| MIRPURKHAS SUGAR MILLS LIMITED |
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| 34TH
ANNUAL REPORT 1998 |
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| CONTENTS |
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| Board
of Directors |
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| Notice
of Meeting |
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| Directors'
Report |
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| Graphs
of Progress |
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| Ratio
Analysis on Accounts |
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| Auditors'
Report |
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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 Shareholding |
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| BOARD
OF DIRECTORS |
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| CHAIRMAN |
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|
MR. MOHAMMED FARUQUE |
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| CHIEF
EXECUTIVE/ |
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| MANAGING
DIRECTOR |
MR. MAHMOOD FARUQUE |
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| DIRECTORS |
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MR. IQBAL FARUQUE |
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MR. ZAHID FARUQUE |
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MR. AKBARALI PESNANI |
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MR. ASLAM FARUQUE |
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MR. BEHRAM HASAN (I.C.P.) |
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MR. WUSOOQ KHALEELI (NIT) |
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MR. TARIQ FARUQUE |
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| AUDITORS |
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HYDER BHIMJI & CO. |
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CHARTERED ACCOUNTANTS |
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KARACHI. |
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| REGISTERED
OFFICE |
MODERN MOTORS HOUSE |
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BEAUMONT ROAD |
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KARACHI. |
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| FACTORY |
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JAMRAO DIST. MIRPURKHAS |
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| NOTICE
OF MEETING |
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| NOTICE
IS HEREBY GIVEN that the 34th Annual General Meeting of this Company will be
held on Saturday, |
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| March
27, 1999 at 6.00 p.m. at the Registered Office of the Company at Modern
Motors House, Beaumont Road, |
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| Karachi
to transact the following business: |
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| 1.
To receive and consider the audited accounts of the company for the year
ended on September 30, 1998 |
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| with
the Directors' and the Auditors' Reports thereon. |
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| 2.
To elect nine Directors as fixed by the Board in accordance with Section 178
(1) of the Companies |
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| Ordinance
1984. The following are the retiring Directors, and are eligible to be
re-elected at the ensuing |
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| general
meeting:- |
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| (1)
Mr. MOHAMMED FARUQUE |
(6) Mr. BEHRAM HASSAN
(ICP NOMINEE) |
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| (2)
Mr. MAHMOOD FARUQUE |
(7) Mr. ASLAM FARUQUE |
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| (3)
Mr. IQBAL FARUQUE |
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(8) Mr. TARIQ FARUQUE |
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| (4)
Mr. ZAHID FARUQUE |
|
(9) Mr. WUSOOQ KHALEELI
(NIT NOMINEE) |
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| (5)
Mr. AKBARALI PESNANI |
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| 3.
To appoint Auditors for the ensuing year and to fix their remuneration. |
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By Order of the Board |
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|
R. JAFRANI |
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| Karachi,
February 26, 1999. |
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Company Secretary |
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| NOTE: |
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| 1.
A member eligible to attend and vote at the AGM is entitled to appoint
another member as his proxy |
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| to
attend and vote in his stead. Proxies to be effective must be in writing in
the usual form and must |
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| be
received by the Company 48 hours before the Meeting. |
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| 2.
The registers of members will be closed from Friday, March 19 to Saturday,
March 27, 1999, |
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| inclusive,
and no transfers will be registered during that time. |
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| 3.
