| Fecto Sugar Mills Limited |
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| Annual
Report 1998 |
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| CONTENTS |
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| COMPANY
INFORMATION |
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| NOTICE
OF THE MEETING |
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| DIRECTORS'
REPORT |
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| FINANCIAL
HIGHLIGHTS |
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|
| AUDITORS'
REPORT |
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|
| BALANCE
SHEET |
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|
| PROFIT
& LOSS ACCOUNT |
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|
| STATEMENT
OF CHANGES IN |
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| FINANCIAL
POSITION (CASH FLOW) |
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| NOTES
TO THE ACCOUNT |
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|
| SCHEDULE
OF FIXED ASSETS |
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| PATTERN
OF SHAREHOLDING |
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| COMPANY'S
INFORMATION |
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|
| BOARD
OF DIRECTORS |
CHIEF EXECUTIVE |
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|
MR. MUNAWAR ALl FECTO |
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| DIRECTORS |
|
MR. GHULAM MOHAMMED A.
FECTO |
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|
MR. KAISER MEHMOOD FECTO |
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MRS. ABEDA BANO |
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DR. ABDUL WAHID MOHAMMED |
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MR. JAMES R. RICHARDS |
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CH. BARKAT ALl |
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MR. SAID AHMED |
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MR. YAHYA AHMED BAWANY |
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MR. MUHAMMED AKBER SAEED |
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|
MR. H. A. NAQVI |
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|
MR. IMTIAZ RASOOL |
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| SECRETARY |
|
MR. MUHAMMED ANWAR
NATHANI (ACA) |
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|
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| AUDITORS |
|
M/S. HYDER BHIMJI &
CO. |
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|
(Chartered Accountants) |
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|
M/S. A. R. DIWAN &
CO. |
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|
(Chartered Accountants) |
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|
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| BANKERS |
|
MUSLIM COMMERCIAL BANK
LTD. |
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|
HABIB BANK LTD. |
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|
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| REGISTERED
OFFICE |
1ST FLOOR, PANORAMA
CENTRE, |
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|
RAJA GHAZANFAR ALl KHAN
ROAD, |
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|
KARACHI - 75530 |
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| ZONAL
OFFICE |
1ST FLOOR, NAWA-E-WAQT
HOUSE, |
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|
4- SHAHRAH-E-FATIMA
JINNAH, |
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|
LAHORE. |
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| MILLS |
|
Darya Khan (Distt:
BHAKKAR) |
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| NOTICE
OF THE MEETING |
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| NOTICE
IS HEREBY GIVEN that the Thirty Four' Annual General Meeting of the |
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| Members
of the Company will be held on Monday the 22nd March, i999 at 11.00 a.m. |
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| at
Hotel Metropole, Club Road, Karachi to transact the following business:- |
|
|
| ORDINARY
BUSINESS |
|
|
| (1)
To receive and adopt the Report of the Directors and the Audited Accounts or
the |
|
| Company
together with the Auditors' Report for the Financial Year ended 30th |
|
| September,
1998. |
|
|
| (2)
To elect Eleven Directors in accordance with the provisions of Section 178 of
the |
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| Companies
Ordinance 1984 for a period of three years. The retiring Directors are |
|
| Mrs.
Abeda Bano, James R. Richards, Ch. Barkat Ali, Yahya Ahmed Bawany, |
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| Said
Ahmed, Dr. Abdul Wahid Muhammad, H. A. Naqvi, Muhammad Akber Saeed |
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| and
Imtiaz Rasool. |
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|
|
|
|
| (3)
To appoint Auditors for the year 1998-99 and fix their remuneration. |
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|
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|
By order of the Board |
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|
(MUNAWAR ALl FECTO) |
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| Karachi:
the 18th February, 1999 |
|
Chief Executive |
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|
|
|
|
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| NOTES: |
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|
|
|
|
| (1)
The Share Transfer Books of the Company will remain closed from 15th March, |
|
| 1999
to 22nd March, 1999 (both days inclusive) |
|
|
| (2)
A member entitled to attend and vote at this Meeting may appoint another
member |
|
| as
his/her Proxy to attend, speak and vote on his/her behalf. |
|
|
| (3)
An instruments appointing a proxy must be received at the Registered Office |
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| of
the Company not later than forty eight hours before the time appointed |
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| for
the Meeting. A member shall not be entitled to appoint more than one |
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| proxy.
