KARACHI, May 29: Sugar mills are posting sweet results for the first half of the year ended March 31, 2003, though reasons vary from mill to mill.
It is the reporting season for the textile and the sugar sectors. And results released so far by several sugar mills for the Oct- March 2002-03 six months shows that companies have managed to improve their bottomline, thanks to availability of sugarcane, which saw mills post a collective production figure of 3.67 million tons of sugar up to May 15. This is the highest recorded output so far and exceeds the previous best of 3.55 million tons produced in crushing season 1997-98.
Higher sales in terms of value or reduction in costs, or both, are the main attributable factors for improved profitability in the six months under review.
Shakarganj Mills Limited at Punjab, was the first to begin crushing sugarcane on October 7, 2002. The early start gave it the advantage to be able to crush the largest quantity of sugarcane and produce sugar that represented the highest among all 76 sugar mills in the country. The company, nonetheless, posted lower sales at Rs1,269 million for the half year ended March 30, 2003, compared with sales at Rs1,440 million in the corresponding period of the previous year. By cutting down on cost of sales, the company managed to increase gross profit to Rs247 million, from Rs217 million and the benefit travelled down to the bottomline with after-tax profit at Rs143 million for the six months under review, up from Rs94 million in the similar period of 2002.
Sindhabadgar Sugar Mills, which began crushing on December 20, reported increased sales amounting to Rs316 million for the six months to end-March 2003, up from Rs283 million in the same period of last year. The company also managed to reduce costs, which enabled it to swing back to gross profit of Rs34 million, from gross loss of Rs2 million in the same time of 2002. At the net profit (pretax) level, the company showed profit of Rs0.2 million, against a huge loss of Rs45 million suffered in the earlier similar period.
Shahmurad Sugar Mills declared improved sales at Rs528 million, from Rs458 million and returned to operating profit of Rs18 million, against an almost equal sum of loss suffered in the first year of 2002. Sales at Al-Asif Sugar Mills rose to Rs295 million with an after-tax profit of Rs25 million, replacing the loss of Rs96 million on sales of Rs211 million in the first six months of 2002. Habib Sugar Mills, which runs trading, distillery and textile divisions, besides the sugar, showed sugar sales up at Rs437 million, up from Rs342 million and operating profit of Rs6 million, which offset the operating loss of Rs23 million suffered in the first half of last year. Mirza Sugar Mills increased sales to Rs300 million from Rs247 million, which reduced its losses to Rs26 million, from Rs48 million. Sugar division of Al-Noor (which also runs a board mill) reported higher sales at Rs586 million, from Rs445 million and operating profit of Rs12 million in place of operating loss of Rs20 million.
Sales at Noon Sugar Mills decreased to Rs245 million, from Rs258 million, yet through reduction in costs, net earnings could be pushed higher to Rs32 million, from Rs24 million. Sales at Husein Sugar Mills plunged heavily to Rs318 million, from Rs500 million, but profit before tax looked up to Rs65 million, from Rs49 million, thanks to overall cost reductions.
Mirpurkhas Sugar Mills also saw sales drop to Rs258 million, from Rs297 million, but by cutting down manufacturing cost of goods sold, the company could reduce net losses to Rs29 million for the period under review, from Rs92 million the same time last year.
Going against the trend, The Thal Industries Corporation (Layyah Sugar Mills) showed higher sales at Rs207 million, from Rs196 million, but dipped into after-tax loss of Rs3 million, compared with net profit of Rs9 million in the same time last year.
But for all the glittering figures for the first half, it is doubtful if sugar companies would manage to carry that over to the end of the year to September, given the huge unsold stocks pilling up in mills’ godowns. Against the total available stocks at 4.27 million tons, including the earlier season’s brought forward stocks of 500,000 tons, domestic consumption is about 3.2 million tons. This could leave nearly a million tons in surplus. In spite of the TCP’s helping hand, which lifted 100,000 tons for exports, sugar mills are concerned on how to dispose of the stocks and improve cash flows before the start of the next crushing season in October-November.