Baba Farid Sugar Mills Limited - Annual Reports

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Baba Farid Sugar Mills Limited

Annual Report 2000

CONTENTS

COMPANY'S INFORMATION

NOTICE OF THE MEETING

DIRECTORS' REPORT

AUDITORS' REPORT

BALANCE SHEET

PROFIT & LOSS ACCOUNT

STATEMENT OF CHANGES IN

FINANCIAL POSITION (CASH FLOW STATEMENT)

STATEMENT OF CHANGES IN EQUITY

NOTES TO THE ACCOUNTS

SCHEDULE OF FIXED ASSETS

PATTERN OF SHAREHOLDING

COMPANY'S INFORMATION

BOARD OF DIRECTORS

CHIEF EXECUTIVE

MR. GHULAM MOHAMMED A. FECTO

DIRECTORS

MR. MUNAWAR ALI FECTO

MR. KAISER MAHMOOD FECTO

DR. ABDUL WAHID MOHAMMED

MR. SAID AHMED

MR. YAHYA AHMED BAWANY

MR. JAMES R. RICHARDS

MR. FAZLUR REHMAN

CH. BARKAT ALI

SECRETARY

MR. MUHAMMED ANWAR NATHANI (ACA)

AUDITORS

M/S. HYDER BHIMJI & CO

(Chartered Accountants)

M/S. A. R. DIWAN & CO.

(Chartered Accountants)

BANKERS

MUSLIM COMMERCIAL BANK LTD.

HABIB BANK LTD.

REGISTERED

1ST FLOOR, PANORAMA CENTRE,

RAJA GHAZANFAR ALI KHAN ROAD,

KARACHI-75530

ZONAL OFFICE

1ST FLOOR, NAWA-E-WAQT HOUSE,

4-SHAHRAH-E-FATIMA JINNAH

LAHORE.

MILLS

OKARA (Distt. OKARA)

NOTICE OF THE MEETING

NOTICE IS HEREBY GIVEN that the Twenty Second Annual General Meeting of the members

of the Company will be held on Saturday the March 10, 2001 at 10:00 A.M. at Hotel Regent

Plaza, Shahrah-e-Faisal, Karachi. to transact the following business.

ORDINARY BUSINESS

(1) ' To receive and adopt the Report of the Directors and the Audited Accounts of the Company

together with the Auditors' Report for the Financial Year ended September 30, 2000.

(2) To elect Nine Directors in accordance with the provisions of Section 178 of the Companies

Ordinance 1984 for a period of three years. The retiring Directors are Messrs Ghulam

Mohammed A. Fecto, Munawar All Fecto, Kaiser Mehmood Fecto, Dr. Abdul Wahid

Mohammed, Mr. James R. Richards, Ch. Barkat All, Yahya Ahmed Bawany, Said Ahmed

and Mr. Fazlur Rehman.

(3) To appoint Auditors for the year 2000-2001 and fix their remuneration.

By order of the Board

(GHULAM MOHAMMED A FECTO)

Karachi the February 15, 2001

Chief Executive

NOTES:

(1) The Share Transfer Books of the Company will remain closed from March 03, 2001 to March 10,

2001 (both days inclusive).

(2) All the members should bring their original National Identity Cards at the time of the meeting.

(3) A member entitled to attend and vote at this Meeting may appoint another member as his/her Proxy

to attend, speak and vote on his/her behalf. The instrument appointing a proxy and the power of

attorney or other authority under which it is signed or a notarially attested copy of the power of attorney

must be deposited at the registered office of the a Company at least 48 hours before the time of the

meeting.

CDS Account Holder:

A. For Attending the Meeting:

i) In case of individuals, the account holder or sub-account holder and/or the person whose securities

are in group account and their registration details are uploaded as per the Regulations, shall authen-

ticate his/her identity by showing his/her original National identity Card (NIC) or original passport at

the time of attending the meeting.

ii) In case of corporate entity, the Board of Directors resolution/power of attorney with specimen

signature of the nominee shall be produced (unless it has been provided earlier) at the time of the

meeting.

