Page 210 - InterloopAnnualReport2020

DIRECTORS’ CONSOLIDATED

REPORT

The Directors are pleased to present the consolidated audited results of Interloop Limited (“the holding company”) and its
subsidiary i.e., M/s IL Apparel (Private) Limited, for the year ended Jun 30, 2020.

The holding Company has annexed its consolidated financial statements along with its stand-alone financial statements in
accordance with the requirement of International Financial Reporting Standards and as required under section 228 of the
Companies Act, 2017.

Pandemic-hit Pakistan’s economy witnessed an overall growth rate down in the FY20. The total size of the country’s economy
and per capita income is expected to shrink significantly in terms of dollar in the post-COVID-19 pandemic. Pakistan’s textile
and clothing exports posted a negative growth of over six percent to $12.526 billion in the FY20, as compared to $13.3 billion
in FY19. However, the current account deficit during FY20 has shrunk by 78 percent Year-on-Year to USD 2.96 billion which is
1.1% of GDP, compared to a deficit of USD 13.43 billion in FY19 which was 4.8% of GDP.

Pertinent to note that the global textile demand has decreased sharply due to the Coronavirus pandemic, hurting Pakistan’s
exports. However, it is expected that Pakistan’s textile industry may stand to ultimately gain from the crisis since it will recover
quicker than its competitors. This can be attributed to Pakistan’s largest export market Europe coming out of lockdown, home
textile exports going strong, and the added benefits from global orders being rerouted out of China. Moreover, the government
has also already taken measures to protect exporters during the present crisis and provided a more level playing field. Several
input costs have been rationalized and Pakistan’s currency is no longer overvalued.

Although Pakistan’s economy received a severe hit from the pandemic and subsequent lockdown measures in the final quarter
of FY 2020 (Apr-Jun), despite these challenges, the Group recorded aggregate sales revenue of Rs. 36.797 billion as compared
to Rs. 37.511 billion during last year. The gross profitability of the Group stood at Rs. 7.574 billion, which decreased by 36.18%
compared to Rs. 11.867 billion during last year. Operating expenses of the Group have reduced by around 11.48% mainly due
to reduction in distribution cost. The finance cost of the Group was recorded at Rs. 1.201 billion, 20.17% higher as compared to
Rs. 0.999 billion last year owing to an increase in the short term and long term financing of the Group. The Group earned a net
profit after tax of Rs. 1.126 billion as compared to Rs. 5.061 billion during last year. The decrease is mainly due to the COVID-19
pandemic and resulted in lockdowns which effected the operations and revenues of the Group.

The Directors’ Report giving a detailed analysis of the performance of the Interloop Limited and its subsidiary i.e., M/s IL Apparel
(Private) Limited, for the year ended Jun 30, 2020, has also been presented separately. The Board of Directors appreciates all
its stakeholders for their trust and continued support to the Company.

On Behalf of the Board

Navid Fazil Jahan Zeb Khan Banth
Director/CEO Director

Faisalabad
September 16, 2020

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