MS AR 2018 (1)

- 700,000 units. In the backdrop of increased population and
emergence of nuclear families in rural areas the demand
for housing is on the rise which is a trigger to the demand
for Company’s products, which are the predominantly used
material in housing sector across Pakistan.
Large Infrastructure Development
The large infrastructure development activity is expected
to experience boost subject to initiation of various, public
/ private sector development and commercial projects in
Pakistan.
Financial Review
The Company registered net sales of Rs. 22,225.842 million
against Rs. 18,802.811 million in the corresponding period,
with an increase of 18.20%. The increase in sales revenue
was due to increase in sales volume as well as sale prices.
Increase in sales volume was mainly driven by increase in
sales of Mughal Supreme.
Gross margin increased to Rs. 2,794.412 million in the
current period, compared to Rs. 1,965.447 million in the
corresponding period resulting in increase of 42.18%.
As a percentage gross margin increased from 10.45% to
12.57%. Gross margin for the year was affected adversely by
increase in foreign exchange rates and raw material prices
and positively affected by increase in sale rates and increase
in production of cost effective self-manufactured billet. The
impact of increase in raw material prices was to large extent
curtailed by bulk procurement of scrap inventory at lower
rates.
Sales & marketing expenses increased from Rs. 164.048
million to Rs. 246.333 million resulting in increase of 50.16%
and mainly comprised of freight outward and marketing
expenses. The increase was mainly attributed to marketing
expenses incurred in respect of various marketing activities
and promotional campaigns.
Administrative expenses increased from Rs. 265.075 million
to Rs. 312.901 million resulting in increase of 18.04%.
The increase was mainly due to increase in number of
employees and increase in salaries.
Other charges increased from Rs. 91.451 million to Rs.
115.353 million resulting in increase of 26.14% and mainly
included provisions for workers’ profit participation fund and
workers’ welfare fund which increased in line with increase in
profits.
Other income increased from Rs. 33.977 million to Rs.
36.364 million resulting in increase of 7.03%. There was no
major variation in other income which mainly represented
profit earned on saving accounts and term deposit receipts.
Finance costs increased from Rs. 256.551 million to Rs.
552.460 million, resulting in increase of 115.39%. The
reason for increase was mainly due to increase in average
outstanding short-term loans in FY 2018 as compared to FY
2017 as a result of increase in working capital requirements.
Taxation increased significantly from Rs. 231.538 million to
Rs. 313.513 million resulting in increase of 35.40%. Increase
is mainly due to increase in profit for the year and exhaustion
of minimum taxes and brought forward losses.
Resultantly, profit for the year rose to Rs. 1,290.215 million
during the year, compared to Rs. 990.760 million in the last
year resulting in increase of 30.22%. As a percentage profit
for the year increased from 5.27% to 5.81%.
Earnings per share for the current year stood at Rs. 5.13 per
share as compared to Rs. 4.21 per share in the last year.
Property, plant & equipment comprised of tangible fixed
assets, capital work-in-progress and major spare parts and
standby equipment. Additions in tangible fixed assets mainly
represented addition of power engines, grid enhancement
related expenditure and other routine additions. Capital
work-in-progress mainly represented capital expenditure
incurred on expansion projects comprising of BMR of steel
rebar re-rolling mill project and installation of new furnaces
related project. Major spares were mainly charged to capital
work-in-progress.
Stores, spares & loose tools increased from Rs. 462.744
million to Rs. 597.198 million. The increase was mainly
associated with increase in furnaces related store items due
to increased utilization of furnaces and increase in furnace
oil prices.
Stock-in-trade decreased from Rs. 5,381.802 million to Rs.
5,319.720 million. Stock-in-trade mainly includes stock of
raw material and finished goods. Raw material amounted to
Rs. 5,080.582 million as compared to Rs. 5,292.091 million
last year, whereas finished goods amounted to Rs. 239.138
million as compared to Rs. 89.711 million last year. Increase
in stocks of finished goods was due to non-dispatching of
good as on closing day and mainly included stock of girders
and steel re-bars, which was dispatched in subsequent
week. Overall stock-in-trade value was also affected by
increase average inventory rates during the year.
Annual Report 2018
29