| DEWAN SUGAR MILLS LIMITED |
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| Annual
Report 1997 |
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| Mission
Statement |
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| The
mission of Dewan Sugar Mills Limited is to be the finest |
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| Organisation,
and to conduct business responsibly in a straight |
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| forward
way. |
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| Our
basic aim is to benefit the customers, employees and |
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| shareholders
and to fulfil our commitments to the society. Our |
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| hallmark
is honesty, initiative and teamwork of our people and |
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| our
ability to respond effectively to change in all aspects of life |
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| including
technology, culture and environment. |
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| We
will create a work environment, which motivates, recognises |
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| and
rewards achievements at all levels of the Organisation |
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| because |
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| IN
ALLAH WE TRUST & IN PEOPLE WE BELIEVE. |
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| We
will always conduct ourselves with integrity and strive to be |
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| the best. |
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| CONTENTS |
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| Company
Information |
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| Notice
of the Meeting |
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| Statement
Under Section 160 |
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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
& Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Share Holding |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
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| DEWAN
ZIAUR REHMAN FAROOQUI |
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| Chairman |
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| DEWAN
GHULAM MUSTAFA KHALID |
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| Vice
Chairman |
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| DEWAN
MOHAMMAD YOUSUF FAROOQUI |
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| Managing
Director / Chief Executive |
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| DEWAN
ABDUL REHMAN FAROOQUI |
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| Deputy
Managing Director |
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| DEWAN
MUHAMMAD AYUB KHALID |
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| DEWAN
ASIM MUSHFIQ FAROOQUI |
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| DEWAN
ABDULLAH AHMED SWALEH FAROOQUI |
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| AUDITORS |
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| MESSRS.
FARUQ ALI & CO. |
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| Chartered
Accountants |
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| Habib
Square, |
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| M.A.
Jinnah Road, |
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| Karachi. |
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| BANKERS |
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| MUSLIM
COMMERCIAL BANK LIMITED |
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| HABIB
BANK LIMITED |
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| SOCIETE
GENERALE, |
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| THE
FRENCH & INTERNATIONAL BANK |
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| STANDARD
CHARTERED BANK |
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| AMERICAN
EXPRESS BANK |
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| BANK OF AMERICA |
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| CITI BANK |
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| ABN
AMRO BANK |
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| REGISTERED
OFFICE |
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| DEWAN
CENTRE |
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| 3-A,
Lalazar, |
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| Beach
Hotel Road, |
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| Karachi
- 74000, |
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| Pakistan. |
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| MILLS |
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| JILLANIABAD,
BUDHO TALPUR |
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| Taluka:
Mirpur Bathoro, |
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| District:
Thatta, Sindh, |
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| Pakistan. |
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| NOTICE
OF SIXTEENTH ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Sixteenth Annual General Meeting of Dewan Sugar
Mills |
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| Limited
will be held on 25 March 1998 at 3:00 p.m. at Dewan Centre, 3-A Lalazar Beach |
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| Hotel
Road, Karachi, to transact the following business: |
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| ORDINARY
BUSINESS: |
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| 1.
Recitation from HOLY QURAN. |
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| 2.
To read and confirm the minutes of the Fifteenth Annual General Meeting held
on 28 |
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| June 1997. |
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| 3.
To receive, consider and adopt the annual audited accounts for the year ended
30 |
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| September
1997, together with the Directors' and Auditors' Report thereon. |
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| 4.
To approve the declaration of 15% Cash Dividend. |
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| 5.
To appoint Auditors of the Company for the year ending 30 September 1998 and
to fix |
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| their
remuneration. |
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| SPECIAL
BUSINESS: |
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| 6.
To consider and approve short term loans and advances out of surplus funds
available with the |
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| Company
to Dewan Textile Mills Limited and/or Dewan Khalid Textile Mills Limited
and/or |
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| Dewan
Mushtaq Textile Mills Limited, in compliance with the provisions of Section
208 of the |
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| Companies
Ordinance, 1984. |
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| 7.
To transact any other business with the permission of the Chairman. |
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| NOTES: |
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| 1.
