Abdullah Shah Ghazi Sugar Mills Faces Operational Shutdown and Financial Losses

Karachi: Abdullah Shah Ghazi Sugar Mills Limited reported a challenging nine-month period ending June 30, 2024, with significant operational disruptions leading to financial losses. The company’s interim financial results reflect a continuation of economic struggles within Pakistan’s sugar sector.

During the 2023-24 crushing season, the mill’s operations were prematurely halted due to severe technical issues with one of its boilers and power turbines. This closure significantly impacted the company’s production capabilities and financial health. According to information available from the Pakistan Stock Exchange (PSX), the company recorded a loss after taxation of Rs. 246.933 million, a slight improvement over the previous year’s loss of Rs. 277.136 million, but still a substantial negative outcome for the period.

The broader economic environment poses additional challenges for the sugar industry in Pakistan. Domestic sugar prices remain markedly lower than global averages, a result of protective measures in other countries that keep their domestic prices high. This pricing disparity makes Pakistani sugar some of the cheapest in the world. Despite annual increases of 20-25% in sugarcane prices, sugar prices have not adjusted proportionately. This misalignment threatens the viability of sugarcane farming, which occupies less than 5% of Pakistan’s agricultural land.

The company’s financial statements, prepared in compliance with International Accounting Standard No. 34 “Interim Financial Reporting,” have been reviewed by external auditors as mandated by the Code of Corporate Governance. These policies are consistent with those used in the previous year’s financial statements.

In their report, the directors acknowledged the hard work of the company’s staff and the support of their bankers during these difficult times. They emphasized the need for governmental action to stabilize sugar prices, suggesting that aligning local prices more closely with international rates could provide better returns for growers and help the industry achieve more sustainable profit margins.