| Mehran Sugar Mills Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| CONTENTS |
|
|
|
|
| Board
of Directors |
|
|
| Notice
of Meeting |
|
|
| Directors'
Report |
|
|
| Operation
at a Glance |
|
|
| Auditors'
Report |
|
|
| Balance
Sheet |
|
|
| Profit
and Loss Account |
|
|
| Cash
Flow Statement |
|
|
| Notes
to the Accounts |
|
|
| Pattern
and Shareholdings |
|
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Mr.
Mohammed Kasim Hasham |
|
| Chairman |
|
|
| Mr.
Mohammed Ebrahim Hasham |
|
| Chief
Executive Officer |
|
|
| Mr.
Mohammed Hussain Hasham |
|
| Lt
Cdr (Retd) Muhammad Azam (ICP) |
|
| Mr
Muhammad Shafi (NIT) |
|
| Mr.
Suleman A. Memon |
|
| Mr.
Muhammad Amin Kath |
|
| Mr.
Muhammad Asad Kath |
|
| Mr.
Khurram Kasim |
|
| Mr.
S. Qamar Ali Zaidi |
|
| Alternate
Director for Mr. Ahmed Ebrahim |
|
|
| Auditors |
|
| Messrs
Gangat & Company |
|
| Chartered
Accountants |
|
| Karachi |
|
|
| Legal
Advisor |
|
| Aman
Law Associates |
|
| Advocate
& Corporate Consultants |
|
|
| Registered
Office |
|
| Adamjee
House, 8th Floor, |
|
| I.I.
Chundrigar Road, |
|
| Karachi. |
|
| Fax:
241-6477 |
|
| Tel:
241-7131-4,242-3881 |
|
|
| Mills |
|
| Tando
Allahyar, Distt: Hyderabad, Sindh |
|
| Fax:
(02231) 890568 |
|
| Tel:
(02231) 890856, (02231) 3419 |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 33rd Annual General Meeting of Mehran Sugar Mills
Limited, will be held |
|
| at
its Registered Office, at Adamjee House, 8th floor, I.I. Chundrigar Road,
Karachi, on March 24, 1999 |
|
| at
10.00 a.m. to transact the following business: |
|
|
| 1.
To confirm the minutes of the last Annual General Meeting of the Company held
on March |
|
| 20, 1998. |
|
|
|
|
|
|
| 2.
To receive and adopt the Audited Accounts of the Company for the year ended
September |
|
| 30,
1998, alongwith the Directors' Report and the Auditors' Report thereon. |
|
|
|
|
| 3.
To appoint auditors for the year ending September 30, 1999 and to fix their
remuneration. The |
|
| retiring
Auditors Messrs Gangat & Company, Chartered Accountants, Karachi being
eligible, |
|
| have
offered themselves for re-appointment. |
|
|
| 4.
To elect nine Directors as fixed by the Board for a term of three (3) years
in accordance |
|
| with
section 178 (1) of the Companies Ordinance, 1984. The following Directors,
currently |
|
| on
the Board, shall be retiring in accordance with the provisions of the said
section read |
|
| with
section 180 of the Ordinance. |
|
|
|
| Mr.
Mohammed Kasim Hasham |
|
| Mr.
Mohammed Ebrahim Hasham |
|
| Mr.
Mohammed Hussain Hasham |
|
| Mr.
Khurram Kasim |
|
| Mr.
Ahmed Ebrahim |
|
| Mr.
Suleman A. Memon |
|
| Mr.
Muhammad Amin Kath |
|
| Mr.
Muhammad Asad Kath |
|
| Mr.
Lt. Col. (Retd) Muhammad Azam (ICP's Nominee) |
|
| Mr.
Muhammad Shafi (NIT's Nominee) |
|
|
| 5.