If a Member appoints more than one proxy and more than one |
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| instruments
of proxies are deposited by a Member with the Company all such |
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| instruments
shall be rendered invalid. |
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|
|
| (4)
Members are requested to notify any change in their address immediately. |
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|
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| (5)
Members should quote their Folio Number in, all correspondence and at the |
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| time
of attending the Meeting. |
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|
|
| DIRECTORS'
REPORT |
|
|
| The
Members, |
|
| FECTO
SUGAR MILLS LIMITED, |
|
| KARACHI. |
|
|
| Gentlemen, |
|
|
| Your
Directors have much pleasure in presenting to the Shareholders the Thirty
Fourth |
|
| Annual
Report together with the audited accounts for the financial year ended 30th |
|
| September,
1998. |
|
|
| The
operating performance and other salient features for the year under review as |
|
| compared
with preceding year are as follows: |
|
|
|
|
1998 |
1997 |
|
|
|
|
|
| Date
of Commencement of Season |
|
|
21,11-1997 |
25-11-1996 |
|
| Date
of Cessation (Concluding of Season) |
|
04-05-1998 |
28-03-1997 |
|
| Crushing
Duration |
|
Days |
164 |
123 |
|
| Cane
Crushed |
|
Tons |
686,467 |
418,699 |
|
| Sugar
Production |
|
Tons |
57,055 |
29,822 |
|
| Sucrose
Recovery |
|
% |
8.26 |
7.18 |
|
|
| It
will be observed from the operating performance that our Company has produced
a |
|
| record
quantity of Refined Sugar because of bumper Cane crop with good sucrose |
|
| recovery.
By the Grace of Almighty Allah the benefits of enhanced capacity under BMR. |
|
| have
given fruitful results. Although a record quantity of sugar has been produced
we |
|
| could
not derive the requisite benefits due to downward trend of selling prices in
the local |
|
| market
as well as in. the International market which were. out of focus to the
record |
|
| increase
in support' price of sugarcane by the Government i.e. from Rs. 24/- per 40
kgs. to |
|
| Rs.
35/- per 40 kgs. We may here like to add that it is not our Company alone
which has |
|
| been
affected but the entire sugar industry of the country is facing this crisis. |
|
|
| The
company's financial results for the year under report are as follows:- |
|
|
|
|
|
RUPEES |
|
| Net(loss)/profit
before taxation |
|
(5,727,270) |
|
| Taxation |
|
|
(4,687,841) |
|
|
|
|
---------- |
|
|
|
|
(10,415,111) |
|
| Un-appropriated
Loss |
|
(38,298,953) |
|
|
|
|
---------- |
|
| Accumulated
loss carried forward |
|
(48,714,064) |
|
|
========== |
|
|
| Your
Directors regretfully recommended that Dividend for the year under review be |
|
| passed
over. |
|
|
| CURRENT
YEAR PROSPECTS |
|
|
| The
current crushing season commenced on 25-11-1998 and as on February 14, 1999 |
|
| we
have crushed 378,762 tonnes of sugarcane producing 26,670 tonnes of White
Sugar and |
|
| 7.13%
recovery. We will be able to crush 550,000 metric tons to 600,000 metric tons |
|
| approximately
during the current season and hope we will achieve the target production |
|
| despite
of low sucrose recovery due to viral attack in sugarcane crop and prolong dry |
|
| spell. |
|
|
| Your
Company hopes for a better future and financial results although these will
be |
|
| dependent
on production achievement, selling prices in the local market and |
|
| International
market as well as recent incentives provided by the Government to the
Industry. |
|
|
| BOARD
OF DIRECTORS |
|
|
| During
the year under review the National Investment Trust, and State Life Insurance |
|
| Corporation
changed the nominee directors and consequently Mr. Imran Azimand |
|
| Mr.
Abdul Rauf Malik were replaced by Mr. H. A. Naqvi and Mr. Imtiaz Rasool.
Further |
|
| Mr.
Muhammad Akbar Saeed was nominated by Investment Corporation of Pakistan in
place |
|
| of
Mr. Muhammad Munawar. The Board places on record its appreciation for the
valuable |
|
| support
and contribution by the outgoing Directors and extends its warm welcomes to
the |
|
| new
Directors. |
|
|
| During
the year there was complete industrial peace and harmony in all areas of our |
|
| operation.
