| MIRPURKHAS SUGAR MILLS LIMITED |
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| (Annual Report 1997) |
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| CONTENTS |
|
| Board of Directors |
|
| Notice
of Meeting |
|
| Directors' Report |
|
| Graphs of Progress |
|
| Ratio
Analysis on Accounts |
|
| Auditors' Report |
|
| Balance
Sheet |
|
|
| Profit & Loss Account |
|
| Cash Flow Statement |
|
| Notes to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
|
|
| BOARD
OF DIRECTORS |
|
|
| CHAIRMAN |
|
MR. MOHAMMED FARUQUE |
|
|
| CHIEF
EXECUTIVE/ |
|
| MANAGING
DIRECTOR |
MR. MAHMOOD FARUQUE |
|
|
| DIRECTORS |
|
MR. IQBAL FARUQUE |
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|
MR. ZAHID FARUQUE |
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|
MR. AKBARALI PESNANI |
|
|
MR. ASLAM FARUQUE |
|
|
MR. BEHRAM HASSAN
(I.C.P.) |
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|
MR. TARIQ FARUQUE |
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|
| AUDITORS |
|
HYDER BHIMJI & CO. |
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|
CHARTERED ACCOUNTANTS |
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|
KARACHI. |
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| REGISTERED
OFFICE |
MODERN MOTORS HOUSE |
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|
BEAUMONT ROAD |
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|
KARACHI. |
|
|
| FACTORY |
|
JAMRAO DIST. MIRPURKHAS |
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| NOTICE
OF MEETING |
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| NOTICE
IS HEREBY GIVEN that the 33rd Annual General Meeting of this Company will be
held on Thursday, |
|
| March
26, 1998 at 5.00 p.m. at the Registered Office of the Company at Modern
Motors House, Beaumont Road, |
|
| Karachi
to transact the following business: |
|
|
| 1.
To receive and consider the Report of the Directors, Statement of Accounts
and the Balance Sheet for the |
|
| year
ended September 30, 1997 with the Auditors' Report thereon. |
|
|
| 2.
To declare final dividend @ Rs. 1.50 per share (15%) as recommended by the
Directors. |
|
|
| 3.
To appoint Auditors for the ensuing year and to fix their remuneration. |
|
|
| NOTE: |
|
|
| 1.
A member eligible to attend and vote at the AGM is entitled to appoint
another member as his proxy |
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| to
attend and vote in his stead. Proxies to be effective must be in writing in
the usual form and must |
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| be
received by the Company 48 hours before the Meeting. |
|
|
| 2.
The registers of members will be closed from Thursday, March 19 to Thursday,
March 26, 1998, |
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| inclusive
and no transfers will be registered during that time. The shares received in
order upto the |
|
| closing
office hours on Wednesday March 18, 1998 shall qualify to the above dividend. |
|
|
| 3.
The shareholders are requested to notify the Company if there is any change
in their address. |
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|
|
| DIRECTORS'
REPORT TO THE MEMBERS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
| Dear
Shareholders, |
|
|
| The
Directors have pleasure in presenting to you 33rd Annual Report together with
the audited accounts for the |
|
| year
ended September 30, 1997. |
|
|
| PRODUCTION |
|
|
| The
mill commenced crushing on 08.11.1996 and closed on 02.04.1997 after
operating 146 days against 150 |
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| days
in 1995-96. The production data and other salient features for the reporting
year as well as the comparative |
|
| statement
for the last year are as follows: |
|
|
|
Year ended |
Year ended |
|
|
30-09-97 |
30-09-96 |
|
| Sugarcane
Crushed: |
|
| Metric Tonnes |
|
351,685.84 |
347,697.93 |
|
| Maunds |
|
9,422,437 |
9,315,592 |
|
| Sucrose
percentage |
|
10.43 |
9.88 |
|
| Sugar
production (M.T.) |
|
36,739.50 |
34,367.05 |
|
| Molasses
production (M.T.) |
|
18,110 |
18,400 |
|
| Average
crushing per day (M.T.) |
2,408.80 |
2,333.54 |
|
|
|
|
| For
the year under review the Government increased minimum support price of
sugarcane from Rs. 21.75 per |
|
| 40
Kgs to Rs. 24.50 per 40 Kgs. As reported at the last Annual General Meeting
sugarcane was in short supply. |
|
| Two
new sugar mills also started in our vicinity. The growers resorted to slow
down in harvesting, demanding extra |
|
| payment
coupled with increase in crushing capacities. Most of the sugar mills in the
province succumbed to the |
|
| growers
pressure and increased cane prices upto Rs. 63/- per 40 Kgs ex-mill. We did
not try to match these prices |
|
| but
still were forced to pay a higher price in line with the adjoining mills. |
|
|
| A
new factor in the high cost of production was the imposition of sales tax on
baggages used in-house by mills |
|
| for
their power and steam requirements. The mills have gone into appeal.
