| HUSEIN SUGAR MILLS LIMITED |
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 2004 |
|
|
| BOARD
OF DIRECTORS |
Mst. Nusrat Shamim |
(Chairman) |
|
|
(Chairperson & Chief
Executive) |
|
|
Mian Parvaiz Aslam |
(Member) |
|
|
Mian Shahzad Aslam |
(Member) |
|
| RESIDENT
DIRECTOR |
Mian Farrukh Naseem |
|
| CHIEF
FINANCIAL OFFICER |
Mian Aamir Naseem |
|
|
Mst. Seema Sajjad |
|
| INTERNAL
AUDITOR |
Mst. Ayesha Shahzad |
|
| COMPANY
SECRETARY |
Mian Shahzad Aslam |
|
|
| AUDIT
COMMITTEE |
Mr. Muhammad Saeed |
|
|
Muhammad Iqbal Malik |
|
|
Syed Arif Hussain |
|
|
Muhammad Sajid Latif |
|
|
| BANKERS |
|
Muslim Commercial Bank
Limited |
|
|
BankAlfalah Limited |
|
|
United Bank Limited |
|
|
National Bank of Pakistan |
|
|
Habib Bank Limited |
|
|
Allied Bank of Pakistan
Limited |
|
|
Faysal Bank Limited |
|
|
Union Bank Limited |
|
|
| EXTERNAL
AUDITORS |
M/s. Riaz Ahmad & Co. |
|
|
Chartered Accountants |
|
|
| MILLS |
|
Lahore Road, Jaranwala |
|
|
| REGISTERED
/ HEAD OFFICE |
30-AE/l, Old FCC, Gulberg |
|
|
Ph:5762089 5762090 |
|
|
Fax: (042)5712680 |
|
|
Lahore |
|
|
| REVIEW
REPORT TO THE MEMBERS ON STATEMENT OF |
|
| COMPLIANCE
WITH BEST PRACTICES OF CODE OF |
|
| CORPORATE
GOVERNANCE |
|
| We
have reviewed the statement of compliance with the best practices contained
in the code of |
|
| corporate
governance prepared by the Board of Directors of HUSEIN SUGAR MILLS LIMITED
to |
|
| comply
with the Listing Regulation Nos. XI and XIII respectively of Karachi and
Lahore Stock |
|
| Exchanges
where the company is listed. |
|
|
| The
responsibility for compliance with the code of corporate governance is that
of the Board of |
|
| Directors
of the company. Our responsibility is to review, to the extent where such
compliance |
|
| can
be objectively verified, whether the statement of compliance reflects the
status of the |
|
| company's
compliance with the provisions f the code of corporate governance and report
if it |
|
| does
not. A review is limited primarily to' inquiries of the company personnel and
review of various |
|
| documents
prepared by the company to comply with the code. |
|
|
| As
part of our audit of financial statements, we are required to obtain an
understanding of the |
|
| accounting
and internal control systems sufficient to plan the audit and develop an
effective audit |
|
| approach.
We have not carried out any special review of the internal control system to
enable us |
|
| to
express an opinion as to whether the Board's statement on internal control
covers all controls |
|
| and
effectiveness of such internal controls. |
|
|
| Based
on our review, nothing has come to our attention which causes us to believe
that the |
|
| statement
of compliance does not appropriately reflect the company's compliance, in all
material |
|
| respects,
with the best practices contained in the code of corporate governance. |
|
|
| DIRECTORS'
REPORT |
|
| Dear Members, |
|
| Your
Directors are pleased to welcome you to the 38th Annual General Meeting of your company |
|
| and
place before you the Annual Report along with Audited Accounts of the Company
for the year |
|
| ended
30th September, 2004. |
|
|
| Financial
Results: |
|
|
| The
financial results of the company are summarized below:- |
|
|
|
(Rupees In Thousand) |
|
|
|
2004 |
2003 |
|
| Profit
before taxation |
|
83,303 |
57,526 |
|
| Provision
for taxation |
|
29,074 |
21,473 |
|
| Profit
after taxation |
|
54,229 |
36,053 |
|
| Un-appropriated
profit brought forward |
|
551 |
748 |
|
| Profit
available for appropriation |
|
54,780 |
36,801 |
|
|
| Your
Directors proposed appropriation as under: |
|
| Transferred
to General Reserve |
|
27,000 |
17,000 |
|
| Proposed
Cash Dividend @ 25 % (2003:17.50 %) |
|
27,500 |
19,250 |
|
|
| Operatinq
Performance: |
|
| Our
crushing season ended on 13th April, 2004 after 135 days of crushing whereas last year it |
|
| had
closed on 17th April,
2003 after 150 days of operation. |
|
|
| Comparative
operating results for the period under review are as follows:- |
|
|
|
|
|
2004 |
2003 |
|
| No.
