The leading manufacturer of food ingredients and industrial products, Rafhan Maize Products Co. Ltd. (PSX: RMPL) is having a decent year. For the nine months ended September 2016, the firm's top line grew by three percent year-on-year, while lower costs gave a huge boost to gross profit and margins. The bottom line has grown by an astounding 32 percent over last year.
Rafhan Maize caters to a variety of industries in Pakistan. The textile sector is the largest consuming segment of the companys industrial-grade starches, and the continuous slide in textile exports has adversely impacted demand. However, the confectionery, paper & corrugation, and pharmaceutical sectors led the company's growth during the period, as per the half-yearly Director's Report.
Moreover, Rafhan Maize has reinforced its cost-saving initiatives and greatly benefited from better energy availability, effective management of controllable costs, and optimizing operational efficiencies. The company has passed the cost-reduction to its customers by reducing the prices of its products in different phases, claims the Director's Report.
The benefits from low crude oil prices and lower grain prices have also played a huge role in enhancing profitability. Increase in corn crop area and a better crop yield helped keep the price of maize - the principal raw material and major component of the company's cost - stable in Pakistan.
Going forward, Rafhan Maize has initiated a 12MW coal-fired co-generation plant at its site in Jaranwala. The project is nearing completion and will help to reduce energy related issues at the site by providing low cost electricity & steam.
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