Mughal Iron & Steel Industries : Transmission of Quarterly Report for the Quarter Ended September 30, 2023

CONTENTS

COMPANY INFORMATION & MANAGEMENT REVIEW

Company Information	2
Company Profile	3
Directors' Review	4

INTERIM FINANCIAL STATEMENTS (UNAUDITED)

Condensed Interim Statement of Financial Position	5
Condensed Interim Statement of Profit or Loss
& Other Comprehenisve Income	6
Condensed Interim Statement of
Changes in Equity	7
Condensed Interim Statement of Cash Flows	8
Selected Explanatory Notes to the Condensed Interim	9-16
Financial Statements

COMPANY INFORMATION

	BOARD OF DIRECTORS
	Mr. Mirza Javed Iqbal
	Non-Executive Director - Chairman
	Mr. Abdul Rehman Qureshi
	Non-Executive / Independent Director
	Mr. Shoaib Ahmad Khan
	Non-Executive / Independent Director
	Ms. Mariam Khawar
	Non-Executive / Independent Director
	Mr. Khurram Javaid
	Executive Director / Chief Executive Officer
	Mr. Muhammad Mubeen Tariq Mughal
	Executive Director
	Mr. Jamshed Iqbal
	Executive Director
	Mr. Fazeel Bin Tariq
	Non-Executive Director
REPORT	Mr. Muhammad Mateen Jamshed
Mr. Abdul Rehman Qureshi
	Non-Executive Director
	AUDIT COMMITTEE
FINANCIAL	Chairman
Member
	Mr. Fazeel Bin Tariq
	Member
INTERIM	Mr. Muhammad Mateen Jamshed
HUMAN RESOURCE & REMUNERATION
	COMMITTEE
	Mr. Abdul Rehman Qureshi
CONDENSED	Chairman
INVESTOR RELATIONS
	Mr. Mirza Javed Iqbal
	Member
	Mr. Fazeel Bin Tariq
	Member

2 Financial analysts, stock brokers, interested investors and financial media desiring information regarding the Company should contact Mr. Muhammad Fahad Hafeez at the Company's Registered Office, Lahore.

Tel: [phone] Ext: 155

E-mail: [e-mail]

SHARE REGISTRAR

Enquiries concerning lost share certificates, dividend payments, change of address, verification of transfer deeds and share transfers should be directed to:

THK Associates (Private) Limited

Plot No. 32-C, Jami Commercial Street 2, D.H.A. Phase-VII, Karachi, Pakistan.

Tel: [phone]

E-mail: [e-mail]

Web: www.thk.com.pk

SHAREHOLDER COMPLAINT HANDLING CELL Incase of shareholder complaints/queries, Please Contact:

Mr. Zeeshan Ejaz

Tel : [phone]Ext:136

E-mail: [e-mail]

AUDITORS

Fazal Mahmood & Company Chartered Accountants

(A member firm of Prime Global)

Muniff Ziauddin & Company Chartered Accountants

(A member of DKR International)

SHARIAH ADVISOR Mufti Imran Khan

LEGAL ADVISOR

Mr. Muhammad Atif Butt

TAX ADVISORS Akhtar Ali Associates Juris Counsel

Farooq Khan Law Associates Butt & Company

Punjab Law Associates

CHIEF OPERATING OFFICER

Mr. Shakeel Ahmed

Tel: [phone] Ext:154

E-mail: [e-mail]

CHIEF FINANCIAL OFFICER

Mr. Muhammad Zafar Iqbal

Tel: [phone] Ext:138

E-mail: [e-mail]

COMPANY SECRETARY

Mr. Muhammad Fahad Hafeez Tel: [phone] Ext:155

E-mail: [e-mail]

STOCK EXCHANGE LISTING

Mughal Iron & Steel Industries Limited is a listed Company and its shares are traded on the Pakistan Stock Exchange Limited ("PSX"). The Company's shares are quoted in leading dailies under the Engineering Sector with symbol "MUGHAL".

