| AL-NOOR SUGAR MILLS LTD. |
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| 28th
Annual Report and Accounts 1996-97 |
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| CONTENTS |
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| COMPANY
INFORMATION |
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| NOTICE
OF MEETING |
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| DIRECTORS'
REPORT |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| BALANCE
SHEET |
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|
| PROFIT
AND LOSS ACCOUNT |
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| CASH
FLOW STATEMENT |
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|
| NOTES
ON ACCOUNTS |
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| PATTERN
OF SHARE HOLDING |
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| BOARD
OF DIRECTORS |
|
| MR.
ELLIAS H. ZAKARIA |
|
Chairman |
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|
| MR.
ISMAIL H. ZAKARIA |
|
Managing Director |
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| MR.
SULEMAN AYOOB |
|
Resident Director |
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| MR.
YUSUF AYOOB |
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| MR.
A. AZIZ AYOOB |
|
Marketing Director |
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| MR.
A. WAHAB JAFFAR |
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| MR.
NOOR MOHAMMAD ELLIAS |
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| MR.
ZIA. I. ZAKARIA |
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| MR.
SALIM AYOOB |
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| MR.
S. QAMAR ALI ZAIDI |
|
(N.I.T. Nominee) |
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|
| MR.
SAIFULLAH KHAN |
|
(PICIC Nominee) |
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| COMPANY
SECRETARY |
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| MR.
M. YAKOOB ADMANEY |
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| FCIS, FCMA. |
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| AUDITORS |
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| DAUDALLY
LALANI & COMPANY |
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| Chartered
Accountants |
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| LEGAL
ADVISOR |
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|
| MOHAMMAD
JAMEEL CHOUDRY |
|
| Bar at Law |
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| REGISTERED
OFFICE |
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| 96-A
SINDHI MUSLIM SOCIETY, |
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| KARACHI-74400 |
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| FACTORY |
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| SHAHPUR
JAHANIA, P.O. NOOR JAHANIA, |
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| TALUKA
MORO, DISTT. NAWABSHAH. |
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| NOTICE
OF MEETING |
|
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| Notice
is hereby given that the 28th Annual General Meeting of AL-NOOR SUGAR MILLS
LIMITED will be |
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| held
at the Registered Office of the Company at 96-A, Sindhi Muslim Society,
Karachi on Friday, May 29, |
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| 1998
at 11.30 a.m. to transact the following business: |
|
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| 1.
To read and confirm the Minutes of the 27th Annual General Meeting of the
Company held on March |
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| 31, 1997. |
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| 2.
To read and consider the Accounts for the year ended September 30, 1997 and
reports of Directors |
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| and
Auditors thereon. |
|
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| 3.
To appoint Auditors and to fix their remunerations. |
|
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| 4.
To transact any other business with permission of the chair. |
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| The
Share Transfer Book of the Company will remain closed from May 22, 1998 to
May 29, 1998 |
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| (both
days inclusive). |
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| NOTE: |
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| 1.
A member of the Company entitled to attend and vote may appoint any member as
his/her proxy to |
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| attend
and vote on his/her behalf. PROXIES MUST BE RECEIVED AT THE REGISTERED |
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| OFFICE
OF THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING. |
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|
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| 2. Shareholders are requested to inform the
Company of any change in their address immediately. |
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| DIRECTORS'
REPORT |
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| To: |
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| The
shareholders, |
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| We
take pleasure in submitting before you the 28th Annual Report together with
the Audited Accounts for the |
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| year
ended September 30, 1997. Your Company incurred a loss of Rs.1.837 million.
