Jauharabad Sugar Mills Limited ('Jauharabad Sugar' or 'the Company') was incorporated as a public limited company and is listed on the Pakistan Stock Exchange since 1973.

The Company was established on build, operate and transfer (BOT) contract by Pakistan Industrial Development Corporation (PIDC) in collaboration with Thal Development Authority (TDA). In 1955, Saigol Group acquired the contract and named the Company, Kohinoor Sugar Mills Limited. In Oct 2013, Cane Processing (Pvt.) Ltd. acquired major stakes (~64%) of Kohinoor Sugar Mills and rename it to Jauharabad Sugar.

Jauharabad Sugar is engaged in the manufacturing and sale of sugar and its by-products molasses, bagasse, and mud. The Company has two sugarcane crushing units, named Line-I and Line-II with a combined sugarcane crushing capacity of 12,500 MT per day. Line I has a sugarcane-crushing capacity of 3,000 MT per day. However, it’s currently not operational. While the Company’s Line-II can crush 9,500 MT enhanced from 7,500 of sugarcane per day. In terms of production performance, Jauharabad recorded sugar production of 64,873 MT during the fiscal year MY24. This marks an increase of ~1% compared to the 64,197 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 89 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, remains stable at ~9.85% 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 Company’s majority ownership rests with Cane Processing, a holding company that holds 64% of the shares, while 9% is owned by individuals from the Latif family. Institutional investors, including NIT and ICP, collectively hold 3% of the shares. The remaining 35% constitutes the Company’s free float, allowing for public trading and investor participation. Cane Processing, the principal shareholder, is predominantly controlled by Mrs. Ghazala Amjad, who owns a 99% stake, giving her significant influence over the Company’s strategic direction and decision-making.

The presence of a holding Company enhances stability by providing long-term strategic direction and financial security. Transferring the entire family stake to the holding company would further consolidate ownership, streamline decision-making, and reinforce the company's structural integrity, ensuring sustained growth and operational efficiency.

The sponsoring family has a long-standing history in the business world. Mother of Mr. Ahsan Latif (JSML’s Chief Operating Officer), Mrs. Ghazala Amjad hails from the sponsoring family of Kohat Cement. Mr. Ahmad Latif, younger brother of Mr. Ahsan Latif, owns two LPG businesses – named Synergy and Awami.

The company is primarily owned by Cane Processing, which serves as a strong financial backbone. The sponsors possess sufficient financial strength to support the Company in times of distress, ensuring stability, continuity, and resilience against market fluctuations.

The Company's Board comprises two Executive Directors, three Independent Directors, and two Non-Executive Directors nominated by Cane Processing. The Board is chaired by an Independent Director, ensuring balanced governance and oversight. Its composition, which emphasizes independence and diverse expertise, strengthens decision-making and enhances strategic direction.

The Board's Chairman, Mr. M. Aamir Beg is associated with the Company for 7 years and has a thirty seven years of practical experience in the fields of Marketing and new projects development. He is a qualified M.B.A from Liverpool University, England in 1981. Mr. Ghias-ul-Hasan, Non-executive Director/ CPL Nominee, is an entrepreneur with forty four years’ experience, has led number of businesses in Pakistan including Manufacturing, Trading and Advertising. His work experience and Managerial ability is one of the key success factors for the Company. The Board's experience and skillset is the key success factors for the Company.

During MY24, the Board met four times, with majority attendance, maintaining well documented minutes. The Board has two subcommittees: Audit Committee (met 4 times during MY23) and HR & Remuneration Committee (met once during MY24).

External auditors, UHY Hassan Naeem & Company, Chartered Accountants, have expressed an unqualified opinion on the financial statements of MY24. The firm has been QCR rated and is in Category 'A' of SBP panel.

The Company operates through eight key divisions: Mill, Operations, Power, Cane, Marketing, Human Resources, Internal Audit, and Finance. All functional heads report directly to the Chief Operating Officer (COO), who, in turn, reports to the Chief Executive Officer (CEO). However, to ensure independent oversight, the Head of Internal Audit reports functionally to the Board Audit Committee while maintaining an administrative reporting line to the CEO. This structure promotes operational efficiency, accountability, and robust internal controls.