CREDIT RATING

VIS Credit Rating Company Limited Long-termentity rating (A+) Short-termentity rating (A1)

Future Outlook Rating: Watch -Developing status

Last updated: March 31, 2023

The Pakistan Credit Rating Agency Limited Long-termentity rating (A+)

Short-term entity rating (A1)

Future Outlook: Stable

Last updated: October 16, 2023

BANKERS

Askari Bank Limited

Allied Bank Limited

Al Baraka Bank (Pakistan) Limited

Bank Alfalah Limited

Bank Islami Pakistan Limited

Bank of Punjab (Islamic Taqwa Division)

Bank of Khyber

Bank Al-Habib Limited

Dubai Islamic Bank Limited

Faysal Bank Limited

Habib Metropolitan Bank Limited

Habib Bank Limited

ICBC Bank Limited

JS Bank Limited

MCB Bank Limited

MCB Islamic Bank Limited

Meezan Bank Limited

National Bank of Pakistan

Silk Bank Limited

Soneri Bank Limited

Summit Bank Limited

Samba Bank Limited

Standard Chartered Bank Limited

United Bank Limited

GEOGRAPHICAL PRESENCE Registered / Corporate office 31-AShadman 1

Lahore, Pakistan

Tel: [phone]

Fax: [phone]

E-mail: [e-mail]

Sale centres and warehouse

Badami Bagh

Lahore, Pakistan

Factory & warehouses 17-KMSheikhupura Road Lahore, Pakistan

Company Website:

www.mughalsteel.com

Note: Company's Financial Statements are also available at the above website.

COMPANY PROFILE

Mughal Iron & Steel Industries Limited ("Mughal Steel") was incorporated in 2010 as a public limited company. In 2011, the Company took over the running business of a partnership concern by the name of "Mughal Steel" which had been in the steel business for over 60 years and was being run by the major sponsors of the Company. Today, the Company is one of the leading companies involved in both ferrous and non-ferrous operations in Pakistan.

At Mughal Steel we work with passion and expertise to develop high-quality diversified portfolio of quality products. This means we create value for our customers and can successfully exploit the diverse opportunities in the markets of the future. Depth of technical and managerial expertise, reputation for reliability and a sharply defined business focus, has forged the organization into a modern, highly competitive supplier of quality products. The Company's ability to generate profits throughout the fluctuations of various economic and business cycles is testimony to the strategic initiatives to continuously reinvest, modernize and diversify.

The Company is involved in multidimensional activities. The products are grouped into ferrous and non-ferrous segments. Ferrous segment mainly comprises of billets, girders and steel re-bars while non-ferrous segment mainly comprises of copper ingots, copper granules and related waste. The diversified product and market mix of the Company has been carefully designed to mitigate different risks. Being in the industry for over 5 decades has enabled the Company to carefully nurture this portfolio enabling it to maintain its competitive edge year over year.

The main markets of the Company are domestic housing sector market both in urban and rural areas, large infrastructure projects market and international market for copper products. Demand from rural markets is based upon various crop seasons while demand from urban markets is non-seasonal. Copper products are exported to Peoples' Republic of China. There is no major seasonal impact on demand for copper products except for impact of market shutdowns or holidays.

Steel re-bars cater to both housing sector market and large infrastructure projects market, while girders mainly cater the housing sector market. The housing sector market for steel re-bars comprises mainly of housing sector in the urban areas, whereas, the housing sector market for girders mainly comprises of housing sector in the rural areas.

The large infrastructure projects market on the other hand comprises of demand from different projects initiated by various private sector, public sector and semi-government institutions. Mughal Supreme steel re-bars are used to target the housing sector in the urban areas since steel re-bars are used for construction of roofs in urban areas, whereas G60 steel re-bars are mainly used to cater large infrastructure projects market. On the other hand, since girders are products used for construction of roofs in rural areas, therefore they are used to target the rural housing market.

