Shahtaj Sugar Mills reports 119pc surge in net profit

LAHORE: The net profit of Shahtaj Sugar Mills Limited (SHJS) increased by 119.4pc for the company’s first quarter ended December 31, 2019.

According to the company’s unaudited financial results for the first quarter, the sugar mill registered a net profit of Rs15.354 million as compared to the net loss of Rs79.040 million during the same period of 2018.

During the period under review, the company registered a turnover of Rs667.943 million, as compared to Rs479.318 million in the corresponding period of last year.

As per the company’s unaudited condensed financial information for the first quarter, the cost of sales clocked in at Rs569.626 million, as compared to Rs492.299 million the year.

The sugar mill made a gross profit of Rs98.317 million for the first quarter, as against the gross loss of Rs12.981 million during the same period of 2018.

SHJS states that the main reason for the profit was an increase in the price of sugar and molasses.

During the said period, the financial cost of SHJS was Rs13.753 million as against Rs10.931 million during the same period in 2018. This was due to high utilization of banking limits against pledge of sugar and upward adjustment in interest rates due to change of discount rates.

PERFORMANCE

As per the company director’s report, the crushing season 2019-20 started on 30 November 2019, and until the morning of 29 January 2020, they crushed 347,566 metric tonnes of sugarcane, producing 31,515MT of sugar at an average recovery of 9.31pc.

According to the data produced above, there was an increase in production with high crushing of sugarcane due to the early start of crushing season as compared to last year.

Further, recovery percentages of sugar and molasses were lower than last year due to weather conditions.

The Punjab government has fixed support price of sugarcane for this season at Rs190 per 40 kg, whereas last year it was Rs180 per 40 kg.

Initial estimates of availability of sugarcane were less than that of last year due to lesser cultivation of crop and poor rainfall during the year 2019 but the recent increase in support price will motivate growers towards this cash crop.

Sugar prices during the three-month period were better than the corresponding period of last year owing to lesser production overall in the country.

Further, molasses prices during the period under review were also better as compared to the corresponding period due to low production and non-availability of molasses stocks in the market.