| Faran Sugar Mills Limited |
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| CONTENTS |
|
|
|
| Company
Profile |
|
|
| Notice
of Meeting |
|
|
| Five
years at a Glance |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholdings |
|
|
|
| COMPANY
PROFILE |
|
|
| BOARD
OF DIRECTORS: |
|
| 1. Mr. Mohd. Amin Ahmed Bawany |
|
Chief Executive |
|
| 2.
Mr. Omar Amin Bawany |
|
| 3.
Mr. Ahmed Ali Mohammed Amin |
|
| 4.
Mr Iqbal A. Rehman |
|
| 5.
Mr. Abdul Wahid Ghaffar |
|
| 6.
Mr. Wusooq Khaleeli (N.I.T.) |
|
| 7.
Mr. Hammad Mahmood (N.I.T.) |
|
| 8.
Mr. Abdul Latif Uqaili (I.C.P.) |
|
| 9.
Mr. Z. I. Saifi (B.E.L.) |
|
|
| COMPANY
SECRETARY |
Mr. Iqbal A. Rehman |
|
|
| AUDITORS |
|
Rahim Iqbal Rafiq &
Co. |
|
|
Chartered Accountants |
|
|
| BANKERS |
|
Habib Bank Limited |
|
|
|
Bank Al - Habib |
|
|
|
| REGISTERED OFFICE |
Bank House No. 1, |
|
|
3rd Floor, Habib Square, |
|
|
M.A. Jinnah Road, |
|
|
Karachi 74000. |
|
|
| MILLS |
|
Shaikh Bhirkio, |
|
|
Taluka: Tando Mohd. Khan |
|
|
District: Hyderabad |
|
|
SINDH |
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 17th Annual General Meeting of the Company will be
held on Wednesday, |
|
| 24th
March, 1999 at 11:00 A.M., at RAFFIA CHOUDRI MEMORIAL CENTRE, GROUND FLOOR,
SIDCO |
|
| CENTRE,
264 R.A. LINES, KARACHI. to transact the following business:- |
|
|
| ORDINARY
BUSINESS |
|
|
| 1.
To read and confirm the minutes of the 16th Annual General Meeting of the
company held on 26th |
|
| March, 1998. |
|
|
| 2.
To read and consider accounts for the year ended 30th September, 1998 and
reports of Directors and |
|
| Auditors
thereon. |
|
|
| 3.
To appoint Auditors for the year 1998-99 and to fix their remuneration. The
present auditors |
|
| M/s.
Rahim Iqbal Rafiq & Co. Chartered Accountants, being eligible have
offered themselves for |
|
| re-appointment. |
|
|
| 4.
To transact any other business with the permission of the Chair. |
|
|
| BY
ORDER OF THE BOARD |
|
|
|
(Iqbal A. Rehman) |
|
| Karachi:
Dated: 25th February, 1999. |
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The Shares transfer Books of the Company will remain closed from March 20,
1999 to March 24, |
|
| 1999.
(both days inclusive) |
|
|
| 2.
A member entitled to attend and vote at the General Meeting is entitled to
appoint a proxy to attend |
|
| and
vote on his behalf. Form of Proxies in order to be valid must be received at
the Registered Office |
|
| of
the Company 48 hours before the time of the Meeting. A proxy must be a member
of the Company. |
|
|
| 3.
Shareholders are requested to notify any change in address. |
|
|
| BY
ORDER OF THE BOARD |
|
|
|
(Iqbal A. Rehman) |
|
| Karachi:
Dated: 25th February, 1999. |
|
Company Secretary |
|
|
|
| FIVE
YEARS AT A GLANCE 1998 |
|
|
|
1998 |
1997 |
1996 |
1995 |
1994 |
|
|
| OPERATIONAL
PERFORMANCE |
|
|
|
|
| Cane
crushing (M.Tons) |
|
752,380 |
533,671 |
604,667 |
622,293 |
606,039 |
|
|
| Sugar
Production (M.Tons) |
|
76,570 |
56,328 |
59,688 |
57,203 |
53,557 |
|
|
| Average
Recovery |
|
10.17% |
10.56% |
9.87% |
9.80% |
8.80% |
|
|
| EARNINGS
AND DIVIDEND |
|
|
|
|
| Sales
(Rs. in Million) |
|
1,103.306 |
934.158 |
781.890 |
625.458 |
576.951 |
|
|
| Operating
Profit/(Loss) (Rs. in Million) |
62.787 |
82.217 |
96.138 |
25.702 |
(11.442) |
|
|
| Earning/(Loss)
Before Taxation |
|
(2.747) |
(0.430) |
25.95 |
(38.081) |
(56.098) |
|
|
| (Rs.
