Chashma Sugar Mills Reports Loss in Nine-Month Period Amid Economic Challenges

Lahore: Chashma Sugar Mills Limited has reported a significant loss of Rs. 1,485.09 million for the nine-month period ending June 30, 2024, according to the Directors’ Review Report. The financial downturn contrasts sharply with the profit of Rs. 257.05 million recorded in the same period last year. This financial information was compiled in compliance with International Accounting Standard No. 34 and the Listed Companies (Code of Corporate Governance) Regulations, 2019.

According to information available from the Pakistan Stock Exchange (PSX), the company’s operational performance has also experienced fluctuations. The crushing operations for the period commenced on November 27, 2023, and concluded on March 6, 2024, with a total of 1,726,610 metric tons processed, a decrease from 1,963,196 metric tons in the previous year. Sugar production totaled 171,591 metric tons, down from 211,871 metric tons, alongside a slight increase in ethanol fuel production.

Financially, Chashma Sugar Mills attributes its losses primarily to higher finance costs and increased expenses in sugar production driven by rising inflation. The Khyber Pakhtunkhwa (KPK) Provincial Government set the minimum support price of sugarcane at Rs. 400 per 40 kilograms, but local competition and the establishment of new mills have pushed procurement prices even higher.

The broader economic environment has compounded these operational challenges. With the government indecisive on the export of a surplus 1.5 million metric tons of sugar, coupled with high KIBOR rates and hyperinflation, production costs have surged without a corresponding increase in sugar prices. Most mills, including Chashma, are now selling sugar below production costs, leading to severe financial strain.

Despite these hurdles, the future might hold some respite. The State Bank of Pakistan has recently lowered the policy rate from 22.00% to 20.50% per annum, and with the IMF projecting a slowdown in inflation, further rate cuts are anticipated. Additionally, the government has permitted the export of 150,000 metric tons of sugar under strict conditions, which could potentially ease some financial pressures on the mills.

The Directors have acknowledged the hard work of the company’s staff and the support of their bankers during these trying times. They remain cautiously optimistic about the prospects of navigating through the current economic challenges.