Feroze1888 Mills : Transmission of Quarterly Report for the Period Ended 31 March 2023

Condensed Interim Financial Statements for the Nine Months Ended March 31, 2023

CONTENTS

For the nine months ended March 31, 2023 | 1

DIRECTORS' REPORT

We are pleased to present the performance review and the un-audited Financial Statements for the nine months ended 31 March 2023.

ECONOMIC & INDUSTRY OVERVIEW

During the period under review, Pakistan's economy is reeling from one of its worst economic crises in history, the country has been faced with a barrage of woes with a perceived default risk and downgrade by international ratings agencies reflecting the state of the economy that has also had to bear major political turmoil and frequent change in key leadership. According to ADB, Pakistan's economic growth is expected to slow significantly to 0.6% in FY23 from 6% in the previous fiscal year.

Pakistan remains engulfed in high inflation, hitting a six-decade high at 35.4% in March 2023. In response to curb crippling inflation, SBP has hiked its benchmark policy rate by 100 basis points to a new record high of 21% - after the rupee plunged to an all-time low of Rs288 against the US dollar in the inter-bank market. However, as a net importer it is expected that Pakistan will continue experiencing strong inflationary pressures for the rest of FY2023.

The current account deficit has narrowed considerably, more than previously anticipated, mainly on the back of sizable import containment and somewhat an artificial one. The overall balance of payments position continues to remain under stress, with foreign exchange reserves at historical low levels.

The value of textile and garment exports from Pakistan, as reported by the PBS - decreased by 11.09% year- on-year in dollar terms in the first eight months of fiscal 2022-23. During the period, the Country earned US$11.22 billion from textile and apparel exports, compared to exports of US$12.62 billion in corresponding period last year. Specifically, Exports of towel also down by 7% and were valued at US$666.50 million during the period July-Feb2022-23. The textile imports in July-Feb2022-23 also decreased to US$ 2.75 billion (US$ 3.07 billion last year), thus posting a drop of 10.51%. Raw cotton imports went up by 19.46% year-on-year to US$1.25 billion.

REVIEW OF OPERATING RESULTS

A brief overview of the performance of your Company for the nine months ended 31st March 20 23 is stated below:

Statement of Profit or Loss for the nine months ended:

The Company's profit after tax for the nine months has increased significantly by Rs.4,288 million i.e. by 126% in comparison with the corresponding period of last year. The net sales during the period has increased by Rs.2,843 million, appears amplified on the back of devaluation of PKR (Rs 11,105m) in comparison with the corresponding period last year. However, reduction in volume has an impact of Rs. 10,024m (7.2%) therely positively impacting the profits as well.

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FUTURE OUTLOOK

The current year is turning to be more challenging than 2022. The issues afflicting the textile sector of Pakistan in 2023 are almost the carryover of the problems it faced last year. First & foremost, inflation is topping the list all over the world, more so in Pakistan. This has resulted in undercutting consumer demand in economies that are major buyers of textiles, pushing consumers to curtail spending.

In addition to that, the prolonged war in Ukraine is another high concern to the industry, having already disrupted trade routes and triggered energy crisis that will continue to have an impact.

However, in view of the constant & multiple challenges faced, Textile industry performed reasonably considering the additional drawbacks it faced in the shape of a weak economy, withdrawal of subsidies and volatile political situation. Going forward, focus on business delivery, cost competitiveness and maintaining close coordination with customer will be imperative to navigate these unprecedented challenging times.

ACKNOWLEDGEMENT

We would like to take this opportunity to express our deep sense of gratitude to the shareholders, employees, customers and business partners for their cooperation, confidence and faith they have always reposed in the Company.

For and on behalf of the Board of Directors

Karachi: April 29, 2023

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