Gadoon Textile Mills : Transmission of Quarterly Report for the Third Quarter ended on March 31, 2022

Contents

Company Information 02

Directors' Report to the Members 03

Condensed Interim Statement of Financial Position 07

Condensed Interim Statement of Profit or Loss 08

Condensed Interim Statement of Other Comprehensive Income 09

Condensed Interim Statement of Cash Flows 10

Condensed Interim Statement of Changes in Equity 11

Notes to the Condensed Interim Financial Statements 12

Directors' Report - In Urdu 23

Company Information

Board of Directors

Audit Committee

HR and Remuneration Committee

Mr. Muhammad Yunus Tabba (Chairman)

Mr. Muhammad Sohail Tabba (Chief Executive Officer) Mr. Muhammad Ali Tabba

Mr. Jawed Yunus Tabba

Ms. Zulekha Tabba Maskatiya

Syed Muhammad Shabbar Zaidi (Independent Director) Mr. Moin M. Fudda (Independent Director)

Syed Muhammad Shabbar Zaidi (Chairman) Mr. Moin M. Fudda

Mr. Muhammad Ali Tabba Mr. Jawed Yunus Tabba

Mr. Moin M. Fudda (Chairman) Mr. Jawed Yunus Tabba

Ms. Zulekha Tabba Maskatiya

Executive Director Finance Mr. Abdul Sattar Abdullah

Chief Financial Officer Chief Internal Auditor Company Secretary Auditors

Registered Office

Head Office

Liaison Office

Factory Locations

Share Registrar / Transfer Agent

Bankers

Allied Bank Limited Askari Bank Limited

Mr. Muhammad Imran Moten Mr. Haji Muhammad Mundia Mr. Muhammad Umair

Yousuf Adil

Chartered Accountants

Independent Correspondent firm to Deloitte Touche Tohmatsu

200-201, Gadoon Amazai Industrial Estate,

Distt. Swabi, Khyber Pakhtunkhwa.

Phone: [phone]

Fax: [phone]

Email: [e-mail]

7-A, Muhammad Ali Society,

Abdul Aziz Haji Hashim Tabba Street, Karachi.

Phone: [phone] Fax: [phone]

Syed's Tower, Third Floor, Opposite Custom House, Jamrud Road, Peshawar.

Phone: [phone] Fax: [phone]

E-mail: [e-mail]

200-201, Gadoon Amazai Industrial Estate, Distt. Swabi, Khyber Pakhtunkhwa.

57 K.M. on Super Highway, Karachi.

CDC Share Registrar Services Limited CDC House, 99-B, Block B, S.M.C.H.S. Main Shahrah-e-Faisal, Karachi.

Toll Free: 0800 23275

MCB Bank Limited Meezan Bank Limited

Bank Al-Falah Limited (Islamic Banking)	National Bank of Pakistan
Bank Al-Habib Limited	Soneri Bank Limited
Bank Islami Pakistan Limited	Standard Chartered Bank Pakistan Limited
Dubai Islamic Bank Pakistan Limited	The Bank of Punjab
Habib Bank Limited	The Bank of Khyber
Habib Metropolitan Bank Limited	United Bank Limited
Industrial & Commercial Bank of China Limited
02Gadoon Textile Mills Limited

Directors' Report to the Members

Dear Members

The Directors of your Company are pleased to present the performance review and the un-audited financial statements for the nine months ended March 31, 2022.

Overview

During the period under review, your Company has Alhamdulilah managed to secure the top line of Rs.39.77 billion against Rs.29.76 billion for the Same Period Last Year (SPLY), substantially growing its turnover by 33.6%. Despite of the fact that during this period, there has been a significant increase in cost of imported raw material owing to devaluation of the rupee, higher international cotton prices and challenging supply chain, coupled with shortage of gas supply to the industry, the gross profit margins have increased from 9.6% to 16.6% from SPLY mainly on account of better product mix and acceleration in the sale price of yarn. The increasing gross profit margins has also supported the net profit margins of the Company, and accordingly, the Company's net profit increased to a record-breaking level of Rs. 5,016.59 million from Rs. 1,858.79 million in SPLY, registering a growth of 169.9%.

Economic Prospects

The overall economic growth is on the positive trend post COVID-19 and its progress depends on the policy measures of the new government as well as the geo-political scenarios which is changing over the course of time mainly on account of Russia-Ukraine War.

