Sindh Abadgars Sugar Mills Limited (“SASML” or “the Company”) is a public listed company incorporated in Pakistan on January 28, 1984, under the then-applicable Companies Ordinance, 1984, which was subsequently repealed with the enactment of the Companies Act, 2017, on May 30, 2017. The shares of the Company are listed on the Pakistan Stock Exchange Limited. The principal activity of the Company is the manufacture and sale of white sugar.

The Company was incorporated in Karachi, Pakistan, on January 28, 1984, originally under the ownership of the Effendi Group. In 2005, control of the Company was transferred to the Essarani Family, who have managed its operations and oversight ever since.

The Company is primarily engaged in the manufacturing and sale of white refined crystal sugar, along with the production of key by products, including bagasse, utilized for energy generation and as a raw material for various industries, and molasses, which is used in the production of ethanol. The Company has an installed sugarcane crushing capacity of 8,000 metric tons per day, and its production facility is located in Tando Mohammed Khan, Sindh. During the MY24-25 crushing season, the Company operated for 95 gross days, compared to 87 gross days in the previous season. Despite the longer crushing period, net crushing days declined to 74 from 85, primarily due to cane availability constraints and operational stoppages. Total sugarcane crushed during the season stood at 405,205 tons, reflecting a decline of ~22% compared to 521,657 tons crushed in the preceding season. Consequently, average daily crushing reduced to 4,265 tons on gross days and 5,452 tons on net days, compared to 5,996 tons and 6,137 tons, respectively, in the previous season. The reduction in throughput primarily reflects lower cane availability and a shorter effective crushing duration.  while sugar recovery decreased to 9.9% percent from 10.9% in the previous season. Molasses production amounted to 18,800 tons, compared to 23,320 tons last season, in line with the decline in cane crushing volumes. Overall, the Company’s operational performance was adversely affected by lower sugarcane availability, resulting in reduced crushing and sugar production volumes.

The Essarani Family holds the majority shareholding in Sindh Abadgars Sugar Mills Limited, owning ~79% of the total shares. Financial institutions collectively hold ~2% of the shareholding, while foreign investors, with the Islamic Development Bank being a prominent participant, account for ~9%. The general public holds the remaining ~10% of the Company’s shares.

The Essarani family’s majority control, combined with the limited presence of outside investors, provides a strong foundation for continuity of operations. This ownership stability supports long-term operational consistency and fosters confidence among key stakeholders. While there is no formalized succession plan, the roles and responsibilities of family members within the Company are clearly defined.

The Essarani Family brings extensive experience in the agricultural sector, operating under the umbrella of the DM United Group. The Group maintains a diversified portfolio spanning multiple industries, with key assets including Sindh Abadgars Sugar Mills. In addition, the family’s holdings extend to United Ethanol Industries Limited, a significant player in ethanol production, as well as Agro Trade Private Limited, United Agro Chemicals, SGM Sugar Mills (Pvt.) Limited, Ranipur Sugar Mills (Pvt.) Limited, and Synergy Packaging (Pvt.) Limited, further reinforcing the Group’s presence across the agricultural and chemical sectors.

The Company demonstrates adequate financial strength, supported by its position within the DM United Group and the strong backing of its sponsors. The Essarani Family’s majority ownership provides both strategic guidance and financial support, which enhances the Company’s ability to manage working capital requirements and fund ongoing operations.

The Board of SASML comprises of ten members with a diverse composition. This includes five non-executive directors, two executive directors, and three independent directors. The Board has nine male members and one female representative. The Essarani Family, as the principal sponsor, exerts significant influence over the Board, holding seven of the ten seats, thereby ensuring strong representation in strategic and operational decision-making. The Board structure combines family oversight with independent and non-executive participation, supporting governance while reflecting the ownership profile of the Company.

