Mirpurkhas Sugar Mills Limited (the Company) was incorporated in Pakistan on May 27, 1964 as a public limited company and its shares are quoted on Pakistan Stock Exchange Limited.

The Company was incorporated on May 27, 1964 and started its operations in 1965 with a crushing capacity of 1,500 TCD. Over the years, through frequent BMR and capacity enhancements, crushing capacity has been enhanced to 12,500 TCD. The Company's mill is located at Umerkot Road, Mirpurkhas, Sindh. Meanwhile the head office is based in Karachi. The Company also commenced corporate farming in 2012.

The Company’s operations are divided into two segments, i.e. Sugar Segment, Paper and Board Segment. The sugar plant of the Company operated for 97 days during MY25, same as the previous year. Total sugarcane crushed was 508,214MT during MY25 (MY24: 616,103MT) to produce 52,977MT of sugar as compared to 66,100MT of sugar during the corresponding period last year. The decrease in sucrose recovery to 10.42%, from 10.73% last season, was due to delayed onset of summer and water shortage, particularly in Sindh. The Company also produced 26,086 metric tons of molasses during the period, compared to 30,110 metric tons produced during the corresponding period last year. During the year , the Company sold 58,678 tons of sugar, including 5,003 tons of exports, compared to 70,037 tons last year. For Paper and Board division, the Company has the production capacity of 250MT paper per day. The plant produced 42,658 tons of paper in 2024-25, compare to last year was 31,968 tons. The Company has also 33.33% ownership stake in Unicol Limited, a joint venture between Faran Sugar Mills Limited and Mehran Sugar Mills Limited. Unicol’s ownership is divided equally among the three stake holders.

The shareholding structure of Mirpurkhas Sugar Mills is primarily anchored by the Faruque Group, which exerts significant control through Faruque Pvt. Limited and its associated entities with a dominant 49.28% stake. The General Public maintains a substantial presence in the equity mix, holding 30.15% of the shares. Institutional participation is led by Banks, DFIs, and NBFIs at 10.38%, followed by Modarabas at 7.51% and Insurance Companies at 1.79%. Finally, a small portion of 0.87% is retained directly by the company’s Sponsors, rounding out a diverse yet group-concentrated ownership profile.

The Group's long-term vision is supported by a multi-generational management approach, with the third generation actively involved and the fourth generation being strategically introduced at various business and operational levels. This is further reinforced by a well-defined holding Company structure that fosters a shared understanding and clearly defined interests among the family sponsors, ensuring sustained and stable leadership.

The Company is a part of Ghulam Faruque Group and is one of its first ventures. The Group was founded by Mr. Ghulam Faruque in 1964 through the establishment of Faruque (Private) Limited, the Parent Company. Over the years, the Group has established a strong foothold in various industries across Pakistan. After the demise of Mr. Faruque, operations of group companies were taken over by his five sons, who gradually expanded the business to where it stands today. The Group, through its established entities, and various subsidiaries, holds a notable position in the industries of cement, sugar, packaging, ethanol, software solution, power, air conditioning and FMCG, among others.

The Company derives financial strength from Ghulam Faruque Group, which houses well-known entities, such as Cherat Cement Company Ltd., Cherat Packaging Ltd., Unicol Ltd. Faruque (Pvt.) Ltd., Greaves Pakistan (Pvt.) Ltd., Greaves Airconditioning (Pvt.) Ltd., Greaves Engineering Services (Pvt.) Ltd., Greaves CNG (PVT.) Ltd., and Zenosoft (Pvt.) Ltd. The Group's commitment to contingency planning ensures the Company has access to necessary financial support during times of financial challenge.

The Company’s Board of Directors comprises seven members, including the Chairman, three Non-Executive Directors including a female director, two Executive Directors and two Independent Directors, one of whom is a representative of NIT.

Members of the Company possess a diversified background. Mr. Arif Faruque is the chairman of board and also CEO of Faruque (Pvt.) Limited. He is on the Board of Directors of Cherat Packaging Ltd. and Cherat Cement Company Ltd. Besides the above, he is also a member of the Board of Governors of Lahore University of Management Sciences (LUMS).

The Board maintains effective oversight through Board Audit Committee and HR & Remuneration Committee. High frequency of Board of Directors & Committees' meetings bodes well for the Company.

Kreston Hyder Bhimji & Co. Chartered Accountants, has expressed an unqualified opinion on the financial reports for the Company for the year ending in Sept-25. The firm is classified under category ‘A’ by the SBP and holds a satisfactory QCR rating.

The organizational structure of the company is distributed across ten specialized departments, including finance, sales, marketing, procurement, and internal audit. Under this framework, the majority of department heads report directly to the COO, while the CFO oversees the financial division as a distinct executive role. To ensure independent oversight, specific reporting lines are bifurcated: the heads of Internal Audit and HR report administratively to the CEO. Functionally, however, they report to their respective board-level bodies—the Board Audit Committee and the Board HR & Remuneration Committee—maintaining a system of checks and balances across the leadership hierarchy.

Management comprises experienced individuals. The CEO, Mr. Aslam Faruque has experience of above 4 decades. He also serves as the CEO of Unicol Ltd., a joint venture distillery project. He is ably supported by COO - Mr. Wasif Khalid & CFO - Mr. Abdul Muqeet.

