Shezan International : Transmission of Quarterly Report for the Period Ended 30 September 2022

QUARTERLY REPORT

30 SEPTEMBER 2022

COMPANY INFORMATION

Board of Directors:

Mr. Muneer Nawaz	Chairman
Mr. Humayun A. Shahnawaz	Chief Executive
Mr. M. Naeem
Mr. Abid Nawaz
Mr. Rashed Amjad Khalid
Ms.Manahil Shahnawaz
Mr. Shahid Hussain Jatoi	(Independent Director)
Mr. Abdul Hamid Ahmed Dagia	(Independent Director)
Mr. Nauman Khalid	(Independent Director)

Chief Financial Officer:

Mr. Faisal Ahmad Nisar, FCA

Company Secretary:

Mr. Khurram Babar

Audit Committee:

Mr. Shahid Hussain Jatoi	Chairman
Mr. Muneer Nawaz	Member
Mr. M. Naeem	Member
Mr. Rashed Amjad Khalid	Member

Human Resource &

Remuneration Committee:

Mr. Nauman Khalid	Chairman
Mr. Muneer Nawaz	Member
Mr. M. Naeem	Member
Mr. Humayun A. Shahnawaz	Member

Registered Office / Head Office:

56 - Bund Road, Lahore-54500. Phones: [phone]-04.

Faxes: [phone] & 37466895.

E-mail: [e-mail]

Factories:

• 56 - Bund Road, Lahore - 54500. Phones: [phone]-04.
  Faxes: [phone] & 37466895.
  E-mail: [e-mail]
• Plot No. L-9, Block No. 22,
  Federal "B", Industrial Area, Karachi - 75950. Phones: [phone]-23.
  Fax: [phone].
  E-mail: [e-mail]
• Plot No. 33-34, Phase III,
  Hattar Industrial Estate, Hattar - 66210 Phones: [phone] & 617343.
  Fax: [phone].
  E-mail:[e-mail]

Website:

www.shezan.pk

Auditors:

EY Ford Rhodes, Chartered Accountants,

96-B-1, 4th Floor, Pace Mall Building, M. M. Alam Road, Gulberg II, Lahore.

Share Registrar:

Corplink (Private) Limited,

Wings Arcade, 1-K, Commercial,

Model Town, Lahore.

Legal Advisors:

Cornelius, Lane & Mufti,

Nawa-e-Waqt Building,

Shahrah-e-Fatima Jinnah, Lahore.

Bankers:

United Bank Limited.

MCB Bank Limited.

National Bank of Pakistan.

Bank Al-Habib Limited.

Habib Bank Limited.

Bank Alfalah Limited.

Allied Bank Limited.

Habib Metropolitan Bank Limited.

QUARTERLY REPORT JULY-SEPTEMBER| 2022

01

Always farm fresh

DIRECTORS' REPORT

TO THE MEMBERS

On behalf of the Board of Directors of Shezan International Limited, we are pleased to present the Directors' Report together with condensed Interim Financial Statements (Un-audited) of the Company for the three-month period ended 30 September 2022.

The quarter ended appears to be a challenging quarter for the businesses in the country as the economic environment was not favourable due to severe energy crises, spiraling inflation rate, the unprecedented disaster of floods causing massive damage to crops, livestock, infrastructure, supply chain disruptions and the overall ongoing political instability in the country. Pak Rupee devaluation is also another big challenge for the struggling national economy.

OPERATIONAL OVERVIEW

The Company's performance during the three-month period under review is summarized below:

	2022	2021
Particulars	Rupees in thousand
Revenue from contracts with customers-net	2,433,632	2,078,769
Gross profit	553,193	440,664
Profit before taxation	57,496	80,111
Net profit after tax for the period	33,697	54,499
		(Re-stated)
Earnings per share (Rs.)	3.49	5.64

On the operational side, we will like to apprise our shareholders that commodity costs remained high in the quarter ended due to high inflation. Some factors like record increase in the prices of mango pulp and Tetrapak paper (a major raw and packing material for our products), high payroll expenses because of increase in minimum wages in the fiscal budget 2022-2023, heavy urban and rural flood turmoil in the country, shortage of various crops of fruits and vegetables due to flood disaster, continuous increase in the prices of oil, gas, and electricity, inflated cost of locally available raw and packaging materials and sky-high import cost due to decline in the Pak Rupee value against the U.S dollar, have adversely affected the profitability of the Company.

Despite this hostile economic environment our Company, however, depicted satisfactory financial performance by achieving a reasonable growth of 17% in the turnover. Our main product juices (in tetra packaging) are an impulse buy, have shown positive sales trends. Consumer acceptance of our juice products is growing reasonably and contribution from these products to the sales has made a substantial impact in the profitability. However, keeping in view the inflationary trends, we had to enforce the price rationalization of our products to offset the impact of higher input costs. Still, we had to absorb a big component of hiked input costs as we could not pass on the full impact to end consumers due to the intense competitive environment. We upheld our growth momentum in exports and achieved reasonable growth during the quarter under review. Our cooked food range, Juicepak, bottled juices, squashes, and ketchup are the main contributors to export sales.

The finance cost of the working capital component has increased significantly due to the upward revision of 125 basis points in policy rates by the State Bank of Pakistan during the quarter bringing it to a cumulative of 1500 basis points. These working capital borrowings were made to stock the seasonal fruits, pulps, and packaging materials to fulfill the annual sales demand of our products.

02

FUTURE PROSPECTS

The quarters ahead again will be challenging for the Company as the economic conditions do not appear to be favourable. The urban and rural flooding in the country, the devastation of agricultural crops resulting in a shortage of the availability of fruits and vegetables, upside risks from potential food-price shocks, adverse future agriculture conditions due to flood water, supply chain disruption, gas and electricity load shedding in winter, inflation, declining consumer's buying power, devaluation of Pak Rupee, continuous rising interest rates and political instability are the key factors which can adversely affect the future performance and profitability of the Company. The oil prices are further expected to mount as the oil-producing countries have announced to reduce the production of oil, this will further exacerbate the energy/oil crises in the country and resultantly for the Company.

Despite the above challenges the Company's prospects are promising as the management will utilize its best potential towards increasing the Company's market share in all its sales segments. The Company will also try to uplift the sales of its off-season products in our next two thinnest quarters. The Company will strive to attain volumetric growth from its existing customers and will continue to explore local and foreign markets. The Company's focus on R&D and product management will further strengthen its product portfolio, enabling sustainable growth in the future.

VOTE OF THANKS

We take this opportunity to thank our shareholders for their confidence, valued customers for the trust they continue to place in us, the management team for its sincere efforts, the employees for their commendable services, the Board of Directors for their continuous guidance and all stakeholders - Bankers, Dealers, Vendors, Associates.

For and on behalf of the Board

	JULY-SEPTEMBER| 2022
	QUARTERLY REPORT
Nauman Khalid	Humayun A. Shahnawaz
Director	Chief Executive Officer
Lahore:
25 October 2022.	03