Ghani Global Glass Limited

Ghani Global Glass Limited (PSX: GGGL) was incorporated in Pakistan as a private limited company in 2007. Initially, the company was known as Ghani Tableware (Private) Limited. The principal activity of the company is the manufacturing and sale of glassware, glass tubes, vials, ampoules, and chemicals.Pattern of Shareholding As of June 30, 2024, GGGL has a total of 240 million shares outstanding which are held by 6,227 shareholders. Ghani Global Holdings Limited, the parent company of GGGL holds 50.098 percent of its shares followed by individuals holding 47.098 percent shares of GGGL. Joint stock companies account for 1.978 percent of shares of the company. The remaining shares are held by other categories of shareholders.Financial Performance (2019-24)GGGL’s topline has followed an upward trajectory over the period under consideration. Its bottom line which was in the negative zone in 2019 started recovering thereafter to boast its highest level in 2022. In 2023, GGGL’s bottom line plunged followed by a rebound in 2024. The company’s margins registered improvement until 2021. In 2022, gross margin fell while operating and net margins continued to strengthen. This was followed by the decline of all the margins in 2023. In 2024, gross margin further eroded while net and operating margins picked up. The detailed performance review of the period under consideration is given below.In 2019, GGGL’s topline grew by 59.68 percent year-on-year to clock in at Rs.792.02 million. This was due to the gradual acceptance of the company’s products in the market. During the year, the demand for the company’s vials and ampoules started increasing in the North-West and KPK regions. GGGL also partnered with renowned national and multinational companies to provide tubing. During the year, the company also started exporting its tubes to Bangladesh. During the year, GGGL changed its furnace design from natural gas firing to oxygen combustion which improved its operational efficiency and reduced cost. This resulted in a 463 percent higher gross profit in 2019 with the GP margin clocking in at 6.60 percent versus the GP margin of 1.87 percent recorded in 2018. Administrative expenses grew by 11.26 percent in 2019 due to higher payroll expenses which was partially offset by low fee & subscription charges. Distribution expenses grew by 48.51 percent in 2019 due to higher freight charges, payroll expenses as well as rent, rates, and taxes incurred during the year. Other expenses grew by 20.90 percent year-on-year in 2019 mainly on account of inadmissible sales tax. Other income slid by 74.48 percent in 2019 due to the high-base effect as the company wrote back credit balances in 2018. GGGL incurred an operating loss of Rs.44.54 million in 2019, down 8.6 percent year-on-year. Finance costs mounted by 32.96 percent in 2019 on account of a higher discount rate as well as an increase in the company’s project finance and working capital lines. GGGL’s gearing ratio increased from 39 percent in 2018 to 43 percent in 2019. The company recorded a net loss of Rs.147.598 million in 2019, up 20 percent year-on-year. This translated into a loss per share of Rs.1.48 in 2019 versus a loss per share of Rs.1.23 posted in 2018. In 2020, GGGL’s topline registered staggering year-on-year growth of 63.77 percent to clock in at Rs.1297.09 million. This was on account of the company’s growing market share. In 2020, GGGL’s customer base of ampoules and vials increased to 80 pharmaceutical companies from 60 companies in the previous year. The company tapped other export destinations such as Egypt, Argentina, and Mexico besides Bangladesh. Higher margins on export sales due to Pak Rupee depreciation as well as cost-control measures put in place during the year such as overhaul of ampoules forming machines and installation of a water recycling system to reduce water consumption resulted in 448.83 percent year-on-year escalation in gross profit with GP margin posting a steep flight to clock in at 22.08 percent in 2020. Administrative and distribution expenses posted marginal increases of 2.30 percent and 6.28 percent respectively in 2020 due to higher freight charges and payroll expenses. GGGL expanded its workforce from 196 employees in 2019 to 206 employees in 2020. Other expenses dropped by 19.74 percent in 2020 due to lower inadmissible sales tax and tamed exchange loss. Other income eroded by 75.62 percent in 2020 as the company didn’t write back any credit balances and didn’t reverse provision for ECL during the year unlike 2019. In 2020, GGGL was able to record an operating profit of Rs.182.23 million in 2020 with OP