Tandlianwala Sugar Mills Limited (TSML or ‘the Company’) is a publicly listed entity, incorporated in November 1998. Recognized as a prominent player in Pakistan’s sugar, ethanol, and carbon dioxide sectors, TSML has consistently demonstrated industry leadership. Having commenced production of its first refined sugar in 1992, the Company has since pursued a strategy of continuous expansion, solidifying its position as a key contributor to the country’s agro-industrial landscape.

Tandlianwala Sugar Mills Limited (TSML) commenced its journey in 1992 with the production of its first refined sugar, setting the foundation for a series of strategic expansions. The Company established its first sugar mill in Faisalabad, with an initial crushing capacity of 12,500 TCD, followed by a second mill in Dera Ismail Khan (DIK) and a third in Muzaffargarh, each with a crushing capacity of 16,000 TCD. Further diversifying its operations, TSML inaugurated its first distillery in Faisalabad in 2008, with a daily production capacity of 125,000 liters, and a second distillery in Muzaffargarh in 2013, boasting a capacity of 140,000 liters per day. Additionally, Unit 1 is equipped with a CO2 plant, underscoring the Company’s commitment to integrated, multi-faceted growth within the sector.

Tandlianwala Sugar Mills Limited (TSML) operates from its corporate headquarters in Lahore, with key production facilities located in Faisalabad, Dera Ismail Khan, and Muzaffargarh. The Company boasts a total crushing capacity of 48,500 TCD, supported by distilleries capable of producing a combined total of 265,000 liters of ethanol daily. In the most recent marketing year (MY24), TSML experienced a modest decline in sugar production, with output reaching 332,388 M.T, down from 333,663 M.T in MY23, yielding a recovery rate of 9.12%. Furthermore, TSML’s operational capabilities are enhanced by a fleet of six storage tanks, which collectively offer a monthly storage capacity of 15,600 MT, facilitating the secure storage of ethanol and petroleum products.

The majority ownership of Tandlianwala Sugar Mills Limited (TSML) is held by the Akhtar Group and its associated family members, including the Directors, CEO, their spouses, and minor children, who collectively control approximately 84% of the Company’s shares. Banks and financial institutions hold a marginal stake of around 0.16%, while the local public owns approximately 16%. Additionally, 5% of the Company’s shares are classified as free float, contributing to the liquidity and market presence of TSML.

Tandlianwala Sugar Mills Limited (TSML) enjoys a strong and stable ownership structure, with the Akhtar family holding the majority of controlling interests. This consolidated control ensures continuity in governance and strategic decision-making, fostering a stable operational environment. The Company’s ownership is viewed as resilient, with the Akhtar family’s long-term commitment serving as a key pillar of its ongoing stability and growth.

The Akhtar family, as the sponsors of Tandlianwala Sugar Mills Limited (TSML), brings a wealth of experience and a proven track record of success across a diverse portfolio of large-scale manufacturing enterprises in Pakistan. Akbar Akhtar Khan, with over two decades of leadership excellence, has played a pivotal role in steering TSML to its current stature. In addition to his leadership at TSML, he serves as the Managing Director of Superior Textile Mills Ltd., further underscoring his extensive expertise in managing and growing industrial operations at a strategic level.

As of 9MMY25, Tandlianwala Sugar Mills Limited (TSML) demonstrates strong financial resilience, with a substantial asset base of approximately PKR 52 billion and a robust equity base of around PKR 13.9 billion. This solid financial position not only underscores the Company's stability but also highlights its capacity for future expansion and strategic investments. The significant equity base provides a cushion against market fluctuations, while the sizeable asset base reflects the value of TSML’s operational infrastructure and long-term growth potential. This financial strength positions the Company well to navigate industry challenges and capitalize on emerging opportunities.

The Company’s Board of Directors (BoD) consists of two Executive Directors and five Non-Executive Directors. The current composition highlights a need for enhanced independent oversight and greater diversity to strengthen the governance framework. The Board is chaired by a Non-Executive Director and is predominantly influenced by the Akhtar Family, with six Nominee Directors.

