Sindh Abadgars Sugar Mills Limited (referred to as "SASML" or "the Company") is a publicly listed entity on the Pakistan Stock Exchange.

The Company was founded in Karachi, Pakistan, on January 28, 1984, under the ownership of the Effendi Group. In 2005, the Essarani Family took over and has since been in charge of its operations and management.

The Company is primarily engaged in the manufacturing and sale of white refined crystal sugar, along with by-products such as bagasse (used for energy generation and as a raw material for various industries) and molasses (used in the production of ethanol). The Company’s sugar mill boasts an impressive annual crushing capacity of 8,000 metric tons (MT) per day. In terms of production performance, Sindh Abadgars recorded sugar production of 56,855 MT during the fiscal year MY24. This marks an increase of ~10.3% compared to the 51,529 MT produced in MY23, demonstrating a steady improvement in operational efficiency and output. The mill’s capacity utilization remained at ~77% during MY24. The Company operated for 85 crushing days during the year, which is indicative of an efficient operational period. Additionally, the sugar recovery rate, which measures the amount of sugar extracted from the sugar cane, increased by ~0.45%, from ~10.63% in MY23 to ~10.90% in MY24. This improvement in recovery rate can largely be attributed to favorable moisture content in the sugar cane crop, which enhances the efficiency of the extraction process and leads to a higher yield of sugar from the raw material. The mill is located in Tando Mohammed Khan, Sindh.

The Essarani Family holds the majority ownership of Sindh Abadgars, owning ~79% of the total shares. Insurance companies collectively hold around ~2% of the ownership, while foreign investors, with the Islamic Development Bank being a prominent participant, hold about ~9%. The general public holds the remaining ~10% of the Company's shares.

Given the current ownership distribution and the strong family involvement, it is unlikely that significant changes will occur in the near future. The family's control of the majority of shares and the absence of outside investors suggest that the enterprise is positioned for continuity. This stability provides a solid foundation for maintaining long-term operations and can also foster trust with stakeholders, including employees, customers, and business partners, who value consistency in leadership and direction. Although there is no formalized succession planning documenting the roles of family members within the company are clearly defined.

The Essarani family brings a wealth of experience in the agricultural sector, operating under the umbrella of the 'United Group.' The group's diversified portfolio spans multiple industries, with key assets including sugar mill—Sindh Abadgar's Sugar Mills . Additionally, the family’s holdings extend to United Ethanol Industries Limited, a major player in ethanol production, as well as Agro Trade Private Limited, United AgroChemicals and, Synergy Packaging (Pvt.) Limited which further strengthen the group's presence in the agriculturaland chemical industries.

The company maintains robust financial stability attributed to the support of its group and sponsors. As of the MY23, the group's total assets amounted to ~PKR 29bln, backed by an equity base of around PKR 13.2bln. During this period, the group achieved a net profit of ~PKR 1,682mln. The group maintains a moderate level of leverage.This stable financial position the Company for continued growth and resilience in the face of market fluctuations.

The Board of Sindh Abadgars Sugar Mills Limited (SASML) is constituted of 10 members in total, with a diverse mix of roles. Among them, there are 5 Non-executive directors, 2 Executive directors, and 3 Independent directors. The board is comprised of 9 Male members and 1 female representative on the Board. Additionally, the Board is predominantly influenced by the sponsoring family, holding a significant majority with seven members from the family.

Mr. Deoo Mal Esraani, Chairman of the Board, also chairs SGM Sugar Mills Limited and United Ethanol Industries Limited. Mr. Deoo Mal has over 47 years of experience, he assumed the chairmanship role. The Board comprises three independent directors: Mr. Zafar Ahmed Ghori, Mr. M. Siddiq Khokhar, and Ms. Maheshwari Osha.

The Board of Directors of the company has established two key sub-committees to ensure effective governance and oversight. The Audit Committee is responsible for overseeing the financial reporting process, ensuring the accuracy and integrity of financial statements, reviewing internal controls, and monitoring compliance with legal and regulatory requirements. The HR & Remuneration Committee, on the other hand, focuses on the company’s human resources strategy, including talent management, executive compensation, and organizational development, ensuring that HR practices are aligned with the company’s objectives and compliant with relevant laws. Together, these committees play a crucial role in promoting transparency, accountability, and strategic alignment within the organization.

The Company's auditors, M/s Rahman Sarfaraz Rahim Iqbal Rafiq, issued an unqualified opinion on the financial statements for MY24. The firm come under category 'A' as designated by the SBP.

The organizational structure is divided in two segments: Mill operations overseen by the resident director and Head-Office administration managed by the Group CFO. Both heads report directly to the CEO. Specialized departments include Administration & Sales, Finance & Tax, Purchase, and Corporate Affairs, all reporting to the CFO, who reports directly to the CEO.

Dr. Tara Chand, the CEO, brings over 16 years of expertise in the sugar and allied industries. In addition to his role as CEO of the Company, Dr. Chand also serves as the CEO of United Ethanol Industries. He is supported by a skilled leadership team, including Mr. Abdul Rahim Mallah (Resident Director Mills), and Mr. Saqib Ghaffar (Group Director Finance). Together, they provide strong leadership and direction for the Company. All the senior management team comprises seasoned professionals with significant expertise in the Sugar Industry.