Your Directors place on record their appreciation for the honest and
dedicated |
|
| work
of the staff and workers of all categories and have pleasure to mention here
that |
|
| during
the year under review, the Management Employees relations continued to remain |
|
| quite
cordial. |
|
|
| Your
Directors express their thanks to the officials of the Ministry of Food and |
|
| Agriculture,
other Government Agencies and Pakistan Sugar Mills Association for the |
|
| support
and encouragement they have extended to your Company and which we hope will |
|
| be
continued in future too. We would also like to express our sincere thanks to
all the |
|
| financial
institutions for their continued support and co-operation. |
|
|
| Pursuant
to Section 173 of the Companies Ordinance 1984 all Director have |
|
| completed
their tenure of office and stand retired on the date of the forthcoming
Annual |
|
| General
Meeting. All the Directors are however eligible for re-election. The Board
has |
|
| fixed
the number of elected Directors at eleven. |
|
|
| YEAR
2000 COMPLIANCE OF COMPUTER SYSTEM |
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|
| The
Company is based on P.C. based software system requiring minimum changes |
|
| in
Software and Hardware being fully compliant to Y2K requirements. Hopefully
the |
|
| process
will be completed by June, 1999. |
|
|
| Messrs
Hyder Bhimji & Co. and Messrs A. R. Diwan & Co. the Auditors of the |
|
| Company
retire and offer themselves for reappointment. |
|
|
| Statement
showing the pattern of holding of the shares held by the members of Fecto |
|
| Sugar
Mills Limited as on 30-09-1998 is annexed. |
|
|
|
|
By Order of the Board |
|
|
|
(MUNAWAR ALI FECTO) |
|
| KARACHI:
the 18th February, 1999 |
|
|
Chief Executive |
|
|
|
|
| FINANCIAL
HIGHLIGHTS |
|
|
|
|
Sept. 30 |
Sept. 30 |
Sept. 30 |
Sept. 30 |
Sept. 30 |
|
|
|
1998 |
1997 |
1996 |
1995 |
1994 |
|
|
| Cane
crushed M. Tons |
|
686,467 |
418,699 |
409,599 |
437,313 |
435,371 |
|
| Sugar
recovery percentage |
8.26 |
7.18 |
8.00 |
8.68 |
8.08 |
|
| Sugar
production M. Tons |
57,055 |
29,822 |
32,680 |
38,007 |
35,373 |
|
| Molasses
production M. Tons |
32,721 |
19,720 |
16,152 |
17,260 |
17,190 |
|
| Share
capital |
|
50,297,280 |
50,297,280 |
50,297,280 |
25,148,460 |
25,148,460 |
|
| Reserve |
|
6,000,000 |
6,000,000 |
6,000,000 |
6,000,000 |
5,000,000 |
|
| Members
equity |
|
13,583,216 |
23,998,327 |
65,075,397 |
43,796,897 |
42,821,442 |
|
| Deferred
liabilities |
|
33,117,885 |
6,000,000 |
8,300,000 |
12,300,000 |
12,300,000 |
|
| Total
capital employed |
|
7,583,216 |
17,998,327 |
56,775,397 |
31,498,897 |
30,521,442 |
|
| Fixed
assets |
|
511,617,023 |
552,599,553 |
587,665,901 |
86,304,229 |
86,907,341 |
|
| Capital
work-in-progress |
108,655,188 |
70,262,843 |
18,775,571 |
554,315,386 |
446,658,031 |
|
| Loans,
advance, deposits pre- |
|
|
| payments
& deferred Cost |
35,178,314 |
35,966,839 |
43,152,305 |
39,421,156 |
50,051,231 |
|
| Working
capital |
|
98,330,341 |
102,953,915 |
(65,270,898) |
(517,372,920) |
(350,931,216) |
|
| Total
assets |
|
817,862,137 |
779,248,705 |
744,325,712 |
86,304,229 |
86,507,341 |
|
| Turn over |
|
831,611,332 |
554,089,808 |
546,442,090 |
375,560,683 |
341,820,354 |
|
| (Loss)/Profit
before tax |
(5,727,270) |
(38,268,375) |
(1,583,640) |
10,998,393 |
7,435,491 |
|
| (Loss)/Profit
after tax & |
|
|
| adjustment |
|
(10,415,111) |
