Welcome to PakSearch.com Pakistan's Premier Business Information Service


For business information, annual reports, laws, ordinances, regulations and articles.




Google
 
Web Paksearch.com
SHAKARGANJ MILLS LIMITED
Annual Report 1995
CONTENTS:
Five Years Financial Summary 2
Production Data 3
To Our Shareholders 4
Flow of funds Analysis 7
Board of Governors and Principal Functions 8
Director General's Review 9
Directors' Report to Shareholders 10
Auditors' Report to the Members 11
Balance Sheet 12-13
Profit and Loss Account 14
Statement of Changes in Financial Position 15
Notes to the Accounts 17
Accounts of Subsidiary Company 39-46
Annual General Meeting 47
Form 34 48
CORPORATE MISSION
Preamble
We, the management of Shakarganj Mills Limited, have set forth our belief as to the purpose for which the company
is established and the principles under which it should operate. We pledge our efforts to the accomplishment of the
purpose within the agreed principles.
Basic Purpose
The basic purpose of Shakarganj Mills Limited is to perpetuate as a Public Limited Company engaged
in manufacturing and marketing white refined cane sugar, food products, sugar by-products and other
products wherein management as sponsor have expertise. In addition we preserve to assume a leadership 
position in related industry regarding quality of the product, cost effectiveness, turnover and technology.
What we Do
Our main business area is the production of refined cane sugar by-products. We recognise the value
of technological improvement keep in step with the latest6 innovations and developments in our
field. We believe in modern management practice and use latest techniques. We constantly train our people 
and keep them highly motivated as they are our most important assets. We strongly believe in integrity
in business and integrity of Shakarganj depends on integrity of each one of its employees. 
We consider Research and Development as back bone of our business and conduct extensive Agriculture
Research through Shakarganj Sugar Research Institute.
We consider our farmers who are our raw material suppliers as the most important part of our business.
We transfer the technology and results of our research to our farmers with the objective of matching
their sugar cane output to world standard. We believe in diversification through new manufacturing
facilities and through equity participation.
Five Years Financial Summary
(Rupees in thousand), except amount per share)
1995 1994 1993 1992 1991
Operating Results:
Net Sales 1,204,483 1,090,098 645,774 686,466 727,225
Cost of Sales 1,017,561 1,011,269 623,989 601,602 641,841
Selling, General end Admin, Expenses 46,215 44,386 31,404 29,027 24,158
Interest Expenses 137,158 104,624 64,682 59,540 48,716
Other Charges 3,276 1,553 305 2,031 2,592
Other Income, Net 55,979 96,565 70,393 40,368 35,400
Pre-Tax Profit/(Loss) 56,252 24,831 (4,213) 34,634 45,318
Income Tax 1,522 5,450 (11,771) (550) 10,636
Net Income 54,730 19,381 7,558 35,184 34,682
Per Share Results and Return:
Earnings per Share 257 1.07 55 3.58 4.82
Cash Dividends per Share - - - - -
Stocks Dividends per Share 1:10 1:10 1:10 1:5 1:5
Net Income to Sales Per cent 4.54 1.78 1.17 5.13 4.77
Return on Average Assets Per cent 3.39 1.24 0.56 3.65 5.18
Return on Average Equity Per cent 12.22 5.12 2:38 13.71 16.78
Financial Position:
Current Assets 704,115 754,398 592,632 368,299 212,331
Current Liabilities 755,614 800,523 710,842 480,475 303,718
Operating Fixed Assets 808,026 529,515 401,084 282,970 265,694
Total Assets 1,594,810 1,630,077 1,500,634 1,187,794 738,071
Long-Term Debt 320,478 340,877 350,763 296,250 117,079
