Bawany Sugar Mills Limited
Annual Report 2003
CONTENTS
Company Profile
Notice of Meeting
Directors' Report
Pattern of Shareholding
Vision / Mission Statements
Statement of Ethics & Business Practices
Six Years Data At A Glance
Statement of Compliance with the Best Practices of Corporate Governance
Auditors' Report
Balance Sheet
Profit and Loss Account
Statement of Changes in Financial Position (Cash Flow Statement)
Statement of Changes in Equity
Notes to the Accounts
COMPANY PROFILE
BOARD OF DIRECTORS		MR. MUHAMMAD DIN		Chief Executive
		MR. QAZI AMJAD ABID ABBASAI		Director
		MR. M. ARSHAD MIRZA		Director
		MRS. HUSNA AMJAD QAZI		Director
		MR. SHAMAS-UD-DIN KHAWAJA		Director
		MR. ABDUL HUSSAIN BULEDI		Director
		MR. MUHAMMAD ASHIQ		Director
		MR. ANSAR HUSSAIN		Director (S.L.I.C.)
		MR. MUHAMMAD ABDUL SAMAD		Director (N.I.T.)
AUDIT COMMITTEE		MR. M. ARSHAD MIRZA		Chairman
		MR. MUHAMMD ASHIQ		Member
		MRS. HUSNA AMJAD QAZI		Member
CHIEF FINANCIAL OFFICER &
COMPANY SECRETARY		MR. MUHAMMAD BAQIR JAFFERI
AUDITORS		M/S. HYDER BHIMJI & CO.
		CHARTERED ACCOUNTANTS
COST AUDITORS		M. ISHAQUE & COMPANY
		COST & MANAGEMENT ACCOUNTANT, KARACHI.
LEGAL ADVISOR		MR. MUHAMMAD SALIM THEPDAWALA & CO.
REGISTERED OFFICE		BANK HOUSE NO. 1,
		3RD FLOOR, HABIB SQUARE,
		M. A. JINNAH ROAD,
		P.O.BOX NO. 4178,
		KARACHI-74000
FACTORY		AHMED NAGAR
		TALHAR:
		(DISTT. BADIN) SINDH.
NOTICE OF MEETING
Notice is hereby given that the 39th Annual General Meeting of the Company will be held on
Wednesday, 28th January 2004 at 12.00 noon at the Registered Office at 3rd Floor, Bank House
No. 1, Habib Square, M.A. Jinnah Road, Karachi to transact the following business:-
1.          To confirm the minutes of the 38th Annual General Meeting held on 05-03-2003.
2.          To receive, consider and adopt the Director's Report, Audited Accounts of the Company
and Auditor's  Report thereon  for the year ended  30th  September 2003.
3          To appoint Auditors and fix their remunreration. Present auditors M/s. Hyder Bhimji & Co.
Chartered Accountant, retire and did not offer for re-appointment in view of rotation
requirements of Code of Corporate Governance being part of listing regulation of Karachi
Stock Exchange. Aduit Committee have, recommended the name of M/s. Gardezi & Co.
Chartered Accountant for appointment in place of retiring auditors, for consideration in the
A.G.M.
4.         To transact any other business that may be brought forward with permission of the Chairman.
BY ORDER OF THE BOARD
(MUHAMMAD BAQIR JAFFERI)
Company Secretary
Karachi the Dated 31st December 2003
NOTES:
1.          The Share Transfer Books of the Company will remain closed from 20-01 -2004 to 28-01-
2004 (both days inclusive).
2.          A member entitled to attend and vote at the Annual 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 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 immediately.
4.          Kindly quote your folio number in all correspondence with the Company.
DIRECTORS' REPORT
In The Name of Allah, The Most Gracious, The Most Merciful.
Dear Members Assalam-e-Alekum,
On the behalf of the Board of Directors, it is my privilege to present 39th Annual Report and Audited Financial Statements
together with auditors report thereon for the year ended 30th September 2003.
