| Sanghar Sugar Mills Limited |
|
|
|
|
|
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|
|
|
| Annual
Report 1999 |
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|
| CONTENTS |
|
|
| BOARD
OF DIRECTOR'S |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTORS'
REPORT |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| CASH
FLOW STATEMENT |
|
|
| NOTES
TO THE ACCOUNTS |
|
|
| PATTERN
OF SHARE HOLDING |
|
|
|
| BOARD
OF DIRECTORS |
|
|
| CHIEF
EXECUTIVE & MANAGING DIRECTOR |
|
| Nasim Umar |
|
|
| DIRECTOR |
|
| Haji
Khuda Bux Rajar |
|
| Jam Mitha Khan |
|
| Haji
Muhammad Anwer |
|
| Shamsuddin |
|
| Shamim
Ahmed (Nominee NIT) |
|
| Imtiaz
Haider (Nominee NIT) |
|
| Muhammad
Asif (Nominee NIT) |
|
|
| COMPANY
SECRETARY |
|
| Rashid
A. Mateen |
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|
| AUDITORS |
|
| A.
F. Ferguson & Co. |
|
| Chartered
Accountants |
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|
| REGISTERED
OFFICE |
|
| 101-Ocean
Centre, |
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| Talpur
Road, Karachi. |
|
| Phone:
2427171-72 |
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| Fax
No.: 2410700 |
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|
| FACTORY |
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| 13th KM, |
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| Sanghar-
Sindhri Road, |
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| Deh
Kehar, District Sanghar, |
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| Phone:
(02346) 42000-42043 |
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|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
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| NOTICE
is hereby given that the FOURTEENTH Annual General meeting of |
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| Sanghar
Sugar Mills limited will be held on Friday, 10th March 2000 at 3:00 p.m. |
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| at
Beach Luxury Hotel, Moulvi Tamizuddin Khan Road, Karachi, to transact the
following |
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| business: |
|
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| 1.
To confirm the minutes of the Extra Ordinary General meeting held on |
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| 4th
November 1999. |
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|
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| 2.
To receive, consider and adopt the Audited Accounts for the year ended |
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| 30th
September 1999, together with Auditor's and Director's Report thereon. |
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| 3.
To appoint Auditors for the year 1999 - 2000 and fix their remuneration. The
retiring |
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| auditors,
Messrs. A. F. Ferguson & Company, Chartered Accountants, being eligible |
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| have
offered themselves for re-appointment. |
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| 4.
Any other business with the permission of the Chair. |
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|
By order of the Board |
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| Karachi, |
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|
(RASHID A. MATEEN) |
|
| 4th
February, 2000 |
|
Company Secretary |
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|
| NOTES: |
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|
| a)
The Share transfer Books of the Company will remain Closed from 1st March to |
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| 10th
March 1999 (both days inclusive). |
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|
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| b)
A member entitled to attend and vote at this meeting may appoint another
member as |
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| his/her
proxy to attend and vote. The form of proxy is annexed which, duly completed |
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| should
reach the Registered office of the Company 101-First Floor, Ocean Centre, |
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| Talpur
Road, Karachi, at least 40 hours before the time of meeting. |
|
|
| c)
Members are requested to notify immediately if any change in their registered
address. |
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| d)
CDC Account Holders must bring their original NIC or PASSPORT at the time of |
|
| attending
the meeting. |
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|
|
|
| DIRECTORS'
REPORT |
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| On
behalf of the Board of Directors, it is my pleasure to welcome you in the |
|
| Fourteenth
Annual General Meeting and present the Auditors Report and Review the |
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| performance
of the Company. |
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|
| OPERATING
RESULTS: |
|
|
|
|
|
1999 |
1998 |
|
|
|
(Rupees
'000) |
|
|
| Duration
of Season (days) : |
|
128 |
139 |
|
| Cane
crushed (Tons) : |
|
417,297 |
460,199 |
|
| Sugar
produced (Tons) : |
|
35,919 |
44,574 |
|
| Recovery
% age: |
|
8.60 |
9.68 |
|
| Molasses
(Tons) : |
|
19,207 |
22,621 |
|
|
|
|
| FINANCIAL
RESULTS: |
|
|
|
|
(Rupees
'000) |
|
|
| Loss
before taxation : |
|
|
( 23,418 ) |
(57,579) |
|
| Provision
for taxation : |
|
|
( 5,537 ) |
(14,043) |
|
| Loss
after taxation : |
|
|
( 17,881 ) |
(43,536) |
|
| Un-appropriated
(Loss) / Profit B/F: |
|
( 31,427 ) |
12,109 |
|
| Loss
carried forward : |
|
|
( 49,308 ) |
(31,427) |
|
|
| The
Sugarcane situation has not improved and the Mills in Sindh are still
crushing |
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| below
capacity. The sugarcane recovery during the period was 8.6% (9.678% in 1998).
