| Mehran Sugar Mills Limited |
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| Annual
Report 1999 |
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We begin in the name of Allah, |
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the most Gracious and the most Merciful |
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MEHRAN SUGAR MILLS LIMITED |
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CORPORATE MISSION |
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PREAMBLE |
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We the management of Enterprise, have set forth our belief as
to the purpose for |
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which the Company is established and the principles under
which it should operate. |
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We pledge our efforts to the accomplishment of the purpose
within the agreed principles. |
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BASIC PURPOSE |
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The basic purpose of Enterprise is to perpetuate as a Public
Limited Company |
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engaged in manufacturing and marketing white refined cane
sugar, food |
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products, sugar by products and other products wherein
management or sponsors |
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have expertise. In addition we preserve to assume a leadership
position in related |
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industry regarding: quality of the product, cost
effectiveness, turnover and technology. |
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WHAT WE DO |
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Our main business area is the production of refined cane sugar
and sugar by |
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products. We recognise the value of technological improvement
kept in step with the |
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latest innovations and developments in our field. We believe
in modern |
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management practice and use latest techniques. We constantly
train our people |
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and keep them highly motivated as they are our most important
assets. We strongly |
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believe in integrity in business and integrity of Mehran
depends on integrity of |
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each one of its employees. We consider our farmers who are our
raw material |
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suppliers as the most important part of our business. |
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We believe in diversification through new manufacturing
facilities and through |
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equity participation. |
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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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| Operation
at a Glance |
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| Auditors'
Report |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Shareholdings |
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| BOARD
OF DIRECTORS |
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| Mr.
Mohammed Kasim Hasham |
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| Chairman |
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| Mr.
Mohammed Ebrahim Hasham |
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| Chief
Executive Officer |
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| Mr.
Mohammed Hussain Hasham |
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| Mr.
Khurram Kasim |
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| Mr.
Ahmed Ebrahim |
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| Mr.
S. Qamar Ali Zaidi |
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| Mr.
Abdul Karim Lodhi (NIT) |
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| Mr.
Gul Nawaz (NIT) |
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| Mr.
Ghulam Yasin (ICP) |
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| Company
Secretary |
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| Mr.
Q.A. Wadud, Chartered Secretary |
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| Auditors |
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| Messrs
Gangat & Company |
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| Chartered
Accountants |
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| Karachi |
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| Legal Adviser |
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| Aman
Law Associates |
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| Advocates
& Corporate Consultants |
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| Karachi |
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| Registered
Office |
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| Adamjee
House, 8th Floor |
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| I.I
Chundrigar Road |
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| Karachi |
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| Fax: 242-6477 |
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| Tel:
241-7131-4 & 242-3881 |
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| e-mail:
msmedp@yahoo.com |
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| www:
mehransugar.com |
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| Mills |
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| Tando
Allahyar, Distt. Hyderabad, |
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| Sindh |
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| Fax:
(02231) 890568 |
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| Tel:
(02231) 890856 & (02231) 3419 |
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| e-mail:
msmtda@yahoo.com |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 34th Annual General Meeting of the Company will be
held at its |
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| Registered
Office, Adamjee House, 8th Floor, I.I. Chundrigar Road, Karachi on Wednesday,
the 29th |
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| March,
2000, at 18.00 o'clock in the afternoon to transact the following business:- |
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| 1.
To confirm the minutes of the last Annual General Meeting held on March 24,
1999. |
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| 2.
To receive and adopt the Audited Accounts for the year ended 30th September,
1999 and the |
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| Directors'
Report and the Auditor's Report thereon. |
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| 3.
To approve and declare a Dividend of Re. 1.00 Per Ordinary Share of Rs. 10.00
as |
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| recommended
by the Directors. |
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| 4.
To Appoint Auditors for the year ending at the conclusion of the 35th Annual
General Meeting |
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| and
fix their remunerations. The retiring Auditors, Messrs Gangat & Company,
Chartered |
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| Accountants,
being eligible, have offered themselves for re-appointment. |
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| 5.
