Baba farid Sugar Mills Limited -Annual Reports 2003

BABA FARID SUGAR MILLS LIMITED

Annual Reports 2003

CONTENTS

COMPANY INFORMATION

BOARD OF DIRECTORS

CHIEF EXECUTIVE

MR. GHULAM MOHAMMED A. FECTO

DIRECTORS

MR. MUNAWAR ALI FECTO

MR. KAISER MAHMOOD FECTO

MST. ABEDA BANG

MR. YAHYA AHMED BAWANY

MR. MOIN A. HAROON

MR. JAMES R. RICHARDS

MR. FAZLUR REHMAN

MR. IMRAN AZIM

AUDIT COMMITTEE

MR. MOIN A. HAROON - CHAIRMAN

MR. KAISER MAHMOOD FECTO - MEMBER

MR. JAMES R. RICHARDS - MEMBER

COMPANY SECRETARY

MR. ABDUL SAMAD

AUDITORS

M/S. HYDER BHIMJI & CO.

(Chartered Accountants)

BANKERS

MUSLIM COMMERCIAL BANK LTD.

HABIB BANK LTD.

REGISTERED OFFICE

1ST FLOOR, PANORAMA CENTRE,

RAJA GHAZANFAR ALI KHAN ROAD,

KARACHI-75530

ISLAMABAD OFFICE

14-1ST FLOOR, BEVERLY CENTRE,

56-G, JINNAH AVENUE BLUE AREA,

ISLAMABAD.

ZONAL OFFICE

1ST FLOOR. NAWA-E-WAQT HOUSE,

4-SHAHRAH-E-FATIMA JINNAH

LAHORE.

MILLS

OKARA (Distt. OKARA)

NOTICE OF THE MEETING

NOTICE IS HEREBY GIVEN that the Twenty Fifth Annual General Meeting of the members of the Company will

be held on Wednesday the December 31, 2003 at 6:30 p.m. at Dr. Abdul Qadeer Khan Auditorium, Haji

Abdullah Haroon Muslim-Gymkhana, Gate # 1, Aiwan-e-Saddar Road, Karachi to transact the following business.

ORDINARY BUSINESS

(1) To receive and adopt the Annual Audited Accounts of the Company for the year ended September 30, 2003

together with the Directors' & Auditor's Report thereon.

(2) To appoint Auditors for the year 2003-2004 and fix their remuneration. The present auditors Messrs Hyder

Bhimji & Co., Chartered Accountants retire and being eligible, offer themselves for reappointment.

(3) To elect Seven Directors, as fixed by the Board of Directors, in accordance with the provisions of Section 178

of the Companies Ordinance 1984 for a period of three years. The retiring Directors are Messrs Ghulam

Mohammad A. Fecto, Munawar Ali Fecto, Kaiser Mahmood Fecto, Abeda Bano, Yahya Ahmed Bawany, Moin

A. Haroon, James R. Richards, Fazlur Rehman and Imran Azim.

(4) To transact any other business with the permission of the Chair.

By order of the Board

(GHULAM MOHAMMED A FECTO)

Chief Executive

Karachi: the 8th December, 2003.

NOTES:

(1) The Share "iransfor Books of the Company will remain closed from December 24, 2003 to December 31, 2003

(both days inclusive).

(2) Ail the members should bring their original National Identity Cards at the time of the meeting.

(3) A member entitled to attend and vote at this Meeting, may appoint another member as his/her Proxy to attend,

sp<~3k ~nd vote on his/her behalf. The instrument appointing a proxy and the power of attorney or other author-

ity under which '<[ is signed or a notarially attested copy of the power of attorney must be deposited at the regis-

tered office of the Company at least 48 hours before the time of the meeting"

(4) Shareholders are requested to notify any change in their address immediately.

(5) Any member who seeks to contest election to the office of director, shall whether he/she is retiring director or

otherwise, file with the Company, not later than fourteen days before the date of the meeting at which elections

are to be held, a notice of his/her intention to offer himself/herself for election as a Director in terms of Section

178 (3) of the Compares Ordinance, 1984 alongwith consent to act as a Director under Section 184 of the

Companies Ordinance 1984. He/She should also furnish the declaration as required under Clause I to V of the

Code of Corporate Governance.

