| Mehran Sugar Mills Limited |
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| Annual
Report 2000 |
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| CORPORATE
MISSION |
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| PREAMBLE |
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| We
the management of Enterprise, have set forth our belief as to the purpose for |
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| which
the Company is established and the principles under which it should operate. |
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| We
pledge our efforts to the accomplishment of the purpose within the agreed |
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| principles. |
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| BASIC
PURPOSE |
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| The
basic purpose of Enterprise is to perpetuate as a Public Limited Company |
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| engaged
in manufacturing and marketing white refined cane sugar, food |
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| products,
sugar by products and other products wherein management or sponsors |
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| have
expertise. In addition we preserve to assume a leadership position in related |
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| industry
regarding: quality of the product, cost effectiveness, turnover and |
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| technology. |
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| WHAT
WE DO |
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| Our
main business area is the production of refined cane sugar and sugar by |
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| products.
We recognise the value of technological improvement kept in step with the |
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| latest
innovations and developments in our field. We believe in modern |
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| management
practice and use latest techniques. We constantly train our people |
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| and
keep them highly motivated as they are our most important assets. We strongly |
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| believe
in integrity in business and integrity of Mehran depends on integrity of |
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| each
one of its employees. We consider our farmers who are our raw material |
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| suppliers
as the most important part of our business. |
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| We
believe in diversification through new manufacturing facilities and through |
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| equity
participation. |
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| CONTENTS |
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| Company Information |
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| Notice
of Meeting |
|
| Operation at a Glance |
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| Directors'
Report |
|
| Pattern
of Shareholdings |
|
| Auditors' Report |
|
| Balance Sheet |
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| Profit
& Loss Account |
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| Cash Flow Statement |
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| Notes to the Cash Flow
Statement |
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| Statement of Changes in Equity |
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| Notes to the Accounts |
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| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Mohammed Kasim Hasham |
|
Chairman |
|
| Mr.
Mohammed Ebrahim Hasham |
Chief Executive Officer |
|
| Mr.
Muhammed Hussain Hasham |
Director |
|
| Mr.
Khurram Kasim |
|
Director |
|
| Mr.
Ahmed Ebrahim |
|
Director |
|
| Mr.
S. Qamar All Zaidi |
|
Director |
|
| Mr.
Abdul Karim Lodhi (NIT) |
|
Director |
|
| Mr.
Gul Nawaz (NIT) |
|
Director |
|
| Mr.
Ghulam Yasin (ICP) |
|
Director |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Q.A. Wadud, Chartered Secretary |
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|
| AUDITORS |
|
| Messrs
Gangat & Company |
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| Chartered
Accountants |
|
| Karachi |
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| LEGAL
ADVISER |
|
| Aman
Law Associates |
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| Advocates
& Corporate Consultants |
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| Karachi |
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| REGISTERED
OFFICE |
|
| Adamjee
House, 8th Floor |
|
| I.I.
Chundrigar Road |
|
| Karachi |
|
| Fax :241-6477 |
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| Tel
: 241-7131-4 & 242-3881 |
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| e-mail:
msmedp@yahoo.com & |
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| mehransugar@yahoo.com |
|
| www
: mehransugar. com |
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|
| MILLS |
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| Tando
Allahyar, Distt. Hyderabad, |
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| Sindh |
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| Fax
: (02231) 890568 |
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| Tel
: (02231) 890856 & (02231) 890407, 891984 |
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| e-mail:
msmtda@yahoo.com |
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|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 35th Annual General Meeting of the Company will be
held at its |
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| Registered
Office, Adamjee House, 8th Floor, I.I. Chundrigar Road, Karachi on Wednesday |
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| 28th
March 2001 at 10:00 a.m. to transact the following business:- |
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|
| 1.
To confirm the minutes of the last Annual General Meeting held on March 29,
2000. |
|
|
| 2.
To receive and adopt the Audited Accounts for the year ended 30th September
2000 |
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| and
the Directors' and Auditors' report thereon. |
|
|
| 3.
To approve and declare the dividend of Rs. 1.00 per ordinary shares of Rs.
10.00 as |
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| recommended
by the Directors. |
|
|
| 4.
