January 22, 2019 (MLN): Tri-Star Polyester Limited has notified the Pakistan Stock Exchange regarding the progress it has made towards the achievement of its expansion objectives, via a report issued on Tuesday. The report communicates the developments during the period May-18 to Sept-18, and measures progress against the financial plan developed and submitted as per SECP regulations.
Operationally, the company made significant growth and expansion of its new business operations dealing in unstitched value added embroidered fabric and stitched garments under the brand name “Image”. The company made capital expenditure amounting to PKR 81.2 million during the financial year ending June, 2018. Further capital expenditure was made during the quarter ending September, 2018 amounting to PKR 2.4 million. The expenditure includes the acquisition of 50 stitching machines as planned.
In addition to this, the company managed to establish 2 new retail outlets by the end of June, 2018 out of the planned total of 6 new outlets for the financial years ending in 2018 and 2019. The total number of retail outlets at present is 6.
“The primary reason for delay in opening of retail outlets is the general fiscal and monetary imbalance prevailing within the economy for the past 6-8 months. This has forced the management to review its decision regarding establishment of more outlets for the time being. The management now awaits improved economic stability in order to make a proper decision regarding the sustainability of rental and other overhead commitments” the report said.
Of the planned acquisition of 2 Schifli embroidery machines, as per last progress report, the company has already purchased 1 machine, and signed the purchase contract and made a down payment for another machine – shipment for which is expected soon.
All in all, the company has made significant progress towards achieving its planned expansion and has more than achieved the projected performance for the year. The company has managed to stay in line with sales targets (exceeding the projections for the year ending 2018) while continuing to curb direct costs in the face of rising input costs, thereby, leading to higher than projected margins.
The slowdown in the execution of expansion plans due to economic uncertainty and rising working capital requirements is expected to reverse once there is better economic predictability. Additionally, based on performance to date, it is expected that the company will be able to generate sufficient cash flow with conversion of current assets into cash to meet the required capital expenditure in the coming periods.
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