| Sanghar Sugar Mills Limited |
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
| CONTENTS |
|
|
| BOARD
OF DIRECTORS |
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTORS
REPORT |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHARE HOLDERS |
|
|
|
|
|
|
|
| BOARD
OF DIRECTORS |
|
|
| CHIEF
EXECUTIVE & MANAGING |
|
| DIRECTOR |
|
| Nasim Umar |
|
|
| DIRECTORS |
|
| Haji
Khuda Bux Rajar |
|
| Peer
Bux Junejo |
|
| Jam Mitha Khan |
|
| Wali Muhammad |
|
| Haji
Muhammad Anwer |
|
| Shamsuddin |
|
| Zahid
Ali H. Jamal (Nominee NIT) |
|
|
| COMPANY
SECRETARY |
|
| Aftab Umar |
|
|
| AUDITORS |
|
| A.
F. Ferguson & Co. |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE |
|
| 101
-Ocean Centre, |
|
| Talpur
Road, Karachi. |
|
| Phone
: 242-7171-2 |
|
| Fax
No. : 2410700 |
|
|
| FACTORY |
|
|
| 13th KM, |
|
| Sanghar-
Sindhri Road, |
|
| Deh
Kehar, District Sangbar, |
|
| Phone:
(02346) 42000-42043 |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| NOTICE
is hereby given that the THIRTEENTH Annual General Meeting of Sangbar Sugar
Mills Limited |
|
| will
be held on Friday, 26th March, 1999 at 6.30 p.m. at Beach Luxury Hotel,
Maulvi Tamizuddin |
|
| Khan
Road, Karachi, to transact the following business: |
|
|
| 1)
To confirm the minutes of the 12th Annual General Meeting held on 24th March,
1998. |
|
|
| 2)
To receive, consider and adopt the Audited Accounts for the year ended 30th
September 1998, |
|
| together
with Auditor's and Director's Report thereon. |
|
|
| 3)
To appoint Auditors for the year 1998-99 and fix their remuneration. The
retiring auditors, Messrs. |
|
| A.
F. Ferguson & Company. Chartered Accountants, being eligible have offered
themselves |
|
| for
re-appointment. |
|
|
| 4)
Any other business with permission of Chair. |
|
|
| By
order of the Board |
|
|
| Karachi |
|
AFTAB UMAR |
|
| 24th
February, 1999 |
|
(Company Secretary) |
|
|
| NOTES : |
|
|
| 1)
The Share Transfer Books of the company will remain closed from 15th March to
26th March, |
|
| 1999
(both days inclusive). |
|
|
| 2)
A member entitled to attend and vote at this meeting may appoint another
member as his/ |
|
| her
proxy to attend and vote. The form of proxy is annexed which, duly completed
should |
|
| reach
the Registered Office of the company at least 48 hours before the time of the
meeting. |
|
|
| 3)
Members are requested to notify immediately if any change in their registered
address. |
|
|
|
| DIRECTOR'S
REPORT |
|
|
| On
behalf of Board of Directors it is my pleasures to welcome you to the
THIRTEENTH ANNUAL |
|
| GENERAL
MEETING and present the Auditors Report and review the performance of the
Company. |
|
|
| OPERATING
RESULTS |
|
1998 |
1997 |
|
| Duration
of Season |
|
139 Days |
131 Days |
|
| Cane
Crushed (Tons) |
|
460,199 |
306,250 |
|
| Sugar
Produced (Tons) |
|
44,574 |
29,020 |
|
| Recovery |
|
9678% |
9.47% |
|
| Molasses
(Tons) |
|
22,621 |
15,458 |
|
|
|
|
| FINANCIAL
RESULTS |
|
1998 |
1997 |
|
|
Rs:(000) |
Rs:(000) |
|
| Profit/(Loss)
before Taxation |
|
(57,579) |
(20,921) |
|
| Provision
of Taxation |
|
(14,043) |
7,877 |
|
| Profit/(Loss)
after Taxation |
|
(43,536) |
(13,044) |
|
| Unappropriated
profit B/F |
|
12,109 |
25,153 |
|
| Profit
carried forward |
|
(31,427) |
12,109 |
|
|
| The
shortage of Sugar Cane continued in our area because of short cultivation of
Sugar Cane |
|
| majorly
effected by cotton sowing, which yielded higher priced for the crop. Such
situation also |
|
| prevailed
in areas where preference on sowing was given by cotton growers.. This
situation |
