Panther Tyres : Half-Yearly Progress Report

PROGRESS REPORT

PANTHER TYRES LIMITED

HALF-YEARLY PROGRESS REPORT

31 AUGUST 2023

(AS REQUIRED BY REGULATION 16 OF THE PUBLIC OFFERING

REGULATIONS 2017).

P a g e 1 | 10

PROGRESS REPORT

TABLE OF CONTENTS

PREAMBLE……..……………………………………………………………………………………………………………3

IPO PROCEEDS…………………………………………………………………………………………………………..…3

IMPLEMENTATION STATUS………………………………………………………………………………………….4

ANNEXURE-I………………………………………………………………………………………………………………..8

P a g e 2 | 10

PROGRESS REPORT

PREAMBLE

We are pleased to share the half-yearly progress report for the period ended August 31, 2023. This progress report is being submitted in compliance with the requirement of Clause 16(i)(ii) of post-issue reporting and disclosures of the "Public Offering Regulations, 2017" and in pursuance of the requirement specified in clause 4.1.10 of the prospectus to the issue of the Company.

The Company carried out an IPO in February 2021 to partially finance its major expansion plan at estimated costs of Rs. 3.066 billion as per clause 2.1.2 of the prospectus to the issue. A sum of Rs.1.410 billion was allocated to this expansion from IPO proceeds. Rest of the amount was either arranged from banks or funded through internal cash flows of the Company.

Following is the detail of capital expenditures which were originally planned to be funded through IPO proceeds of Rs.1.410 billion:

	Description			Funds Required			Allocation %
			(PKR)
Plant and Machinery
4 Roll Calendar Line Comerio Italy	586,310,100		41.6%
Banbury Tangential Mixer	328,629,670		23.3%
Freehold Land & Development Expenses	100,000,000		7.1%
Building and Civil Works
Building for Calendar Department	166,780,230		11.8%
Building for Mixing Department	167,880,000		11.9%
Building for Tube Department	60,400,000		4.3%
Total	1,410,000,000		100.0%

Further detail of the above projects along with progress status is given below:

NET IPO PROCEEDS

The Company had raised funds through the issuance of 30 million ordinary shares at a strike price of Rupees 65.80 per share. The net IPO proceeds generated through this transaction is detailed below:

	Description			Amount (PKR)
Issuance of 30,000,000 ordinary shares at the floor price of Rs. 47 per		1,410,000,000
share
Excess funds received - share premium at Rs 18.80		564,000,000
Less: IPO expenses		(99,566,342)
Net IPO proceeds		1,874,433,658
Less: Funds Utilized to pay off Working Capital Loan (Ref clause 4.1.8)		*(464,433,658)
Net Funds available for expansion		1,410,000,000

P a g e 3 | 10

PROGRESS REPORT

*The excess funds amounting to Rupees 464.43 million received through IPO were utilized to reduce the short-term working capital lines as per clause 4.1.8 of the prospectus.

IMPLEMENTATION STATUS

The status of the expansion project as of the close of August 2023 is given below on prescribed format:

				Funds						Actual
						Allocation			Expenditures
	Description			Required
					%			31 Aug-2023
				(PKR)
									(PKR)
Freehold Land & Development Expenses	100,000,000		7.10%		101,021,403
Building and Civil Works
Building for Tube Department	60,400,000		4.30%		60,810,689
Building for Calendar Department	166,780,230		11.80%		173,973,475
Building for Mixing Department	167,880,000		11.90%		388,014,213
Plant and Machinery
4 Roll Calendar Line Comerio Italy	586,310,100		41.60%		763,002,644
Banbury Tangential Mixer	328,629,670		23.30%		511,929,319
	Total			1,410,000,000			100%			1,998,751,743

Brief detail of every project as mentioned above is given here below:

LAND AND DEVELOPMENTS

The company has acquired land measuring 21.4 Kanals. This land is located adjacent to existing land of factory located at 29.4 KM Sheikhupura Road.