To appoint Auditors' for the year ending at the conclusion of the 36th Annual
General |
|
| Meeting
and fix their remuneration. The retiring Auditors, Messrs Gangat &
Company, |
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| Chartered
Accountants, being eligible, have offered themselves for re-appointment. |
|
|
| 5.
To transact any other business, which may be dealt in such meeting, with the
permis- |
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| sion
of the Chairman. |
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|
By order of the Board of Directors |
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|
|
Q,A. Wadud |
|
| Karachi,
February 22, 2001 |
|
Company Secretary |
|
|
| Note: |
|
| (1)
A member entitled to attend and vote at the meeting is entitled to appoint
proxy to |
|
| attend
and vote on his/her behalf. A proxy must be a member of the Company. The |
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| instrument
appointing a proxy must be deposited at the Registered Office of the Com- |
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| pany
not less than 48 hours before the time appointed for holding the Annual
General |
|
| Meeting. |
|
|
| (2)
The Share Transfer Books shall remain closed from 22nd March 2001 to 28th
March |
|
| 2001
(both days inclusive) for determining the entitlement of dividends. |
|
|
| (3)
Members are requested to intimate any change in their addresses immediately. |
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|
|
| OPERATION
AT A GLANCE-KEY INDICATORS (2000-1996) |
|
|
| PERIOD
ENDING SEPTEMBER 30TH |
|
| Particulars |
|
2000 |
1999 |
1998 |
1997 |
1996 |
|
|
| Equity
(Rs. in million) |
|
| Paid-up
Capital |
98.438 |
98.438 |
98.438 |
98.438 |
98.438 |
|
| Capital
& General Reserves |
149.849 |
144.206 |
117.113 |
117.113 |
107.781 |
|
| Production
(M. Tons): |
|
| Sugarcane
Crushed |
437,622 |
699,994 |
568,225 |
275,292 |
243,283 |
|
| Sugar
Produced |
40,765 |
63,590 |
57,117 |
29,100 |
34,284 |
|
| Average
Sucrose Recovery |
9.30% |
9.08% |
10.06% |
10.57% |
9.90% |
|
| Crushing
Days |
109 |
142 |
137 |
111 |
144 |
|
| Earnings
(Rs. in million): |
|
| Sales |
|
663.110 |
1014.993 |
852.092 |
555.799 |
511.956 |
|
| Gross
Profit/(Loss) |
74.560 |
135.684 |
78.653 |
89.370 |
88.767 |
|
| Pre-Tax
Profit/(Loss) |
16.820 |
51.856 |
1.791 |
21.411 |
10.697 |
|
| After
Tax Profit/(Loss) |
15.486 |
46.781 |
(0.831) |
24.851 |
7.937 |
|
| Return
on Equity |
1.57 |
4.75 |
-0.08 |
2.22 |
0.81 |
|
| Payout
(Rs. in million): |
|
| Cash
Dividend |
9.844 |
19.688 |
|
12.305 |
9.844 |
|
| Bonus Shares |
|
0 |
0 |
0 |
0 |
0 |
|
| Rate
of Return |
10% |
20% |
0 |
12.50% |
10% |
|
|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
|
| The
members of the Board of Director take pleasure in presenting the Thirty-fifth
Annual Report, |
|
| alongwith
the audited accounts of the Company for the year ended September 30, 2000. |
|
|
| The
year under review was a difficult year for the Sugar Industry as a whole.
Installed crush- |
|
| ing
capacity of almost every mill in Sindh remained under utilized due to less
availability of |
|
| sugarcane.