|
| resulted
in increase of price of Sugar Cane. Nearby sugar mills increased price of
cane and |
|
| entered
in price war. Although the Government has fixed minimum price of Cane to |
|
| Rs.36/=
per 40 Kg but none of the grower was willing to supply their corps on this
price. To |
|
| maintain
the Crushing the price of Cane had to be increased. |
|
|
| The
tight liquidity position because of growers demand for cash payments against
Sugar Cane |
|
| delivery,
and Banks not willing to increase/provide cash financing facilities, the
mills were forced |
|
| to
sell Sugar at low rates Government although allowed export in December 1997
for 200,000 |
|
| M.Tons
that was increased to 400,000 M.Tons in July 1998. This definitely helped the
Sugar |
|
| mills
to sell Sugar in international market main buyer being India. The
international rate started |
|
| from
$320 Per Ton in Jan.1998, felldown in June to $249.20 and $228.70 in Sept.
1998. |
|
| The
Govt. allowed rebate from Rs; 1,500/= per ton which was later on increased to |
|
| Rs.
4,500 = per ton. The refund payment of rebate is being allowed very late. The
Government |
|
| has
yet not paid even refund cases of August 1997. |
|
|
|
| During
the year the total production of Sugar in the country was around 3.555
million Tons |
|
| against
local requirement of 2.8 million Tons, thus leaving a surplus of 700,000 .Lac
Tons to flood |
|
| the market. |
|
|
| All
the above factors faced by your mill forced for continued borrowing from Bank
resulting payment |
|
| of
very high mark-up and liquidity problems. |
|
|
| Molasses
which is basically exported has very low demand and price offered has gone
down |
|
| from
Rs. 800/- to Rs. 600/- per ton. |
|
|
| FUTURE
PROSPECTS |
|
|
| The
current years prevailing Sugar cane price had given growers an incentive to
grow more |
|
| cane.
The Cultivation in our area has increased by around 17% than in the last
year. The late |
|
| rains
has damaged the crop and sucrose recovery has also been effected which is
1.2% to |
|
| 1.4%
less in the region than last season in the same period. The Govt. had allowed
exports |
|
| in
time and a substantial quantity has been exported by most of the mills. This
has resulted |
|
| positively
on local Sugar market, which has shown improvement from last year market
price. |
|
|
| It
is hoped that Sugar mill will continue achieving better price through out
season. The |
|
| Government
has increased quality premium from paisa 36 to paisa 50 an increase from 8.7% |
|
| benchmark
recovery. There is demand of high price of Sugarcane from growers. Few mills
have |
|
| entered
into price competition but we are resisting not to enter in price war and
hope to get |
|
| away
without involving your mill. The results for current season upto 23.2.99
February 1999 |
|
| are
as under. It is hoped that the year-end will show better financial results: |
|
|
| Cane Crushed |
|
366,769 Tons |
|
| Sugar made |
|
30,847 Tons |
|
| Recovery |
|
8.524 % |
|
|
| YEAR 2000 |
|
|
| To
have effective compliance for the status of the year 2000, necessary
modifications and testings |
|
| are
being made in the system, Inshallah, we will be Y2K compliant by September
1999. |
|
|
| LABOUR
AND MANAGEMENT RELATIONS |
|
|
| The
relation between the Labour Union (CBA) and the management of the Company
remained |
|
| cordial
during the period under report. In the end we thank all the Executives and
staff members |
|
| of
the Company and wish to place on record their appreciation for the loyalty
and devotion to |
|
| duty
