Lahore: The Thal Industries Corporation Limited has reported its financial results for the first quarter ending March 31, 2025. Despite experiencing a significant rise in net sales, the company faced a decline in profit before tax due to various industry challenges.
The sugar industry, a major component of Pakistan's agricultural sector, ranked as the second-largest agro-based industry following textiles, contributing approximately 3.5% to agricultural value addition and 0.8% to the national GDP. However, the 2024-25 crushing season was fraught with challenges, including adverse weather conditions and rising input costs, leading to an estimated 10-15% decline in sugarcane yield per acre. In a move towards deregulation, the Provincial Governments did not set official support prices for sugarcane, resulting in the company procuring sugarcane at an average rate of PKR 429 per maund.
The company processed 2,501,854.655 metric tons of sugarcane, producing 241,471.300 metric tons of white refined sugar with a consistent recovery rate of 9.655%, despite a year-over-year decline of approximately 7.4% in sugarcane crushing. Net sales for the first six months of the fiscal year surged to PKR 24,586.33 million, compared to PKR 12,274.49 million in the same period last year.
According to information available from the Pakistan Stock Exchange (PSX), despite the increase in revenue, profit before tax fell sharply to PKR 390.11 million from PKR 1,718.21 million the previous year. This was largely due to reduced profit margins on carryover inventory and increased finance costs stemming from higher short-term borrowings. The company is focusing on optimizing processes, advancing technology, and controlling operational costs to support long-term growth. Strategic support is also extended to sugarcane growers through the provision of high-quality seeds, fertilizers, pesticides, and agronomic guidance.
The current season's mixed policy environment, with deregulated support prices but regulated ex-mill and retail sugar prices, poses challenges and opportunities for the industry. The Pakistan Sugar Mills Association continues to advocate for complete deregulation for sustainable growth, while the government's pricing policy aims to balance consumer affordability with industry viability.
The State Bank of Pakistan's monetary easing has seen the policy rate drop from 22% to 11% between March 2024 and March 2025, potentially reducing borrowing costs and improving margins. Market participants are hopeful for further rate cuts. Additionally, export earnings are now taxed under the Normal Tax Regime, which could slightly affect net profitability. Nonetheless, the company remains committed to enhancing operational efficiency, financial discipline, and shareholder value.
The Board of Directors expressed appreciation for the workforce's dedication and thanked financial institutions, growers, government agencies, and stakeholders for their continued support.