The mill had to be closed earlier after working for only 109 days as compared
to |
|
| 142
days in the last year. The average recovery of sucrose however improved to
9.30% as |
|
| compared
to last year's 9.08%. |
|
|
| A
brief summary of the operational results is as follows: |
|
|
|
September, 2000 |
|
September, 1999 |
|
|
|
|
|
|
| Season
commenced |
|
November, 07 |
|
November, 12 |
|
| Season
closed |
|
February, 23 |
|
April, 02 |
|
| Duration
of season |
|
109 Days |
|
142 Days |
|
| Cane
crushed - Metric tons |
|
437,622 |
|
701,628 |
|
| Cane
crushed - Maunds |
|
11,724,900 |
|
18,798,216 |
|
| Average
crushing per day - M/ton |
4,015 |
|
4,162 |
|
| Average
Sucrose recovery |
|
9.30% |
|
9.08% |
|
| Sugar
Production - M/Ton |
|
40,765 |
|
63,589 |
|
| Molasses
Production - M/Ton |
|
22,140 |
|
35,291 |
|
|
| Due
to short supply of cane your mill could produce only 40,765 metric tons of
sugar which is |
|
| 35.89
percent lower as compared to last years 63,590 metric tons. However, the
policy of |
|
| prompt
payment and further improving relations with growers remained the top
priority of the |
|
| management. |
|
|
| The
financial results for the year under review are as under: |
|
|
1999-2000 |
1998-1999 |
|
| Profit
before Taxation |
|
17,572,554 |
51,855,692 |
|
| Profit
(Loss) after Taxation |
|
15,278,571 |
46,780,875 |
|
| Profit
(Loss) available for appropriation |
|
16,703,444 |
46,112,373 |
|
|
| Earning
per ordinary shares of Rs.10/= each for the year under review is Rs.1.57 as
com- |
|
| pared
to Rs.4.75 in the previous year. |
|
|
| The
following negative factors affected the profitability of the Company: |
|
|
| ·
Higher cane price due to unhealthy competition amongst the mills. |
|
| ·
Active role of the middleman, which further aggravated the cane supply
position. |
|
| ·
Increased rates of POL products. |
|
| ·
Overall increase in cost of production due to lower utilization of crushing
capacity. |
|
|
| Performance
of the on-going season |
|
| The
crushing season started on November 2, 2000. Due to lower carry over stocks
of sugar, |
|
| the
sugar prices increased to an unprecedented level just before the start of the
season which |
|
| prompted
the growers to demand extremely high price for the sugarcane. Mills started
pay- |
|
| ing
higher price for sugar cane looking only at the short term scenario. However,
the sugar |
|
| prices
began to decline as the availability of sugar improved due to full swing
crushing and |
|
| liberal
imports of sugar. The escalating prices of cane and declining trend of the
sugar market |
|
| made
it uneconomical for the mills to continue crushing. This led to the closure
of all the |
|
| sugar
mills of Sindh for about a fortnight. The Government of Sind intervened and
the mills |
|
| restarted
after an agreement was reached between the growers and Mills that the cane
will be |
|
| supplied
by the growers at the rate of Rs.50.00 per 40 Kgs. |
|
|
| Till
todate, your mill has crushed 493,619 metric tons of sugarcane and produced
44,014 |
|
| metric
tons of sugar at an average recovery of 9.15%. In addition to this, 9,576
metric tons of |
|
| sugar
has been refined / manufactured from imported Raw Sugar for the first time at
a recov- |
|
| ery
of 92.65%. Thus total sugar produced so far comes to 53,590 metric tons. |
|
|
| The
reasons for lower sugarcane crop are as follows: |
|
|
| ·
15% to 20% fall in yield per acre. |
|
| ·
Approximately 05 to 10% fall in acreage. |
|
| ·
Draught like situation in some of the cane growing areas. |
