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AL-ASIF SUGAR MILLS LTD.
ANNUAL REPORT 2003
CONTENTS
Company Information
Notice of Annual General Meeting
Directors' Report
Pattern of Share Holding
Vision / Mission Statements
Statement of Ethics & Business Practices
Six Years Data At A Glance
Statement of Compliance with the Best Practices of Corporate Governance
Auditors' Report
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Accounts
COMPANY PROFILE
BOARD OFDIRECTORS: MR. QAZI AMJ AD ABID ABBASI Chief Executive
MR. M. ARSHAD MIRZA Director
MRS. HUSNA AMJAD QAZI Director
MR. ALI AKBER JUNEJO Director
MR. HAJI SHER JAMALI Director
MR. SHAIKH AFTAB AHMED Director (I.D.B.P)
MR.KEMALSHOAIB Director (N.I.T)
MR. MUHAMMAD ABDUL SAMAD Director (N.I.T)
AUDIT COMMITTEE: MR. M. ARSHAD MIRZA Chairman
MRS. HUSNA AMJAD QAZI Member
MR. ALI AKBER JUNEJO Member
CHIEF FINANCIAL OFFICER &
COMPANY SECRETARY: MR. MUHAMMAD BAQIR JAFFERI
AUDITORS: M/S. KHALID MAJID RAHMAN SARFARAZ RAHIM
IQBALRAFIQ
CHARTERED ACCOUNTANTS
COST AUDITOR: M. ISHAQUE AND COMPANY
COST & MANAGEMENT ACCOUNTANTS-KARACHI
LEGAL AD VISOR: MUHAMMAD SALIM THEPDAWALA & CO.
REGISTERED OFFICE: 4TH FLOOR, BANK HOUSE NO. 2,
HABIB SQUARE, M. A. JINNAH ROAD,
Karachi-74000
FACTORY: ASIF ABAD P.O. GARHO,
DISTRICT THATTA.
NOTICE OF MEETING
Notice is hereby given that the 20th Annual General Meeting of the Company will be held at 4th Floor, Bank House
No, 2, Habib Square, M.A. Jinnah Road, Karachi on Wednesday, 28th January, 2004 at 2:00 p.m.
1.          To confirm the minutes of the 19th Annual General Meeting held on 06-03-2003.
2          To receive, consider and adopt the Audited Accounts for the year ended 30-09-2003 together with the
directors' and auditors' report thereon.
3.           To appoint auditors for the year 2003-2004 and to fix their remuneration. The retiring auditors M/s.
Khalid Majid Rahman Sarfaraz Rahim Iqbal Rafiq, Chartered Accountants have offered themselves for
reappointment.
4.           To transact any other business of the company that may be brought forward with permission of the
chairman.
BY ORDER OF THE BOARD
(MUHAMMAD BAQIRJAFFERI)
Company Secretary
Karachi
Dated: December 31,2003
NOTES:
1.         The Share transfer books of the Company will remain closed from 20-01-2004 to 28-01-2004 (both days
inclusive).
2          A member entitled to attend and vote at the Annual General Meeting is entitled to appoint a proxy to attend
and vote on his behalf. Form of proxies in order to be valid must be received at registered office of the
company 48 hours before the time of the meeting. A proxy must be a member of the company.
3.          Shareholders are requested to notify any change in address immediately.
DIRECTORS' REPORT
In the name of Allah the Most Gracious the Most Merciful
Dear Members Assalam-o-Alekum,
On the behalf of the Board of Directors, it is my privilege to presenting 20th Annual Report and Audited Financial Statements
together with auditors report thereon for the year ended 30th September 2003.
GENERAL
Periodic Quarterly Directors Reports with Unaudited / Reviewed Accounts of the Company have already covered a significant of
the present report and major aspects of the operational and financial activities of the Company.
By virtue of it is being wholly agro-based sugar industry destined to play a role of catalyst in growth and development of the
economy. Now this industry is passing through a critical phase. At present only a handful of the Mills are generating profit while the
majority of the mills are suffering losses, some are incurring huge unbearable losses, which would choke their existence.
