| Shahmurad Sugar Mills Limited |
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| CONTENTS |
|
|
| BOARD
OF DIRECTORS |
|
| NOTICE
OF MEETING |
|
| DIRECTORS'
REPORT |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| BALANCE SHEET |
|
| PROFIT AND LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| NOTES ON ACCOUNTS |
|
| SHAREHOLDERS'
STATISTICS |
|
|
|
| BOARD
OP DIRECTORS |
|
|
| MR.
ISMAIL H. ZAKARIA |
|
Chairman |
|
| MR.
YUSUF AYOOB |
|
Managing Director |
|
| MR.
SULEMAN AYOOB |
|
| MR.
A. AZIZ AYOOB |
|
| MR.
ZIA I. ZAKARIA |
|
Resident Director |
|
| MR.
SALIM AYOOB |
|
| MR.
ZOHAIR ZAKARIA |
|
| MR.
NASlM BEG |
|
(N.I.T. Nominee) |
|
| MR.
S. HASHIM ISHAQUE |
|
(N.I.T. Nominee) |
|
|
| COMPANY
SECRETARY: |
|
| M.
YAKOOB ADMANEY |
|
| FCIS,
FCMA. |
|
|
| LEGAL
ADVISOR: |
|
| DR.
RAEES M. MUSHTAQ & CO. |
|
| Advocate |
|
|
| AUDITORS: |
|
| A.
R. DIWAN & COMPANY |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE: |
|
| 96-A,
SINDHI MUSLIM SOCIETY, |
|
| KARACHI. |
|
|
| FACTORY: |
|
| JHOK
SHARIF, |
|
| TALUKA
MIRPUR BATHORO, |
|
| DISTRICT
THATTA (SINDH) |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 20th Annual General Meeting of SHAHMURAD SUGAR MILLS
LIMITED |
|
| will
be held at the Registered Office of the Company at 96-A, Sindhi Muslim
Society, Karachi, on Wednesday, |
|
| March
31, 1999 at 3.00 pm. to transact the following business: |
|
|
| 1.
To read and consider the Minutes of the 19th Annual General Meeting of the
Company held on April |
|
| 17, 1998. |
|
|
| 2.
To read and consider the Accounts for the year ended September 30, 1998 and
reports of Directors |
|
| and
Auditors thereon. |
|
|
| 3.
To appoint Auditors and to fix their remuneration. |
|
|
| 4.
To transact any other business with permission of the chair. |
|
|
| The
Shares Transfer Book of the Company will remain closed from March 15, 1999 to
March 31, |
|
| 1999
(both days inclusive). |
|
|
| By
Order of the Board |
|
(M. YAKOOB ADMANEY) |
|
|
COMPANY SECRETARY |
|
| Karachi:
February 26, 1999. |
|
|
| NOTE: |
|
| 1.
A member of the Company entitled to attend and vote may appoint any member as
his/her proxy to |
|
| attend
and vote on his/her behalf. PROXIES MUST BE RECEIVED AT THE REGISTERED |
|
| OFFICE
OF THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING. |
|
|
| 2.
Shareholders are requested to inform the Company of any change in address
immediately. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| To: |
|
|
| The
Shareholders: |
|
| We
submit before you the 20th Annual Report together with the Audited Accounts
for the year ended 30th |
|
| September,
1998. Your Company incurred a loss of Rs. 14.336 million. After adjusting
last year's un- |
|
| appropriated
profit of Rs. 2.7 million, a loss of Rs. 11.626 million is carried over to
the Balance Sheet. |
|
|
| SMS
started crushing on 12th November, 1997. By the grace of Allah, SMS crushed
749,111 metric tons |
|
| (1997:
685,185 metric tons) of sugarcane. The sugar produced was 81,590 metric tons
(1997:73,195 |
|
| metric
tons) with an average recovery of 10.89% (1997: 10.685%). Molasses produced
during the year |
|
| was
to the extent of 36,202 metric tons (1997: 33,869 metric tons). SMS increased
crushing by 9.32% |
|
| thereby
increasing the production of sugar by 11.47% compared to the previous year. |
|
|
| During
the year, the Government increased the support price of sugarcane from
Rs.24.50 to Rs.36/= per |
|
| 40
kg. Quality premium was also raised from 27 paisa to 32 paisa for 0.1%
recovery over and above the |
|
| 8.7%
recovery benchmark set by the Government. The increase in support price, and
due to the shortage |
|
| of
sugarcane in the vicinity of your Mill, SMS was forced to obtain sugarcane
from distant areas. This |
|
| was
essential to meet capacity requirements. However, transport cost sky rocketed
and increased the cost |
|
| of
raw material which had a negative impact on profitability. The surplus
production of sugar in the |
|
| country
and the late announcement by the Government allowing the export of sugar,
resulted in heavy |
|
| inventory
and financial costs. Both the factors mentioned above effected the
profitability of the Company |
|
| adversely
and your Company incurred a loss. |
|
|
| During
the year, your Company had to pay Rs. 131 million to the sugarcane growers
due to the higher |
|
| recovery
achieved (@ 32 paisa per 40 kg. for every 0.1% over and above the 8.7%.