The Share Transfer Books of the Company will remain closed from 21 March,
1998 to |
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| 31
March, 1998 (Both days inclusive). |
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| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint a proxy to |
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| attend,
speak and vote for him/her. (A proxy must be member of the company). |
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| 3.
An instrument of proxy and a power of attorney or other authority (if any)
under which it is |
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| signed
or a notarially certified copy of such power of attorney, in order to be
valid must be |
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| deposited
at the registered office of the Company not less than 48 hours before the
time of the |
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| meeting. |
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| 4.
Members are requested to notify any change in their addresses immediately. |
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| "Statement
under section 160 of the Companies Ordinance, 1984 is attached with the
Annual |
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| Report
circulated to the members of the company". |
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| STATEMENT
UNDER SECTION 160 |
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| OF
THE COMPANIES ORDINANCE, 1984 |
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| This
statement is annexed to the Notice of Sixteenth Annual General Meeting of
Dewan Sugar Mills |
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| Limited
(hereinafter referred to as DSML) to be held on 25 March 1998 and sets out
material fact con- |
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| cerning
the Special Business to be transacted at the Meeting. |
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| 1.
Investment in Associated Companies |
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| The
Board of Directors considers to advance temporary short term financing to the
associated com- |
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| panies
out of surplus funds available with the Company. Details of such financing
are given |
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| below: |
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| (i)
Name of borrower Company and |
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Dewan Textile Mills
Limited |
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| associated
undertaking together with |
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Rupees Fifty Million only |
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| the
amount of loans and advances. |
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Dewan Khalid Textile
Mills Limited |
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Rupees Fifty Million only |
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Dewan Mushtaq Textile
Mills Limited |
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Rupees Fifty MiIlion only |
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| (ii)
Rate of interest to be charged on each |
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1% above the rate on
which the lending |
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| loan
and advance together with the |
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Company has obtained its
own borrowing |
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| particulars
of collateral security to be |
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No Security is considered
necessary as all the |
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| obtained
from borrower. |
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companies are under
common management |
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control. |
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| (iii)
Period for which these loans and |
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Twelve Months |
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| advances
will be made |
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| (iv)
The terms of repayment or any other |
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The loans and advances
are adjustable within |
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| terms
of loans and advances. |
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a period of twelve months
or, as and when |
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required by the lending
Company. |
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| (v)
Purpose of loans and advances |
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The purpose of loans and
advances is to pro- |
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vide any immediate
requirement of working |
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capital 6f the
borrowing-Companies. |
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| (vi)
Benefits likely to accrue to the |
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The investing Company and
its shareholders |
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| Company and its shareholders
from |
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will be benefited in a
manner that their invest- |
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| loans
and advances |
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ment will fetch a return
of one percent over |
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and above the mark-up
rate at which the |
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investing Company has
borrowed. Further, |
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th~ surplus funds will
not remain idle and will |
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be invested in the most
efficient manner |
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whereby the investing
Company, not only get- |
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ting good return but the
funds will also remain |
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at the disposal of the
investing Company as |
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such loans and advances
are repayable on |
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demand. |
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| None
of the Directors or their spouse has any vested or non-vested interest
whether directly, or indirectly in |
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| the
proposed business. |
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| In
this regard following resolution is proposed to be passed, with or without
modification, as a 'SPECIAL RES- |
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| OLUTION.' |
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| "Resolved
that the Board of Directors of the Company be and is hereby authorised to
make temporary short |
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| term
loans / advances to the following associated companies upto maximum limit of
Rs. 50 million each at |
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| the
mark up rate of 1% above the rate on which the Company has obtained the
borrowing. |
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| -Dewan
Textile Mills Limited |
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| -Dewan
Khalid Textile Mills Limited |
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| -Dewan
Mushtaq Textile Mills Limited |
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| These
temporary loans / advances shall b-e adjusted as and when required by the
Company and shall not |
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| exceed
12 months period." |
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| DIRECTORS'
REPORT |
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| Your
Directors take pleasure in presenting to you the 16th Annual Report of the
Company together |
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| with
the audited accounts for the financial year ended on September 30, 1997. |
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| Alhamdolillah, the results for the year under review are satisfactory despite
many adverse factors |
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| such
as increase in cane prices as compared with last year, instability in sugar
prices and glut of |
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| imported
sugar. |
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| By
the Grace of Almighty Allah, your
Company has earned a Net Profit of Rs. 33.5 million after |
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| Charging
Rs. 57.7 million for depreciation and making a provision for Tax amounting to
Rs. 30.4 mil- |
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| lion.
