Treet Corporation Limited has, for decades, concentrated on the manufacture and sale of conventional and disposable razors and blades.

But it has diversified and is entering into new fields: assembly and sale of motorcycles; manufacture and sale of lead acid batteries and corrugated boxes for packaging; trading and merchandising; flotation and control of modarabas; labour-hire services and educational projects.

In the middle of last week, Treet surprised the market by making a ‘material disclosure’ to the effect that it had acquired 58pc equity stake in Renacon Pharma (Private) Limited on the basis of an indicative Non-Binding Offer.

The intention of acquisition was first conveyed on Dec 8 last year. The company then notified that it intended to acquire 55pc equity interest in Renacon Pharma for up to Rs400m.

It has not been clarified how much more Treet had to pay for the 3pc extra shares over the earlier intended acquisition of 55 pc holding in the pharmaceutical firm.

Apart from its healthy balance sheet the Treet Corporation’s strong group backing is enabling the company to enter into new waters

The pharma company specialises in the production of all types of formulations of Hemodialysis Concentrate in powder and solution form. Company Secretary of Treet, Rana Shakeel Shaukat elaborated: “Renacon Pharma is the only company in Pakistan which is producing custom-made formulation of hemodialysis concentrate as per individual patients’ requirements and also exporting it to several countries”.

Apart from its healthy balance sheet the Treet Corporation’s strong group backing is enabling the company to enter into new waters. Packages, IGI Insurance and the recently floated Loads Limited, are associated companies of Treet.

But diversification does not mean that the company is moving away from its conventional blades and razor business. The segment remains Treet’s core activity providing the greatest part of the revenue and contributing the biggest share to the bottom-line.

In aggregate sales of Rs1.97bn for the first quarter — July-Sept 2016, blades generated sales of Rs1.16bn; followed by packaging products at Rs417m; soaps at Rs266m; battery trading at Rs72m and motorbike project at Rs61m.

In the first quarter ended Sept 30, 2016, the company saw a steep drop of 72pc in profit after tax (PAT) at Rs23.5, from PAT at Rs83.6m in the corresponding quarter of the previous year.

“The blade/disposable business showed increase in local market but there was decline in exports”, said the CEO Shahid Ali Shah in the directors’ report for the period.

Local sales of blades rose to Rs759m, from Rs618m, while exports declined to Rs398m, from Rs518m YoY. Directors said the sale of soaps improved and kept margins intact; corrugation declined during the period and the motorbike segment showed increase in volumes.

“The company has started import and trade of lead batteries. Volumes will pick up momentum in the coming months”, the directors assured. During the first quarter, production of razors and blades from Lahore and Hyderabad stood at 433.79m blades up 13.54pc from 382.06m blades produced in the same quarter last year.

At the end of quarter ended Sept 30, 2016, total assets (consolidated) stood at Rs9.75bn. Paid-up capital amounted to Rs1.38bn; reserves were Rs4.81bn and unappropriated profit was Rs1.39bn.

Treet Corporation Limited is the holding company of a number of subsidiaries and undertakings which include: Treet Holdings Limited; First Treet Manufacturing Modaraba; Treet HR Management (Pvt) Limited; Global Arts Limited and Treet Power Limited.

Treat Power Limited was incorporated on Nov 20, 2007 as private limited company. It is in the planning stage of setting up an electric power generation project for electricity generation, distribution and sale.

The annual report for the year ended June 30, 2016 showed that the company had the capacity to produce 1,880m units of blades; 30,000 metric tonnes of corrugated boxes; 18,000 units of bikes and 5,000m tonnes of soap. Against those, actual production in 2016 stood at 1,749m units of blades; 25,920m tonnes of boxes; 7,284 bikes and 4,762m tonnes of soap.

At the close of the last financial year, the major shareholder of Treet Corporation was Syed Shahid Ali with 27.75pc shares. Other stakeholders included NIT with 8.86pc; Loads Limited, the associated company with 5.53pc; one foreign company with 4.29pc shares and 13 banks, development financial institutions and insurance companies with aggregate stake of 4.33pc.

Most market watchers believe that long-term investors, who look for growth, hold much of the floating stock.

At close of trading last Wednesday, Treet Corporation stock at a par value of Rs10, was tagged at a market price of Rs73.84.

Published in Dawn, Business & Finance weekly, January 23rd, 2017