recovery |
|
| benchmark). |
|
|
| During
the year, your Company exported 26,950 metric tons of sugar and earned US$
7.494 million |
|
| foreign
exchange for the country. |
|
|
| During
the year, the matter relating to the excise duty benefits corresponding to
the year 1988-89 was |
|
| decided
by the Honourable Sindh High Court and the verdict has been given in favour
of your Company. |
|
| SMS
has moved an application for the release of the Bank Guarantee from Collector
of Central Excise |
|
| and
Land Custom, Hyderabad.. |
|
|
| In
the previous Annual General Meeting, election of directors was held. Mr.
Ismail H. Zakaria, Mr. Yusuf |
|
| Ayoob,
Mr. Suleman Ayoob, Mr. A. Aziz Ayoob, Mr. Zia I. Zakaria, Mr. Salim Ayoob,
Mr. Zohair |
|
| Zakaria,
Mr. Nasim Beg and Mr. S. Hashim Ishaque were elected as Directors of the
Company for a |
|
| period
of three years. The Board appointed Mr. Ismail H. Zakaria as Chairman, Mr.
Yusuf Ayoob as |
|
| Managing
Director and Mr. Zia I. Zakaria as Resident Director. |
|
|
| COMPUTER
& Y2K: |
|
| The
management has taken necessary corrective actions for the computer problem
for the Y2K. It is expected |
|
| that
by the end of 1999, a majority of the computers will be replaced with newer
versions. |
|
|
| LABOUR
MANAGEMENT RELATIONS: |
|
| We
are happy to report that labour management relations are better than the
previous year. Your Directors |
|
| appreciate
the cooperation shown by the workers and hope it will continue. |
|
|
| STAFF: |
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| Your
Directors also place on record deep appreciation of hard work, loyalty and
devotion to duty shown by the |
|
| officers
and staff of the Company. |
|
|
| AUDITORS: |
|
| Messrs
A.R. Diwan and Company, Chartered Accountants, Auditors of the Company,
retire and offer their |
|
| services
for the ensuing year. |
|
|
| FUTURE
OUTLOOK: |
|
| For
the current year, the Government has maintained the support price of
sugarcane at the same level. |
|
|
| The
current crushing season started on 11th November, 1998 and crushing upto 25th
February, 1999 was |
|
| 661,496
metric tons with an average recovery of 9.56%. In the current season upto
25th February 1999, your |
|
| Company
has exported 13,822 metric tons of sugar. |
|
|
| FOR
AND ON BEHALF OF BOARD OF DIRECTORS |
|
|
(YUSUF AYOOB) |
|
| Karachi:
26th February, 1999. |
|
MANAGING DIRECTOR |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Shahmurad 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 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 and Profit and Loss Account and the 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 the cash flows for the year then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under Zakat and Ushr ordinance,
1980 was deducted by the |
|
| company
and deposited in the Central Zakat Fund established under Section 7 of that
Ordinance. |
|
|
|
A. R. Diwan & CO. |
|
| Karachi:
February 26, 1999. |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30TH SEPTEMBER, 1998 |
|
|
|
|
1998 |
1997 |
|
|
Note |
(Rupees in thousand) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
Capital |
|
| 25,000,000
ordinary shares of Rs. 10.00 each |
|
|
250 000 |
250 000 |
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
2 |
14,579 |
14,579 |
|
| Reserve: |
|
|
|
|
| General
Reserve |
|
|
26,464 |
