| Habib Sugar Mills Limited |
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
| Contents |
|
|
| Company
Information |
|
| Notice
of Annual General Meeting |
|
| Directors'
Report |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholdings |
|
|
|
|
|
| Company
Information |
|
|
| Board of |
Hamid D. Habib |
|
Chairman |
|
| Directors |
Ali Raza D. Habib |
|
|
Asghar D. Habib |
|
|
Lic. jur. Wolfgang E.
Seeger |
|
|
Farzana Munaf |
|
|
Murtaza H. Habib |
|
|
Hasnain A. Habib |
|
|
Raeesul Hasan |
|
Chief Executive |
|
|
| Secretary |
Ismail Merchant |
|
|
|
| Bankers |
ABN-AMRO Bank N.V. |
|
|
Allied Bank of Pakistan
Limited |
|
|
American Express Bank
Limited |
|
|
Bank AL Habib Limited |
|
|
Citibank N.A. |
|
|
Habib Bank AG Zurich |
|
|
Habib Bank Limited |
|
|
Muslim Commercial Bank
Limited |
|
|
National Bank of Pakistan |
|
|
Societe Generale, The
French and International Bank |
|
|
Standard Chartered Bank |
|
|
| Auditors |
Hyder Bhimji & Co. |
|
|
Chartered Accountants |
|
|
| Registered |
Imperial Court, 3rd
Floor, |
|
| Office |
Dr. Ziauddin Ahmed Road, |
|
|
Karachi-75530 |
|
|
| Mills |
Nawabshah |
|
|
|
| Notice
of Annual General Meeting |
|
|
| Notice
is hereby given that the Thirty-seventh Annual General Meeting of Habib Sugar
Mills Limited |
|
| will
be held on Monday, March 22, 1999 at 11.00 a.m. at Marriott Hotel, Abdullah
Haroon Road, |
|
| Karachi,
to transact the following business: |
|
|
| 1.
To confirm the minutes of the Thirty-sixth Annual General Meeting of the
Company held on |
|
| March
31, 1998. |
|
|
| 2.
To receive and consider the audited accounts, the Directors' report and the
Auditors' report |
|
| for
the year ended September 30, 1998. |
|
|
| 3.
To approve payment of cash dividend @ 20% i.e. Re. 1/- per share of Rs. 5
each for the year |
|
| ended
September 30, 1998. |
|
|
| 4.
To elect Directors of the Company in accordance with the provisions of the
Companies |
|
| Ordinance,
1984. The number of elected Directors of the Company fixed by the Board |
|
| of
Directors in their meeting held on February 15, 1999 is Seven (7). The
retiring Directors |
|
| are
Mr. Hamid D. Habib, Mr. All Raza D. Habib, Mr. Asghar D. Habib, Mr. Lic.Jur. |
|
| Wolfgang
E. Seeger, Ms. Farzana Munaf, Mr. Murtaza H. Habib and Mr. Hasnain A. Habib. |
|
|
| 5.
To appoint auditors for the year ending September 30, 1999 and fix their
remuneration. |
|
|
| Special
Business |
|
|
| 6.
To approve the remuneration of Chief Executive and other working Directors of
the |
|
| Company. |
|
|
|
By order of the Board |
|
|
|
Ismail Merchant |
|
| Karachi:
February 15, 1999 |
|
Secretary |
|
|
| Notes: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from Tuesday,
March 9, 1999 |
|
| to
Monday, March 22, 1999, both days inclusive. |
|
|
| 2.
A member entitled to attend and vote at this meeting is entitled to appoint
another member |
|
| of
the Company as a proxy to attend and vote on his/her behalf. Proxies in order
to be |
|
| effective
must be received at the Registered Office of the Company duly stamped and
signed |
|
| not
less than 48 hours before the meeting. |
|
|
| 3.
Members are requested to promptly communicate to the Company any change in
their |
|
| addresses. |
|
|
| 4.
