FARAN   SUGAR MILLS   LIMITED
Annual Reports 2003
CONTENTS
Company Profile
Vision / Mission Statement
Statement of Ethics and Business Practices
Notice of Meeting
Directors' Report
Auditors' Report
Six years perspective
Statement of compliance with the code of corporate governance
Auditors' Review Report to the members on statement of compliance with
best practice of code of Corporate governance
Balance Sheet
Profit and Loss Account
Cash flow statement
Statement of Changes in Equity
Notes to the Accounts
Pattern of Shareholdings
COMPANY PROFILE
BOARD OF DIRECTORS		Mr. Mohammad Amin Ahmed Bawany - Chief Executive.
		Mr. Omar Amin Bawany
		Mr. Ahmed Ali Mohammad Amin
		Mr. Iqbal A. Rehman
		Mr; Abaiif Wahid A. Ghaffar
		Mr. A. Wahid Jaliawala
		Mr. Mohammad Asif (NIT)
		Mr. Iqbal Ismail (NIT)
		Mr.Tanzim Haqqi (BEL)
AUDIT COMMITTEE		Mr. Omar Amin Bawany   - Chairman
		Mr. Iqbal A. Rehman   - Member
		Mr. Abdul Wahid A. Ghaffar - Member
AUDITORS		Khalid Majid Rahman Sarfaraz Rahim Iqbal Rafiq
COMPANY SECRETARY		Mr. Iqbal A. Rehman
CHIEF FINANCIAL OFFICER		Mr. A. Razzak Sorathia
LEGAL ADVISOR		Mr. A; Ghaffar Gheewala
BANKERS		Habib Bank Ltd.
		Bank AI-Habib
REGISTERED OFFICE		3rd Floor, Bank House No. 1 ,
		Habib Square, M. A. Jinnah Road,
		Karachi.
MILLS		Shaikh Bhirkio,
		Taluka Tando Mohd. Khan
		Distt. Hyderabad, Sindh.
E-MAIL		violin@cyber.net.pk
WEBSITE		www.faran.com.pk
Vision / Mission Statement
The objective of the organization is economic benefits and betterment of all stake holders and the Nation as a
whole. The mission is to strive for and aim at quality production with maximum operating efficiency and thus
contribute towards economic and social aspects. To achieve the set objective through continued process of
research, technological advancement and review process.
STATEMENT OF ETHICS AND BUSINESS PRACTICES
Faran Sugar Mills Ltd has adopted Business Ethics and Practices to translate envisioned Mission into a
success through:
a)       Planning - Production and Management
1.       Highest standard of product of international quality with high utility and nutritional value.
2.       Utilize join/by-product at maximum economic benefit.
3.       Continuous research adoption of advance technique and review of processes.
4.       Maintenance of Plant, facilities and infra-structures in up-to-date condition for smooth and hindrance
free operation.
5.       Effective co-ordination, cooperation and communication towards achieving maximum efficiency and
oneness.
6.       Employment of suitable personnel with on-job training and counseling to develop efficiency through
motivation.
7.       Set rules & regulations of conduct for the employees to achieve co-ordination, harmony and sense of
responsibility.
8.       Avoidance of activities which may generate conflicts misunderstandings and overlapping.
9.       Plan payment of dues - salaries, wages and benefits to the employees.
10.     Creation of atmosphere which avoids conflicts, sense of deprivation but contributes towards
organizational method and objectives.
b)    Financial & Legal
1.       The annual financial plan will be drawn up to meet financial requirements and its resources with
emphasis to operate within the plan, and to monitor all variances.
2.       Utilization of most economical and cheapest mode of financing and for the minimum necessary period.
3.       Ensure adherence to the financial commitments to build up credibility.
4.       Compliance with all legal and statutory requirements corporate or otherwise.
Karachi:                                                                      Mohammad Amin Ahmed Bawany
Date: 30th December, 2003                                                              Chief Executive
DIRECTORS' REPORT
IN THE NAME OF ALLAH THE MOST GRACIOUS THE MOST MERCIFUL.
Dear Shareholders,
All thanks to Almighty Allah who enabled me to present you 22nd Annual Report for the year ended 30th September,
2003. Thanks also to Allah who helped us to survive and sustain in severe crises which continue to prevail in sugar
industry particularly of Sindh Province.
Despite increased cost of production and depressed market with net selling price falling below cost, your Company
earned a gross profit of Rs. 17.211 million, however, could not avert the loss despite economics in every sphere of
activity, for the Company has no influence on the market price of sugar especially when there is an over supply of this
commodity.The only course to survive was to effect maximum saving by cutting off the expenses wherever possible.
The efforts of the Management resulted in bringing down the financial charges from Rs. 94.401 million in the
preceding yearto Rs. 34.734 million - a saving of Rs. 59.67 million.