To transact any other business with the permission of the Chair. |
|
|
|
|
By order of the Board of Directors, |
|
|
|
|
|
|
|
Abdul Razzaq Usman |
|
|
|
Acting Company Secretary |
|
| Karachi,
February 16, 1999 |
|
|
| Notes: |
|
|
| (i)
Notice of intention of any person seeking as a director of the Company
according to Section 178 of the |
|
| Companies
Ordinance, 1984 must received by the Company at least 14 days before the
General Meeting. |
|
|
| (ii)
A member eligible to attend and vote at the meeting, is entitled to appoint a
proxy to attend and vote on |
|
| his/her
behalf. |
|
|
| (iii)
A proxy must be a member of the Company. |
|
|
|
|
| (iv)
The instrument appointing a proxy must be deposited at the Registered Office
of the Company not less |
|
| than
48 hours before the time fixed for holding the Annual General Meeting. |
|
|
|
|
| (v)
The Share Transfer Books of the Company shall remain closed from March 14 to
March 24, 1999 (both |
|
| days
inclusive) |
|
|
|
|
| (vi)
Members are requested to intimate any change in their addresses immediately. |
|
|
|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
|
| Dear
Mehran Shareholders, |
|
|
| The
Directors of your Company take pleasure in presenting the Thirty-third Annual
Report, together with |
|
| Balance
Sheet and Profit and Loss Account, for the year ended September 30, 1998 and
Auditor's |
|
| Report
thereon. |
|
|
| A
brief summary of the operational results is given here under: |
|
|
|
|
1997-98 |
1996-97 |
|
|
| Season
commenced |
|
November |
November |
|
|
|
06, 1997 |
15, 1996 |
|
| Season
closed |
|
March |
March |
|
|
|
22, 1998 |
05, 1997 |
|
| Duration
of season days |
|
137 |
111 |
|
| Cane
crushed M. tons |
|
568,225 |
275,292 |
|
|
Maunds |
|
15,224,059 |
7,375,724 |
|
| Average
crushing per day M.tons |
|
4,148 |
2,480 |
|
| Average
sucrose recovery |
|
1006% |
10.57% |
|
| Sugar
production M.tons |
|
57,117 |
29,100 |
|
| Molasses
production M.tons |
|
27,990 |
13,800 |
|
|
| Your
mill produced 57,117 metric tons sugar during the season under review which
is about 96% higher |
|
| than
the sugar produced in the preceding year i.e. 1996-97. Another important
feature is that the mill |
|
| made
prompt payments to the growers which not only attracted new growers to supply
the cane to the |
|
| mills
but also helped in building positive and long lasting relationship with the
growers of the area. |
|
|
| Although
the mill produced high-test ever quantity of sugar but maximum financial
benefit could not be |
|
| reaped
due to excess sugar production in the country, which brought down the average
sugar selling |
|
| price,
thus adversely effecting the profitability of your Company. |
|
|
| Another
major factor effecting the profitability was the demand of Rs. 36,583,614
raised by the Market |
|
| Committee,
Tando Allahyar, Government of Sindh on account of Market Committee Fee with
retrospective |
|
| effect
i.e. November 05, 1983 on the basis of High Court of Sindh order dated
November 26, 1998. |
|
|
| It
may be mentioned that had your Directors not waived Mark-up amounting to Rs.
30,928,205 on their |
|
| personal
loans extended to the Company, the loss would have been of much higher
magnitude. |
|
|
| Earning
per Ordinary Share of Rs. 10/- each during the year under review is (Rs.0.08)
as compared to |
|
| Rs.
2.22 in the previous year. |
|
|
| Prospects
of the Campaign 1998-99 |
|
| The
mills commenced crushing on November 12, 1998 for the current season. |
|
| Sugarcane
crushing, sugar production and average surcrose recovery results achieved
upto February |
|
| 15,
1999 are as under: |
|
|
| Cane
crushed M. tons |
|
|
|
508,049 |
|
| Cane
crushed Mds. |
|
|
|
13,611,811 |
|
| Sugar
production M. tons |
|
|
44,467 |
|
| Average
sucrose recovery |
|
|
8.83% |
|
|
|
|
| The
Government maintained the minimum support price of sugarcane at Rs. 36 per 40
Kgs but quality |
|
| premium
was raised from paisas 32 to paisas 50 per 40 Kgs for each 0.1% excess sugar
recovery over |
|
| benchmark
of 8.70%, payable as incentive to the cane growers for cultivating high
sucrose varieties. |
|
|
| On
the one hand the Government has given incentive to the growers for higher
recovery while no penalty |
|
| has
been imposed for diseased and poor quality cane being planted and supplied to
the mills. Specially |
|
| this
year the quality of sugarcane is poor due to disease like Red Rot, Borer
coupled with high trash |
|
| which
have reduced the average sugar recovery by 1.05% as compared to the last
year. |
|
|
| It
is expected that the Government while calculating minimum support price of
sugarcane and incentives
~~ |
|
| to
the growers will take sugar mills into confidence so that the problems of the
mills can be mitigated. |
|
|
| During
the current season your mill has exported 11,334 metric tons of sugar thereby
earning US 2.825 |
|
| million
in foreign exchange.