Shareholders' Equity 485,110 410,844 346,002 289,244 224,060
Break-up Value per Share 2,277 2,259 2,512 2,939 3,119
Financial Ratios:
Current Liabilities to Current Assets 1.07 1.06 1.20 1.30 1.43
Long-Term Debt to
Capitalisation Percent 39.78 45.35 50.34 so.60 34.32
Total Debt to Total Assets Percent 69.58 74.80 76.94 75.64 69.64
Interest Coverage Times 1.43 1.25 0.94 1.62 1.98
Average Collection Period days 7.66 9.40 5.49 2.96 2.11
Inventory Turnover Times 6.90 6.13 3.46 5.15 10.55
Fixed Assets Turnover Times 1.40 1.29 0.75 0.89 1.54
Total Assets Turnover Times 0.76 0.67 0.43 0.58 0.99
Other Data:
Depreciation & Amortization 116,639 89,011 80,307 63,017 55,278
Capital Expenditure 367,357 187,346 163,433 49,679 67,016
Production Data 1974-1995 INDUSTRIAL PARTICLE
SUGAR MOLASSES ALCOHOL BOARD
Industrial Particle
Duration of Cane Sugar Process Molasses Alcohol Board
Season Crushed Produced Recovery Losses Produced Produced Produced
Season (Days) (M. Tons) (M. Tons) (Percent) (Percent) (M. Tons) (Litres) (Cubic Meters)
1994-95 157 1,057,036 86,075 8.11 2.77 53,172 5,460,000 5,299,250
1993-94 196 1,203,371 88,117 7.34 2.65 60,150 5,250,076 4,334,770
1992-93 161 691,839 54,055 7.85 2.68 35,980 4,887,020 1,662,757
1991-92 174 746,506 63,986 8.57 2.53 37,710 4,525,900 3,360,000
1990-91 204 866,552 65,537 7.56 2.59 47,135 3,422,204 642,940
1989-90 187 708,632 57,912 8.17 2.31 33,180 3,030,217
1988-89 170 446,325 36,367 7.70 2.44 22,410
1987-88 193 698,605 55,726 7.98 2.61 38,740 308,494
1986-87 149 333,601 27,899 8.36 2.24 15,060 1,855,809
1985-86 113 237,602 20,625 8.66 2.29 11,470 20,239
1984-85 168 441,718 39,523 8.96 2.38 22,580
1983-84 173 427,169 35,501 8.31 2.40 21,860
1982-83 173 361,291 29,440 8.16 2.44 16,255
1981-82 207 466,040 39,474 8.47 2.48 21,255
1980-81 187 287,723 25,562 8.89 2.42 13,373
1979-80 112 61,207 5,619 8.95 2.25 2,358
1978-79 114 107,106 9,267 8.80 2.27 4,147
1977-78 177 319,960 27,620 8.61 2.44 14,103
1976-77 166 308,987 26,086 8.45 2.67 15,228
1975-76 157 246,394 18,865 7.61 2.68 11,424
1974-75 107 104,069 8,253 8.30 2.75 4,182
1973-74 101 87,825 5,477 6.28 3.57 4726
ABOUT SHAKARGANJ:
Shakarganj Mills Limited is a Public Limited Company incorporated on September
20, 1967 and is listed on the Stock Exchanges of Pakistan. The manufacturing facilities
consisting of Sugar, Industrial Alcohol and Particle Board are located in the famous town
of Jhang in the central Punjab. High quality sugar conforming to international standard
is manufactured and used by Pharmaceutical Industry and other food manufacturers in
addition to quality conscious housewives.
At Shakarganj three co-products of sugar are produced. Molasses is converted into
Industrial Alcohol and Sugarcane bagasse is converted to high quality Particle Board
Surplus power is supplied to the National Grid, Power supplied by Shakarganj caters to the
needs of 5375 domestic consumers. We take care of 12.86 percent of domestic load of
Jhang City.
Research and development is very important aspect of business at Shakarganj and for this
purpose Shakarganj Sugar Research Institute has been established since 1983 along side
the other facilitates. Shakarganj serves 24.500 farming families in addition to several
other suppliers.
Crescent Business Management (Private) Limited is a wholly owned subsidiary of
Shakarganj. This Company manages First Crescent Modaraba which is listed on Karachi,
Lahore and Islamabad Stock Exchanges. First Crescent Modaraba is dedicated to reform the
financial and business conduct and bring it in accordance with the principles enshrined
in the Sharia.