26,464 |
|
| Unappropriated
(loss) / profit |
|
|
(11,628) |
2,709 |
|
|
|
---------- |
---------- |
|
|
|
14,836 |
29,173 |
|
|
|
---------- |
---------- |
|
|
|
29,415 |
43,752 |
|
| REDEEMABLE
CAPITAL |
|
3 |
56,528 |
31,623 |
|
|
|
|
|
| LONG
TERM LOAN |
|
4 |
- |
2,275 |
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| TO
FINANCE LEASE |
|
5 |
6,983 |
20,281 |
|
|
|
|
| DEFERRED
LIABILITIES |
|
6 |
14,830 |
12,315 |
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
| Short
term running finance and borrowings |
|
7 |
54,441 |
30,675 |
|
| Current
maturity of redeemable capital, long term |
|
|
|
| loan
and finance lease |
|
8 |
56,204 |
5,709 |
|
| Creditors
accrued and other liabilities |
|
9 |
21,931 |
60,278 |
|
| Taxation |
|
|
2,343 |
14,221 |
|
| Proposed
Dividend |
|
|
- |
15,839 |
|
|
---------- |
---------- |
|
|
3,847 |
61,186 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
10 |
- |
- |
|
|
---------- |
---------- |
|
|
46,067 |
40,360 |
|
|
========== |
========== |
|
| FIXED
ASSETS |
|
| Operating
assets |
|
11 |
46,577 |
6,432 |
|
| LONG
TERM INVESTMENT |
|
12 |
5,000 |
5,000 |
|
| LONG
TERM LOANS AND ADVANCES |
|
13 |
346 |
442 |
|
| LONG
TERM DEPOSITS |
|
14 |
5,931 |
12,708 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
| Stores
and spares |
|
15 |
17,022 |
9,179 |
|
| Stock-in-trade |
|
16 |
127 |
35,441 |
|
| Book debts |
|
|
28,480 |
- |
|
| Loans,
advances, prepayments and other receivables |
17 |
50,774 |
31,420 |
|
| Duty
draw back receivable |
|
|
8,714 |
- |
|
| Bank
and cash balance |
|
18 |
14,168 |
5,274 |
|
|
|
---------- |
---------- |
|
|
|
53,749 |
474,530 |
|
|
---------- |
---------- |
|
|
46,067 |
40,360 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
YUSUF AYOOB |
|
SULEMAN AYOOB |
ZOHAIR ZAKARIA |
|
|
Managing Director |
|
Director |
|
Director |
|
|
| Karachi:
February 26, 1999 |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR |
|
|
| ENDED
30TH SEPTEMBER, 1998 |
|
|
|
1998 |
1997 |
|
|
(Rupees in thousand) |
|
|
| Sales |
|
19 |
18,005 |
57,914 |
|
| Cost
of sales |
|
20 |
23,954 |
49,748 |
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
59,587 |
8,166 |
|
|
|
|
| Administration
expenses |
|
21 |
50,568 |
50,878 |
|
| Selling
and Distribution expenses |
|
22 |
31,758 |
2,670 |
|
|
---------- |
---------- |
|
|
16,790 |
53,548 |
|
|
---------- |
---------- |
|
| Operating
profit |
|
42,797 |
20,154 |
|
| Other
income |
|
23 |
284 |
23,253 |
|
|
|
---------- |
---------- |
|
|
|
43,081 |
43,407 |
|
|
|
---------- |
---------- |
|
| Financial
charges |
|
24 |
56,594 |
31,602 |
|
| Other
charges |
|
25 |
754 |
1,754 |
|
|
---------- |
---------- |
|
|
57,348 |
33,356 |
|
|
---------- |
---------- |
|
| (Loss)
/ profit before taxation |
|
(14,267) |
10,051 |
|
| Taxation |
|
26 |
70 |
-- |
|
|
---------- |
---------- |
|
| (Loss)
/profit after taxation |
|
(14,337) |
10,051 |
|
| Unappropriated
profit brought forward |
|
2,709 |
8,497 |
|
|
---------- |
---------- |
|
|
(11,628) |
18,548 |
|
| Appropriations |
|
| Proposed
cash dividend |
|
-- |
15,839 |
|
|
---------- |
---------- |
|
| Unappropriated
(loss) / profit carried forward |
|
(11,628) |
2,709 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| YUSUF
AYOOB |
SULEMAN AYOOB |
|
ZOHAIR ZAKARIA |
|
| Managing
Director |
Director |
|
Director |
|