The |
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| production
and crushing figures during the two years in Sindh were as under : |
|
|
|
Cane crushed |
|
Production |
|
Recovery |
|
| 1998 - 99 |
15,095, 412 - tons |
1,353, 012 - tons |
|
8.96 % |
|
| 1997 - 98 |
13,853,107- tons |
|
1,374,477- tons |
|
9.92 % |
|
|
|
|
| During
the season 1998 - 99 a quantity of 1,242,305 tons excess cane was crushed, |
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| then
in 1997 - 98, season production was less by 21,465 tons because of almost |
|
| 1%
less recovery during the current year. This is mainly due to adverse weather
conditions |
|
| and
late rains. Due to shortage of cane during the season, the Mills had again
entered |
|
| into
price war procuring cane at higher rates in order to improve crushing. |
|
|
| The
timely decision of the Government of Pakistan to allow export improved the
local |
|
| price
of sugar, but this did not last much as the international price of sugar went
down |
|
| from
US $ 250 per ton to US $190 per ton. Also due to the late receipts of rebates
from Government |
|
| and
pressure from the growers for payment of supplies forced for extended
borrowing |
|
| resulted
in higher financial charges. |
|
|
| During
the year the total sugar produced in the country was 3.555 million tons
against |
|
| the
local requirements of 2.8 million tons. Thus leaving a surplus quantity of
700,000 tons |
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| against
which permission for export was only given for 500,000 tons. |
|
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| All
the above factors forced to continue borrowing and resulted higher financial |
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| charges. |
|
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| Your
Mill has been able to contain losses as we stayed out of the price war and |
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| were
amongst the first to close the early season, but the main factor which
affected was |
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| the
lower sucrose recovery. |
|
|
| FUTURE
PROSPECTS |
|
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| The
overall sugarcane cultivation has dropped drastically due to the improved
cotton |
|
| price
during last year, which resulted in the switching of area under cultivation
of sugarcane |
|
| to
cotton. The cyclone last May also damaged a vast area under cane in Distt.
Thatta |
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| and
Badin which have the highest number of Sugar Mills in Sindh. This has forced
the Mills |
|
| to
procure cane from other districts which has resulted in a price war. We have
been able |
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| to
crush 223,945 tons of cane at the minimum support prices. The local prices of
sugar have |
|
| stabilized
the prospect for sugar export and price are quite optimistic. |
|
|
| The
results for the current season till February 2nd, 2000 are: |
|
|
| Cane crushed |
|
358,260 Tons |
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| Sugar produced |
|
31,215 Tons |
|
| Recovery |
|
8.87 % |
|
|
| YEAR 2000 |
|
| By
the Grace of Allah, we have achieved Y2K compliance during the year 1999. |
|
|
| LABOUR
AND MANAGEMENT RELATIONS |
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| The
relation between the Labour Union (CBA) and the management of the Company |
|
| remained
cordial during the period under report. In the end we thank all the
Executives |
|
| and
staff members of the Company and wish to place on record their appreciation
for the |
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| loyality
and devotion to duty by the officers and staff of the Company. |
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|
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS |
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|
|
|
|
| Karachi |
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|
NASIM UMAR |
|
| 4th
February, 2000 |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Sanghar Sugar Mills Limited as at
September 30, |
|
| 1999
and the related profit and loss account, statement of changes in equity and
cash flow |
|
| statement,
together with the notes forming part thereof, for the year then ended. 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 |
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| 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, statement of changes in
equity and 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 September 30, 1999 and
of the loss |
|
| and
cash flows for the year then ended; and |
|
|
| (d)