B. For Appointing Proxies

i) In case of individuals, the account holder or sub-account holder and/or the person whose securities

are in group account and their registration details are uploaded as per the Regulations, shall submit

the proxy form as per the above requirements.

ii) The proxy form shall be witnessed by two persons whose names, addresses and NIC numbers shall

be mentioned on the form.

iii) Attested copies of NIC or the passport of the beneficial owners and the proxy shall be furnished with

the proxy form.

iv) The proxy shall produce his/her original NIC or original passport at the time of the meeting.

v) In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen signature

shall be submitted (*unless it has been provided earlier) alongwith proxy form to the Company.

DIRECTORS' REPORT

The Members,

BABA FARID SUGAR MILLS LIMITED

KARACHI.

Gentlemen,

Your Directors take pleasure in presenting Twenty Second Annual Report and Audited Accounts

for the year ended September 30, 2000. The operational performance for the year under review

is as under :-

1999-2000

1998-1999

Commencement of Season

November 15, 1999

November 25, 1998

Concluding of Season

March 22, 2000

April 27, 1999

Operating days

Days

128

153

Cane crushed

M.Tons

335,992

466,326

Production

M.Tons

24,100

30,923

Average recovery

7.17

6.63

From the above chart it is evident that the production of refined sugar has gone down because

supply of raw material was affected due to pilferage of sugar cane from our natural zone by other

mills by paying higher prices to growers as against support prices fixed by the Government. The

situation further intensified due to competition among other mills to crush maximum quantity of

sugarcane. Consequently prices of Sugar Cane has gone up. This situation has arisen because

of area cultivated for sugarcane has reduced by 25% to 30% in Province of Punjab. Secondly,

though sucrose contained has improved as compared to last year but not improved as was

expected due to shortage of rains and irrigation water, continuation of degenerate quantity of

sugarcane and long dry spell.

Although the production has gone down as against last year but increase in sale price of sugar

in local market the trading results has improved. This improvement was offset by increase in

prices of raw material, furnace oil and utilities. The management has tried its best to reduce the

loss by curtailing expenditure and gain in selling price.

Your Board regretfully recommends that Dividend for the yea. r under review be passed over. The

earning per share has improved from Rs. (8.16) to (0.60).

CURRENT YEAR PROSPECTS

The current crushing season 2000-2001 commenced on November 20, 2000. But non-availability

of sugarcane in the earlier part of the season prevailed on refusal by growers to harvest the crop

at the price fixed by the Government and demanding higher prices at Rs. 50/= for 40 kgs. Hence,

Mills operated on under capacity basis during the earlier part of the season. Therefore we have

crushed 181.878 M. Tons of sugarcane producing 11,801 M. Tons of refined sugar with sucrose

content, 6.69% upto February 12, 2001. Now the supply of sugarcane has improved to a great

extent. We are striving hard to procure the sugarcane from our natural zone and ,hope we will

be able to procure maximum quantity of sugarcane in order to achieve the production target.

As supply of sugarcane was affected due to lesser area cultivated and higher rates demanded

by growers the Government was deeply concerned with this situation of total production of

refined sugar in the country and therefore allowed import of raw sugar for catering to demand

of the country.

But this step of Government has gone in vain as prices of raw sugar in International market has

gone up and cost of production is more than selling prices prevailing in the local market. Though

Government has enhanced the limit of import of raw sugar from 0.50 Million M.Tons to 0.60

Million M.Tons this development has proved to be too late. On the other hand the Government

is allowing large imports of refined sugar from India at this critical juncture when the Industry had

started operating with normal crushing capacity without estimating total productions of refined

sugar in the country. In fact the Government has over imported refined sugar resulting in waste

of valuable foreign exchange and as a result harming the local industry.

The prices of sugar in local market has shown rising trend at the start of the season but the deci-

sion of Government to import refined sugar has pushed refined sugar prices downward. High

production cost, cheap imports and non-availability of raw material together with manifestation

of luke warm response by the Government has pushed the indigenous sugar Industry to the

verge of collapse. We recommend the revival of Zoning system that was abolished on political

grounds, banning import of refined sugar and extending incentives to growers for good sugar

cane variety as well as sucrose content of cultivated sugar cane instead of Indian variety of

sugar cane that has damaged the industry. Efforts are being made for a better future as well as

financial outcome although these steps would be primarily dependent on production achieve-

ment, selling prices in local market and maximum utilization of resources. Your Directors are

pleased to inform that there are no defaults and improvement in production and financial results

hopefully in coming days would show better results as all our efforts are being made towards

increase the cane production specially good sugar cane variety.

