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Bawany Sugar Mills Limited
Annual Report 1998
CONTENTS
Company Profile
Notice of Meeting
Five Years at a Glance
Chairman's Review
Directors' Report
Auditors' Report
Balance Sheet
Profit and Loss Account
Statement of Changes in Financial Position (Cash Flow Statement)
Notes to the Accounts
Pattern of Shareholding
COMPANY PROFILE
BOARD OF DIRECTORS
1. Mr. Dawood Ebrahim Bawany - Chairman
2. Mr. Khalid Ebrahim Bawany - Chief Executive
3. Mr. Ismail Ebrahim Bawany
4. Mr. Ahmed Ebrahim Bawany
5. Mr. M. Tariq Bawany
6. Ms. Farzana Munaf
7. Mr. Ansar Hussain
8. Mr. Zakaria A. Aziz Kamdar
9. Mr. Mohd. Khalid Vali Mohd. Bawany
10. Mr. H.A. Sattar Mohammed
COMPANY SECRETARY Mr. Mohd. Zakaria A.G. Tabba
BANKERS Habib Bank Limited
National Bank of Pakistan
Metropolitan Bank Limited
AUDITORS Hyder Bhimji & Co.,
Chartered Accountants.
REGISTERED OFFICE Bank House No.1,
3rd Floor, Habib Square,
M. A. Jinnah Road,
P.O. Box No. 41 78,
Karachi-74000
MILLS Ahmed Nagar,
TALHAR
(Distt. Badin) Sindh.
NOTICE OF MEETING
Notice is hereby given that the 34th Annual General Meeting of the Company will be held on Wednesday,
24th March, 1999 at 12:00 noon at Raffia Choudri Memorial Centre, Ground Floor, Sidco Centre, 264 R.A. Lines,
Karachi to transact the following business:-
1. ORDINARY BUSINESS
1. To confirm the minutes of the 33rd Annual General Meeting held on 26th March, 1998.
2. To receive, consider and adopt the Directors' Report, Chairman's Review, Audited Accounts of the
Company and Auditors' Report thereon for the year ended 30th September, 1998.
3. To elect Directors of the Company for a period of three years commencing from 31st March,1999
in accordance with the provisions of the Companies Ordinance, 1984 in place of retiring Directors
namely Mr. Dawood Ebrahim Bawany, Mr. Khalid Ebrahim Bawany, Mr. Ismail Ebrahim Bawany,
Mr. Ahmed Ebrahim Bawany, Mr. M. Tariq Bawany, Mr. Ansar Hussain, Ms. Farzana Munaf,   
Mr. Zakaria A. Aziz Kamdar, Mr. Mohd. Khalid Valimohd Bawany and H. A. Sattar Mohammad.
The Board of Directors have fixed the number of Elected Directors at nine (9). All retiring Directors
shall be eligible to offer themselves for re-election.
4. To appoint Auditors for the year 1998-99 and fix their remuneration. The present Auditors
Messrs. Hyder Bhimji & Co., Chartered Accountants, being eligible have offered themselves for
re-appointment.
II. SPECIAL BUSINESS
5. To consider and if thought fit, pass the following Ordinary Resolution for the Capitalisation of
Rs. 4,154,570/-.
RESOLVE D THAT
i) a sum of Rs. 4,154,570 from the Company's revenue reserve as at 30th September, 1998
be capitalised for issuing 415,457 fully paid-up Ordinary Shares of Rs. 10/- each as Bonus
Shares to be allotted to those members whose names appear in the Register of Members on
15th March, 1999 in proportion of 1 (One) Share for every 20 (Twenty) existing shares held
and that the Bonus Shares when issued shall rank pari-passu in all respects with the existing
Ordinary Shares of the Company.
ii) the holders of fractions of shares as a result of holdings either being less or in excess of an
exact multiple of proportion (referred in 5 (i) above) shall be given the sale proceeds of their
fractional entitlement for which purpose the fractions shall be consolidated into whole shares
and sold on the Karachi Stock Exchange; and
iii) for the purpose of giving effect to the above, the Chairman, and/or Chief Executive be and
is hereby authorised to take all necessary actions and to settle any question or difficulty that
may arise in regard to the distribution of the said Bonus Shares or in the payment of the
sale proceeds of the fractional entitlements as he deems fit.