in Million) |
|
|
|
|
| Earnings/(Loss)
After Taxation |
|
(8.747) |
(5.231) |
21.40 |
(41.782) |
(58.998) |
|
|
| (Rs.
in Million) |
|
|
|
|
| Earnings
Per Share After Tax |
|
-- |
-- |
17.05 |
-- |
-- |
|
|
| Cash dividend |
|
-- |
-- |
-- |
-- |
-- |
|
|
| Stock Dividend |
|
-- |
-- |
-- |
-- |
-- |
|
|
| Break-up
Value Per Share |
|
11.32 |
11.27 |
12.44 |
10.73 |
14.06 |
|
|
| SHARE
HOLDERS EQUITY |
|
|
|
|
| (Rs.
in Million) |
|
|
|
|
| Share Capital |
|
125.513 |
125.513 |
125.513 |
125.513 |
125.513 |
|
|
| Free
Reserve and Surplus |
|
16.597 |
15.931 |
30.640 |
9.172 |
109.000 |
|
|
| Shareholders
Equity |
|
142.111 |
141.445 |
156.154 |
134.685 |
176.467 |
|
|
|
|
|
|
| DIRECTORS'
REPORT |
|
|
| IN THE NAME OF ALLAH THE MOST GRACIOUS
THE MOST MERCIFUL |
|
|
| Dear
Shareholders, |
|
|
| On
behalf of the Board of Directors of the Company I hereby present the 17th
Annual Report of the Company |
|
| for
the period ended 30-09-98. |
|
|
| The
Operating Results of the Company are as under:- |
|
| Sale |
|
Rs. |
1,103,306,187 |
|
|
| Gross Profit |
|
Rs. |
95,112,974 |
|
|
| Profit/(Loss)
after taxation |
|
Rs. |
(8,747,147) |
|
|
| Accumulated
(Loss) brought forward |
Rs. |
(83,655,243) |
|
|
| Accumulated
(Loss) carried forward |
Rs. |
(92,402,390) |
|
|
|
| OPERATING
RESULTS |
|
| In
1997-98 season, we commenced crushing on 3rd November 97 and continued up to
15th April 98. The |
|
| comparative
statistics of cane crushing and sugar produced are given below. |
|
|
|
Year 1998 |
Year 1997 |
|
|
| No.
of Days Worked |
|
164 |
153 |
|
| Cane
Crushed M.Tons |
|
752380 |
533,671 |
|
| Average
Recovery % |
|
10.17% |
10.56% |
|
| Production
of Sugar M. Tons |
|
76,570 |
56,328 |
|
|
| During
the year under review the cane crop was bumper. Your factory achieved better
results. Cane crushing |
|
| increased
by 40% and sugar production by36% as compared to last year, which is the
highest ever in the |
|
| history
of the Company. |
|
|
| The
Government, at the same time, increased cane support price from Rs. 24/50 to
Rs. 36/- per Kg. and also |
|
| Quality
Premium from 0.27 to 0.32 per 0.1% sucrose recovery over and above 8.7%.This
exorbitant increase |
|
| in
support price by about 47% had a negative impact on the sugar industry. |
|
|
| SALES |
|
| Sugar
production, resulting from larger sugarcane produce, also set a record,
reaching the level of |
|
| 3.50
million tons in 1997-98, an increase of about 27% over and above production
of the previous year. Thus |
|
| the
country became surplus in sugar requirement by about 700,000 tons with the
expected domestic |
|
| consumption
of 2.8 Million tons. Sugar being surplus, its price in the local market
collapsed, while the sugar- |
|
| cane
price (paid by sugar mills to growers) was set very high. Most of the sugar
mills had to sell their stock |
|
| at
low price in local market, to meet their day-to-day requirements i.e. payment
to growers, wages to workers, |
|
| and
other Government levies. |
|
|
| EXPORT |
|
| After
protracted deliberations of the PSMA with the Government furnctionaries
concerned, the Government |
|
| allowed
export of sugar but very late. By that time, the International Market had
depressed. Due to severe |
|
| competition
in the International Market, the Government allowed export rebate but it came
in very late. |
|
| By