Mr. Deoo Mal Essarani, Chairman of the Board, also chairs SGM Sugar Mills Limited and United Ethanol Industries Limited. The non-executive directors are Mr. Deoo Mal Essarni, Mr. Dileep Kumar, Mr. Jugdesh Kumar, Mr. Mohan Lal, and Dr. Besham Kumar. The executive directors are Dr. Tara Chand Essarani and Mr. Mahesh Kumar, while the independent directors are 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 strengthen 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 and Remuneration Committee focuses on the Company’s human resources strategy, including talent management, executive compensation, and organizational development, ensuring that HR practices are aligned with corporate objectives and comply with relevant regulations. Collectively, these committees play a crucial role in promoting transparency, accountability, and strategic alignment within the organization. At present, the Company has not constituted a separate Nomination Committee. Matters relating to nominations, Board composition, and committee structures are addressed directly by the Board on the recommendation of the HR and Remuneration Committee, in line with its approved terms of reference. Similarly, a separate Risk Management Committee has not been established. Oversight of the Company’s risk management framework, including financial, operational, and compliance controls, is currently performed by the Audit Committee in accordance with its approved terms of reference. The Audit Committee regularly evaluates the adequacy and effectiveness of risk management procedures and reports its findings and recommendations to the Board.

The Company's auditors, M/s Rahman Sarfaraz Rahim Iqbal Rafiq, issued an unqualified opinion on the financial statements for MY25. The firm comes under category 'A' as designated by the SBP.

The Company’s organizational structure is divided into two main segments: mill operations, overseen by the Resident Director, and head-office administration, managed by the Group Chief Financial Officer (CFO). Both report directly to the Chief Executive Officer (CEO). Specialized departments under the CFO include Administration and Sales, Finance and Tax, Purchase, and Corporate Affairs, all of which report directly to the CFO, ensuring a clear line of authority and streamlined operational and administrative oversight.

Dr. Tara Chand, Chief Executive Officer, brings over 17 years of experience in the sugar and allied industries. In addition to his role as CEO of the Company, he also serves as CEO of United Ethanol Industries. Dr. Chand is supported by a competent leadership team, including Mr. Abdul Rahim Mallah, Resident Director Mills, and Mr. Saqib Ghaffar, Group Director Finance. Collectively, the senior management team comprises seasoned professionals with extensive experience in the sugar industry, providing effective leadership and strategic direction to the Company.

The Company does not currently maintain formally established management committees. However, the management team conducts regular performance discussions to assess and review ongoing activities. These discussions enable the leadership to monitor progress, address operational challenges, and ensure alignment with the Company’s strategic objectives.

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 strengthen its control environment by expanding the internal audit team, adding personnel to enhance oversight, and improving the effectiveness of internal controls across the organization.

Sugar production across Pakistan for the 2025-26 crushing season has commenced nationwide, with initial indicators suggesting an improvement in sucrose recovery compared to the previous season, supported by favorable climatic conditions and enhanced cane quality. Preliminary estimates indicate an upside in average recovery of approximately 0.5%, which could enable the industry to reach the national average recovery level of 10%, driven by higher sucrose content in cane and improved agronomic practices at the farm level. In addition, the area under sugarcane cultivation and yield per acre are projected to improve marginally, and the combined effect of higher recovery rates and increased cane availability is expected to result in higher overall sugar production volumes, potentially surpassing last year’s output. Overall, the industry outlook for the ongoing season remains cautiously optimistic, underpinned by improved operational efficiencies and supportive agricultural inputs.

The Company contributed ~1% to total sugar production in Pakistan, reflecting its modest share in the national industry.

The Company’s topline recorded a year-on-year growth of ~7.5%, increasing from ~PKR 5,766 million in MY24 to ~PKR 6,196 million in MY25. This growth was primarily driven by higher average selling prices, which more than offset the impact of largely stable sales volumes. Domestic sales remained the dominant contributor, accounting for ~88% of total revenue, while exports comprised the ~12%. The revenue expansion underscores the Company’s ability to pass on a portion of elevated input costs in a relatively tight domestic supply environment, supported by industry-wide price rationalization during the period. In addition, the Company generated ancillary income from by-products, with bagasse contributing ~PKR 98 million and molasses ~PKR 572 million, providing incremental support to overall revenues and diversifying the income base.