by the officers and staff of the company. |
|
|
| Karachi |
|
NASIM UMAR |
|
| 24th
February, 1999. |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Sanghar 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. 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 |
|
|
| (ill)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 loss 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. |
|
|
| Karachi |
|
A. F, Ferguson & Co. |
|
| 24th
February, 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
(Rupees '000) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
capital |
|
| 20.000,000
share of Rs. 10 each |
|
200,000 |
200,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
3 |
119,460 |
119,460 |
|
| Reserve |
|
4 |
121,500 |
121,500 |
|
| (Accumulated
Ioss)/Unappropriated profit |
|
(31,427) |
12,109 |
|
|
|
---------- |
---------- |
|
|
|
209,533 |
253,069 |
|
| REDEEMABLE
CAPITAL |
|
5 |
46,443 |
- |
|
| LONG
-TERM LIABILITY |
|
6 |
6,979 |
- |
|
| OBLIGATIONS
UNDER FINANCE LEASES |
7 |
11,419 |
51,177 |
|
| DEFERRED
LIABILITIES |
|
8 |
74,642 |
90,839 |
|
| CURRENT
LIABILITIES |
|
| Current
portion of redeemable capital, long term |
|
| liability
and obligations under finance leases |
9 |
60,690 |
34,700 |
|
|
|
|
| Short-term
finances |
|
10 |
123,145 |
135,500 |
|
| Creditors,
accrued and other liabilities |
11 |
124,710 |
36,526 |
|
|
|
---------- |
---------- |
|
|
|
308,545 |
206,726 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
12 |
---------- |
---------- |
|
|
657,561 |
601,811 |
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
| Operating
assets |
|
13.1 |
475,200 |
473,137 |
|
| Capital
work-in-progress |
|
13.2 |
14,666 |
21,519 |
|
|
|
---------- |
---------- |
|
|
489,866 |
494,656 |
|
|
| LONG-TERM
DEPOSITS |
|
4,417 |
7,817 |
|
| CURRENT ASSETS |
|
|
| Stores,
spares, and loose tools |
14 |
55,818 |
57,740 |
|
| Stock-in-trade |
|
15 |
21,455 |
766 |
|
| Debtors,
unsecured - considered good |
|
19,547 |
- |
|
| Loans
and advances |
|
16 |
26,197 |
36,968 |
|
| Deposits
and prepayments |
|
17 |
2,429 |
511 |
|
| Other
receivables |
|
18 |
33,515 |
476 |
|
| Taxation |
|
|
3,995 |
2,735 |
|
| Cash
and bank balances |
|
19 |
322 |
142 |
|
|
|
---------- |
---------- |
|
|
163,278 |
99,338 |
|
|
---------- |
---------- |
|
|
657,561 |
601,811 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| NASIM UMAR |
|
|
HAJI KHUDA BUX RAJAR |
|
| Chief
Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1998 |
|
|
|
1998 |
1997 |
|
|
(Rupees '000) |
|
|
|
|
| Sales |
|
20 |
681,843 |
549,045 |
|
| Cost
of goods sold |
|
21 |
631,644 |
494,515 |
|
|
|
---------- |
---------- |
|
| Gross profit |
|
|
50,199 |
54,530 |
|
| Selling
and administration expenses |
22 |
50,582 |
39,576 |
|
|
|
---------- |
---------- |
|
| Trading
(loss) / profit |
|
|
(383) |
14,954 |
|
| Other income |
|
23 |
592 |
1,973 |
|
|
|
---------- |
---------- |
|
|
|
209 |
16,927 |
|
| Financial
charges |
|
24 |
56,508 |
36,882 |
|
| Other charges |
|
25 |
1,280 |
966 |
|
|
|
---------- |
---------- |
|
|
|
57,788 |
37,848 |
|
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
|
(57,579) |
(20,921) |
|
| Provision
for taxation |
|
26 |
(14,043) |
(7,877) |
|
|
|
---------- |
---------- |
|
| Loss
after taxation |
|
(43,536) |
(13,044) |
|
| Unappropriated
profit brought forward |
|
12,109 |
25,153 |
|
|
---------- |
---------- |
|
| (Accumulated
loss) / profit carried forward |
|
(31,427) |
12,109 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| NASIM UMAR |
|
HAJI KHUDA BUX RAJAR |
|
| Chief