The highlights of the Accounts are as follows: |
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1997 |
1996 |
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|
(Rupees) |
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| Gross
sales |
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1,546,983,397 |
1,659,770,365 |
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| Depreciation |
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|
57,717,400 |
61,794,039 |
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| Gross
Profit |
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|
199,872,366 |
227,337,542 |
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| Financial
Charges |
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|
86,789,874 |
54,894,133 |
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| Taxation |
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|
30,434,386 |
48,205,221 |
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| Net
Profit After Tax |
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|
33,462,147 |
69,382,751 |
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| We
humbly and gratefully bow our heads before Almighty Allah, the Most Gracious and Merciful, |
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| who
has rewarded and blessed your Company with His innumerable bounties in the
difficult times. |
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| IF
YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN) |
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| Your
Directors are pleased to propose appropriation of profit in the following
manner: |
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| Profit
for the Year 1996-97 |
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Rs. |
33,462,147 |
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| Un-appropriated
profit brought forward |
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Rs. |
66,200,446 |
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---------- |
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| Profit
available for appropriation |
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RS. |
99,662,593 |
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========== |
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| Appropriation |
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| Proposed
cash dividend @ 15% |
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RS. |
18,859,500 |
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| -
Un-appropriated profit carried forward |
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RS. |
80,803,093 |
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---------- |
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| Total |
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|
Rs. |
99,662,593 |
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|
========== |
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| The
Board of Directors took decision for appropriation of the profit keeping in
view the expectations |
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| of
the shareholders from Dewan Mushtaq Group, cash position of the Company,
future profitability |
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| and
present scenario of sugar industry. |
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| PLANT
PERFORMANCE |
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| The
sugar cane crushing season for 1996-97 started on October 30, 1996 and
continued upto April 12, |
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| 1997.
During the season, the plant crushed 1,036,314 metric tons or 27,765,229
maunds of sugar cane. |
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| Total
white sugar produced was 106,900 metric tons at an average recovery of
10.32%. Total quanti- |
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| ty
of molasses produced was 51,430 metric tons at an average recovery of 4.963%.
Again due to |
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| lower
availability of sugar cane coupled with start up of new factories and
expansion of existing |
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| mills
in the vicinity, we could not meet the target of crushing 3.5 crore maunds. |
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| REVIEW
ON ACCOUNTS |
|
|
| Alhamdolillah, despite reduced quantitative sales, increased cost of sugar
cane and other inputs, |
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| the
results may be termed as satisfactory. The total gross sales of the company
amounted to Rs. 1.55 |
|
| billion
as compared to Rs. 1.65 billion last year. The earning per share of the
Company works out to |
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| Rs.
2.66. Mashah Allah, your Company
has been able to meet all its financial obligations on time and |
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| from
its own resources. |
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|
| The
sugar cane crushing season 1996-97 was the second successive year to witness
drop in sugar |
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| production.