6. To transact any other business that may be brought forward with the permission of the Chairman.
The Share Transfer Books of the Company will be closed from 16th March, 1999 to 24th March,
1999 (both days inclusive). Transfers received in order at the Registered office of the Company
upto the close of business on 15th March, 1999 will be considered in time to be eligible for issue
of Bonus Shares to the transferees.
BY ORDER OF THE BOARD
MOHD. ZAKARIA A. G. TABBA
Karachi- 16th February, 1999. Company Secretary
NOTES:
1. A member eligible to attend and vote at this meeting may appoint another member as his/her proxy to
attend and vote instead of him/her. Proxies in order to be effective must be received by the Company
at the Registered office not later than 48 hours before the time for holding the Meeting.
2. Shareholders are requested to immediately notify the change in address, if any.
3. A Statement under Section 160 of the Companies Ordinance, 1984 pertaining to the Special Business
referred to above is annexed to this Notice of Meeting.
STATEMENT UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984 IN RESPECT OF SPECIAL
BUSINESS TO BE CONDUCTED AT THE 34TH ANNUAL GENERAL MEETING.
AGENDA NO. 5
The Board of Directors have recommended issue of Bonus Shares @ 5% out of General Reserve. As such
it has become necessary to capitalize a part of the reserves by way of issue of Bonus Shares to the share
holders. Upon issuance of the Bonus Shares, the paid-up Capital of the Company shall stand increased to
Rs. 87,245,910/-.
BY ORDER OF THE BOARD
MOHD. ZAKARIA A. G. TABBA
Karachi- 16th February, 1999. Company Secretary
FIVE YEARS AT A GLANCE
1998 1997 1996 1995 1994
Cane Crushing (M. Tons) 685,845 459,857 501,117 561,095 561,845
Sugar Production (M. Tons) 70,025 48,266 51,035 51,454 53,439
Average Recovery 10.16% 10.56% 10.19% 9.18% 9.38%
EARNINGS AND DIVIDENDS
(Loss)/Earnings before Taxation
(Rs. in million) (47.73) 5.98 3.93 8.44 4.97
(Loss)/Earnings after Taxation
(Rs. in million) (52.43) 1.98 0.33 4.89 2.42
(Loss)/Earning per share after tax (6.31) 0.25 0.05 0.78 0.39
Cash Dividend - - - - 12.50%
Stock Dividend 5% 5% 10% 15% -
Break up value per share (Rs.) 24.46 32.30 35.26 40.50 39.72
SHAREHOLDERS' EQUITY
(Rs. in million)
Share Capital 83.09 79.13 71.94 62.55 62.55
Reserves and Surplus 120.15 176.54 181.75 190.81 185.90
Shareholders' equity 203.24 255.67 253.69 253.36 248.46
CHAIRMAN'S REVIEW
IN THE NAME OF ALLAH, THE MOST GRACIOUS, THE MOST MERCIFUL
I present to you this review of the Company's Annual Report and performance for the year ended 30th
September 1998. Your company earned a gross profit of 60.76 million but suffered a pre-tax loss of 47.73 million.
As reported earlier the crushing season saw a remarkable improvement in sugar production whereby we were
able to cross the 70,000 tons sugar production mark by the Grace of Almighty Allah, with an average recovery
of 10.16%.
The results of the plant operation were the following.
Year Year
PARTICULARS 1997/98 1996/97
Season 01/11/97 to 06/11/96 to
15/04/98 08/04/97
Number of Days worked 165 154
Cane Crushed M. Tons 685,845 459,857
Average Recovery 10.16% 10.56%
Production of Sugar M. Tons 70,025 48,266
Production of Molasses M. Tons 32,345 22,865
OPERATING RESULTS AND COST OF MANUFACTURING
Your Mill was able to utilize its extended capacity due to a larger sugarcane crop in Sindh which touched
a record high last year. The Government announced a new sugarcane price of Rs. 36 per 40 Kgs. which was
an increase of 47% over the previous year's support price. Your mill also had to pay quality premium to the
tune of 80.10 million. At such high cost of manufacture due to raw material price alone, the industry definitely
was unable to compete in the international market.