After adjusting the last |
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| year's
unappropriated profit of Rs.6.915 million, a sum of Rs.5.114 million is
available which we propose to |
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| carry over. |
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|
| SUGAR MILL: |
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|
| Your
factory started crushing on November 11, 1996 and crushed 557,699 metric tons
(1996:506,991 metric |
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| tons)
of sugarcane. Sugar produced was 47,355 metric tons (1996:43,080 metric tons)
with an average |
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| recovery
of 8.5% (1996: 8.5%). Molasses produced was 26,696 metric tons (1996:23,826
metric tons). |
|
|
| Due
to shortage of sugarcane, price shot upto a level which was completely
uneconomical. To meet the fixed |
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| overhead,
management had no option except to buy sugarcane at whatever price it was
available. In addition, |
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| during
the year, Government allowed import of sugar from India and other countries
which resulted that mills |
|
| located
in Sindh province were badly effected and your Mill was forced to hold sugar
stocks till imported sugar |
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| were
exhausted which resulted that a very handsome quantity of sugar valuing
Rs.232 million were lying in the |
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| godowns
of the mill on September 30, 1997. |
|
|
| As
informed to the members that Government has increased the minimum support
price of sugarcane from |
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| Rs.21.75
to Rs.24.50 per 40 kg and quality premium @ paisa 27 for every 0.1% excess
recovery over and |
|
| above
8.7% was retained. |
|
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| During
the year matter relating to excise duty benefit remained unresolved and the
matter is still pending with |
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| the
concerned authority. It is hoped that concerned department will look into the
issue and will help the |
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| industry
by resolving this outstanding issue. |
|
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| The
new boiler installed was running at low pressure instead of high pressure and
is still not giving full |
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| performance.
Your management has taken the corrective measures and performance is
improving, we are |
|
| expecting
that in the season 1998-99, Insha Allah, it will give 100% performance. The
teething problems of |
|
| new
tandem are still not resolved during the year and machinery could not be put
into full operation. The |
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| second
tandem was tested at full capacity at the tail-end and the result seems to be
satisfactory. |
|
|
| MEDIUM
DENSITY FIBRE BOARD (MDFB) PLANT: |
|
|
| During
the year, 12,638 metric tons of Lasani Wood (1996:13,174 metric tons) in
various thicknesses were |
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| produced.
The product is well known in the market. The local market has been developed
to utilize capacity |
|
| but
unfortunately during the year, handsome quantity of MDF Board has been dumped
in Pakistani markets |
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| from
countries of Far East which resulted that we were forced to compete with them
at very low price. The |
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| matter
has been referred by us to the concerned authorities. |
|
|
| We
are pleased to inform our members that Wood Chipper installed in the factory
during the year started |
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| production.
Wood prices are high due to freight charges from upcountry farms, and your
Mill is in the process |
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| of
developing local farms close to the Mills so that cost of raw material can be
reduced. |
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| LABOUR
MANAGEMENT RELATIONS: |
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| We
are happy to report that labour management relations has improved
considerably during the year under |
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| report.
Your directors appreciate the spirit of cooperation shown by the workers and
hope it will continue. |
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| STAFF: |
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| Your
directors also place on record deep appreciation of hard work, loyalty and
devotion to duty shown by the |
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| officers
and staff of the Company. |
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| AUDITORS: |
|
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|
|
| M/s.
Daudally Lalani and Company, Chartered Accountants, Auditors of the Company,
retire and offer their |
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| services
for ensuing year. |
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|
| FUTURE
OUTLOOK: |
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| For
the year 1997-98, Government has fixed the sugarcane support price of Rs.36/=
per 40 kg. Quality |
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| premium
has also been raised from paisa 27 to paisa 32 for every 0.1% over and above
8.7% of the sugar |
|
| recovery.
With this increase in the rate of sugarcane and quality premium, sugar mill
has been deprived of |
|
| benefits
which have been achieved through better efficiency and efforts through
modernization and balancing |
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| which
has not been considered while calculating the benefits of recovery achieved.
