| FECTO SUGAR MILLS LIMITED |
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|
| (Annual
Report 1997) |
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| CONTENTS |
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| COMPANY'S
INFORMATION |
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| NOTICE
OF THE MEETING |
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|
| DIRECTORS'
REPORT |
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| FINANCIAL
HIGHLIGHTS |
|
|
| AUDITORS'
REPORT |
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| BALANCE SHEET |
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|
|
| PROFIT
& LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN |
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|
| FINANCIAL
POSITION (CASH FLOW) |
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| NOTES
TO THE ACCOUNTS |
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| SCHEDULE
OF FIXED ASSETS |
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|
| PATTERN
OF SHAREHOLDING |
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| COMPANY'S
INFORMATION |
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|
| BOARD
OF DIRECTORS |
|
| CHIEF EXECUTIVE |
|
| MR.
MUNAWAR ALl FECTO |
|
| DIRECTORS |
|
| MR.
GHULAM MUHAMMED A. FECTO |
|
| MR.
KAISER MEHMOOD FECTO |
|
| MRS. ABEDA BANO |
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| DR.
ABDUL WAHED MUHAMMED |
|
| MR. SAID AHMED |
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| MR.
YAHYA AHMED IBAWANY |
|
| MR.
JAMES R. RICHARDS |
|
| CH. BARKAT ALl |
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| MR. IMRAN AZIM |
|
| MR.
ABDUL RAUF MALIK |
|
|
| SECRETARY |
|
| MR.
MUHAMMED ANWER NATHAN! (ACA) |
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|
| AUDITORS |
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| M/S.
HYDER BHIMJI & CO. |
|
| (Chartered
Accountants) |
|
| M/S.
A.R. DIWAN & CO. |
|
| (Chartered
Accountants) |
|
|
| BANKERS |
|
| MUSLIM
COMMERCIAL BANK LTD. |
|
| HABIB BANK LTD. |
|
|
| REGISTERED
OFFICE |
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| IST
FLOOR, PANORAMA CENTRE, |
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| RAJA
GHAZANFAR ALl KHAN ROAD, |
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| KARACHI-75530. |
|
|
| ZONAL OFFICE |
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| IST
FLOOR, NAWA-E-WAQT HOUSE. |
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| 4-SHAFIRAH-E-FATIMA
JINNAH. |
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| LAHORE. |
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|
| MILLS |
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| DARYAKHAN
(DISTT: BHAKKAR) |
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| NOTICE OF THE MEETING |
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| NOTICE
IS HEREBY GIVEN that the Thirty Three Annual General
Meeting of the |
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| Members
of the Company will be held on Tuesday the 10th March, 1998 at 11.00 a.m. |
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| at
Hotel Metropole, Club Road, Karachi to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
|
| (1)
To receive and adopt the Report of the Directors and the Audited Accounts of
the |
|
| Company
together with the Auditors' Report for the Financial Year ended 3Oth |
|
| September,
1997. |
|
|
| (2)
To appoint Auditors for the year 1997-98 and fix their remuneration. |
|
|
| NOTES |
|
|
| (1)
The Share Transfer Books of the Company will remain closed from |
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| Tuesday
3rd March, 1998 to Tuesday the 10th March, 1998 (both days |
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| inclusive). |
|
|
| (2)
A member entitled to attend, speak and vote at this meeting may appoint |
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| another
Member as his/her proxy to attend, speak and vote on his/her behalf. |
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|
| (2)
An instrument appointing a proxy must be received at the Registered Office |
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| of
the Company not later than forty eight hours before the time appointed |
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| for
the Meeting. A Member shall not be entitled to appoint more than one |
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| proxy.
If a Member appoints more than one proxy and more than one |
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| instrument
of proxies are deposited by a Member with the Company all such |
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| instruments
shall be rendered invalid. |
|
|
| (4)
Members are requested to notify any change in their address immediately. |
|
|
| (5)
Members should quote their Folio Number in all correspondence and at the |
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| time
of attending the Meeting. |
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|
| DIRECTORS'
REPORT |
|
| The Members, |
|
| FECTO
SUGAR MILLS LIMITED, |
|
| KARACHI. |
|
|
|
| Gentlemen, |
|
|
| Your
Directors are pleased to present to the Shareholders their Thirty Third
Annual |
|
| Report
together with the audited accounts for the financial year ended30th
September, |
|
| 1997. |
|
|
| The
operating performance and other salient features for the year under
reviewable |
|
| compared
with preceding year are as follows: |
|
|
|
1997 |
1996 |
|
|
| Date
of Commencement of Season |
|
25-11-1996 |
10-11-1995 |
|
| Date
of Concluding of Season |
|
28-03-1997 |
11-03-1996 |
|
| Crushing
Duration |
Days |
123 |
122 |
|
| Cane Crushed |
|
Tons |
418.70 |
409.60 |
|
| Sugar
Production |
Tons |
29.82 |
32.68 |
|
| Sucrose
Recovery |
% |
7.18 |
8.00 |
|
|
| The
major reasons for shortfall in sugar production and steep increase in cost of |
|
| production
was less availability of sugarcane to your mills because of continuous
poaching |
|
| of
sugarcane from our natural zone by other mills. This has created a fierce tug
of war |
|
| price
among mills, as against fixed support price of sugarcane Rs.24.00 per 40 kgs.