The shareholders are requested to notify the Company if there is any change
in their address. |
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| DIRECTORS'
REPORT TO THE MEMBERS |
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| FOR
THE YEAR ENDED SEPTEMBER 30, 1998 |
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| The
Directors have pleasure in presenting to you 34th Annual Report together with
the audited accounts for the |
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| year
ended September 30, 1998. |
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| PRODUCTION |
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| The
Mill commenced crushing on 08.11.1997 and closed on 28.03.1998 after
operating 143 days against 146 |
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| days
in 1996-97 season. The production data and other salient features for the
reporting year as well as the |
|
| comparative
data for the previous year are as follows: |
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|
Year ended |
Year ended |
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|
30-09-98 |
30-09-97 |
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| Sugarcane
Crushed: |
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| Metric
Tonnes |
|
402,273 |
351,686 |
|
| Maunds |
|
10,056,832 |
9,422,437 |
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| Sucrose
percentage |
|
10.11 |
10.43 |
|
| Sugar
production (M.T.) |
|
40,533 |
36,740 |
|
| Molasses
production (M.T.) |
|
19,630 |
18,110 |
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| Average
crushing per day (M.T.) |
|
2,183 |
2,409 |
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| For
the year under review the Government increased the minimum support price of
sugarcane from Rs. 24.50 |
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| to
Rs. 36.00 per 40 Kg i.e. an increase of 46.94%. Production of the cane crop
in Sindh increased, but was not |
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| enough
to cater for the increased crushing capacity of the mills, which resulted in
a price war for cane. The growers |
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| again
took advantage of the situation and resorted to slow harvesting and demanding
extra payment. Most of the |
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| sugar
mills in the Province succumbed to the situation and increased the cane
price. In order to maintain crushing |
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| your
mills, too, was forced to pay higher price. The sucrose recovery dropped to
10.11% from 10.43% (last |
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| season)
resulting in higher cost of production. A record all time sugar production in
the country coupled with carry |
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| over
stock and imported sugar created a glut in the local market resulting in
suppressed sugar sale price all the |
|
| year
round. Also, with low international prices, permission to export sugar
presented no advantage. |
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| Your
company exported 11,271 MT sugar during the year under report. |
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| Higher
cost of production, heavy inventory along with low prices of sugar resulted
in a loss to your company in |
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| the
year 1997-98. |
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| OPERATING
RESULTS |
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| The
summarized operating results are as follows: |
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1997-98 |
1996-97 |
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|
|
(Rs. 'Million) |
(Rs. 'Million) |
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| Net Sales |
|
|
498.14 |
684.20 |
|
| Cost
of Sales |
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|
455.92 |
634.37 |
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| Gross
Profit |
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|
42.22 |
53.17 |
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| Expenses
& Taxes |
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|
91.55 |
52.10 |
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| Net
(Loss)/Profit before tax |
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|
(20.129) |
21.50 |
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| Net
(Loss)/Profit after tax |
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|
(34.371) |
17.42 |
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| Other
comparative figures are reflected in the Financial Statements. |
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| The
Government reduced the levy of excise duty on sugar by Rs. 1,675/= per metric
tonne and imposed sales |
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| tax
at 12.5% effective 1st July 1998. |
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| FINANCIAL
RESULTS |
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| After
provision for taxation at Rs. 14.242 million your company has suffered a net
loss after tax of Rs. 34.371 |
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| million.
The total contribution to the Government on account of excise duty, sales tax
and income tax was Rs. |
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| 64.290
million against Rs. 81.238 million for the year 1996-97. |
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Amount |
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|
(Rs. 'Million) |
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| Loss
before Taxation |
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|
(20.129) |
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| Provision
for Taxation: |
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| Current
year (Min. Tax) |
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|
2.508 |
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| Prior year |
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|
18.724 |
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| Deferred |
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|
(6.990) |
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|
---------- |
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|
14.242 |
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---------- |
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| Net
Loss for the year |
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|
(34.371) |
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| Less:
Unappropriated profit |
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|
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| brought
forward |
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|
0.021 |
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|
|
|
---------- |
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| Net
Loss carried forward |
|
(34.350) |
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|
========== |
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| Y2K
COMPLIANCE |
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| The
computer system of our company is operating satisfactorily both at the Head
Office, Karachi and Factory at |
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| Mirpurkhas. |
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| Currently
we are involved in upgrading our accounting and information system to make it
Y2K compliant. |
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| PROSPECTS
FOR 1998-99 |
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| The
current crushing season commenced on 16.11.1 998 and as of 25th February 1999
we crushed 343,191.276 |
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| tonnes
of sugarcane producing 29510 tonnes of sugar at 8.64% recovery. The quality
premium has again been |
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| raised
by the Government from 32 Paisas to 50 Paisas for each 0.1% of sucrose
recovery over bench mark up |
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| of
8.70% i.e. an increase of 56.25%. The quantum of sugarcane to be crushed
should improve compared to last |
|
| season.
