Shams ul Nisa

Balochistan Glass Limited's net sales contracted by 86.2% to Rs186 million in the fiscal year ending on June 30, 2023 from Rs1.3 billion in FY22 due to suspension of tableware glass production. The tableware glass production was suspended due to inflationary pressures and economic distress in Pakistan during the period under review. The company's gross loss widened to Rs193.6 million in FY23, which was 13.55% higher than Rs170.57 million posted in FY22. As a result, Balochistan Glass Limited posted a gross loss margin of 104.13% in FY23 compared to 12.67% in FY22. The company’s administrative and selling expenses fell substantially by 66.71% to Rs24.49 million in FY23 from Rs73.57 million in FY22 as it followed strict cost management policies.

However, during FY23, the company generated an operating profit of Rs5.34 million, which was 103.37% greater than the operating loss of Rs158.56 million recorded in FY22. The company declared loss-before-tax of Rs142.14 million in FY23, which was, however, 45.69% lower than the Rs261.74 million loss registered in FY22. Similarly, the firm continued to suffer net losses in FY23 and FY22. However, it posted a decline of 49.9% in net loss to Rs135.05 million in FY23 compared to Rs269.4 million posted in FY22. The earnings per share (EPS) of the company stood at negative Rs0.52 in FY23 compared to negative Rs1.03 in FY22.

Historical trend analysis

The net sales of Balochistan Glass Limited increased dramatically from Rs475.5 million in 2018 to a peak of Rs1.49 billion in 2020. The sales, however, slightly declined to Rs1.25 billion in 2021 before rising to Rs1.34 billion in 2022 and plunging to Rs186 million in 2023, which was the lowest amount. Except for a gross profit of Rs117.49 million in 2021, the company experienced gross losses in 2018, 2019, 2020, 2022, and 2023. This cumulative gross loss overtime demonstrates that the company was unable to gain profits from its primary activities. Similarly, the company reported a net loss from 2018 to 2020 before gaining a profit of Rs25.45 million in 2021. In 2022 and 2023, however, the company experienced yet another period of net losses. The company suffered the highest loss of Rs464.2 million in 2020. 

Profitability and liquidity ratios analysis

The company saw a gross loss ratio from 2018 to 2020 before making a comeback in 2021 and registering a gross profit ratio of 9.38%. But in the following years, the company once again posted a gross loss ratio, with 2023 recording the largest gross loss of 104.13%. The profit-after-tax ratio followed the similar pattern, recording a post-tax profit ratio of 2.03% in 2021. The company reported a post-tax loss ratio in the subsequent years with 2023 recording the highest loss ratio of 72.61%. The current ratio, which measures how well a company can cover its short-term liabilities with its current assets, remained below 1, thus increasing the risk that the company won’t be able to meet its short-term obligations with its assets. The ratio between 1.2 and 2 and above is regarded as safe. Balochsitan Glass Limited has seen a current ratio below 1.2 over the years, indicating a growing risk associated with its ability to pay its debts with its assets.

Credit: INP-WealthPk