SHAHMURAD SUGAR MILLS LIMITED Half Yearly Results for the period 1st October 2017 to 31st March, 2018
COMPANY INFORMATION BOARD OF DIRECTORS MR. ISMAIL H. ZAKARIA MR. YUSUF AYOOB MR. SULEMAN AYOOB MR. A. AZIZ AYOOB MR. ZIA ZAKARIA MR. NOOR MOHAMMAD ZAKARIA MR. ZOHAIR ZAKARIA MR. NAEEM AHMED SHAFI MR. KHURRAM AFTAB BOARD AUDIT COMMITTEE MR. NAEEM AHMED SHAFI MR. SULEMAN AYOOB MR. ZOHAIR ZAKARIA HUMAN RESOURCE AND REMUNERATION COMMITTEE MR. SULEMAN AYOOB MR. YUSUF AYOOB MR.NOOR MOHAMMAD ZAKARIA Chairman Managing Director Resident Director Independent Director (N.I.T. Nominee) Chairman Member Member Chairman Member Member CHIEF FINANCIAL OFFICER MR. IQBAL UMER COMPANY SECRETARY MR. MOHAMMAD YASIN MUGHAL FCMA AUDITORS M/s. KRESTON HYDER BHIMJI & CO. Chartered Accountants LEGAL ADVISOR MR. ABDUL SATTAR PINGAR Advocate REGISTERED OFFICE 96-A, SINDHI MUSLIM HOUSING SOCIETY, KARACHI-74400 Tel: 34550161-63 Fax: 34556675 FACTORY JHOK SHARIF, TALUKA MIRPUR BATHORO, DISTRICT SUJAWAL (SINDH) REGISTRAR & SHARES REGISTRATION OFFICE M/s. C & K MANAGEMENT ASSOCIATES (PVT) LTD. 404-TRADE TOWER, ABDULLAH HAROON ROAD, NEAR METROPOLE HOTEL, KARACHI - 75530 WEBSITE www.shahmuradsugar.co 1
DIRECTORS' REPORT Dear Members Asslamu-o- Alaikum On behalf of Board of Directors' I take the opportunity to place before you the unaudited financial statements of your company for the period ended March 31 st 2018. Salient features of production and Financial Statements are as under: PRODUCTION DATA March 31, 2018 March 31, 2017 Crushing commenced on 28-11-2017 28-11-2016 Crushing completed up to 31-03-2018 18-03-2017 Duration of crushing (days) 124 111 Sugarcane crushed (M Tons) 738,134 672,747 Sugar produced (M Tons) 81,195 72,755 Sugar recovery percentage 11.07 10.82 Molasses produced (M Tons) 34,470 30,750 Ethanol Production (M Tons) 18,553 12,915 FINANCIAL DATA (Rupees in thousands) Sales revenue 4,028,621 2,351,052 Cost of sales (3,875,796) (1,990,398) Gross profit 152,825 360,654 Distribution cost (364,745) (109,175) Administrative expenses (103,008) (103,834) Financial cost (80,324) (77,292) Other operating expenses net of income 556,102 1,590 Profit before taxation 160,850 71,943 Provision for taxation (47,649) 5,250 Profit after taxation 113,201 77,193 Earnings per share Rs.5.36 Rs.3.66 Segment wise performance is elaborated as under: SUGAR DIVISION During the period under review the mill crushed 738,134 metric tons of cane and produced 81,195 metric tons of sugar. During the same period last year the mill crushed 672,747 metric tons of cane and produced 72,755 metric tons of sugar. The current period production is more than last year by 11.60 percent or 8,440 metric tons. The increase in production of sugar was mainly due to huge sugar cane crop across the country and higher volume of crushing and also increase in the recovery percentage which increased to 11.07 from 10.82 percent achieved last year. The price of sugar cane was notified by the government of Sindh at Rs 182 per 40 kg which was the same as fixed for the crushing season 2016-2017. However the price of sugar declined substantially during the period under review and the sugar mills filed a case before the honorable High Court of Sindh. The honorable High Court of Sindh gave an interim decision that the sugar mills will purchase sugar cane at the rate of 160 per 40 kg and the balance would be decided by the honorable Supreme Court of Pakistan. 2
