Lahore February 19 2022: Mughal Board approved CAPEX budget for its non-ferrous and ferrous segments, as per company filing at exchange.
CAPEX for non-ferrous segment amounted to approx. PKR 2.5 billion which will enable the Company to commence exports of aluminium ingots and also increase its current copper exports. These projects are expected to come online within 20 months from the date of establishing letter of credit.
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Attack Refinery operated at higher utilization in second quarter of fiscal year 2022: PSX
CAPEX for ferrous segment amounted to approx. PKR 400 million and was mainly related to procurement of rolling mill spares.
The above CAPEX will be financed mainly by way of long-term debt with expected mix of debt-to-equity ratio of 80:20.
On operational front, sales revenue increased from PKR 19,445.579 million to PKR 32,081.988 million as compared to corresponding
period, with an increase of 65 percent. Increase in sales was due to increase in sale prices as well as volumes both in ferrous and non-ferrous segments. Overall gross margins increased significantly from PKR 2,597.575 million to PKR 5,677.198 million in the current period. Gross margins improved for both ferrous and non-ferrous segments.
Within the ferrous segment the impact of increase in raw material prices in the international markets and impact of PKR devaluation had resulted in increase in sale prices of local ferrous products, however, due to inventory in hand the weighted average cost of inventory witnessed gradual increase resulting in improvement in gross margins as compared to corresponding period. Within non-ferrous segment PKR devaluation resulted in increase in sale prices and resulted in increase in gross margins. Commission on sales increased as compared to corresponding period mainly due to commission paid to various parties in respect of export sales which was in line with increase in exports.
“On the economic front, current account deficit, depreciating currency, struggling foreign exchange reserves, rising inflation, upward revision of discount rate by 100 bps to 9.75 percent, high scrap prices in international markets and increase in energy cost, impacted the overall performance of the Company.” Says Chief Executive Officer
Sales and marketing expenses increased from PKR 67.577 million to PKR 98.767 million as compared to corresponding period, resulting in increase of 46 percent. The increase was mainly due to increase in salaries, advertisement and freight cost. Administrative expenses increased by 43 percent mainly due to increase in salaries. Other charges increased from PKR 121.181 million to PKR 300.730 million as compared to corresponding period, resulting in increase of 148 percent. The increase was mainly due to increase in workers’ profit participation fund and workers’ welfare fund which was in line with increase in profits. During the period allowance for expected credit loss recognized amounting to PKR 118.992 million. Other income increased from PKR 67.901 million to PKR 175.160 million as
compared to corresponding period, resulting in increase of 158 percent. The increase was mainly due to recognition of foreign exchange gain. Taxation increased from PKR 228.234 million to PKR 469.978 million resulting in increase of 106 percent. The increase was mainly due to recognition of deferred taxation.
Resultantly, profit for the period increased to PKR 3,530.967 million as compared to PKR 1,398.393 million in corresponding period resulting in increase of 153 percent. Earnings per share (EPS) for the current period stood at PKR 10.52 as compared to EPS of PKR 4.55 (restated) in the corresponding period. Prior period EPS was restated to account for the impact of bonus element in right shares issued during the last year and impact of bonus shares issued during the period.
Additions in property, plant and equipment mainly represented addition on account of BMR of girder re-rolling mill. Capital work in progress mainly represented work on CCM and furnaces project. Further, during the three months ended December 31, 2021, the Board of Directors, approved the sale of certain items of property, plant and equipment comprising of certain items of plant and machinery and coal gasifier plant having aggregate book value of PKR 568.787 million. Accordingly, these non-current assets were classified as assets held for sale.
Immediately before the initial classification of these asset as held for sale, the carrying amounts of these assets was measured in accordance with previous revaluation model in terms of IAS-16 ‘Property, Plant and Equipment’ and checked for impairment and accordingly, net impairment loss of PKR 53.871 million in respect of revalued assets was recognized in other comprehensive income to the extent of credit balance existing in the revaluation surplus in respect of those assets.
Further, impairment loss of PKR 3.109 million was recognized in statement of profit or loss in respect of assets carried on cost model.
Inventories comprised of store, spare & loose tools, raw material and finished goods. Inventories increased by 58 percent from 14,867.878 million as at June 30, 2021 to PKR 23,536.921 million as at December 31, 2021. The increase was mainly due to increase in average inventory prices and increase in production levels. Trade debts also increased significantly due to increase in overall sales and also due to increase in sale prices. Further, allowance for expected credit losses amounting to PKR 118.992 million was recognized during the period. Deposits, prepayments and other receivables decreased by 78 percent. The decrease was mainly due to release of bank guarantees which were issued in favor of customers for supply of steel bars.
Trade and other payables increased by 36 percent mainly due to increase in utility payables and foreign creditors. Short-term borrowings increased by 47 percent and were in line with increase in working capital requirements which increased due to significant increase in commodity prices, depreciation of PKR and increase in production. Short-term borrowings also included Islamic commercial paper to the tune of PKR 1,859.260 million issued during the period. Further, the Board of Directors also approved issuance of sukuk certificates-II to the tune of PKR. 5,000 million for a period of 5 years for meeting working capital requirements.
Resultantly, the Balance sheet footing stood at PKR 53,605.673 million as of December 31, 2021, compared to PKR 41,799.806 million as of June 30, 2021. Breakup value per share increased to PKR 59.53 as of December 31, 2021 from PKR 56.55 as at June 30, 2021. Current ratio as at December 31, 2021 stood at 1.39:1 as compared to 1.37:1 in June 30, 2021.