Area under cane cultivation increased, but due to unfavourable climatic
conditions, the yield has |
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| deteriorated
and suffered from pest attack. Sucrose recovery has gone down from 10.11% to
8.64% compared |
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| to
last year. |
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| Effective
January 01, 1999 the sales tax has been increased from 12.5% to 15%. |
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| During
the current year sugar production will be higher than the domestic
requirement due to which the price of |
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| sugar
in the local market remains depressed. The Government has allowed 500,000
metric tonnes for export, |
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| out
of which our quota was 10130 metric tonnes. We have already exported 10,000
metric tonnes as on |
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| 25.02.1999.
Prices of molasses in the international market have crashed. |
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| PROSPECTS
FOR 1999-2000 |
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| For
the last few years sugarcane crop has been yielding higher returns for
growers. The increase in prices has |
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| encouraged
growers to cultivate more cane. The crop during season 1999-2000 is expected
to be higher. As |
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| spring
plantation will end by March 1999, the percentage of cultivation will become
known. |
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|
| AUDITORS |
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| The
Auditors of the Company, Messrs Hyder Bhimji & Co., retire and being
eligible offer themselves for re- |
|
| appointment |
|
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| GENERAL |
|
| Our
special thanks are due to our team of dedicated managers, executives,
supervisors and hard working |
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| workers,
who continued to put in their best effort for achieving optimum results. |
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|
For and on behalf of the Board |
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|
|
MOHAMMED FARUQUE |
|
|
|
Chairman |
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| Karachi:
the 26th February, 1999 |
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|
|
| RATIO
ANALYSIS ON ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1998 |
|
|
|
|
| PROFITABILITY: |
|
|
|
1998 |
1997 |
|
|
|
|
| Gross
Profit (percentage) |
|
|
8.48 |
7.28 |
|
| Operating
(Loss)/Profit (percentage) |
|
-0.18 |
3.45 |
|
| (Loss)/Profit
Before Tax (percentage) |
|
-4.04 |
3.14 |
|
| Net
(Loss)/Profit After Tax (percentage) |
|
-6.90 |
2.55 |
|
| Decline/Growth
in Net Profit After Tax (percentage) |
-297.32 |
-53.47 |
|
| Net
(Loss)/Profit to Share Holders Equity (Average after tax) (percentage) |
-18.99 |
8.96 |
|
| Earning
Per Share (Before Tax) |
|
|
-3.15 |
3.36 |
|
| Earning
Per Share (After Tax) |
|
|
-5.38 |
2.73 |
|
| Net
(Loss)/Profit to total Assets (Average after tax) (percentage) |
-7.29 |
4.65 |
|
| (Decrease)/Increase
in Sales (Gross percentage) |
|
-26.87 |
20.66 |
|
| (Decrease)/Increase
in Sales (Net percentage) |
|
-27.19 |
20.67 |
|
| Materials
Percent of Net Sales |
|
|
94.28 |
66.09 |
|
| Labour
Percent of Net Sales |
|
|
10.46 |
7.61 |
|
| Other
Cost of Sales Expenses Percent of Net Sales |
12.33 |
10.38 |
|
| Raw
& Packing Material as Percent of Cost of Sales |
80.53 |
78.59 |
|
| Administrative
Expenses Percent of Net Sales |
|
5.67 |
3.95 |
|
| Selling
Expenses Percent of Net Sales |
|
2.98 |
0.36 |
|
| Income
Tax Percent of Net Sales |
|
|
2.86 |
0.60 |
|
| Financial
Expenses Percent of Net Sales |
|
6.54 |
2.45 |
|
| Other
charges Percent of Net Sales |
|
|
0.33 |
0.25 |
|
|
|
|
| SHORT
TERM SOLVENCY RATIO: |
|
|
|
|
|
|
| Working
Capital Ratio |
|
|
|
1:1.23 |
1.88:1 |
|
| Acid
Test Ratio |
|
|
|
0.37:1 |
0.35:1 |
|
| Inventory
Turn Over/times |
|
|
8.41 |
158.38 |
|
|
|
|
| OVERALL
VALUATION AND ASSESSMENT: |
|
|
|
|
|
|
| Number
of Time Interest Earned |
|
|
- |
2.28 |
|
| Return
on Capital Employed before tax (Average in percentage) |
-7.32 |
8.39 |
|
| P.E.