MARKETING
The sugar production of the country touched a peak level of approximately 3.50 million tons, while the
national requirement was estimated at 2.90 million tons. As a result the sugar prices collapsed to levels not
seen for many years at a time when sugarcane prices were set very high. Those mills that had to sell during
the crushing season and were unable to stock sugar for off-season found themselves trapped at these prices.
The Government in order to support the industry at a time of huge surplus production did try its level
best to formulate a workable export policy. However, when the complete policy came in early May 1998, your
mill had sold 86% of its production with export no longer a possibility. Thus your mill was unable to fully recover
its conversion cost of sugar even at this high production level. It is indeed a sad reflection of the industry's
general well being.
PROSPECTS
The present season is expected to end by Eid-uI-Azha (end March) and sugar production is expected to
be similar to last year both for your factory and the industry in general. The recoveries, however, are exceptionally
low throughout, due to a damaged crop from persistent cloudy weather last summer. Your mill started the current
crushing season on 11th November, 1998 and by the Grace of Almighty Allah, the production was bagged at
42,990 tons, on 15th February, 1999 at an average recovery rate of 9.04%. The Government announced the
sugar export policy well in time this season and your mill has exported 7,650 metric tons todate. The sowing
for the next season is on the lower side and we pray to Almighty Allah for favourable weather conditions in
the hope of a healthy crop and blessings in all our endeavours.
CONCLUSION
I would like to close with thanks to the Company's management, Executives and entire working staff for
their valuable contribution to the affairs of the company. The employees and trade union deserve appreciation
for their strenuous efforts and may Allah bless us in our efforts.
Karachi: 16th February, 1999. DAWOOD EBRAHIM BAWANY
Chairman
IN THE NAME OF ALLAH, THE MOST GRACIOUS, THE MOST MERCIFUL
Dear Shareholders,
By the Grace of Almighty Allah, your Directors presenting the 34thAnnual Report and the Company's Audited
Accounts together with the Auditors' Report thereon for the year ended 30th September, 1998.
ACCOUNTS
Rupees
Net (Loss) for the year after Provision for Taxation (52,434,696)
Unappropriated Profit brought forward 187,803
----------
(52,246,893)
==========
PATTERN OF SHARE HOLDINGS
The pattern of share holdings as at 30th September, 1998 is annexed to this report.
AUDITORS
Messrs. Hyder Bhimji & Company, Chartered Accountants, Auditors of the company retire at this Annual General
Meeting and being eligible, offer their services for re-appointment as auditors of the company for the ensuing year.
COMPUTER AND Y2K
Your Company has acquired necessary software/hardware equipment to face the millennium challenge. We shall
be Y2K compliant in due course.
For and on behalf of the Board
Karachi- 16th February, 1999. KHALID EBRAHIM BAWANY
Chief Executive
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the annexed Balance Sheet of BAWANY SUGAR MILLS LIMITED as at September 30, 1998
and the 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 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 expenditures 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 September 30,1998 and of the profit and the changes in
financial position (Cash Flow Statement) for the year then ended; and
(d) in our opinion no Zakat was deductible at source under Zakat and Ushr Ordinance, 1980.
HYDER BHIMJI & CO.
