Mohan Plans Reporting Changes at Loss-making FSC
Recently appointed Fiji Sugar Corporation (FSC) chairman Vishnu Mohan, while not being pleased with the company’s $31.7 million 2015 loss, said he intended to present the company’s accounts every half yearly instead of the current annually. He made the comments following the presentation of FSC’s Annual Report which was tabled at the Corporation’s board meeting in the morning and shareholders meeting in the afternoon.
“We are trying to get the 2016 accounts soon and next time around we will try and have the meeting within 6 months of the balance sheet date than what is current,” he said.
“I can’t say I am pleased,” he said when asked about the loss. “I think there is common knowledge that there are challenges, but the important thing is everybody has to work together to make FSC a viable proposition for the future because sugar industry is particular for the economy of the country.”
“It constitutes a good part of the GDP and is important because foreign currency for the country.” “So we need to make the business successful and first and foremost is to get the production up.” Mr Mohan said costs to the industry could be brought down further and FSC was trying their best to do this. “But even if we bring it down slightly, the important thing is to get the top line improving and that’s what we are working on.” Mr Mohan said another way of improving the financial situation for FSC was to find some new markets and they were trying their best to do so. “So we need to have more mechanisation and one of the challenges with the farmers is labour. For people to cut cane, we need to address that. Transport needs to be addressed. “These are some of the infrastructure that needs to be stream lined and improved in order to make the ultimate product successful. “Clearly we need to make the mills more efficient but we also need to focus on getting the cane production up, get the farmers incentivised and clearly mechanisation is one of the key components of that.” Mr Mohan said infrastructure was critical.
“At the end of the day, it’s all about improving the top line. If the top line improves, everything improves.” The Fiji Sugar Corporation incurred an operating loss for the year ending 2015 of $31.7 million. This was compared to an operating profit of $6.9 million the previous year.
In its annual report, the corporation noted the share of proceeds was $56 million compared to $62.5 million in 2014.
It suffered a consolidated trading loss of $9.3 million, almost double the figure of $4.7 million the previous year. While the corporation had invested $39.9 million in 2014, it spent $31.3 million last year while earnings per share were $0.71 compared to a positive $0.16 in 2014.
In its operations for 2015, 1.83 million tonnes of sugar was crushed from 38,427 hectares compared to 1.6 million tonnes from 38,248 hectares was crushed the year before. Improved cane production and TCTS (tonne of cane for a tonne of sugar) last year saw an increase to 226,858 tonnes from 179,870 tonnes in 2014. Last year, the TCTS was 8.08 compared to 8.95 the previous year while can quality (POCS) improved to 12.3 compared to 11.4 in 2014. The Annual Report also noted that 184,414 tonnes of sugar was exported to the European Union last year, compared to 165,557 tonnes in 2014.
In his report, the former executive chairman Abdul Khan said in review of 2015, the dry year had an impact on sugar cane and sugar production. “This was further compounded by depressed sugar prices throughout the world,” Mr Khan said in his report. On the effects of Cyclone Winston this year, Mr Khan said this had affected the industry in terms of sugar cane and infrastructure. This saw the Penang Mill in Rakiraki close its operations for this year with all sugar cane in the area being transferred to Rarawai Mill in Ba.
“To ensure the interest of all stakeholders in the industry is kept intact, the Corporation improved the cane payment to farmers from $70.90 to $81.01 per tonne,”Mr Khan said.
“In doing so, the profitability of the Corporation had been affected. “After the annual impairment review of the independent consultant, the Corporation decided not to write back any impairment although based on the review, a value of up to $10.5 million could have been written back.
“Another factor that influenced any possible impairment write back was the impact of weather on sugarcane production and the depressed price for raw sugar.”