Karachi: Habib Rice Products Ltd. has reported significant hurdles affecting its operational sustainability and competitiveness for the third quarter ending March 31, 2025. According to the company's chairman's review and directors' report, unfavorable policy measures and external market pressures continue to impede the company's progress.
A key issue highlighted in the report is the sharp rise in energy costs, which has not been offset by adjustments in customer pricing. The situation has made it more economical for customers to import Sorbitol, with imports subject to only a 1% sales tax compared to the 18% levied on domestically produced alternatives. The Free Trade Agreement with China further exacerbates this issue, reducing import duties on Sorbitol to 3%, with a complete elimination effective January 1, 2026. This regulatory framework has led to a decline in demand for locally produced Sorbitol by over 33%, discouraging domestic manufacturing.
The report also outlines the challenges posed by the Government of Baluchistan's Market Committee Fee, which imposes high charges due to broadly defined product categories. These charges, often determined by contract collectors, add to the company's financial burdens.
Water scarcity remains a critical concern, despite the Hub Dam having overflowed for three consecutive years and containing more than three years' worth of supply. The company is forced to purchase water from private suppliers at Rs. 1.6 per gallon, compared to the official industrial rate of Rs. 0.05 per gallon. This discrepancy, attributed to the operations of the 'Tanker Mafia,' significantly raises input costs.
Agricultural challenges also loom large, as a reduced corn crop has shifted poultry feed demand toward rice, supporting higher rice prices. However, post-harvest anti-fungal treatments have rendered the rice non-organic, limiting its use in protein products and confining the company to the domestic market, where it faces competition from cheaper soybean meal imports.
According to information available from the Pakistan Stock Exchange (PSX), these structural and policy-related issues, if left unaddressed, may further erode the viability of domestic production and weaken the industrial base. The report closes with a plea for policymakers to take corrective action to protect local industries.