To Our Shareholders
Review of Fiscal 1995
Dear Shakarganj Investor:
During the year under review three weeks of valuable production time was
lost due to delay in government decision regarding disposal of surplus sugar
in the international market. For several years imported sugar was dumped in
the local market at subsidized price. Local sugar industry was forced to sell
Pakistani sugar at a loss. Domestic sugar price had no relevance to the cost
of production. It was always preached that the industry had to compete in an
environment of free market mechanism. When the industry accepted the
challenge and demanded free import and export of sugar, the authorities
refused to practice what they had been preaching for several years.
Production of Sugar and Co-Products
Sugar production fell from 88,000 M. Tons in 1993/94 to 86,000
M. Tons during the year under review. Daily production and capacity
utilization, however improved. As compared to a daily sugar production level
of 450 M. Tons in 1993/94, during the year under review sugar production
averaged at 548 M.Tons per day. Sugar recovery also increased from 7.34
percent in 1993/94 to 8.11 percent during 1994/95.
Production of Industrial Alcohol was up from 5.25 million litres in 289 days
in 1993/94 to 5.46 million litres in 245 days this year. Particle Board
production increased from 4300 cubic meters to 5300 cubic meters during
fiscal 1995.
Power supply to the national grid increased from 2.43 million KWH to 2.92
million KWH during the year under review.
Financial Analysis
By the grace of Allah, Shakarganj generated its best ever sales revenue of Rs.
1.2 billion in fiscal 1995 up from Rs. 1.09 billion last year registering an
increase of 10.49 percent. Company's gross profit increased to Rs. 186
million from Rs. 78.8 million in 1994. In terms of percentage of sales, gross
profit worked out to 15.52 percent this year compared to 7.23 percent in
1994.
Your company recorded a net income of Rs. 54.73 million compared to
19.38 million a year ago. In other words net income increased by 182
percent during fiscal 1995. Return on average assets improved from 1.24
percent to 3.39 percent and return on average equity was up from 5.12
percent to 12.22 percent.
Shareholders equity increased by 18.08 percent. It was up from Rs. 410
million in 1994 to Rs. 485 million in fiscal 1995.
Your management continued its efforts for effective utilization of assets.
Inventory turnover improved marginally from 6.13 times to 6.90 times.
Both, fixed assets turnover and total assets turnover registered a nominal
increase.
Increase in Paid up Capital
The Board of Directors have followed the policy of increasing the paid up
capital of the company in pace with growth rate.
For fiscal 1995 the Directors have recommended stock dividend of 10 percent
which will increase the paid up capital of your company to Rs. 242.01
million. The cash retained in the company will be used to found the growth.
Capital Expenditure
Your company's focal point over the last few years has been its commitment
to increasing productivity. This helps in reducing the cost of production and
increasing the ratio of sales per employee. These objectives are achieved
through investment in upgrading the manufacturing technology and
increasing the production capacity. Capital expenditure to the tune of Rs.
127.93 million was made during the year. Depreciation and amortization
expenses rose to Rs. 116.64 million in fiscal 1995 from Rs. 89.01 million last
year.
Investment Portfolio
Inspite of unprecedented bearish tendency in the stock market, your
investment portfolio carried an unrealized capital gain of Rs. 78.25 million or
20.71 percent over the cost at the year end. Disinvestment to the tune of RS.
62.77 million was made during the year. Capital gain of Rs. 19.38 million
was realized in the process.
Contribution to Economy
Shakarganj plays a very important role with regard to its contribution to
economy. During the year under review, value added to the materials and
services of Rs. 714.50 million worked out to Rs. 545.96 million. Your
company's contribution towards Federal, Provincial and local taxes
exceeded Rs. 189.67 million. We spent Rs. 137.06 million as cost of
financing and share of workers was Rs. 47.55 million. During the last ten
years, your company has made a consolidated contribution of Rs. 1.33
billion in shape of Federal, Provincial and Local Taxes.