that time, however, most of the sugar mills had off loaded their 80%
production in the local market at |
|
| very
low selling price. |
|
|
| All
the above factors have severely affected the profitability of the Company. |
|
|
| CURRENT
SEASON 1998-99 |
|
| The
mill has started crushing season 1998-99 from 11th November 1998 and the
crushing/production |
|
| figures
upto 24th February 1999 are given here below:- |
|
|
| Cane
Crushed M.Tons |
|
659,434 |
|
| Sugar Recovery |
|
9.00 % |
|
| Sugar
Produced M. Tons |
|
58,108 |
|
|
| The
Government has increased Quality Premium from paisa 0.32 to 0.50 with the
result that Quality |
|
| Premium
to be paid to Growers by the mills will increase considerably during the
current season. |
|
|
| FUTURE
OUT LOOK |
|
| In
current season sugarcane crop is better than last year but sucrose content is
very low due to weather |
|
| condition,
as such the production of sugar might remain the same as last year. |
|
|
| During
the current season also the sugar industry is facing the problem of surplus
stock of sugar. However, |
|
| the
Government has announced Export Policy well in time, but the International
Market is at its lowest |
|
| level
since last 12 years. The sugar mills are trying to utilitze maximum quota
allowed by the Government |
|
| for
export of sugar so that the local sales price may be maintained at a
reasonable level. |
|
|
| In
these circumstances, the Management is trying hard to get better results with
the help of Almighty |
|
| Allah. |
|
|
| AUDITORS |
|
| M/s.
Rahim lqbal Rafiq & Co. (Chartered Accountants) Auditors of the Company
have conveyed their |
|
| willingness
to be re-appointed as Auditors for the next year. |
|
|
| PATTERN
OF SHARE HOLDING |
|
| The
pattern of shares holding as on 30 the September, 1998 is annexed. |
|
|
| COMPUTER
ANDY2K |
|
| Your
Company is trying to acquire necessary software/hardware equipment to face
the millennium challenge. |
|
| We
shall be Y2K compliant in due course. |
|
|
| 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 best
results. |
|
|
|
On Behalf of the
Directors |
|
|
FARAN SUGAR MILLS
LIMITED, |
|
|
| Karachi. |
|
MUHAMMAD AMIN AHMED
BAWANY |
|
| Dated:
25th February 1999 |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of FARAN SUGAR MILLS LIMITED as at
September 30, |
|
| 1998
and the related Profit and Loss Account and Statement of Changes in Financial
Position 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)
Provision for diminution in the value of investments amounting to Rs. 38.71
million has not |
|
| been
made in these financial statements. Had the provision been made, the loss lot
he year |
|
| would
have increased by this amount. |
|
|
| (b)
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 year |
|
| were
in accordance with the objects of the Company; |
|
|
| (c)
except for the effect on the financial statements of the matter referred to
in para (a) above, 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 statement of changes in financial
position, |
|
| 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 loss and the
changes in |
|
| financial
position for the year then ended, and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| Karachi: |
|
RAHIM IQBAL RAFIQ &
COMPANY |
|
| Dated:
25th February, 1999 |
|
Chartered Accountants. |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
Note |
RUPEES |