The Board of Directors of Tandlianwala Sugar Mills Limited (TSML) is predominantly composed of members from the sponsoring Akhtar family, ensuring a strong familial presence in governance. However, the Board’s expertise is complemented by a well-balanced mix of professionals with significant experience in the sugar industry, along with experts in business, finance, and legal matters. Mr. Ghazi Akhtar Khan, the Chairman of the Board, brings invaluable experience in both the sugar and banking sectors. In addition to his leadership at TSML, Mr. Khan serves as President of Lotte Akhtar Beverages (LTAB). His extensive background includes a senior management role in the International Banking Division of Toronto Dominion Bank (now TD Bank) and a managerial position at Peat, Marwick, Mitchell & Co. (now KPMG) in Toronto, Canada. Mr. Khan is a Member of the Canadian Institute of Chartered Accountants and holds a Bachelor of Commerce (Honors) degree from the University of Toronto, Canada. His diverse expertise and global experience significantly enhance the Board’s strategic oversight and decision-making capabilities

The Board of Directors (BoD) of Tandlianwala Sugar Mills Limited (TSML) is supported by four key committees: the Audit Committee, the HR & Remuneration Committee, the Risk Management Committee, and the Nomination Committee. Mr. Humayun Akhtar, a Non-Executive Director, effectively chairs both the Audit and HR & Remuneration Committees, bringing valuable oversight to these critical areas. The responsibilities related to the Risk Management and Nomination Committees are handled directly at the Board level, ensuring a strategic and comprehensive approach to governance. The minutes of all committee meetings are meticulously maintained, ensuring transparency and a thorough record of discussions and decisions for future reference. This structured committee framework reinforces the Board’s effectiveness in monitoring, guiding, and steering the Company towards its long-term objectives.

Tandlianwala Sugar Mills Limited (TSML) upholds a high standard of financial transparency through the appointment of UHY Hassan Naeem & Co. Chartered Accountants as its external auditors. The firm holds a satisfactory Quality Control Review (QCR) rating, and is on SBP's A category list, reflecting its credibility and professional competence. For the financial year ending September 2025, UHY Hassan Naeem & Co. issued an unqualified opinion on the Company’s financial statements, further reinforcing the accuracy, reliability, and integrity of TSML’s financial reporting.

Tandlianwala Sugar Mills Limited (TSML) operates with a well-defined organizational structure, where each department is led by a department head who reports directly to the CEO. The six key departments within the Company are Banking & Finance, Operations, Control & Maintenance (OC&M), New Projects, Sales & Trading (S&T), IT Accounts & Tax, and Export & Audit. All functional heads provide direct reports to the CEO, who is responsible for making strategic decisions. This streamlined structure, while effective in ensuring operational efficiency, also underscores the potential key-man risk, as the CEO plays a central role in the Company's decision-making and overall management.

Mr. Akbar Khan, the CEO of Tandlianwala Sugar Mills Limited (TSML), has been with the Company for over 3 decades. He holds a Bachelor of Science in Business with a focus on Accounting and Finance from Wright State University, USA, as well as a Master’s in Business Administration from Ball State University, USA. Before returning to Pakistan, Mr. Khan served as the Chief Auditor at a respected accounting firm in the United States for five years. His extensive experience and leadership have been integral to TSML’s growth and success. The management team at TSML boasts long tenures within the Company, bringing a wealth of experience in both the sugar industry and their respective fields. Mr. Ahmad Jehanzeb Khan, the Chief Financial Officer (CFO), has been with the Company for 32 years, further strengthening the leadership team’s deep-rooted expertise in the industry and financial management. This continuity and seasoned leadership underscore the team’s capability to navigate the complexities of the business and drive TSML’s strategic objectives.

This long-standing association fosters a deep understanding of the Company’s operations and the sugar industry, allowing for well-informed decision-making and a consistent approach to driving growth and profitability. The synergy between the leadership and their collective experience in the sugar industry, finance, and operations is a testament to the team’s capability to navigate challenges and capitalize on emerging opportunities, ensuring the continued success of TSML.

TSML leverages an in-house developed business management software suite to streamline and optimize day-to-day operations. The bespoke ERP applications cover critical functions such as Finance, Procurement, Human Resources, Production, Sales, Laboratory Analysis, and Automation, ensuring comprehensive oversight and integration across all departments. The system is continuously updated to meet evolving business needs, with enhancements and maintenance managed by a dedicated Development Team. This proactive approach to MIS enables TSML to maintain operational efficiency, improve decision-making through accurate data insights, and adapt swiftly to industry demands.