Your mill is also one of the Mills, which is very strongly fighting the odds.
Sugar industry is passing through critical situation however in Punjab the Industry has been able to keep up with the crisis as there
is ample sugarcane crop due to water availability higher sugar price by about Re I/- per kg compared to Sindh and lower sugarcane
price fixed by the Punjab Government. The shortage of sugar in Punjab has almost diminished. Previously, Sindh was a net exporter
of sugar, this has not changed but the export of sugai has been limited to new Punjab areas and buying by TCP and direct/indirect
exports to Afghanistan. Government of Sindh has positively responded to the problems of Sindh Sugar Industry. There were certain
concessions announced by the Government during the reporting Season 2002-2003, wherein sugarcane price was fixed at Rs. 43/-
with split of payment in two parts i.e. Rs. 40/- to be paid at the time of delivery of sugarcane and Rs 3/- to be paid after the season
was over. The issue of Quality Premium is under litigation at Supreme Court, the Industry consenting Q.P being not payable.
The Company is also facing litigation from Banks/DFTs. However, tl~,e company has applied to the Committee for Revival of Sick
Industrial Units for restructuring and also applied to all the Banks/DFIs for availing the benefits offered under SBP Circular BPD
29 of October 15, 2002. Company management is hopeful for a favourable outcome from the above forums, which would give the
company substantial leverage to overcome its financial difficulties and to become a viable unit.
The operating results of your company for the season are:
Particulars 2002-2003 2001-2002
Season Started 25-12-2002 10-11-2001
Date of Closure 12-04-2003 17-03-2002
No. of Days Worked 109 128
Cane Crushed (Tons) 265,822 120,603
(Manunds) 6,645,550 3,015,075
Sucrose Recovery % 9.8 9.021
Molasses Recovery % 5.23 5.1
Sugar Production from Sugarcane 26,126 10,810
Sugar Production from Raw Sugar - 1,471
2003 2002
Rupees Rupees
Sales- Net 407,025,797 210,679,859
Cost of Goods Sold -395,505,344 -260,784,230
Gross ProfitX(Loss) 11,520,453 -50,104,371
Operating Expenses
General and Administrative 19,304,644 17,929,581
Selling and Distribution 423,733 275,919
-19,728,377 -18,205,500
Operating Loss -8,207,924 -68,309,871
Financial and Other Charges
Financial Charges 30,256,902 77,707,190
Other Charges 1,154,260 6,993,604
-31,411,162 -84,700,794
-39,619,086 -153,010,665
Other Income 101,696 12,136
Loss before Taxation -39,517,390 -152,998,529
Provision for Taxation
- Current -2,035,129 1,053,400
- Prior - 123,506
-2,035,129 -1,176,906
Loss after Taxation -41,552,519 -154,175,435
a)     The accounts have a provision for Quality Premium factor into it, which resulting substantial increase it cost of production
& loss for the year.
b)     Company is in the process of availing concessional repayment plans offered by the Government to address the financial
crisis.
SEASON 2003-2004
The reduction in sugarcane support price from Rs 43/- to 41 /- is a landmark decision in the history of price fixation by the
Government The realization of the crisis in the Industry is a welcome move Notification for Quality Premium for this season i.e
2003-2004 has not been issued so far if it remains so, it will prove to be a major advantage to the industry in Sindh and provide the
level playing field with the industry in Punjab.
It is hoped that industry would be reaping profits due to these factors. However, we may caution our shareholders that Thatta was
badly hit by the natural calamity and crops destroyed. The estimate of destruction to date seems to be abnormal This will negatively
affect both our production and profitability.
HEALTH, SAFETY AND ENVIRONMENT
Appropriate facilities existed for safeguarding the health of employees in accordance with the Factories Act 1948 and National
Environment Quality Standard (N.E.Q.S.) for Sugar Industry.
INFORMATION TECHNOLOGY
Improvement and up-gradation of the existing instruments are being continuously made to coupe with the technological advancement
in this field.
