Karachi: Chashma Sugar Mills Limited has released its Directors’ Report along with the audited financial statements for the fiscal year ending September 30, 2024. The company, which is primarily involved in the production and sale of sugar and related products, faced a financially challenging year, reporting a net loss after tax of Rs. 2.64 billion, a significant drop from the previous year’s profit of Rs. 1.70 billion. This downturn is attributed to inconsistent government export policies and delays in export-related decisions.
The financial year ended on September 30, 2024, was notably tough for Chashma Sugar Mills. Despite a 24% increase in net sales within the Sugar Division, reaching Rs. 24.72 billion from Rs. 19.88 billion, the gross profit plummeted to Rs. 793.64 million from Rs. 2.98 billion. This decline is due to sugar being sold below production costs, exacerbated by increased sugarcane prices influenced by higher support rates and market pressures.
According to information available from the Pakistan Stock Exchange (PSX), the Ethanol Division experienced a decrease in net sales from Rs. 8.03 billion to Rs. 3.85 billion. Despite higher sales figures, the gross profit in this division also fell to Rs. 1.43 billion from Rs. 3.20 billion, mainly due to reduced ethanol prices, higher raw material costs, and increased transportation expenses. Additionally, finance costs surged to Rs. 4.07 billion from Rs. 2.74 billion, driven by rising interest rates and greater working capital requirements, further worsening the company’s financial condition.
The operational highlights reveal that the sugarcane crushing season for 2023-24 began on November 27, 2023, and concluded on March 6, 2024. The mills crushed 1.73 million tons of sugarcane, producing 171,591 tons of sugar with an average sucrose recovery of 9.94%, down from 10.80% the previous year. For the 2024-25 season, which commenced on November 21, 2024, the mills have crushed 1.11 million tons of sugarcane, producing 104,353 tons of sugar as of February 4, 2025.
The government has permitted the export of 790,000 tons of sugar to address surplus production and stock levels. However, international sugar prices, ranging between $500 and $530 per ton, could not be capitalized on due to restricted export quotas and delays in approval processes. These limitations, coupled with ongoing market instability, have strained the industry’s profitability, highlighting the need for consistent pricing mechanisms and deregulation for sustainable growth.
The economic environment in 2024 was marked by high inflation, stringent financial policies, and economic pressures, adversely impacting businesses and consumer spending, leading to reduced demand and manufacturing. However, some improvements were noted towards the year’s end, offering a glimmer of hope for the future.