|
| ·
Overall inadequate supply of irrigation water in the traditional zone of our
mill. |
|
| ·
Excessive lifting of the sugarcane from the natural zone of our mill by other
sugar mills. |
|
|
| Appointment
of Auditors |
|
| Messers
Gangat & Company, Chartered Accountants, Karachi, the retiring Auditors
of the |
|
| Company
being eligible, offer themselves for re-appointment, for the year 2000-2001 |
|
|
| Acknowledgement |
|
| The
Directors place on record their appreciation for the devoted services and
hard work of the |
|
| officers,
staff and workers of the Company in achieving best possible results. |
|
|
| The
Directors also appreciate the continued cooperation and support of the
shareholders, sugar- |
|
| cane
farmers of the area, the customers, creditors and the provincial and federal
governments. |
|
|
|
For and on behalf of the Board of Directors, |
|
|
|
Mohammed Kasim Hasham |
|
Mohammed Ebrahim Hasham |
|
|
Chairman |
|
Chief Executive Officer |
|
|
|
|
| Karachi,
February 22, 2001 |
|
|
|
| PATTERN
OF SHAREHOLDINGS |
|
| as
at September 30, 2000 |
|
|
| Number of |
|
Total |
|
| Shareholders |
|
Shareholding |
shares held |
|
|
| 783 |
From |
1 |
to |
100 |
20,096 |
|
| 150 |
From |
101 |
to |
500 |
39,782 |
|
| 41 |
From |
501 |
to |
1000 |
29,198 |
|
| 63 |
From |
1001 |
to |
5000 |
177,435 |
|
| 14 |
From |
5001 |
to |
10000 |
90,862 |
|
| 5 |
From |
10001 |
to |
15000 |
64,377 |
|
| 5 |
From |
15001 |
to |
20000 |
77,365 |
|
| 4 |
From |
20001 |
to |
25000 |
82,386 |
|
| 5 |
From |
25001 |
to |
30000 |
25,463 |
|
| 1 |
From |
30001 |
to |
35000 |
30,072 |
|
| 1 |
From |
35001 |
to |
40000 |
38,683 |
|
| 2 |
From |
40001 |
to |
45000 |
86,830 |
|
| 3 |
From |
45001 |
to |
50000 |
139,353 |
|
| 1 |
From |
50001 |
to |
55000 |
52,672 |
|
| 1 |
From |
55001 |
to |
60000 |
58,905 |
|
| 1 |
From |
65001 |
to |
70000 |
65,829 |
|
| 2 |
From |
70001 |
to |
75000 |
148,204 |
|
| 1 |
From |
75001 |
to |
80000 |
79,642 |
|
| 1 |
From |
85001 |
to |
90000 |
85,549 |
|
| 2 |
From |
95001 |
to |
100000 |
199,253 |
|
| 1 |
From |
130001 |
to |
135000 |
131,706 |
|
| 1 |
From |
160001 |
to |
165000 |
162,339 |
|
| 1 |
From |
165001 |
to |
170000 |
166,272 |
|
| 1 |
From |
185001 |
to |
190000 |
187,500 |
|
| 1 |
From |
200001 |
to |
205000 |
201,298 |
|
| 1 |
From |
330001 |
to |
335000 |
332,510 |
|
| 1 |
From |
420001 |
to |
425000 |
420,778 |
|
| 1 |
From |
575001 |
to |
580000 |
577,386 |
|
| 1 |
From |
1155001 |
to |
1160000 |
1,157,092 |
|
| 1 |
From |
1185001 |
to |
1190000 |
1,189,558 |
|
| 1 |
From |
1190001 |
to |
1195000 |
1,190,758 |
|
| 1 |
From |
2530001 |
to |
2535000 |
2,534,597 |
|
| ----------- |
|
----------- |
|
| 1098 |
|
9,843,750 |
|
| ========== |
|
========== |
|
| (The
slabs, having no holding, have been omitted) |
|
|
| Categories
of Shareholders |
|
Number |
Share held |
Percentage |
|
| Individuals |
|
1,082 |
6,484,358 |
65.87 |
|
| Investment
Companies |
|
1 |
2,534,597 |
25.75 |
|
| Insurance
Companies |
|
3 |
173,094 |
1.76 |
|
| Joint
Stock Companies |
|
4 |
188,045 |
1.91 |
|
| Financial
Institutions |
|
3 |
455,851 |
4.63 |
|
| Modaraba
Companies |
|
-- |
-- |
-- |
|
| Other
(See below) |
|
5 |
7,805 |
0.08 |
|
|
----------- |
----------- |
----------- |
|
|
1,098 |
9,843,750 |
100.00 |
|
|
========== |
========== |
========== |
|
| The
Okhai Memon Youth Services |
|
5,235 |
0.05 |
|
| The
Hussain Ebrahim Foundation |
|
437 |
-- |
|
| The Administrator,
Abandoned Properties, |
|
| Government
of Pakistan |
|
132 |
-- |
|
| The
