Fosrich establishes new company to take advantage of SEZ concessions
ELECTRICAL and lighting company Fosrich has formally set up a new firm, Blue Emerald Limited, and is seeking to have it registered under the Special Economic Zone Authority.
This is being done to take advantage of the significant long-term tax concessions that are available under this new regime, which replaces free zone operations.
The new company will take charge of Fosrich’s recently built 120,000 square foot Hayes facility in Clarendon, costing over $100 million.
Blue Emerald will act exclusively for Fosrich under a contract manufacturing arrangement which the company carries out on behalf of Fosrich electrical repair and PVC manufacturing and distribution.
Fosrich Managing Director Cecil Foster reports that the Hayes facility “should be up and running by the end of December 2020”.
Blue Emerald will be charged with the responsibility for repairing Jamaica Public Service (JPS) transformers at the Hayes facility under a four-year renewable contract that Fosrich signed earlier this year with Jamaica’s light and power company.
The Taxpayer Audit & Assessment Department recently executed an audit of Fosrich’s 2016 income tax returns, seeking to raise additional income tax from the company. Foster advised shareholders that Fosrich has “agreed to most aspects of their (Taxpayer Audit & Assessment Department) findings. However, we are also now in the appeal stage of the process in respect of some adjustments”.
In his foreword to the company’s latest September quarterly unaudited financial statement, as well as that for the nine-month period ended September 30, 2020, Foster stated that the company has already begun to make provisions to cover these additional taxes.
Turning to the company’s financial performances, year-todate returns have been credible with Fosrich reporting income as at September 30, 2020 of $1.39 billion, an increase of $205 million compared to $1.18 billion in the same period in 2019. Gross profit year-to-date is up by $39.5 million to $554.3 million, compared to $514.8 million for 2019.
The marginal improvement in gross profit is attributed primarily to the greater availability of the products required by the market. The product lines that had significant increases were industrial electrical products, which grew by 214 per cent and PVC products, which grew by 240 per cent.
During the third quarter the company generated income of $534.3 million compared to $440 million for the prior reporting period, representing an increase of $94.3 million. Gross profit for the quarter was $215.7 million, compared to $199.6 million for the prior reporting period. Other income was positively impacted by foreign currency gains.
Administration expenses yearto-date were $436.1 million, reflecting an increase of $42 million or 11 per cent over the prior reporting period, amount of $394.1 million. This was driven primarily in the first quarter by a combination of building out of its human resources expertise, as the company built out its capacity for the future.