GST Hits at Drastic Level
(Muhammad Babar Khan , sialkot )
Increase in GST from 10 to 16% came into effect from January 2014, results in
increase in the prices of tractors. This has adversely impacted the buying power
of the farmers which resulted in low demand of tractors. Bolan Casting Limited a
leading foundry of its kind in Pakistan has suffered a drastic decline in sales
due to the GST rise in 2014.
BCL top-line decreased by 36.4% in FY-2014, consequently the firm’s gross margin
is decreased by 113%. The company faced this turbulent time due to increase in
finance cost of 26% this year and a huge increase in taxation of 265% in 2014.
The company’s sales and production also hampered by Govt. Policies, due to which
ZTBL and other commercial banks significantly reduced extending loans for the
purchase of tractors. This all led to a drastic decrease in the Bottom-line of
574% as company recorded in 2014 net loss of Rs.105,526,000 against the net
profit of Rs.22,261,000 last year.
Govt. Decision to reduce the GST from 16 to 10% in FY-2015 observed as a good
omen for company and company is going towards the recovery after a stressed
period of 2014.
In 1QFY-2015 BCL’s Top-line growth is 117% Y.O.Y that makes the company
confident to set-off the loss of last year. Currently the prospects appear
strong and company is expecting to keep elevates Top-line because when things
starts positive at the top, chances are that the good fortune will translate all
the way down.
Revenue (PKR bn)
Rs.’’000’’ FY14 FY13 YoY%
Sales 1111227 1745974 (36.4)
Gross profit/loss (21956) 160699 (113.7)
EBIT (83992) 82775 (201.5)
Taxation 40819 11160 265.8
NPAT (105526) 22261 (574)