GENERAL
Periodic Quarterly Directors Reports with Unaudited / Reviewed Accounts of the Company have already covered a significant
portion of the present report and major aspects of the operational and financial activities of the Company.
By virtue of it is being wholly agro-based sugar industry is destind to play a role of catalyst in growth and development of
the economy. Now this industry is passing through a critical phase. At present, only a handful of the Mills are generating profit,
while the majority of the mills are suffering losses, some are incurring huge unberable losses, which would choke their existence.
Your mill is also one of the Mills, which is very strongly fighting the odds.
Sugar Industry in passing through critical situation however in Punjab the Industry has been able to keep up with the crisis,
as there is ample sugarcane crop due to water avaiiablility, higher sugar price by about Re. I/- per kg compared to Sindh and
lower sugarcane price fixed by the Punjab Government. The shortage of sugar in Punjab has almost diminished Previously,
Sindh was a net exporter of sugar, this has not changed but the export of sugar has been limited to new Punjab areas and buying
by TCP and direct/indirect exports to Afghanistan. Government of Sindh has positively responded to the problems of Sindh
Sugar Industry. There were certain concessions announced by the Government during the reporting Season 2002-2003, wherein
sugarcane price was fixed at Rs. 43/- with split of payment in two parts i.e. Rs. 40/- to be paid at the time of delivery of
sugarcane and Rs. 3/- to be paid after the season was over. The issue of Quality Premium is under litigation at Supreme Court,
the Industry contesting Q.P. being not payable.
The Company is also facing litigation with Banks/DFIs. However, the company has applied to the Committee for Revival of
Sick Industrial Units for restructuring and also applied to all the Banks/DFIs for availing the benefits offered under SBP
Circular BPD 29 of October 15, 2002. Company's management is hopeful for a favourable outcome from the above forums,
which would give the company substantial leverage to overcome its financial difficulties and to become a viable unit.
The District Badin has become prone to calamities. In last four years Badin has experienced floods, draughts, earthquake and
cyclone. There was an unprecedented flood in Badin during end July beginning August 2003. Which caused heavy losses to
lives and properties.
The company has fought all difficulties against its existence and valiantly being able to survive. Company has arranged financial
resources to operate the mill from unconventional sources and kept itself as a going concern.
PERFORMANCE REVIEW
The operating results of your Company for the season are as under:
					2002-2003	2001-2002
Season started					22-12-2002	30-08-2001
Season closed					13-04-2003	28-03-2002
Days worked					113	179
Sugarcane crushing				(Tons)	399,158	214,211
				(Maunds)	9,978,950	5,355,275
Sugar recovery				(%)	9.53	8
Sugar production				(Tons)	38,017	23,972
Molasses recovery				(%)	5.1	5.251
Molasses production				(Tons)	20,345	10,938
You will note that the company has been able to produce more sugar due to availability factor. Due to flood aftermath and late
start of season, the ensuing season seems to be less productive.
FINANCIAL RESULTS
					2003	2002
					Rupees	Rupees
Sales					587,304,047	425,600,433
Less: Cost of Sales					546,607,859	541,089,124
Gross Profit/(Loss)					40,696,188	-115,488,691
Establishment and Other
Expenses					28,059,750	32,744,733
Selling and Distribution Expenses					529,450	549,331
					28,589,200	33,294,064
Operating Profit/(Loss)					12,106,988	-148,782,755
Other Income					13,785,294	577,557
					25,892,282	-148,205,198
Financial Expenses					72,581,172	85,175,421
Other charges					25,099,273	24,347,254
					97,680,445	109,522,675
Loss before taxation					-71,788,163	-257,727,873
Provision for Taxation					7,663,480	5,928,394
Loss after Taxation					-64,124,683	-251,799,479
Financial results are better than previous year, your mills earned operating profit of Rs. 12.106 million as compare to last
season operating loss of Rs. 148.782 million. Management is confident to get even better figures from ensuing season.
