KARACHI: Murree Brewery Company Limited has declared 4.6 percent increase in net profit despite ban on liquor sale in Sindh, according to half- year financial results for period ended December 31, 2018 submitted to Pakistan Stock Exchange (PSX) on Thursday.
The net sales revenue increased by 10.2 percent to Rs4.582 billion during July – December 2018 from Rs4.15 billion in the corresponding period of the last year.
The gross profit of the company has increased by 10.2 percent to Rs1.544 billion from Rs1.4 billion.
Earnings per share of the company have increased by 4.6 percent to Rs23.78 from Rs22.75 EPS.
The company declared the profit despite ban on liquor sale in Sindh. It said that as advised earlier the case is pending before the Sindh High Court. Meanwhile, sales during the half year were satisfactory.
The company also pointed out depreciation in local currency. It said that the rupee has further devalued to Rs.138 per US dollar increasing the cost of imports and making repayment of foreign currency loans and interest thereon dearer.
The benefit to the country by making exports cheaper has been marginally received by reducing the current account deficit. The cost of production has increased with dearer imports and increases in the cost of gas and electricity which has also increased the cost of living of the public utilizing higher quantities of these utilities, it added.
The company said that the Punjab Government issued a notification # SO(E&M)2-3/2011(P-II) dated 24th June, 2015 by which Still Head Duty was levied from 1st July, 2015 on all Pakistan Made Foreign Liquor and beer meant for consumption outside the province of Punjab. The Company challenged this notification in the Lahore High Court, Lahore.
The notification was set aside by the Honorable High Court on 27th June 2016.
The Company is paying this duty and recovering it from the buyers, which makes Murree Brewery products dearer than our competitors.
The Punjab Government has filed an appeal in the Lahore High Court, Lahore praying the impugned judgment may be set aside and the Notification dated 24th June, 2015 be declared intra vires to the Constitution of Islamic Republic of Pakistan.
Punjab Excise has got a stay against Sindh wine dealers and is collecting “extra duty”. The intra court appeal of the Excise Department has been dismissed by the Honorable Lahore High Court, Lahore on 19th February, 2019. However, the department has the right to appeal in the Supreme Court.
The company said that tax on extraction for business purpose also affected the sales.
In December 2018 the Supreme Court ordered a Re 1 per litre tax on water extracted for business purposes on a suo motu case pertaining to selling of water extracted from underground sources without any charge as well as the fitness of the same for human consumption.
Finally it applies to many industries including cement, beverages, textiles etc. The modalities of this tax have not yet been determined.
As the Company’s Tops and Liquor Divisions come under the purview of this tax, a review petition has been led in the Supreme Court.