Saiham Textile Mills Ltd

12.00 Revaluation Reserve :

Revaluation reserve is treated as a capital reserve. It is created to finance future projects for
business expansion. Revaluation reserves are carried in the balance sheet until the asset is
discarded.
In 2018 the revaluation reserve was 380,449,077 and in 2017 it was 400,089,371.So we can
say that the revaluation reserve was better in 2017 then 2018.
13.00 Term Loan- Prime Bank
A term loan is a loan which is issued by a bank for a specific amount that has a specified
repayment schedule and either a fixed or floating interest rate. A term loan is appropriate for
business with sound financial statements. Companies often use a term loan to purchase fixed
assets, such as equipment or a new building for production process.
Here, Saiham Textile Mills took the term loan from Prime Bank. In 2018 the amount was
81,249,995 and in 2017 it was 0. That means in 2017 they did not take any term loan from
bank.
14.00 Deferred Tax Liabilities
The deferred tax liabilities is a tax which is assessed or is due for the current period but not
yet been paid. The deferral is the difference in time gap between when the tax is accrued and
when the tax is paid. Deferred income tax shows up as a liability on the balance sheet. It can
be classified either a current or long term liability.
In 2018 it was 171,886,833 and in 2017 it was 165,982,619. As it is liability, in 2017 it was
in better position than 2018.
15.00 Short Term Loan
A short term loan is a type of loan which have to be paid in less than one year. It is obtained
to support a temporary business capital need. Short term loan provides quick cash for
temporary financial trouble and it has shorter repayment period.
Here, Saiham Textile Mills Ltd. took short term loan from different banks, such as SCB,
HSBC, EBL, Lanka Bangla Finance. In 2018 their total amount of short term loan was
712,429,227 and in 2017 it was 699,642,973. We know that short term loan is liability so in
2017 the short term loan amount was better than 2018. Because they took less loan in 2017.
16.00 Current Portion of Long Term Loan
The current portion of long term loan is the amount of unpaid principal from a long term debt
that has accrued in a company’s operating cycle which is less than 12 months. It is considered
as current liability because it has to be paid within the period.
In 2018 the current portion of long term loan was 12,500,004 and in 2017 it was
125,606,126.So it was better in 2018 as the amount was less than 2017.
17.00 Liabilities for Goods
Liabilities for goods mean a liability which is occurred for goods. It is defined as the future
sacrifices of economic benefits. In 2018 the amount of liabilities for goods was
1,508,703,175 and in 2017 the amount was 874,055,585. So company was better in 2017 in
the perspective of liabilities of goods as the amount of liabilities was less in that year.
18.00 Liabilities for Expense and Others
We know that liabilities are the obligations and debts a company owes. And liabilities for
expense mean liabilities which are occurred for expenses. Electricity charges, gas charges,
dividend, auditor fees, office rent these are the expenses by which liabilities can occur.
Workers profit participation fund (WPPF) is another component of liabilities for expense.
According to the labor law the company has to pay 5% of net profit to the workers profit
participation fund. It is an expense. The payment must be made no longer than nine months
of the close of every year.
In 2017 the liabilities of expense was 26,324,656 which was less than 2018. So in 2017 it was
better as it is a liability.
19.00 Provision of Tax
Tax provisions are for payment of income tax. Tax provisions are an amount set aside
specifically to pay a company’s income taxes. That means it is a amount of income taxes a
company estimates it will pay in a given period. Provision for taxes can be treated as a
current liability and it decreases the working capital in the schedule of changes in working
capital. In the balance sheet it is shown under the other liabilities and provision.
In 2018 it was 0 , that means there were no provision of tax. But in 2017, it was 17,131,854.
20.00 Cost of Goods Sold
One of the major components of income statement is cost of goods sold (COGS) .COGS
refers to the direct costs of producing the goods sold by a company. The amount includes the
cost of the materials and labor directly used to produce the goods sold by company. Such as
cost of production, consumption of parts, consumption of packing materials, raw materials,
factory overhead. But it excludes indirect expenses. COGS could be different if different
inventories valuation methods are used.
21.00 Administrative and Marketing Expenses
Administrative and marketing expenses are shown in income statement. Administrative
expenses are costs incurred by an organization that are not directly related to a specific
business function. Administration expenses are for performing basic operations and increase
efficiency. Salary, allowances, provident fund, rent, printing, stationary, travelling, board
meeting fees, utility expense, electric expense, depreciation these are the typical items of
administration expenses.