With the high cost of |
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| sugarcane,
cost of production has gone up tremendously. However, your management is
trying to reduce the |
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| cost
of production with purchase of fresh and better recovery sugarcane and
through better efficiency |
|
| utilization. |
|
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| The
current crushing season started on November 22, 1997 and season ended on
April 14, 1998 with 63,512 |
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| metric
tons of sugar with an average recovery of 8.35%. |
|
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| The
production of Lasani Wood during the year has also been effected due to the
availability of imported |
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| sheets
in the local market at a very low price from Far East countries which has
forced your Company to curtail |
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| its
production due to piling up stocks. Efforts are in hand and representation
has been made to the concerned |
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| agencies. |
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|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of AI-Noor Sugar Mills Limited as at
September 30, 1997 and the related |
|
| Profit
and Loss Account and Cash Flow Statement, together with the notes forming
part thereof, for the year then ended |
|
| and
we state that we have obtained all the information and explanations which to
the best of our knowledge and belief |
|
| were
necessary for the purposes of our audit and after due verification thereof,
we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the Company as
required by the Companies |
|
| Ordinance,
1984. |
|
|
|
|
| (b)
in our opinion: |
|
|
| (i)
the Balance Sheet and Profit and Loss Account together with the notes thereon
have been drawn up in |
|
| conformity
with the Companies Ordinance, 1984 and are in agreement with the books of
account and |
|
| are
further in accordance with accounting policies consistently applied; |
|
|
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
|
|
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year were in |
|
| accordance
with the objects of the Company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the Balance Sheet |
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| and
Profit and Loss Account and the Cash Flow Statement, together with the notes
forming part thereof, give the |
|
| information
required by the Companies Ordinance, 1984 in the manner so required and
respectively give a true |
|
| and
fair view of the state of the Company's affairs as at September 30, 1997 and
of the loss and the cash flow |
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| for
the year then ended; and |
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|
|
|
| (d)
in our opinion, no Zakat was deductible at source under Zakat and Ushr
Ordinance, 1980. |
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|
DAUDALLY LALANI & CO. |
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| Karachi:
April 27, 1998 |
|
CHARTERED ACCOUNTANTS |
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|
|
|
|
| BALANCE
SHEET AS AT 30TH SEPTEMBER, 1997 |
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|
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|
Note |
1997 |
1996 |
|
|
|
|
|
(Rupees in thousand) |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised
Capital |
|
|
|
| 20,000,000
ordinary shares of Rs. 10.00 each |
|
200,000 |
200,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
2 |
185,703 |
168,820 |
|
| Reserves: |
|
3 |
|
|
| General
reserve |
|
|
170,000 |
170,000 |
|
| Reserve
for issue of bonus shares |
|
|
- |
16,882 |
|
| Unappropriated
profit |
|
|
5,114 |
6,951 |
|
|
|
|
---------- |
---------- |
|
|
|
|
175,114 |
193,833 |
|
|
|
|
---------- |
---------- |
|
|
|
|
360,817 |
362,653 |
|
|
|
|
|
| REDEEMABLE
CAPITAL |
|
4 |
48,748 |
95,072 |
|
| LONG
TERM LOANS |
|
5 |
10,355 |
29,615 |
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
6 |
120,993 |
111,914 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
7 |
113,392 |
154,440 |
|
|
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
| Short
term running finance and borrowings |
8 |
450,453 |
96,516 |
|
| Current
maturity of redeemable capital, |
|
| long
term loans and finance lease |
|
9 |
100,775 |
111,068 |
|
| Creditors
accrued and other liabilities |
10 |
120,836 |
88,747 |
|
| Taxation |
|
|
7,658 |
2,380 |
|
|
|
|
---------- |
---------- |
|
|
|
|
679,722 |
298,711 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
11 |
-- |
-- |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,334,027 |
1,052,405 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
|
(Rupees in thousand) |
|
| FIXED
ASSETS |
|
|
|
|
|
|
| Operating
assets |
|
12 |