Fortunately, higher sucrose recovery |
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| at
10.43% resulted in improved production. |
|
|
| OPERATING
RESULTS |
|
|
| The
year under review has registered sugar sales of Rs. 684.351 million as
compared to Rs. 567.166 million for |
|
| the
previous year. The cost of sales is Rs. 634.374 million leaving a gross
profit of Rs. 49.823 million i.e. 7.28% |
|
| of
net sales versus 17.15% last year. During the year the company imported sugar
for trading from which your |
|
| company
earned a profit of Rs.3.342 million, resulting in a total gross profit for
the year of Rs. 53.166 million. After |
|
| deduction
of operating and other expenses totalling Rs. 48.053 million and adding other
income of Rs. 16.390 |
|
| million,
the net profit before tax comes to Rs. 21.504 million for the year, which
comes to 3.14% of net sales. |
|
|
| FINANCIAL
RESULTS |
|
|
| After
provision for taxation at Rs. 4.085 million your company has earned a net
profit after tax for the year of Rs, |
|
| 17.419
million i.e. 2.55% of net sales. The earning per share comes to Rs. 2.73
(1995/96 - Rs. 5.86). The total |
|
| contribution
to Government on account of excise duty and income tax comes to Rs. 81.238
million (11.87% of |
|
| gross
sales) versus Rs. 101.75 million for 1995/96. |
|
|
| Your
directors propose to appropriate the profit as follows: |
|
|
| -
Net Profit for the year |
|
|
Rs. 17418761 |
|
| -
Add :Unappropriated profit brought forward |
Rs. 85498 |
|
|
|
---------- |
|
|
|
Rs. 17504259 |
|
|
|
========== |
|
| Appropriation: |
|
| Dividend |
|
9,583,200 |
|
| Transfer
to General Reserve |
|
7,900,000 |
|
| Balance
Carried Forward |
|
21,059 |
|
|
| PROSPECTS
FOR 1997-98 |
|
|
| The
current crushing season commenced on 06.11.1997 and as of 25th February 1998,
we have crushed |
|
| 350,343.985
tonnes of sugarcane producing 34,490 tonnes of sugar at 10.04% recovery. The
sugarcane price |
|
| has
again been raised substantially by Government from Rs.24.50 to Rs.36.00 per
40 Kgs and quality premium |
|
| from
0.27 paisa to 0.32 paisa for each 0.1% of sucrose recovery over bench mark of
8.7%. The quantum of |
|
| sugarcane
to be crushed during the current crushing season is estimated to be higher by
50,000 tonnes than last |
|
| year's
as the higher cane price has encouraged growers to grow more cane. |
|
|
| PROSPECTS
FOR 1998-99 |
|
|
| For
the last three years sugarcane crop was under heavy pressure. The increasing
prices of sugarcane has |
|
| encouraged
growers to cultivate more cane and it is expected that sugarcane crop during
season 1998-99 will |
|
| again
be higher. As spring plantation will end by close of March, 1998, exact
percentage of higher cultivation will |
|
| be
established later. |
|
|
| AUDITORS |
|
|
| The
Auditors of the Company, Messrs Hyder Bhimji & Co., retire and being
eligible offer themselves for re- |
|
| appointment |
|
|
| GENERAL |
|
|
| Our
special thanks are due to our team of dedicated managers and other
