Otsuka Pakistan : Transmission of Quarterly Accounts for the nine months ended March 31, 2023

Quarterly Accounts

For the Nine Months Ended

March 31, 2023

CONTENTS

COMPANY INFORMATION	02
DIRECTORS' REPORT (ENGLISH VERSION)	03
DIRECTORS' REPORT (URDU VERSION)	07
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION	08
CONDENSED INTERIM STATEMENT OF PROFIT OR LOSS ACCOUNT	09
CONDENSED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME	10
CONDENSED INTERIM STATEMENT OF CASH FLOWS	11
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY	12
NOTES TO AND FORMING PART OF THE CONDENSED INTERIM FINANCIAL STATEMENTS	13

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COMPANY INFORMATION

BOARD OF DIRECTORS	:	Mr. Mikio Bando (Chairman)	(Alternate: Mr. Muhammad Taufiq Feroz)
		Mr. Hanif Sattar (Director and Chief Executive Officer)
		Mr. Koichi Okada
		Mr. Mehtabuddin Feroz
		Mr. Suhari Mukti		(Alternate: Mr. Sajid Ali Khan)
		Mr. Abid Hussain (Independent Director)
		Mrs. Navin Salim Merchant (Independent Director)
COMPANY SECRETARY	:	Mr. Muhammad Amin Bashir
AUDIT COMMITTEE	:	Mr. Abid Hussain (Chairman)
		Mr. Koichi Okada (Member)
		Mr. Mehtabuddin Feroz (Member)
HEAD OF INTERNAL AUDIT:	Mr. Jawaid Noor (Secretary)
RISK MANAGEMENT	:	Mr. Abid Hussain (Chairman)
COMMITTEE		Mr. Koichi Okada (Member)
		Mr. Hanif Sattar (Member)
		Mr. Sajid Ali Khan (Secretary)
HUMAN RESOURCES	:	Mrs. Navin Salim Merchant (Chairperson)
REMUNERATION &		Mr. Koichi Okada (Member)
NOMINATION COMMITTEE	Mr. Mehtabuddin Feroz (Member)
		Mr. Hanif Sattar (Member)
AUDITORS (EXTERNAL)	:	Yousuf Adil Chartered Accountants
		(An Independent Correspondent Firm to Deloitte Touche Tohmatsu Limited)
AUDITORS (INTERNAL)	:	Saud Tariq & Co. Chartered Accountants
LEGAL ADVISORS	:	Dr. Moneeba Hamid
BANKERS	:	Citibank N.A., Habib	Habib Metropolitan Bank Limited
		Bank Limited, The	Bank Al-Habib Limited
		Bank of Punjab,	Allied Bank Limited
		MCB Bank Limited,	National Bank of Pakistan
		Bank Alfalah Limited
REGISTERED OFFICE	:	Head Office:			Factory:
		30-B, Sindhi Muslim Co-operative,		Plot No. F/4-9,
		Housing Society, Karachi-74400		Hub Industrial Trading Estate,
		Tel.: [phone] - 4,			Distt. Lasbella (Balochistan)
		E-mail: [e-mail]	Tel.: [phone], Fax: [phone]
		Web site: www.otsuka.pk
SHARE REGISTRAR	:	CDC Share Registrar Services Limited - (CDCSRSL)
		CDC House, 99-B, Block B, S.M.C.H.S.,
		Main Shahra-e-Faisal, Karachi 74400, Pakistan.
		Tel: [phone], Fax: [phone]
		Email: [e-mail]

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Directors' Report

The Directors are pleased to present accounts of the Company for the nine months ended March 31, 2023.

Board of Directors

The composition of Board of Directors ("the Board") and its sub‐committees are as follows:

	CATEGORY		NAMES		GENDER
	Executive Director	Mr. Hanif Sattar (CEO)
			Mr. Mikio Bando (Chairman)
	Non‐Executive Directors		Mr. Mehtabuddin Feroz		Male
		Mr. Koichi Okada
			Mr. Suhari Mukti
	Independent Directors		Mr. Abid Hussain
		Mrs. Navin Salim Merchant	Female
Board Sub‐Committees

	NAME OF BOARD SUB‐COMMITTEE		NAME OF MEMBER
			Mr. Abid Hussain (Chairman)
	Audit Committee		Mr. Koichi Okada
			Mr. Mehtabuddin Feroz
	Human Resource, Remuneration		Mrs. Navin Salim Merchant (Chairperson)
&		Mr. Koichi Okada
	Nomination Committee	Mr. Mehtabuddin Feroz
			Mr. Hanif Sattar (Secretary)
			Mr. Abid Hussain (Chairman)
	Risk Management Committee		Mr. Koichi Okada
		Mr. Hanif Sattar
			Mr. Sajid Ali Khan (Secretary)

The Board has a formal policy and transparent procedures for the remuneration of its Directors in accordance with the Companies Act, 2017 and the Listed Companies (Code of Corporate Governance) Regulations 2019. Currently, the two independent directors and a non-working alternate director are getting fixed fees for attending the Board and its committee meetings. The aggregate amount of remuneration paid to each director of the Company during the period is given below:

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	CATEGORY			NAMES			NATURE OF REMUNERATION			Amount (Rs.
							In '000)
	Executive Director		Mr. Hanif Sattar (CEO)		Salaries and benefits *	15,401
				Mr. Mikio Bando (Chairman) **		Not applicable		NIL
	Non‐Executive Directors		Mr. Mehtabuddin Feroz	Consultancy fees	2,880
		Mr. Koichi Okada		Not applicable		NIL
				Mr. Suhari Mukti		Not applicable		NIL
	Independent Directors		Mr. Abid Hussain	Meeting fees	120
		Mrs. Navin Salim Merchant	Meeting fees	120

• CEO is entitled to full time working salaries and company benefits as recommended by the board of directors which was duly approved by the shareholders of the Company.

• Meeting fees of Rs. 60,000 paid to Mr. Taufiq Feroz for attending meeting as an alternate director of Mr. Mikio Bando.

Business Review

During the 3rd quarter ended March 31, 2023, sales have shown a growth of 12% as compared to the corresponding period of 2022. The cost of sales for the nine months have significantly increased by 31.7% in line with rising inflation levels due to which the Company's gross profit margins have declined from 34% to 23%.

The Company has taken measures to control the operating expenses of the Company which has resulted in 7% and 5% increase in the Selling expenses and the administrative expenses respectively. Other income of the company has increased by 159% due to the gain on disposal of fixed assets and increase in scrap sales during the period. The other expenses have gone up by 202% particularly due to the net exchange loss of Rs. 208 million as compared to the net exchange loss of Rs. 48 million during the same period last year. The finance cost has significantly increased by Rs. 42 million due to the increase in bank rates up to 22% as well as the increase in running finance requirements of the Company due to the planned renovation of Line-II facility.

During the quarter, the Company has made functional its nutraceutical unit and first product ORTIE (ORS) will be launched in May 2023. Further, the Company has managed to complete the significant part of the Line-II renovation and is hopeful to re-start the production in Line-II facility from the month of May 2023. The Company has closed these nine months ended with a loss per share of Rs. 5.63 against positive earnings per share of Rs. 16.86 during the same period last year.

Future outlook

In near future, the Company can foresee further hurdles in importing its raw materials and finished products which may hamper the business operations of the Company. Further the persistent dearth of foreign reserves in the country may bring devaluation of Pak-rupee causing an escalation in the cost of production of the Company. We also look forward to government's support for processing the outstanding sales tax refunds. Further the government must realize the hardships being faced by the industry and a reasonable price increase must be allowed on ad-hoc basis urgently.

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