541,542 |
557,601 |
|
| Capital
work-in-progress |
|
13 |
254,476 |
226,504 |
|
|
|
|
---------- |
---------- |
|
|
|
|
796,018 |
784,105 |
|
|
|
|
|
| LONG
TERM INVESTMENT |
|
14 |
26,631 |
26,631 |
|
| LONG
TERM LOANS AND ADVANCES |
|
15 |
404 |
668 |
|
| LONG
TERM DEPOSITS |
|
16 |
11,765 |
14,162 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
17 |
117,605 |
114,677 |
|
| Stock-in-trade |
|
18 |
269,576 |
25,888 |
|
| Trade debts |
|
19 |
7,007 |
757 |
|
| Loans,
advances, prepayments and |
|
|
|
| other
receivables |
|
20 |
63,887 |
51,659 |
|
| Bank
and cash balances |
|
21 |
41,134 |
33,858 |
|
|
|
|
---------- |
---------- |
|
|
|
|
499,209 |
226,839 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,334,027 |
1,052,405 |
|
|
|
|
========== |
========== |
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR |
|
| ENDED
30TH SEPTEMBER, 1997 |
|
|
|
Note |
1997 |
1996 |
|
|
|
(Rupees in thousand) |
|
|
|
|
| Sales |
|
22 |
854,852 |
839,559 |
|
| Cost
of sales |
|
23 |
689,571 |
671,317 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
165,281 |
168,242 |
|
|
|
|
|
| Administration
and selling expenses |
|
24 |
65,250 |
67,737 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
100,031 |
100,505 |
|
| Other
income |
|
25 |
6,056 |
24,552 |
|
|
|
|
---------- |
---------- |
|
|
|
|
106,087 |
125,057 |
|
|
|
|
---------- |
---------- |
|
| Financial
charges |
|
26 |
106,883 |
101,000 |
|
| Other
charges |
|
27 |
1,041 |
2,794 |
|
|
|
|
---------- |
---------- |
|
|
|
107,924 |
103,794 |
|
|
|
---------- |
---------- |
|
| (Loss)/profit
before taxation |
|
(1,837) |
21,263 |
|
| Taxation |
|
|
|
28 |
- |
2,762 |
|
|
|
|
|
|
---------- |
---------- |
|
| (Loss)/profit
after taxation |
|
(1,837) |
18,501 |
|
| Unappropriated
profit brought forward |
|
6,951 |
5,332 |
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
5,114 |
23,833 |
|
| Appropriations |
|
|
|
| Reserve
for issue of Bonus Shares |
|
- |
16,882 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
5,114 |
6,951 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED 30TH SEPTEMBER, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
|
|
|
(Rupees in thousand) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
| Cash
(used in)/generated from operations |
34 |
(140,108) |
159,844 |
|
| Taxes paid |
|
|
(3,194) |
(7,480) |
|
| Payment
for staff retirement benefits |
|
(185) |
(250) |
|
| Financial
charges paid |
|
|
(95,568) |
(91,860) |
|
| Long
term loans and advances |
|
|
264 |
137 |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,397 |
578 |
|
| Long
term deposits |
|
|
|
|
|
|
|
| Net
cash inflow/(outflow) from operating activities |
(236,394) |
60,969 |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
| Fixed
capital expenditure |
|
|
(44,135) |
(82,874) |
|
| Sale
proceeds of operating assets |
|
|
672 |
1,222 |
|
|
|
|
---------- |
---------- |
|
| Net
cash outflow from investing activities |
|
(43,463) |
(81,652) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Redeemable
capital |
|
- |
50,000 |
|
| Obligation
under finance lease |
|
46,776 |
15,867 |
|
| Repayment
of redeemable capital, long |
|
|
|
| term
loans and finance lease |
|
(113,576) |
(96,374) |
|
| Dividend
paid |
|
(4) |
(4) |
|
|
|
---------- |
---------- |
|
| Net
cash outflow from financing activities |
|
(66,804) |
(30,511) |
|
|
|
---------- |
---------- |
|
| Net
decrease in cash and cash equivalents |
|
(346,661) |
(51,194) |
|
| Cash
and cash equivalents at the beginning of the year |
(62,658) |
(11,464) |
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
35 |
(409,319) |
(62,658) |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR |
|
| ENDED
SEPTEMBER 30, 1997 |
|
|
| LEGAL
STATUS AND OPERATIONS |
|
|
| The
Company is a public company incorporated in Pakistan under the Companies Act,
1913 (now Companies |
|
| Ordinance,
1984). Its shares are quoted on Karachi and Lahore Stock Exchange in Pakistan
and is principally |
|
| engaged
in the production and sale of sugar and medium density fibre board. |
|
|
| Summary
of Significant accounting policies: |
|
|
| 1.1
Accounting convention: |
|
| These-accounts
have been prepared under the historical cost convention except that certain
exchange |
|
| differences
have been included in fixed assets referred to in Note 1.8. |
|
|
| 1.2
Taxation: |
|
| Provision
for current taxation for the year is based on taxable income at the current
rate of taxation after |
|
| taking
into account tax credits available, if any. |
|
|
| The
company accounts for deferred taxation on all material timing differences
using the liability method. |
|
| However,
deferred tax to certain extent is not provided if it can be established with
reasonable probability |
|
| that
these timing differences will not reverse in the foreseeable future. |
|
|
| 1.3
Fixed assets: |
|
| (a) OWN |
|
|
| Operating
assets except freehold land are stated at cost less accumulated depreciation.