For item No. 6 statement under section 160 of the Companies Ordinance, 1984
is being sent |
|
| to
all the members. |
|
|
|
| Directors'
Report |
|
|
| Dear
Members - Assalam-o-Alekum |
|
|
| On
behalf of my colleagues on the Board, I welcome you to the Thirty-seventh
Annual General |
|
| Meeting
of the Company and present the Annual Report alongwith the audited accounts
of the |
|
| Company
for the year ended September 30, 1998. |
|
|
| Operating
Results |
|
| By
the Grace of Allah, your Company's operations for the year resulted in a
pre-tax profit of |
|
| Rs.
64.279 million. The financial results and appropriations, as recommended by
the Board of |
|
| Directors
are as follows: |
|
|
|
(Rupees in thousands) |
|
|
| Profit
for the year before taxation |
|
64,279 |
|
| Less:
Provision for taxation |
|
22,500 |
|
|
---------- |
|
| Profit
after taxation |
|
41,779 |
|
| Unappropriated
profit brought forward |
|
5,072 |
|
|
---------- |
|
| Profit
available for appropriation |
|
46,851 |
|
| Appropriations: |
|
| Proposed-
Cash Dividend @ 20% i.e. Re. 1/- |
|
| per
share of Rs. 5 each |
|
32,400 |
|
|
| -
Transfer to general reserve |
|
12,500 |
|
|
---------- |
|
|
44,900 |
|
|
---------- |
|
| Unappropriated
profit carried forward |
|
1,951 |
|
|
========== |
|
|
|
|
| Performance
Review |
|
|
|
|
|
|
|
| Sugar Unit |
|
| The
crushing season 1997-98 commenced on November 14, 1997 and the plant operated
for 144 |
|
| days,
producing 68,895 tons of sugar with average sucrose recovery of 8.70 percent.
Comparative |
|
| statistics
of operations are as under: |
|
|
|
1997-98 |
1996-97 |
|
|
| Crushing
duration |
|
Days |
144 |
122 |
|
| Sugar-cane
crushed |
|
Tons |
791,636 |
586,307 |
|
| Average
recovery |
|
% |
8.70 |
8.84 |
|
| Sugar
production |
|
Tons |
68,895 |
51,745 |
|
|
| The
comparative statistics of the operations as shown above indicate an increase
of 35% in quantum |
|
| of
sugar-cane crushed as compared with the previous year. The sugar-cane
availability improved on |
|
| account
of increase in acreage under sugar-cane cultivation by the growers, who
switched over to |
|
| sugar-cane
from cotton and banana for better returns on account of increase in support
price from |
|
| Rs.
24.50 to Rs. 36.00 per 40 kgs. ex-mill. |
|
|
| The
production during the season was 68,895 tons as compared with 51,745 tons
produced during |
|
| the
last' season. Average sucrose recovery was lower and is attributed to the
continuing increased |
|
| acreage
of B-43/60 and CO-1148 varieties of sugar-cane in upper Sindh, which are
banned varieties. |
|
|
| Sugar
prices in the domestic market remained depressed due to excess stocks carried
over from |
|
| the
previous year and increased quantum of sugar production during the season by
about 49% in |
|
| the
country and about 34% in the province of Sindh. The government on account of
surplus sugar |
|
| available
in the country allowed export and granted export rebate in view of the
depressed sugar |
|
| prices
in international market. The company availed the opportunity of exporting
sugar under the |
|
| newly
announced government policy and Alhamdolillah, was able to export a sizable
quantity during |
|
| the
year under review. |
|
|
| In
view of the increased quantum of sugar produced and effective cost control
measures adopted |
|
| by
the company, the operating profit of the unit was Rs. 34.443 million as
compared with Rs. 24.912 |
|
| million
in the previous year. |
|
|
| Distillery
Unit |
|
|
| The
comparative statistics of the unit's operations are given below: |
|
| ----------------------------------------------------------------------------- |
|
| Year |
|
Days of |
Molasses |
Industrial alcohol |
|
|
|
operation |
processed |
produced |
|
|
| ----------------------------------------------------------------------------- |
|
|
Tons |
Tons |
|
| ----------------------------------------------------------------------------- |
|
| 1997-98 |
|
347 |
43,666 |
8,880 |
|
| 1996-97 |
|
214 |
25,803 |
5,144 |
|
|
| In
the year 1997-98, the unit produced 8,880 tons of industrial alcohol, up from
5,144 tons in the |
|
| previous
year. |
|
|
| The
profitability of the unit registered an increase of Rs. 13.323 million over
the previous year due |
|
| to
increase in production and sales volumes and also increase in rental income
from storage facili- |
|
| ties
at Keamari terminals. |
|
|
| Pollution
Free Environment at Nawabshah |
|
|
| Your
Directors are pleased to inform you that the fly ash removal systems
installed in the boilers |
|
| continued
to operate satisfactorily and the spread of black soot particles has been
completely |
|
| eliminated.
