JDW Sugar Mills Limited

Annual Reports 2003

Contents

Company Information

Directors

Syed Ahmed Mahmud

Chairman

Mr. Jahangir Khan Tareen

Chief Executive

Mrs. Amina Tareen

Mrs. Sameera Mahmud

Ms. Meher Khan Tareen

Mr. Ijaz Ahmed Phulpoto

Mr. Muhammad Nawaz

Company Secretary and CFO

Mr. Muhammad Rafique

Audit Committee

Mr. Jahangir Khan Tareen

Chairman

Syed Ahmed Mahmud

Secretary

Mr. Ijaz Ahmed Phulpoto

Member

Auditors

M/s. Taseer Hadi Khalid & Co.

Chartered A ccountants

Legal Advisor

Cornelius, Lane & Mufti

Bankers

Habib Bank Ltd.

Union Bank Ltd.

Faysal Bank Ltd.

Muslim Commercial Bank Ltd.

United Bank Ltd.

Fidelity Investment Bank Ltd.

The Bank of Punjab

Escorts Investment Bank Ltd.

Bank Alfalah Ltd.

Registered Office

32-N, Industrial Area,

Gulberg-II, Lahore.

Factory Site

Mouza Sharin, Jamal Din Wali

Distt. Rahim Yar Khan

Notice of Annual General Meeting

Notice is hereby given that 14lh Annual General Meeting of JDW Sugar Mills Limited will be held at the Avari Hotel,

Lahore on Wednesday, 31st December, 2003 at 9:00 AM to transact the following business:

1. To confirm the minutes of Extra Ordinary General Meeting held on 3 T day of October, 2003.

2. To receive, consider and adopt the audited accounts of the company for the year ended 30lh September, 2003

together with Directors' and Auditors' Reports thereon.

3. To approve a cash dividend @ 20% i.e Rs.2.00 per share for the year ended September 30, 2003 as

recommended by the Directors.

4. To appoint Auditors of the Company for the year 2003-04 and fix their remuneration. The retiring Auditors

M/s Taseer Hadi Khalid & Co. Chartered Accountants, being eligible, have offered themselves for

reappointment as Auditors of the Company.

5. To transact any other business with the permission of the Chairman.

By Order of the Board

MUHAMMAD RAFIQUE

Company Secretary

Lahore: 09 December 2003

NOTES:

1. The share transfer books of the company will remain closed and no transfer of shares will be accepted for

registration from 24th December, 2003 to 31st December, 2003 (both days inclusive).

2. A member entitled to attend and vote at the General Meeting may appoint another member as his/her proxy to

attend and vote instead of him/her at the meeting. Proxies must be deposited at the Company Registered

Office not less than forty eight hours before the time of holding the meeting.

3. Any individual beneficial owner of CDC, entitled to vote at the General Meeting, must bring his/her NIC with

his/her to prove his/her identity, and in case of proxy, attested copy of share holder's NIC must be attached with

the proxy form. The representative of corporate member should bring the usual documents required for such

purpose.

4. Members are requested to notify immediately the change of address to our Company Registrar, Corplink (Pvt)

Limited, Wings Arcade, I-K Commercial, Model Town, Lahore.

JDW SUGAR MILLS LIMITED

Registered Office: 32-N Industrial Area,

Gulberg-II, Lahore

DIRECTORS' REPORT TO THE MEMBERS

On behalf of the Board of Directors I welcome you to the 14th Annual General Meeting and present before you the

Annual Report and Audited Accounts of the company for the year ended 30* September, 2003.

FINANCIAL RESULTS

2003

2002

(Rupees in '000')

Operating profit

259,344

123,034

Other income

317

129

Financial charges

-93,080

-98,019

Profit before other charges

166,581

25,144

Provision for WPPF

8,329

1,257

Provision for minimum taxation

8,254

5,686

16,584

6,943

Profit after taxation

149,998

18,201

Un-appropriated profit brought forward

8,048

136

Profit available for appropriations

158,046

18,337

Appropriations:

Proposed cash dividend @20% (2002:5%)

41,156

10,289

Un-appropriated profit carried forward

116,890

8,048

OPERATING RESULTS

Operating results for the year with comparative figures are given below:

2002-03

2001-02

Season started

15.11.2002

03.12.2001

Season closed

03.05.2003

30.03.2002

Days worked

170

118

Average crushing

Tones

6,437

5,680

Cane crushed

Tones

1,094,212

670,272

Recovery

10.04

9.868

Sugar production

Tones

109,875

66,155

Molasses recovery

4.53

4.355

Owing to carryover surplus stocks, record production in the country and negligible export of sugar by TCP the sugar

prices remained depressed throughout the year, which has caused financial problems for the sugar industry. Your

company, even under these circumstances, has still performed well. The performance is better than last year and net

profit after tax has risen to Rs. 150 million as compared to Rs. 18.2 million last year.