Human Resource Development
We at Shakarganj believe in professional management. All appointments are
made on open merit. Our policies are geared for attracting and retaining
competent people, Our team is well qualified and consists specialists in the
fields of Agriculture, Engineering and Business Administration. We believe in
continuous training and management resources are constantly developed
through training both within and outside Pakistan. Foreign experts visit us
on regular basis to upgrade the skills of our team.
Research and Development
Shakarganj management gives top priority to Research and Development.
We rely heavily on agricultural research with major emphasis on sugarcane.
Shakarganj Sugar Research Institute has made useful contribution by
releasing several suitable varieties of sugarcane.
Future Outlook
The year ahead poses numerous challenges. Sugar Industry is facing a
serious problem of excess capacity and raw material shortage. Some of the
major issues are summarized below:
- Raw material availability down by 2.5 percent
- Raw material cost up by 50 percent
- All time high rate of inflation
- Rapid devaluation of Pak Rupee and unprecedented increase in cost of
imported inputs
- Double digit increase in cost of all inputs on one hand and decrease in
volume of production on the other hand
A portion of additional costs will be compensated by higher sugar price but it
will be an uphill task to maintain a reasonable level of profit in 1995/96.
Sugar Supply to Utility Stores Corporation
Sugar Industry has supplied 200,000 M.Tons of sugar to USC at a subsidy of
Rs. 500 million. Our share of supply is 5611 M.Tons. Cheaper sugar supplied
by the industry will cater to the needs of 40 million Pakistanis in the low
income group.
Directors and Employees
The Directors are always a source of guidance and support for the
Management and we appreciate their commitment to your company's
progress and prosperity.
Your company's progress has mainly been possible through the dedication
of the employees and they deserve a very warm vote of thanks. they have
always shown their willingness to take advantage of opportunities and face
challenges of changing economic pictures. Our sugarcane farmers are the
back bone of our industry and we thank them for their continued support.
Statement of Value Added
(Rs in Million)
1995 1994
Sales Revenue 1,204.48 1,090.10
Other Receipts 55.98 96.56
------------------- -----------------
1,260.46 1,186.66
Less Materials & Services 714.50 738.27
------------------- -----------------
Value Added 545.96 448.39
Applied the Following Way: %AGE %AGE
To Employee:
Wages, Salaries and Related Costs 47.55 8.71 43.61 9.73
To Government:
Income Tax, Excise Duty, Sales Tax 189.67 34.74 191.53 42.72
and Other Taxes
To Providers of Capital:
Finance Charges on Loans and
Advances 137.06 25.10 104.62 23.33
Transfer From Share Premium
Account (22.00) (4.03) 0.00
Dividend to Shareholders 22.00 4.03 18.18 4.05
---------- ---------- ---------- ----------
137.06 25.10 122.80 27.39
To Charitable Institutions 0.31 0.06 0.24 0.05
To Provide for Maintenance
& Expansion of Assets
Depreciation/Amortization 116.64 21.36 89.01 19.85
Profit Retained 54.73 10.02 1.20 0.27
---------- ---------- ---------- ----------
171.37 31.39 90.21 20.12
---------- ---------- ---------- ----------
545.96 100.00 448.39 100.00
Flow of Funds Analysis
Development of net current position in million of Rupees
Sept. 30 Sept.30 Sept. 30
1993 Change 1994 Change 1995
Liquid Assets + 372.19 + 148.78 + 520.97 + 196.53 + 324.44
Short term receivable + 9.72 + 18.36 + 28.08 + 2.79 + 25.29
Short term liabilities and provision - 659.02 - 94.74 - 753.76 - 55.90 - 697.86
- 277.11 + 72.40 - 204.71 + 143.42 - 348.13
Factors affecting the change in the
net current position
Source of Funds
Net Income for the year + 19.38 + 54.73
Depreciation + 58.14 + 88.73
Amortization of assets subject to
Finance Lease + 30.87 + 27.91
Deferred Taxation _ - 4.50
Internal Financing: + 108.39 166.87