Karachi: Gatron (Industries) Limited, a notable player in the yarn manufacturing sector, has reported substantial financial losses for the nine months ending March 31, 2025. The company's un-audited financial statements reveal a troubling scenario, with net sales recorded at Rs.19,487 million and a net loss after income tax amounting to Rs.1,850 million. This represents a stark contrast to the corresponding period, exacerbated by various market dynamics.
The company's operating loss stood at Rs.417 million, with a loss before levies and income tax reported as Rs.1,605 million. The levies and income tax amounted to Rs.245 million. Gatron's paid-up capital was Rs.1,087 million, while shareholders' equity reached Rs.11,466 million. A significant factor in these losses was the reduction in net revenue by 28% compared to the previous year, largely attributed to an 18% decrease in yarn sales quantities and falling unit prices due to the reduced cost of raw materials.
According to information available from the Pakistan Stock Exchange (PSX), the company has faced extraordinary dumping of imported yarn, adding to the supply in the local market at exceptionally low prices. The National Tariff Commission (NTC) had previously terminated the Anti-Dumping Duties (ADD) on Polyester Filament Yarn (PFY) in November 2023, citing technical reasons. Despite the imposition of provisional anti-dumping duties in late November 2024, these expired on March 14, 2025, due to delays in finalizing these measures. Gatron anticipates the completion of an on-site audit of major Chinese suppliers will lead to the imposition of final anti-dumping duties by the end of May 2025.
The ongoing challenges have led to underutilization of Gatron's expanded production capacity, prompting increased fixed costs, including depreciation. Despite significant investment over recent years to boost production capability from 65,000 tons in 2020 to approximately 99,000 tons, the company struggles to capitalize on this growth due to market pressures. The misuse of duty-free imports under the Export Facilitation Scheme (EFS) further strains the industry, though the government is expected to introduce effective control measures.
Gatron's financial distress also reflects a 61% increase in distribution and selling expenses, offset by an 8% decrease in administrative expenses. The company's finance costs have decreased following a reduction in the discount rate by the State Bank of Pakistan (SBP), though future financial charges may lessen if inventory control measures are effective.
On the balance sheet, Gatron's stocks decreased by Rs.834 million to Rs.6.669 million, while finished goods stocks rose. Debtors increased by Rs.521 million to Rs.4,037 million, and creditors decreased by Rs.84 million to Rs.5,439 million. Short-term borrowings saw a rise of Rs.851 million, totaling Rs.4,431 million.
Looking ahead, Gatron remains hopeful that effective anti-dumping measures will allow better capacity utilization, supporting local industry against dumped imports. The company also plans to benefit from in-house production enhancements and additional solar power capacity. Despite the current challenges, Gatron is committed to navigating the complexities of the market, as indicated by its ongoing Scheme of Arrangement with Nova Frontiers Limited and Ghani & Tayub (Private) Limited, aimed at restructuring shareholder arrangements without affecting core business operations.
The Directors have decided against recommending an interim cash dividend for the period, and the loss per share for the nine months ended March 31, 2025, stands at Rs.17.02. The Board acknowledges the steadfast support from stakeholders, government institutions, and financial entities as Gatron endeavors to stabilize and grow amidst these adversities.