Hence |
|
| growers
were demanding higher prices than price fixed by Government and also
intentionally |
|
| curtailed
supplies from time to time. Consequently we had to pay excess of Rs.130
million |
|
| as
against the preceding year in order to fetch raw materials and lesser
quantity had been |
|
| crushed
as against the quantity that had been expected under BMR&E. ,Secondly due
to |
|
| shortage
of sugarcane we were unable to exercise control over 'the quality ot raw
material. |
|
| The
fall of frost and attack of borer. These factors have affected the sucrose
recovery |
|
| percentage
which went down from 8.00% to 7.18% and production too was lower. Timely, |
|
| closure
of factory had saved us huge losses. Currently the sugar prices in local
market are |
|
| low
so far but we are hopeful it will improve as Government has announced to
export the |
|
| sugar. |
|
|
| Besides
increase in utilities tariffs, financial charges and wages have also affected |
|
| the
profitability of your Company. The sale of sugar was also affected due to
import of |
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| sugar
from start of the 1996-97crushingseason. The untimely import of sugar at sub- |
|
| sidised
rate created a glut of sugar in the country and as a result the sugar price
was |
|
| driven
sharply downward. |
|
|
| The
company's financial results for the year under report are as follows:- |
|
|
|
RUPEES |
|
| Net(loss)
/ profit before taxation |
|
(38,268,375) |
|
| Taxation |
|
508,695 |
|
|
(38,777,070) |
|
| Un-appropriated
profit brought forward |
|
478,117 |
|
| .Accumulated
loss carried forward |
|
(38,298,953) |
|
|
| Your
Directors regretfully recommended that Dividend for the year under review be
passed |
|
| over. |
|
|
| CURRENT
YEAR PROSPECTS |
|
|
| The
current crushing season commenced on 21-11-1997 and as on date of report we
have |
|
| crushed
310,561 tonnes of sugarcane producing 24,372 tonnes of white sugar and 7.84% |
|
| recovery.
The sugarcane price has again been raised by the Government from Rs.24.00 to |
|
| Rs.
35.00 per 40 kgs. This increase in price is highest in history of sugar
industry and will |
|
| affect
the cost of production. Financial outcome will depend on sugar price in
future and to |
|
| the
extent of ability to offset the high cost of raw materials from sugar price.
The increase in |
|
| price
has given good response from growers and the cultivation of sugarcane has
increased. |
|
| In
this year we will get the benefits of expansion for BMR&E which had not
been achieved in |
|
| last
two years. We are taking all possible steps and trust that by the grace of
Allah, we will be |
|
| able
to crush 450,000 metric tons to 500,000 tons during the current season and
also |
|
| production
will be higher because sucrose recovery would be better. |
|
|
| We
are expecting a turnaround in future. The sugarcane price fixed by Government |
|
| has
generated a lot of enthusiasm in growers and resultantly a bumper crop is
fore |
|
| casted
for ensuing season. Hopefully and with the blessing of Allah we expect to |
|
| achieve
the targeted production that was expected at the time of BMR&E. This year |
|
| recovery
is also better. |
|
|
| Since
the last report, there has been a change composition of the Board that Mr. |
|
| Mohammad
Munawar a nominee Director of Investment Corporation of Pakistan has |
|
| resigned.
Therefore the Board has taken this opportunity to thank Mr. Mohammad |
|
| Munawar
for invaluable contribution made by him. |
|
|
| During
the year there was complete industrial peace and harmony in all areas of our |
|
| operation.
