M/s.Kreston Hyder Bhimji & Co.
F.D. Registrar Services (Pvt) Limited Spc Application
Suit 1705, 17th Floor, Saima Trade Tower-A,
Dubai Islamic Bank Pakistan Limited
Standard Chartered Bank (Pakistan) Limited
Plot No.441/49-M2, Sector "M",
H.I.T.E., Main R.C.D. Highway,
Jinnah Road, Quetta - Pakistan.
11th Floor, G&T Tower,
On behalf of the Board of Directors, we are pleased to present the un-audited condensed financial statements of Gatron (Industries) Limited for the three months ended September 30, 2022.
The financial synopsis for the period under review are as below:
During the period under review, your Company has achieved net sales revenue of Rs.4,896 million as compared to Rs.4,953 million in corresponding period of last year. On account of devaluation of Pak Rupee, the sales have not reduced significantly in monetary terms, however quantum of sales of both main products i.e., Polyester Filament Yarn (PFY) and PET Preforms reduced by 28% and 37% respectively. The sales volume of PFY remained at lower side and inventory of Finished PFY also increased from around 6,200 tons in end June 2022 to above 10,000 tons in end September 2022 due to quite an overhang of inventory in the market due to sudden surge of imported PFY. This is the highest ever inventory of Finished PFY ever in the history of the Company. The production of PFY was also low on account of this and it reflected average plant capacity utilization in this quarter of 73% only. On the other hand, sales volume of PET Preforms remained at lower side during the period as compared to last year corresponding period due to the impact of floods and extraordinary inflation affecting carbonated soft drink demand.
At the time when the Company has invested heavily in expansion plant & machinery, the lower operating rates resulting in higher cost of manufacturing and on the other side significant increase in finance cost, put pressure on net result of the Company. Further selling prices of local yarn are under pressure due to overhang inventory of imported PFY which is being dumped with no anti-dumping duties being paid = evaded at import by the traders. However as noted below the Government is now serious in tackling this evasion.
Distribution & selling expenses significantly increased by around 102% as compared to last corresponding period and it is mainly due to increase in freight and transportation charges. On the other hand, administrative expenses increased by 42% mainly increased due to inflationary factors because of Pak Rupee devaluation.
Finance costs have also increased significantly as compared to last year corresponding period due to significant increase in Stock in Trade and Receivables which resulting in higher working capital requirements on the other side discount rate almost reached to double i.e., 15%.
On the Balance Sheet front as compared to June 30, 2022, stocks increased by Rs.5,537 million to reach to Rs.11,855 million. Debtors increased by Rs.254 million to reach Rs.4,577 million while creditors increased by Rs.3,888 million to reach Rs.7,556 million. In view of the above, Company's short-term borrowing increased by Rs.2,981 million as compared to June 30, 2022, to meet financing in working capital requirements.
As already reported earlier that with the resolve of the Government to strongly pursue the collection of Anti-Dumping Duty on Filament Yarn, your Company has already proceeded with the phase 2 of its expansion plan. This will allow the Company the capacity to produce 95,000 to 99,000 tons per annum of mixed denier (up from 75,000 tons current potential). This is three times the 33,000 tons of similar mixed denier production potential of the Company 5 years ago in 2017. Also, the polymer plant of capacity more than 200,000 tons/year is being installed, which will start Insha Allah in April 2023. This Polymer will now be able to feed all the PFY lines including the new capacity which otherwise the existing polymer plant would have been able to feed only one-third of the PFY capacity. Furthermore, it also allows production of additional polymer for more diversified products for local sale, own use as well as export. These diversified products also include Cationic polymer for Cationic yarn as well as Film grade Silica resin. The additional bright polymer will give the opportunity to the Company to expand the production of FDY yarn by Direct spinning if it so choses. Further, the export opportunity is being tapped to obtain low rate of long term financing of capital costs of the respective production plant. This would also allow better utilization of production capacity at a time when the domestic market is in a flux.
Furthermore, by December 2022, your Company Insha Allah will increase its capability of producing recycled yarn from PET bottle flakes upto nearly 12% of its PFY capacity, thus increasing the potential of more diverse set of customers for the same and increasing further the diversity in the already broad range of different varieties of PFY that the Company is able to produce.
Also, by December 2022 the auto handling, auto inspection and auto packing project of PFY will Insha Allah be in full swing, under this project the yarn trolleys move on a track and the yarn bobbins are inspected, graded, and packed in sealed & labelled cartons without any human touching the bobbins. The inspection, grading as well as packed production data also auto uploaded to the digital records of the Company.
Your Company has put up in-house knitting machines to supply Knitted Fabric of good quality for the local buyers of such product. This project is more to show the way for improved quality of Polyester Knitted fabric to the market and to demonstrate that the same can be produced with your Company's yarn. At moment the available capacity can convert 2.50% of your Company's PFY production into Knitted Fabric.
During the period under review, Pakistan's largest SAP (Systems, Applications and Products) implementation went live at Gatron. We have implemented and activated modules in Finance, Production, Supply Chain, Projects and HR. This will bring a result in a cultural shift that brings together people, data, and processes from across the business to create a better customer experience and become more competitive in an increasingly digital world.
CHALLENGES FACED AND FUTURE OUTLOOK
Accordingly, NTC has reduced the notified antidumping duties in the range of 2.78% to 6.82% (average 4.8%) before remand the notified antidumping duties were in the range of 3.25% to 11.35%. These were already low to cover the actual dumping/injury and are much lower than Anti-Dumping Duties imposed on Chinese exporters of Polyester Filament yarn:
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Mediem Tenacity Yarn Gatron Industries Ltd. published this content on 07 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 November 2022 10:31:05 UTC.