Tandlianwala Sugar Mills Limited (TSML) maintains a strong control environment to ensure operational efficiency and compliance with established policies and procedures. The Company has instituted a dedicated internal audit function tasked with implementing, monitoring, and evaluating its control framework. The internal audit department conducts quarterly evaluations to assess the effectiveness of processes and adherence to regulatory and organizational standards. Its findings and recommendations are directly reported to the Audit Committee, reinforcing a culture of accountability and continuous improvement. This proactive approach to internal controls underscores TSML's commitment to governance and operational excellence.

Pakistan’s sugar industry stands as the second-largest agro-based sector in the country, comprising approximately 90 mills with an annual crushing capacity of 80-90 million MT. Despite its scale, the industry faces persistent challenges, particularly due to the Government-regulated sugarcane support prices, which are set based on farmers’ costs and often constrain millers' profitability. Sugar production increased at a CAGR of ~6.1% during MY20-24. Production during MY24 clocked at ~6.8mln MT (MY23: ~6.7mln MT), up ~1.3% YoY, while consumption also increased to ~6.4mln MT from ~6.1mln MT in MY23 (YoY increase of ~4.9%).The current MY24 season also reflects the lingering effects of flash floods, with a 4.7% loss in cultivated area. Despite these setbacks, sugar production is estimated to recover slightly to around 7 million MT. The Government’s continued support for exports is expected to provide a much-needed boost to millers, helping them navigate challenging industry dynamics and mitigate financial pressures.

Owing to numerous industry players, companies relatively have good market share. Tandlianwala Sugar Mill contributes ~ 5% to the total sugar production of Pakistan

The Company generates revenue through a diversified product base comprising sugar, ethanol, and Top Gas. During the first nine months of MY25, the topline contracted by 6.0%, declining to PKR 30 billion (9MMY24: PKR 32 billion). The contraction primarily stemmed from lower ethanol export volumes, while sugar sales posted an estimated growth of 6.6% during the same period. Despite the volume decline, favorable price dynamics in both sugar and ethanol segments partly mitigated the topline impact. A geographical breakdown reveals that the local market contributed around 79% of total revenue, while exports accounted for the remaining share. Going forward, revenue stability is expected to be supported by resilient domestic demand for sugar and ethanol, alongside prospects of recovery in export volumes. The Company’s ability to preserve pricing power, enhance operational efficiencies, and maintain an optimal product mix across markets will remain essential in sustaining its topline performance amid evolving industry conditions.

The Company’s profitability margins depict a weakened performance during 9MMY25, reflecting cost pressures and a decline in overall efficiency compared to the preceding period. Gross Profit Margin fell to 13% (9MMY24: 15.6%) due to increased input and energy costs, coupled with lower ethanol export volumes. Consequently, Operating Profit Margin and PBIT Margin also moderated to 11% each (9MMY24: 13%), indicating reduced operational leverage and higher production overheads. Net Profit Margin contracted significantly to 0.9% (9MMY24: 3.2%) amid elevated finance costs, which rose marginally to 8.7% of sales (9MMY24: 8.5%), and a sharp escalation in the Effective Tax Rate to 55% (9MMY24: 27%). The Company’s cash flow generation remained positive though lower than the preceding year, as reflected by a Cash Conversion Efficiency (FCFO/Sales) of 7% (9MMY24: 11%). When adjusted for working capital changes, the ratio stood at -5% (9MMY24: -25%), indicating a relative improvement in working capital management. Return indicators weakened, with ROA reducing to 1% (9MMY24: 4%) and ROE to 3% (9MMY24: 10%), mainly due to subdued earnings and a decline in asset turnover (91% vs. 111%). Overall, while revenue growth remained positive, profitability was constrained by higher costs and taxation, underscoring the need for margin recovery and improved cost efficiency to support future financial stability.

