Karachi September 12 2021: International Industries Limited (INIL) achieved sales volume of 190,000 MT during the FY21, with turnover of PKR 28.9 Billion compared to PKR 18.9 billion in FY20, as per information shared by the company at Pakistan Stock Exchange.
The Company’s export turnover for year was PKR 5.9 Bn (FY20: PKR 2.9 Bn). Export sales performance was exceptional, showing volume growth of 71% compared to last year. Sales across most major markets and product lines increased as post lockdown demand remained healthy throughout the year. Company continues to win prestigious accolades, receiving the FPCCI Best Export Performance Award 2019 for the 20th consecutive year in the Engineering Products (Mechanical) segment.
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IIL Australia, a wholly-owned subsidiary based in Melbourne, Australia, registered net sales of AUD 24 million (FY20: AUD 12 million). It continues to grow rapidly, having become a preferred supplier in the Australian market. Australia is now IIL’s largest export destination. The Company delivered its highest-ever sales volume as it continued to expand its network and build a sustainable customer base. Ongoing geopolitical tensions between China and Australia will provide opportunities for further growth in the coming year.
The establishment of our wholly-owned subsidiary, IIL Americas Inc., in Ontario, Canada last year continues to provide better access to buyers and greater opportunities to develop alternative products. Net sales of the Company were CAD 6 million.
The Company’s domestic turnover for the year was PKR 23 Bn (FY20: PKR 16 Bn) as domestic sales volume increased 25% over the previous year. This increase was attributable to our strong marketing and sales efforts which capitalized on the rebound from unusually low sales volume last year due to the COVID-19 pandemic and ensuing lockdowns and economic slowdown. The recovery was led by sales of our CR Tubes which are used in the automotive, furniture and general fabrication segments. Our Black Pipe and HSS line of products also performed well due to the broad-based increase in infrastructure and construction activity. Sales of our GI Pipe product line remained healthy. Our API line pipe sales to gas utility companies were higher than last year despite the postponement or cancellation of several expected tenders by gas companies due to funding constraints.
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Based on successes in production and sales during the year, the Company posted growth of 53% than last year, earning a gross profit of PKR 3,973 million. Revenue from the Steel segment stood at PKR 25,577 million, yielding gross profit of PKR 3,441 million. Revenue from the Polymer segment was PKR 3,364 million, delivering gross profit of PKR 532 million.
Company’s Profit before Tax recorded at PKR 2,259 million and Profit after Tax at PKR 2,315 million. Profit was also boosted by savings in financial charges, leading to Earnings per Share for the year of PKR 17.55.
Cost of goods sold for the year at PKR 24,967 million was 42% higher than last year due to historical highs in steel prices and higher sales volumes. Selling and distribution expenses of PKR 1,494 million were 84% higher than last year on account of higher export sales volume compared to last year, coupled with record increases in ocean freight costs. Administrative expenses of PKR 383 million were 28% higher than last year due to inflationary rises and payments on account of staff exits. Other operating charges of PKR 189 million were 514% higher than last year, mainly due to higher WPPF / WWF costs resulting from higher profits. Other income of PKR 1,054 million showed an increase of 82% mainly due to higher dividend income from investments in subsidiary and associated companies.
Financial charges during the year decreased by PKR 483 million, which was 39% lower than last year, primarily due to the lower cost of borrowing over the year.
Management is actively continue to enhance commercial and institutional customer engagement via nationwide events, sponsorships and direct engagement mechanisms, despite activities being hampered by the pandemic.
International Industries is the leading manufacturer of tubes & pipes in the domestic market for GI Pipes, CR Tubes, Stainless Steel Tubes & Pipes, Hollow Structural Section and Black & Scaffolding Pipe, having the largest product range in the segments it operates in. The IIL brand is the benchmark for quality and has, over several decades, built continuing loyalty from its customers, dealers and business partners. The Company is continuously striving towards customer centricity and being attuned to the market needs.
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Stainless Steel Sales
Stainless steel tube sales grew by almost 80% compared to the previous year. The introduction of our economical SS 200 series brand of stainless steel pipes and an expanded range of diameters and shapes have started to reflect in our overall volumes. Output is also expected to further increase next year as we commission new production lines.
Turnover of our range of polymer pipes and fittings was PKR 3.4 Bn. (2020: 2.5 Bn.) with gross profit of PKR 532 million (FY20: PKR 346 million). The segment saw broad-based growth during the year with all major product lines showing healthy increases. Our gas company tender business grew significantly, despite inadequate funding resulting in tender delays and cancellations. Water and duct products continues to perform well and is expected further develop in the coming year.
Our line of PPRC pipes and fittings continues to perform well with volumes increasing by 52% over last year. We continue to drive the same customer centric approach in this segment that is associated with our brand name in the steel segment. The proliferation of inferior quality polymer products in Pakistan makes sales and marketing of premium quality products to customers with limited product knowledge a formidable challenge. The management continues to create awareness about quality standards and the long-term health implications of using sub-standard polymer pipe systems. This is made possible through regular nationwide dealer events, seminars with institutional clients, site visits and media campaigns. We also continue to educate institutional clients about quality standards for water and duct pipes; however, the commercial market remains a challenge where cheap, substandard product is available in abundance and without adequate regulations.
Company commissioned a stainless-steel tube mill and polishing machine for square and rectangular tubes and sections during the year, which will further enhance our product range. Two polymer extruders were also added to cater for growing demand for PE and PPRC water pipes. Company API audit scheduled during the year was also carried out successfully.
International steel prices nearly doubled during FY21, which put tremendous pressure on the borrowing levels and the debt ratio. The Company has performed creditably in this regard and the debt ratio improved by 1%. This was achieved by efficient working capital management and a higher profit retention rate. Debt to equity ratio was 60:40 at 30 June 2021, compared to 61:39 on 30 June 2020.
The Board of Directors has recommended a final cash dividend of PKR 6.5 (65%) per share. With the interim dividend of PKR 3.5 (35%) per share already paid during the year, the total dividend for the year 2021 will amount to PKR 10 (100%) per ordinary share of PKR 10 each. The total profit distributed by way of dividend amounts to 57% (FY20: Nil).