Mughal Iron & Steel Industries Limited (Mughal Steel), principal activity is manufacturing and trading of mild steel products. The management announced its financial results for the half year closed December 31, 2017, where the financial experts of the company recorded that the sales revenue of the company grew from Rs. 8,683.993 million to Rs. 11,184.902 million as against to the same period previous year.
Rise in sales revenue was chiefly because of significant rise in sale of Mughal Supreme along with rise in sale of steel bars (Grade-60) also. Increase in sale was also complimented by increase in sale prices. It is also said that Mughal Steel has been building the foundations of Pakistan since its inception and has a depth of technical and managerial expertise carefully nurtured.
Mughal Steel works with passion and expertise to develop high-quality products and intelligent industrial processes that create maintainable infrastructures and promote efficient use of resources. The financial experts also recorded that consequently gross margin also grew from Rs. 870.767 million to Rs. 1,426.900 million in the period under review. As a percentage gross margin grew from 10.03 to 12.76 percent. Gross margin chiefly grew because of rise in sales rates, consumption of low cost scrap inventory and rise in production of self-manufactured billets. Distribution & marketing costs grew by 116.08 percent, which is directly attributable with marketing and promotional expenses incurred in respect of Mughal Supreme and freight expenses incurred in respect of sale of steel bars. In the financial report of the company, it is also calculated that administrative expenses also grew by 33.89 percent as against to the same period previous year. Increase was primarily because of rise in salaries. Finance costs grew by 127.51 percent, which is directly attributable with grow in short-term borrowings as against to the same period under review.
Mughal Steel has also managed to obtain sanction and technical clearance for extension of existing grid station load from 19.99 to 59.99MW from LESCO. The extension of grid station is predicted to be completely operational by the 3rd quarter of calendar year 2018. Although, the company recorded an after tax profit of Rs. 620.427 million as against to Rs. 474.226 million in the corresponding period previous year. Furthermore, earnings per share (EPS) for the period reached at Rs 2.47 as against to EPS of Rs. 2.02 in the same period. In awake of the upcoming tremendous growth predicted in steel sector because of demand from retail and infrastructural side, sustainability of the Mughal Iron & Steel Industries’ operations are precisely dependent on growing in-house melting production and eventually operating as a vertically integrated unit.
The financial experts have also recorded that the balance sheet footing reached at Rs. 15,777.930 million as of December 31, 2017, against to Rs. 16,023.727 million as of June 30, 2017. Breakup value per share rose to Rs. 28.25 as of December 31, 2017 from Rs. 26.38 as at June 30, 2017. Stock-in-trade comprised of raw material and finished goods. Raw material in hand amounted to Rs. 4,897.900 million and included Rs. 1,231.215 million on account of Raw material in transit. Trade debts amounted to Rs. 1,282.106 million as against to Rs. 1,347.038 in same period previous year. However, all the balances are considered good.
The company urged that the short-term investments grew from Rs. 305.664 million to Rs. 611.612 million and mainly explained unutilized funds grew from right issue. Cash and Bank Balances amounted to Rs. 1,115.109 million as against to Rs. 2,033.228 the same period previous year. The fall is mainly because of utilization of right issue proceeds.
World Steel Association stated that the world crude steel production stood 1,691.2 million ton for the year 2017, up by 5.3 percent as against to 2016. Crude steel production grew in all regions in 2017 except in the CIS. In Pakistan, steel sector is constantly expanding, with the current demand exceeding the available production, and it is predicted to rise more due to inauguration of mega development schemes and power projects under CPEC. No doubt, Mughal Steel makes a wide range of steel products mostly catering the construction industry both in retail & infrastructure market.