This year very good sowing is taking place due to rates and we hope that if all goes well a

bumper crop for season 2001-2002 can be expected.

Your Directors, place on record their appreciation of services rendered by the team of dedicated man-

agers and other executives, supervisors and hard working employees. The Directors also take

pleasure in mentioning that during the year, the Management Employees relations continued to

remain cordial.

Yours Directors express their thanks to the officials of the Ministry of Food and Agriculture, other

Government Agencies and Pakistan Sugar Mills Association for the support and encouragement

they have extended to sugar industry and which we hope will be continued in future too. We

would also like to express our sincere thanks to the company's banks/financial institutions for

their continued support and co-operation.

Pursuant to section 178 of the Companies Ordinance 1984, Directors, completed their tenure of

office and stand retired on the date of forthcoming Annual General Meeting. All the Directors are,

however eligible for re-election. The Board has fixed the number of elected Directors at NINE.

Messrs Hyder Bhimji & Co and Messrs A.R. Diwan & Co. the Auditors of the Company retire and

offer themselves for reappointment.

Statement showing the pattern of holding of the shares held by the members of Baba Farid

Sugar Mills Limited as on September 30, 2000 is annexed.

With Allah's blessings we are determined to move forward and hope for a better and prosperous

future.

By Order of the Board

(GHULAM MOHAMMED A. FECTO)

Chief Executive

KARACHI: February 15, 2001.

AUDITORS' REPORT TO THE MEMBERS

We have audited the annexed balance sheet of BABA FARID SUGAR MILLS LIMITED as

at September 30, 2000 and the related profit and loss account, cash flow statement and state-

ment of changes in equity, together with the notes forming part thereof for the year ended and

we state that we have obtained all information and explanations which to the best of our knowledge

and belief were necessary for the purpose 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 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 test basis, evidences supporting the amounts and disclosures in the

above said statements. An audit also includes assessing the accounting policies and significant

estimates made by management as well as, evaluating the overall presentation of the above

said statements. We believe that our audit provides reasonable basis for our opinion and after

due verification 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

iii) the business conducted investments made and 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, cash flow statement, and statement of

changes in equity together with the notes forming part thereof conform with approved

accounting standards are applicable in Pakistan, and 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, 2000 and of the loss its cash

flows and changes in equity for the year then ended; and

d) in our opinion, no Zakat was deductible at source, under the Zakat and Ushr Ordinance, 1980.

Without qualifying our report, we draw your attention to note No. 2 of the financial statements in

respect of appropriateness of going concern basis. However the financial statements have been

prepared on the basis in view of matters stated in that note.

A. R. DIWAN & CO.

HYDER BHIMJI & CO.

Chartered Accountants

Karachi: the February 15, 2001

BALANCE SHEET AS AT SEPTEMBER 30, 2000

2000

1999

NOTE

RUPEES

SHARE CAPITAL AND RESERVES

SHARE CAPITAL

Authorized

10,000,000 Ordinary Shares of

Rs. 10/= each

100,000,000

==========

Issued Subscribed & Paid up

94,500,000

Accumulated (loss)

(76,579,980)

(70,882,222)

-----------

17,920,020

23,617,778

SUB-ORDINATED LOANS

60,000,000

DEFERRED LIABILITIES

29,700,000

32,906,291

LONG TERM LOAN

51,080,000

LIABILITIES AGAINST ASSETS

SUBJECT TO FINANCE LEASE

40,977,963

37,373,786

CURRENT LIABILITIES

Current Portion of Long Term Liabilities

99,161,993

27,998,339

Short Term Running Finance

(Utilized under Mark-up Arrangements)