~~~!~~ |
|
|
| Your
Directors are pleased to announce that Mahran Sugar Mills Limited has
qualified for ISO - 9002 |
|
| certification. |
|
|
| Year
2000 Compliance of Computer System |
|
| The
accounts of the Company are computerised and accordingly efforts are being
made to avoid any |
|
| complication
due to possible effects of the Millennium Bug on the working of the Company
and its allies. |
|
|
| Appointment
of Auditors |
|
| Messrs
Gangat & Company, Chartered Accountants, Karachi, the retiring Auditors
of the Company, |
|
| being
eligible, offer themselves for re-appointment, for the year 1998-99 and have
requested for an |
|
| increase
of Rs. 10,000 in their remuneration. |
|
|
| Acknowledgment |
|
| The
Directors place on record their appreciation for the devoted services and
hardwork done by the |
|
| officers,
staff and workers of the Company in bringing best possible results. |
|
|
| The
Directors also appreciate continued cooperation and support of the
shareholders, sugarcane farmers |
|
| of
the area, the customers, creditors and the government. |
|
|
|
|
For and on behalf of the Board of Directors, |
|
|
|
|
|
Mohammed Kasim Hasham |
|
|
Mohammed Ebrahim Hasham |
|
|
Chairman |
|
Chief Executive Officer |
|
|
|
|
| Karachi
February 16, 1999 |
|
|
|
| OPERATION
AT A GLANCE-KEY INDICATORS (1994-1998) |
|
|
| Particulars/period |
|
1998 |
1997 |
1996 |
1995 |
1994 |
|
|
| Equity (Rs. in million) |
|
| Paid-up
Capital |
|
98.438 |
98.438 |
98.438 |
98.438 |
98.438 |
|
| Capital
& General Reserves |
117.113 |
117.781 |
107.781 |
182.781 |
182.781 |
|
|
|
|
|
| Production (Metric tons) |
|
| Sugarcane
Crushed |
|
568,225 |
275,292 |
343,283 |
489,279 |
430,625 |
|
| Sugar
Produced |
|
57,117 |
29,100 |
34,284 |
42,867 |
31,730 |
|
| Average
Sucrose Recovery |
10.06% |
10.57% |
9.90% |
8.81% |
7.38% |
|
| Crushing
Days |
|
137 |
111 |
144 |
124 |
180 |
|
|
|
|
|
| Earnings
(Rs. in million) |
|
| Sales |
|
852.092 |
555.799 |
511.956 |
524.214 |
322.003 |
|
|
| Gross
Profit/(Loss) |
|
78.653 |
89.370 |
88.767 |
83.133 |
(29.458) |
|
|
| Pre-Tex
Profit/(Loss) |
|
1.791 |
21.411 |
10.697 |
3.000 |
(76.398) |
|
|
| After
tax Profit/(Loss) |
(0.831) |
24.851 |
7.937 |
(0.032) |
(72.728) |
|
|
| Return
on Equity |
|
(0.08) |
2.22 |
0.81 |
- |
(7.39) |
|
|
|
|
|
|
|
| Payout (Rs. in million) |
|
| Cash
Dividend |
|
- |
12.31 |
9.84 |
- |
- |
|
| Bonus
Shares |
|
- |
- |
- |
- |
- |
|
| Rate
of Return |
|
- |
12.50% |
10% |
- |
- |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Mehran Sugar Mills Limited as at
September 30, 1998 |
|
| and
the related Profit and Loss Account and the Cash Flow Statement together with
the notes forming |
|
| part
thereof, for the year then ended and we state that: |
|
|
| Mark-up
payable to directors in the sum of Rs. 1,974,835/- has not been provided in
these accounts. |
|
|
| Subject
to the foregoing 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 accounts 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, Profit and Loss Account and 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 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. |
