Rupali Polyester : Transmission of Quarterly Repot for the Period ended 2022-09-30

Quarterly Accounts (Un-audited)

for the 1st Quarter ended

30 September 2022

2 Rupali Polyester Limited

Directors' Review

On behalf of the Board of Directors, we are pleased to present the Company's un-audited financial statements for the first quarter ended 30 September 2022.

Overview

Severe economic challenges and uncertainty that started in fourth quarter of last financial year continued in the wake of socio-economic instability in the country and affected the Company's business in the quarter under review.

July-September 2022 quarter closed on a negative note with the financial results showing declining momentum. This was the result of escalation in the cost of our basic raw materials (PTA & MEG) owing to depreciation of Pak rupee against US dollar and abnormal increase in cost of energy generation from other sources of fuel as against constrained gas supply adversely affecting the cost of manufacturing and goods sold. The parallel upsurge in product sale price was less than the increase in cost due to contraction in downstream consumers demand. SBP has placed strict controls for opening letters of credits and markup rates have exceeded 15% maximum threshold. Inflationary pressures and proliferation in cost of doing business in Pakistan devastated the domestic PSF and PFY manufacturers.

PSF and PFY Market Conditions

The demand from our downstream consumers particularly sectors of elastic, lace, jai-namaz, knitting, water jet and grey cloth remained sluggish due to commercial volatilities and political vagueness in addition to falling of Islamic months of Muharram and Safar during the current quarter.

Energy Tariffs

In contrast to earlier commitments by the Government to continue the 'Regionally Competitive Electricity Tariff for five Export-Oriented Sectors in next five years, the Ministry of Energy (Power Division) withdrew the tariff for Export-Oriented Sectors in September 2022. After apprehensions of the Export-Oriented Sectors over discontinuity of Regionally Competitive Electricity Tariff making them internationally uncompetitive, the Ministry of Finance and Revenue announced the restoration of Regionally Competitive Electricity Tariff to Export-Oriented Sectors at the rate of Rs. 19.99 per kWh all-inclusive instead of US cents from 1 October 2022 to 30 June 2023.

Raw Material Prices

The prices of core raw materials used in polymerization to manufacture stable fiber and filament yarn have gone up and down when compared to corresponding period ending 30 September 2021.In September 2021, PTA price was US$730 per M Ton whereas it has increased to US$960 in September 2022. MEG price in September 2021 was US$ 680 per M Ton whereas it has now decreased to US$ 525 per M Ton. Despite the mix variation in above-said prices in US dollars, due to un-predictable exchange rate fluctuations of Pak rupee against foreign currencies, average procurement prices of PTA and MEG in Pak rupees have risen by 85% and 23% respectively.

1st Quarterly Accounts 2022

3

Financial Results

Sales revenue for Q1 of FY 2022-23 ended 30 September 2022 ALHAMDOLILLAH increased to Rs.2,420.26 million from Rs.2,248.72 million in Q1 of FY 2021-22. Attributed to increased cost of goods sold, gross profit decreased to Rs.91.30 million compared to Rs.270.43 million in same quarter of last year. Selling, admin and general costs have increased due to rise in minimum wages, increments to staff and increase in fuel and power costs. Effective mark-up rates on loans and borrowings from banks increased by 7.70% on average owing to increase in SBP's discount rate and KIBOR. Despite the reduced utilization of working capital loans, owing to increase in mark-up rates, finance costs increased to Rs.40.44 million in current quarter from Rs.25.37 million in the corresponding quarter of last financial year. Consequently, your Company has earned profit before tax amounting to Rs.7.85 million against Rs.192.23 million and incurred loss after tax amounting to Rs. 22.41 million compared to profit after tax of Rs.159.55 million in same quarter of last year.

Earnings per share of Rs.4.68 per share in the Q1 of last year turned into loss of Rs.0.66 per share for the quarter ended 30 September 2022.

A Note of Gratitude

The Directors express their appreciation for the cooperation provided by the Ministries of Finance, Revenue and Economic Affairs, Industries and Production, Communication and Commerce and Textile. We would also like to convey our gratitude to the Federal Board of Revenue and Government of the Punjab for their cooperation. We appreciate the patronage and confidence placed in the Company by the Development Financial Institutions and commercial banks. We are thankful to our valued customers and expect growing business relationships with them. To our stakeholders, we are grateful for their faith and trust in the Company. We place on record our appreciation for the contribution made by employees at all levels. Our resilience to meet challenges was made possible by their hard work, solidarity, cooperation and support.

On behalf of the Board

Nooruddin Feerasta	Shehzad Feerasta
Chief Executive Officer	Director
Lahore
26 October 2022