Due to the huge cane crop for the crushing season and the carry over stock from the previous year a surplus of approximately 2.5 million tons is expected. The excess production in the local market and international market has kept the local prices of sugar under pressure. Due to this alarming situation the Federal and Provincial Government allowed an initial export of 1.5 million tons of sugar with an export subsidy. Your company up to March 31st 2018 exported 48,630 tons of sugar. Unfortunately due to extremely slow release of subsidy payments and depressed international prices export quota still remains unutilized as of March 31st 2018. ETHANOL DIVISION During the period under consideration the Ethanol Division produced 18,553 metric tons of ethanol as against 12,915 metric tons produced in the same period of last year. The production of ethanol is higher than the previous years' production as the molasses was available. As stated previously the capacity of the ethanol division is being enhanced and installation of additional plant and machinery is in the final stage. Trial production of the additional plant has commenced on May 18th 2018. With the enhancement of the capacity it is expected that the production of ethanol division would increase during the remaining period of the current year. Full impact of the capacity enhancement would emerge during the next year. FUTURE OUTLOOK It is expected that during the next crushing season cane crop in Punjab and KPK would be surplus; however cane crop in Sindh would be seriously affected due to non availability of water. We hope that the Government will take timely decision for export as well as building buffer stock which would be the only way to stabilize domestic sugar prices. Future outlook of ethanol appears to be positive as the price of crude oil registered an upward trend. BOARD OF DIRECTORS During the period under consideration there was no change in the composition of Board of Directors. The Board of Directors wishes to assure its respectable stakeholders for the dedicated efforts to achieve the success with better planning to overcome, In Sha Allah, the difficult situation being faced presently by the sugar industry of the country. Please extend your pray to Almighty Allah to guide / help us to achieve the desired goals. (Aameen) Karachi: Dated: May 24, 2018 YUSUF AYOOB Managing Director 3
AUDITORS' REPORT TO THE MEMBERS ON REVIEW OF CONDENSED INTERIM FINANCIAL STATEMENTS INTRODUCTION: We have reviewed the accompanying condensed interim statement of financial position of SHAHMURAD SUGAR MILLS LIMITED (" the Company") as of March 31, 2018, and the related condensed interim statement of profit and loss, condensed interim statement of comprehensive income, condensed interim statement of cash flow and condensed interim statement of changes in equity together with the notes forming part thereof (hereinafter referred to as the "condensed interim financial information") for the half year then ended. Management is responsible for the preparation and presentation of this condensed interim financial information in accordance with the approved accounting standards as applicable in Pakistan. Our responsibility is to express a conclusion on this condensed interim financial information based on our review. The figures of the condensed interim statement of profit and loss for quarters ended March 31, 2018 and March 31, 2017 have not been reviewed, as we were required to review only the cumulative figures for the half year ended March 31, 2018. SCOPE OF REVIEW: We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of this condensed interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. CONCLUSION: Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information as of and for the half year ended on March 31, 2018, is not prepared, in all material respects, in accordance with approved accounting Standards as applicable in Pakistan for interim financial reporting. Karachi: Dated: May 24, 2018 KRESTON HYDER BHIMJI & CO. CHARTERED ACCOUNTANTS Engagement partner: Fahad Ali Shaikh Suite No. 1601, 16th Floor, Kashif Centre, Shahrah-e-Faisal, Karachi. Phone: 92-21-35640050 to 52 Fax: 92-21-35640053, Website: www.krestonhb.com E-mail: hyderbhimji@yahoo.com, hyderbhimji@gmail.com OTHER OFFICES LAHORE - FAISALABAD - ISLAMABAD A member of kreston international A global network of independent accounting firms. 4
CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION (UN-AUDITED) AS AT MARCH 31, 2018 Un-Audited Audited March September 2018 2017 Note ASSETS NON CURRENT ASSETS Property, plant and equipment 4 3,907,940 3,052,313 Long term investment in associate 2,673 2,673 Long term loans 1,675 1,535 Long term deposits 2,429 2,429 Deferred taxation 73,107 81,034 3,987,824 3,139,984 CURRENT ASSETS Stores, spare parts and loose tools 173,439 166,501 Stock-in-trade 3,723,743 2,359,550 Trade debts 536,462 454,573 Loans and advances 671,914 483,153 Trade deposits and short term prepayments 8,463 5,903 Other receivables - Export subsidy announced by Federal and Provincial Governments on export sale of sugar 521,684 - Income tax refundable-net 42,383 29,014 Cash and bank balances 54,957 38,492 5,733,045 3,537,186 9,720,869 6,677,170 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Authorised Capital 25,000,000 ordinary shares of Rs. 10 each 250,000 250,000 Issued, subscribed and paid-up capital 211,187 211,187 General reserve 80,000 80,000 Share of associate's unrealized loss on re-measurement of its investment (1,885) (1,885) Unappropriated Profit 957,429 842,010 Surplus on Revaluation of Property, Plant & Equipment 533,930 546,707 NON CURRENT LIABILITIES 1,780,661 1,678,019 Long term financing 1,795,055 1,542,234 CURRENT LIABILITIES Trade and other payables 2,251,372 445,217 Accrued finance cost 32,581 37,956 Short term borrowings 3,466,269 2,602,820 Loan from related parties 187,336 194,836 Current portion of long term financing 203,472 172,222 Unclaimed dividend 4,123 3,866 6,145,153 3,456,917 CONTINGENCIES AND COMMITMENTS 5 - - 9,720,869 6,677,170 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. YUSUF AYOOB Managing Director ZIA ZAKARIA Director 5 IQBAL UMER Chief Financial Officer
CONDENSED INTERIM STATEMENT OF PROFIT & LOSS (UN-AUDITED) FOR THE HALF YEAR ENDED MARCH 31, 2018 Notes For the half year October to March 2018 2017 For the Quarter January to March 2018 2017 Sales 4,028,621 2,351,052 1,833,594 1,331,004 Cost of Sales 6 (3,875,796) (1,990,398) (1,691,102) (1,058,838) Gross profit 152,825 360,654 142,492 272,166 Profit / (Loss) from trading activities 14 1,986 (39) 1,986 152,839 362,640 142,453 274,152 Distribution cost (364,745) (109,175) (182,183) (70,908) Administrative expenses (103,008) (103,834) (55,677) (55,056) Other operating charges (15,882) (7,083) (15,275) (6,670) (483,635) (220,092) (253,135) (132,634) Operating (Loss) / Profit (330,796) 142,548 (110,682) 141,518 Other income - including Export subsidy announced by Federal and Provincial Governments on export sale of sugar 571,970 6,687 397,541 4,453 241,174 149,235 286,859 145,971 Finance cost (80,324) (77,292) (43,288) (55,072) Profit before taxation 160,850 71,943 243,571 90,899 Taxation -Current (39,721) (16,678) (16,205) (6,464) -Deferred (7,928) 21,928 (47,740) 11,561 (47,649) 5,250 (63,945) 5,097 Profit after taxation 113,201 77,193 179,626 95,996 Earning per share-basic and diluted - Rupees 5.36 3.66 8.51 4.55 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. YUSUF AYOOB Managing Director ZIA ZAKARIA Director 6 IQBAL UMER Chief Financial Officer
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED) FOR THE HALF YEAR ENDED MARCH 31, 2018 For the half year October to March 2018 2017 For the Quarter January to March 2018 2017 Profit after taxation 113,201 77,193 179,626 95,996 Other comprehensive income - - - - Total comprehensive income for the period 113,201 77,193 179,626 95,996 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. YUSUF AYOOB Managing Director ZIA ZAKARIA Director IQBAL UMER Chief Financial Officer 7
