Balochistan Glass Limited (PSX: BGL) was established in May 1983 as a public limited company. It was acquired by the Gharibwal Group in 1999 and has been operating under the group since then. BGL's manufacturing facility is located at Hub in Balochistan while it acquired some units in 2002, located in Lahore.
It is engaged in the production of beverage bottles such as those of 7-up and Slice; Empty glass pharmaceutical bottles, and tableware. The latter includes items such as tumblers, mugs, jars, jugs, cups and saucers, etc. under the brand name 'Marimax'. It is also in the plastic products manufacturing, producing crates used to hold bottles.
Shareholding pattern
Balochistan Glass Limited is mostly owned by the directors, CEO, their spouses and minor children, at 68 percent. Of this, Mr. Muhammad Tauseef Paracha who is the CEO of the company holds majority of the shares. Local general public holds about 11 percent while associated companies, undertakings and related parties collectively hold a little over 10 percent. The remaining 11 percent of shares is distributed between the rests of the categories.
Historical and operational performance
BGL's top-line has been fluctuating throughout the decade in both value terms and the growth rate. The company's margins are also following a similar trend of movement.
In FY15, BGL saw its top-line decline by 27 percent due to shut down of BGL Unit-II and closure of one out of the two furnaces installed at BGL Unit-III. Cost of sales more than consumed the sales value resulting in a negative gross margin. A huge component of the cost of sales was of power, fuel and water making up 23 percent of the total expenses incurred. Interrupted supply of gas further worsened the situation of the profitability, resulting in a net loss of Rs459 million.
In FY16, the top-line further declined by nearly 7 percent year-on-year. This was as a result of a reduction in selling price of tableware essentially, in order to remain competitive in the market. The cost of production continued to increase, both in value terms and as a percentage of sales. This was again largely due to the expense of fuel, power and water apart from stock purchases. BGL was able to reduce administrative and finance costs, as a percentage of sales revenue. Administrative costs saw a decline due to fall in the salary expense, which is also evident from the reduction in the number of employees from 464 to 148 at year end. A control in short term borrowings helped to control finance costs, which made almost 14 percent of the revenue.
BGL's top-line more than halved during FY17, reducing by 54 percent. A number of factors were at play which brought down the company's financial performance at an all-time low. In November 2017, the company had to shut down Unit-II amid losses and rising energy costs, while Unit-I was already closed. The production facilities of Unit-I were transferred to Unit-III, with the latter achieving its targets. Despite restructuring, supply of gas continued to remain a challenge for the company.
Losses continued in FY18, with the top-line declining by almost 30 percent year on year, recorded at its lowest in the decade at Rs475 million. This was mostly due to only one unit operating while the other two remain closed. The company managed the production facilities of Pharma Glass Products, which were transferred from Unit-I to Unit-III, with the purpose of remaining in the market despite the increase in energy costs. BGL also undertook the process of Balancing, Modernisation and Replacement (BMR) essentially of Unit-I, making it fully operative by the start of next year.
Although BGL incurred losses, the value of loss declined, with net loss declining from Rs491 million in FY17 to Rs284 million in FY18. The company's finance cost also reduced considerably, from 31 percent in FY18 to 11 percent in FY18, as a percentage of sales. This was due to a change in terms of loans.
Some recovery was seen in FY19 depicted by the top-line increasing by 136 percent year on year. This was achieved due to the commencement of pharmaceutical operations at Unit-I, which was previously shut down, with the company attempting to improve their market share. It also resumed production of tableware glass products at Unit-III while energy costs continued to remain a problem for the company consuming a little more than 40 percent of the total cost of sales.
Other operating income brought some relief to the negative figures for the year increasing from Rs21 million in FY18 to Rs132 million in FY19. This was mostly earned through 'liabilities and mark-up written back on settlement with financial institutions'. The improved performance of the company is also evidenced by the increase in the number of employees along with the value of salaries.
Quarterly performance and future outlook
Increase in top-line is accompanied by an increase in costs between 1QFY19 and 1QFY20 with the top-line growing from Rs127 million in 1QFY19 to Rs423 million in 1QFY20 due to efficiency at Unit-I of pharmaceutical operations. Since energy is one of the major components of the company's costs of production, profitability can primarily be lifted by a reduction in costs along with continuous supply. In addition, BGL also launched a new glassware brand by the name of 'Mari-Crystal' while looking to revamp and upgrade Unit-III with the intent of enhancing production capacity.
================================================================ BGL: Quarterly results ================================================================ Rs (mn) 1QFY20 1QFY19 YoY ================================================================ Net revenue- LHS 423 127 233.07% Cost of sales (429) (187) 129.41% Gross profit/(loss) (6) (60) -90.00% Administrative expenses (23) (18) 27.78% Other operating income 0 99 -100.00% Operating profit/(loss) (29) 21 -238.10% Finance cost (26) (11) 136.36% Profit/(loss) before taxa (55) 10 -650.00% Taxation (0.50) (0.70) -28.57% Profit after taxation (56) 9 -696.77% EPS (0.21) 0.04 ================================================================
Source: Company accounts
=================================================================== BGL: Shareholding pattern as at June 30,2019 =================================================================== Categories of shareholders % =================================================================== Directors, CEO, their spouses and children 68.0357 Associated companies, undertakings, and related parties 10.6236 NIT & ICP Banks, DFIs, NBFIs 1.5274 Insurance companies 0.066 Modarabas and mutual funds 0.539 General public: Local 11.4127 General 0.013 Others: Pension funds 0.0207 Foreign companies 5.8681 Joint stock companies 1.8372 Other companies 0.0566 =================================================================== Total 100 ===================================================================
Source: Company accounts
Comments
Comments are closed.