Mirpurkhas Sugar Mills Limited (MIRKS), some 300 KM from Karachi is listed on karachi stock exchange as public limited company, heading towards its golden jubilee next year. Under a well renowned Ghulam Faruque group, started its business with production capacity of 1500 TDC (tons per day capacity), MIRKS achieved a milestone target of 5000 TDC and also attained distinction in 1982, 1983 and 1986 being among top ten organization of the Pakistan.
As future prospect integration in both the direction is a visionary aspect of its management. Different varieties of sugarcane been tried to develop on experimental basis on its 300 acres farm. Farmers are being helped out by provision of fertilizers, agricultural chemicals and up to date technical support. Survival is only possible with continuous and positive adoption and same is been exercised as organization has gained expertise in production as well as testing of latest kinds of fertilizers and seed. Sales proceeds of the organization tumbled by 30% in 2012 as compared to 2011 due to supply glut in sugar industry and declining prices in the market.
Raise in support price of sugarcane up to Rs 154 per maund by the government further added miseries to the company. Crushing was also on the lower side by 8% in 2012. Sucrose recovery rate was at its lowest level in 2012 as compared to previous five years period. Earning per share and market price reduced up to 26% and 19% respectively in 2012. Current assets were 40% of total assets.
Gross profit, operating profit, return on assets and return on equity all showed decreasing trend. Debt to equity and debt to assets showed declining trend of debts in 2012 on the other hand decreasing value of interest coverage would not be a healthy sign. Company operated just 96 days in 2012 as compared to 144 days of 2011. The company is exposed to financial risks as it is using financial instruments. It includes market risk (Interest rate risk, Price risk and currency risk), liquidity risk and credit risk. Selling ratio of total production was 57% in 2012 and remaining 43% was stocked in inventory. There was a quite significant difference between current and quick ratio as the quite huge amount of cash been stuck in inventory.
Excessive expected production during the year would further enhance the liquidity issues not only for the organization but for industry as well. This issue may be resolved by the positive steps of TCP, as purchase of surplus stock and allowing the crushers to export excessive sugar.
Economic Coordination Committee (ECC) under-taken a responsibility of resolving the issue by asking Trade Corporation of Pakistan (TCP) to maintain a strategic stock level of 330,000 tons by procuring in 2012-13. This decision will certainly help smoothening price level in the economy and hence save sugar industry from losses as well as resolve liquidity problems.
Contributed by
Nida Javaid, Asif, Ayesha, Abdul basit, Usama
BS ACT students
University of Management & Technology, Lahore