of days worked |
|
|
135 |
150 |
|
| Cane crushed |
|
(M.Tons) |
622,148 |
663,111 |
|
| Average
recovery from sugarcane |
|
|
8.95% |
8.72% |
|
| Sugar produced |
|
(M.Tons) |
55,690 |
57,791 |
|
|
| Sugarcane
Development: |
|
| The
management of your company is continuing to give significant emphasis for the
development |
|
| of
early maturing with higher sucrose contents and better yielding varieties of
sugarcane. The |
|
| company
is taking positive steps in this respect by continuing the policy of
advancing free of |
|
| interest
loans to the growers. The company have advanced free of interest loans to the
tune of |
|
| Rs.4.568
million to the growers during the year under review for sowing early maturity
and higher |
|
| yielding
varieties of sugarcane. |
|
|
| Due
to the above policy of the company, the cultivation of obsolete Indian
variety (COJ 1148) |
|
| which
was to the extent of 90 % of the total cultivated area of sugarcane a few
years before have |
|
| been
reduced to 15 % of the cultivated area for the year under review. We will see
marked |
|
| improvement
in recovery and yield per acre in future. |
|
|
| Future
Prospects and Planning: |
|
| The
crushing season 2004-2005 started on 19th November, 2004. Till 6th December, 2004 your |
|
| company
had crushed 87,751.000 M.Tons of sugarcane and produced 6,509.000 M.Tons of |
|
| sugar
at an average recovery of 7.98 %. |
|
|
| The
prospects for the year 2004-2005 depends on the supply of sugarcane for the
remaining |
|
| period
of the season and also on the sale price of sugar. |
|
|
| The
sugarcane growth is effected due to scanty rains and supply of sugarcane is
likely to be less |
|
| than
the year under review. |
|
|
| We
have initiated balancing and modernization of the existing plant, which was
installed thirty- |
|
| eight
years ago. The required machinery has been finalized and we expect to catch
portion of |
|
| 2004-2005
crushing season. |
|
|
| Environment.
Health. Safety and Social Actions: |
|
| The
natural environment supports all human activity. We continually look for new
ways to reduce |
|
| the
environmental impact of our operation and product throughout their life cycle
by monitoring |
|
| the
environmental progress where applicable. The overall Health and Safety
Performance of the |
|
| Mill
was excellent th oughout the year. The Husein Sugar Mills Limited has an
ongoing proactive |
|
| approach
to safety management. The Mill is also accredited with I.S.O 9002 for quality |
|
| management
system. |
|
|
| Related parties |
|
| The
transactions between the related parties were carried out at arm's length
prices determined |
|
| in
accordance with the comparative uncontrolled prices method. The company has
fully complied |
|
| with
the best practices on Transfer Pricing as contained in the Listing
Regulations of Stock |
|
| Exchanges
in Pakistan. The Statement of Compliance with the best practice on Transfer
Pricing |
|
| is enclosed. |
|
|
| Corporate
Governance |
|
| The
statement of compliance with the best practices of Code of Corporate
Governance is |
|
| annexed. |
|
|
| Corporate
And Financial Frame Work: |
|
| In
compliance of the code of corporate governance, we give below statement of
Corporate and |
|
| Financial
Reporting Frame Work. |
|
|
| The
financial statements, prepared by the management of the company, fairly
present its state of |
|
| affairs,
the results of its operations, cash flows and changes in equity. |
|
|
| The
company has maintained proper books of accounts. |
|
|
| Appropriate
accounting policies have been consistently applied in preparation of
financial |
|
| statements
and accounting estimates are based on reasonable and prudent judgment. |
|
|
| International
Accounting Standards, as applicable in Pakistan, have been followed in
preparation |
|
| of
financial statements. |
|
|
| The
system of internal control is being continuously reviewed by the internal
audit and other such |
|
| procedures.