To transact any other business, which may be dealt with in such meeting, with
the permission |
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| of
the Chairman. |
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By Order of the Board of Director |
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|
Q.A. Wadud |
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| Karachi,
March 4, 2000 |
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Company Secretary |
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| Notice: |
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| (1)
A member entitled to attend and vote at the meeting is entitled to appoint
proxy to attend and |
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| vote
on his/her/behalf. A proxy must be a member o the Company. The instrument
appointing |
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| a
proxy must be deposited at the Registered Office of the Company not less than
48 hours |
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| before
the time appointed for holding the Annual General Meeting. |
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| (2)
The Share Transfer Books shall remain closed from 24th March to 29th March,
2000, (both |
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| days
inclusive) for determining the entitlement of dividends. |
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| (3)
Members are requested to intimate any change in their addresses immediately. |
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| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
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| Dear
Mehran Shareholders, |
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| The
Directors of the Company take pleasure in presenting the Thirty-fourth Annual
Report, along |
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| with
the audited accounts of the Company for the year ended September 30, 1999. |
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| By
the grace of Allah, the operational performance and the financial results for
the year under review |
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| have
improved considerably. The Sugar policy of the Government by way of an
exorbitant support |
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| price
of sugar cane and the increase in the quality premium acted as deterrents to
achieving better |
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| financial
results. |
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| A
brief summary of the operational results is given hereunder: |
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1998-99 |
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1997-98 |
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| Seasons
commenced |
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November 12, 1998 |
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November 06, 1997 |
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| Season closed |
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April 02, 1999 |
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March 22, 1998 |
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| Duration
of season |
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142 days |
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137 days |
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| Cane
crushed M. Tons |
|
701,627 |
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568,225 |
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| Cane
crushed Mounds |
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18,798,216 |
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15,224,059 |
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| Average
crushing per day M. Tons |
4,162 |
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4,148 |
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| Average
sucrose recovery |
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9.08% |
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10.06% |
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| Sugar
Production M. Tons |
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63,589 |
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57,117 |
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| Molasses
Production M. Tons |
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35,291 |
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27,990 |
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| Your
mill produced 63,589 metric tons sugar during the year under review, which is
about 12.66% |
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| higher
than the sugar produced in the preceding year. Your company maintained a good
payment |
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| record
to the growers, which not only attracted new growers to supply the cane to
the mill but also |
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| helped
in building positive and lasting relationship with the growers of the area. |
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| Your
Company was able to export 11,324 M. Tons of sugar thereby earning foreign
exchange worth |
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| U.S.
$2.825 million. By producing highest ever quantity of sugar and exporting
almost 18% of our |
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| production,
the Company was able to earn pretax profit of Rs. 51,856 million. The Company
has |
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| already
paid interim dividend of 10% to its shareholders. |
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| The
financial results for the year under review are as under: |
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1998-99 |
1997-98 |
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|
(Rupees) |
(Rupees) |
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| Profit
before taxation |
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51,855,692 |
1,790,666 |
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| Profit/(Loss)
after taxation |
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46,780,875 |
(831,415) |
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| Profit/(Loss)
available for appropriation |
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46,112,373 |
(668,502) |
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| Appropriation: |
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| Interim
dividend |
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|
9,843,750 |
-- |
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| Earning
per Ordinary Shares of Rs. 10.00 each during the year under review is Rs.