The effectiveness of the management team is underscored by their extensive professional qualifications and decades of industry experience, which have been instrumental in streamlining operations and maintaining a resilient market position. Their insights are clearly reflected in the Company’s well-managed operational framework.

The Company implemented SAP in 2010 and upgraded to SAP HANA in 2024. Production, sales and financial reports are submitted to the senior management periodically.

In order to ensure operational efficiency, the Company has setup an effective internal audit function. The department conducts regular reviews to monitor effectiveness of operations while identifying potential areas of improvements.

The sugar industry in Pakistan operates within a competitive market structure, contributing approximately 0.8% to the nominal GDP and 3.5% to the value added in the agriculture sector as of MY24. Regional dynamics show that production is heavily concentrated in Punjab, which accounted for 68.5% of the province-wide distribution in MY25, followed by Sindh at 24.8% and KPK at 6.7%. The cultivated area for sugarcane remained steady at 1.2 million hectares in MY25 and MY24. Despite the adverse impact of floods, sugar production increased to 6.66 million tonnes in MY25 from 5.8 million tonnes in MY24. The market is dominated by major players, with the JDW Group (combined) holding the largest production share at 11.9% in MY24, followed by Hamza at 6.9% and Tandlianwala (combined) at 5.5%. Local sugar prices have historically been lower than global averages, though they are projected to rise to 450 USD/MT in 3MMY26. Total consumption is steadily growing, reaching an estimated 6.6 million MT in MY25, with per capita consumption at 27.4 kg. The distillery segment faced significant margin compression due to elevated molasses costs, constrained supply from a shorter sugarcane crushing season, and subdued international ethanol prices, compounded by broader inflationary pressures. Operations were maintained at reduced capacity to mitigate losses. Looking ahead, the segment is likely to continue experiencing margin pressures from volatile molasses prices, limited availability, currency devaluation, and inflation.

The Company held ~0.9% share in total sugar production of the country and holds a relatively low market share. Additionally, it has expanded its presence in the paper and board segment.

The company achieved a 5% Year-over-Year (YoY) revenue increase to PKR 12,615 million in MY25, up from PKR 11,969 million the previous year. While domestic turnover remains the primary contributor—representing 91% of the total mix compared to 98% previously—the export segment saw a substantial surge, rising from PKR 174 million to PKR 1,051 million. From an operational standpoint, the sugar division continues to be the lead revenue driver at approximately 63% of total turnover, while the paper division contributed 39% during the period. Revenue from sugar division was reported at PKR 7,953mln whereas revenue from paper division was reported at PKR 4,661mln. While sugar division remained profitable, it reported a PAT of PKR 620mln. However, paper division of the company reported a net loss of PKR 871mln. The major factors contributing to the loss include intense competition, and rising raw material costs. Sales prices remain under pressure, exacerbated by increased costs of old corrugated cartons (OCC). However, the ongoing installation of the agro pulping plant is expected to reduce reliance on imported OCC. The plant is expected to be completed in the April 2025.

The company's profitability margins demonstrated significant improvement during the year, highlighted by a surge in gross profit to PKR 1,565 million from PKR 820 million in the previous period. This performance bolstered the gross profit margin to 12.4% (MY24: 6.8%), which subsequently translated into an enhanced operating profit margin of 7.2%, up from 2.0% YoY. Although the company remains in a net loss position, it achieved a substantial recovery by narrowing its bottom-line deficit to PKR 251 million, compared to a PKR 2,221 million loss in MY24. This turnaround was largely driven by a reduction in finance costs—which fell to PKR 1,174 million from PKR 1,858 million—resulting in an improved net profit margin of -2.0% compared to the previous year's -18.6%.

To ensure long-term operational sustainability and reduce reliance on imported OCC (Old Corrugated Containers), the Company is installing an Agro Pulp Plant within its Paper Division, which is scheduled to commence full operations in the upcoming month following the successful start of its testing phase. Simultaneously, the Sugar Sector is witnessing enhanced sucrose recovery rates, allowing the Company to effectively sustain its margins despite market fluctuations.

The company’s net working capital cycle improved to 86 days during the year, down from 92 days in the prior period, primarily driven by enhanced inventory management as inventory days fell to 55 from 70. While this efficiency gain was partially offset by an elongation of the trade receivable cycle—which rose to 44 days from 32 days—the overall gross working capital cycle reported at 99 days from 102 days. Furthermore, a marginal stretch in the trade payable period to 12 days, compared to 10 days in MY24, contributed to the overall improvement in the cash conversion efficiency.

The company’s Free Cash Flow from Operations (FCFO) significantly strengthened to PKR 1,069 million in MY25, up from PKR 494 million in the prior year, signaling robust cash generation capabilities. This improvement, coupled with a reduction in finance costs to PKR 1,174 million (down from PKR 1,858 million as previously noted), resulted in a substantially enhanced FCFO-to-finance cost coverage ratio of 0.9x, compared to 0.3x in MY24. Furthermore, the company’s debt-servicing capacity was further validated by the EBITDA-to-finance cost ratio, which improved to 1.1x from 0.4x, reflecting a much healthier operating cushion against interest obligations.

The company’s capital structure saw a notable shift in MY25. During the year, the company improved its debt structure by reducing short-term borrowings from 64.8% to 50.3%. This transition reflects an effort to achieve a more sustainable maturity profile by reducing repayment pressure. However, the business remains highly leveraged, as the debt-to-equity ratio saw a marginal improvement to 76.9% from 78.1% in the previous year.