Shakarganj Limited (PSX: SML) has started MY17 on an extraordinary note; for the first quarter ended, the companys topline has more than quadrupled over last year. Gross profit and margins were in positive territory, as the core business of sugar seems to have turned around. However, net profit was down 13 year-on-year, owing to lower other income and profit from associates.
Shakarganj operates in a number of segments apart from sugar bio-fuel, bio-power, building materials, textile. However, all of them (except textile) were closed last year due to financial pressure, low bio-fuel prices, and unavailability of surplus bagasse.
The quarter under review saw action almost entirely in the sugar segment. As per the Directors Report, Shakarganjs sugar production was up by 237 percent year-on-year. Better sugar prices during the period gave the sugar division an operational profit of Rs108 million, as against a loss of Rs100 million in 1QMY16.
The textile division saw 20 percent higher yarn production. However, this segment was still unable to turn a profit. The companys quarterly report cites irregular supply of electricity and long shutdowns as hampering the divisions productivity.
Going forward, the bio-fuel plants are starting production and Shakarganj is expected to restart export of bio-fuel soon. Moreover, the company has also entered into agreement for sale of carbon dioxide (CO2) a by-product of bio-fuel manufacturing which is expected to start in the next quarter.
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