Executive |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
(Rupees '000) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from operations |
27 |
28,510 |
69,932 |
|
| Staff
gratuity paid |
|
(52) |
(87) |
|
| Road
cess and surcharge (net) |
|
863 |
4,976 |
|
| Market
committee fee |
|
7,979 |
- |
|
| Financial
charges paid |
|
(38,482) |
(40,753) |
|
| Taxes paid |
|
(3,793) |
(745) |
|
| Long
term deposits (net) |
|
3,400 |
(1,279) |
|
|
---------- |
---------- |
|
| Net
Cash (outflow)/inflow operating activities |
|
(1,575) |
32,044 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
(18,033) |
(25,554) |
|
| Sale
proceeds of fixed assets |
|
446 |
2,571 |
|
| Profit
received on bank deposits |
|
22 |
32 |
|
|
---------- |
---------- |
|
| Net
cash outflow from investing activities |
|
(17,565) |
(22,951) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Proceeds
from/(repayment of) redeemable capital |
|
58,500 |
(26,426) |
|
| (Repayment
of )/proceeds from obligations under |
|
|
|
| finance
leases-net |
|
(26,825) |
5,318 |
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from financing activities |
31,675 |
(21,108) |
|
|
---------- |
---------- |
|
| Net
increase/decrease) in cash and cash equivalents |
12,535 |
(12,015) |
|
| Cash
and cash equivalents at beginning of the year |
(135,358) |
(123,343) |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at end of the year |
28 |
(122,823) |
(135,358) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| NASIM UMAR |
|
HAJI KHUDA BUX RAJAR |
|
| Chief
Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1998 |
|
|
| 1.
LEGAL STATUS AND OPERATIONS |
|
|
| The
Company is a public listed company incorporated in Pakistan under the
Companies Ordinances, |
|
| 1984.
Its shares are quoted on Karachi and Lahore Stock Exchanges. The Company is
principally |
|
| engaged
in the manufacture and sale of sugar. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Staff retirement benefits |
|
|
| The
Company operates a funded contributory provident fund scheme for all its
permanent |
|
| employees.
Equal monthly contributions are made both by the Company and the employees to |
|
| the
Fund for the year at the rate of 8.33% of basic salary and gross salary in
respect of officers |
|
| and
factory workers respectively whereas upto last year it was based only on
basic salary. |
|
| The
effect of such a change, however, is not material. |
|
|
| The
Company also operates an unfunded gratuity scheme for all its permanent
employees. Annual |
|
| provisions
are made in the accounts to cover obligations under the scheme. |
|
|
| 2.3 Taxation |
|
|
| Current |
|
|
| The
Company accounts for current taxation on the basis of taxable income at the
current rates |
|
| of
taxation after taking into account tax credits and rebates available, if any. |
|
|
| Deferred |
|
|
| The
Company accounts for deferred taxation on all major timing differences using
the liability method. |
|
|
| 2.4
Tangible Fixed Assets |
|
| There
are stated at cost less accumulated depreciation whereas freehold land and
capital |
|
| work-in-progress
are stated at cost. |
|
|
| Depreciation
is charged to income using the reducing balance method whereby the cost of an
asset |
|
| is
written off over its estimated useful life. Full year's depreciation is
charged on all assets, including |
|
| additions
during the year, except for plant and machinery on which depreciation is
charged on |
|
| the
basis of actual operating days. No depreciation is charged on assets in the