SASML’s profitability profile improved significantly in MY25, supported by favorable pricing dynamics amid lower sugar production in Pakistan. The gross profit margin expanded to ~9.5%, up from ~3.5% in MY24, translating into a substantial improvement at the operating level. The operating profit margin increased to ~6.4% from ~0.6%, while the PBIT margin strengthened to ~7.8% from ~2.6%, reflecting enhanced operating leverage. Consequently, the Company returned to profitability at the bottom line, with the net profit margin recovering to ~2.3% in MY25 from a net loss margin of ~5.1% in MY24, supported by improved operating performance and relatively contained finance costs. Overall, net income rebounded sharply to ~PKR 140 million, following a net loss of ~PKR 296 million in MY24, marking a significant turnaround in profitability.

SASML’s profitability profile improved significantly in MY25, supported by favorable pricing dynamics amid lower sugar production in Pakistan. The gross profit margin expanded to ~9.5%, up from ~3.5% in MY24, translating into a substantial improvement at the operating level. The operating profit margin increased to ~6.4% from ~0.6%, while the PBIT margin strengthened to ~7.8% from ~2.6%, reflecting enhanced operating leverage. Consequently, the Company returned to profitability at the bottom line, with the net profit margin recovering to ~2.3% in MY25 from a net loss margin of ~5.1% in MY24, supported by improved operating performance and relatively contained finance costs. Overall, net income rebounded sharply to ~PKR 140 million, following a net loss of ~PKR 296 million in MY24, marking a significant turnaround in profitability.

The Company’s working capital cycle lengthened moderately in MY25, driven by higher inventory holdings and an increase in receivables. Average inventory days rose to ~88 from ~82 in MY24, reflecting elevated stock levels in line with production and sales dynamics. In addition, average trade receivable days increased to ~9 from ~2, indicating a modest elongation in collection cycles. Consequently, average gross working capital days expanded to ~97 in MY25, compared to ~84 in the preceding year. This increase was only partially mitigated by a marginal contraction in supplier credit, with average trade payable days declining slightly to ~16 from ~17. As a result, average net working capital days increased to ~81 in MY25 from ~67 in MY24, pointing to a higher level of capital being tied up in operations and exerting incremental pressure on liquidity during the period.

The Company’s debt-servicing capacity improved markedly in MY25, underpinned by a strong recovery in operating performance. EBITDA-to-finance cost coverage increased to ~2.9x in MY25 from a weak ~0.5x in MY24, indicating a materially enhanced ability to service finance charges from operating earnings. This improvement is further supported by a sharp turnaround in cash flow generation, with FCFO growth rebounding to ~1,283.3% in MY25 following a contraction of ~96.6% in MY24. As a result, overall coverage metrics strengthened meaningfully: interest coverage and core operating coverage improved to ~2.1x in MY25 from ~0.1x in MY24, while total operating coverage rose to ~2.2x from ~0.1x. These trends reflect a transition from previously stressed coverage levels to moderate, though still evolving, debt-servicing comfort.

SASML’s capital structure exhibited improvement in MY25, as leverage declined to ~34.2% from ~41.2% in MY24, reflecting a reduction in reliance on debt amid improved profitability and internal cash generation. The composition of borrowings also improved, with short-term borrowings comprising ~65.8% of total debt compared to ~69.7% previously, indicating a gradual shift toward a more balanced maturity profile. Additionally, interest payable days reduced to ~20.9 from ~50.5, highlighting enhanced liquidity management and improved timeliness in servicing finance obligations, which collectively underscore a strengthening capital structure and reduced refinancing risk.