The process of review and monitoring will continue with the object to improve
it |
|
| further. |
|
|
| There
are no overdue taxes and levies as on 30th September, 2004. |
|
|
| There
is no doubt about the company's ability to continue as a going concern. |
|
|
| There
has been no material departure from the best practices of corporate
governance, as |
|
| detailed
in listing regulations. |
|
|
| Audit
Committee |
|
| The
audit committee is continued in compliance with the Code of Corporate
Governance and the |
|
| following
non-Executive Directors, are its members, Executive Directors are its
members: |
|
|
| Mian
Shahzad Aslam |
Chairman |
|
| Mian
Farrukh Naseem |
Member |
|
| Mian
Aamir Naseem |
Member |
|
|
| Key
Operating And Financial Data |
|
| The
Key Operating and financial data of last six years are annexed. |
|
| Value
of investment of employees provident fund were as follows: |
|
|
| As
on 30th June,2004 |
As on 30th June,2003 |
|
| (Un-audited) |
|
(Audited) |
|
| Rs.48.635 Million |
|
Rs.50.690 Million |
|
|
| Name
of Directors |
No.of Meetinqs Attended |
|
| 1. Mst. Nusrat Shamim |
4 |
|
| 2. Mian Parvaiz Aslam |
2 |
|
| 3. Mian Shahzad Aslam |
2 |
|
| 4. Mian Farrukh Naseem |
2 |
|
| 5. Mian Aamir Naseem |
4 |
|
| 6. Mst. Seema Sajjad |
4 |
|
| 7. Mst. Ayesha Shahzad |
3 |
|
|
| (However,
leaves of absence were granted to the Directors who could not attend the
Board |
|
| Meetings'
due to their pre-occupations). |
|
|
| Code
of Ethics and Business Practices has been developed and acknowledged by each
Director |
|
| and
employees of the Company. |
|
|
| Pattern
of Share Holding and information under clause |
|
| XIX(i)
And (i) of the Code of Corporate Governance |
|
|
| The
information under this head as on September 30, 2004 is annexed. |
|
| External
Auditors: |
|
| The
present Auditors M/s. Riaz Ahmed and Company, Chartered Accountants retire
and offer |
|
| themselves
for re-appointment by rotating the partner as per provisions of clause (Xli)
of Code of |
|
| Corporate
governance. |
|
|
| The
audit committee and Board of Directors have also recommended the
re-appointment of M/s. |
|
| Riaz
Ahmed and Company, Chartered Accountants as auditors of the company for the
ensuing |
|
| year
on their confirmation to change the Partner Incharge of Audit subject to the
approval of |
|
| Securities
And Exchange Commission of Pakistan. |
|
|
| Appreciation : |
|
| The
Directors would like to express their gratitude to all Officers and workers
for their invaluable |
|
| services
rendered for the company and look forward to strengthen this relationship in
future. |
|
|
| STATEMENT
OF COMPLIANCE WITH THE CODE |
|
| OF
CORPORATE GOVERNANCE |
|
| Year
Ended: September 30, 2004 |
|
| This
statement is being presented to comply with the Code of Corporate Governance
contained in |
|
| Regulation
No.37, 43 & 36 of listing regulations of Karachi, and Lahore Stock
Exchanges |
|
| respectively
for the purpose of establishing a framework of good governance, whereby a
listed |
|
| company
is managed in compliance with the best practices of corporate governance. |
|
|
| The
Company has applied the principles contained in the Code in the following
manners: |
|
|
| 1. The company encourages
representation of independent non-executive directors and |
|
| directors
representing minority interests on its Board of Directors. At present the Board |
|
| includes
independent non-executive directors. |
|
|
| 2. The directors have confirmed that
none of them is serving as a director in more than ten |
|
| listed
companies, including this Company. |
|
|
| 3. All the resident directors of the
Company are registered as taxpayers and none of them |
|
| has
defaulted, being a member of a stock exchange and has been declared as a |
|
| defaulter
by that stock exchange. |
|
|
| 4. Since the last report, no change in