Karachi: 16th February, 1999. Chartered Accountants
BALANCE SHEET AS AT 30TH SEPTEMBER, 1998
Notes 1998 1997
Rupees Rupees
SHARE CAPITAL AND RESERVES
SHARE CAPITAL
Authorised:
15,000,000 Ordinary Shares of Rs.10/- each. 150,000,000 150,000,000
========== ==========
Issued, Subscribed and Paid-up Capital 2 83,091,340 79,134,610
RESERVES AND SURPLUS
Reserves 3 172,400,000 176,356,730
(Loss)/Unappropriated Profit (52,246,893) 187,803
---------- ----------
120,153,107 176,544,533
---------- ----------
203,244,447 255,679,143
REDEEMABLE CAPITAL 4 137,885,658 131,489,567
LONG-TERM LOAN 5 34,656,346 26,745,649
DEFERRED LIABILITIES
Deferred Taxation 43,000,000 43,000,000
Employees Retirement Gratuity 18,600,000 18,600,000
---------- ----------
61,600,000 61,600,000
CURRENT LIABILITIES & PROVISIONS
Current Maturity of Redeemable
Capital & Long term Loan 6 8,745,921 32,043,408
Short term running finance 7 161,962,238 120,968,944
Workers' (Profit) Participation Fund 8 391,211 576,695
Creditors, Accrued and Other Liabilities 9 88,839,717 99,710,662
Provision for Taxation 10 11,913,480 15,658,005
---------- ----------
271,852,567 268,957,714
CONTINGENCIES & COMMITMENTS 11
---------- ----------
709,239,018 744,472,073
========== ==========
TANGIBLE FIXED ASSETS
Operating Assets 12 394,069,067 404,276,660
Capital Work-in-Progress 13 1,104,875 1,417,185
---------- ----------
395,173,942 405,693,845
LONG-TERM INVESTMENTS 14 45,757,986 57,052,000
LONG-TERM DEPOSITS 15 5,698,058 7,447,675
CURRENT ASSETS
Stores and Spares 16 42,087,155 39,099,093
Stock-in-Trade 17 35,616,746 21,576,356
Trade Debts 18 140,211,153 145,701,718
Loans, Advances & Other Receivables 19 39,483,782 48,771,507
Cash and Bank Balances 20 5,210,196 19,129,879
---------- ----------
262,609,032 274,278,553
---------- ----------
709,239,018 744,472,073
========== ==========
Note: The annexed notes form an integral part of these accounts.
KHALID EBRAHIM BAWANY DAWOOD EBRAHIM BAWANY
Chief Executive Chairman
PROFIT AND LOSS ACCOUNT FOR THE YEAR
ENDED 30TH SEPTEMBER, 1998
Notes 1998 1997
Rupees Rupees
Sales 21 954,079,939 810,074,101
Less: Cost of Sales 22 893,311,643 726,994,270
---------- ----------
GROSS PROFIT 60,768,296 83,079,831
---------- ----------
Establishment and Other Expenses 23 48,755,189 34,336,900
Selling and Distribution Expenses 24 4,344,914 766,823
Workers' (Profit) Participation Fund - 315,070
---------- ----------
53,100,103 35,418,793
---------- ----------
Operating Profit before the following: 7,668,193 47,661,038
Other Income 25 13,013,075 12,749,333
---------- ----------
20,681,268 60,410,371
---------- ----------
Financial Expenses 26 50,950,224 40,809,815
Lease Rent 16,466,390 13,278,220
Charity and Donation 27 999,350 336,000
---------- ----------
68,415,964 54,424,035
---------- ----------
(Loss)/Profit before taxation (47,734,696) 5,986,336
Provision for taxation 28 (4,700,000) (4,000,000)
---------- ----------
(Loss)/Profit after taxation (52,434,696) 1,986,336
Transfer from General Reserve - 1,800,000
Unappropriated Profit brought forward 187,803 358,197
---------- ----------
Available for Appropriation (52,246,893) 4,144,533
APPROPRIATION:
Transfer from General Reserve 4,154,570 -
Transfer to Capital Reserve for Issue of
Bonus Shares @ 5% (1997: 5%) (4,154,570) 3,956,730
---------- ----------
- 3,956,730
---------- ----------
(LOSS)/UNAPPROPRIATED PROFIT CARRIED FORWARD (52,246,893) 187,803
========== ==========
Note: The Annexed notes form an integral part of these accounts.
KHALID EBRAHIM BAWANY DAWOOD EBRAHIM BAWANY
Chief Executive Chairman
STATEMENT OF CHANGES IN FINANCIAL POSITION
(CASH FLOW STATEMENT)
FOR THE YEAR ENDED 30TH SEPTEMBER, 1998
1998 1997
Rupees Rupees
CASH FLOW FROM OPERATING ACTIVITIES
(Loss)/Profit before taxation (47,734,696) 5,986,336
ADD: Item not effecting funds:
Depreciation 23,519,735 22,922,577
(Profit) on sale of fixed assets (976,357) (377,907)
Financial Charges 50,950,224 40,809,815
---------- ----------
25,758,906 69,340,821