The overall situation in the industry continues to deteriorate with falling demand and falling sugar price due to over
supply situation.The crushing season began with unsold sugar stock of 250,374 M.Tons. During two weeks to 15th
December, 2003; the sugar mills in sindh produced 75,184 M.Tons of sugar while the production in Pakistan was
367,518 M.Tons. The production for this season is expected to be around 3.9 million tons. This is an over supply
situation. Unless efforts are made to export surplus quantity, there are no prospects of improvement in the sugar
price, which may ultimately prove to be yet anothertough year forthe struggling sugar Industry.
Your Company foreseeing this tough chain of events took strong cost cutting measures in all respects. The
management is hopeful that all the cost cutting measures undertaken this year will Insha Allah start to yield its fruits
in the forthcoming season and is hopeful that it will enable your company to bring down the cost per kg. of sugar
produced to a certain extent which should in turn help in boosting the bottom line in future.
The ground realities notwithstanding, your management is endeavoring not only to survive and sustain, but to come
out of the crisis with the blessings of Almighty Allah and your prayers Insha Allah.
Financial Reporting Frame Work
In compliance with the requirement of Code of Corporate Governance, your Directors report that:
The financial statement prepared by the Management present fairly its state of affaires, the results of its operation,
cash flow and changes in equity.
•    The company has maintained proper books of accounts as requi red by the law.
•    Appropriate accounting policies have been consistently applied in preparation of financial statements and
accounting estimates are based on reasonable and prudent judgment.
•    The Accounting policies and disclosures are in accordance with the International Accounting Standards
applicable in Pakistan, unless otherwise disclosed.
•    The system of internal control is sound in design and effectively implemented.
•    There is no significant doubt as to the ability of the Company to continue as an on-going concern.
•    There has been no material departure from the best practices of corporate governance, as detailed in the
listing regulations.
•    The summary of key operating and financial data for last six years - annexed.
•    The company operates a contributory recognized Provident Fund scheme.The Accounts/Funds are annually
audited by a firm of chartered accountants. The value of investment at cost held by the Trust was Rs. 4.728
millions with net realiseable value of Rs. 12.018 million as   of 30th June, 2003, per audited Financial
Statements.
Board Meetings
During the yearthree meetings of Board of Directors were held. Participation of Directors is as follows:
Name of Director			No. of meetings attended
Mr. Mohammed Amin Ahmed Bawany			3
Mr. Omar Amin Bawany			3
Mr. Ahmed Ali Mohammed Amin			3
Mr.lqbalA.Rehman			3
Mr.A.WahidA.Ghaffar			3
Mr.A. Wahid Jaliawala			-
Mr.TanzimHaqqi(BEL)			1
Mr. Muhammed Asif (NIT)			2
Mr. Iqbal Ismail (NIT)			-
Leave of absence was granted to Directors who could not attend some meeting.
The Current Season
The current crushing season commenced on 30th November, 2003. By 26th December,2003 your mills crushed
150,620 M.Tons of sugarcane and produced 11,450 M.Tons of sugar at an average recovery of 8.44%.
Future Outlook
If the past was an indicator to the future, the outlook is cloudy. On the production front the country may achieve the
highest ever production with further pressure on already depressed market, unless surplus production as stated
earlier is timely exported to stabilise the local market.
Depreciation
The company continues to charge depreciation on the actual number of days of operation of Plant & Machinery. This
gives not only consistency and comparability but also, in the opinion of the Management, is more appropriate and
realistic as it distributes wear and tear cost of plant and machinery on actual crushing and resultant sugar
production.The method is constantly applied for last 11 Years and is considered to be more realistic, appropriate and
equitable method of allocation of depreciation cost to the production.
Auditors
Khalid Majid Rahman Sarfaraz Rahim Iqbal Rafiq, (Chartered Accountants) Auditors of the company have
conveyed their willingness to be re-appointed as auditors for the next year.
Our special thanks to our team of dedicated Managers and other Executives, Supervisors and Workers, who
continue to put'in their best efforts for achieving better results.
On behalf of the Directors
FARAN SUGAR MILLS LIMITED
MOHAMMAD AMIN AHMED BAWANY
CHIEF EXECUTIVE
Karachi
Dated: 30th December, 2003,
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Faran Sugar Mills limited as at September 30,2003 and the related profit &
loss account, cash flow statement and statement of changes in equity 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 forthe purposes of our audit.
It is the responsibility of the company's management to establish and maintain a system of internal control, and prepare
and present the above said statements in conformity with the approved accounting standards and the requirements of the
Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan.These standards require that
we plan and perform the audit to obtain reasonable assurance about whether the above said statements are free of any
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the above said statements. An audit also includes assessing the accounting policies and significant estimates made by
the management, as well as evaluating the overall presentation of the above said statements. We believe that our audit
provides a reasonable basis for our opinion and, after due verification, we report that -
1. The company continues to charge depreciation on number of production days instead of on full year's basis as
recommended vide Accounting Technical Release-11 of the Institute of Chartered Accountants. The effect of such
a decision could not be ascertained unless a revised rate of charge based on remaining useful life of the assets is
determined by the company.
a)  in our opinion, proper books of accounts have been kept by the company as required by the Companies
ordinance, 1984;
b)  in our opinion:
(i) the balance sheet together with the notes thereon have been drawn up in conformity with the Companies