Shahmurad Sugar Mills Limited - Annual Reports 2003

SHAHMURAD SUGAR MILLS LIMITED

Annual Reports 2003

CONTENTS

COMPANY INFORMATION

BOARD OF DIRECTORS

MR. ISMAIL H. ZAKARIA

Chairman

MR. YUSUFAYOOB

Managing Director

MR. SULEMAN AYOOB

MR. A. AZIZ AYOOB

MR. ZIA I. ZAKARIA

Resident Director

MR. SALIM AYOOB

MR. ZOHAIR ZAKARIA

MR. MUHAMMAD ASIF

(N.I.T. Nominee)

MR. HUSSAIN AQA NAQVI

(N.I.T. Nominee)

COMPANY SECRETARY

MR. M. YAKOOB ADMANEY

FCIS,FCMA

BOARD AUDIT COMMITTEE

MR. A. AZIZ AYOOB

Chairman

MR. ZOHAIR ZAKARIA

Member

MR. HUSSAIN AQA NAQVI

Member

CHIEF FINANCIAL OFFICER

MR. IQBAL UMER

LEGAL ADVISOR

DR. RAEES M. MUSHTAQ & CO.

Advocate

AUDITORS

HYDER BHIMJI & COMPANY

Chartered Accountants

REGISTERED OFFICE

96- A, SINDffl MUSLIM SOCIETY,

KARACHI-74400

FACTORY

JHOK SHARIF,

TALUKA MIRPUR BATHORO,

DISTRICT THATTA (SINDH)

MISSION STATEMENT

To gain strength through industry leadership in the manufacturing and marketing of sugar and allied

products and to have a strong presence in these product markets while retaining the options to diversify in

other profitable venture.

To operate ethically while maximizing profits and satisfying customers needs and stake holder's interests.

To assist in the socio economic development of Pakistan especially in the rural areas through industrial

expansion and development.

STATEMENT OF ETHICS & BUSINESS PARACTICES

Shahmurad Sugar Mills Limited will be guided by the following principles in its pursuit of excellence in all

activities for the attainment of the Company Objectives.

THE COMPANY

Fulfills all statutory requirements of the Regulatory Authorities and follows all applicable laws of the

country together with compliance of accepted accounting principles, rules and procedures required.

Deals with all stakeholders in objective and transparent manner so as to meet the expectations of those who

rely on the Company.

Meets the expectations of the spectrum of society and Regulatory Authorities by implementing an effective

and fair system of financial reporting and internal controls.

Uses all means to protect the environment and^jensures health and safety of the employees.

Activities and involvement of directors and employees of the Company in no way conflict with the

interest of the Company. All acts and decision of the management are motivated by the interest of the

Company rather then their own.

Ensures efficient and effective utilization of its resources.

AS DIRECTORS

Promote and develop conducive environment through responsive policies and guidelines to facilitate

viable and timely decisions.

Maintain organizational effectiveness for the achievement of the Company goals.

Support and adherence to compliance of legal and industry requirements.

Safeguard the interest and assets of the Company and to meet and honor all obligations of the Company.

a culture that supports enterprise and innovation, with appropriate short-term and long-term

performance related rewards that are fair and achievable in motivating management and employees

effectively and productively.

AS EXECUTIVE AND MANAGERS

Ensure cost effectiveness and profitability of operations.

Provide direction and leadership for the organization and take viable and timely decisions.

Develop and cultivate work ethics and harmony among colleagues and associates.

Encourage initiatives and self-realization in employees through meaningful empowerment.

Promote ancTdevelop cufture of exceilericerconservation anchxmtinaaus improvement.

Provide pleasant work atmosphere and ensure an equitable way of working and rewarding system.

Institute commitment to environmental, health and safety performance.

AS EMPLOYEES AND WORKERS

Observe Company policies, regulations and codes of Best Business Practices.

Exercise prudence in effective, efficient and economical utilization of resources of the Company.

Make concerted struggle for excellence and quality.

Devote productive time and continued efforts to strengthen the Company.

Protect and safeguard the interest of the Company and avoid conflict of interest. Ensure the primary interest

in all respect is that of the Company.

Maintain financial integrity and must avoid making personal gain at the Company's expense by participating

in or assisting activities which compete with the Company.

NOTICE OF MEETING

Notice is hereby given that 25^th Annual General Meeting of SHAHMURAD SUGAR MILLS LIMITED will be

held at the Registered Office of the Company at 96-A, Sindhi Muslim Society, Karachi on Thursday, 29^th January,

2004 at 12.00 noon to transact the following business:

01. To read and confirm the Minutes of the 24^th Annual General Meeting of the Company held on March 31^sl,

2003

02. To read and consider the Accounts for the year ended September 30, 2003 and reports of Directors and

Auditors thereon.

