The company faced numerous challenges ranging from fluctuation in exchange rates, rising interest rates globally, a historic rise in cotton prices globally and locally, increase in energy cost, and demand curtailment. The company faced demand curtailment due to a global economic slowdown which resulted in inventory buildup due to which plant was temporarily shutdown. Due to the implementation of a super tax on pretax profit and the mentioned economic and environmental challenges the Company recorded a decrease in net profit of PKR 220.15 million as compared to a net profit PKR 361.49million last year. Profit per share for the period stood at PKR 25.48 (2021:Profit PKR 41.84).Due to the increase in interest rates thecompany faced a higher finance cost of PKR 96.54 million as compared to (2021: PKR 70.33 million).
A brief financial analysis is presented as under:
| Income Statement | 2022 | 2021 | % Change |
|---|---|---|---|
| Sales | 8,674 | 7,122 | 21.80% |
| Gross profit | 639.86 | 728.95 | 12.22% |
| Operating profit | 462.22 | 536.79 | 13.89% |
| Finance cost | (96.54) | (70.33) | 37.27% | Profit before taxation | 365.68 | 466.47 | 21.61% |
| Taxation | (145.53) | (104.97) | 36.64% |
| Net Profit | 220.15 | 361.50 | 39.10% |
| Earnings per share (EPS) | (25.48) | 41.84 |
Your Company earned a gross profit of Rs. 639.86 million compared to gross profit of Rs. 728.95 million of previous financial year. Downward trend gross profit was primarily due increase in costs of production and lower demand. Finance cost increased by 37.27 percent in comparison to last year caused by an increase in average borrowing due to credit sales. Income tax provision increased by 36.64% due increase in super tax.
The Company strongly believes in integration of corporate social responsibility into its business. We focused on continuing social initiatives for worker and environmental welfare, as well as remaining compliant with social audits for various certifications.
The company’s activities expose it to a variety of financial risks: market risk (including currency risk, other price risk and interest rate risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance. Risk management is carried out by the Company’s finance department under policies approved by the Board of Directors. The Company’s finance department evaluates and hedges financial risk management, as well as policies covering specific areas such as currency risk, other price risk, interest rate risk, credit risk, liquidity risk.
As required under regulation 25 of Listed Companies (Code of Corporate Governance) Regulations, 2019 (“CCG Regulations, 2019”), the Chief Executive Officer and the Chief Financial Officer present the financial statements, duly endorsed under their respective signatures, for consideration and approval of the Board of Directors (Board), after consideration and approval, the Board authorize the signing of financial statements for issuance and circulation. The financial statements of the Company have been duly audited by the Messrs. Riaz Ahmad & Co, Chartered Accountants and their report is attached with the financial statements. They have issued an unqualified report to the members.
The auditors Messrs. Riaz Ahmad & Co., Chartered Accountants, retire and offer themselves for re-appointment for the FY2023. The Audit Committee has recommended their re-appointment which has been endorsed by the Board for shareholders consideration and approval at the forthcoming annual general meeting.
No material changes and commitments affecting the financial Position of the Company have occurred between the end of the financial year to which these financial statements relate and the date of the Director’s Report.
Pattern of shareholding of the Company, as required by section 227(2)(f) of the Companies Act. 2017 as at June 30, 2022 is provided at page number 65 of this report.
The Company has compiled with requirements of the Listed
Companies (Code of Corporate Governance) Regulations 2019