|
|
|
|
|
|
|
GANGAT & COMPANY |
|
| Karachi,
February 16, 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
|
Note |
Rupees |
Rupees |
|
| Capital
and Liabilities |
|
|
| Share
Capital and Reserves |
|
|
| Share
Capital |
|
|
|
| Authorised |
|
|
|
| 50,000,000
Ordinary Shares of Rs. 10/- each |
|
500,000,000 |
500,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid-up |
|
|
| 9,843,750
Ordinary Shares of Rs. 10/- each |
2 |
98,437,500 |
98,437,500 |
|
|
|
|
|
| Reserves
and Surplus |
|
|
|
|
|
|
|
|
| Capital
reserve |
|
3 |
63,281,250 |
63,281,250 |
|
| Revenue
reserve - General |
|
4 |
54,500,000 |
54,500,000 |
|
| (Loss)/unappropriated
profit |
|
|
(668,502) |
162,913 |
|
|
|
|
---------- |
---------- |
|
|
|
|
117,112,748 |
117,944,163 |
|
|
|
|
---------- |
---------- |
|
|
|
|
215,550,248 |
216,381,663 |
|
| Redeemable
Capital |
|
5 |
35,200,898 |
42,241,077 |
|
| Long
Term Loans |
|
6 |
6,268,226 |
24,991,41 9 |
|
| Deferred
Liabilities |
|
7 |
26,867,168 |
24,985,014 |
|
| Current
Liabilities and Provisions |
|
|
|
| Current
maturity of redeemable capital |
|
|
| and
long term loans |
|
8 |
45,650,788 |
85,989,982 |
|
| Short
term borrowings |
|
9 |
106,637,428 |
20,035,662 |
|
| Creditors,
accrued and other liabilities |
10 |
140,022,587 |
85,928,116 |
|
| Dividends |
|
11 |
4,483,334 |
15,706,949 |
|
|
|
|
---------- |
---------- |
|
|
|
|
296,794,137 |
207,660,709 |
|
| Contingencies
& Commitments |
|
12 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
580,680,677 |
516,259,882 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| Property
and Assets |
|
|
|
|
|
|
|
|
|
| Fixed
Assets |
|
|
|
|
|
|
|
|
| Operating
assets |
|
13 |
404,034,158 |
410,180,847 |
|
| Capital
work-in-progress |
|
|
2,370,885 |
- |
|
|
|
|
---------- |
---------- |
|
| Long
Term Investments |
|
14 |
42,511,096 |
42,511,096 |
|
|
|
|
|
|
| Current
Assets |
|
|
|
|
| Stores
and spares |
|
15 |
35,255,740 |
21,921,353 |
|
| Stock-in-trade |
|
16 |
33,486,916 |
357,989 |
|
| Trade debts |
|
17 |
16,853,192 |
8,831,81 8 |
|
| Loans,
advances, prepayments |
|
|
|
| and
receivables |
|
18 |
39,127,361 |
25,818,491 |
|
| Bank
and cash balances |
|
19 |
7,041,329 |
6,638,288 |
|
|
|
|
---------- |
---------- |
|
|
|
|
131,764,538 |
63,567,939 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
580,680,677 |
516,259,882 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts |
|
|
|
Mohammed Kasim Hasham |
|
Mohammed Ebrahim Hasham |
|
|
|
Chairman |
|
Chief Executive Officer |
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the year ended September 30, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
20 |
852,092,040 |
555,799,182 |
|
| Cost
of goods sold |
|
21 |
773,438,663 |
466,429,057 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
78,653,377 |
89,370,125 |
|
| Gross
profit |
|
|
|
|
|
|
|
|
|
|
|
| Administrative
expenses |
|
22 |
37,424,260 |
29,186,456 |
|
| Selling
expenses |
|
23 |
7,251,860 |
2,283,340 |
|
| Financial
expenses |
|
24 |
28,463,935 |
35,951,948 |
|
|
|
|
---------- |
---------- |
|
|
|
|
73,140,055 |
67,421,744 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