4.82 as compared |
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| to
Rs. (0.08) in the previous year. |
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| The
following negative factors affected the profitability of your Company. |
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| *
Increase of Sales Tax rate to unregistered persons from 16.00% to 18.00%. |
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| *
Provision of market committee fee for Rs. 3,508,138 for the current year. |
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| *
Decrease in recovery of sucrose from 10.06% to 9.08% due to poor quality of
cane coupled |
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| with
high trash content in the sugar cane. |
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| Performance
of the on-going season |
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| The
on-going crushing season commenced on November 7th, 1999 and till February
23rd, 2k, the |
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| mill
has crushed 473,621.220 metric tons of sugar cane and produced 40,622 metric
tons of sugar |
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| at
an average recovery rate of 9.29%. Regrettably, due to non-availability of
sugar cane, the mill |
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| has
closed in the mid-season, after working for only 109 days. Apparently, the
operating performance |
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| and
the financial results will be adversely affected. |
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| Reduced
availability of sugarcane is due to the following factors. |
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| a)
Approximately 15% fall in yield per acre. |
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| b)
Approximately 20% fall in acreage. |
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| c)
Inadequate supply of irrigation water for the cultivation of sugarcane in the
traditional zone of |
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| our mill. |
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| d)
Excessive lifting of sugarcane produced in the natural zone of our mill by
other sugar mills & |
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| those
in the coastal area where the sugarcane crop was affected by the cyclone. |
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| Appointment
of Auditors |
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| Messrs
Gangat & Company, Chartered Accountants, Karachi, the retiring Auditors
of the Company, |
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| being
eligible, offer themselves for re-appointment, for the year 1999-2000. |
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| Acknowledgement |
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| The
Directors place on record their appreciation for the devoted services and
hardwork of the officers, |
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| staff
and workers of the Company in bringing best possible results. |
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| The
Directors also appreciate continued cooperation and support of the
shareholders, sugarcane |
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| farmers
of the area, the customers, creditors and the government. |
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For and on behalf of the Board of Directors. |
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|
Mohammed Kasim Hasham |
|
Mohammad Ebrahim Hasham |
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|
Chairman |
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Chief Executive Officer |
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| Karachi,
March 04, 2000 |
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| OPERATION
AT A GLANCE-KEY INDICATORS (1995-1999) |
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| Particulars/period |
1999 |
1998 |
1997 |
1996 |
1995 |
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| Equity
(Rs. in million) |
|
| Paid-up Capital |
|
98,438 |
98,438 |
98,438 |
98,438 |
98,438 |
|
| Capital
& General Reserves |
144.206 |
117.113 |
117.113 |
107.781 |
182.781 |
|
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|
| Production
(Metric tons) |
|
| Sugarcane
Crushed |
699,994 |
568,225 |
275,292 |
243,283 |
289,279 |
|
| Sugar
Produced |
63,509 |
57,117 |
29,100 |
34,284 |
42,867 |
|
| Average
Sucrose Recovery |
9.08% |
10.06% |
10.57% |
9.90% |
8.81% |
|
| Crushing Days |
|
142 |
137 |
111 |
144 |
124 |
|
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|
| Earnings
(Rs. in million) |
|
|
| Sales |
|
1,014.993 |
852.092 |
555.799 |
511.956 |
524.214 |
|
| Gross
Profit/(Loss) |
135.864 |
78.653 |
89.370 |
88.767 |
83.133 |
|
| Pre-Tex
Profit/(Loss) |
51.856 |
1.791 |
21.411 |
10.697 |
3.000 |
|
| After
tax Profit/(Loss) |
46.781 |
(0.831) |
24.851 |
7.937 |
(0.032) |
|
| Return
of Equity |
4.82 |
(0.08) |
2.22 |