The Government allowed liberal imports of sugar at concessional duty
structure at the |
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| time
when preparations were being made for the start of crushing season. This
resulted in glut of |
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| sugar
in the Country as sugar in bulk was imported. Domestic production of sugar
was 2.4 million |
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| tons
which witnessed a decline as compared to last year's production of 2.7
million tons. |
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| During
the season 1996-97, 2.017 million tons of locally produced sugar was lifted
and imported |
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| sugar
stood at 624,645 tons. During the same period last year 2.458 million tons of
locally produced |
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| sugar
was lifted whilst imported sugar was 166,425 tons. This clearly indicates
that imported sugar |
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| replaced
the sale of locally produced sugar resulting in severe financial crunch for
the sugar mills as |
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| they
were forced to carry stocks to new season. Additional financial charges were
incurred due to |
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| accumulated
inventory which will further aggravate the crisis of local Sugar industry. |
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| In
Sindh Province due to reduction in area under cultivation coupled with
inferior yield per hectare, |
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| sugar
cane production dropped from 13,737,168 tons last year to 13,110,609 tons
this year. The late |
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| start
up of the season helped the mills to achieve slightly better average sugar
recovery to 9.97% |
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| from
9.75% last year, thereby total sugar produced in Sindh marginally increased
from 1.008 million |
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| tons
of last year to 1.028 million tons this year. |
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| CURRENT
YEAR PROSPECTS |
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| The
present sugar cane crushing season (1997-98) started on November 12, 1997 and
up to February |
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| 24,
1998 the plant crushed 668,527, metric tons or 17,911,389 maunds of sugar
cane at an average |
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| recovery
of 10.135% and produced 67,755 metric tons of sugar and 31,207 metric tons of
molasses. |
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| The
current sugar cane crushing season commenced with a further increase in
minimum sugar cane |
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| support
price of Rs. 36.00 per 40 Kgs as against last year's price of Rs. 24.50 per
40 Kgs. Apart from |
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| this
47% increase in minimum sugar cane support price, a further 19% increase is
made in the rate of |
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| quality
premium. |
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| The
sugar cane crop is not adequate to cope with the increase in capacities of
sugar cane crushing in |
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| the
Country, particularly in Sindh Province. Hence, availability of sugar cane to
the mills is not suf- |
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| ficient
to enable them to operate at their optimum capacities, and yet again, there
is a price war sit- |
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| uation
amongst the mills for getting maximum supplies. |
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| The
national production is expected to touch 3.1 million tons with carry over
stocks of 0.41 million |
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| tons
against the total requirement of 2.8 million tons. This result in excess
availability of 0.7 million |
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| tons.
The Government has initially allowed export of sugar up to 300,000 tons.
However, the glut of |
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| sugar
in global market and high cost of locally produced sugar, negate viability of
sugar exports. The |
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| impact
of last year's bulk import of sugar resulted in over-supply which has put
tremendous pres- |
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| sure
on selling prices since beginning of new season. The prospects of current
year are faced with |
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| surplus
availability of sugar in the market, high cost of sugar cane and other inputs
and consecutive |
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| pressure
on selling prices. Your Directors seek the blessings of Almighty Allah for
His support and |
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| divine
guidance to pragmatically tackle the tough times. |
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| NOTE
OF THANKS |
|
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| The
Board puts on record its gratitude to its valued shareholders, federal and
provincial government |
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| functionaries,
banks, development financial institutions, and customers of 'Salsabil' brand