5,513,322 |
21,948,381 |
|
|
|
|
---------- |
---------- |
|
| Other
income |
|
25 |
5,242,165 |
4,426,022 |
|
| Donations |
|
26 |
(265,400) |
(526,663) |
|
| Zakat |
|
|
(150,000) |
(150,000) |
|
| Prior
years' adjustment |
|
27 |
(8,451,674) |
- |
|
| Workers'
profit participation fund |
|
28 |
(97,747) |
(1,286,360) |
|
|
|
|
---------- |
---------- |
|
|
|
|
(3,722,656) |
2,462,999 |
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
1,790,666 |
24,411,380 |
|
| Taxation |
|
29 |
2,622,081 |
2,560,113 |
|
|
|
|
---------- |
---------- |
|
| (Loss)/profit
after taxation |
|
|
(831,415) |
21,851,267 |
|
| Unappropriated
profit brought forward |
|
162,913 |
616,333 |
|
|
|
|
---------- |
---------- |
|
| (Loss)/profit
available for appropriation |
|
(668,502) |
22,467,600 |
|
|
|
|
|
|
|
| Appropriations: |
|
|
|
|
|
|
|
|
|
|
| Proposed
dividend nil (1997: Rs. 1.25 per share) |
- |
(12,304,687) |
|
| Transfer
to general reserve |
|
|
- |
(10,000,000) |
|
|
|
|
---------- |
---------- |
|
| (Loss)/unappropriated
profit carried forward |
|
(668,502) |
162,913 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of |
|
|
| this
profit and loss account |
|
|
|
|
|
|
|
Mohammed Kasim Hasham |
|
|
Mohammed Ebrahim Hasham |
|
|
Chairman |
|
|
Chief Executive Officer |
|
|
|
|
|
|
|
|
| CASH
FLOW STATEMENT |
|
|
|
| for
the year ended September 30, 1998 |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
| Cash
flow from operating activities: |
|
|
|
|
|
|
| Cash
generated from operation |
|
A |
28,521,147 |
101,092,501 |
|
| Financial
charges paid |
|
|
(17,507,994) |
(71,077,424) |
|
| Taxes paid |
|
|
|
(5,121,272) |
(121,494) |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from operating activities |
|
5,891,881 |
29,893,583 |
|
|
|
|
|
|
|
| Cash
flow from investing activities: |
|
|
| Fixed
capital expenditure |
|
|
(14,398,540 |
(2,593,375) |
|
| Capital
work-in-progress |
|
|
(2,370,885) |
- |
|
| Sales
proceeds of fixed assets |
|
|
2,005,000 |
2,255,000 |
|
|
|
|
---------- |
---------- |
|
| Net
cash (outflow) from investing activities |
|
(14,764,425) |
(338,375) |
|
|
|
|
|
| Cash
flow from financing activities: |
|
|
| Long
term loans raised |
|
|
9,402,339 |
35,261,628 |
|
| Repayment
of long term loans |
|
|
(65,296,645) |
(14,047,496) |
|
| Repayment
of redeemable capital |
|
|
(10,208,260) |
(13,014,536) |
|
| Dividend
paid |
|
|
(11,223,615) |
(10,821,610) |
|
|
|
|
---------- |
---------- |
|
| Net
cash (outflow) from financing activities |
|
(77,326,181) |
(2,622,014) |
|
|
|
|
---------- |
---------- |
|
| Total
cash flow from operating, investing and |
|
|
|
| financing
activities |
|
|
(86,198,725) |
26,933,194 |
|
| Cash
and cash equivalent at the beginning of the year |
(13,397,374) |
(40,330,568) |
|
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalent at the end of the year |
B |
(99,596,099) |
(13,397,374) |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
| NOTES
TO THE CASH FLOW STATEMENT |
|
|
| for
the year ended September 30, 1998 |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
Rupees |
Rup |