RUPEES |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
capital |
|
| 20,000,000
ordinary shares of Rs. 10/- each |
|
200,000,000 |
200,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
3 |
125,513,300 |
125,513,300 |
|
| Revenue
reserve-general |
|
3.1 |
109,000,000 |
99,586,502 |
|
| Unappropriated
loss |
|
(92,402,390) |
(83,655,243) |
|
|
| REDEEMABLE
CAPITAL |
|
4 |
100,622,011 |
119,028,179 |
|
|
|
|
|
| LONG-TERM
LOANS |
|
5 |
25,432,882 |
37,548,136 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
6 |
70,302,029 |
84,991,750 |
|
|
| CURRENT
LIABILITIES |
|
|
| Short-term
finances |
|
7 |
212,448,187 |
179,832,887 |
|
| Current portion / over due
of long term |
|
| liabilities |
|
8 |
74,609,207 |
83,506,689 |
|
| Creditors,
accrued and other liabilities |
9 |
193,862,860 |
139,603,659 |
|
| Taxation |
|
12,444,911 |
8,779,510 |
|
| Proposed
dividend |
|
- |
9,413,498 |
|
|
----------- |
----------- |
|
|
493,365,165 |
421,136,243 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
10 |
|
|
----------- |
----------- |
|
|
831,832,997 |
804,148,867 |
|
|
============ |
============ |
|
| FIXED ASSETS |
|
|
| Operating
assets |
|
11 |
536,076,738 |
543,408,441 |
|
|
| LONG-TERM
INVESTMENTS |
|
12 |
45,263,330 |
45,263,330 |
|
|
|
| LONG
TERM DEPOSITS |
|
8,324,964 |
7,190,254 |
|
|
| CURRENT ASSETS |
|
|
| Stores
and Spares |
|
13 |
40,694,667 |
36,870,158 |
|
|
|
|
| Stock in trade |
|
14 |
65,663,603 |
56,464,050 |
|
|
|
|
| Trade
debts unsecured - considered good |
|
25,818,574 |
18,447,949 |
|
|
|
|
| Loans,
advances and prepayments |
|
15 |
68,492,103 |
76,427,742 |
|
|
|
|
| Other
receivables |
|
16 |
37,266,075 |
188,132 |
|
|
|
|
| Cash
and bank balances |
|
17 |
4,232,943 |
19,888,811 |
|
|
---------- |
---------- |
|
|
242,167,965 |
208,286,842 |
|
|
---------- |
---------- |
|
|
831,832,997 |
804,148,867 |
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
| Karachi |
|
| Dated:
25th February, 1999 |
|
|
| Mohammad
Amin Ahmed Bawany |
Omar Amin Bawany |
|
Ahmed Ali Mohammad Amin |
|
| Chief
Executive |
Director |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1998. |
|
|
|
|
1998 |
1997 |
|
|
Note |
RUPEES |
RUPEES |
|
| Sales |
|
18 |
1,103,306,187 |
934,157,744 |
|
| Cost of sales |
|
19 |
(1,008,193,213) |
(810,611,190) |
|
|
------------- |
------------- |
|
| Gross Profit |
|
95,112,974 |
123,546,554 |
|
|
| Operating
Expenses |
|
| Administration
and general |
|
20 |
23,213,241 |
22,313,468 |
|
| Selling
and distribution |
|
21 |
1,517,291 |
1,870,667 |
|
| Machinery
lease rent |
|
7,595,452 |
17,145,308 |
|
|
----------- |
----------- |
|
|
(32,325,984) |
(41,329,443) |
|
|
----------- |
----------- |
|
| Operating
profit |
|
62,786,990 |
82,217,111 |
|
|
| Other charges |
|
22 |
(431,634) |
(354,373) |
|
| Other income |
|
23 |
3,251,054 |
3,446,183 |
|
| Financial
charges |
|
24 |
(80,888,379) |
(85,739,707) |
|
|
|
----------- |
----------- |
|
|
(78,068,959) |
(82,647,897) |
|
|
----------- |
----------- |
|
| Profit
/ (loss) before taxation |
|
(15,281,969) |
(430,786) |
|
| Reversal
of liabilities |
|
25 |
12,534,822 |
-- |
|
|
----------- |
----------- |
|
|
(2,747,147) |
(430,786) |
|
| Provision
for taxation - minimum tax |
26 |
(6,000,000) |
(4,800,000) |
|
|
----------- |
----------- |
|
| Profit
/ (loss) after taxation |
|
(8,747,147) |
(5,230,786) |
|
| Accumulated
