Kohinoor Mills : Transmission of quarterly accounts for the 3rd quarter ended March 31, 2024

KOHINOOR

MILLS LIMITED

THIRD QUARTERLY REPORT

31 MARCH 2024

w w w . k o h i n o o r m i l l s . c o m

CONTENTS

Kohinoor Mills Limited
CompanyInformation	02
Directors' Review	03
Condensed Interim Statement of Financial Position	06
Condensed Interim Statement of Profit or Loss	08
Condensed Interim Statement of Comprehensive Income	09
Condensed Interim Statement of Cash Flows	10
Condensed Interim Statement of Changes in Equity	11
Selected Notes to the Condensed Interim Financial Statements	12

Third Quarter Report 2024

1

COMPANY INFORMATION

BOARD OF DIRECTORS
Mr. Rashid Ahmed	Chairman
Mr. Aamir Fayyaz Sheikh	Chief Executive
Mr. Ismail Aamir Fayyaz	Director
Ms. Imrat Aamir Fayyaz	Director
Mrs. Hajra Arham	Director
Mr. Muhammad Anwarul Haq Siddiqui Director
Mr. Matiuddin Siddiqui	Director (NIT Nominee)
Audit Committee
Mrs. Hajra Arham	Chairperson
Mr. Rashid Ahmed	Member

Mr. Muhammad Anwarul Haq Siddiqui Member

HR & Remuneration Committee

Mr. Muhammad Anwarul Haq Siddiqui Chairman

Mr. Rashid Ahmed	Member
Mrs. Hajra Arham	Member

Chief Financial Officer

Mr. Kamran Shahid

Head of Internal Audit

Mr. Waheed Amaiant Ali

Legal Advisor

Raja Mohammad Akram & Co.,

Advocate & Legal Consultants, Lahore

Company Secretary

Mr. Muhammad Rizwan Khan

Auditors

M/s Riaz Ahmad & Company

Chartered Accountants

Bankers

Al Baraka Bank (Pakistan) Limited

Allied Bank Limited

Askari Bank Limited

Bank Alfalah Limited

Habib Bank Limited

Habib Metropolitan Bank Limited

MCB Bank Limited

MCB Islamic Bank Limited

Meezan Bank Limited

National Bank of Pakistan

Samba Bank Limited

Silk Bank Limited

The Bank of Punjab

United Bank Limited

Registered Office & Mills

8 K.M. Manga Raiwind Road, District Kasur,

Pakistan.

UAN: (92-42 ) 111-941-941

Cell Lines: (92-333)4998801-6

Land Lines: (92-42) 36369340

Fax: [phone] Ext: 444

Email: [e-mail]

Website: www.kohinoormills.com

Shares Registrar

M/s. Hameed Majeed Associates (Pvt.) Ltd HM House, 7 Bank Square, Lahore.

Land Lines: (92-42) 37235081 & 82, 37310466

Fax: [phone]

OTHER CORPORATE INFORMATION

• Kohinoor Mills Limited is registered in Pakistan with Securities and Exchange Commission of Pakistan. The Registration Number of the Company is 0017194
• Kohinoor Mills Limited is listed on Pakistan Stock Exchange Limited as a Public Limited Company and its shares are traded under textile composite sector. Shares trading symbol is KML
• The National Tax Number of the Company is 0658184-6
• Financial statements are available on website of the Company i.e., www.kohinoormills.com

2 Kohinoor Mills Limited

DIRECTORS' REVIEW

The Directors of the company are pleased to present the interim financial statements for the nine months ended 31 March 2024.

Operating & Financial Results

During the nine months ended 31 March, 2024, your company earned a gross profit of Rs. 3,503 million on sales of Rs. 22,716 million, compared to a gross profit of Rs. 4,057 million on sales of Rs. 20,213 million for the corresponding period of previous financial year. During the period under review, your company recorded a net profit of Rs. 170 million (EPS: Rs. 3.34 per share), compared to a net profit of Rs. 1,375.5 million (EPS: Rs. 27.02 per share), in the corresponding period.