The management team is being led by Mr. Khurram Javaid, Director and CEO.

KEY BRANDS

• Mughal Supreme
• Mughal Super Girder

MAJOR PRODUCT PORTFOLIO

The Company's main product range comprises of the following products:

• Steel re-bars (G60 / Mughal Supreme)
• Girders
• Billets
• Copper ingots
• Copper granules

3

MUGHAL IRON & STEEL INDUSTRIES LIMITED

DIRECTORS' REVIEW

Dear Valued Shareholders,

On behalf of the Board of Directors of MUGHAL IRON & STEEL INDUSTRIES LIMITED, we are pleased to present the unaudited condensed interim financial statements of the Company for the quarter ended, September 30, 2023, the financial results of which are summarized below:

				(Rs. in Millions)
		Quarter ended September 30,	Variation %
	Financial highlights	2023	2022
	Sales-net	21,032.129	14,073.291	49.45
	Gross profit	2,517.700	2,084.440	20.79
	Profit before taxation	722.170	1,031.218	(29.97)
REPORT	Taxation	(207.114)	(159.700)	(29.69)
Profit for the period	515.056	871.518	(40.90)
Earnings per share-Basic & Diluted	1.53	2.60	(40.90)
FINANCIAL	Business, financial & operational review
During the quarter, your company posted highest ever topline along with profitable bottom line despite of the
INTERIM
prevailing adversities. Increase in topline was associated with increase in selling prices both in ferrous and non-
ferrous segments and increase in volumes in ferrous segments. Non-ferrous volumes witnessed decline due to
decrease in sale of waste, which was mainly due to in-house utilization of iron scrap by ferrous segment, however,
CONDENSED
copper volumes witnessed increase. Overall gross margins witnessed decline which was due to temporary
decline in ferrous margins in the quarter.
Administrative expenses mainly increased due to increase in salaries expenses. Rs. 71.204 million was reversed
on account of allowance for expected credit losses in respect of trade debts due to recovery of overdue balances.

4 Other income decreased by 50.09% mainly due to decrease in exchange gain. Finance cost increased significantly by 79.60% mainly due to significant hike in base discount rate. Resultantly, your company posted EPS of Rs. 1.53 per share as compared to EPS of Rs. 2.60 per share in corresponding quarter.

Additions in property, plant and equipment mainly represented installation of induction furnace and CCM. Inventories increased by 16.80% mainly due to increase in average cost and also due to increase in inventories in transit. Loans and advances decreased due to decrease in advances to suppliers. Deposits, prepayments and other receivables decreased due to release of guarantee margins. Resultantly, the statement of financial position footing stood at Rs. 63,130.460 million as of September 30, 2023, compared to Rs. 59,831.987 million as of June 30, 2023. Breakup value per share increased to 77.13 as of September 30, 2023 from Rs 75.60 as at June 30, 2023. Current ratio as at September 30, 2023 stood at 1.46:1 as compared to 1.50:1 as at June 30, 2023.

Future outlook

Going forward, the impact of political and economic scenario and increase in base discount rate may continue to impact the performance of the Company, however, Company will continue to manage its topline and bottom line.

Acknowledgement

The Board remains committed to provide sustained returns to our shareholders, in addition to maintaining our reputation for good governance. Lastly, we would like to thank all stakeholders for their patronage and look forward to their continued support.