margin clocking in at 14.05 percent. Finance cost grew by 37.54 percent in 2020 due to a high discount rate for the most part of the year coupled with an increase in outstanding borrowings. However, the gearing ratio dropped to 40 percent in 2020 due to an expansion in GGGL’s equity as its accumulated loss began to shrink. Net profit stood at Rs.40.48 million in 2020 with EPS of Rs.0.33 and NP margin of 3.12 percent. In 2021, GGGL’s topline grew by 7.8 percent to clock in at Rs.1398.17 million. The company managed to operate at its optimum capacity despite COVID-19 restrictions as it had to fulfill the needs of the pharmaceutical segment. Export sales declined during the year. GGGL’s continuous investment in state-of-the-art technology enabled it to cut down its cost by 2.64 percent in 2021 which resulted in 44.64 percent higher gross profit in 2021. GP margin climbed up to 29.62 percent in 2021. Administrative expenses mounted by 73.75 percent year-on-year in 2021 which was the consequence of elevated payroll expenses and fee & subscription charges incurred during the year against the issuance of right shares. The Distribution expenses dropped by 32.32 percent in 2021 due to lower freight charges on account of lower export sales. Other expenses surged by 273.74 percent year-on-year in 2021 due to higher profit-related provisioning and allowance for ECL. Other income also enhanced by 363.93 percent in 2021 on account of higher profit on deposits, amortization of deferred income as well as discount received during the year. GGGL’s operating profit picked up by 46.25 percent in 2021 with OP margin rising up to 19.06 percent. Finance cost plummeted by 22.1 percent in 2021 due to monetary easing as well as reduced outstanding borrowings. GGGL’s gearing ratio dropped to 22 percent in 2021. Net profit magnified by 228.87 percent year-on-year in 2021 to clock in at Rs.133.12 million with EPS of Rs.0.85 and NP margin of 9.52 percent. In 2022, GGGL’s net sales grew by 7.64 percent to clock in at Rs.1505.04 million. This was on account of the continuously expanding customer base of the company which stood at over 100 customers by the end of 2022. However, high inflation, hike in energy tariffs, global commodity price increases as well as Pak Rupee depreciation resulted in a meager 1.4 percent growth in gross profit with GP margin dipping down to 27.90 percent in 2022. Administrative and distribution expenses nosedived by 24.1 percent and 16.31 percent respectively in 2022 mainly on account of lower payroll expenses, curtailed fee & commission charges as well as low export commission. Other expenses spiked by 10.54 percent in 2022 due to higher profit-related provisioning. However, other expenses were conveniently offset by 220.66 percent higher other income recorded by GGGL in 2022. This was mainly the consequence of unclaimed liabilities written back during the year, exchange gain as well as gain on disposal of fixed assets. Operating profit grew by 19.16 percent in 2022 with OP margin mounting to 21.10 percent. Despite the high discount rate, GGGL was able to trim down its finance cost by 26.81 percent in 2022 as the company financed its capital investment using the TERF scheme of the SBP which carried a subsidized rate of 4.5 percent per annum. GGGL’s gearing ratio bounced back to 40 percent in 2022. The imposition of super tax also increased the tax burden. Nevertheless, it posted a net profit of Rs.197.94 million in 2022, up 48.7 percent year-on-year. EPS stood at Rs.0.82 in 2022. In 2023, GGGL’s topline boasted a tremendous 37.6 percent growth to clock in at Rs.2070.89 million. This was due to growth in sales volume across categories. Exports remained under pressure due to unfavorable economic conditions in Asian and African countries. Economic headwinds continued to mount resulting in a 41 percent year-on-year spike in cost of sales in 2023. The core reasons behind the towering cost were high Indigenous inflation, rise in energy tariff, global commodity super cycle as well as Pak Rupee depreciation. On the other hand, the prices of pharmaceutical products were controlled by DRAP resulting in erosion of margins for GGGL. During 2023, GGGL’s gross profit grew by 28.74 percent, however, its GP margin ticked down to 26.11 percent. The Administrative expenses escalated by 18.23 percent in 2023 mainly due to elevated payroll expenses as GGGL’s workforce grew from 323 employees in 2022 to 331 employees in 2023. Distribution expenses mounted by 62.76 percent in 2023 due to an increase in freight charges, traveling expenses, export commission as well as payroll expenses. Other expenses shrank by 37.75 percent