LAHORE: Dewan Automotive Engineering, and Dewan Farooque Motors have both released their earnings for Q2FY23 to the Pakistan Stock Exchange (PSX). Dewan Automotive Engineering ended Q2FY23 with a net loss of Rs 2.559 million for a total HFY23 loss of Rs 18.6 million. Similarly, Dewan Farooque Motors ended Q2FY23 with a net loss of Rs 80.25 million for a total HFY23 loss of Rs 185.3 million.
Both companies have encountered impediments in fulfilling their financial commitments to lending institutions owing to liquidity constraints, leading to the non-renewal of short-term facilities by banks and other financial entities. Consequently, a significant number of creditors have pursued legal recourse to recuperate their outstanding debts via the foreclosure and sale of mortgaged assets, while others have initiated winding-up proceedings against the companies.
Dewan Automotive Engineering
Dewan Automotive Engineering Limited is a publicly traded entity that specialises in the assembly and manufacturing of tractors, light commercial vehicles, motorcycles, and associated parts. The company’s incorporation took place on May 6th, 1982, followed by the initiation of commercial operations in August of the subsequent year. The Yousuf Dewan Company assumed management control of Dewan Automotive Engineering in April 2004.
Dewan Automotive Engineering was added to the defaulters’ list of the Pakistan Stock Exchange (PSX) in 2017, leading to the suspension of trading activities of its shares. Consequently, the company’s operations have been suspended to date due to its exclusion from credit lines, subject to the formal agreement with its creditors.
Dewan Automotive Engineering Q2FY23
The company gross loss grew by 3.27% quarter-on-quarter (QoQ) to Rs 3.75 million from its previous 3.6 million. This amounted to a 1.65% year-on-year (YoY) increase from the loss it recorded in Q2FY22. Similarly, the company recorded an operating loss of Rs 4.2 million. This amounted to a 4.61% QoQ increase from its previous Q1FY23 loss of Rs 4.05 million, and a 6.87% YoY increase on its previous Q2FY22 loss of Rs 3.971 million.
The company serendipitously recorded the exact same ‘other income’ in Q2FY23 that it did in Q2FY22. This Rs 274,000 was also a 0.74% QoQ increase on the Rs 272,000 it recorded in Q1FY23. The company also saw a 1.81% QoQ increase on its tax rebate, which grew from Rs 442,000 to Rs 450,000. The Rs 450,000 amounted to a 27.48% YoY increase. The company’s cost of finance became negative as it recorded an inflow of Rs 961,000. The most likely reason for this is that a previous interest expense had been overstated, and thus it is being corrected here. This could also indicate possible success in Dewan’s negotiations with its creditors.
Finally, the company closed the quarter with a final loss of Rs 2.559 million. This is a QoQ improvement of 84.07% from its previous loss of Rs 16 million, and a 86.2% YoY improvement from its Q2FY22 loss of Rs 18.55 million.
Dewan Automotive Engineering HFY23
The company saw a 6.9% YoY improvement on its gross loss. It recorded a gross loss of Rs 7.39 million in comparison to its previous Rs 7.94 million. The company’s other income stood stagnant at Rs 546,000 whilst its tax rebate grew 1.13% YoY from Rs 882,000 to Rs 892,000. Finally, the company’s HFY23 accumulated loss improved 28.04% YoY from Rs 25.8 million to Rs 18.6 million.
Dewan Farooque Motors
Dewan Farooque Motors Limited, a publicly traded company, was incorporated in Pakistan on December 28, 1998, with its shares listed on all the major stock exchanges in the country. The company’s core business activity involves the assembly, progressive manufacturing, and sale of vehicles within Pakistan.
Due to working capital constraints, production activities were suspended, leading to significant losses. The company was unable to continue production from November 2010 until August 2013, and again had to suspend production in March 2014.Thereafter, on August 01, 2016, Dewan Farooque Motors entered into a contractual agreement with Daehan-Dewan Motor Company (Pt.) Limited, for the assembly of vehicles on a contractual basis. The company produced vehicles under this arrangement from March 2018 to June 2018. The plant has remained closed since then.
Dewan Farooque Motors Q2FY23
The company saw its gross loss increase QoQ by 251% from Rs 17.7 million to Rs 62.4 million. The gross loss is also a 208.22% YoY increase on its gross loss of Rs 20.2 million in Q2FY22. The company recorded a distribution and marketing expense of Rs 8.18 million, in comparison to the none that it recorded in Q1FY23, and Q2FY22. The company also recorded an interest expense of Rs 3,000 whereas there had been no such expense in Q1FY23, and Q2FY22.
The company recorded no tax expense in Q2FY23 similar to its position in Q2FY22, whereas it had obtained a tax rebate in Q1FY23. The company ended the quarter with a total loss of Rs 80.25 million. This is a 23.63% QoQ reduction on its loss of Rs 105 million from Q1FY23, but also 3524.75% increase on the loss of Rs 2.214 million it recorded in Q2FY22.
Dewan Farooque Motors HFY23
The company saw its sales for HF23 fall 53.39% YoY from Rs 118,00 to Rs 55,000. However, the company’s cost of goods sold rose 79.94% YoY from Rs 44.5 million in HF22 to its current Rs 80.2 million. This led to a final gross loss of Rs 80.18 million, a whopping 80.24% YoY increase from its HFY22 loss of Rs 44.48 million.
The company incurred a distribution, and marketing expense of Rs 8.18 million in HF23. It incurred no such expense in HFY22, and is attributable to the aforementioned Q2FY23. The company’s Rs 3,000 expense for cost of finance is similar. The company’s tax expense remained unchanged from HFY22 to HFY23.
Finally, the company ended HFY23 with an accumulated loss of Rs 185 million. This is a 180.7% increase on its previous loss of Rs 66 million in HFY22.