For and on behalf of the Board of Directors,

Mirza Javed Iqbal	Khurram Javaid
(Chairman/Director)	(CEO / Director)
Date: October 27, 2023
Place: Lahore

CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

AS AT SEPTEMBER 30, 2023

Rupees	Note	September 30,	June 30,
2023	2023
		(Unaudited)	(Audited)

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment Long-term investment in financial assets Long-term loans to employees Long-term deposits

CURRENT ASSETS

6. 19,618,236,256

53,155,819

68,231,412

2,838,069

19,742,461,556

19,691,989,633

50,153,187

65,909,792

2,838,069

19,810,890,681

Inventories Trade debts Loans and advances

Deposits, prepayments and other receivables Due from the government

Cash and bank balances

EQUITY AND LIABILITIES

SHARE CAPITAL & RESERVES

Authorized share capital

Issued, subscribed and paid-upcapital Capital reserves:

Share premium account Contigency reserve

Revaluation surplus on property, plant and equipment Revenue reserve:

Un-appropriated profits

LIABILITIES

NON-CURRENT LIABILITIES

Long-term financing- secured

Deferred taxation

Defined benefit obligation

Deferred liabilities

CURRENT LIABILITIES

7. 26,899,099,274

9,236,230,585

203,703,747

184,578,176

3,540,095,391

3,324,291,709

43,387,998,882

63,130,460,438

8. 10,000,000,000

3,356,339,330

2,324,952,020

980,000,000

3,974,512,112

15,251,688,983

25,887,492,445

2,945,306,106

3,902,891,345

646,498,762

87,111,699

7,581,807,912

23,030,260,466

9,283,146,446

431,390,565

629,520,459

3,761,651,991

2,885,126,870

40,021,096,797

59,831,987,478

5,000,000,000

3,356,339,330

2,324,952,020

980,000,000

3,998,378,178

14,712,766,418

25,372,435,946

3,302,066,679

3,879,094,946

601,259,811

85,013,360

7,867,434,796

5

MUGHAL IRON & STEEL INDUSTRIES

Trade and other payables

Unclaimed dividends

Unpaid dividends

Accrued profit / mark-up

Short-term borrowings

Short-term loans from Directors - unsecured

Current portion of long-term financing

Current portion of deferred grant

CONTINGENCIES AND COMMITMENTS

9.

4,012,775,875

2,956,938

6,053,542

1,046,294,705

22,915,089,475

61,272,018

1,609,537,079

7,180,449

29,661,160,081

37,242,967,993

63,130,460,438

3,006,477,394

2,956,938

6,105,932

889,758,212

20,995,046,293

5,689,036

1,678,411,215

7,671,716

26,592,116,736

34,459,551,532

59,831,987,478

LIMITED

The annexed notes from 1 to 21 form an integral part of these condensed interim financial statements.

Khurram Javaid	Muhammad Zafar Iqbal	Muhammad Mubeen Tariq Mughal
Chief Executive Officer/Director	Chief Financial Officer	Director

CONDENSED INTERIM STATEMENT OF PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME

FOR THE QUARTER ENDED SEPTEMBER 30, 2023 (UNAUDITED)

Rupees	Note	2023	2022

CONDENSED INTERIM FINANCIAL REPORT

Sales-net	10.	21,032,129,421
Cost of sales	11.	(18,514,429,753)
GROSS PROFIT		2,517,699,668
Sales and marketing expenses		(71,962,902)
Administrative expenses		(203,477,700)
Other charges		(59,811,490)
Allowance for expected credit losses (reversal)		71,203,673
Other income		51,929,954
Finance cost		(1,583,410,519)
		(1,795,528,984)
PROFIT BEFORE TAXATION		722,170,684
Taxation		(207,114,185)
PROFIT FOR THE PERIOD
	515,056,499
OTHER COMPREHENSIVE INCOME

14,073,291,750

(11,988,851,901)

2,084,439,849

(60,895,295)

(146,687,073)

(90,079,070)

22,010,878

104,039,463

(881,610,556)

(1,053,221,653)

1,031,218,196

(159,700,436)

871,517,760

6

Other comprehensive income		-		-
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		515,056,499		871,517,760
EARNINGS PER SHARE-BASIC AND DILUTED	12.	1.53		2.60

The annexed notes from 1 to 21 form an integral part of these condensed interim financial statements.