in 2023 due to lower provisioning for ECL, WWF, and WPPF. Other income also dropped by 78.95 percent in 2023 due to lower exchange gain, no writebacks, no return on loans from related parties as well as lesser amortization of deferred income. Operating profit grew by 25.65 percent in 2023, however, OP margin slipped to 19.27. Finance cost soared by 229.18 percent in 2023 due to the unprecedented level of discount rate as well as higher short-term borrowings. GGGL’s gearing ratio climbed up to its highest level of 46 percent in 2023. Net profit eroded by 48.53 percent year-on-year in 2023 to clock in at Rs.101.878 million with EPS of Rs.0.42 and NP margin of 4.92 percent.In 2024, GGGL posted 17.81 percent year-on-year growth in its topline which was recorded at Rs.2,439.73 million. This came on the back of improved sales of vials, neutral glass tubes, and glass ampoules. Export sales posted a dip in 2024 as the company didn’t make any sales to Bangladesh and Uruguay in 2024. Sales to Egypt also declined during the year. The cost of sales mounted by 23.50 percent in 2024 due to a massive spike in raw material charges and energy costs. This resulted in a 1.71 percent uptick in gross profit in 2024 with GP margin falling down to 22.54 percent. Administrative expenses ticked up by 1.19 percent in 2024 as higher payroll expenses were offset by lower rent, rates & taxes, office expenses as well as fee & subscription charges incurred during the year. Distribution expenses plunged by 32 percent in 2024 due to a considerable fall in freight charges and export commission due to thinner export sales recorded during the year. Other expenses mounted by 47 percent in 2024 due to higher profit-related provisioning as well as an allowance for ECL booked during the year. Other income mounted by a staggering 3286 percent in 2024 due to rental income of Rs.151.200 million recognized during the year the company rented out its eight ampoule machines. Operating profit strengthened by 45.86 percent in 2024 with OP margin jumping up to its highest level of 23.85 percent. Finance costs surged by 52.85 percent in 2024 due to higher discount rates. Net profit multiplied by 42.15 percent to clock in at Rs.144.817 million in 2024 with EPS of Rs.0.60 and NP margin of 5.94 percent.Recent Performance (1HFY25) GGGL recorded 4.44 percent higher net sales to the tune of Rs.1311.53 million in 1HFY25. Both local and export sales posted an increase during the period. The cost of sales dropped by 3.28 percent in 1HFY25 due to stability in the prices of international raw materials coupled with an appreciation of the Pak Rupee. This resulted in a 30.38 percent improvement in gross profit in 1HFY25 with the GP margin clocking in at 28.64 percent versus the GP margin of 22.95 percent posted during the same period last year. Administrative and distribution expenses slid by 7.94 percent and 8.94 percent respectively in 1HFY25. Other expenses mounted by 123.26 percent in 1HFY25 due to higher profit-related provisioning and allowance for ECL booked during the year. Other expenses as well as operating expenses were offset by 41.81 percent higher other income recorded during the period which appears to be due to rental income of ampoule machines. Operating profit strengthened by 39.61 percent in 1HFY25 with OP margin improving from 22.24 percent in 1HFY24 to 29.73 percent in 1HFY25 – thanks to superior other income. Finance costs dipped by 1.43 percent in 1HFY25 due to better cash management and a lower discount rate. This resulted in 150.95 percent growth in net profit which clocked in at Rs.164.459 million in 1HFY25 with EPS of Rs.0.69 versus EPS of Rs.0.27 recorded during the same period last year. NP margin climbed up from 5.22 percent in 1HFY24 to 12.54 percent in 1HFY25.Future OutlookThe company is making constant strides to increase its capacity and undertake BMR of the existing lines to improve their efficiency. This will enable the company to take up more export orders and strengthen its foothold in South African, Latin American, and European countries. With all eyes set on expanding its grip in the international markets, not only will GGGL’s sales boost, but higher margins on export orders will also absorb high costs emanating from economic and political uncertainties in the home market and result in a vigorous bottom line.The company has recently installed four European ampoule machines with two more machines to be installed during the ongoing fiscal year. This will increase the total capacity to 55 million per month and will put the company in a better position to cater to the demand of local and international pharmaceutical companies.

