AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi: Shakarganj Limited has released its condensed interim financial statements for the nine months ending June 30, 2024, detailing a period marked by significant financial difficulties and operational disruptions across its diverse business segments.
During this period, the company encountered steep increases in sugarcane procurement costs without a corresponding rise in sugar prices, heavily impacting profitability. The Punjab Government initially set the sugarcane support price at Rs. 400 per 40 kg, but market forces pushed prices beyond Rs. 500, forcing the company to incur substantial losses. As a result, Shakarganj Limited reported a gross loss of Rs. 1.51 billion, a stark contrast to the gross profit of Rs. 111 million recorded in the same period last year.
According to information available from the Pakistan Stock Exchange (PSX), the sugar division of Shakarganj Limited experienced a significant reduction in sugarcane crushing, with only 778,454 metric tons processed compared to 1,019,181 metric tons last year, resulting in sugar production of 72,213 metric tons. This reduction is attributed to the shortened crushing season, which lasted only 91 days due to the non-viability of sugarcane procurement prices.
The company’s biofuel division also struggled, with production plummeting from 9.93 million liters to just 2.23 million liters due to a lack of available molasses at feasible prices. This led to a gross loss of Rs. 367.55 million for the biofuel division, a significant downturn from the previous year’s gross profit of Rs. 190.55 million.
The textile division remained non-operational during the review period due to adverse market conditions in the yarn sector, further exacerbating the company’s financial woes.
On a consolidated basis, Shakarganj Limited reported a substantial operating loss of Rs. 1.59 billion, a drastic change from the operating profit of Rs. 406.10 million in the prior year. The consolidated loss after tax amounted to Rs. 2.38 billion, compared to a profit after tax of Rs. 104.14 million in the previous year.
Shakarganj Limited has been listed on the Defaulters List by the Pakistan Stock Exchange due to its current liabilities exceeding its current assets by Rs. 4.79 billion. Despite these challenges, management remains committed to addressing the liquidity crisis and improving operational efficiency to safeguard the company’s future.
The outlook for the remainder of the fiscal year remains cautious, with limited raw material availability for biofuel production and ongoing challenges in the textile sector. However, the management is optimistic about navigating through these difficulties with strategic measures aimed at revitalizing the company’s operations.