The reason for the good results even in a tough year for the Industry is solely due to the long term vision of

Management. Our efforts and Investment in working with Farmers to increase per acre yields, reduce costs and our

prompt payment policy has resulted in increased Farmer Incomes. They have therefore brought more area under cane

cultivation resulting in the large jump in crushing volume.

The development of a close and friendly relationship with farmers has also resulted in the complete elimination of low

sucrose varieties, Farmer adherence to a planned harvesting regime and the supply of clean cane. These crucial

activities are the reason for our excellent sucrose recovery.

Other significant points for the year under review are summarized below:

Your company has produced 109,875 tons of sugar, which is 66% higher as compared to last year.

Production achieved this year is highest ever since the inception of your mills. The second highest

was 66,155 tons achieved last year. This production level has placed your company on 3rd position on

overall Pakistan basis.

Average recovery rate 10.04 % achieved this season has again placed your mills at top of the list in

Punjab Province and 7* on overall country basis. Your company has the privilege of achieving

double-digit average recovery rate which none of the sugar mills in Punjab had ever achieved in the

past.

With same capacity level the average cane crushing per day achieved during this year is 6,437 TCD

as compared to 5,680 TCD last year.

The entire growers liability amounting to Rs.1.1 billion has been fully settled. The payment of the

last fortnight of the crushing season was paid to the growers within 15 days of the close of the season.

Provision of technical and financial assistance through different schemes was also continued to large

and small growers. These consistent efforts have resulted in substantial increase in the area under

sugar cane cultivation and your company now has become self sufficient in the availability of sugar

cane.

The gross profit ratio has gone up to 18% as compared to 14% last year. Earning per share has

increased from Rs.0.88 to Rs.7.29.

The work of re-profiling the balance sheet was successfully completed during the year by obtaining

long-term loans of five years from Habib Bank Limited, Union Bank Limited and Faysal Bank

Limited on competitive mark up rates. These loans were utilized to repay the expensive leases and

short- term loans. Part of these loans was also utilized to finance the addition to fixed assets during

the year. The leasing company also reduced the IRR on existing outstanding leases to single digit.

The working capital loans for 2003-04 have been negotiated at substantially reduced mark up rates.

The positive financial impact of reduction in mark up rates on all type of financing shall result in

further improving the profitability of your company from 2003-04 and onwards.

The annual maintenance of the plant & machinery was completed ahead of the schedule.

Replacement of certain equipments and improvement in certain areas has been done to minimize the

technical stoppages during the coming season.

Your company is the first one in Pakistan, which has taken the initiative of introducing mechanical

devices in the field of cane harvesting. For this purpose Cane Harvesters have been imported from

Australia and the trial run of these machines has been successfully completed. This process of

harvesting will result in more efficiency and cost effectiveness.

This is the 3rd consecutive year of your company in which cash dividend has been declared. The cash

dividend percentage as compared to last years has been substantially improved. The improvement in

dividend rate will be continued keeping in view the financial results in the subsequent years.

NEW SEASON

For 2003-04 season crushing was started in November 2003 and the production results being achieved are

quite satisfactory. We are confident that the Crushing and sucrose recovery levels achieved last year will be

maintained in the current year also.

FUTURE OUT LOOK

Your company has achieved satisfactory growth in the area under sugarcane cultivation. All out

efforts shall be made to maintain this growth and further increase it.

All out efforts shall be made to further increase efficiencies in plant operations and enhancing quality

of the sugar.

STATEMENT OF CHANGES AND FINANCIAL REPORTING FRAME WORK

a) The financial statements prepared by the company fairly present company's state of affairs, the result

of operations, cash flows and changes in equity.

b) Proper books of accounts have been maintained.

c) Appropriate accounting policies have been consistently applied in the preparation of financial

statements and accounting estimates are based on reasonable and prudent judgment.