FFBL to file review petition of GIDC verdict, as their case is different from rest of fertilizer industry

August 22, 2020 (MLN): Fauji Fertilizer Bin Qasim (FFBL) held its analyst briefing on Friday wherein the management discussed its ongoing endeavors, as well as the company’s outlook and future course of action against Supreme court’s decision regarding GIDC.

Explaining company’s stance on GIDC, the management informed that the company will go for a review petition as the they believe that their case is different from rest of the fertilizer industry as they have not collected GIDC from consumers, especially on DAP business, a report by Topline Securities stated.

According to the report, the management apprised that in case, if the company is required to pay GIDC, they will ask the government to set off its outstanding dues, which includes sales tax, subsidy receivable and income tax adjustment with GIDC.

The management was also of the view that GIDC should not be charged on new plants as government has contracted with them to not charge any tax on new investment for 10 years, the report highlighted.

The report further underscored that the company has to pay around Rs 22 billion on account of the Cess. The company has provided for the Cess in its accounts, thus, there will be no impact on accounting earnings of the company.

Speaking of company’s liabilities, the management informed that currently they are in the process of rescheduling company’s long-term loans details of which will be disclosed once the process is completed.

With regards to international DAP prices and margins which improved in July 2020, the management believes that the rising trend is likely to continue.

Regarding sales tax input adjustment, the management updated that talks are ongoing with the government to resolve the issue. “If they fail to reach an agreement, the company will increase prices to pass on the impact”, they added.

Furthermore, the BODs of the company, has recommended to increase authorized capital by Rs 4 billion from Rs 11 billion to Rs 15 billion. The receipts from any subsequent raise in issued capital will be used for multiple purposes, the report highlighted.

The management also informed that the FFBL Power Company (Coal Power plant) has not yet had any discussion with the IPPs negotiating committee formed by GoP.

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