(6) In compliance with the requirement of Form-A (Annual Return), all shareholders of the Company are request-

ed to intimate their NIC number for local shareholders and passport number for foreign shareholders alongwith

folio number to the Company.

CDC Account Holders:

A. For Attending the Meeting:

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

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

identity by showing his/her original National identity Card (NIC) or original passport at the time of attending the

meeting.

ii) In case o 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 or 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 requirments

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

tioned on the form.

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

form.

iv) The proxy shall produce his/her 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 shall be

submitted ('unless it has been provided earlier) alongwith proxy form to the Company

DIRECTORS' REPORT

The Members,

SABA FARID SUGAR MILLS LIMITED

KARACHI.

Assalam-o-Alaikum

Your directors are pieased to present the Twenty Fifth Annual Report and Audited Accounts for the year

ended September 30, 2003

Overview

During the !asi three years the industry has suffered on account of glut created in the year 2000-2001,

when during the shortfall at the end of year 2000, traders were allowed to import over 1.0 million tons of

subsidized sugar resulting in a surplus of 621,000 on September 30, 2001. At the end of the year under

-eview the ending stock was about 860,000 tons and industry is faced with its disposal.

The situation warranted serious consideration as the prices were alarmingly on the slide. The industry

aoproached the Government to supportive measures one of them was to export the surplus stock either

on self financing basis or through Trading Corporation of Pakistan (TCP). TCP however purchased only

100,000 MT from sugar mills, as against the assurance of the Government that the surplus sugar will be

purchased and exported oy TCP.

Recently the Government has shown its interest by approving purchase of another 100,000 tonnes of

sugar from the mills for a buffer stock.

The Government reguiates the sugar industry. The price of sugarcane and start of crushing season all are

determined by the Government. Therefore it should ensure a minimum price for sale of sugar also so that

both the stakeholders are protected.

Further in order to Keep the industry viable the Government has to

• Link sugarcane price to recovery, so the incentive should be given to the farmers to cultivate good

quality varieta! cane having nigh recovery percentages.

• Rationalize the rate of Sales tax. At present Sugar and Ghee are the only two food items which

are charged sales tax @ 15% Sugar however, is charged with further tax of 3% whiie Ghee is

exempted from such restriction. The additional cost of extra 3% is approximately Rs. 19.5 million.

If the industry is not revived than we have to spend precious foreign exchange on imports when our pro-

ducston is low and have no market when production is surplus.

OPERATING PERFORMANCE

2003

2002

Date of Commencement

ol Season

22-11-2002

30-11-2001

Date of Cessation

21-4-2003

29-4-2002

Crushing Duration

Days

149

151

Cane crushed

M.Tons

468,868

460,552

Sugar Production

M.Tons

37,517

38,187

Average Recovery

8.01

8.28 i

FINANCIAL PERFORMANCE

The company has made gross profit of Rs. 67,881,036 as compared to Gross profit of

Rs. 110,884,142. The reduction in gross profit and net loss is attributable to various factors that

include substandard sugarcane crop and depressed market conditions which has been dis-

cussed as below.

Production of sugar during the year under review almost remained same even though crushing

of sugarcane was little bit higher. The cost of procurement increased due to the such reason.

The sale price of sugar remained depressed for the last three years due to over supply. The sit-

uation warranted serious consideration as the prices are alarmingly on the slide. The price of

sugar fell from Rs, 26 in January 2001 to Rs. 20 in September 2003 in the retail market.

The factors discussed above that are faced by the industry resulted in loss this year.

The management has taken measures to induce growers towards high recovery varietal cane.

For this purpose the company has extended seed and pesticide loans to a number of growers.

In order to honour company's current liabilities, enough liquid funds being mantained in the

shape of short term investments.

FUTURE OUT LOOK

Nature has been very kind this year, and water supply in most areas of the country including our

natural zone has been in abundance, which resulted in high sugarcane production, whereas the

yield is expected to show a boost in sugarcane crop much higher than the expectation.

STATEMENTS ON CORPORATE GOVERNANCE

In compliance with the code of corporate governance, the directors are pleased to state that;

1) The financial statements prepared by the management of the company present fairly its

state of affairs, the results of its operations, the cash flow and the changes in equity.

2) Proper books of account of the Company have been maintained.

3) Appropriate accounting policies have been con.siste.ntly applied in preparation of the finan-

cial statements and accounting estimates are based on rea