Rupali Polyester : Transmission of 3rd Quarterly Accounts - 31.03.2023

Quarterly Accounts (Un-audited)

for the 3rd Quarter ended 31 March 2023

2 Rupali Polyester Limited

Directors' Review

We are pleased to present the Company's un-audited financial statements for the third quarter and nine-months period ended 31 March 2023.

Overview

During the first nine months of the financial year 2022-23, the Company encountered several obstacles stemming from political and economic turmoil within the country such as devalued Pakistan Rupee, limited foreign exchange for importing raw materials, higher raw material costs, energy supply crisis, and declining downstream demand. The Company suffered losses at operational and overall levels due to increased taxes and markup rates, product price contraction, and slowed product lifting due to severe flooding. The country's economic activity also decreased due to foreign exchange liquidity crisis and tightened monetary and fiscal measures by the government.

Energy Tariffs

The Government's decision to remove the Regionally Competitive Energy Tariff (RCET) and gas pricing for five export-oriented sectors is expected to worsen the country's foreign currency liquidity crisis by reducing export competitiveness on the global market.

Raw Material Prices

Raw material prices for polymerization used in staple fiber and filament yarn manufacturing varied compared to the period ending March 31, 2022. In March 2022, PTA and MEG prices were US$1,000 per MT and US$690 per MT, respectively, which decreased to US$850 per MT and US$590 per MT in March 2023. However, due to unpredictable Pak rupee exchange rate depreciation, average PTA and MEG procurement prices in Pak rupees increased by 33% and 18%, respectively.

Regulatory Duty on Polyester Filament Yarn

The domestic PFY industry's persistent efforts led the Government to re-impose a 5% regulatory duty on PFY imports on December 21, 2022.

Financial Results

Despite lower sales volumes of both PSF and DTY, increased product prices led to higher sales revenue during the nine months of FY 2022-23, which ended on March 31, 2023. However, the Company incurred gross losses during this period primarily due to high material and power costs, along with increased finance costs resulting from the maximum utilization of financing facilities with an average increase of 12% in mark-up rates. In nutshell, the Company incurred after tax loss of Rs. 502 million compared to a profit after tax of Rs. 954 million in the same period of the previous financial year.

Future Outlook

The Government's efforts to manage the foreign exchange liquidity crisis are expected to revive the economy. There is a huge gap between domestic demand and supply of PSF and PFY,

3rd Quarterly Accounts 2023

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and the government's promised protection of local production is driving us to increase our production capacities with new, advanced technology machines. However, to further expand and invest capital, stable long-term economic policies are needed to protect the industry and develop it as a major driver of import substitution, saving on foreign exchange spent on imports.

A Note of Gratitude

The Directors extend their gratitude to the Ministries of Finance, Industries and Production, Commerce, Communication and Textile, the Federal Board of Revenue, Departments of Customs and Central Excise, and the Government of the Punjab for their cooperation. They also appreciate the patronage and confidence of Development Financial Institutions, Commercial Banks, and valued customers, and expect continued growth in business relationships. The Company is thankful for the faith of stakeholders and values their trust, as well as the hard work of management and staff.

On behalf of the Board

Shehzad Feerasta	Zeeshan Feerasta
Director	Director
Lahore
26 April 2023