loss brought forward |
|
(83,655,243) |
(78,424,457) |
|
|
----------- |
----------- |
|
|
(92,402,390) |
(83,655,243) |
|
| Appropriation |
|
|
|
| Transfer
from general reserve |
|
-- |
9,413,498 |
|
| Proposed
dividend @ Nil (1997: 7.5%) |
|
-- |
(9,413,498) |
|
|
----------- |
----------- |
|
|
-- |
-- |
|
| Accumulated
loss carried forward |
|
(92,402,390) |
(83,655,243) |
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
| Mohammad
Amin Ahmed Bawany |
Omar Amin Bawany |
|
Ahmed All Mohammad Amin |
|
| Chief
Executive |
Director |
|
Director |
|
|
|
| STATEMENT OF CHANGES |
IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1998. |
|
|
|
1998 |
1997 |
|
|
RUPEES |
RUPEES |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Profit/(Ioss)
before taxation |
|
(2,747,147) |
(430,786) |
|
|
| Adjustment
for: |
|
| Depreciation |
|
30,060,306 |
29,413,155 |
|
| Financial
charges |
|
80,888,379 |
88,785,175 |
|
| Reversal
of liability |
|
(12,534,822) |
-- |
|
| Gain
on sale of assets |
|
(20,952) |
(905,151) |
|
|
----------- |
----------- |
|
|
98,392,911 |
117,293,179 |
|
|
----------- |
----------- |
|
| Operating
profit before working capital changes |
|
95,645,764 |
116,862,393 |
|
|
| Changes
in working capital |
|
|
| (Increase)
/ decrease in current assets |
|
|
| Stores
and spares |
|
(3,824,509) |
501,059 |
|
| Stock in trade |
|
(9,199,553) |
(19,700,623) |
|
| Trade debts |
|
(7,370,625) |
19,898,470 |
|
| Loans,
advances and prepayments |
|
14,246,632 |
3,410,066 |
|
| Other
receivables |
|
(37,077,943) |
1,237,700 |
|
|
| Increase/(Decrease)
in current liabilities |
|
| Creditors'
accrued and other liabilities |
|
83,345,580 |
6,390,817 |
|
|
----------- |
----------- |
|
|
40,119,582 |
11,737,489 |
|
|
----------- |
----------- |
|
| Cash
generated from operations |
|
135,765,346 |
128,599,882 |
|
|
|
|
| Taxes paid |
|
(7,580,198) |
(3,820,306) |
|
| Financial
charges paid |
|
(111,040,152) |
(80,340,430) |
|
| Dividend paid |
|
-- |
-- |
|
|
----------- |
----------- |
|
|
(118,620,350) |
(84,160,736) |
|
|
----------- |
----------- |
|
| Net
cash from operating activities |
|
17,144,996 |
44,439,146 |
|
|
=========== |
=========== |
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
(23,500,751) |
(20,694,361) |
|
| Proceed
from disposal of fixed assets |
|
793,100 |
1,668,850 |
|
| Long
term security deposits |
|
(1,134,710) |
1,046,735 |
|
|
----------- |
----------- |
|
| Net
cash used in investing activities |
|
(23,842,361) |
(17,978,776) |
|
|
=========== |
=========== |
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Repayment
of redeemable capital - net |
|
(20,947,590) |
(766,486) |
|
| Repayment
of long term loans - net |
|
(18,471,314) |
(16,707,026) |
|
| (Decrease)
/increase in short term finances |
|
32,615,300 |
(3,533,079) |
|
| Payment
of Deferred liability |
|
(2,154,889) |
-- |
|
|
----------- |
----------- |
|
| Net
cash (used in) / from financing activities |
|
(8,958,503) |
(21,006,591) |
|
|
========== |
========== |
|
| Net
increase in cash |
|
(15,655,868) |
5,453,779 |
|
| Cash
and bank balance at the beginning of the year |
|
19,888,811 |
14,435,032 |
|
|
----------- |
----------- |
|
| Cash
and bank balance at the end of year |
|
4,232,943 |
19,888,811 |
|
|
========== |
========== |
|
|
| Mohammad
Amin Ahmed Bawany |
Omar Amin Bawany |
|
Ahmed All Mohammad Amin |
|
