Buxly Paints Limited (PSX: BUXL) was established as a private limited company in 1954 under the Companies Act, 1913 (now Companies Act, 2017). Later in 1985, it was converted into a public limited company. The company manufactures and sells paints, pigments, protective surface coating, varnishes and other related products. It does so under a toll manufacturing agreement with Berger Paints Limited.
Shareholding pattern As at June 30, 2021, close to 38 percent shares were held by the sponsors, directors, CEO and their children, followed by over 27 percent shares held by the local general public. The associated companies own 19 percent shares in the company while another 8 percent shares are held in mutual funds. Over 6 percent shares are categorized under “others” while the remaining roughly 2 percent shares are with the rest of the shareholder categories.
Historical operational performance
Buxly Paints Limited has mostly seen a growing topline while the profit margins in the last six years have fluctuated.
During FY18 the company witnessed a 16.7 percent growth in its topline to reach Rs 314 million in value terms. But this did not translate into higher profitability as cost of production consumed almost 85 percent of revenue, compared to almost 76 percent seen in the previous year. The increase in costs was due to increase in prices of raw materials and currency devaluation. The entire burden of higher costs could not passed on to the consumers therefore, gross margin reduced to 15 percent, from last year’s 24 percent. Although the company earned a significant Rs 5 million in other income, it could not offset the escalation in finance expense that rose to Rs 4 million compared to Rs 1.5 million in FY17. Thus, the company incurred a loss of Rs 5.4 million for the year. After seven consecutive years of increasing revenue, the latter contracted by over 18 percent in FY19. This was the biggest decline in topline seen since FY09. The loss in revenue resulted in gross margin decreasing further to 12 percent. In addition, the business environment had generally been impacted by the general elections and the political uncertainty associated with it. The economy also witnessed inflationary pressure and currency devaluation that discouraged spending. Similar to the previous year, the support from other income could not offset the continuously rising finance expense owing to rising interest rates. Thus, net loss escalated to an all-time high […]