KTML returns to profitability on healthy margins

August 16, 2021 (MLN): Kohinoor Textile Mills (KTML) has announced its financial results for the fiscal year 2021 whereby it has witnessed a turnaround in its net profit worth Rs11.05 billion (EPS: Rs28.26), against losses of Rs2.60bn (LPS: Rs3.32) in the preceding fiscal year.

In conjunction with financial results, the company offered a final cash dividend for the year ended June 30, 2021, at Rs1 per share i.e., 10%.

This turnaround in earnings is due to impressive gross margins due to higher sales revenue amid strong recovery after the lifting of COVID-related restrictions and lower finance costs.

During the period under review, the topline went up by 29% YoY to Rs65.45bn on an account of higher growth in sales volume. Despite an 8.7% YoY increase in the cost of sales, this substantial increase in topline expanded the gross margin from 10% to 24% during FY21.

On the cost side, the distribution and administrative expenses jumped by 42% and 5% to stand at Rs2.33bn and Rs1.60bn, respectively.

Meanwhile, the other income increased substantially by around 5.5x YoY to peg at Rs5.18bn. Notably, the finance cost of the company fell by 43% YoY to Rs2.06bn due to a lower interest rate regime.

However, the company booked a tax expense of Rs2.64bn, up by 796 times YoY in the fiscal year 2021.

Accompanied by the result, the Board of Directors (BoD) of KTML has approved investment up to Rs1,000mn as loans /advances to Maple Leaf Cement Factory Limited (MLCF), a subsidiary company of the Company, to meet the working capital requirements of MLCF, subject to the approval of the shareholders of the Company.

The similar nature of reciprocal facility of loans/advances of Rs500mn for working capital requirements of the Company has already been recommended by the Board of MLCF, subject to the approval of the shareholders of MLCF.

Further, the BoD has approved investment up to Rs1,000mn as loans /advances to Maple Leaf Capital Limited (MLCL), a subsidiary company of the Company, to meet the working capital requirements of MLCL, subject to the approval of the shareholders of the Company under Section 199 of the Companies Act, 2017.

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