(38,777,070) |
127,680 |
977,453 |
7,435,491 |
|
|
|
|
| Dividend
declared |
|
- |
- |
- |
- |
- |
|
| Break-up
value of shares |
1.51 |
3.58 |
11.29 |
12.53 |
12.14 |
|
| Dividend
(rupee per share) |
- |
- |
- |
- |
- |
|
| Net
earning per share |
|
- |
- |
0.03 |
0.39 |
2.96 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of FECTO SUGAR MILLS LIMITED, as |
|
| at
September 30, 1998 and the related Profit & Loss Account and Statement of
Changes in |
|
| Financial
Position (Cash Flow Statement) together with the notes forming part thereof
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 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 were for the purpose of 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, Profit and Loss Account and statement of changes |
|
| in
financial position (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, 1998 and of the loss and the changes in financial |
|
| position
for the year then ended; and |
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980. |
|
|
|
A. R. DIWAN & CO. |
|
HYDER BHIMJI & CO. |
|
|
Chartered Accountants |
|
Chartered Accountants |
|
|
| KARACHI:
the 18th February 1999 |
|
|
|
| BALANCE
SHEET AS AT 30TH SEPTEMBER, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
|
NOTE |
RUPEES |
RUPEES |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| SHARE
CAPITAL: |
|
|
|
| Authorized
capital |
|
|
|
| 15,000,000
ordinary shares of Rs. 10/- each |
|
150,000,000 |
150,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
3 |
50,297,280 |
50,297,280 |
|
| Revenue
reserve |
|
4 |
6,000,000 |
6,000,000 |
|
| Accumulated
loss |
|
|
(48,714,064) |
(38,298,953) |
|
|
|
|
---------- |
---------- |
|
|
|
|
7,583,216 |
17,998,327 |
|
| SUB-ORDINATED
LOANS |
|
5 |
466,000,000 |
452,000,000 |
|
|
|
|
|
| REDEEMABLE CAPITAL |
|
|
6 |
- |
4,000,000 |
|
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
| TO
FINANCE LEASE |
|
7 |
37,104,799 |
67,784,794 |
|
|
|
|
| DEFERRED
TAXATION |
|
|
6,000,000 |
6,000,000 |
|
| DEFERRED
LIABILITIES |
|
8 |
27,416,885 |
7,110,410 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
| Shod
term running finance utilized under |
|
| mark-up
arrangements |
|
9 |
134,731,755 |
115,625,926 |
|
|
|
|
| Current
portion of Redeemable |
|
|
| capital |
|
|
|
4,000,000 |
15,147,770 |
|
| Current
portion of Deferred liability |
|
7,214,970 |
- |
|
| Current
portion of liabilities against |
|
| assets
subject to finance lease |
|
|
30,679,995 |
31,269,316 |
|
| Creditors,
accrued and other liabilities |
10 |
92,225,117 |
58,567,469 |
|
| Provision
for taxation |
|
|
|
4,905,400 |
3,744,692 |
|
|
|
|
---------- |
---------- |
|
|
|
273,757,237 |
224,355,173 |
|
| Contingencies
and commitments |
|
11 |
- |
- |
|
|
|
|
---------- |
---------- |
|
| TOTAL
RUPEES |
|
|
817,862,137 |
779,248,704 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
|
| Operating
assets |
|
12 |
511,617,023 |
552,599,553 |
|
| Capital
work-in-progress |
|
13 |
108,655,188 |
70,262,843 |
|
|
|
|
---------- |
---------- |
|
|
|
|
620,272,211 |
622,862,396 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
14 |
10,037,900 |
10,037,900 |
|
|
|
|
| LONG
TERM DEPOSITS |
|
|
12,125,130 |
19,375,130 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
15 |
59,379,896 |
63,582,180 |
|
| Stock-in-trade |
|
16 |
89,271,555 |
40,154,151 |
|
| Loans
and advances |
|
17 |
13,615,674 |
13,566,216 |
|
| Deposits,