Your Directors place on record their appreciation for the honest and dedicat- |
|
| ed
work of the staff and workers of all categories and have pleasure to mention
here |
|
| that
during the year under review, the management employees relations continued to |
|
| remain
quite cordial. |
|
|
| Your
Directors express their thanks to the officials of the Ministry of Food and
Agri.- |
|
| culture,
other Government Agencies and Pakistan Sugar Mills Association for the |
|
| support
and encouragement they have extended to your Company and which we hop(; |
|
| will
be continued in future too. |
|
|
| Messrs
Hyder Bhimji & Co. and Messrs A.R. Diwan & Co. the Auditors of the |
|
| Company
retire and offer themselves for reappointment. |
|
|
| Statement
showing the pattern of. holding of the shares held by the members of Fecto |
|
| Sugar
Mills Limited as on 30-09-1997 is annexed. |
|
|
|
| FINANCIAL
HIGHLIGHTS |
|
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
Sept.30 |
Sept. |
Sept. |
Sept. |
Sept. |
|
|
1997 |
1996 |
1995 |
1994 |
1993 |
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Cane
crushed M. Tons |
418,699 |
409,599 |
437,313 |
435,371 |
403.84 |
|
| Sugar
recovery percentage |
7.18 |
8.00 |
8.68 |
8.08 |
8.25 |
|
| Sugar
production M. Tons |
29,822 |
32,680 |
38,007 |
35,373 |
33.06 |
|
| Molasses
production M. Tons |
19,720 |
16,152 |
17,260 |
17,190 |
15,330 |
|
| Share capital |
|
50,297,280 |
50.297,28011 |
25.148,460 |
25.148,460 |
25,148.64 |
|
| Reserve |
|
6,000,000 |
6.000.000 |
6.000,000 |
5,000,000 |
31.500.000 |
|
| Members equity |
|
23,998,327 |
65,075,397 |
43,796,897 |
42,821,442 |
35.385.951 |
|
| Deferred
liabilities |
6,000,000 |
8.300,000 |
12,300,000 |
12.300,000 |
! 2.300,000 |
|
| !Total
capital employed |
17,998,327 |
56.775.397 |
31.498,897 |
30.52t.442 |
23.085,951 |
|
| Fixed assets |
|
552,599,553 |
587.665.901 |
86.304,229 |
86:907.341 |
87.867.852 |
|
| Capital
work-in progress |
70,262,843 |
18.775.571 |
554.315,386 |
446.658.031 |
260.836.200 |
|
| Loans,
advance. deposits. pre- |
|
| payments
& deferred Cost |
35,966,839 |
43 152.305 |
39,421,156 |
50,051,231 |
37.437.407 |
|
| Working capital |
|
102,953,915 |
(65,270),898) |
(517,372,920) |
(35,0931,216) |
(205481,708) |
|
| Total assets |
|
779,248,705 |
|
86,304,229 |
86,507.34 |
87.867.852 |
|
| Turn over |
|
554,089,808 |
546,442,090 |
375,560,683 |
341,820,354 |
314.210.797 |
|
| (Loss)/Profit
before tax |
38,268,375 |
(1.583.640) |
10,998,393 |
7,435.49 |
7.857.495 |
|
| (Loss)/Profit/after
tax & |
|
|
|
| adjustment |
|
38,777,070 |
127,860 |
977,453 |
7,435,491 |
7.857,495 |
|
| Dividend
declared |
- |
- |
- |
- |
- |
|
| Break-up
value of shares |
3.58 |
11.29 |
12.53 |
12.14 |
9.10 |
|
| Dividend
(rupee per share) |
- |
- |
- |
- |
- |
|
| Net earning per share |
-- |
- |
0.03 |
0.39 |
2.96 |
3.12 |
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of FECTO SUGAR MILLS LIMITED as at |
|
| 30th
September, 1997 and related profit and loss account and statement of changes
in |
|
| financial
position,(cash flow statement) together with the notes forming part thereof;
for the |
|
| year
then ended and 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 the accounting policies consistently applied: |
|
|
| (ii)
the expenditures incurred during the year were for the purpose of the |
|
| company's
business; and |
|
|
| (iii)
the business conducted. investments made and the expenditure incurred |
|
| during
the 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 and the |
|
| statement
of changes in financial position, (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 30th September, 1997 |
|
| and
of the loss and the changes in financial position (cash flow) for the year |
|
| then ended; and |
|