Finance costs experienced a significant upswing, surging by 63.6% to a total of Rs. 1,319 million from Rs. 806 million in the corresponding period of the previous year. This substantial increase was primarily propelled by a steep rise in the policy rate, reaching 22%. Additionally, the Export Refinance scheme (ERF) observed a notable escalation compared to the preceding period, rising from 10% to 19%. The non- availability of the State Bank of Pakistan (SBP) Long-Term Finance Facility (LTFF) for previously planned capital expenditures had a profound impact on our financing costs, further contributing to the overall surge.

Performance Overview

A brief overview of performance of your company for the nine months ended 31 March 2024 is discussed below:

Weaving Division

Despite the persistent global and domestic challenges faced by the weaving sector, the Weaving Division accomplished a significant milestone with a gross turnover of Rs. 15,001 million, marking a substantial increase from Rs. 12,533 million in the corresponding period of the previous financial year. However, owing to the elevated cost of production, the Weaving Division was unable to translate this accomplishment into a positive impact on the bottom line.

Looking ahead, we recognize the persistent challenges arising from a slowdown in demand, higher utility expenses, and increasing financing costs, all of which continue to put pressure on profit margins. In response, we reaffirm our commitment to implementing proactive strategies aimed at optimizing costs, expanding our market presence, and efficiently managing our finances to mitigate these challenges and enhance profitability in the coming periods.

Dyeing Division

The fashion retail sector, known for its vibrancy and intense competition, remains susceptible to economic shifts. In the financial year 2024, the aftermath of the global recession stemming from the COVID-19 pandemic, geopolitical tensions, and supply chain disruptions continues to impact the industry. Concurrently, escalating inflation worldwide is adding pressure to both businesses and consumers. The resulting decline in consumer confidence and discretionary spending, particularly in non-essential areas like fashion, has led to decreased sales for retailers, especially those targeting higher-end markets. In response to this challenging economic climate, fashion retailers in FY-24 must prioritize adaptability and innovation for sustained success.

In the face of the overall challenging environment within the fashion retail industry, the Dyeing Division achieved a noteworthy 7.28% increase in gross turnover, rising from Rs. 13,133 million to Rs. 14,089 million. It is imperative to complement this success with strategic initiatives focused on achieving sustainable growth through increased sales volumes, diversification, and effective risk management. The industry's capacity to innovate and adeptly respond to these challenges will be pivotal in determining its resilience and growth in the coming years.

As a pivotal component of the Division's diversification strategy, progress is underway for the establishment of an apparel unit. This initiative aims to catalyze sustained long-term growth and enhance profitability by introducing a new and dynamic product line to the existing portfolio.

Third Quarter Report 2024

3

Genertek Division

Due to a significant increase in natural gas prices and electricity tariff of national grid, the company is facing multiple challenges to maintain competitive energy costs. The natural gas price also leaves the Genertek division exposed to exchange rate risk. These factors have caused a decline in profit margins in current period under review. The company is committed to achieving energy efficiency and making persistent efforts to tackle these challenges.

For steam generation, this division has diversified its fuel input requirements towards non-conventional green bio-fuels which are cleaner, cheaper and environment friendly. However, the rise in natural gas prices also increases the risk of rise in prices of non-conventional green bio-fuels.

Future Outlook

The textile sector in Pakistan confronts an array of challenges, hampering its competitiveness on both regional and global scales. These obstacles encompass diminished global demand, escalating inflation, heightened operational costs, expensive imports, inadequate raw materials, persistent currency fluctuations, and increased government taxation. This adversity is compelling several small and medium- sized textile enterprises to close down. Conversely, larger vertically integrated facilities exhibit resilience in this arduous environment. Despite these hardships, industry leadership remains optimistic about securing profitability through a focus on cost-saving measures and active advocacy for supportive government policies.

In the pursuit of sustainable growth and effective management of the trade deficit, the government needs to prioritize sectors geared towards exports. This entails ensuring regionally competitive energy tariffs for electricity and maintaining a consistent supply of Re-Gasified Liquefied Natural Gas (RLNG). These strategic initiatives not only boost the competitiveness of Pakistani products in the global market but also foster investment, economic expansion, and job creation, thereby positively impacting the overall national economy. While the depreciation of the PKR provides some advantages for exporters, it is crucial to acknowledge that the escalating costs of imported raw materials such as cotton and yarn, along with increased expenses on dyes, chemicals, and additional working capital requirements due to currency devaluation, often counterbalance these gains.