The Company currently does not have formally established management committees. However, the managementteam engages in regular performance discussions to assess and review ongoing activities. These discussions allowthe leadership to evaluate the progress of various initiatives, address challenges, and ensure alignment with theCompany’s strategic goals.

The Company has implemented Enterprise Resource Planning (ERP) software from Cosmosoft to streamline its operations and enhance efficiency. This software helps integrate various business processes, providing a centralized system for managing key functions such as inventory, production, finance, and human resources.

The internal audit function is currently centralized at the group level. Going forward, the group plans to enhance its control environment by expanding the internal audit team, adding more personnel to oversight and improve theeffectiveness of internal controls across the organization.

Pakistan’s sugar industry stands as the second-largest agro-based sector in the country, comprising approximately 90 mills with an annual crushing capacity of 80-90 million MT. Despite its scale, the industry faces persistent challenges, particularly due to the Government-regulated sugarcane support prices, which are set based on farmer’s costs and often constrain millers' profitability. In MY23, sugar production declined by approximately 15%, reaching 6.7million MT, primarily due to the devastating floods that damaged standing crops and reduced the recovery rate. To manage the surplus inventory, the Government permitted the export of 0.5 million MT of sugar, offering some relief to the industry. The current MY24 season also reflects the lingering effects of flash floods, with a 4.7% loss in cultivated area. Despite these setbacks, sugar production is estimated to recover slightly to around 7 million MT. The Government’s continued support for exports is expected to provide a much-needed boost to millers, helping them navigate challenging industry dynamics and mitigate financial pressures.

The Company contributed approximately ~0.9% to the total production of sugar produced in Pakistan

The primary source of the Company's revenue is derived from the sale of refined sugar. A geographical split of revenue indicates that ~96.4% is generated from the local market, while the remaining ~3.5% originates from exports. During MY24, the Company's topline increased by ~4.1%, reporting to PKR 5.7 billion compared to PKR 5.5 billion in the corresponding period of the previous year MY23. This growth was driven by an increase in the sale price per kg, which rose from PKR 91/kg in MY23 to PKR 112/kg in MY24, despite a decline in sales volume, which decreased from 61,141 M/tons to 51,571 M/tons. Looking ahead, revenue stability is anticipated, underpinned by resilient local market demand for sugar. Additionally, the Company's financial performance improved due to sugar exports, amounting to PKR 205mln, which contributed positively to its results.

The Company's profitability margins reflect a deteriorated performance during MY24. Gross profit margin fell sharply to ~4.9% (MY23: ~20.5%), This steep decline was primarily driven by a substantial increase in the procurement cost of sugarcane, which had a direct negative impact on the cost of production. Higher sugarcane costs reduced the overall margin from the core business operations, making it more difficult to sustain profitability at the same levels as in the previous year. This translated into shrink Operating profit margin (~2%, down from ~17.7%). Moreover, during MY24 net profit margin contracted to -5.2% from ~6.7%. This decline is primarily attributed to a substantial net loss, occurred in 9MMY24 and MY24. Additionally, decline is primarily attributed to a substantial increase in finance costs, which rose to ~49%, reflecting the impact of elevated borrowing costs in a high-interest-rate environment.

The Company is projected to benefit from higher sugar prices and exports, leading to improved margins. Nevertheless, management should prioritize diversifying the Company's revenue sources.

The Company’s working capital management has shown increased during MY24. Inventories witnessed a rise, averaging 82 days compared to 71 days in MY23, driven by higher levels of finished goods. This increase reflects extended stockholding periods, which could tie up liquidity and strain cash flows if not managed effectively. Trade receivables remain negligible at 2 days on average, underscoring the Company’s efficient receivables collection practices. However, trade payables averaged 17 days, from 19 days in MY23, indicating improved utilization of supplier credit. Despite this, the Gross Working Capital cycle lengthened to 84 days (MY23: 73 days), resulting in a higher Net Working Capital cycle of 67 days compared to 54 days in the previous period. Going Forward, the working capital cycle is expected to improve due to the efficient selling of stock through export.

The Company's coverage indicators reflect a mixed performance during MY24, highlighting challenges in its financial risk profile. The EBITDA-to-Finance Cost ratio has declined to 0.5x (MY23: 3.2x), signaling a reduced capacity to cover finance costs through operational earnings. Similarly, the FCFO-to-Finance Cost ratio has weakened to 0.1x from 3.0x, indicating tighter cash flow coverage of financial obligations. Debt repayment timelines have lengthened due to weaker cash flow generation, highlighting the need for improved financial efficiency. Going forward, coverages are expected to ease resulting due to lower finance cost.

SASML maintains a low leveraged capital structure which is a good sign in comparison to other industry players, with a debt-to-equity ratio standing at ~38.2% in MY24 (MY23: ~23.3%). The Company's debt consists of short-term borrowings only, constituting (100%) of the total debt. In MY24, the total debt of the Company stood to PKR 1,311mln due to increased utilization for running finance for working capital purposes and repayment of loan. The equity base of the Company stood at ~PKR 2,902mln (MY23: ~PKR 2,061mln).