Khurram Javaid	Muhammad Zafar Iqbal	Muhammad Mubeen Tariq Mughal
Chief Executive Officer/Director	Chief Financial Officer	Director

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY

FOR THE QUARTER ENDED SEPTEMBER 30, 2023 (UNAUDITED)

Capital Reserves

Revenue

Reserve

Issued,

Share

Contingency

Revaluation

Un-appropriated

Total

Rupees

subscribed and

premium

surplus on property,

paid-up capital

account

reserve

plant and equipment

profits

Equity

BALANCE AS AT JUNE 30, 2022-(audited)

3,356,339,330

2,324,952,020

980,000,000

3,018,133,793

11,167,653,096

20,847,078,239

Profit for the period

Other comprehensive income-net of tax

Total comprehensive income for the period

Transfer incremental of incremental depreciation relating to revaluation surplus on property, plant and equipment -net of tax

BALANCE AS AT SEPTEMBER 30, 2022-(unaudited)

-

-

-

-

3,356,339,330

-		-		-		871,517,760		871,517,760
-		-		-		-		-
-		-		-	871,517,760		871,517,760
-		-		(18,179,436)		18,179,436		-
2,324,952,020		980,000,000		2,999,954,357	12,057,350,292		21,718,595,999

BALANCE AS AT JUNE 30, 2023-(audited)

3,356,339,330 2,324,952,020 980,000,000 3,998,378,178 14,712,766,418 25,372,435,946

Profit for the period

Other comprehensive income-net of tax

Total comprehensive income for the period

Transfer of Incremental depreciation relating to revaluation surplus on property, plant and equipment -net of tax

BALANCE AS AT SEPTEMBER 30, 2023-(unaudited)

-		-
-		-
-		-
-		-
3,356,339,330		2,324,952,020

-	-	515,056,499	515,056,499
-	-	-	-
-	-	515,056,499	515,056,499
-	(23,866,066)	23,866,066	-
980,000,000	3,974,512,112	15,251,688,983	25,887,492,445

The annexed notes from 1 to 21 form an integral part of these condensed interim financial statements.

7

MUGHAL IRON & STEEL INDUSTRIES LIMITED

Khurram Javaid	Muhammad Zafar Iqbal	Muhammad Mubeen Tariq Mughal
Chief Executive Officer/Director	Chief Financial Officer	Director

CONDENSED INTERIM STATEMENT OF CASH FLOWS

FOR THE QUARTER ENDED SEPTEMBER 30, 2023 (UNAUDITED)

Rupees	Note	2023	2022

REPORT

CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from / used in operations	13.

Net decrease in long-term loans to employees

Net increase in long-term deposits

Payments for defined benefits

Payments for workers' welfare fund

Payments for income tax-net

Net cash generated from / used in operating activities

396,173,760

1,428,380

-

(12,931,148)

-

(45,417,829)

339,253,163

(1,286,382,224)

6,812,868

(2,563,069)

(11,153,707)

(94,066,845)

(199,487,007)

(1,586,839,984)

CONDENSED INTERIM FINANCIAL

8

CASH FLOWS FROM INVESTING ACTIVITIES
Payments for acquisition of property, plant and equipment	(66,999,374)		(384,848,559)
Profit received on term deposit receipts	27,494,267		20,340,105
Net cash used in investing activities	(39,505,107)		(364,508,454)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayment of long-term financing	(427,777,637)		(308,901,416)
Net proceeds from / repayments short-term borrowings	1,909,021,210		(61,013,898)
Net proceeds from / repayment of short-term loans from Directors	55,582,982		(25,062,812)
Payments for finance cost	(1,411,607,142)		(621,895,511)
Payment for dividends	(52,390)		(66,063)
Net cash generated from / used in financing activities	125,167,023		(1,016,939,700)
NET INCREASE / DECREASE IN CASH AND CASH EQUIVALENTS	424,915,079		(2,968,288,138)
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE PERIOD	2,885,126,870		5,163,452,475
NET EXCHANGE DIFFERENCE ON FOREIGN
CURRENCY ACCOUNTS	3,227,788		24,020,161
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 14.
3,313,269,737		2,219,184,498

The annexed notes from 1 to 21 form an integral part of these condensed interim financial statements.