Concerning the company's operations, a concerted effort is being made to maintain cost efficiency through strategies such as optimizing capacity utilization, rationalizing expenses, and implementing an effective bio-mass procurement strategy. The company is committed to expanding its footprint with the goal of generating greater wealth for the benefit of its shareholders. The management team is also fully focused on minimizing the effects of the global slowdown in demand amid recessive pressures. The planned order position for rest of the FY-24 appears encouraging and management is hopeful of utilizing the higher capacity levels attained after modernization.

Acknowledgement

The board places on record its profound gratitude for its esteemed shareholders, banks, financial institutions, suppliers and customers, whose cooperation, continued support and patronage have empowered the company to make progress towards consistent improvement. During the period under review, relations between the management and employees remained cordial and we wish to put on record our appreciation for the dedication, perseverance and steadiness of the employees of the company.

	For and on behalf of the Board
Kasur:	Aamir Fayyaz Sheikh	Hajra Arham
April 25, 2024	Chief Executive	Director

4 Kohinoor Mills Limited

FINANCIAL STATEMENTS

For the Nine Months ended 31 March 2024

CONDENSED INTERIM STATEMENT OF

FINANCIAL POSITION

AS AT 31 MARCH 2024

Note

EQUITY AND LIABILITIES Share capital and reserves

Authorized share capital

220,000,000 (30 June 2023: 220,000,000) ordinary shares of Rupees 10 each 30,000,000 (30 June 2023: 30,000,000) preference shares of Rupees 10 each

Issued, subscribed and paid-up share capital

50,911,011 (30 June 2023: 50,911,011) ordinary shares of Rupees 10 each

Capital reserves

Share premium reserve

Fair value reserve FVTOCI investment

Surplus on revaluation of operating fixed assets - net of tax

Revenue reserves

General reserve

Accumulated profit

Total equity

LIABILITIES

Non-current liabilities
Long term financing - secured	4
Deferred liabilities
Deferred income - Government grant
Current liabilities
Trade and other payables
Accrued mark-up
Short term borrowings - secured
Current portion of non-current liabilities
Provision for taxation- net
Unclaimed dividend
Total liabilities
Contingencies and commitments	5
TOTAL EQUITY AND LIABILITIES

Un-audited	Audited
31 March	30 June
2024	2023
Rupees	Rupees

2,200,000,000 2,200,000,000

300,000,000 300,000,000

2,500,000,000 2,500,000,000

509,110,110 509,110,110

213,406,310 213,406,310

14,698,756 13,980,230

2,456,849,491 2,493,164,645

788,199,282 788,199,282

3,925,190,993 3,871,599,693

7,907,454,942 7,889,460,270

1,113,466,164		1,397,727,507
365,938,010		359,694,174
139,372,168		168,636,391
1,618,776,342	1,926,058,072

4,038,136,678 4,751,498,857

180,664,983 278,033,136

6,570,749,757 7,280,650,382

501,785,319 500,906,713

108,587,820 14,809,226

8,418,733 7,440,570

11,469,625,290 12,833,338,884

13,088,401,632 14,759,396,956

20,995,856,574 22,648,857,226

The annexed notes form an integral part of this condensed interim financial information.

AAMIR FAYYAZ SHEIKH		HAJRA ARHAM
CHIEF EXECUTIVE		DIRECTOR

6 Kohinoor Mills Limited

		Un-audited		Audited
		31 March		30 June
		2024	2023
	Note	Rupees		Rupees
ASSETS
Non-current assets
Fixed assets	6	9,013,524,159	9,066,735,430
Intangible asset	7	-	-
Investment property		1,981,607	1,981,607
Long term investment		24,800,490	23,622,579
Long term loans		5,976,087	13,101,665
Long term security deposits		98,311,789		80,913,312
		9,144,594,132	9,186,354,593