In our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
|
| Karachi |
|
|
A.F. Ferguson & Co. |
|
| 4th
February, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
(Rupees
'000) |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
| Authorised
capital |
|
|
|
| 20,000,000
shares of Rs, 10 each |
|
|
|
200,000 |
200,000 |
|
|
|
|
|
|
|
| Issued,
subscribed and paid up capital |
|
3 |
119,460 |
119,460 |
|
|
|
|
|
|
| Reserve |
|
|
4 |
121,500 |
121,500 |
|
|
|
|
|
|
| Accumulated
loss |
|
|
|
(49,308) |
(31,427) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
191,652 |
209,533 |
|
|
|
|
|
|
| REDEEMABLE
CAPITAL |
|
|
5 |
28,080 |
46,443 |
|
|
|
|
|
|
|
| LONG-TERM
LIABILITY |
|
|
6 |
5,979 |
6,979 |
|
|
|
|
|
|
|
| OBLIGATIONS
UNDER FINANCE LEASES |
|
7 |
17,176 |
11,419 |
|
|
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
8 |
65,815 |
74,642 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
portion of redeemable capital, long term |
|
|
|
| liability
and obligations under finance leases |
|
9 |
57,758 |
60,690 |
|
|
|
|
|
| Short-term
finances |
|
|
10 |
165,000 |
123,145 |
|
|
|
|
|
| Creditors,
accrued and other liabilities |
|
11 |
65,578 |
124,710 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
288,336 |
308,545 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
12 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
597,038 |
657,561 |
|
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
assets |
|
13.1 |
478,187 |
457,200 |
|
| Capital
work-in-progress |
|
13.2 |
13,577 |
14,666 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
491,764 |
489,866 |
|
|
|
|
| LONG-TERM
DEPOSIT |
|
|
9,604 |
4,417 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Stores,
spares, and loose tools |
|
14 |
51,517 |
55,818 |
|
| Stock-in-trade |
|
15 |
2,411 |
21,455 |
|
| Debtors,
unsecured - considered good |
|
|
389 |
19,547 |
|
| Loans
and advances |
|
16 |
28,296 |
26,197 |
|
| Deposits
and prepayments |
|
17 |
5,370 |
2,429 |
|
| Other
receivables |
|
18 |
1,008 |
33,515 |
|
| Taxation |
|
|
3,589 |
3,995 |
|
| Cash
and bank balances |
|
19 |
3,090 |
322 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
95,670 |
163,278 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
597,038 |
657,561 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
NASIM UMAR |
|
|
HAJI KHUDA BUX RAJAR |
|
|
Chief Executive |
|
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
(Rupees
'000) |
|
|
|
|
| S ales |
|
20 |
563,866 |
681,843 |
|
| Cost
of goods sold |
|
21 |
484,142 |
631,644 |
|
|
|
|
------------------ |
------------------ |
|
| Gross profit |
|
|
79,724 |
50,199 |
|
| Selling
and administration expenses |
|
22 |
49,933 |
50,582 |
|
|
|
|
------------------ |
------------------ |
|
| Trading
profit / (loss) |
|
|
29,791 |
(383) |
|
| Other income |
|
23 |
948 |
592 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
30,739 |
209 |
|
|
|
|
| Financial
charges |
|
24 |
52,323 |
56,508 |
|
| Other charges |
|
25 |
1,834 |
1,280 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
54,157 |
57,788 |
|
|
|
|
|
|
| Loss
before taxation |
|
|
(23,41 8) |
(57,579) |
|
| Provision
for taxation |
|
26 |
(5,537) |
(14,043) |
|
|
|
|
------------------ |
------------------ |
|
| Loss
after taxation |
|
|
(17,881) |
(43,536) |
|
|
|
|
========== |
========== |
|
| Earnings
per share - Basic and diluted |
|
27 |
Rs. (1.50) |
Rs. (3.64) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
NASIM UMAR |
|
|
|
HAJI KHUDA BUX RAJAR |
|
|
Chief Executive |
|
|
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
|
Issued, |
Revenue |
Unappropriated |
Total |
|
|
subscribed and |
reserve- |
profit/ |
|
|
|
paid-up shares |
general |
(Accumulated loss) |
|
|
|
|
(Rupees '000) |
|
|
|
| Balance
as at September 30, 1997 |
119,460 |
121,500 |
12,109 |
253,069 |
|
|
|
|
|
| Loss
for the year |
-- |
-- |
(43,536) |
(43,536) |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at September 30, 1998 |
119,460 |
121,500 |
(31,427) |
209,533 |
|
|
|
|
|
| Loss
for the year |
-- |
-- |
(1 7,881) |
(17,881) |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at September 30, 1999 |
119,460 |
121,500 |
(49,308) |
191,652 |
|
|
|
========== |
========== |
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
NASIM UMAR |
|
HAJI KHUDA BUX RAJAR |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR, ENDED SEPTEMBER 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
(Rupees
'000) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from operations |
|
29 |
71,861 |
28,510 |
|
| Staff
gratuity paid |
|
|
(107) |
(52) |
|
| Road
cess and surcharge (net) |
|
|
-- |
863 |
|
| Market
committee fee |
|
|
(1,000) |
7,979 |
|
| Financial
charges paid |