SEASON 2003-2004
This season started in the third week of December 2003. However, we are hopeful for about the matching crushing of last year,
as upper sindh areas have benefited from the rains.
There is also another positive factor, that of, sugarcane price, which has been reduced by Rs. II- per Maund, compared to last
year's Rs. 43/- Government has also avoided notifying Q.P., which means there is realization of the crisis in the Sugar Industry.
Both the above factors would benefit the industry to overcome losses.
TCP has also been given authorization to procure excess quantity of sugar to facilitate in the financial difficulties of the sugar
mills. These steps would prove well for the Industry.
HEALTH, SAFETY AND ENVIRONMENT
Appropriate facilities existed for safeguarding the health of employees in accordance with the Factories Act 1948 and National
Environment Quality Standard (N.E.Q.S.) for Sugar Industry.
INFORMATION TECHNOLOGY
Improvement and up-gradation of the existing instruments are being continuously made to coupe with the requirements of
technological advancement in this field.
AUDIT REPORT
The Audit Report for the year under review contains certain qualifications, which are being addressed as follows:
1.     We have achieved satisfactory production results for the year ended 30th September 2003. Mills earned the gross profit
of Rs,. 40.696 million & operating profit of Rs. 12.106 million but due to debt servicing of huge financial & other charges
of Rs. 97.680 million mills suffered the net loss of Rs. 64.124 million, we are in the process of negotiation with the
financial institutions for rescheduling of liabilities and some amicable terms of repayment. If we gets fruitful results of
these negotiations, which resulting a sufficic.it reductions in financials charges & vise versa increase the profitability of
the Company. The Banks and DFIs takes into account our liquidity problem. Thus we are hopeful for the withdrawal of
litigaion by the Banks and DFIs.
2.     The trade debts are collectable from a party M/s. Aebros (Pvt) Ltd. We have started recovery and have collected Rs.
680.00million in the current financial year as reflected in note no. 18 of these financial statements. We are optimistic to
recover the entire amount.
3.    The other receivables represent amount recoverable from M./s. Ebramin (Pvt) Ltd. and M/s. Kotri Trading Company. We
have started the recovery and have collected Rs. 7.2 million in the current financial year. We would hopefully collect
substantial amount from these parties in the ensuing season.
4.     We provided mark-up according to laon agreements with Banks and DFIs. The difference of mark-up occurs due to
execussive rates and mark-up on mark-up charged by the banks as to exaggerate their claim in the court of law. The
difference would be settled by our negotiation, which is in process, or by the court. Besides as regards the confirmations
from Banks and DFIs, it is stated that usually when suit in filed the lendor avoids issuing confirmation and the company
cannot influence Banks and DFIs in this matter.
5.     The company faced serious financial constraint in 1998 and came to position of shut down. The management was and is
determined to keep the wheel running. None of the financial institutions were cooperating in those crises. To overcome
the then financial problem, the company used the provident fund balance with the connivance of Trustees and employees
and destined to payoff the liability as soon as the liquidity position is improved. However, the company is adequately
compensating  the   fund   for  its  utilization   as   reflected  in  note  no.   27   of these   financial   statements.
BOARD OF DIRECTORS
There has been no change so far in the Board of Directors since after 30th September, 2002.
AUDITORS
The present auditors - M/s. Hyder Bhimji & Co. Chartered Accountants, retire and had completed their tenure of five years
as per clause no. 37(Xi) of Code of Corporate Governance so they are not eligible for reappointment. M/s. Gardazi & Co.
Chartered Accountant, Karachi has offered their services for the financial year 2003-2004.
The Board's Audit Committee has recommended their appointment for the ensuing year.
CODE OF CORPORATE GOVERNANCE
The Company has adopted the Code of Governnance promulgated by the Securities Exchange Commission of Pakistan. We