executives, supervisors and hard |
|
| working
workers, who continue to put in their best efforts for achieving optimum
results year after year. |
|
|
|
| RATIO
ANALYSIS ON ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
| PROFITABILITY: |
|
1997 |
1996 |
|
|
|
|
|
| Gross
Profit (percentage) |
|
728 |
1,715 |
|
| Operating
Profit (percentage) |
|
3.45 |
12.08 |
|
| Profit
Before Tax (percentage) |
|
3.14 |
11.82 |
|
| Net
Profit After Tax (percentage) |
|
2.55 |
6.60 |
|
| Growth
in Net Profit After Tax (percentage) |
|
(53.47) |
47.38 |
|
| Net
Profit to Share Holders Equity (Average after tax) (percentage) |
8.96 |
19.67 |
|
| Earning
Per Share (Before Tax) |
|
3.36 |
10.49 |
|
| Earning
Per Share (After Tax) |
|
2.73 |
5.86 |
|
| Net
Profit to total Assets (Average after tax) (percentage) |
4.65 |
10.26 |
|
| (Decrease)/Increase
in Sales (Gross percentage) |
|
20.66 |
(5.02) |
|
| (Decrease)/Increase
in Sales (Net percentage) |
|
20.67 |
(5.01) |
|
| Materials
Percent of Net Sales |
|
66.09 |
45.60 |
|
| Labour
Percent of Net Sales |
|
7.62 |
8.73 |
|
| Other
Cost of Sales Expenses Percent of Net Sales |
|
19.01 |
28.50 |
|
| Raw
& Packing Material as Percent of Cost of Sales |
|
71.28 |
55.05 |
|
| Administrative
Expenses Percent of Cost of Sales |
|
3.95 |
4.73 |
|
| Selling
Expenses Percent of Net Sales |
|
0.36 |
0.33 |
|
| income
Tax Percent of Net Sales |
|
0.60 |
521 |
|
| Financial
Expenses Percent of Net Sales |
|
2.45 |
1.21 |
|
| Other
charges Percent of Net Sales |
|
0.25 |
0.90 |
|
|
|
|
| SHORT
TERM SOLVENCY RATIO: |
|
|
|
|
|
|
| Working
Capital Ratio |
|
1:1.04 |
1.14:1 |
|
| Acid
Test Ratio |
|
0.17:1 |
0.60:1 |
|
| Working
Capital Turn Over (Net Sales) times |
|
158.37 |
15.15 |
|
|
|
|
| OVERALL
VALUATION AND ASSESSMENT: |
|
|
|
|
|
|
| Number
of Time Interest Earned |
|
2.28 |
10.70 |
|
| Return
on Capital Employed before tax (Average in percentage) |
8.15 |
2,630 |
|
| P.E.
Ratio (Before tax) |
|
4.76 |
1.72 |
|
| Book
Value per share |
|
31.01 |
29.79 |
|
| Debt Ratio |
|
0.46:1 |
0.49:1 |
|
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of MIRPURKHAS SUGAR MILS LIMITED, as
at 30th September, |
|
| 1997
and the related Profit & 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 accounting policies consistently applied;
except for the changes |
|
| as
stated in note No. 2.4 to the accounts with which we do not concur. |
|
|
| 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 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 Profit and the changes in financial
position (Cash Flow) for |
|
| the
year then ended; and |
|
|
| (d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980, was deducted by |
|
| the
Company and deposited in the Central Zakat Fund established under Section 7
of that Ordinance. |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1997 |
|
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Share Capital: |
|
| Authorized |
|
3.1 |
150,000,000 |
150,000,000 |
|
|
|
========== |
========== |
|
| issued.
