fax #: 111-404-404
E-mail address: -
Key Manager / Contact Personnel:
Relationship Manager:
Back-up RM(s):
Unit Head:
Date First Credit Extended (if any):
Business Group (CBG, FIG, IBG): CBG
Date First Account Opened: -
How Obtained (direct marketing, client referral): -

Customer Background

1. Comment on the strategic fit of various companies in the economic group.

Indus Dyeing & Manufacturing Company Ltd. (IDMCL) is a public limited company listed on the Pakistan Stock
Exchange (PSX). IDMCL is a flagship concern of Indus Group and has been involved in the business of spinning / yarn
manufacturing since 1957. Over the years, the company has shown an outstanding export performance on the back
of which it has earned trophies for highest export in cotton yarn from the Federation of Pakistan Chambers of
Commerce & Industry. In addition to its primary business of manufacturing and exporting cotton yarn, the company
also exports raw cotton.

IDMCL initially started with two production facilities, one located at Hyderabad and the other at Muzafargarh. In
2005, the former Yusuf Textile Mills Ltd (YTML) unit was amalgamated into IDMCL giving the company a presence in
Karachi as well. In the year 2012 the company acquired Indus Lyallpur Ltd. (formerly known as MIMA Cotton Mills
Ltd.)

Majority shareholding of IDMCL (88.46%) resides with the directors (and their families), who are related to the
chairman Mian Mohammed Ahmed, whereas 6.65% of the shares are held with institutional investors and
remaining is public float. Sponsors and management of IDMCL are experienced industrialists who enjoy an excellent
market reputation with regard to business integrity and professional management techniques. The company through
its excellent reputation and professional management has established itself as one of the market leaders in the
industry.

2. Shareholding Pattern

Name % Held Position

Directors & Spouses 88.46 Directors
Joint Stock companies 2.59
Individuals 1.97
Mutual Funds 2.92
Financial Institutions 1.59
Insurance Companies 2.47
Total 100

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Brief Management profile:
Mian Muhammad Ahmed (Chairman)
Mian Mohammad Ahmed started his textile business 50 years ago. With hard work and devotion he laid the
foundation of the Indus group of companies by setting up cotton ginning factories and later on establishing textile
spinning business. He is responsible for strategic corporate planning.

Mian Shahzad Ahmed (CEO)

Shahzad Ahmed took charge as Chief Executive after his graduation in Marketing from USA; he oversees functioning
of all activities of Indus Dyeing from sales to finance.

Mian Riaz Ahmed (Director)

He works closely with Mr. Mohammed Ahmed. His keen business acumen has contributed immensely to the group’s
vitality. He looks after the cotton ginning business.

Mian Naveed Ahmed (Director)

After graduating from USA in Accounting in 1985 he joined Indus Group. He is responsible for yarn sales for the
group and corporate activities of Yusuf Textile Mills Limited (Associated concern of Indus Dyeing)

Mian Kashif Riaz (Director)

He is in-charge of Sunray Textile Mills and an MBA from USA.

Mian Irfan Ahmed (Director)

After having studied B.Sc. Textiles from USA, he now looks after all functions related to Yusuf Textile Mills Limited.

Mr. Shafqat Masood (Director)

He is a Chartered Accountant by profession and joined the group in 1980 as executive director. He is the Finance
Head of Indus Group.

Mr. Shahwaiz Ahmed (Director)

He is an MBA from USA and looks after operations side of business.
3. Group and Associated Companies:
# Name Area of business
1 Indus Dyeing & Mfg. Co. Ltd. Spinning: Manufacturing and sale of yarn
2 Indus Lyallpur Ltd.
Spinning: manufacturing and sale of yarn
(100% owned by IDMCL)
3 Indus Home (Pvt.) Ltd.
Manufacturing and export of greige and home textile items and towels
(100% owned by IDMCL)
4 Sunrays Textile Mills Ltd.
(associate company with 1.2% share- Spinning
holding of IDMCL)
5 Indus Home USA Inc.
Acts as a commission agent to generate sales orders in textile sector.
(100% owned by IHL)
It is to be noted that the parent company i.e. Indus Dyeing also owns and operated three ginning units which
provides cotton to its sister concerns depending on the requirement. Since a major portion of the cotton used is
imported excess cotton from ginning units is also sold in the open market.
Similarly yarn produced by Indus Dyeing and Indus Lyallpur is used to manufacture home textile items in Indus
Home and the excess yarn is sold locally and exported.

4. Comment on the empowerment of key managers.

The directors are managing key affairs themselves; therefore the management is highly decentralized. Our key
contact, Mr. Shafqat Masood, who is handling the finance of the group, keeps a close liaison with the company’s
bankers and therefore key banking decisions are expected to be made in a time efficient manner.

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 Bank Lines
LIMITS WITH OTHER BANKS
# Bank Name Short Term Term Loan Total

Suppliers & Trade Reputation

Supplier Raw Material Currency % of COGS Relationship Since Purchase Terms
Various Raw cotton PKR/USD/EUR 23% 1990 Cash/
(imports) LC sight
77% (local)

Describe procurement patterns. State if there is seasonality in procurement and the duration of the season. Are
there any long- term supply contracts in place? What are the benefits and / or risks emanating from such
contracts? Comment on the strength of the supplier relationships. Is there single supplier dependence? Are
sourcing alternatives available?

