Lahore March 1 2022: The expansion project is progressing gradually, some delays have been observed due to unforeseen circumstance, yet the management is working hard for its completion at earliest, as per company filling to the exchange.
To increase the installed capacity of different segments in order to meet the growing business requirements, the company is carrying out expansion plan of PKR 3.07 billion.
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The first phase of the project has already been completed during the last quarter and put to operations. This will help the Company to get more volumes in forthcoming mini season of agriculture tyres, thus, will improve the margin of the Company. Second phase is planned to be completed by 3rd quarter of current financial year which was earlier expected to be completed by March 2022. There are certain supply chain issues, however, its progressing satisfactorily. Work on third phase which is related to infrastructure development and back end process enhancement is also underway and efforts being made to complete it by close of this financial year.
During the half year ended on December 31, 2021, the Company continued its momentum of growth and posted 17% growth in top line which was closed at PKR 9,481 million as against PKR 8,128 million reported in the same period last year. This increase is mainly attributed to the increase in selling prices of the products. However, the overall quantitative demand of tyres and tube remained slightly under pressure due to inflationary pressures that is mounting since the last six months.
The gross profit during the period decreased to PKR 1,044 million as against PKR 1,292 million posted in comparable period last year. Prices of imported raw materials remained on higher end throughout the period which along-with the exponential rise in sea freights and devaluation of PKR negatively impacted the margins. During the period under review, supply of raw materials also remained disrupted and affected the productivity of the production operations. On the other hand, higher energy costs resulting from sharp increase in coal price and oil price in the international markets also played its role as fuel to the fire during the quarter.
Selling and distribution expenses during the half year ended on December 31, 2021 increased from PKR 260 million to PKR 330 million mainly due to increase in freight cost and advertisement expenses. However, Administrative remained under control.
Finance cost for the period under review of PKR 233 million is higher as compared to PKR 179 million for the corresponding period of last year. Policy rate hikes especially in the second quarter coupled with increased working capital requirement pushed the finance cost higher, even though finances availed under concessionary financing schemes of SBP have subsided the impact to an extent. Resultantly, the net profit after tax stood at PKR 259 million for the half year ended December 31, 2021.