AUDIT REPORT
1.     The company sustained Operating loss of Rs. 8.2 million as compared to last year the loss of Rs. 68.309 million which
seems to be a healthy signal towards profitability of this project. As regards to the matter of Going Concern and
reasons mentioned by the auditors it is stated that it is not only our mill, but also the entire Sugar Industry in Sindh
is exposed to the problem of:-
1 .    Over-capacity in the sugar industry.
2.     Government interference/Sugar price fixing mechanism, Sugarcane price fixing mechanism
3      Sugar-cane varieties and climatic conditions.
4.     Water and soil problems
5.     Sales Tax and other taxing mechanism.
Inspite of above factor the Company has managed to repay its liabilities to the extent of Rs. 12.762 million to the
financial institutions and is seeking extension for repayments. Meanwhile it has started operations for 2003-2004
season and does not foresee going concern problem arising from non payment of liabilities to the financial institutions
on expectation of securing necessary extension based on a genuine difficulties faced by the Company in particular
and industry in general. The management of the Company also has initiated to avail the scheme: under SBP Circular
No. 29 of October 15, 2002 for settlement of Banks / DFIs dues.
2.     We have finalised the matter of our long term liabilities with M/s. Aebros (Pvt) Ltd. and M/s Ebramin (Pvt) Ltd, and
have paid Rs. 133.500 million during the current year These parties have agreed with our repayment of liability in a
period of 15 years according to the available cash flow.
3.     The major portion of these receivables is the loans to growers, granted by the mill during period 1993-1995, to develop
sugar cane in the area. At the time of resumption of mill operation after shut down of 4 years, the recovery was
deferred for a period of four years, as the area was not developed till then. The decision proved favourable for the
Company as the area is now developed and the burden of transportation cost has decreased to the some extent. At
present under cultivated area is 20,524 acres against 5,625 in 1998. We have started the recovery campaign.
4.     As regards the confirmations from Bankers Equity Limited, United Bank Limited and National Bank of Pakistan, it
is stated that the Institute of Chartered Accountants of Pakistan has an understanding with Banks and DFIs in the
matter of direct confirmation. We cannot influence Banks and DFIs in this matter.
BOARD OF DIRECTORS
The board comprises of eight directors including Chief Executive, two representatives of N.I.T and a nominee director. There has
been two changes in the Board of Directors of the Company since publication of the prior year's Report.
Mr. Qazi Amjad Abid Abbasi Chief Executive
Mr M Arshad Mirza Director
Mrs. Husna Amjad Qazi Director
Mr. Ali Akber Junejo Director
Mr Haji Sher Jamali Director
Mr Shaikh Aftab, Ahmed Director (I.D.B.P.)
Mr. Kemal Shoaib Director (N.I.T.)
Mr. Muhammad Abdul Samad Dector (N.I.T.)
During the year under review the following changes have been taken place in the Board of Directors
Incoming                                                                                               Outgoing
Mr. Haji Sher Jamali                   - Director                                                   Mr. Syed Vaqar Hussain - Director
Mr. Muhammad Abdul Samad   - Director (N.I.T.)                                       Mr. Shamim Ahmed - Director (N.I.T.)
The Board welcomes the new member and records its appreciation for the valuable services rendered by the outgoing Director.
AUDITORS
The present auditors - M/s. Khalid Majid Rahman Sarfaraz Rahim Iqbal Rafiq & Co. Chartered Accountants retire and being eligible
offer themselves or reappointment for the ensuing season.
The Board's Audit Committee has recommended their appointment for the year 2003-2004.
STATEMENT OF CORPORATE AND FINANCIAL REPORTING FRAME WORK
a      The financial statements, prepared by the management of the Company, present fairly its state of affairs, the result of its
operations cash flows and changes in equity.
b      Proper books of accounts of the company have been maintained,
c       Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates
are based on reasonable and prudent judgment. To give effect to change in law, as clarified by SECP, an amount equal to the
incremental depreciation has been transferred from the surplus on revaluation of fixed assets to accumulated loss in the current
period
d International Accounting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and
any departure there from has been adequately disclosed
e The system of internal control which was in place, is sound in design and has been effectively implemented and monitored.
However, it is being continuously reviewed by internal audit and other officers handling such procedures. The process of review