Khurram Javaid	Muhammad Zafar Iqbal	Muhammad Mubeen Tariq Mughal
Chief Executive Officer/Director	Chief Financial Officer	Director

SELECTED EXPLANATORY NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS

FOR THE QUARTER ENDED SEPTEMBER 30, 2023 (UNAUDITED)

1. THE COMPANY AND ITS OPERATIONS

Mughal Iron & Steel Industries Limited (the Company) was incorporated in Pakistan as a public limited company on February 16, 2010 under the repealed Companies Ordinance, 1984 (now the Companies Act, 2017). The Company is listed on the Pakistan Stock Exchange Limited (PSX). The Company's operations mainly comprise of ferrous and non-ferrous business segments as disclosed in note 15. to these condensed interim financial statements. However, the principal activity of the Company is manufacturing and sale of mild steel products relating to ferrous segment. The Company is domiciled in Lahore. The Board of Directors in their meeting held on August 15, 2023 and the members of the Company in their meeting held on September 19, 2023, have approved the acquisition of Mughal International DMCC and Mughal Energy Limited, respectively, however, both the acquisition transactions are currently pending and in process. The geographical locations and addresses of the Company's business units including plants are as follows:

Business unit:	Geographical location / address:
- Registered office	31-AShadman-1, Lahore
- Manufacturing plants	17-KM Sheikhupura Road, Lahore
- Warehouses	17-KM Sheikhupura Road, Lahore and Badami Bagh, Lahore
- Sales centres	Badami Bagh, Lahore

2. STATEMENT OF COMPLIANCE

These condensed interim financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprise of:

• International Accounting Standard (IAS) 34, 'Interim Financial Reporting', issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017;
• Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as notified under the Companies Act, 2017; and
• Provisions of and directives issued under the Companies Act, 2017.

Where provisions of and directives issued under the Companies Act, 2017 differ with the requirements of (IAS) 34 or (IFAS), the provisions of and directives issued under the Companies Act, 2017 have been followed.

1. BASIS OF PREPARATION
   These condensed interim financial statements have been prepared under the historical cost convention, except as otherwise stated in relevant notes and are presented in Pakistani Rupees (Rs.), which is the functional currency of the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   The significant accounting policies and the methods of computation adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of the annual audited financial statements of the Company for the year ended June 30, 2023, except detailed below or elsewhere. These condensed interim financial statements do not include all the information and disclosures as are required for annual audited financial statements, and therefore, should be read in conjunction with the Company's annual audited financial statements for the year ended June 30, 2023.
   During the period, certain amendments / interpretations became effective and were adopted by the Company. Management has assessed the changes laid down by the amendments / interpretations that became effective during the period and determined that they do not have any significant impact on these condensed interim financial statements.
   Taxes on income in the interim periods are accrued using tax rate that would be applicable to expected annual profit or loss. Actuarial valuations are carried out on annual basis. The last actuarial valuation was carried out on June 30, 2023. The impact of remeasurement of retirement benefit plan has not been incorporated in the condensed interim financial statements.
3. CRITICAL ACCOUNTING ESTIMATES & JUDGMENTS
   The preparation of condensed interim financial statements in conformity with the approved accounting standards requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these condensed interim financial statements, the significant judgements made by management in applying the Company's accounting policies and key sources of estimation of uncertainty were the same as those applied to the annual audited financial statements of the Company for the year ended June 30, 2023, except as disclosed otherwise in respective notes.

9

MUGHAL IRON & STEEL INDUSTRIES LIMITED