Mr. Syed Anwar Hussain Shahid, the CEO, a renowned Sugar Technologist having a vast experience of forty one years in the erection and commissioning sugar plants, Technical Supervision indecision about plant expansion, equipment selection and project exposure. He is associated with the Company since 2021. He is responsible for overseeing technical matters of JSML sugar operations. Mr. Ahsan Latif, the COO, has work experience of 24 years and is associated with the Company since 2013. The management team has substantial experience in the relevant domain.

The Company’s management ensures operational effectiveness through a Management Committee, which includes the heads of all divisions. Daily coordination meetings are conducted to facilitate communication, align strategies, and address key operational matters. The minutes of these meetings are systematically documented and circulated to ensure accountability, track progress, and follow up on action items, fostering a structured and efficient decision-making process.

The Company uses ERP system which is updated on real time basis and generates 15 reports to assist the top management in monitoring and evaluating the performance.

The Internal Audit function is co-sourced with KPMG, ensuring a robust and independent review process. This function plays a vital role in providing support, guidance, and oversight for the internally established Standard Operating Procedures (SOPs). Additionally, KPMG conducts gap analyses of existing systems and policies, identifying areas for improvement and ensuring compliance with best practices, thereby strengthening the company’s internal controls and risk management framework.

Pakistan’s sugar industry stands as the second-largest agro-based sector in the country, comprising approximately90 mills with an annual crushing capacity of 80-90 million MT. Despite its scale, the industry faces persistentchallenges, particularly due to the Government-regulated sugarcane support prices, which are set based onfarmer’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 therecovery 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 toaround 7 million MT. The Government’s continued support for exports is expected to provide a much-needed boostto millers, helping them navigate challenging industry dynamics and mitigate financial pressures.

The Company contributed approximately ~0.955% to the total production of sugar produced in Pakistan.

The Company generates revenue by selling refined sugar in the local markets (~97%) the export market (~3%). Sale of molasses (~12.3%), bagasse (~1.4%), and mud (~0.14%) also account for the Company’s total turnover. During MY24, the Company's topline increased by ~15.4%, reporting to PKR 7.9 billion compared to PKR 6.9 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. 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 242mln, which contributed positively to its results.

The Company's profitability margins reflect a deteriorated performance during MY24. The gross profit margin fell to ~12.6% (MY23: ~15.5%). This 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 a shrinking Operating profit margin (~9.3%, down from ~12%). Moreover, during MY24, the net profit margin contracted to 0.02% from ~3.1%. This decline is primarily attributed to a decline in the net income during the year. Additionally, the decline is primarily attributed to a substantial increase in finance costs, which rose to ~69.4%, reflecting the impact of elevated borrowing costs in a high-interest-rate environment.

Going forward, the Company aims to capitalize on the benefits of its recently installed 14.44 MW bagasse-based power plant, bringing the total power generation capacity, including the existing 7 MW plant, to 21.44 MW.

The Company’s working capital management has shown signs of operational inefficiencies during MY24. Inventories witnessed an increase, averaging 101 days compared to 82 days in MY23, driven by high levels of finished goods. Trade receivables remain negligible at 1 day on average, underscoring the Company’s efficient receivables collection practices. However, trade payables averaged 6 days, from 7 days in MY23, indicating improved utilization of supplier credit. Despite this, the Gross Working Capital cycle lengthened to 102 days (MY23: 82 days), resulting in a Net Working Capital cycle of 88 days compared to 77 days in the previous period. Leverage indicators present a stable picture, with Short-Term Total Leverage remaining neutral at -0.8% (MY23: 2.8%) and Short-Term Trade Leverage recorded to -16.5% from -16%, reflecting less dependency on short-term trade credit. 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 1.3x (MY23: 2.1x), signaling a reduced capacity to cover finance costs through operational earnings. Similarly, the FCFO-to-Finance Cost ratio has weakened to 1.1x from 1.9x, indicating tighter cash flow coverage of financial obligations. Debt repayment timelines have lengthened (12.2x from 1.8x) 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.

JSML 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 ~33.9% in MY24 (MY23: ~21.2%). The Company's debt consists of short-term borrowings, constituting ~99%, and long term borrowing, constituting lease liabilities of ~1% of the total debt. In MY24, the total debt of the Company stood at PKR 2,848mln due to increased utilization for running finance for working capital purposes and repayment of loan. The equity base of the Company stood at ~PKR 7,958mln (MY23: ~PKR 7,990mln).