Ghani Value Glass Limited (PSX: GVGL) was established as a public limited company in 1967. The company manufactures and sells mirror, tempered glass and laminated glass. Its manufacturing plants are located at Sheikhupura Road and Multan Road, Kasur.
Shareholding pattern
As at June 30, 2021, close to 86 percent shares are owned by the directors, CEO, their spouses and minor children. Within this category, one of the directors, Mr. Aftab Ahmad Khan is a major shareholder holding over 29 percent shares. Over 13 percent shares are held by the local general public, while the remaining almost 1 percent shares are with the rest of the shareholder categories.
Historical operational performance
Revenue since FY13 has primarily been increasing consistently with the exception of FY17, when it contracted by 1.7 percent. Profit margins, in the last few years particularly, have been on a rise, except for in FY20 when they saw a downward revision.
In FY18, topline propelled upwards to Rs 1.2 billion, registering a nearly 44 percent growth year on year. This was largely attributed to the rise in sales volumes. In addition, the company has held a positive outlook on the economy with the real GDP registering a growth of 5.8 percent during the year. Production cost, on the other hand, also reduced significantly; from consuming nearly 93 percent of revenue in FY17, it reduced to 74.5 percent due to undertaking cost reduction measures. As a result, gross margin improved to 25.5 percent. This also trickled down to the bottomline, with net margin recorded at 14.3 percent, compared to 2.4 percent in FY17.
Revenue in FY19 continued to grow at double-digits, at 23.5 percent, nearing Rs 1.5 billion in value terms. A revenue breakdown reveals that majority of the revenue was earned from local sales, whereas product-wise sales breakdown reveals that increases were seen in mirror glass, tempered and non-tempered glass, frosted glass, and laminated glass; the latter had zero sales in the previous year. Production cost went further down to nearly 66 percent of revenue, allowing gross margin to reach to 34.3 percent- the highest thus far. Despite, the increase in operating expenses, net margin continued to improve year on year and peak at almost 24 percent for the year. The increase in operating expenses were offset by the growth in topline.
Topline continued to grow in FY20, at 11.6 percent, with net sales revenue clocking in at Rs 1.64 billion for the year. Local sales registered an 11.5 percent rise, while export sales grew by 3.2 times year on year. Product-wise breakdown shows growth in sales of mirror glass, tempered and non-tempered glass, and laminated glass. However, due to the shut down of production processes owing to the outbreak of the Covid-19 pandemic, the inventory built up led to an increase in expenses. Moreover, production cost increased to over 71 percent of revenue, leading gross margin to reduce to nearly 29 percent. This was further reduced by the rise in administrative and other operating expenses. Thus, net margin fell to 14 percent for the year.
Revenue in FY21 posted an impressive growth of 56 percent, taking revenue to cross Rs 2.5 billion in value terms. Majority of this growth was brought about by local sales. Production cost fell to an all-time low of slightly above 65 percent, therefore gross margin also reached a peak of almost 35 percent. Although administrative expenses increased significantly year on year in value terms, as a share in revenue, it reduced marginally. Other operating expenses increased notably due to higher donations; of this majority went to Ghani Foundation Trust. But with a positive tax expense, the increase in net margin was more pronounced, from 14 percent in FY20, to 23 percent in FY21.
Quarterly results and future outlook
Revenue in the first quarter of FY22 was higher by almost 57 percent year on year as the first quarter of FY21 had just started with the resumption of activities as lockdowns gradually began to ease, therefore pick up in demand was slow. During the period, production cost was significantly low year on year with 1QFY22 seeing 57.5 percent of revenue, whereas production cost in 1QFY21 made over 69 percent of revenue. This resulted in an improvement in year on year profitability that trickled down to the bottomline with net margin in 1QFY22 recorded at 26.7 percent that was substantially higher than 12.7 percent in 1QFY21.
In FY21, the board of directors of the company and its shareholders agreed to the “proposed scheme of arrangement for merger of Ghani Automobile Industries Limited (GAIL) with and into Ghani Value Glass Limited (GVGL)”. Moreover, with the gradual resumption of activities, the economy was able to post a growth of 3.9 percent in the first year of Covid-19. By 2022, economic growth is expected at 4 percent, as business activity remains open for a large part of the year comparatively.