Karachi: Faisal Spinning Mills Limited reported a substantial loss of PKR 1.52 billion before taxes for the fiscal year ending June 30, 2024. The announcement came amid various economic challenges, including heightened energy costs and inflationary pressures that severely impacted the textile industry.

According to information available from the Pakistan Stock Exchange (PSX), the company experienced a sharp decline in profitability, with a pre-tax loss of PKR 1.52 billion compared to a profit of PKR 1.39 billion the previous year. The loss after taxes deepened to PKR 1.38 billion. Despite a 20 percent growth in sales to PKR 45.03 billion, the company's gross margin halved from 12 percent to 6 percent due to a significant rise in the cost of sales, which escalated to PKR 42.29 billion.

The financial strain was exacerbated by a record-high inflation rate of 38 percent in May 2023 and the State Bank of Pakistan's (SBP) lending rate, which peaked at 22 percent. Additionally, the withdrawal of energy subsidies as part of an IMF loan agreement further strained the firm's operational costs.

Faisal Spinning Mills did not declare dividends for the fiscal year, citing the substantial losses. The company's board is considering measures to improve financial health, including optimizing energy costs through renewable energy initiatives. The company has invested in solar energy and is developing a windmill project aimed at reducing dependency on traditional energy sources.

In terms of governance, the board actively participated in overseeing the company’s strategies and operations, with emphasis on compliance and risk management. Notably, all related party transactions were conducted at arm's length and in compliance with corporate policies.