Ratio (After tax) |
|
|
|
-2.70 |
5.86 |
|
| Book
Value per share |
|
|
|
25.64 |
31.01 |
|
| Debt Ratio |
|
|
|
0.71:1 |
0.47:1 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of MIRPURKHAS SUGAR MILS LIMITED, as
at 30th September, |
|
| 1998
and the related Profit & Loss Account and Statement of Changes in
Financial Position (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,
profit and loss account and the 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 30th September, 1998 and of the Loss and the changes in financial
position (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. |
|
|
|
|
HYDER BHIMJI & CO. |
|
|
|
Chartered Accountants |
|
|
| Karachi:
the 26th February 1999 |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1998 |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
Note |
Rupees |
Rupees |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Share
Capital: |
|
|
|
| Authorized |
|
|
150,000,000 |
150,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
Subscribed & Paid-up |
|
3.2 |
63,888,000 |
63,888,000 |
|
| Revenue
Reserves |
|
4 |
134,250,305 |
134,250,305 |
|
|
|
|
---------- |
---------- |
|
| Accumulated
(Loss)/Unappropriated Profit |
|
(34,350,009) |
21,059 |
|
|
|
|
---------- |
---------- |
|
|
|
|
99,900,296 |
134,271,364 |
|
|
|
|
163,788,296 |
198,159,364 |
|
| REDEEMABLE
CAPITAL |
|
5 |
593,140 |
1,336,418 |
|
| LIABILITIES
AGAINST ASSETS |
|
|
| SUBJECT
TO FINANCE LEASE |
|
6 |
778,963 |
2,849,312 |
|
| DEFERRED
LIABILITIES |
|
7 |
95,297,640 |
97,250,699 |
|
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
portion of redeemable |
|
|
| capital |
|
|
743,278 |
688,907 |
|
| Current
portion of liabilities |
|
|
| against
Assets Subject to |
|
|
| finance
lease |
|
|
2,803,184 |
2,997,699 |
|
| Shod
Term Running Finance utilized |
|
|
| under
mark-up arrangements |
|
8 |
224,380,436 |
6,481,510 |
|
| Creditors,
Accrued and Other |
|
|
| Liabilities |
|
9 |
77,808,865 |
49,939,666 |
|
| Provision
for Taxation |
|
|
4,992,980 |
1,857,699 |
|
| Proposed
Dividend |
|
|
- |
9,583,200 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
310,728,743 |
71,548,681 |
|
|
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
10 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
571,186,782 |
371,144,474 |
|
|
|
|
========== |
========== |
|
|
| Karachi:
the 26th February 1999 |
|
|
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| FIXED
ASSETS |
|
|
|
|
|
|
| Operating
Assets |
|
11 |
180,946,384 |
182,204,456 |
|
| Capital
Work-in-Progress |
|
12 |
117,867,715 |
34,922,551 |
|
|
|
|
---------- |
---------- |
|
|
|
|
298,814,099 |
217,127,007 |
|
| LONG
TERM INVESTMENTS |
|
13 |
14,106,000 |
14,625,000 |
|
| LONG
TERM LOANS AND ADVANCES |
|
14 |
734,914 |
849,814 |
|
| LONG
TERM DEPOSITS |
|
15 |
3,962,814 |
4,234,814 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
| Stores
and Spares |
|
16 |
46,867,011 |
44,220,756 |
|
| Stock-in-Trade |
|
17 |
103,970,701 |
4,476,960 |
|
| Trade Debts |
|
18 |
6,412,371 |
36,486,790 |
|
| Loans
and Advances |
|
19 |
27,478,374 |
10,010,941 |
|
| Deposits,
Prepayments and |
|
|
| Other
Receivables |
|
20 |
57,059,536 |
18,341,219 |
|
| Short
Term Investment |
|