year of disposal. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Major renewals |
|
| and
improvements are capitalised and the assets so replaced, if any, are retired. |
|
|
| Gains
and losses on disposal of assets are included in income currently. |
|
|
| 2.5
Stores, Spares, Loose tools and Fertilizers |
|
|
| These
are valued at cost calculated on moving average basis less provision for
obsolescence |
|
| except
for the items in transit which are valued at cost accumulated to the balance
sheet date. |
|
|
| 2.6
Stock-in-trade |
|
|
| Stock-in-trade
is valued at the lower of cost and net realisable value except molasses which
is valued |
|
| at
net realisable value. Cost in relation to work-in-process and finished goods
consists of annual |
|
| average
material cost, direct wages and applicable manufacturing overheads. |
|
|
| 2.7
Foreign Currencies |
|
|
| Assets
and liabilities in foreign currencies and translated into rupees at rates of
exchange prevailing |
|
| at
the balance sheet date. Exchange gains and losses are included in income
currently. |
|
|
| 2.8
Mark-up on redeemable capital and charges on finance leases |
|
|
| Make-up
on redeemable capital and charges on finance leases are allocated to the
deferred payment |
|
| periods
so as to produce a constant periodic rate of financial cost on the remaining
balance of |
|
| principal
liability for each period. |
|
|
| 2.9
Revenue recognition |
|
|
| Sales
are recorded on despatch of goods. |
|
|
|
1998 |
1997 |
|
|
(Rupees '000) |
|
|
| 3.
ISSUED, SUBSCRIBED AND PAID UP CAPITAL |
|
|
| 10,860,000 |
Ordinary shares of Rs.10 |
|
|
each fully paid in cash |
|
108,600 |
108,600 |
|
|
| 1,086,000 |
Ordinary shares of Rs.10 |
|
|
each issued a fully paid |
|
|
bonus shares |
|
10,860 |
10,860 |
|
| ---------- |
|
---------- |
---------- |
|
| 11,946,000 |
|
119,460 |
119,460 |
|
| =========== |
|
=========== |
=========== |
|
|
|
|
|
| 4. RESERVE |
|
|
|
| General
reserve |
|
| At
the beginning and end of the year |
|
121,500 |
121,500 |
|
|
=========== |
=========== |
|
|
|
1997 |
1998 |
|
|
(Rupees '000) |
|
|
| 5.
REDEEMABLE CAPITAL -Secured (Non-participatory) |
|
| Long-term
finances utilised under mark-up arrangement |
|
| Habib
Bank Limited - note 5.1 |
|
58,500 |
- |
|
| Less:
Current portion - note 9 |
|
12,057 |
- |
|
|
---------- |
---------- |
|
|
46,443 |
- |
|
|
=========== |
=========== |
|
|
|
|
| 5.1
In September 1998, the Habib Bank Limited, agreed in principle to convert
short term agricultural |
|
| finance,
referred to in note 10.1 amounting to Rs.60 million into long term finance.
The finance |
|
| has
been classified as long term since the necessary agreement and other
formalities were in process |
|
| at
year end which finalized subsequently. |
|
|
| The
corresponding purchase price of the finance amounts to Rs.80 million which is
repayable in |
|
| twelve
equal quarterly installments commencing from January 31, i999 alongwith
mark-up accrued |
|
| thereon
at the rate of 0.52 paisa per thousand per day. |
|
|
| The
finance is secured against first pari passu charge on all fixed assets of the
company. |
|
|
|
1997 |
1998 |
|
|
(Rupees '000) |
|
|
| 6.
LONG -TERM LIABILITY |
|
| Market
committee fee |
|
7,979 |
- |
|
| Less:
Current portion - note 9 |
|
1,000 |
- |
|
|
----------- |
----------- |
|
|
6,979 |
- |
|
|
=========== |
=========== |
|
| 6.1
This represents market committee fee of prior years, reclassified as long
term from current |
|
| liabilities,
payable in half-yearly installments of Rs.500,000 each commencing from
January 1999. |
|
|
|
1997< |