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED 30TH SEPTEMBER, 1998 |
|
1998 |
1997 |
|
|
|
|
(Rupees in thousand) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated / (used in) from operations |
|
32 |
8,700 |
(189,034) |
|
| Taxes paid |
|
|
(15,214) |
(2,902) |
|
| Payment
for staff retirement benefits |
|
|
(235) |
(227) |
|
| Financial
charges paid (including interest income) |
|
(122,723) |
(92,835) |
|
| Long
term loans advances |
|
|
96 |
125 |
|
| Long
term deposits |
|
|
6,777 |
3,153 |
|
|
|
---------- |
---------- |
|
|
|
8,473 |
(281,720) |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
(2,198) |
(3,768) |
|
| Sale
proceeds of operating assets |
|
340 |
572 |
|
|
---------- |
---------- |
|
| Net
cash outflow from investing activities |
|
( 1,858) |
(3,196) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Redeemable
capital |
|
- |
50,000 |
|
| Obligation
under finance lease |
|
- |
6,472 |
|
| Repayment
of redeemable capital, long term loans |
|
|
|
| and
finance lease |
|
(71,245) |
(86,610) |
|
| Short
term running finance and borrowings |
|
23,766 |
20,422 |
|
| Dividend |
|
(15,778) |
(1) |
|
|
---------- |
---------- |
|
| Net
cash inflow from financing activities |
|
2,279 |
55,819 |
|
|
---------- |
---------- |
|
| Net
increase / (decrease) in cash and cash equivalents |
|
8,894 |
(32,489) |
|
| Cash
and bank balance at the beginning of the year |
|
5,274 |
37,763 |
|
|
---------- |
---------- |
|
| Cash
and bank balance at the end of the year |
|
18 |
14,168 |
5,274 |
|
|
========== |
========== |
|
| YUSUF
AYOOB |
|
SULEMAN AYOOB |
|
ZOHAIR ZAKARIA |
|
| Managing
Director |
|
Director |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR |
|
| ENDED
30TH SEPTEMBER, 1998 |
|
|
| LEGAL
STATUS AND OPERATIONS |
|
|
| The
Company is a public company incorporated in Pakistan under the Companies AcT
1913 (now Companies |
|
| Ordinance,
1984}. Its shares are quoted on Karachi Stock Exchange in Pakistan and is
principally engaged |
|
| in
the production and sale of sugar. |
|
|
| Summary
of Significant accounting policies: |
|
|
| 1.1
Accounting convention: |
|
| These
accounts have been prepared under the historical cost convention except that
certain exchange |
|
| differences
have been included in fixed assets referred to in Note 1.4. |
|
|
| 1.2
Staff retirement benefits: |
|
| The
Company operates a provident fund scheme for all its employees eligible for
the benefits and |
|
| contributions
thereto are made in accordance with the terms of the scheme. |
|
|
| Effective
October 01, 1990, Company had introduced an unfunded gratuity scheme for
those permanent |
|
| employees
who have completed qualifying period and are members of the aforestated
provident fund |
|
| scheme. |
|
|
| 1.3
Taxation: |
|
| Provision
for current taxation for the year is based on taxable income at the current
rate of taxation |
|
| after
taking into account tax credit available, if any. |
|
|
| The
company accounts for deferred taxation on all material timing differences
using the liability |
|
| method.
However, deferred tax is not provided if it can be established with
reasonable probability that |
|
| these
timing differences will not reverse in the foreseeable future. |
|
|
| 1.4
Fixed assets: |
|
|
| (a) OWN |
|
| Operating
assets except freehold land are stated at cost less accumulated depreciation.