prepayments and other receivables |
18 |
9,437,510 |
3,025,493 |
|
| Cash
and bank balances |
|
19 |
3,722,261 |
6,645,238 |
|
|
|
|
---------- |
---------- |
|
|
|
|
175,426,896 |
126,973,278 |
|
|
|
|
---------- |
---------- |
|
| TOTAL
RUPEES |
|
|
817,862,137 |
779,248,704 |
|
|
|
|
========== |
========== |
|
| NOTE:
The annexed notes form an integral pad of these accounts |
|
|
|
|
(MUNAWAR ALI FECTO) |
|
(H.A. NAQVI) |
|
| KARACHI:
the 18th February, 1999 |
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30TH SEPTEMBER, 1998 |
|
|
|
|
|
|
1998 |
1997 |
|
|
NOTE |
RUPEES |
RUPEES |
|
|
|
|
| Sales |
|
20 |
831,611,332 |
540,572,289 |
|
| Cost
of goods sold |
|
21 |
764,171,721 |
513,867,334 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
67,439,611 |
26,704,955 |
|
| Operating
expenses |
|
|
|
| Administrative
expenses |
|
22 |
28,294,359 |
26,154,434 |
|
| Selling
and distribution expenses |
|
23 |
1,965,947 |
1,193,813 |
|
|
|
|
---------- |
---------- |
|
|
|
|
30,260,306 |
27,348,247 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit/(loss) |
|
|
37,179,305 |
(643,292) |
|
| Other
income |
|
26 |
1,391,158 |
5,595,783 |
|
|
|
|
---------- |
---------- |
|
|
|
|
38,570,463 |
4,952,491 |
|
|
|
|
---------- |
---------- |
|
| Financial
charges |
|
27 |
44,085,736 |
42,327,479 |
|
| Other
charges |
|
28 |
211,997 |
893,387 |
|
|
|
|
---------- |
---------- |
|
|
|
|
44,297,733 |
43,220,866 |
|
|
|
|
---------- |
---------- |
|
| (Loss)
before taxation |
|
|
(5,727,270) |
(38,268,375) |
|
| Taxation |
|
|
|
|
|
29 |
(4,687,841) |
(508,695) |
|
| Loss
after taxation |
|
|
---------- |
---------- |
|
|
|
|
(10,415,111) |
(38,777,070) |
|
| Un-appropriates
(loss)/profit b/f. |
|
|
(38,298,953) |
478,117 |
|
|
|
|
---------- |
---------- |
|
| Accumulated
(loss) carried forward |
|
|
(48,714,064) |
(38,298,953) |
|
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts |
|
|
|
(MUNAWAR ALl FECTO) |
|
(H.A. NAQVI) |
|
|
Chief Executive |
|
Director |
|
|
| KARACHI:
the 18th February, 1999 |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED |
|
| 30TH
SEPTEMBER 1998 |
|
|
|
1998 |
1997 |
|
|
|
NOTE |
RUPEES |
RUPEES |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
| Cash
generated from operations |
|
30 |
65,456,296 |
28,945,119 |
|
| Financial
charges paid |
|
|
(40,562,350) |
(37,763,003) |
|
| Return
on term deposits |
|
|
38,643 |
1,178,109 |
|
| Taxes paid |
|
|
(3,527,133) |
(1,959,795) |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from operating activities |
|
21,405,456 |
(9,599,570) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
(45,817,063) |
(58,285,142) |
|
| Sale
proceeds of fixed assets |
|
28,500 |
2,502,826 |
|
| (Increase)/decrease
in long term loan |
|
- |
362,280 |
|
| (Increase)/decrease
in long term deposits |
|
7,250,000 |
2,509,600 |
|
|
|
---------- |
---------- |
|
|
|
(38,538,563) |
(52,910,436) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Proceeds
of sub-ordinated loan |
|
|
14,000,000 |
35,000,000 |
|
| Repayment
of Redeemable capital |
|
|
(15,147,770) |
(20,573,601) |
|
| Increase
in Deferred liabilities |
|
|
27,521,445 |
4,015,598 |
|
| Repayment
of liabilities against assets |
|
|
|
| subject
to finance lease |
|
|
(31,269,316) |
(23,270,046) |
|
| Proceeds
of liabilities against assets |
|
|
|
| subject
to finance lease |
|
|
- |
12,722,913 |
|
| Dividend
paid |
|
|
(58) |
(5,163) |
|
|