Subscribed & Paid-up |
|
3.2 |
63,888,000 |
63,888,000 |
|
|
|
---------- |
---------- |
|
| Revenue
Reserves |
|
4 |
134,250,305 |
126,350,305 |
|
| Unappropriated
Profit |
|
|
21,059 |
85,498 |
|
|
|
---------- |
---------- |
|
|
|
134,271,364 |
126,435,803 |
|
|
|
|
---------- |
---------- |
|
|
|
198,159,364 |
190,323,803 |
|
| REDEEMABLE
CAPITAL |
|
5 |
1,336,418 |
2,025,324 |
|
| LIABILITIES
AGAINST ASSETS |
|
|
|
|
| SUBJECT
TO FINANCE LEASE |
|
6 |
2,849,312 |
5,010,245 |
|
|
|
|
|
| DEFERRED
TAXATION |
|
7 |
24,230,000 |
25,880,000 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
portion of redeemable |
|
---------- |
---------- |
|
| capital |
|
|
688,907 |
634,540 |
|
| Current
portion of liabilities |
|
|
|
| against
Assets Subject to |
|
|
|
|
| finance lease |
|
|
2,997,699 |
3,007,480 |
|
| Shod
Term Running Finance utilized |
|
|
|
| under
mark-up arrangements |
|
8 |
6,481,510 |
- |
|
| Creditors,
Accrued and Other |
|
|
|
|
| Liabilities |
|
9 |
122,960,365 |
109,658,238 |
|
| Provision
for Taxation |
|
|
1,857,699 |
25,036,739 |
|
| Proposed
Dividend |
|
|
9,583,200 |
15,972,000 |
|
|
|
---------- |
---------- |
|
|
|
144,569,380 |
154,308,997 |
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
10 |
- |
- |
|
|
|
---------- |
---------- |
|
|
|
371,144,474 |
377,548,369 |
|
|
|
========== |
========== |
|
|
|
|
|
| AT
SEPTEMBER 30, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
| FIXED ASSETS |
|
|
|
|
|
|
| Operating
Assets |
|
11 |
182,204,456 |
74,418,566 |
|
| Capital
Work-in-Progress |
|
12 |
34,922,551 |
11,065,065 |
|
|
|
---------- |
---------- |
|
|
|
217,127,007 |
185,483,631 |
|
| LONG
TERM INVESTMENTS |
|
13 |
14,625,000 |
14,025,000 |
|
| LONG
TERM LOANS AND ADVANCES |
|
14 |
849,814 |
558,976 |
|
| LONG
TERM DEPOSITS |
|
15 |
4,234,814 |
4,863,454 |
|
|
|
---------- |
---------- |
|
| CURRENT ASSETS |
|
|
|
| Stores
and Spares |
|
16 |
44,220,756 |
46,661,457 |
|
|
|
|
|
| Stock-in-Trade |
|
17 |
4,476,960 |
3,534,003 |
|
| Trade Debts |
|
18 |
36,486,790 |
|
|
| Loans
and Advances |
|
19 |
10,010,941 |
16,015,066 |
|
| Deposits,
Prepayments and |
|
|
|
|
| Other
Receivables |
|
20 |
18,341,219 |
17,566,218 |
|
|
|
|
|
| Short
Term Investment |
|
21 |
10,500,000 |
80,500,000 |
|
| Cash
and Bank Balances |
|
22 |
10,271,173 |
8,340,564 |
|
|
|
---------- |
---------- |
|
|
|
134,307,839 |
172,617,308 |
|
|
|
---------- |
---------- |
|
|
|
371,144,474 |
377,548,369 |
|
|
|
=========== |
=========== |
|
|
|
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR |
|
| ENDED SEPTEMBER 30, 1997 |
|
|
|
|
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
23 |
684,197,500 |
566,987,335 |
|
| Cost
of Goods Sold |
|
24 |
634,374,198 |
469,725.78 |
|
|
|
---------- |
---------- |
|
| Gross Profit |
|
|
49,823,302 |
97,261,558 |
|
| Trading Profit |
|
25 |
3,342,791 |
- |
|
|
|
---------- |
---------- |
|
|
|
53,166,093 |
97,261,558 |
|
|
|
---------- |
---------- |
|
| Administrative
Expenses |
|
26 |
27,061,558 |
268,638,611 |
|
| Selling
& Distribution Expenses |
27 |
2,493,398 |
1,892,317 |
|
|
|
---------- |
---------- |
|
|
|
29,554,956 |
28,756,178 |
|
|
|
---------- |
---------- |
|
| Operating
Profit |
|
|
23,611,137 |
68,505,380 |
|
| Other Income |
|
28 |
16,390,465 |
10,562,163 |
|
|
|
---------- |
---------- |
|
|
|
40,001,602 |
79,067,543 |
|
|
|
---------- |
---------- |
|
| Other Charges |
|
30 |
1,679,023 |
5,143,984 |
|
|
|
---------- |
---------- |
|
|
|
18,498,070 |
12,051,859 |
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
21,503,532 |
67,015,684 |
|
| Provision
for taxation |
|
31 |
4,084,771 |
29,578,658 |
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
17,418,761 |
37,437,026 |
|
| Unappropriated
