Karachi, January 24, 2025 – Dewan Sugar Mills Limited, in its annual report for 2024 submitted to the Pakistan Stock Exchange (PSX), disclosed adverse observations by auditors concerning the company’s repayment capacity and financial health. These observations have raised significant concerns about the sustainability of the company’s operations.
According to the report, auditors from Feroze Sharif Tariq & Co. expressed an adverse opinion on Dewan Sugar’s going concern assumption, citing persistent financial challenges. The auditors highlighted that as of September 30, 2024, Dewan Sugar Mills reported a post-tax loss of Rs. 608.932 million (2023: Rs. 863.655 million). Additionally, the company’s negative revenue reserves reached Rs. 5.895 billion, resulting in negative equity of Rs. 661.441 million. Current liabilities exceeded current assets by Rs. 5.946 billion, and the company has not provisioned for markups on restructured liabilities.
The financial difficulties have severely impacted Dewan Sugar Mills’ operations. The sugar unit remained non-operational during 2023-24 due to a lack of working capital, and its polypropylene production facility has been shut down for an extended period. The auditors also noted that banks have not renewed short-term financing facilities worth Rs. 192.196 million, further limiting the company’s ability to operate at full capacity.
Dewan Sugar has defaulted on repayments of restructured long-term liabilities, totaling Rs. 2.633 billion, as per its compromise agreement. This default has triggered legal action from financial institutions, which have filed suits for the execution of decrees against the company. Despite this, Dewan Sugar Mills has filed counter-suits in the Sindh High Court, contesting these actions as unjust.
In its report, Dewan Sugar Mills’ management acknowledged the financial struggles but expressed optimism about the future. It confirmed that maintenance and overhauling of the sugar plant have been completed, and the company plans to resume production in the 2024-25 season. Management is also in discussions with lenders for further restructuring of liabilities and expects a favorable resolution soon, which would streamline funding requirements and support optimal production.
The auditors, however, noted that if provisions for markups on restructured liabilities were made, Dewan Sugar’s post-tax losses would increase by Rs. 2.187 billion, further lowering shareholders’ equity. These financial challenges highlight the precarious position of Dewan Sugar Mills as it struggles to regain stability and sustain its operations.
Dewan Sugar Mills emphasized that its financial statements have been prepared on a going concern basis, citing ongoing efforts to restructure liabilities and improve operations. The company remains hopeful that these measures will secure its future and restore financial viability.