Mardan: The Premier Sugar Mills and Distillery Company Limited has reported substantial losses for the fiscal year ending September 30, 2024. The financial results reveal a profound loss before tax amounting to 449.01 million rupees, a stark contrast to the previous year’s modest profit of 14.74 million rupees. This announcement comes amidst a challenging operational landscape, marked by increased competition and variable market conditions.
According to information available from the Pakistan Stock Exchange (PSX), the company’s turnover for the year was reported at 1.40 billion rupees, a significant decrease from the previous year’s 3.05 billion rupees. The company faced a loss after tax of 173.11 million rupees compared to a profit of 72.98 million rupees in 2023. The earnings per share also reflected this downturn, with a basic and diluted loss of 19.46 rupees.
The Directors’ Report highlights key operational challenges, including the sugarcane crushing season’s early closure on December 15, 2023, due to the diversion of sugarcane towards untaxed gur manufacturing. This situation has resulted in significantly higher sugarcane prices, approximately 30% above those in other sugar-producing areas, compelling the management to diversify into jaggery production. The installation of a jaggery plant with a capacity of 750 tons crushing per day is currently underway, aimed at addressing market demands and improving competitiveness.
The fluctuating sugar prices have further complicated the company’s financial landscape. During the 2023-24 season, the price of sugarcane was increased by 33%, reaching 400 rupees per 40 kilograms, impacting production costs. Conversely, for the 2024-25 season, the absence of price regulation by provincial governments is expected to result in a 3% increase in sugar production, projected at 6.10 million tons.
The company’s ethanol plant, which underwent an upgrade to enhance its capacity to 65,000 liters per day of Extra Neutral Alcohol (ENA), has resumed operations. The completion of the Balancing, Modernization, and Replacement (BMR) process in January 2025 is anticipated to bolster efficiency, sales, and profitability.
Looking ahead, the board has endorsed the establishment of a jaggery plant within the mill’s premises in Mardan, leveraging the growing demand in the Khyber Pakhtunkhwa region. This strategic move aims to counteract the illegal gur production and capitalize on regional market opportunities.
The economic backdrop of high inflation, stringent financial policies, and economic pressures posed additional challenges throughout the fiscal year. However, a loan of approximately USD 7 billion from the International Monetary Fund (IMF) and subsequent interest rate reductions by the State Bank of Pakistan, from 22% to 13% between June and December 2024, offer a promising outlook for reduced business costs and improved profitability.
In summary, The Premier Sugar Mills and Distillery Company Limited is navigating a complex array of operational and economic challenges. The company’s strategic initiatives, coupled with anticipated improvements in market conditions, may offer a pathway to recovery in the coming fiscal year.