Freehold |
|
| land
and capital work in progress are stated at cost. Cost in relation to certain
fixed assets |
|
| including
capital work in progress signifies historical cost and exchange differences
referred to in |
|
| Note 1.8. |
|
|
| Depreciation
is charged to income at normal tax rate on the written down value of the
assets as |
|
| affected
on account of exchange differences referred to in Note 1.8. Full year's
depreciation is |
|
| charged
on all assets in the year of acquisition, except for plant and machinery on
which |
|
| depreciation
is charged on the basis of actual operating days of factory. 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 capitalized and the assets so replaced, if any, are retired. |
|
|
| Gain
and loss on disposal of assets are taken to profit and loss account. |
|
|
| (b) LEASED |
|
| Assets
held under finance leases are included in operating assets at present value
of minimum |
|
| lease
payments. |
|
|
| The
financial charge is calculated at the interest rate implicit in the lease and
is charged to profit |
|
| and
loss account. |
|
|
| Depreciation
is charged at the same rates as company owned assets. However, if there is no |
|
| reasonable
certainty that the company will obtain ownership by the end of the lease
term, the |
|
| assets
are depreciated over shorter of the lease term or its useful life. |
|
|
| 1.5
Long term investments: |
|
| The
company's investments in associated undertaking are stated at cost. The
provision is made there |
|
| against
for permanent diminution, if any, in the value of investment. Dividends
received are reflected |
|
| in
the company's profit and loss account. |
|
|
| 1.6
Stores, spares and fertilizer: |
|
| Stores,
spares and fertilizer are valued at cost, using FIFO cost flow method. |
|
|
| Store
in transit are valued at cost comprising invoice value and other charges paid
thereon. |
|
|
| 1.7
Stock-in-trade: |
|
| Work
in process is valued at average cost and finished goods for sale in open
market are valued at |
|
| lower
of average cost and net realisable value. By-products are valued at net
realisable value. |
|
|
| 1.8
Foreign Currencies Translation: |
|
| Liabilities
in Foreign Currencies have been converted into Pakistani rupees at the rate
of exchange |
|
| ruling
at the Balance Sheet date. Exchange gains and losses are adjusted in the
value of the related |
|
| asset. |
|
|
| 1.9
Deferred Cost: |
|
| Deferred
cost consists of preliminary and share issue expenses including brokerage,
commission and |
|
| other.
These expenses are being written off during the period of five years
including the financial year |
|
| in
which expenses are incurred. |
|
|
| 1.10
Revenue recognition: |
|
| Sales
are recorded on despatch of goods to customer. |
|
|
| 1.11
Mark-up on Finance: |
|
| The
agreed mark-up and interest on redeemable capital, long term loan and short
term running finance |
|
| is
accounted for on accrual basis. |
|
|
| 1.12
Capitalisation of borrowing costs: |
|
| Borrowing
costs on assets which call for substantial period of time to get them ready
for their intended |
|
| use
are taken to fixed capital expenditure. |
|
|
|
1998 |
1997 |
|
|
(Rupees in thousand) |
|
| 2.
ISSUED, SUBSCRIBED AND PAID UP CAPITAL |
|
|
| 11,730,368
Ordinary shares of Rs. 10.00 |
|
| each
fully paid up in cash. |
|
51,768 |
51,768 |
|
|
| 9,388,295
Ordinary shares of Rs. 10.00 |
|
| each
fully paid up issued as |
|
| bonus
shares |
|
28,347 |
28,347 |
|
|
---------- |
---------- |
|
|
14,579 |
14,579 |
|
|
========== |
========== |
|
| 3.
REDEEMABLE CAPITAL |
|
| (NON
PARTICIPATORY-SECURED) |
|
|
|
1998 |
1997 |
|
|
HBL |
SCB |
SAUDI PAK |
BEL |
(Rupees in thousand) |
|
|
(Long term running finance |
(Term finance |
|
|
utilized under mark-up
arrangement) |
certificates) |
|
|
| Balance |
|
15,000 |
32,000 |
44,937 |
5,222 |
31,623 |
3,964 |
|
|
| Less:-
Current Maturity |
|
| shown
under current |
|
| liabilities
Note No.8 |
7,500 |
16,000 |
11,909 |
5,222 |
40,631 |
37,877 |
|
|
------------------------------------------------------------------ |
|
|
7,500 |
16,000 |
33,028 |
- |
56,528 |
