Shyampur Sugar Mills losses mounting

Shyampur Sugar Mills, a state-run company under the Bangladesh Sugar and Food Industries Corporation (BSFIC), has been burdened with huge losses.

Its main activities are producing sugar from sugarcane. It manufactures molasses as a by-product. The sugar and molasses are sold in the local market.

Gradually, the losses incurred by the "dead horse" are mounting as its production capacity is not at a satisfactory level with ageing old machinery and shortage of raw materials over the years.

Due to the obsolescence of machinery, sugar is extracted at the rate of about 6%, which does not match income with expenditure, according to sources.

Since the emergence of Bangladesh, the mills, set up in 1967 during the Pakistan era, have had an average sugar recovery rate of 7.63% from sugarcane.  

Another reason is that even though the mill is open for a few months during the season, its workers have to be paid their wages even during the off-season.

Owing to such issues, the losses incurred by the mill have been increasing every year.

The mill has a workforce of 506 people – 281 permanent and 225 seasonal. With the mill remaining closed, its authorities are trying to make up for losses by transferring the permanent workers to other companies which are in operation.

According to the auditor, Shyampur Sugar Mills has been incurring losses, resulting in huge capital deficiency. Its accumulated losses rose to Tk557.26 crore.

The accumulated loss per share of the company mounted by Tk1,114 at the end of the 2020-21 fiscal year.

Due to huge losses over the years, the government has suspended the sugarcane threshing of six state-run sugar mills, including Shyampur Sugar Mills, for fiscal 2020-21.

Following the government decision, operations at Shyampur Sugar Mills remained suspended, and its collected raw materials were shifted to the nearby state-run and operational Joypurhat Sugar Mills.

Md Arifur Rahman Apu, chairman of Shyampur Sugar Mills, said that the audit report noted that since its inception there has been no major BMRE (balancing, modernisation, rehabilitation and expansion). The lifespan of most equipment of the mill is over. The mill is run by changing machinery. It costs a lot to maintain, he said.

"Due to an increase in prices of short-term crops, farmers are shifting to short-term crop cultivation instead of long-term sugarcane cultivation. Owing to this, sugarcane cultivation has declined. Due to a lack of raw material, the mill closes within 30-35 days of the season. As a result, huge losses have to be counted," he added.

The chairman said future plans will be made in consultation with the ministries concerned, including the industries ministry.

Liabilities are many times higher than assets

According to the audited report till June 2021, the total assets (current and noncurrent) of Shyampur Sugar Mills stood at Tk26.28 crore but its liabilities had mounted to Tk373.25 crore.

It has Tk179.17 crore short-term and Tk31.10 crore long-term loans.

Debts have defaulted owing to non-payment on time.

Although sugarcane threshing has remained suspended, the mill earned Tk15.32 crore in fiscal year 2020-21 and incurred a loss of Tk62.56 crore.

Basically, this income came from the sale of previously produced goods in that fiscal year when the company sold 2,241 tonnes of sugar.

In the 2019-20 fiscal year, its revenue stood at Tk20.88 crore and loss at Tk60.69 crore.

Shyampur Sugar Mills at a glance

Shyampur Sugar Mills was set up at Shyampur in Rangpur and its machinery and equipment were supplied by Mitsubishi Heavy Industries of Japan.

Its installed cane crushing capacity was 1,016 tonnes per day and its sugar production capacity was 10,160 tonnes per annum.

The sugar mill has produced 7,140 tonnes of sugar per annum on average, with its highest sugar production being 12,825 tonnes in fiscal 1981-82.

The mill has 46,700 acres of cane-cultivable land, of which 9,700 acres per annum on average are brought under sugarcane cultivation.