|
|
(63,344) |
(38,482) |
|
| Taxes paid |
|
|
(2,918) |
(3,793) |
|
| Long
term deposits (net) |
|
|
(5,187) |
3,400 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash (outflow)/inflow from operating activities |
|
|
(695) |
(1,575) |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure- net |
|
(5,058) |
(18,033) |
|
| Sale
proceeds of fixed assets |
|
1,864 |
446 |
|
| Profit
received on bank deposits |
|
20 |
22 |
|
|
|
------------------ |
------------------ |
|
| Net
cash outflow from investing activities |
|
(3,174) |
17,565) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Proceeds
from/(repayment of) redeemable capital |
|
|
(6,481) |
(58,500) |
|
| (Repayment
of)/proceeds from obligations under |
|
|
|
| finance
leases - net |
|
|
(28,737) |
(26,825) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow / (outflow) from financing activities |
|
(35,218) |
31,675 |
|
|
|
|
------------------ |
------------------ |
|
| Net
increase/(decrease) in cash and cash equivalents |
|
(39,087) |
12,535 |
|
| Cash
and cash equivalents at beginning of the year |
|
(122,823) |
(135,358) |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at end of the year |
|
30 |
(161,910) |
(122,823) |
|
|
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
NASIM UMAR |
|
HAJI KHUDA BUX RAJAR |
|
|
Chief Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1999 |
|
|
| 1.
LEGAL STATUS AND OPERATIONS |
|
|
| The
Company is a public listed company incorporated in Pakistan under the
Companies |
|
| Ordinance,
1984. Its shares are quoted on Karachi and Lahore Stock Exchange. The |
|
| Company
is principally engaged in the manufacture and sale of sugar. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
|
| 2.2
Staff retirement benefits |
|
| The
Company operates a funded contributory provident fund scheme for all its
permanent |
|
| employees.
Equal monthly contributions are made both by the Company and the |
|
| employees
to the Fund for the year at the rate of 8.33% of basic salary and gross
salary |
|
| in
respect of officers and factory workers respectively. |
|
|
| The
Company also operates an unfunded gratuity scheme for all its permanent
employees. |
|
| Annual
provisions are made in the accounts to cover obligations under the scheme. |
|
|
| 2.3 Taxation |
|
|
|
| Current |
|
|
| The
Company accounts for current taxation on the basis of taxable income at the
current |
|
| rates
of taxation after taking into account tax credits and rebates available, if
any. |
|
|
| Deferred |
|
|
| The
Company accounts for deferred taxation on all major timing differences using
the liability |
|
| method. |
|
|
| 2.4
Tangible Fixed Assets |
|
|
| These
are stated at cost less accumulated depreciation whereas freehold land and
capital |
|
| Work-in-progress
are stated at cost. |
|
|
| Depreciation
is charged to income using the reducing balance method whereby the cost |
|
| of
an asset is written off over its estimated useful life. Full year's
depreciation is charged |
|
| on
all assets, including additions during the year, except for plant and
machinery on which |
|
| depreciation
is charged on the basis of actual operating days. No depreciation is charged |
|
| on
assets in the year of disposal. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Major |
|
| renewals
and improvements are capitalised and the assets so replaced, if any, are
retired. |
|
|
| Gains
and losses on disposal of assets are included in income currently. |
|
|
| 2.5
Stores, Spares, Loose tools and Fertilizers |
|
| These
are valued at cost calculated on moving average basis less provision for |
|
| obsolescence
except for the items in transit which are valued at cost accumulated |
|
| to
the balance sheet date. |
|
|
| 2.6
Stock-in-trade |
|
|
| Stock-in-trade
is valued at the lower of cost and net realisable value except molasses which |
|
| is
valued at net realisable value. Cost in relation to work-in-process and
finished goods |
|
| consists
of annual average material cost, direct wages and applicable manufacturing |
|
| overheads. |
|
|
|
|
| 2.7
Foreign currencies |
|
| Assets
and liabilities in foreign currencies are translated into rupees at rates of
exchange |
|
| prevailing
at the balance sheet date. Exchange gains and losses are included in income |
|
| currently. |
|
|
|
| 2.8
Mark-up on redeemable capital and charges on finance leases |
|
| Mark-up
on redeemable capital and charges on finance leases are allocated to the
deferred |
|
| payment
periods so as to produce a constant periodic rate of financial cost on the
remaining |
|
| balance
of principal liability for each period. |
|
|
| 2.9
Revenue recognition |
|
|
| Sales
are recorded on despatch of goods. |
|