Corporate Law Authority |
|
1 |
-- |
|
| The
United Executor & Trustees Company Ltd |
|
2,000 |
0.02 |
|
|
----------- |
----------- |
|
|
7,805 |
0.07 |
|
|
========== |
========== |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of MEHRAN 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 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. |
|
|
| 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
signifi- |
|
| cant
estimates made by 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 |
|
|
| (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 3/4 |
|
| (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 dur- |
|
| ing
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 as 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 profit/ |
|
| loss,
its cash flows and changes in equity for the year then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 |
|
| (XVIII
of 1980), was deducted by the company and deposited in the Central Zakat Fund |
|
| established
under Section 7 of that Ordinance. |
|
|
|
GANGAT & COMPANY |
|
| Karachi,
March 4, 2000 |
|
Chartered Accountant |
|
|
|
| BALANCE
SHEET as at September 30, 2000 |
|
|
|
NOTE |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
| CAPITAL
AND LIABILITIES |
|
| SHARE
CAPITAL AND RESERVES |
|
| Share Capital |
|
| Authorised |
|
| 50,000,000
(1999: 50,000,000) ordinary |
|
| shares
of Rs.10/- each |
|
500,000,000 |
500,000,000 |
|
|
========== |
========== |
|
| Issued
Subscribed & Paid up |
|
3 |
98,437,500 |
98,437,500 |
|
| RESERVE
AND SURPLUS |
|
|
|
| Capital
reserve |
|
4 |
63,281,250 |
63,281,250 |
|
| Revenue
reserve - General |
|
5 |
85,000,000 |
79,500,000 |
|
| Unappropriated
profit |
|
1,567,592 |
1,424,873 |
|
|
------------ |
------------ |
|
|
149,848,842 |
144,206,123 |
|
|
------------ |
------------ |
|
|
|
248,286,342 |
242,643,623 |
|
| REDEEMABLE
CAPITAL |
|
6 |
21,120,540 |
28,160,719 |
|
| LONG
TERM LOANS |
|
7 |
26,392,550 |
15,760,446 |
|
| DEFERRED
LIABILITIES |
|
8 |
111,308,307 |
111,646,544 |
|
|
|
| CURRENT
LIABILITIES |
|
| Current
maturity of redeemable capital |
|
| and
long term loans |
|
9 |
22,149,985 |
19,238,757 |
|
| Short
term borrowings |
|
10 |
45,946,864 |
25,700,878 |
|
| Creditors,
accrued and other liabilities |
|
11 |
71,471,681 |
88,595,339 |
|
| Dividends |
|
12 |
15,195,324 |
15,511,686 |
|
|
|
------------ |
------------ |
|
|
|
154,763,854 |
149,046,660 |
|
|
|
|
| CONTINGENCIES
& COMMITMENTS |
|
13 |
|
|
------------ |
------------ |
|
|
561,871,593 |
547,257,992 |
|
|
========== |
========== |
|
|
|
|
| PROPERTY
AND ASSETS |
|
| FIXED
ASSETS |
|
| Operating
assets |
|
14 |
401,571,176 |
397,043,852 |
|
| Capital
work-in-progress |
|
|
3,021,496 |
4,294,481 |
|
| LONG
TERM INVESTMENTS |
|
15 |
42,511,096 |
42,511,096 |
|
|
| CURRENT
ASSETS: |
|
| Stores
and spares |
|
16 |
38,946,615 |
33,135,830 |
|
| Stock-in-trade |
|
17 |
3,359,905 |
2,333,540 |
|
| Trade debts |
|
18 |
9,434,835 |
9,828,185 |
|
| Loans,
advances, prepayments |
|
|
|
| and
receivables |
|
19 |
62,612,875 |
41,863,981 |
|
| Cash
and bank balances |
|
20 |
413,595 |
16,247,027 |
|
|
|
------------ |
------------ |
|
|
114,767,825 |
103,408,563 |
|
|
|
|
|
------------ |
------------ |
|
|
561,871,593 |
547,257,992 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
|
Mohammed Kasim Hasham |
|
Mohammed Ebrahim Hasham |
|
|
Chairman |
|
Chief Executive Officer |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| for
the year ended September 30, 2000 |
|
|
|
NOTE |
2000 |