the directorship has taken place. |
|
|
| 5. The Company has prepared a
Statement of Ethics and Business Practices', which has |
|
| been
singed by all the directors and employees of the Company. |
|
|
| 6. The Board has developed a
vision/mission statement, overall corporate strategy and |
|
| significant
policies of the company. A complete record of particulars of significant
policies |
|
| along
with the dates on which they were approved or amended has been maintained |
|
|
| 7 All the powers of the board have been duly exercised and decisions on
material |
|
|
| transactions,
including appointment and determination of remuneration and terms and |
|
| conditions
of employment of the CEO and other executive directors, have been taken by |
|
| the Board. |
|
|
| 8. The meetings of the Board were
presided over by the Chairperson and the Board met at |
|
| least
once in every quarter. Written notice of the Board meetings, along with
agenda and |
|
| working
papers, were circulated at least seven days before the meeting. The minutes of |
|
| the
meetings were appropriately recorded and circulated. |
|
|
| 9. The Board arranged an orientation
course for its directors during the year to apprise them |
|
| of
their duties and responsibilities. |
|
|
| 10 The appointment of CFO, Company
Secretary and Head of Internal Audit, including their |
|
| remuneration
and terms and conditions of employment have been duly approved by the |
|
| Board. |
|
|
| 11 The
Directors' Report for
this year has
been prepared in
compliance with the |
|
| requirements
of the Code and fully describes the salient matters required to be disclosed. |
|
|
| 12. The financial statements of the
Company were duly endorsed by CEO and CFO before |
|
| approval
of the Board. |
|
|
| 13. The directors, CEO and executives do
not hold any interest in the shares of the Company |
|
| other
than that disclosed in the pattern of shareholding |
|
|
| 14. The Company has complied with all the
corporate and financial reporting requirements of |
|
| the Code. |
|
|
| 15. The audit committee is continued and
it comprised 3 members, of whom, all are non- |
|
| executive
directors including the Chairman of the Committee. |
|
|
| 16. The meetings of the audit committee
were held at least once every quarter prior to |
|
| approval
of interim and final results of the Company and as required by the Code The |
|
| terms
of reference of the committee have been formed and advised to the committee
for |
|
| compliance. |
|
|
| 17. The Board has set-up an effective
internal audit function who are considered suitably |
|
| qualified
and experience for the purpose and are conversant with the policies and |
|
| procedures
of the Company and they are involved in the internal audit function on a full |
|
| time basis. |
|
|
| 18. The statutory auditors of the Company
have confirmed that they have been given a |
|
| satisfactory
rating under the Quality Control Review programme of the institute of |
|
| Chartered
Accountants of Pakistan and that the firm and all its partners are in
compliance |
|
| with
International Federation of Accountants (FCA) guidelines on code of ethics as |
|
| adopted
by Institute of Chartered Accountants of Pakistan. |
|
|
| 19. The statutory auditors of the persons
associated with them have not been appointed to |
|
| provide
other services except in accordance with the listing regulations and the
auditors |
|
| have
confirmed that they have observed IFAC guidelines in this regard. |
|
|
| KEY
OPERATING AND FINANCIAL DATA |
|
|
|
2004 |
2003 |
2002 |
2001 |
2000 |
1999 |
1998 |
|
| OPERATING
DATA |
|
|
| Cane
crushed (M. Tons) |
622,148 |
663,111 |
622,522 |
435,463 |
435,733 |
727,362 |
740,854 |
|
| Sugar
produced from |
|
|
| Sugarcane
(M. Tons) |
55,690 |
57,791 |
54,503 |
32,130 |
32,047 |
51,684 |
57,811 |