0.81 |
-- |
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|
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|
| Payout
(Rs. in million) |
|
|
| Cash Dividend |
|
19.688 |
-- |
12.305 |
9.844 |
-- |
|
| Bonus Shares |
|
-- |
-- |
-- |
-- |
-- |
|
| Rate of Return |
|
-- |
-- |
12.50% |
10% |
-- |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed Balance Sheet of Mehran Sugar Mills Limited as at
September 30, |
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| 1999
and the related Profit and Loss Account and the Cash Flow Statement together
with the |
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| notes
forming part thereof, for the year then ended and we state that we have
obtained all the |
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| information
and explanations which to the best of our knowledge and belief were necessary
for the |
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| purpose
of our audit and after due verification thereof, we report that: |
|
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| (a)
in our opinion, proper books of account have been kept by the Company as
required by the |
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| Companies
Ordinance, 1984; |
|
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| (b)
in our opinion: |
|
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| i)
the Balance Sheet and Profit and Loss Account together with the notes thereon
have |
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| been
drawn up in conformity with the Companies Ordinance, 1984, and are in
agreement |
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| with
the books of account and are further in accordance with accounting policies |
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| consistently
applied; |
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| ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
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| iii)
the business conducted, investments made and the expenditure incurred during
the year |
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| were
in accordance with the objects of the Company; |
|
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| c)
in our opinion and to the best of our information and according to the
explanation given to |
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| us,
the Balance Sheet, Profit and Loss Account and Cash Flow Statement together
with the |
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| notes
forming part thereof, give the information required by the Companies
Ordinance, 1984 |
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| in
the manner so required and respectively give a true and fair view of the
state of the Company's |
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| affairs
as at September 30, 1999 and of the profit and the changes in the cash flow
for the |
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| year
then ended; and |
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| d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was |
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| deducted
by the Company and deposited in the Central Zakat Fund established under
section |
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| 7
of that Ordinance. |
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|
GANGAT & COMPANY |
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| Karachi,
March 4, 2000 |
|
Chartered Accountants |
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| BALANCE
SHEET AS AT SEPTEMBER 30, 1999 |
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|
Note |
1999 |
1998 |
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|
Rupees |
Rupees |
|
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| CAPITAL
AND LIABILITIES |
|
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| Share
Capital and Reserves |
|
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| Share Capital |
|
|
|
|
|
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| Authorised |
|
|
|
| 50,000,000
(1998: 50,000,000) Ordinary |
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| Shares
of Rs. 10/- each |
|
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|
500,000,000 |
500,000,000 |
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|
========== |
========== |
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| Issued
Subscribed & paid-up |
|
|
3 |
98,437,500 |
98,437,500 |
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| RESERVE
AND SURPLUS |
|
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| Capital reserve |
|
|
4 |
63,281,250 |
63,281,250 |
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| Revenue
reserve - General |
|
|
5 |
79,000,000 |
54,500,000 |
|
| Unappropriated
profit/(loss) |
|
|
|
1,424,873 |
(668,502) |
|
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|
|
------------------ |
------------------ |
|
|
|
|
242,643,623 |
117,112,748 |
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|