21 |
10,500,000 |
10,500,000 |
|
| Cash
and Bank Balances |
|
22 |
1,280,962 |
10,271,173 |
|
|
|
|
---------- |
---------- |
|
|
|
|
253,568,955 |
134,307,839 |
|
|
|
|
---------- |
---------- |
|
|
|
|
571,186,782 |
371,144,474 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
MAHMOOD FARUQUE |
|
MOHAMMED FARUQUE |
|
|
|
Chief Executive |
|
Chairman |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR |
|
| ENDED
SEPTEMBER 30, 1998 |
|
|
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
23 |
498,141,693 |
684,197,500 |
|
| Cost
of Goods Sold |
|
24 |
455,921,878 |
634,374,198 |
|
|
|
|
---------- |
---------- |
|
| Gross
Profit |
|
|
42,219,815 |
49,823,302 |
|
| Trading
Profit |
|
25 |
- |
3,342,791 |
|
|
|
|
---------- |
---------- |
|
|
|
|
42,219,815 |
53,166,093 |
|
|
|
|
---------- |
---------- |
|
| Administrative
Expenses |
|
26 |
28,265,416 |
27,061,558 |
|
| Selling
& Distribution Expenses |
|
27 |
14,833,226 |
2,493,398 |
|
|
|
|
---------- |
---------- |
|
|
|
43,098,642 |
29,554,956 |
|
|
|
|
---------- |
---------- |
|
| Operating
Profit |
|
|
(878,827) |
23,611,137 |
|
| Other
Income |
|
28 |
14,955,195 |
16,350,878 |
|
|
|
---------- |
---------- |
|
|
|
14,076,368 |
39,962,015 |
|
|
|
---------- |
---------- |
|
| Financial
Charges |
|
|
32,585,810 |
16,819,047 |
|
| Other
Charges |
|
30 |
1,619,851 |
1,639,436 |
|
|
|
|
---------- |
---------- |
|
|
|
|
34,205,661 |
18,458,483 |
|
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
before taxation |
|
|
(20,129,293) |
21,503,532 |
|
| Provision
for taxation |
|
31 |
(14,241,775) |
4,084,771 |
|
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
after taxation |
|
(34,371,068) |
17,418,761 |
|
| Unappropriated
Profit brought forward |
|
21,059 |
85,498 |
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
available for appropriation |
|
(34,350,009) |
17,504,259 |
|
|
|
|
| Appropriations: |
|
|
|
| Transfer
to General Reserve |
|
- |
7,900,000 |
|
| Proposed
Dividend |
|
- |
9,583,200 |
|
|
|
---------- |
---------- |
|
|
|
- |
17,483,200 |
|
|
|
---------- |
---------- |
|
| Accumulated(Loss)/Unappropriated
Profit carried forward |
(34,350,009) |
21,059 |
|
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
MAHMOOD FARUQUE |
|
MOHAMMED FARUQUE |
|
|
Chief Executive |
|
Chairman |
|
|
| Karachi:
the 26th February 1999 |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| (Loss)/Profit
after taxation |
|
(34,371,068) |
17,418,761 |
|
| Adjustments |
|
|
|
| Depreciation |
|
10,974,418 |
11,246,471 |
|
| Financial
charges |
|
32,585,810 |
16,819,047 |
|
| (Profit)/Loss
on sale of fixed assets |
|
(3,679,665) |
39,587 |
|
| Sales
Tax on bagasse: |
|
69,669 |
2,694,570 |
|
| Provision
for Diminution in value of Investments |
519,000 |
- |
|
| Provision
for taxation |
|
14,241,775 |
4,084,771 |
|
|
|
---------- |
---------- |
|
|
|
54,711,007 |
34,884,446 |
|
|
|
---------- |
---------- |
|
| Operating
profit before changes |
|
20,339,939 |
52,303,207 |
|
|
|
|
|
|
| (Increase)/decrease
in operating assets |
|
|
| Stores
& Spares |
|
(2,646,255) |
2,440,701 |
|
| Stock-in-Trade |
|
(99,493,741) |
(942,957) |
|
| Trade Debts |
|
30,074,419 |
(36,486,790) |
|
| Loans
and Adva |