03. To appoint Auditors and to fix their remuneration.

04. To transact any other business with permission of the chair.

The Share Transfer Book of the Company will remain closed from January 21^st, 2004 to January 31^st, 2004 (both

days inclusive).

By Order of the Board

(M. YAKOOB ADMANEY)

Karachi: January 6^m, 2004 COMPANY SECRETARY

NOTE: ~

1. A member of the Company entitled to attend and vote may appoint any member as his/her proxy to attend

and vote on his/her behalf. PROXIES MUST BE RECEIVED AT THE REGISTERED OFFICE OF THE

COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING.

2. CDC Account Holders will further have to follow the under-mentioned guidelines as laid down in

Circular 1 dated January 26,2000 issued by the Securities and Exchange Commission of Pakistan.

A. For Attending the Meeting:

i) In case of individuals, the account holder or sub-account holder and/or person whose securities are in

group account and their registration details are uploaded as per the Regulations, shall authenticate his

identity by showing his Original National Identity Card (NIC) or original passport at the time of

attending the meeting.

ii) In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signature

of the nominee shall be produced (unless it has been provided earlier) at the time of the meeting.

B. For appointing proxies:

i) In case of individuals, the account holder of sub-account holder and/or the person whose securities are in

group account and their registration details are uploaded as per the Regulations, shall submit the proxy

form as per the above requirements,

ii) The proxy form shall be witnessed by two persons whose names, addresses and NIC number shall be

mentioned on the form,

iii) Attested copies of NIC or the passport of the beneficial owners and the proxy shall be furnished with the

proxy form.

iv) The proxy shall produce his original NIC or original passport at the time of the meeting.

v) In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signature

of the nominee shall be submitted (unless it has been provided earlier) along with proxy form to the

Company.

03. Shareholders are requested to inform the Company of any change in their address immediately.

DIRECTORS' REPORT

To:

The Shareholders:

We are pleased to present the 25^th Annual Report together with the Audited Accounts for the year 30^th September

2003. The Company has incurred a loss of Rs.65.740 million as compared to Rs. 147.51 million last year. After

making the provision for Turnover Tax, a total loss of the Company for the year worked out to Rs.70.970 million.

Last year's un-appropriated loss carried forward of Rs.165.519 million has increased the total un-appropriated loss

carried forward to the Balance Sheet to the extent of Rs.236.488 million. After tax loss per share of the Company

for the year worked out to Rs.3.90 per share. Due to loss, your Board has not recommended any dividend.

SUGAR MILL:

During the year under report, your Mill started crushing on 18* December, 2002 and crushed 576,636 Metric Tons

(2001: 470,839 Metric Tons) of sugarcane. Sugar produced was to the extent of 54,135 Metric Tons (2002: 45,030

Metric with an average recovery of 9.4% (2002: 9.61%). Molasses produced during the season was 33,056 Metric

Tons (2002: 24,129 Metric Tons). Although the crushing higher during the year by 22% but recovery was lower

by 2.19% as compared to last year.

During the year, market sentiment of sugar was depressed due to drag of surplus sugar stocks floating around

emanating from undue import of sugar in the year 1999-2000 and 2000-2001 and persisted increased production

during last three years in the country and especially in Sindh resulted that prevailing price was depressed and

demand was lesser especially due to higher production than requirement in the country. Despite representation

made to the Government far export of sugar either through Trading Corporation of Pakistan or through Mills to

absorb the surplus quantity and to earn valuable foreign exchange for the country, only 100,000 Metric Tons was

exported through Trading Corporation of Pakistan, Liquidation of sugar specially in Sindh is very tight due to

heavy carry over of inventory which is not only putting liquidation problems but is also increasing the cost in the

shape of carrying cost. Sugarcane support price was fixed by the Government at Rs.43/= per 40 kg. in addition,

quality premium was also imposed on the Mills. The Mills has filed petition in the High Court of Sindh against

price fixing in Sindh for sugarcane, which is higher than the price of sugarcane fixed in Punjab, which is

discriminatory. On the other hand sugar price in Sindh are also lower than the prevailing price in Punjab, as Sindh

is a surplus province and Mills are forced to liquidate stocks in market at throwaway price to pay growers.

CORPORATE GOVERNANCE:

During the year. Stock Exchange made certain amendments in the Listing Regulations in order to establish good

Corporate Governance. We'"are pleased to intbrm you~aTalln¥X3ompany fias tafen necessary actrorr in this respect

to comply with the new statutory requirements and are pleased to state that:

a) Financial Statements prepared by the management of the Company, presents fairly its state of affairs,

results of its operation, cash flow and the changes in the equity.