Ghani Global Glass Limited (PSX: GGGL) was incorporated in Pakistan as a private limited company in 2007. Initially, the company was known as Ghani Tableware (Private) Limited. The principal activity of the company is the manufacturing and sale of glassware, glass tubes, vials, ampoules, and chemicals.

Pattern of Shareholding As of June 30, 2024, GGGL has a total of 240 million shares outstanding which are held by 6,227 shareholders. Ghani Global Holdings Limited, the parent company of GGGL holds 50.098 percent of its shares followed by individuals holding 47.

098 percent shares of GGGL. Joint stock companies account for 1.978 percent of shares of the company.

The remaining shares are held by other categories of shareholders. Financial Performance (2019-24) GGGL’s topline has followed an upward trajectory over the period under consideration. Its bottom line which was in the negative zone in 2019 started recovering thereafter to boast its highest level in 2022.

In 2023, GGGL’s bottom line plunged followed by a rebound in 2024. The company’s margins registered improvement until 2021. In 2022, gross margin fell while operating and net margins continued to strengthen.

This was followed by the decline of all the margins in 2023. In 2024, gross margin further eroded while net and operating margins picked up. The detailed performance review of the period under consideration is given below.

In 2019, GGGL’s topline grew by 59.68 percent year-on-year to clock in at Rs.792.

02 million. This was due to the gradual acceptance of the company’s products in the market. During the year, the demand for the company’s vials and ampoules started increasing in the North-West and KPK regions.

GGGL also partnered with renowned national and multinational companies to provide tubing. During the year, the company also started exporting its tubes to Bangladesh. During the year, GGGL changed its furnace design from natural gas firing to oxygen combustion which improved its operational efficiency and reduced cost.

This resulted in a 463 percent higher gross profit in 2019 with the GP margin clocking in at 6.60 percent versus the GP margin of 1.87 percent recorded in 2018.

Administrative expenses grew by 11.26 percent in 2019 due to higher payroll expenses which was partially offset by low fee & subscription charges. Distribution expenses grew by 48.

51 percent in 2019 due to higher freight charges, payroll expenses as well as rent, rates, and taxes incurred during the year. Other expenses grew by 20.90 percent year-on-year in 2019 mainly on account of inadmissible sales tax.

Other income slid by 74.48 percent in 2019 due to the high-base effect as the company wrote back credit balances in 2018. GGGL incurred an operating loss of Rs.

44.54 million in 2019, down 8.6 percent year-on-year.

Finance costs mounted by 32.96 percent in 2019 on account of a higher discount rate as well as an increase in the company’s project finance and working capital lines. GGGL’s gearing ratio increased from 39 percent in 2018 to 43 percent in 2019.

The company recorded a net loss of Rs.147.598 million in 2019, up 20 percent year-on-year.

This translated into a loss per share of Rs.1.48 in 2019 versus a loss per share of Rs.

1.23 posted in 2018. In 2020, GGGL’s topline registered staggering year-on-year growth of 63.

77 percent to clock in at Rs.1297.09 million.

This was on account of the company’s growing market share. In 2020, GGGL’s customer base of ampoules and vials increased to 80 pharmaceutical companies from 60 companies in the previous year. The company tapped other export destinations such as Egypt, Argentina, and Mexico besides Bangladesh.

Higher margins on export sales due to Pak Rupee depreciation as well as cost-control measures put in place during the year such as overhaul of ampoules forming machines and installation of a water recycling system to reduce water consumption resulted in 448.83 percent year-on-year escalation in gross profit with GP margin posting a steep flight to clock in at 22.08 percent in 2020.

Administrative and distribution expenses posted marginal increases of 2.30 percent and 6.28 percent respectively in 2020 due to higher freight charges and payroll expenses.

GGGL expanded its workforce from 196 employees in 2019 to 206 employees in 2020. Other expenses dropped by 19.74 percent in 2020 due to lower inadmissible sales tax and tamed exchange loss.

Other income eroded by 75.62 percent in 2020 as the company didn’t write back any credit balances and didn’t reverse provision for ECL during the year unlike 2019. In 2020, GGGL was able to record an operating profit of Rs.

182.23 million in 2020 with OP margin clocking in at 14.05 percent.

Finance cost grew by 37.54 percent in 2020 due to a high discount rate for the most part of the year coupled with an increase in outstanding borrowings. However, the gearing ratio dropped to 40 percent in 2020 due to an expansion in GGGL’s equity as its accumulated loss began to shrink.