Profit brought forward |
|
85,498 |
620,472 |
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
17,504,259 |
38,057,498 |
|
|
| Appropriations: |
|
---------- |
---------- |
|
| Transfer
to General Reserve |
|
17,900,000 |
22,000,000 |
|
|
| Proposed
Dividend |
|
9,583,200 |
15,972,000 |
|
|
---------- |
---------- |
|
|
17,483,200 |
37,972.00 |
|
|
---------- |
---------- |
|
| Unappropriated
Profit carried forward |
|
21,059 |
85,498 |
|
|
========== |
========== |
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
after taxation |
|
17,418,761 |
37,437,026 |
|
| Adjustments |
|
---------- |
---------- |
|
| Depreciation |
|
11,246,471 |
19,702,618 |
|
| Financial
charges |
|
16,819,047 |
6,977,875 |
|
| (Profit)/Loss
on sale of fixed assets |
|
39,587 |
(215,639) |
|
| Sales
'Tax on baggage |
|
2,694,570 |
- |
|
| Provision
for taxation |
|
4,084,771 |
29,578,658 |
|
|
---------- |
---------- |
|
|
34,884,446 |
55,973,512 |
|
|
---------- |
---------- |
|
|
52,303,207 |
93,410,538 |
|
|
|
|
| (Increase)/decrease
in operating assets |
|
---------- |
---------- |
|
| Stores
& Spares |
|
2,440,701 |
460,385 |
|
| Stock-in-Trade |
|
(942,957) |
54,905,795 |
|
| Trade Debts |
|
(36,486,790) |
1,165,847 |
|
| Loans
and Advances |
|
6,004,125 |
6,575,678 |
|
| Deposits,
prepayments and other Receivables |
|
(775,001) |
5,637,873 |
|
| Short
term investment |
|
70,000,000 |
(70,000,000 |
|
|
---------- |
---------- |
|
|
40,240,078 |
(12,530,168 |
|
|
---------- |
---------- |
|
|
92,543,285 |
80,880,370 |
|
| Increase/(decrease)
in Current liabilities |
|
---------- |
---------- |
|
| Short
term finance |
|
6,481,510 |
(925,391 |
|
| Creditors,
accrued and other liabilities |
|
8,040,467 I |
(3,098,567 |
|
| Taxes paid |
|
(28,913,811 ) |
(11.235,454 |
|
| Financial
charges |
|
(14,251,957) |
(6,719,048 |
|
|
---------- |
---------- |
|
|
(28,643,791) |
(21,978,460 |
|
|
---------- |
---------- |
|
|
63,899,494 |
58,901,910 |
|
| Net
Cash from operating activities |
|
---------- |
---------- |
|
| Cash
flow from investment activities |
|
(44,866,471) |
(28,674.441) |
|
| Capital
expenditure |
|
1,937,038 |
747,140 |
|
| Sale
proceed of fixed assets |
|
(600,000) |
- |
|
| Purchase
of investment |
|
(290,838) |
(194,852) |
|
|
628,640 |
551,927 |
|
|
---------- |
---------- |
|
| Net
cash from investing activities |
|
(43,191,631) |
(27,570,226) |
|
|
| Cash
flow from financing activities |
|
|
---------- |
---------- |
|
| Redeemable
capital |
|
(634540) |
(3,394,892) |
|
| Liabilities
against assets subject to finance Lease |
(2,170,714) |
(7,275,667) |
|
| Payment
of dividends |
|
(15,972,000) |
(15,972,000) |
|
|
---------- |
---------- |
|
| Net
cash flow from financing activities |
|
(18,777,254) |
(26,642,559) |
|
|
---------- |
---------- |
|
| Net
changes in cash flow for the year |
|
1,930,609 |
4,689,125 |
|
| Cash
and bank at the beginning of year |
|
8,340,564 |
3,651,439 |
|
|
---------- |
---------- |
|
| Cash
and bank at the year end |
|
10,271,173 |
8,340,664 |
|
|
========== |
========== |
|
|
| NOTES
FORMING PART OF THE ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997. |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| The
Company was incorporated in Pakistan on May 27, 1964 as a Public Limited
Company and its shares |
|
| are
quoted on Karachi Stock Exchange. Principal activity of the Company is the
manufacture and sale of |
|
| Sugar. |
|
|
| 1.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention: |
|
| These
accounts have been prepared under historical cost convention, modifications,
if any, are |
|
| stated. |
|
|
| 2.2 Taxation: |
|
| The
provision for current taxation is based on taxable income at the current
rates of taxation after |