sugar |
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| whose
co-operation, constant support and patronage have enable your Company to
achieve the |
|
| desired result. |
|
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| The
Board also express its thanks for the valuable teamwork, loyalty and laudable
efforts rendered |
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| by
the executives, staff members and workers of your Company, during the year
under review, and |
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| wish
to place on record its appreciation for the same. |
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| AUDITORS |
|
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| The
Auditors of your Company, M/s. Faruq Ali & Company. Chartered
Accountants, retire and offer |
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| their
services for re-appointment for the ensuing year on the same remuneration. |
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|
| CONCLUSION |
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| In
conclusion, we bow, beg and pray to Almighty Allah,
Rahman-o-Rahim, in the name of our |
|
| beloved
prophet, Muhammad, peace be upon
him, for continued showering of His Blessings, |
|
| Guidance,
Strength, Health and Prosperity to us, our company, Country and Nation; and
also pray |
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| to
Almighty Allah to bestow peace,
harmony, brotherhood and unity in true Islamic spirit to whole |
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| of
Muslim Ummah, Ameen, Summa-Ameen. |
|
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| LO-MY
LORD IS INDEED HEARER OF PRAYER (HOLY QURAN) |
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|
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| AUDITORS'
REPORT TO THE MEMBERS |
|
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| We
have audited the annexed Balance Sheet of Dewan Sugar Mills Limited, as at 30
September, 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 explana- |
|
| tions
which to the best of our knowledge and belief were necessary for the purpose
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
busi- |
|
| ness; 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, 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 30 September 1997 and of the profit and the Cash Flow for the
year |
|
| then
ended and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was |
|
| deducted
by the Company and deposited in the Central Zakat Fund established under
Section |
|
| 7
of that Ordinance. |
|
|
| Faruq
Ali & Company |
|
| Chartered
Accountants |
|
| Karachi. |
|
| Date:
March 02, 1998 |
|
|
|
|
| BALANCE
SHEET AS ON 30 SEPTEMBER, 1997 |
|
|
|
|
1997 |
1996 |
|
|
|
Notes |
(Rupees) |
|
| CAPITAL
AND LIABILITIES |
|
| SHAREHOLDERS'
EQUITY |
|
| Share
Capital |
|
| Authorized |
|
| 15,000,000
Ordinary shares of Rs. 10/- each |
|
150,000,000 |
150,000,000 |
|
| Issued
subscribed and paid-up |
|
========== |
========== |
|
| Share
capital |
|
|
3 |
125,730,000 |
125,730,000 |
|
| Reserves
and surplus |
|
|
4 |
270,803,093 |
256,200,446 |
|
|
---------- |
---------- |
|
|
|
|
396,533,093 |
381,930,446 |
|
|
| DEFERRED
LIABILITIES FOR: |
|
| Assets
subject to finance lease |
|
|
5 |
7,494,766 |
19,965,301 |
|
| Staff
gratuity |
|
|
18,918,242 |
16,637,866 |
|
|
| CURRENT
LIABILITIES |
|
| Current
portion of lease liability |
|
|
12,470,535 |
14,072,716 |
|
| Short
term running finances - Secured |
] |
|
|
561,477,449 |
41,707,153 |
|
| Creditors,
accrued expenses & other liabilities |
7 |
102,545,718 |
121,987,333 |
|
| Dividend |
|
|
8 |
35,040,837 |
32,155,324 |
|
| Provision
for taxation |
|
|
86,879,795 |
56,445,409 |
|
|
|
|
---------- |
---------- |
|
|
|
|
798,414,334 |
266,367,935 |
|
| Commitments |
|
9 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
1,221,360,435 |
684,901,548 |
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
fixed assets - at cost less |
|
| accumulated
depreciation |
|
10 |
433,685,364 |
455,751,636 |
|
| Capital
work in progress |
|
11 |
5,477,238 |
6,973,758 |
|
|
|
|
---------- |
---------- |
|
|
|
|
439,162,602 |
462,725,394 |
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
12 |
68,377,797 |
59,590,724 |
|
| Stock
- in - trade |
|
13 |
488,237,244 |
1,304,730 |
|
| Advances,
deposits, prepayments |
|
|
|
|
| and
other receivables |
|
14 |
218,103,006 |
154,291,171 |
|
| Cash
and bank balances |
|
15 |
7,479,786 |
6,989,529 |
|
|
|
|
---------- |
---------- |
|
|
|
|
782,197,833 |
222,176,154 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,221,360,435 |
684,901,548 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
|
Notes |
(Rupees) |
|
|
| SALES -net |
|
|
16 |
1,377,332,874 |
1,449,753,565 |
|
| COST
OF SALES |
|
|
17 |
1,177,460,508 |
1,222,416,023 |
|
|
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
199,872,366 |
227,337,542 |
|
|
| OPERATING
EXPENSES |
|
| Administrative
& general expenses |
|
18 |
26,266,793 |
20,970,290 |
|
| Selling
& distribution expenses |
|
|
19 |
12,389,054 |
18,656,513 |
|
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
38,655,847 |
39,626,803 |
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
161,216,519 |
187,710,739 |
|
|
|
| OTHER
CHARGES |
|
| Financial
Charges |
|
20 |
86,789,874 |
54,894,133 |
|
| Donation |
|
|
21 |
7,676,450 |
9,710,000 |
|
| Workers'
profit participation fund |
|
|
3,337,510 |
6,155,330 |
|
| Workers'
welfare Fund |
|
|
758,337 |
2,544,104 |
|
|
|
|
---------- |
---------- |
|
|
|
|
98,562,171 |
73,303,567 |
|
|
|
|