Net profit stood at Rs.40.48 million in 2020 with EPS of Rs.

0.33 and NP margin of 3.12 percent.

In 2021, GGGL’s topline grew by 7.8 percent to clock in at Rs.1398.

17 million. The company managed to operate at its optimum capacity despite COVID-19 restrictions as it had to fulfill the needs of the pharmaceutical segment. Export sales declined during the year.

GGGL’s continuous investment in state-of-the-art technology enabled it to cut down its cost by 2.64 percent in 2021 which resulted in 44.64 percent higher gross profit in 2021.

GP margin climbed up to 29.62 percent in 2021. Administrative expenses mounted by 73.

75 percent year-on-year in 2021 which was the consequence of elevated payroll expenses and fee & subscription charges incurred during the year against the issuance of right shares. The Distribution expenses dropped by 32.32 percent in 2021 due to lower freight charges on account of lower export sales.

Other expenses surged by 273.74 percent year-on-year in 2021 due to higher profit-related provisioning and allowance for ECL. Other income also enhanced by 363.

93 percent in 2021 on account of higher profit on deposits, amortization of deferred income as well as discount received during the year. GGGL’s operating profit picked up by 46.25 percent in 2021 with OP margin rising up to 19.

06 percent. Finance cost plummeted by 22.1 percent in 2021 due to monetary easing as well as reduced outstanding borrowings.

GGGL’s gearing ratio dropped to 22 percent in 2021. Net profit magnified by 228.87 percent year-on-year in 2021 to clock in at Rs.

133.12 million with EPS of Rs.0.

85 and NP margin of 9.52 percent. In 2022, GGGL’s net sales grew by 7.

64 percent to clock in at Rs.1505.04 million.

This was on account of the continuously expanding customer base of the company which stood at over 100 customers by the end of 2022. However, high inflation, hike in energy tariffs, global commodity price increases as well as Pak Rupee depreciation resulted in a meager 1.4 percent growth in gross profit with GP margin dipping down to 27.

90 percent in 2022. Administrative and distribution expenses nosedived by 24.1 percent and 16.

31 percent respectively in 2022 mainly on account of lower payroll expenses, curtailed fee & commission charges as well as low export commission. Other expenses spiked by 10.54 percent in 2022 due to higher profit-related provisioning.

However, other expenses were conveniently offset by 220.66 percent higher other income recorded by GGGL in 2022. This was mainly the consequence of unclaimed liabilities written back during the year, exchange gain as well as gain on disposal of fixed assets.

Operating profit grew by 19.16 percent in 2022 with OP margin mounting to 21.10 percent.

Despite the high discount rate, GGGL was able to trim down its finance cost by 26.81 percent in 2022 as the company financed its capital investment using the TERF scheme of the SBP which carried a subsidized rate of 4.5 percent per annum.

GGGL’s gearing ratio bounced back to 40 percent in 2022. The imposition of super tax also increased the tax burden. Nevertheless, it posted a net profit of Rs.

197.94 million in 2022, up 48.7 percent year-on-year.

EPS stood at Rs.0.82 in 2022.

In 2023, GGGL’s topline boasted a tremendous 37.6 percent growth to clock in at Rs.2070.

89 million. This was due to growth in sales volume across categories. Exports remained under pressure due to unfavorable economic conditions in Asian and African countries.

Economic headwinds continued to mount resulting in a 41 percent year-on-year spike in cost of sales in 2023. The core reasons behind the towering cost were high Indigenous inflation, rise in energy tariff, global commodity super cycle as well as Pak Rupee depreciation. On the other hand, the prices of pharmaceutical products were controlled by DRAP resulting in erosion of margins for GGGL.

During 2023, GGGL’s gross profit grew by 28.74 percent, however, its GP margin ticked down to 26.11 percent.

The Administrative expenses escalated by 18.23 percent in 2023 mainly due to elevated payroll expenses as GGGL’s workforce grew from 323 employees in 2022 to 331 employees in 2023. Distribution expenses mounted by 62.

76 percent in 2023 due to an increase in freight charges, traveling expenses, export commission as well as payroll expenses. Other expenses shrank by 37.75 percent in 2023 due to lower provisioning for ECL, WWF, and WPPF.