|
| Average
recovery from |
|
|
| sugarcane (%) |
|
8.95 |
8.72 |
8.75 |
7.37 |
7.35 |
7.1 |
7.81 |
|
| Raw
sugar processed (M.Tc ns) |
|
|
- |
- |
9,939 |
- |
- |
- |
|
| Sugar
produced from |
|
|
| raw
sugar (M. Tons) |
- |
- |
- |
9,197 |
- |
- |
- |
|
| Number
of days worked |
135 |
150 |
140 |
143 |
127 |
162 |
164 |
|
|
|
|
(Rupees in '000) |
|
| FINANCIAL
DATA |
|
|
| Sales |
|
1,061,314 |
705,008 |
1,200,363 |
574,692 |
645,113 |
1,076,341 |
706,165 |
|
| Gross profit (loss) |
|
137,976 |
106,601 |
241,025 |
-28,574 |
85,634 |
89,381 |
54,313 |
|
| Operating
profit / (loss) |
94,104 |
65,604 |
204,453 |
-64,000 |
49,132 |
46,111 |
12,058 |
|
| Profit
/ (loss) before ' |
|
|
| taxation |
|
83,303 |
57,526 |
172,460 |
-105,181 |
16,289 |
15,207 |
-35,866 |
|
| Taxation |
|
-29,074 |
-21,473 |
-28,798 |
14,127 |
-4,049 |
-10,318 |
7,504 |
|
| Profit
/ (loss) after taxation |
54,229 |
36,053 |
143,662 |
-91,054 |
12,240 |
4,889 |
-28,362 |
|
| Total Assets |
|
487,661 |
572,970 |
358,770 |
544,374 |
310,108 |
402,201 |
612,487 |
|
| Current Liabilities |
|
158,544 |
276,313 |
79,629 |
417,038 |
72,052 |
150,077 |
343,752 |
|
|
|
329,117 |
296,657 |
279,141 |
127,336 |
238,056 |
252,124 |
268,735 |
|
| Represented by: |
|
|
|
| Share capital |
|
110,000 |
110,000 |
110,000 |
110,000 |
110,000 |
110,000 |
110,000 |
|
| Reserves |
|
191,437 |
163,310 |
145,597 |
106,544 |
106,544 |
106,544 |
138,224 |
|
| Unappropriated
profit / (loss |
280 |
551 |
748 |
-89,775 |
1,279 |
39 |
-28,300 |
|
| Equity |
|
301,717 |
273,861 |
256,345 |
126,769 |
217,823 |
216,583 |
219,944 |
|
| Redeemable
capital |
- |
- |
- |
- |
- |
- |
4,034 |
|
| Liabilities
against assets |
|
|
| subject
to finance lease |
676 |
- |
- |
567 |
3,233 |
18,541 |
32,757 |
|
| Deferred taxation |
|
26,724 |
22,796 |
22,796 |
- |
17,000 |
17,000 |
12,000 |
|
|
|
329,117 |
296,657 |
279,141 |
127,336 |
238,056 |
252,124 |
268,735 |
|
| STATISTICS
AND RATIOS |
|
|
| Pre-tax
profit to sales % |
7.85 |
8.16 |
14.37 |
-18.3 |
2.52 |
1.41 |
-5.08 |
|
| Pre-tax
profit to capital % |
75.73 |
52.3 |
156.78 |
-95.62 |
14.81 |
13.82 |
-32.61 |
|
| Current ratio |
|
1.65 |
1.29 |
1.95 |
0.8 |
1.08 |
0.94 |
0.97 |
|
| Earning
/ (loss) per share |
4.93 |
3.28 |
13.06 |
-8.28 |
1.11 |
0.44 |
-2.58 |
|
| Cash dividend % |
|
25 |
17.5 |
15 |
- |
10 |
7.5 |
- |
|
| Return
on shareholders |
|
|
| equity % |
|
17.97 |
13.16 |
56.04 |
-71.83 |
5.62 |
2.26 |
-12.9 |
|
| Book
value per share |
27.43 |
24.9 |
23.3 |
•11.52 |
19.8 |
19.69 |
19.99 |
|
|
| THE
COMPANIES ORDINANCE 1984 (SECTION 236(1) and 464) |
|
| PATTERN
OF SHAREHOLDINGS AS AT SEPTEMBER 30, 2004. |
|
|
| No. of |
|
SHAREHOLDINGS |
TOTAL |
|
| Shareholders |
From |
To |
Shares held |
|
| 190 |
1 |
100 |
5009 |
|
| 141 |
101 |
500 |
44006 |
|
| 51 |
501 |
1000 |
35349 |
|
| 62 |
1001 |
5000 |
153609 |
|
| 12 |
5001 |
10000 |
79517 |
|
| 9 |
10001 |
15000 |
113428 |
|
| 3 |
15001 |
20000 |
52406 |
|
| 2 |
20001 |
25000 |
49600 |
|
| 2 |
25001 |
30000 |
52681 |
|
| 2 |
30001 |
35000 |
68594 |
|
| 3 |
45001 |
50000 |
146535 |
|
| 5 |
50001 |
55000 |
268704 |
|
| 1 |
55001 |
60000 |
59330 |
|
| 1 |
60001 |
65000 |
62,000 |
|
| 1 |
75001 |
80000 |
79197 |
|
| 2 |
90001 |
95000 |
187742 |
|
| 2 |
100001 |
105000 |
200166 |
|
| 2 |
125001 |
130000 |
255245 |
|
| 1 |
185001 |
190000 |
188899 |
|
| 1 |
190001 |
195000 |
192496 |
|
| 1 |
255001 |
260000 |
259219 |
|
| 2 |
305001 |
310000 |
618791 |
|
| 1 |
380001 |
385000 |
381146 |
|
| 1 |
505001 |
510000 |
505241 |
|
| 1 |
585001 |
590000 |
585960 |
|
| 1 |
595001 |
600000 |
596661 |
|
| 1 |
635001 |
640000 |
638222 |
|
| 1 |
660001 |
665000 |
660591 |
|
| 1 |
720001 |
725000 |
723330 |
|
| 1 |
740001 |
745000 |
742493 |
|
| 1 |
1280001 |
1285000 |
1284774 |
|
| 1 |
1705001 |
1710000 |
1709059 |
|
| - |
1710001 |
11000000 |
— |
|
| 506 |