35,295,079

102,780,939

Provision For Taxation

4,987,133

5,591,458

Creditors, accrued and other liabilities

60,353,089

54,446,520

-----------

199,797,294

190,817,256

CONTINGENCIES AND COMMITMENTS

-----------

TOTAL

399,475,277

344,715,111

==========

FIXED ASSETS

Operating Assets

250,788,595

253,056,389

Capital Work-in-Progress

13.02

383,437

210,240

-----------

251,172,032

253,266,629

LONG TERM INVESTMENTS

3,000,000

LONG TERM DEPOSITS

13,865,867

9,865,917

CURRENT ASSETS

Stores, Spares and Loose Tools

33,702,275

36,268,781

Stock-in-Trade

14,828,243

28,402,025

Trade Debts

57,162

34,120

Loans and Advances

14,416,417

7,729,124

Deposits, Prepayments and

Other Receivables

1,948,592

4,852,560

Cash and Banks Balances

69,484,689

1,295,955

-----------

134,437,378

78,582,565

-----------

TOTAL

399,475,277

344,715,1!1

==========

Note: The annexed notes form an integral part of these accounts

Karachi: The February 15, 2001

(GHULAM MOHAMMED A. FECTO)

(SAID AHMED)

Chief Executive

Director

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED SEPTEMBER 30, 2000

2000

1999

NOTE

RUPEES

Sales

466,574,137

555,184,707

Cost of Sales

411,156,048

550,079,027

-----------

Gross Profit

55,418,089

5,105,680

Administrative Expenses

28,726,226

29,809,179

Selling & Distribution Expenses

1,582,759

8,739,605

-----------

30,308,985

38,548,784

-----------

Operating Profit / (Loss)

25,109,104

(33,443,104)

Other Income

3,100,664

1,570,713

-----------

28,209,768

(31,872,391)

Financial Expenses

30,819,509

41,862,765

Other Charges

96,240

106,090

-----------

30,915,749

41,968,855

Net (Loss) Before Taxation

(2,705,981)

(73,841,246)

Taxation

(2,991,777)

(3,300,000)

-----------

Net (Loss) After Taxation

(5,697,758)

(77,141,246)

Un-appropriated (Loss) / Profit brought forward

(70,882,222)

1,259,024

-----------

(76,579,980)

(75,882,222)

Transfer from Revenue Reserve

5,000,000

-----------

Accumulated (loss) / Profit carried forward

(76,579,980)

(70,882,222)

==========

Earning per Share

(0.60)

(8.16)

NOTE: The annexed notes form an integral part of these accounts.

(GHULAM MOHAMMED A. FECTO)

(SAID AHMED)

Karachi: February 15, 2001

Chief Executive

Director

(CASH FLOW STATEMENT)

FOR THE YEAR ENDED 30TH SEPTEMBER, 2000

2000

1999

NOTE

RUPEES

CASH FLOW FROM OPERATING ACTIVITIES

Cash generated from operations

69,527,539

70,242,928

Financial charges paid

(35,864,965)

(39,688,312)

Taxes paid

(3,596,102)

(2,789,523)

Dividend paid

(350)

-----------

Net cash inflow from operating activities

30,066,122

27,765,093

-----------

CASH FROM INVESTING ACTIVITIES

Fixed capital expenditure

(16,183,118)

(20,807,548)

Sale proceeds of fixed assets

150,000

250,000

Decrease in long term deposits

(3,999,950)

905,000

Decrease in long term investment

3,000,000

-----------

(17,033,068)

(19,652,548)

CASH FLOW FROM FINANCING ACTIVITIES

Increase in short term finance

(67,485,860)

(45,810,241)

Proceeds of liabilities against

assets subject to finance lease

40,000,000

19,600,000

Repayment of liabilities against

assets subject to finance lease

(22,745,272)

(29,493,387)

Increase in sub-ordinated loan

41,000,000

Decrease/increase in Deferred Liability

(5,038,457)

1,281,437

Proceeds of long term loans

110,425,269

-----------

55,155,680

(13,422,191)

-----------

Net increase/(decrease) in cash and

Cash equivalents

68,188,734

(5,309,646)

Cash and Cash Equivalent in the beginning of

the year

1,295,955

6,605,601

-----------

Cash and cash equivalents at the end of year

69,484,689

1,295,955

==========

The annexed notes form an integral part of these accounts.

(GHULAM MOHAMMED A. FECTO)

(SAID AHMED)

Karachi: February 15, 2001

Chief Executive

Director

A. CASH FLOW FROM OPERATING ACTIVITIES

(Loss) before taxation

(2,705,981)

(73,841,246)

Add/(less) adjustment for non cash

charges and other items

Depreciation

18,253,715

21,521,086

(Profit) on disposal of fixed assets

(126,000)

(176,986)