Similarly, the slop treatment plant has fully eradicated the unpleasant smell
from the |
|
| distillery.
By the Grace of Allah, the successful operations of these projects have
ensured a pollution |
|
| free
environment for the citizens of Nawabshah. |
|
|
| Fabric Unit |
|
|
| The
comparative production data for two years is given below: |
|
|
|
| Year |
Days of |
Yarn |
Finished |
|
|
operation |
consumed |
product |
|
| ------------------------------------------------ |
|
|
Kgs. |
Kgs. |
|
|
| 1997-98 |
300 |
797,353 |
702,406 |
|
| 1996-97 |
300 |
944,888 |
789,589 |
|
| ------------------------------------------------ |
|
|
| During
the year under review, the Fabric unit earned a profit of Rs. 1.216 million
as against a loss |
|
| of
Rs. 4.623 million sustained during the previous year. This was made possible
by increase in sales |
|
| and
effective cost control measures undertaken by the company. |
|
|
| Every
endeavour is being made to increase the volume of sales by exploring markets
in addition to |
|
| European
countries that have been our main traditional buyers. |
|
|
| Future
Prospects |
|
|
| The
1998-99 crushing season commenced on November 13, 1998 and the mills have so
far crushed |
|
| 625,986
tons (1997: 486,768 tons) of sugar-cane with an average sucrose recovery of
8.29% (1997: |
|
| 8.76%). |
|
|
| The
government has maintained the sugar-cane support price of last year of Rs. 36
per 40 kgs. and |
|
| increased
the quality premium rate on sucrose recovery from 32 paisas to 50 paisas for
every 0.1% |
|
| increase
over the benchmark of 8.7% for Sindh province. |
|
|
| In
order to ensure availability of sufficient and improved quality of
sugar-cane, your company has |
|
| launched
an aggressive sowing compaign by providing incentives, loans and advances for
agricul- |
|
| tural
implements, seeds and fertilizers to cane growers. |
|
|
| The
sustaining force of a sugar mill in the ensuing season would be professional
and cost efficient |
|
| management
of its manpower and material resources, continued improvement in performance
abili- |
|
| ties
in relation to its competitors, besides the ability to procure high yielding
and good quality |
|
| sugar-cane
at competitive prices. |
|
|
| The
government has allowed export of sugar for the season 1998-99 and has
allocated quota to |
|
| each
mill equivalent to 25% of its production during 1997-98 season. Your company
has made all |
|
| necessary
arrangements and shall Inshallah, be able to export the entire quota
allocated. |
|
|
| The
performance of the Distillery unit, both in terms of production and sales, is
expected to be |
|
| maintained. |
|
|
| In
so far as the Fabric unit is concerned, every endeavour is being made to
explore markets other |
|
| than
the traditional ones who have been our main buyers so far. The unit is
expected to perform |
|
| better,
both in terms of production and sales during the ensuing year. |
|
|
| Election
of Directors |
|
|
| As
the tenure of existing directors expires on March 29, 1999, election of
directors for a term |
|
| of
three years will be held at the Thirty-seventh Annual General Meeting of the
Company on |
|
| March
22, 1999. Under section 178(1) of the Companies Ordinance, 1984, the number
of |
|
| elected
directors of the Company fixed by the Board of Directors is seven. The
retiring directors |
|
| are
Mr. Hamid D. Habib, Mr. Ali Raza D. Habib, Mr. Asghar D. Habib, Mr. Lic.jur.