------------------ |
------------------ |
|
|
|
|
252,487,373 |
215,550,248 |
|
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|
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|
| REDEEMABLE
CAPITAL |
|
|
6 |
28,160,719 |
35,200,898 |
|
| LONG
TERM LOANS |
|
|
7 |
15,760,446 |
6,268,226 |
|
| DEFERRED
LIABILITIES |
|
|
8 |
28,719,432 |
26,867,168 |
|
|
|
|
|
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| CURRENT
LIABILITIES |
|
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|
|
| Current
maturity of redeemable capital |
|
|
|
| and
long term loans |
|
|
9 |
19,238,757 |
45,650,788 |
|
| Short
term borrowings |
|
|
10 |
25,700,878 |
106,637,428 |
|
| Creditors,
accrued and other liabilities |
|
11 |
171,522,451 |
140,022,587 |
|
| Dividend |
|
|
12 |
15,511,686 |
4,483,334 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
231,973,772 |
296,794,137 |
|
| CONTINGENCIES
& COMMITMENTS |
|
13 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
547,257,992 |
580,680,677 |
|
|
|
|
========== |
========== |
|
|
| PROPERTY
AND ASSETS |
|
|
|
|
| FIXED
ASSETS |
|
|
|
| Operating
assets |
|
|
14 |
397,043,852 |
404,034,158 |
|
| Capital
work-in-progress |
|
|
|
4,294,481 |
2,370,885 |
|
|
|
|
|
|
| LONG
TERM INVESTMENTS |
|
|
15 |
42,511,096 |
42,511,096 |
|
|
|
|
|
| CURRENT
ASSETS: |
|
|
|
|
| Stores
and spares |
|
|
16 |
33,135,830 |
35,255,740 |
|
| Stock-in-trade |
|
|
17 |
2,333,540 |
33,486,916 |
|
| Trade debts |
|
|
18 |
9,828,185 |
16,853,192 |
|
| Loans,
advances, prepayments |
|
|
|
|
| and receivable |
|
|
19 |
41,863,981 |
39,127,361 |
|
| Cash
and bank balances |
|
|
20 |
16,247,027 |
7,041,329 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
103,408,563 |
131,764,538 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
547,257,992 |
580,680,677 |
|
|
|
|
========== |
========== |
|
| 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, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Sales |
|
|
21 |
1,014,993,415 |
852,092,040 |
|
| Cost
of goods sold |
|
|
22 |
879,128,996 |
773,438,663 |
|
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
|
135,864,419 |
78,653,377 |
|
|
|
|
|
| Administrative
expenses |
|
|
23 |
42,226,214 |
37,424,260 |
|
| Selling
expenses |
|
|
24 |
22,027,373 |
7,251,860 |
|
| Financial
expenses |
|
|
25 |
19,072,615 |
28,463,935 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
83,326,202 |
73,140,055 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
52,538,217 |
5,513,322 |
|
|
|
|
| Operating
profit |
|
|
|
| Other income |
|
|
26 |
3,723,668 |
5,242,165 |
|
| Donations |
|
|
27 |
(945,015) |
(265,400) |
|
| Zakat |
|
|
|
(16,000) |
(150,000) |
|
| Prior
years' adjustment |
|
|
28 |
-- |
(8,451,674) |
|
| Workers'
profit participation fund |
|
29 |
(2,765,044) |
(97,747) |
|
| Workers'
welfare fund |
|
|
|
(680,134) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(682,525) |
(3,722,656) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
|
51,855,692 |
1,790,666 |
|
| Taxation |
|
|
30 |
5,074,817 |
2,622,081 |
|
|
|
|
------------------ |
------------------ |
|
| Profit/(Loss)
after taxation |
|
|
|
46,780,875 |
(831,415) |
|
|
|
|
| Transfer
from general reserve |
|
|
|
| Unappropriated
profit brought forward |
|
|
(668,502) |
162,913 |
|
|
|
|
------------------ |
------------------ |
|
| Profit/(Loss)
available for appropriation |
|
|
46,112,373 |
(668,502) |
|
|
|
|
| Appropriations: |
|
|
|
| Interim
dividend @ 10% |
|
|
|
(9,843,750) |
-- |
|
| Proposed
dividend @ 10% |
|
|
|
(9,843,750) |
-- |
|
| Transfer
to Revenue Reserved |
|
|
|
(25,000,000) |
-- |
|
|
|
|
|
|
| Unappropriated
profit/(loss) |
|
|
|
------------------ |
------------------ |
|
| carried
forward |
|
|
|
1,424,873 |
(668,502) |
|
|
|
|
========== |
========== |
|
|
|
|
| Earnings
per share |
|
|
32 |
4.82 |
(0.08) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammed Kasim Hasham |
|
Mohammed Ebrahim Hasham |
|
|
Chairman |
|
Chief Executive Officer |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Cash
flow from operating activities: |
|
|
| Cash
generated from operation |
|
|
A |
164,577,195 |
28,521,147 |
|
| Financial
charges paid |
|
|
|
(21,883,596) |
(17,507,994) |
|
| Taxes paid |
|
|
|
(5,457,735) |
(5,121,272) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow from operating activities |
|
|
137,235,864 |
5,891,881 |
|
|
|
|
| Cash
flow from investing activities: |
|
|
| Fixed
capital expenditure |
|
|
|
(17,063,733) |
(14,398,540) |
|
| Capital
work-in-progress |
|
|
|
(1,923,596) |
(2,370,855) |
|
| Sales
proceeds of fixed assets |
|
|
|
4,512,850 |
2,005,000 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash (outflow) from investing activities |
|
|
(14,474,479) |
(14,764,425) |
|
|
|
|
| Cash
flow from financing activities: |
|
|
| Long
term loans raised |
|
|
|
3,500,000 |
9,402,339 |
|
| Repayment
of long term loans |
|
|
|
(20,419,810) |
(65,296,645) |
|
| Repayment
of redeemable capital |
|
|
(7,040,179) |
(10,208,260) |
|
| Dividend paid |
|
|
|
