Sanghar Sugar Mills Reports Increased Production but Financial Losses Continue

Sanghar: Sanghar Sugar Mills Limited disclosed its operating and financial results for the nine-month period ending June 30, 2024, highlighting increased sugarcane processing and sugar production, albeit amidst continuing financial losses. The details were revealed in the latest Directors’ Review submitted to the company members.

The production data shows a significant rise in sugarcane crushing, from 406,402.296 metric tons in the previous season to 515,994.296 metric tons this season. The sugar production also saw an increase, rising from 41,711.250 metric tons to 52,293.500 metric tons. Despite the increased output, the sugar recovery percentage saw a slight decrease from 10.263% to 10.135%.

According to information available from the Pakistan Stock Exchange (PSX), the financial performance of Sanghar Sugar Mills has not mirrored its production success. The company reported a deeper financial loss before taxation, escalating to Rs. 137,531 thousand from Rs. 81,266 thousand in the corresponding previous period. This increase in loss was attributed to higher production costs and finance charges. The loss per share also worsened, moving from Rs. 8.79 to Rs. 13.48.

The review also highlighted that the lifting of sugar was notably low during the second quarter, adversely affecting the overall financial results, although the first and third quarters showed profitability before and after taxation. Sales of by-products such as molasses and bagasse were pointed out as factors that helped reduce production costs.

The government’s pricing policies were critiqued for creating a cost mismatch. While the minimum price of sugarcane was raised significantly by the Government of Sindh to Rs. 425 per 40 kg, an increase of Rs. 123 per 40 kg from the previous season, the sugar prices were not adjusted proportionally, impacting the cost dynamics and overall financial health of the company.

Looking ahead, the management expressed optimism about the future, citing the recent permission for exporting 150,000 metric tons of sugar as a potential boost for financial recovery. This export quota is expected to benefit the company through sales tax relief and improved cash flows. However, continued challenges such as low local sugar prices and high production costs necessitate further government intervention to stabilize the market and ensure the industry’s profitability.

The Directors extended their gratitude towards the company’s staff, government bodies, financial institutions, and shareholders for their support, which remains crucial for the company’s ongoing operations and future prospects.