Current assets

Stores, spares and loose tools Stock-in-trade

Trade debts

Loans and advances

Short Term deposits and prepayments Sales tax recoverable

Other receivables Short term investments Cash and bank balances

940,704,833

5,825,105,206

3,147,298,714

302,733,602

30,674,082

584,918,232

48,379,359

320,639,500

650,808,914

904,931,947

5,545,414,912

3,717,817,750

191,893,091

25,481,638

2,214,510,057

39,879,720

383,859,900

438,713,618

11,851,262,442 13,462,502,633

TOTAL ASSETS	20,995,856,574 22,648,857,226

KAMRAN SHAHID

CHIEF FINANCIAL OFFICER

Third Quarter Report 2024

7

CONDENSED INTERIM STATEMENT OF

PROFIT OR LOSS (Un-audited)

FOR THE NINE MONTHS ENDED 31 MARCH 2024

		Nine months ended		Quarter ended
		31 March	31 March		31 March	31 March
		2024	2023	2024	2023
	Note	Rupees	Rupees		Rupees	Rupees
REVENUE		22,716,210,745	20,213,833,577	7,430,445,998	7,015,313,879
COST OF SALES	8	(19,213,129,639) (16,156,681,705)	(6,686,982,384)	(5,685,644,419)

GROSS PROFIT

DISTRIBUTION COST ADMINISTRATIVE EXPENSES OTHER EXPENSES

3,503,081,106	4,057,151,872	743,463,614	1,329,669,460
(1,079,455,378)		(1,020,765,318)		(365,901,513)		(351,115,294)
(567,045,805)		(476,909,766)		(197,246,306)		(178,465,607)
(219,561,132)		(244,489,056)		19,288,178		275,477,296
(1,866,062,315)	(1,742,164,140)	(543,859,641)	(254,103,605)
1,637,018,791	2,314,987,732	199,603,973	1,075,565,855

OTHER INCOME	159,553,709	140,290,208	45,099,896	22,533,829
PROFIT FROM OPERATIONS	1,796,572,500	2,455,277,940	244,703,869	1,098,099,684
FINANCE COST	(1,319,737,520)	(806,085,423)	(402,142,082)	(336,675,131)
PROFIT BEFORE TAXATION
476,834,980	1,649,192,517	(157,438,213)	761,424,553
TAXATION	(306,825,801)	(273,660,456)	(73,109,648)	(84,143,725)
PROFIT AFTER TAXATION
170,009,179	1,375,532,061	(230,547,861)	677,280,828
EARNINGS PER SHARE
- BASIC AND DILUTED	3.34	27.02	(4.53)	13.30

The annexed notes form an integral part of this condensed interim financial information.

AAMIR FAYYAZ SHEIKH		HAJRA ARHAM		KAMRAN SHAHID
CHIEF EXECUTIVE
	DIRECTOR	CHIEF FINANCIAL OFFICER

8 Kohinoor Mills Limited

CONDENSED INTERIM STATEMENT OF

COMPREHENSIVE INCOME (Un-audited)

FOR THE NINE MONTHS ENDED 31 MARCH 2024

	Nine months ended		Quarter ended
	31 March	31 March		31 March	31 March
	2024	2023	2024	2023
	Rupees	Rupees		Rupees	Rupees
PROFIT AFTER TAXATION	170,009,179	1,375,532,061	(230,547,861)	677,280,828
OTHER COMPREHENSIVE INCOME

Items that will not be reclassified to profit or loss:

Surplus / (deficit) arising on remeasurement of investment at fair value through other comprehensive income

Deferred income tax relating to this item

Items that may be re-classified subsequently to profit or loss:

Other comprehensive income / (loss) for the period - net of tax

TOTAL COMPREHENSIVE INCOME /

1,177,911

(459,385)

718,526

-

718,526

(2,394,441)

790,166

(1,604,275)

-

(1,604,275)

-

-

-

-

-

-

-

-

-

-

(LOSS) FOR THE PERIOD

170,727,705 1,373,927,786 (230,547,861) 677,280,828

The annexed notes form an integral part of this condensed interim financial information.

AAMIR FAYYAZ SHEIKH		HAJRA ARHAM	KAMRAN SHAHID
CHIEF EXECUTIVE
	DIRECTOR	CHIEF FINANCIAL OFFICER

Third Quarter Report 2024

9