Kathmandu: Eastern Sugar Mills recorded a robust turnover of nearly 1.5 billion rupees within a single fiscal year, signalling a significant scale-up in its operations.
The company’s revenue for the last fiscal year reached Rs 1.493 billion, continuing a steady upward trend from previous years. The mill’s financial trajectory shows consistent growth, having climbed from Rs 947 million in 2022 to Rs 1.125 billion in 2023, and reaching Rs 1.405 billion in 2024.
In terms of industrial output, the mill processed 191,302 metric tons of sugarcane during the last fiscal year, surpassing the 185,504 metric tons handled in 2024. This increase in production volume reflects the company’s operational expansion, even as it navigates a challenging pricing environment. The government-mandated minimum support price for sugarcane rose to Rs 585 per quintal last year from NPR 565 the year before, directly impacting the company’s procurement costs.
Rising support prices have exerted considerable pressure on the mill’s profit margins, a trend expected to persist. For the current fiscal year, the government has set the rate at Rs 620 per quintal, suggesting that the cost of raw materials will continue to squeeze bottom-line figures. Additionally, the domestic sugar industry is facing a shift in trade policy, as the government recently halved the import duty on sugar from 30 percent to 15 percent.
While the reduction in import duties poses a potential threat to the financial health and operational stability of local manufacturers, there is a temporary silver lining. India’s ongoing restrictions on sugar exports are expected to provide some relief to Nepali mills by limiting the volume of cheaper foreign sugar entering the local market. However, the internal financial indicators for Eastern Sugar Mills remain under watch, as low operating margins and a recent debt-funded capital expansion have weakened its debt-servicing capacity, keeping its credit ratings under pressure.
Operating since 1996, the Sunsari-based mill has a daily crushing capacity of 2,500 tons of sugarcane. The company is a prominent joint venture between the Golchha Organization and the Vishal Group. Its ownership structure is led by M/S Flatwood, which holds a 27 percent stake, while Anuj Agrawal, Vishal Agrawal, Nikunj Agrawal, and Hitesh Golchha each hold 9 percent. Other stakeholders include M/S United Distributors Nepal with 7 percent, Dinesh Golchha with 6 percent, and Ashok Kumar Agrawal with 5 percent.
To manage its financial requirements, the company recently sought credit ratings for loan facilities totalling Rs 1.538 billion. This includes a rating for NPR 938 million in long-term debt and Rs 600 million in short-term working capital. These financial instruments are essential for the mill as they balance its ambitious growth targets against the volatile regulatory and economic landscape of the sugar industry.
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