In 2018 the amount was79,761,932 and in 2017 the amount was 68,394,621. So the expenses
were less in 2017.
22.00 Financial Expenses
Financial expenses are costs incurred from borrowing or earning income from financial
investments and these are the external expenses of company’s core business. Financial
expenses include bank interest, bank charges and commission. It is shown in income
statement.
In 2018 the financial expenses were 58,385,508 and in 2017 the expenses were 71,875,052.
So we can say that in 2017 the financial expenses were more than in 2018.
23.00 Non-Operating Income
Non-operating income is profit and loss from sources not related to the typical activities of
the business or organization. Non-operating income can include profit or loss from
investment, property, or asset sales. Non-operating income is generally not recurring and it is
considered separately when evaluating performance over a period time. It can include
dividend income, profits or losses from investments as well as gains or losses incurred by
foreign exchange. It is shown in the income statement.
Here in 2018 it was 20,628,337 and in 2017 it was 39,076,490. So it position was better in
2017.
24.00 Other Income
Other income does not come from company’s main business. Other income includes income
from interest, rent, and profit from the sale of fixed assets. Companies present other income
in a separate section, before income from operations.
In 2018 and 2017 company’s other income as office rent was 2,239,380.
25.00 Net Asset Value (NAV) Per Share
The net asset value per share is a real estate matric that indicates the value of a mutual fund.
It is the expression of the value of the company or fund per share.
In 2018 the net asset value per share was 26.98 and in 2017 the net asset value per share was
26.94.
26.00 Earnings Per Share (EPS)
EPS is the company’s net profit divided by the number of common shares it has outstanding.
It indicates how much money a company makes for each share of its stock.
In 2018 earnings per share was 1.21 and in 2017 it was 1.02. EPS was better in 2018 because
in 2018 EPS was higher than 2017. The higher EPS indicates greater value because investors
will pay more for a company’s share if they think the company has higher profits relative to
its share price.
27.00 Related Party Transaction
In business related party transaction takes place between two parties who hold pre-existing
connection prior to the transaction. Companies often seek business deals with their familiar
parties.
In Saiham Textile Mills Ltd. there are many related party transaction. Such as Faisal Sppining
Mills, Saiham Cotton Mills, Saiham Knit Composite. These were their common director. And
the nature of transaction was trade and other receivable. Apart from those, Mrs. Momena
Begum was there share holder and they took short term loan from her.
28.00 Disclosure as per requirement of Schedule XI , Part II of the Companies Act 1994
This section was shown the director’s attendance status of board meeting. In 2018, seven
board meeting were held. And all the members were present on all the seven meetings.
29.00 Disclosure as per requirement of Schedule XI, Part II of the Companies act 1994
A. This part was for salary range according to employee’s position. Here we can see that
there are different units such as spinning unit and melange unit and the salary range
according to the officers and staffs. The other was directors’ remuneration. A managing
director got remuneration that was shown in that section.
B. Details of production capacity was described in this part. Installed capacity, actual
production, % of achievement, % of shortfall these type of information we can get from this
part.
C. People can get the value of raw cotton, polyester fiber, viscose from this. Apart from
these, the information of import amount, opening amount, local purchase loan amount, total
purchase and consumption amount of raw materials, packing materials and spare parts are
also given here.
30.00 Contingent Liability
A contingent liability is a liability that may occur depending on the outcome of an uncertain
future event. Contingent liabilities are important financial matters for a business.
In 2018 total contingent liability was 11,347, 248 and in 2017 it was 9,582,311.
31.00 Events after reporting period
On October 24, 2018 the board meeting was held by the board of directors. And 15% cash
dividend has been recommended to the shareholders. These information were given in the
footnote. Apart from these some general information were also given.
Introduction
The textile sector is the most important sector in Bangladesh. It is the largest manufacturing
sector in the country. Saiham Textile Mills, Envoy Textile Ltd and H.R. Textile Mills Ltd are
the textile industries in our country.
In the financial statements of these three companies there are foot notes which provide
additional information or explanations for various portion. Footnotes to the financial
statements refer to additional information .These additional information helps to explain how
a company reached its financial statements figure. It is like a supplement which is providing
clarity to those who require it without having the information placed in the financial
statement, such as investors, creditors, analysts or general people.
The footnote present required disclosures, accounting methods, any modifications from
previous period etc. Footnotes are important investors, creditors and other users of the
financial statements. So that they can know more about the company and they may reveal
issues with a company’s financial health.