Tariq Glass Industries Ltd (PSX: TGL) is a Lahore based glass manufacturing company, and it is engaged in manufacture and sale of glass containers, tableware and float glass. It works under multiple brands names that include Toyo Nasic, Omroc and Nova. TGL has become an outstanding player of glass manufacturing industry of Pakistan over the last two decades.
A sole manufacturer of glass tableware products in Pakistan's Lahore base plant has two dedicated tableware glass furnace with a cumulative production capacity of 250 MTPD. The plant has a combination of single and double gob press machines as well as H-28 press and blow and stretch machines for a selection of products including tumblers, mugs, jugs, ashtrays, plates, bowls, ice cream cups, fruit sets, goblets, etc. During FY15, the company undertook a capacity expansion and scheduled maintenance program on one of its tableware furnace, enhancing its production capacity from 110 MTPD to 140 MTPD. Additionally, Tariq Glass Industries Ltd has the facility of fully automated, state-of-the-art printing machines, with the capability of printing six colours simultaneously, including quality gold and silver banding.
TGL not only fulfils domestic demand but also exports its products to various countries across Europe, Middle East, Africa, Asia and the Far East. It also has the technical collaboration with Toyo Glass of Japan.
Tariq Glass Industries Limited vs. Ghani Glass Limited
Before TGL penetrated into float glass market in FY13 with a single furnace based 550 MTPD float glass production line. Ghani Glass Limited, which was the only manufacturer of float glass in Pakistan at that time. Ghani fought with TGL penetration by cutting down its prices significantly to stop TGL penetration. However, now because of different market segments and strategy along with a reduction in production capacity of Ghani float glass, TGL float has been able to raise its market share significantly from 11 percent during FY13 to 44 percent during FY15.
Financial performance
The top line performance of Tariq Glass Industries Limited has stayed quite phenomenal over the years. During the period from FY10 to FY14, Tariq's top line has expanded at a compound annual growth rate of 30 percent. In FY11 the company was able to register the highest ever gross sales of Rs 2.6 billion representing 26 percent top line year-on-year growth over last year. This performance was a remarkable achievement despite the devastating floods and the worsening gas non-availability scenario prevailing throughout the year. However, the gross margins
were under pressure, due to the extra spending of over Rs 200 million on expensive LPG and Furnace Oil. The primary reason behind Tariq's revenue growth was the Company's value added products mainly the addition of goblets and the printed range. The corresponding improvement in earnings was evident of the fact that earnings have emanated both from an increase in revenues and reduction in other processing costs. During the same year, the Company by way of horizontal integration has launched state of the art 550 tonnes per day Float Glass Plant. Tariq Glass also in FY11 successfully achieved issuance of 200 percent right shares at the premium of Rs 2.50 per share for its Float Glass project.
TGL once again kept the momentum successfully going in FY12 as well by registering a net sale of Rs 3.41 billion representing 31 percent year-on-year revenue growth over last year. The Company faced the high cost of raw materials, labour, freight, and general overheads but despite that it saw an increase in its gross profit. The net earnings also rose by 105 percent on the back of economies of scale, and acceptability of Company's value added products in the local as well as in international markets. But Tariq has seen EPS decline during the year due to the issuance of 200 percent of right shares.
Despite reporting a significant growth in its revenue FY14 was a challenging year for the floating glass Company. The Company registered 99 percent year-on-year increase in the net sales. The higher sale is primarily attributed to revenue of Rs 3,997 million from the sale of float glass products. The Company, however, saw a breakeven levelled selling price of float glass products due to initiation of the price war in float glass market. That hitched the gross profit margin to 14 percent. Tariq Glass Company Limited reported a net loss for FY 14 on account of lower gross profit, substantial selling and distribution expenses along with higher finance cost.
FY 15 performance
During the financial year 2015, the sales grew marginally. The float glass sales aggregated to Rs 5.032 billion which represents a growth of 26 percent as compared to the last year's figure. TGL had to shut down one of it furnaces for eight months for the capacity enhancement project. It reduced company's production by 30 percent to 37,111 MT. This scenario allowed entry of imported Chinese tableware products to fulfil high demand, reducing TGL's market share during the period. It has declined 20 percent tableware sales in contrast to corresponding figures of the previous year.
But the Company achieved a higher gross profit margin of 20 percent for the year mainly is attributable to the improved sale prices of float glass products and the plummeted oil prices particularly for the furnace oil and diesel. Henceforward, the Company recuperates its position to profits of Rs 408 million.
Snapshot of FY16
After a delay of several months, the tableware producing furnace which was closed for scheduled rebuild has been fired on April 20, 2016, with enhanced capacity of 140 metric tonnes per day. However, despite that the Company successfully surpass the barrier of Rs 6 billion in net sales during the nine months and recorded a gross margin of 23 percent in year-on-year comparison. TGL during the nine month has enjoyed lucrative profitability mainly due to historically low oil prices and an excellent market demand of Company's value added products.
Future outlook
TGL has focused rightfully on its float glass segment because the market is anticipated higher demand due to construction acceleration because of CPEC and other activities. TGL will also receive higher prices of its tableware and flat glass segments. In FY16 it is also focusing on establishing power plants on its premises to have uninterrupted and cheaper electricity for manufacturing activities. Additionally, the Company is also importing new state of the art Jug Making and Toughening Lehr machines. All these actions make the future outlook of the Company quite bright. Nevertheless, TGL also has to face higher competition from China.
Comments
Comments are closed.