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Lahore: Shahtaj Sugar Mills Limited disclosed a significant drop in sugar production and financial performance for the nine-month period ending June 30, 2024. The company’s financial statements revealed challenges due to decreased sugarcane yields and increased production costs.
For the crushing season that ended on February 25, 2024, Shahtaj Sugar Mills processed 679,859 metric tons of sugarcane, producing 67,793 metric tons of sugar and 28,152 metric tons of molasses. These figures represent a decrease from the previous season’s outputs of 786,325 metric tons of sugarcane and 77,600 metric tons of sugar. The decline in sugarcane availability was attributed to reduced crop area in Punjab, despite governmental efforts to increase support prices from Rs. 300 to Rs. 400 per 40 kg.
According to information available from the Pakistan Stock Exchange (PSX), the sugar industry has been grappling with a surplus, prompting the Economic Coordination Committee to authorize a sugar export quota of 150,000 metric tons to alleviate market saturation. However, Shahtaj’s allocation of just 1,471 metric tons from this quota underscores the minimal relief provided relative to its production volumes.
Financially, the company reported a turnover of Rs. 7,358.442 million for the nine months ended June 30, 2024, down from Rs. 7,681.715 million in the same period last year. The net profit plummeted to Rs. 48.249 million from Rs. 201.552 million, primarily due to heightened costs and increased finance charges, which rose from Rs. 427.009 million to Rs. 498.530 million.
In the shorter term, the three-month period ending June 30 showed a more acute financial downturn, with a net loss of Rs. 150.134 million compared to a profit of Rs. 114.636 million in the prior year. This loss per share of Rs. (12.50) starkly contrasts the earnings per share of Rs. 9.54 reported in 2023, reflecting escalating costs in sugarcane procurement and broader inflationary pressures.
Despite these challenges, the company remains optimistic about the next crushing season, citing better sugarcane sowing and favorable weather conditions that are expected to improve yields.
Additionally, Shahtaj Sugar Mills is progressing with a 32 MW bagasse-based co-generation power project, although its completion has been delayed due to issues with the interconnection facilities, pushing the estimated commercial operation date to potentially the next crushing season.
The directors expressed gratitude for the dedication of the company’s staff across all levels during these challenging times.