Janana De Malucho: A case study in struggling textile spinning mills

Competition from imported yarn from China and Vietnam, and rising energy costs, caused losses to increase five-fold

Janana De Malucho Textile Mills Ltd (JDMT) closed its fiscal year 2024 books with a net loss of Rs467.6 million, more than five times the Rs80.3 million lost the previous year, and its loss-per-share ballooned from Rs11.61 to Rs67.61 per year.

Three mutually-reinforcing factors explain the plunge. There is the shrinking top-line. Net turnover slipped by Rs131.8 million as cheaper Chinese and Vietnamese yarn crowded the domestic market, eroding both volumes and pricing power.

The second major factor is a run-up in energy costs. Power and fuel expenses leapt 60% to Rs1.16 billion (fiscal year 2023: Rs721 million) after a cumulative 150% hike in government-administered gas tariffs – up to Rs2,750 per MMBtu by February 2024.

Finally, there are the inflation-driven payroll pressures. A steep rise in wages and salaries, coupled with higher input costs, turned a Rs347 million gross profit in fiscal year 2023 into a Rs25 million gross loss and pushed the gross margin to zero .

Management’s response was drastic: the board suspended production citing untenable power tariffs, falling sales and piling inventories . A feasibility study for a 1 MW renewable-energy mix is on the table, but only conditional on new working capital becoming available.

 

To read the full article, subscribe and support independent business journalism in Pakistan

The content in this publication is expensive to produce. But unlike other journalistic outfits, business publications have to cover the very organizations that directly give them advertisements. Hence, this large source of revenue, which is the lifeblood of other media houses, is severely compromised on account of Profit’s no-compromise policy when it comes to our reporting. No wonder, Profit has lost multiple ad deals, worth tens of millions of rupees, due to stories that held big businesses to account.

Hence, for our work to continue unfettered, it must be supported by discerning readers who know the value of quality business journalism, not just for the economy but for the society as a whole.

(Already a subscriber? Click here to login)
  • Full Price Subscription Plans

    Not only will you be supporting independent journalism, 25% of the amount from your subscription will be used to subsidise those subscribers who cannot afford the full price of the subscription. As a subscriber you will get full access to exclusive paywalled content, and an ad free reading experience. Yearly full price subscription plans also include a complimentary annual subscription to The Wall Street Journal.

    +

  • Subsidised Subscription Plans

    Pay part of the full subscription price, if you cannot afford to pay all of it, and the rest will be subsidised by a full paying subscriber. As a subscriber you will get access to exclusive paywalled content, and an ad free reading experience.

  • Free Student Subscriptions

    If you are currently a student, you can claim an already-paid-for digital subscription, courtesy

    As a subscriber you will get access to exclusive paywalled content, an ad free reading experience.

     

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Popular Posts