Wolfgang |
|
| E.
Seeger, Ms. Farzana Munaf, Mr. Murtaza H. Habib and Mr. Hasnain A. Habib. |
|
|
| Year
2000 Compliance |
|
|
| The
Company has taken appropriate measures to be Y2K compliant before December
31, 1999. |
|
|
| Earnings
per share (EPs) |
|
| The
earnings per share is Rs. 1.29. |
|
|
| Pattern
of shareholdings |
|
|
| The
statement of the pattern of shareholdings of the Company as at September 30,
1998 is shown |
|
| on Page 33. |
|
|
| Auditors |
|
|
| The
present auditors Messrs. Hyder Bhimji & Co., Chartered Accountants retire
and being eligible |
|
| offer
themselves for reappointment. |
|
|
| General |
|
|
| The
Directors also place on record their appreciation of the devoted services and
hard work put in |
|
| by
the officers, staff and workers of the Company. |
|
|
|
On behalf of the Board of
Directors |
|
|
|
HAMID D. HABIB |
|
| Karachi:
February 15, t999 |
|
Chairman |
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Habib Sugar Mills Limited as at
September 30, 1998 |
|
| and
the related profit and loss account and 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 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 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 cash flows for the
year then |
|
| ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
Hyder Bhimji & Co. |
|
| Karachi:
February 15, 1999 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet as at September 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
(Rupees in thousands) |
|
|
| Capital
and Reserves |
|
| Share
capital |
|
| Authorised |
|
| 40,000,000
ordinary shares |
|
| of
Rs. 5 each |
|
200,000 |
200,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
3 |
162,000 |
144,000 |
|
| Reserves |
|
4 |
367,500 |
355,000 |
|
| Reserve
for issue of bonus shares |
|
- |
18,000 |
|
| Unappropriated
profit |
|
|
1,951 |
5,072 |
|
|
|
---------- |
---------- |
|
|
|
531,451 |
522,072 |
|
|
|
|
|
| Long-term
Loans - secured |
|
5 |
74,212 |
29,257 |
|
|
|
|
|
| Deferred
Liabilities |
|
6 |
176,641 |
158,770 |
|
|
| Current
Liabilities |
|
|
| Short-term
running finances - secured |
7 |
281,675 |
142,972 |
|
| Current
maturity of long-term loans |
8 |
45,045 |
24,012 |
|
| Creditors
and accrued expenses |
9 |
143,978 |
148,594 |
|
| Provision
for Income-tax |
|
|
17,727 |
12,162 |
|
| Proposed
dividend |
|
|
32,400 |
- |
|
|
|
---------- |
---------- |
|
|
|
520,825 |
327,740 |
|
|
|
|
| Contingencies
and Commitments |
10 |
|
|
---------- |
---------- |
|
|
1,303,129 |
1,037,839 |
|
|
========== |
========== |
|
|
|
|
| Tangible
Fixed Assets |
|
|
| Operating
fixed assets |
|
11 |
663,838 |
697,489 |
|
| Capital
work-in-progress |
|
12 |
- |
972 |
|
|
|
|
|
|
|
663,838 |
698,461 |
|
| Long-term
Investments |
|
13 |
28,767 |
28,767 |
|
|
|
|
|
| Long-term
Loans, Advances and Deposits |
14 |
6,170 |
7,487 |
|
|
|
|
|
| Current
Assets |
|
|
|
|
|
|
|
|
| Stores,
spares and loose tools |
15 |
52,367 |
49,107 |
|
| Stock-in-trade |
|
16 |
166,785 |
153,079 |
|
| Trade
debts - considered good |
17 |
203,583 |
28,759 |
|
| Loans,
advances, deposits, prepayments and |
|
|
|
| other
receivables - considered good |
18 |
147,811 |
24,231 |
|
| Cash
and bank balances |
|