Freehold |
|
| land
and capital work in progress are stated at cost. Cost in relation to certain
fixed assets |
|
| including
capital work in progress signifies historical cost and exchange differences
referred to in |
|
| Note 1.8. |
|
|
|
|
| Depreciation
is charged to income at normal tax rates on the written down value of the
assets as |
|
| affected
on account of exchange differences referred to in Note 1.8. Full year's
depreciation is |
|
| charged
on all assets in the year of acquisition, except for sugar unit plant and
machinery on which |
|
| depreciation
is charged on the basis of actual operating days of factory. No depreciation
is charged |
|
| on
assets in the year of disposal. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred, major renewals
and |
|
| improvements
are capitalized and the assets so replaced, if any, are retired. |
|
|
|
|
| Gain
and loss on disposal of assets are taken to profit and loss account. |
|
|
| (b) LEASED |
|
|
|
| Assets
held under finance leases are included in operating assets at present value
Of minimum lease |
|
| payments. |
|
|
|
|
| The
financial charge is calculated at the interest/mark up rate implicit in the
lease and is charged |
|
| to
profit and loss account. |
|
|
| Depreciation
is charged at the same rates as company owned assets. However, if there is no |
|
| reasonable
certainty that the company will obtain ownership by the end of the lease
term, the |
|
| assets
are depreciated over shorter of the lease term or its useful life. |
|
|
| 1.4
Capitalization of borrowing costs: |
|
| Borrowing
costs on assets which call for substantial period of time to get them ready
for their intended use |
|
| are
taken to fixed capital expenditure. |
|
|
|
| 1.5
Long term investments: |
|
| The
company's investments in associated undertaking are stated at cost. The
provision is made there against |
|
| for
permanent diminution, if any, in the value of investment. Dividends received
are reflected in the |
|
| company's
profit and loss account. |
|
|
| 1.6
Stores, spares and fertilizer: |
|
| Stores,
spares and fertilizer are valued at cost, using FIFO cost flow method. Items
in transit are valued at |
|
| cost
comprising invoice value and other charges paid thereon. |
|
|
| 1.7
Stock-in-trade: |
|
| Raw
material, work in process and finished goods are valued at lower of average
cost and net realisable |
|
| value.
By- products are valued at net realisable value. |
|
|
| Cost
signifies prime cost and appropriate portion of the manufacturing overheads. |
|
|
| 1.8
Foreign currencies: |
|
| Assets
and liabilities in foreign currencies are translated into rupees at the rate
of exchange approximately |
|
| ruling
at the balance sheet date. Exchange differences in respect of foreign
currency loans obtained for |
|
| acquisition
of fixed assets are incorporated in the cost of relevant assets. All other
exchange differences are |
|
| taken
to income currently. |
|
|
|
|
| 1.9
Staff retirement benefits: |
|
| The
Company operates a provident fund scheme for all its employees eligible for
benefits and contributions |
|
| thereto
are made in accordance with the terms of the scheme. |
|
|
|
|
| Effective
October 1, 1990 company had introduced an unfunded gratuity scheme for those
permanent |
|
| employees
who have completed qualifying period and are members of the aforesaid
provident fund |
|
| scheme. |
|
|
|
| 1.10
Revenue recognition: |
|
| Sales
are recorded on despatch of goods to customer. |
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
(Rupees in thousand) |
|
| 2.
ISSUED, SUBSCRIBED AND PAID UP CAPITAL |
|
|
|
|
|
|
| 3,617,635
Ordinary shares of Rs.10.00 |
|
|
| each
fully paid up in cash. |
|
|
36,177 |
36,177 |
|
|
|
|
| 814,637
Ordinary shares of Rs. 10.00 each |
|
|
| fully
paid up issued to P.I.C.I.C in |
|
|
| terms
of loan agreement. |
|
8,146 |
8,146 |
|
|
|
|
| 40,000
Ordinary shares of Rs. 10.00 each |
|
|
| fully
paid up issued to I.C.P in |
|
|
| terms
of debenture trust deed. |
|
|
400 |
400 |
|
|
|
|
| 20,000
Ordinary shares of Rs. 10.00 each |
|
|
| fully
paid up issued to State Life |
|
|
|
| Insurance
Corporation of Pakistan |
|
|
|
| in
terms of debenture trust deed. |
|
|
200 |
200 |
|
|
|
|
| 10,000
Ordinary shares of Rs. 10.00 each |
|
|
| fully
paid up issued to N.I.T in |
|
|
|