| (d) |
|
| in
our opinion, no Zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980. |
|
|
|
A.R. DIWAN & CO. |
HYDER BHIMJI & CO. |
|
|
Chartered Accountants |
Chartered Accountants |
|
| Karachi:
the 3rd February, 1998 |
|
|
|
| BALANCE
SHEET AS AT 30TH SEPTEMBER, 1997 |
|
|
|
|
1997 |
1996 |
|
|
NOTE |
RUPEES |
RUPEES |
|
| SHARE
CAPITAL AND RESERVES |
|
|
| SHARE CAPITAL: |
|
| Authorized
capital |
|
| 15,000,000
ordinary shares of Rs. 10/- each |
|
150,000,000 |
150,000,000 |
|
|
========== |
========== |
|
| Issued
subscribed & paid up |
|
3 |
50,297,280 |
50,297,280 |
|
| Revenue reserve |
|
4 |
6,000,000j |
6,000,000 |
|
| Accumulated
(loss)/profit |
|
|
(38,298,953 |
478,177 |
|
|
|
---------- |
---------- |
|
|
|
17.998.327 |
56,775,397 |
|
|
|
|
|
| SUB-ORDINATED
LOANS |
|
5 |
452,000,000 |
417,000,000 |
|
|
|
|
| REDEEMABLE
CAPITAL |
|
6 |
4,000,000 |
19,147,770 |
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| TO
FINANCE LEASE |
|
7 |
69,323,184 |
65,702,317 |
|
|
| DEFERRED
TAXATION |
|
6,000,000 |
8,300,000 |
|
|
| CURRENT
LIABILITIES |
|
|
| Short
term running finance utillized under |
|
---------- |
---------- |
|
| mark-up
arrangements |
|
8 |
115,625,926 |
55,511,877 |
|
| Current
portion of Redeemable |
|
|
capital |
|
|
15,147,770 |
20,573,601 |
|
| Current
portion of liabilities against |
|
|
|
assets subject to finance
lease |
|
29,730,926 |
43,848,926 |
|
| Creditors,
accrued and other liabilities |
9 |
65,677,879 |
54,611,980 |
|
| Provision
for taxation |
|
|
3,744,692 |
2,853,844 |
|
|
|
---------- |
---------- |
|
|
|
229,927,193 |
177,400,228 |
|
| Contingencies
and commitments |
|
10 |
- |
- |
|
|
|
---------- |
---------- |
|
| TOTAL RUPEES |
|
779,248,704 |
744,325,712 |
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
| TANGIBLE
FIXED ASSETS |
|
---------- |
---------- |
|
| Operating
assets |
|
11 |
552,599,553 |
587,665,901 |
|
| Capital
work-in-progress |
|
12 |
70,262,843 |
18,755,571 |
|
|
|
---------- |
---------- |
|
|
622,862,396 |
606,421,472 |
|
|
| LONG
TERM INVESTMENTS |
|
13 |
10,037,900 |
10,037,900 |
|
| LONG TERM LOANS |
|
- |
362,280 |
|
|
| LONG
TERM DEPOSITS |
|
19,375,130 |
21,884,730 |
|
|
|
|
| CURRENT ASSETS |
|
---------- |
---------- |
|
| Stores,
spares and loose tools |
|
63,582,180 |
72,749,612 |
|
| Stock-in-trade |
|
14 |
40,154,151 |
1,094,957 |
|
| Trade debts |
|
15 |
- |
5,654,650 |
|
| Short
term investments |
|
16 |
- |
4,113,322 |
|
| Loans
and advances |
|
17 |
13,566,216 |
14,807,087 |
|
| Deposits,
prepayments and other receivables |
18 |
3,025,493 |
6,098,208 |
|
| Cash
and bank balances |
|
19 |
6,645,238 |
1,101,494 |
|
|
20 |
126,973,278 |
105,619,330 |
|
|
---------- |
---------- |
|
| TOTAL RUPEES |
|
779,248,704 |
744,325,712 |
|
|
========== |
========== |
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30THSEPTEMBER? 1997 |
|
|
|
|
1997 |
1996 |
|
|
NOTE |
RUPEES |
RUPEES |
|
|
| Sales |
|
|
540,572,289 |
528,738,466 |
|
| Cost
of goods sold |
|
21 |
513,867,334 |
451,316,012 |
|
|
|
---------- |
---------- |
|
| Gross profit |
|
|
26,704,955 |
77,422,454 |
|
| Operating
expenses |
|
|
---------- |
---------- |
|
| Administrative
expenses |
|
22 |
26,154,434 |
31,024, 115 |
|
| Selling
and distribution expenses |
23 |
1,193,813 |
1,495,007 |
|
|
|
---------- |
---------- |
|
|
|
27,348,247 |
32,519,122 |
|
|
|
---------- |
---------- |
|
| Operating
(loss), porfit |
|
|
( 643,292 ) |
44,903,332 |
|
| Other income |
|
26 |
5,595,783 |
2,613,995 |
|
|
|
---------- |
---------- |
|
|
|
4,952,491 |
47,517,327 |
|
|
|
---------- |
---------- |
|
| Financial
charges |
|
27 |
42,327,479 |
48,742,830 |
|
| Other charges |
|
28 |
893,387 |
358,137 |
|
|
|
---------- |
---------- |
|
|
|
43,220,866 |
49,100,967 |
|