Seasonality is experienced in the cotton buying period (July-Dec) when the company procures cotton for
production. There is no single supplier dependence for procurement of raw materials. Therefore the company
enjoys significant bargaining power over its suppliers.

Distribution and Selling Terms

Customer Currency % of Sales Selling Terms Selling Terms Relationship since
Various PKR/USD/EURO 61% (exports)* 90-120 days 60-90 days 1999
39% (local)
* around 60% is to China and the rest is to Europe and America.

5. Comment on the quality of buyers. State if there is seasonality in sales and the duration of the season. Is
there single buyer dependence? Comment on the quality of buyers and strength and benefits of buyer
relationships. Does the customer have capability/flexibility to pass cost variations (bargaining leverage) over
its buyers in terms of flexibility to pass on cost increases? Comment on importance of the customer to the
buyer.

Local Yarn constitutes only 39% of its total turnover, while remaining is exported to various countries. The company
exported around 61% of their production mainly to the (Westpoint) USA, (F.B. Fashion (Pvt.) Ltd.) Bangladesh,
(ITOCHU Textile Materials) Hong Kong, Taiwan, UAE, Mauritius and Malaysia.

While local sales are done on cash, exports are done on credit against contracts and LCs both ranging between 60 to
90 days. Local buyers include Artistic Millners, Indigo textile, Hantex, Rajby Textiles etc.

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 OPERATING FACILITIES

Description Location Installed Owned Make/Brand

Capacity
Spindles Karachi/Muzaffargarh/Hyderabad 178,896 Owned Foreign
Ginning Unit Muzaffargarh 72,999 bales Owned Foreign/ Local
Weaving Karachi/Muzaffargarh/Hyderabad 40.953Mn lbs Owned Foreign

IDMCL operates from 03 facilities in Karachi, Muzaffargarh and Hyderabad, with a total capacity of:
- Spinning Housing 178,896 spindles with the capacity of 127.27 million lbs of yarn p.a.
- Weaving currently has the capacity to produce 40.953Mn lbs of fabrics per annum.
- Ginning Unit can produce 72,999 bales of cotton based on 1 shift per day.

MANAGEMENT ANALYSIS

A. What is our assessment of character & integrity of sponsors / management? Describe our specific prior
experience with the management, if applicable.

The Group enjoys a strong market reputation and is a major player in the textile industry. The Group has a
strong and long standing banking relationships with at least eight banks including United Bank Limited. The
customer so far enjoys a healthy borrowing relationship with a prompt payment record and no overdues as of
date with UBL.

B. Does the customer’s ownership and organizational / legal structure affect our risk assessment? In case of
family owned 1/managed enterprise, comment on the likelihood of a split in the family? Is the presence of
current patriarch key to preventing the split? Is an asset distribution plan in place? Is there a history of asset
distribution? Will the fragmented units in case of asset distribution be viable?

The Group is family owned and managed by close relatives. The management of individual mills has been
distributed amongst key family members, who are individually responsible for their respective business units.
Although at present there is no apparent plan to split the business, however since the business units are
bifurcated so evidently, such an eventuality may occur. We foresee this happening only when each individual
unit grows to a prominent size and provided the already existing bifurcation of responsibilities, the split should
be amicable.

C. Who are the key decision makers? What is the overall management depth? Has there been a change in
management structure or turnover in the management? Comment on the company’s ability to react to this
change. Is a succession plan in place? Comment on the borrower’s ability to hire and retain capable
professionals.

The key decision makers are the directors of the company who decide for the main and critical factors that
include inventory procurement, expansion and other important issue. The company has also hired qualifies and
experienced professionals like Chartered Accountants, Textile Engineers, Cost Accountants and Quality Control
Specialists to ensure quality in every area The management team and sponsors are reputed and experienced in
their relevant field and are known in the market for their integrity as well. The company has also been
responsive to the changes in the external environment and in this regard the companies operating under the
group have been undergoing continuous BMR and other charges as and when required.

D. What is our assessment of management’s ability to formulate and execute its business strategy and
respond to changes in the economy, industry and competitive environment? How is it evidenced?

The management has a proactive approach and is fully aware of the development external opportunities and

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 strengths. The Group took a proactive approach to the post WTO market and has undertaken BMR to effectively
compete with bigger players. This is further evidenced by the fact that IDMCL had setup a towel project by the
name of M/s. Indus Home Limited. This has diversified the product portfolio and has enabled the Group to
enter previously un-catered markets. Indus Home provides value addition in the group and utilizes around 50%
yarn produced by the group.

E. What is our access to key managers? Is information easily available regarding customer’s objectives and
business, related performance, management issues and strategy and disputes amongst owners?

Key managers are easily accessible and can be met on short notices. Internal information might be difficult to
extract, however public information is shared in a timely and readily manner.

F. Comment on corporate governance in terms of quality standards, ethical standards, risk management
and financial control. Use quality of auditors, insurer as a guide

The financials of the company are in compliance with the Code of Corporate Governance. The financials are also
in accordance with the accounting laws practiced in Pakistan and are in compliance with the requirements of
the Companies Ordinance 1984. The external auditors of the company are Deloitte / M.Yousuf Adil Saleem &
Company. The auditors have been given an un-qualified opinion.

Trade Checking
Provider Date Comment
ICIL - Applied for

Market Checking
Provider Date Comment
ICIL - Applied for

Bank Checking
Provider Date Comment
Misc. Banks - -

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