During the period, the import bills have increased significantly by 49.1% (in USD terms) to USD 58.87 billion in contrast to USD 39.48 billion SPLY mainly on account of rising energy import cost coupled with increasing imports of items covered under Agricultural, Chemicals and Metallic group. The impact of increasing import on the foreign reserves was offset to some extent by the increase in exports by 24.9% (in USD terms) and increase in remittance by 7.1% (in USD terms) in this period as compared to SPLY.

During the period the general inflation was 12.7% Year-on-Year (YoY) primarily on account of acceleration of global oil prices, increase in domestic demand, supply constraints, etc. Imposition of 100 percent cash margin on certain items during the period and increase in the policy rate by State Bank of Pakistan (SBP) are the indirect measures taken to discourage import and reduce the consumer spending, hence, supporting the balance of payment and sustaining the inflation rate.

According to Pakistan Cotton Ginners' Association (PCGA) publication on March 01, 2022, the country's ginneries received 7.44 million bales of cotton, up from last year's 5.63 million bales, showing an increase of 32.1%, thereby supporting the local textile companies to meet the increasing demand in the value-added sector of the industry.

Financial Performance

A comparison of the key financial results of the Company for the nine months ended March 31, 2022, is as follows:

March 31, 2022

March 31, 2021

---------- (Rupees in '000) ----------

The overall export sales of yarn have significantly increased by 26.7% in this period as compared to SPLY mainly on account of the resumption of economic activity globally and better sales price obtained. Further, a significant improvement has been noticed in the export sales of knitted sheets which has increased by 96.5% in this period as compared to SPLY due to increase in international customer base.

Moreover, an increase has also been witnessed in the overall local sales, which has increased by 31.1% in this period as compared to SPLY, mainly on account of acceleration in the sales price of yarn.

The overall increase in distribution costs is mainly attributable to increase in export sales and increase in freight charges for both local and export sales owing to shipping supply constraints and increase in global oil prices. Further, the inflationary pressure on the economy during the period, has resulted in slight increase in the administrative expenses in this period as compared to SPLY.

Further, the Company has better managed its Working Capital cycle during this period more efficiently as compared to SPLY and accordingly was able to reduce its finance cost by 32.7%.

Additionally, the returns from the Company's strategic decision in diversified avenues contributed Rs.842.20 million against Rs.468.07 million in SPLY, resulting in an increase by 79.9%. Resultantly, the net profits of the Company have increased by 169.9% in this period as compared to SPLY.

Segmental Review of Business Performance

During the current period, both the spinning and knitting segments of the Company has shown tremendous improvement in terms of sales as compared to SPLY. However, net percentage margin of knitting segment has decreased from SPLY mainly on account of increase in yarn prices being the raw material cost (significant component of the manufacturing cost), higher freight charges and non-availability of Drawback of local taxes and levy (DLTL) on export of knitted products in this period.

Corporate Social Responsibility

The Company's CSR programs have reinforced its goal of reaching out to the vulnerable and marginalized segment of communities while maintaining the best business and operational procedures in line with internationally recognized standards. Following CSR activities are undertaken by the Company during the current period.

The Company has taken the initiative of a free hepatitis screening camp for employees at the head office in the observance of World Hepatitis Day. A day was spent with the elderly citizens at Bint-e-Fatima old home in Karachi on World Elder's Day to work together and

04Gadoon Textile Mills Limited

Profit and Loss Summary	Favorable /
(Unfavorable)
Percentage
Direct Export	9,220,993	6,457,753)	14326.8.5) )
Indirect Export	16,527,666	11,295,371)	4363.3.9) )
Local	14,025,192	12,007,949)	1167.8.7) )
Sales (net)	39,773,851	29,761,073)	3432.6.9) )
Gross Profit	6,587,228	2,853,364)	12304.9.0) )
Distribution Cost	(1,039,246)	(453,659)	(1(12598.1.4) )
Administrative Expenses	(266,882)	(220,481)	(2(210.0.1) )
Finance Cost	(331,731)	(492,682)	3429.7.5) )
Other Income	1,007,312	657,739)	5734.1.1) )
Profit Before Taxation	5,611,144	2,176,981)	12574.7.9) )
Profit After Taxation	5,016,597	1,858,798)	136197.9.4) )
Earnings Per Share (Rs.)	178.97	66.31)