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
|
(38,268,375) |
(1,583,640) |
|
|
|
---------- |
---------- |
|
| Taxation |
|
29 |
508,695 |
(1,711,500) |
|
| (Loss)/'profit
after taxation |
|
|
(38,777,070) |
127,860 |
|
|
---------- |
---------- |
|
| Un-appropriated
profit brought forward |
|
478,117 |
350,257 |
|
| Accumulated
(loss/un-appropriated profit |
|
(38,298,953) |
478,117 |
|
| carried forward |
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) FOR THE YEAR ENDED |
|
| 30TH SEPTEMBER, 1997 |
|
|
1997 |
1996 |
|
|
NOTE |
RUPEES |
RUPEES |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from operations |
|
30 |
32,960,717 |
47,260,683 |
|
| Financial
charges paid |
|
(37,763,003) |
(46,865,598) |
|
| Return
on term deposits |
|
1,178,109 |
425,397 |
|
| Taxes paid |
|
(1,959,795) |
(1,398,574) |
|
|
---------- |
---------- |
|
| Net
cash inflow from operating activities |
|
(5,583,972) |
578,092) |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
---------- |
---------- |
|
| Fixed
capital expenditure |
|
(58,285,142) |
(13,344,993) |
|
| Sale
proceeds of fixed assets |
|
2,502,826 |
657,934 |
|
| Decrease
in long term investments |
|
- |
4,113.32 |
|
| (Increase)\decrease
in long term loan |
|
362,280 |
- |
|
| (Increase)\decrease
in long term deposits |
|
2,509,600 |
2.056,661 |
|
|
|
|
|
|
---------- |
---------- |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
(52,910,436) |
(6,517,076) |
|
|
| Proceeds
of right shares |
|
- |
25,148,640 |
|
| Proceeds
of sub-ordinated loan |
|
35,000,000 |
54 000,000 |
|
| Repayment of Redeemable capital. |
(20,573,601) |
|
|
(10,582,947) |
|
| Increase
in Redeemable capital |
|
|
- |
20,000.00 |
|
| Repayment
of liabilities against assets |
|
|
|
| subject
to finance lease |
|
(23,220,046) |
(59,922,225) |
|
| Proceeds
of liabilities against assets |
|
|
|
| subject
to finance lease ' |
|
12,722,913 |
1,197,840 |
|
| Dividend paid |
|
|
(5,163) |
(6,486) |
|
|
---------- |
---------- |
|
|
3,924,103 |
29,834,822 |
|
|
---------- |
---------- |
|
| Net
increase/(decrease) in cash and cash equivalents |
(54,570,305) |
22,739,654 |
|
| Cash
and cash equivalents in the beginning |
|
(54,410,383) |
(77,150,037 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of year |
31 |
(108,980,688) |
(54,410,383 |
|
| Annexed
note form an integral part'6f these accounts |
========== |
========== |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED 30TH SEPTEMBER ,1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| The
Company was incorporated in Pakistan on September 19, 1964 as a public
limited |
|
| company
and is listed at Karachi and Lahore stock exchanges n Pakistan. The Company |
|
| is
principally engaged in the manufacture and sale of sugar. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES: |
|
|
| 2.1
Accounting convention: |
|
|
| These
accounts have been prepared under the historical cost convention.
modification |
|
| thereto
if any, are stated. |
|
|
| 2.2
Staff retirement benefits: |
|
|
| The
Company operates provident fund scheme for all its employees eligible to the |
|
| benefits. |
|
|
| 2.3
Taxation |
|
|
| Current: |
|
| Provision
for current taxation is based on taxable income at the current rates of |
|
| taxation
after taking into account admissible tax credits and rebates. if any. |
|
|
| Deferred: |
|
| The
Company accounts for deferred taxation on all significant timing difference |
|
| using
liability method. |
|
|
| 2.4
Fixed assets tangible: |
|
|
| Company's
Owned: |
|
| Operating
fixed assets are stated at cost less accumulated depreciation except |
|
| freehold
land and capital work-in-progress which are stated at cost. |
|
|
| Depreciation
is charged to income applying reducting balance method whereby the |
|