Start date

Completion date

Commitment made in the

(disclosed in

Rationale for

(disclosed in the

Current status

prospectus

the

delay, if any

prospectus)

prospectus)

Acquisition of land

1Q FY 2021

3Q FY 2021

100%

Project

Complete

completed

P a g e 4 | 10

PROGRESS REPORT

BUILDING AND CIVIL WORKS

Following are the three buildings which were to be constructed through IPO funds:

Start date

Completion date

Current

Rationale

Commitment made in the prospectus

(disclosed in the

(disclosed in the

for delay, if

status

prospectus)

prospectus)

any

Refer to

Tube department Building

3Q FY 2021

4Q FY 2021

100%

sub

Complete

section

'a'

Refer to

Calendar department Building

4Q FY 2021

2Q FY 2022

100%

sub

Complete

section

'b'

Refer to

Mixing department Building

3Q FY 2021

2Q FY 2022

100% Work

sub

Complete

section

'c'

a) MC Tube Building

This was actually the extension of the existing building of the motorcycle tube section. The same was completed in FY2022.

b) Calendar Building

This building has been constructed to accommodate the newly acquired calendaring line. The building structure comprised of two components a pre-fabricated imported structure along with side walls and civil work for floors and low-height walls to rest the imported structure. The work on the building is finished, and the project is 100% complete.

The actual expenditures incurred are slightly higher than the budgeted funds due to adverse exchange rate and rise in building material prices since 2021. The board of directors has duly approved the cost escalation. The cost escalation has been funded through internal cash flows.

c) Mixing Building

This is a new state of the art multi-story building designed to accommodate recently acquired automated mixing lines. Civil and other related work on the project is complete; however, machines are currently being installed.

The above table shows substantial increase in the cost of the project from Rs.167 million to Rs.388 million. As per the initial layout finalized prior to IPO, the building was planned to accommodate two mixing lines

P a g e 5 | 10

PROGRESS REPORT

and the construction cost was estimated at Rs.167 million. Subsequently, on the advice of the technical team, the building design/area was changed to accommodate the four mixing lines. This resulted in an extended scope of work, and escalation of the cost of the building to Rs.388 million. The change in scope and overall cost escalation has been approved by the Board.

Out of the total cost of Rs.388 million, the cost to the tune of Rs.167 million was invested from IPO proceeds whereas the rest of the amount was funded through internal cash flows.

PLANT AND MACHINERY

Plant & machinery financed through IPO include the 4 Roll Calendar Line and Banbury Tangential mixer along with accessories.

The implementation status of these machines is given as under:

Commitment made in the

Start date

Completion date

Rationale for

(disclosed in the

(disclosed in the

Current status

prospectus

delay, if any

prospectus)

prospectus)

Calendar line

Purchase and installation of 4

3Q FY 2021

3Q FY 2022

has been

Refer to Sub

Roll Calendar line

installed &

section 'a'

operational.

The

Purchase and installation of

3Q FY 2021

2Q FY 2022

Machinery is

Refer to Sub

Banbury Tangential Mixer

in installation

section 'b'

phase.

a) 4 Roll Calendar Line

The machinery has been successfully commissioned and has also completed its trial run smoothly. Accordingly the same has been put to use.

The above table shows a delay in the project timeline that has occurred due to a couple of reasons. In November 2020, the company originally estimated its 'completion date' as mentioned in the above table, whereas the listing process took more than expected time due to the second wave of COVID-19, and LC was established six months later. Moreover, COVID restrictions in the source country, Italy, caused the delay in the manufacturing and shipment of machines. Which together resulted in delay in the project timeline.

The actual expenditures incurred surpassed the budgeted cost determined at the time of IPO due to PKR depreciation against the euro and a surge in the prices of steel material used in the project. The cost escalation, financed through internal resources, has been duly approved by the Board.

P a g e 6 | 10

PROGRESS REPORT

ANNEXURE - I

MC Tube Building

Calendar Building

P a g e 8 | 10

PROGRESS REPORT

Mixing Building

P a g e 9 | 10