19 |
33,808 |
47,948 |
|
|
----------- |
----------- |
|
|
604,354 |
303,124 |
|
|
----------- |
----------- |
|
|
1,303,129 |
1,037,839 |
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
| Raeesul
Hasan |
|
Asghar D. Habib |
|
| Chief
Executive |
|
Director |
|
|
|
| Profit
and Loss Account |
|
| for
the year ended September 30, 1998 |
|
|
|
|
Note |
1998 |
1997 |
|
|
(Rupees in thousands) |
|
|
| Sales |
|
20 |
1,120,825 |
1,041,176 |
|
| Cost
of sales |
|
21 |
923,758 |
915,629 |
|
|
---------- |
---------- |
|
|
197,097 |
125,547 |
|
|
| Administration
expenses |
|
22 |
35,884 |
34,853 |
|
| Selling
expenses |
|
23 |
61,067 |
19,645 |
|
| Financial
charges |
|
24 |
65,673 |
46,137 |
|
|
---------- |
---------- |
|
|
162,624 |
100,635 |
|
|
---------- |
---------- |
|
| Operating
Profit/(Loss) - Sugar Unit |
|
34,443 |
24,912 |
|
| -
Distillery Unit |
|
25 |
25,689 |
12,366 |
|
| -
Fabric Unit |
|
26 |
1,216 |
(4,623) |
|
|
---------- |
---------- |
|
| Total
operating profit |
|
61,348 |
32,655 |
|
| Other income |
|
27 |
6,840 |
5,899 |
|
|
|
---------- |
---------- |
|
|
|
68,188 |
38,554 |
|
| Other
charges |
|
28 |
3,909 |
2,478 |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
64,279 |
36,076 |
|
| Taxation |
|
29 |
22,500 |
14,500 |
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
41,779 |
21,576 |
|
| Unappropriated
profit brought forward |
|
5,072 |
1,496 |
|
|
---------- |
---------- |
|
| Available
for appropriations |
|
46,851 |
23,072 |
|
| Appropriations: |
|
| Cash
dividend @ 20% (1997: Nil) |
|
32,400 |
- |
|
| Transfer
to reserve for issue of |
|
| bonus
shares (1997 : 12.5%) |
|
- |
18,000 |
|
| Transfer
to general reserve |
|
12,500 |
- |
|
|
---------- |
---------- |
|
|
|
|
44,900 |
18,000 |
|
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
1,951 |
5,072 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Raeesul
Hasan |
|
Asghar D. Habib |
|
| Chief
Executive |
|
Director |
|
|
|
| Cash
Flow Statement |
|
| for
the year ended September 30, 1998 |
|
|
Note |
1998 |
1997 |
|
|
(Rupees in thousands) |
|
|
|
| Cash
flow from operating activities |
|
|
| Cash
generated from operations |
30 |
(134,257) |
124,828 |
|
| Road
cess and surcharge |
|
12,871 |
8,431 |
|
| Financial
charges paid |
|
(84,274) |
(68,292) |
|
| Taxes paid |
|
(11,935 ) |
(13,828) |
|
| Long-term
loans, advances and deposits |
|
1,317 |
(869) |
|
|
----------- |
----------- |
|
| Net
cash (outflow)/inflow from operating activities |
(216,278 |
50,270 |
|
|
| Cash
flow from investing activities |
|
|
| Fixed
capital expenditure |
|
(3,787 |
(19,648) |
|
| Sale
proceeds of fixed assets |
|
1,242 |
1,589 |
|
|
|
----------- |
----------- |
|
| Net
cash (outflow) from investing activities |
(2,545 |
(18,059) |
|
|
| Cash
flow from financing activities |
|
|
| Proceeds
from long-term loan |
|
100,000 |
- |
|
| Repayment
of long-term loans |
|
(34,012) |
(46,676) |
|
| Dividends
paid |
|
(8) |
(47) |
|
|
----------- |
----------- |
|
| Net
cash inflow/(outflow) from financing activities |
65,980 |
(46,723) |
|
|
----------- |
----------- |
|
| Net
(decrease) in cash and cash equivalents |
(152,843) |
(14,512) |
|
|
| Cash
and cash equivalents at the beginning |