Other income also dropped by 78.95 percent in 2023 due to lower exchange gain, no writebacks, no return on loans from related parties as well as lesser amortization of deferred income. Operating profit grew by 25.

65 percent in 2023, however, OP margin slipped to 19.27. Finance cost soared by 229.

18 percent in 2023 due to the unprecedented level of discount rate as well as higher short-term borrowings. GGGL’s gearing ratio climbed up to its highest level of 46 percent in 2023. Net profit eroded by 48.

53 percent year-on-year in 2023 to clock in at Rs.101.878 million with EPS of Rs.

0.42 and NP margin of 4.92 percent.

In 2024, GGGL posted 17.81 percent year-on-year growth in its topline which was recorded at Rs.2,439.

73 million. This came on the back of improved sales of vials, neutral glass tubes, and glass ampoules. Export sales posted a dip in 2024 as the company didn’t make any sales to Bangladesh and Uruguay in 2024.

Sales to Egypt also declined during the year. The cost of sales mounted by 23.50 percent in 2024 due to a massive spike in raw material charges and energy costs.

This resulted in a 1.71 percent uptick in gross profit in 2024 with GP margin falling down to 22.54 percent.

Administrative expenses ticked up by 1.19 percent in 2024 as higher payroll expenses were offset by lower rent, rates & taxes, office expenses as well as fee & subscription charges incurred during the year. Distribution expenses plunged by 32 percent in 2024 due to a considerable fall in freight charges and export commission due to thinner export sales recorded during the year.

Other expenses mounted by 47 percent in 2024 due to higher profit-related provisioning as well as an allowance for ECL booked during the year. Other income mounted by a staggering 3286 percent in 2024 due to rental income of Rs.151.

200 million recognized during the year the company rented out its eight ampoule machines. Operating profit strengthened by 45.86 percent in 2024 with OP margin jumping up to its highest level of 23.

85 percent. Finance costs surged by 52.85 percent in 2024 due to higher discount rates.

Net profit multiplied by 42.15 percent to clock in at Rs.144.

817 million in 2024 with EPS of Rs.0.60 and NP margin of 5.

94 percent. Recent Performance (1HFY25) GGGL recorded 4.44 percent higher net sales to the tune of Rs.

1311.53 million in 1HFY25. Both local and export sales posted an increase during the period.

The cost of sales dropped by 3.28 percent in 1HFY25 due to stability in the prices of international raw materials coupled with an appreciation of the Pak Rupee. This resulted in a 30.

38 percent improvement in gross profit in 1HFY25 with the GP margin clocking in at 28.64 percent versus the GP margin of 22.95 percent posted during the same period last year.

Administrative and distribution expenses slid by 7.94 percent and 8.94 percent respectively in 1HFY25.

Other expenses mounted by 123.26 percent in 1HFY25 due to higher profit-related provisioning and allowance for ECL booked during the year. Other expenses as well as operating expenses were offset by 41.

81 percent higher other income recorded during the period which appears to be due to rental income of ampoule machines. Operating profit strengthened by 39.61 percent in 1HFY25 with OP margin improving from 22.

24 percent in 1HFY24 to 29.73 percent in 1HFY25 – thanks to superior other income. Finance costs dipped by 1.

43 percent in 1HFY25 due to better cash management and a lower discount rate. This resulted in 150.95 percent growth in net profit which clocked in at Rs.

164.459 million in 1HFY25 with EPS of Rs.0.

69 versus EPS of Rs.0.27 recorded during the same period last year.

NP margin climbed up from 5.22 percent in 1HFY24 to 12.54 percent in 1HFY25.

Future Outlook The company is making constant strides to increase its capacity and undertake BMR of the existing lines to improve their efficiency. This will enable the company to take up more export orders and strengthen its foothold in South African, Latin American, and European countries. With all eyes set on expanding its grip in the international markets, not only will GGGL’s sales boost, but higher margins on export orders will also absorb high costs emanating from economic and political uncertainties in the home market and result in a vigorous bottom line.

The company has recently installed four European ampoule machines with two more machines to be installed during the ongoing fiscal year. This will increase the total capacity to 55 million per month and will put the company in a better position to cater to the demand of local and international pharmaceutical companies..