The Company’s future performance will primarily hinge on the sugar division and the evolving dynamics of the sugar industry. This segment remains a key revenue driver, and its stability will be critical to the Company’s overall financial health. Meanwhile, the ethanol division is expected to maintain its steady performance, supported by consistent demand and pricing trends.High prices in the international market and opportunities for sugar exports are anticipated to support the Company’s topline growth. However, achieving sustainable profitability will require a strategic focus on reducing the leverage structure. Lowering debt levels will not only alleviate the burden of finance costs but also enhance net margins, further strengthening the Company’s financial resilience

The Company’s working capital management reflected a moderate increase in operational inefficiencies during 9MMY25, primarily due to higher inventory holding levels. Average inventory days rose to 137 (9MMY24: 111), driven by a buildup in finished goods inventory at 114 days (9MMY24: 79 days), while raw material days declined slightly to 24 (9MMY24: 32 days). The increase in finished goods inventory indicates slower inventory turnover and extended stockholding periods, which could exert pressure on liquidity if sustained. Trade receivables remained negligible, reflecting continued efficiency in collections, whereas trade payables expanded to 26 days (9MMY24: 7 days), highlighting improved utilization of supplier credit. As a result, the Company’s gross working capital cycle stretched to 137 days (9MMY24: 111 days), with net working capital averaging 111 days (9MMY24: 103 days), pointing to higher working capital requirements. Leverage indicators showed improvement, as Short-Term Trade Leverage stood at 0.0% (9MMY24: -2.1%) and Short-Term Total Leverage at 3.2% (9MMY24: -0.1%), signifying a controlled reliance on short-term funding. Moreover, the Current Ratio strengthened to 3.8x (9MMY24: 2.4x), indicating sound liquidity coverage. Overall, while the Company maintains a comfortable liquidity position, the elongated working capital cycle underscores the need for tighter inventory management and improved turnover to support operational efficiency and cash flow stability.

The Company’s coverage indicators depict a weakening financial risk profile during 9MMY25, reflecting pressure on cash flow generation and debt servicing capacity. The EBITDA to Finance Cost ratio declined to 1.5x (9MMY24: 1.7x), indicating a reduced ability to cover interest obligations through operating earnings. Similarly, the FCFO to Finance Cost ratio deteriorated to 0.8x (9MMY24: 1.3x), pointing to tighter cash flow coverage of financing costs. FCFO growth for the period contracted sharply by 55% (9MMY24: -10%), while the three-year average FCFO growth also turned negative at -4% (9MMY24: +17%), underscoring weakened internal cash generation trends. Comprehensive coverage ratios including FCFO and TCF to total financing obligations stood at 0.8x each (9MMY24: 1.2x), suggesting limited capacity to meet cumulative financial liabilities from operational inflows. The debt payback ratio turned negative (-0.5x vs. 0.5x), reflecting constrained repayment potential due to subdued free cash flows. Furthermore, the liquid cover ratio weakened to -6.3x (9MMY24: -4.8x), highlighting persistent liquidity strain despite available banking lines. Overall, the Company’s coverage metrics remain under pressure, emphasizing the need to strengthen cash flow generation, optimize financing costs, and enhance liquidity buffers to preserve credit quality amid elevated borrowing requirements.

The Company’s capitalization structure indicates an increased reliance on debt financing during 9MMY25, with total borrowings comprising 62.8% of the capital mix (9MMY24: 58.4%). The rise in leverage reflects higher funding requirements, which could elevate financial risk if not offset by improved earnings and cash flow generation. Short-term borrowings continue to dominate the debt profile, representing 84.9% of total borrowings (9MMY24: 97.5%), underscoring the Company’s dependence on short-term credit lines for working capital needs and exposing it to refinancing and interest rate risks. Interest or markup payable days improved slightly to 53.8 days (9MMY24: 64.9 days), indicating better payment management and liquidity discipline. However, the average borrowing cost rose considerably, with the spread over KIBOR widening to 16.1% (9MMY24: 5.8%), reflecting the impact of higher benchmark rates and tighter credit conditions. Off-balance sheet exposures remained negligible, indicating a conservative risk stance. Overall, while the Company’s capital structure remains manageable, sustained deleveraging and a shift toward longer-tenure financing will be essential to enhance financial flexibility and mitigate liquidity and refinancing risks.