Starting out as Shakarganj Mills Limited, which was devoted to the production and sale of sugar, the company has diversified into a wide range of operations.

Apart from sugar — which still remains the mainstay and contributes more than three quarters to net sales — Shakarganj has ventured into the business of food products, textiles, bio-power, building materials and farming.

The company has a 49.2pc stake (74.65m shares) in Shakarganj Food Products limited (SFPL), which, according to market sources, is the fifth largest company in Pakistan in the UHT milk segment. Its brand ‘good milk’ is in competition with products of Engro Foods, Nestle Pak, Unilever Pak and Fauji Foods.

Besides milk, the company has a diverse food portfolio in dairy, fruit and juice

Besides milk, the company has a diverse food portfolio in dairy, fruit and juice. It has two manufacturing facilities in Jhang district.

Shakarganj operates under the fold of the Crescent group. At last count, on Sept 30, 2015, associated companies, undertakings and related parties held 41.35pc of the company stock—21.93pc was vested in Crescent Steel and Allied Products Ltd, followed by 21.90pc shares held by the general public.

“The company is concentrating on the country’s fast growing consumer sector, which has made its dairy associated unit—Shakarganj Food Products Limited (SFPL) one of the fastest growing companies in the dairy business over the last four years (2012-2015), wherein SFPL has almost doubled its revenues”, says analyst Chander Kumar at Sherman Securities.

A company official explained that the firm transforms renewable crops such as sugarcane and cotton into value added products, which comprise of refined sugar, textiles, bio fuel and building material, in addition to generating bio power from biogas.

In the building material segment, the company makes particle boards of varying thickness.

The textile segment consists of a spinning unit that produces carded cotton yarns.

In farming and allied business, the company cultivates on 1,336 acres of land; crops such as sugarcane, wheat, gram, maize, fodder and seasonal vegetables. A dairy farm located at Jhang has been developed, with a herd of 150 milking and fattening cattle.

The last released interim financial figures of the company for the nine months ended June 30, 2016, posted sales at Rs 4.15bn, down from Rs6.44bn in the same period of earlier year.

Sugar prices during this period were better than last year but at the same time the cost of production also went up due to increased price competition for the limited sugarcane crop.

During the nine-months to June, the performance of the Bio-Fuel Division was affected due to the low level of crushing. The Bio-Power Division was not operated during the period and due to depressed selling prices of particle board, that division did not operate either.

“With the help of share of profit from associated companies, the company was able to post Rs168.05m profit before tax as compared to Rs275m profits before tax in the corresponding period and despite all the challenges, a positive bottom line helped the company to manage affairs within range.”, says Anjum Muhammad Saleem, the company’s Chief Executive Officer in the directors’’ report.

The annual accounts for the year ended Sept 30, 2016 are likely to be released soon.

Meanwhile at the close of the last nine-months to June 30, 2016, the company’s reserves amounted to Rs0.933m against staggering accumulated losses at Rs1.966bn.

There was however an item ‘Surplus on revaluation of property, plant and equipment amounting to R5.01bn’, which made things look a bit less bleak.

Total assets of the company at June 30, 2016 stood at Rs10.9bn. Paid up capital of the company amounted to Rs1.10bn in 110m shares of Rs10 each.

The Shakarganj share on the Pakistan Stock Exchange was quoted at Rs37.47 at the close of trading last Wednesday, which produced the company’s market capitalisation at Rs4.13bn.

Besides SFPL, Shakarganj Limited also has a 1.02pc equity interest of Rs70m in the stock market, listed as Crescent Steel and Allied Products Limited; and Rs3m in an unquoted associated company: Crescent Standard Telecommunications Ltd.

The CEO Anjum M Saleem reiterated thatShakarganj Limited has been in a tight liquidity position since 2009.

Subsequent to the year ended Sept 30, 2015, the company again requested its lenders for working capital lines for operations financing in fiscal year 2016.

“Negotiations are also in process for long term financing with one of the company lenders and hopefully this will be finalised soon”, he affirmed.

Keeping in view the financials of the company, further equity amounting to Rs404.76m was injected through issuance of right shares and the proceeds were utilised for redemption of preference shares and outstanding preference dividend.

Directors told shareholders that the company had also entered into agreement for sale of carbon dioxide (CO2), produced as a by-product of the bio fuel manufacturing process, and which could help generate additional liquidity.

Published in Dawn, Business & Finance weekly, January 9th, 2017