CONDENSED INTERIM STATEMENT OF CASH FLOW (UN-AUDITED) FOR THE HALF YEAR ENDED MARCH 31, 2018 March March 2018 2017 A. CASH FLOW FROM OPERATING ACTIVITIES Profit before taxation 160,850 71,943 Adjustment for : Depreciation 4.1 63,928 65,829 Amortisation - - Profit on disposal of property, plant and equipment (2,903) (1,391) Provision for obsolescence and slow moving items 2,550 1,200 Finance cost 80,324 77,292 143,899 142,930 304,749 214,873 (Increase) / decrease in current assets Stores, spare parts and loose tools (9,489) 23,972 Stock in trade (1,364,193) (3,173,250) Trade debts (81,889) (479,304) Loans & advances (188,761) (140,192) Short term prepayments (2,560) (12,813) Other receivables (521,684) (795) (2,168,576) (3,782,382) Increase in current liabilities Trade and other payables 1,806,155 1,139,811 Short term borrowings 863,449 2,624,373 2,669,604 3,764,184 805,777 196,675 (Increase) / Decrease in long term loan (140) 332 (Increase) in long term deposits - (1) Income tax paid (53,090) (18,986) Finance cost paid (85,699) (53,482) (138,929) (72,137) Net cash inflow from operating activities 666,848 124,538 B. CASH FLOW FROM INVESTING ACTIVITIES Additions in property, plant & equipment (923,686) (114,016) Sale proceeds from disposal of property, plant and equipment 7,034 5,793 Net cash outflow from investing activities (916,652) (108,223) C. CASH FLOW FROM FINANCING ACTIVITIES Long term finance received 354,557 800,000 Repayment of long term financing (77,986) (732,936) Dividend paid (10,302) (50,056) Net cash inflows from financing activities 266,269 17,008 Net increase in cash and bank balances (A+B+C) 16,465 33,323 Cash and bank balance at the beginning of the period 38,492 57,363 Cash and bank balance at the end of period 54,957 90,686 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. YUSUF AYOOB Managing Director ZIA ZAKARIA Director 8 IQBAL UMER Chief Financial Officer
CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED) FOR THE HALF YEAR ENDED MARCH 31, 2018 Balances as at October 01, 2016 (Audited) 211,187 80,000 (1,813) 859,026 568,724 1,717,124 During the half year ended March 31, 2017 Issued, Subscribed & paid up capital General reserves Share of Associate's unrealised (loss)/gain on remeasurement of investment Unappropriated profit Capital Reserve Surplus on revaluation of Property Plant & Equipment Transactions with owners Final Dividend for 30-September-2016 @ Rs. 2.40 Per Share - - - (50,686) - (50,686) Total Comprehensive Income for the half year ended March 31, 2017 - - - 77,193-77,193 Transfer from surplus on revaluation of property, plant and equipment on account of incremental depreciation -net of deferred tax - - - 13,106 (13,106) - Effect of change in tax rate on deferred tax related to revaluation surplus - 4,410 4,410 Transfer from revaluation surplus on account of disposal of propery, plant and equipment net of deferred tax - - - 219 (219) - - - - 13,325 (8,915) - Balances at March 31,2017 211,187 80,000 (1,813) 898,858 559,809 1,748,041 Total Balances as at October 01, 2017 (Audited) 211,187 80,000 (1,885) 842,010 546,707 1,678,019 During the half year ended March 31, 2018 Transactions with owners Final Dividend for 30-September-2017 @ Re. 0.50 Per Share - - - (10,559) - (10,559) Total Comprehensive Income for the half year ended March 31, 2018 - - - 113,201-113,201 Transfer from surplus on revaluation of property, plant and equipment on account of incremental depreciation -net of deferred tax - - - 12,334 (12,334) - Transfer from revaluation surplus on account of disposal of propery, plant and equipment net of deferred tax - - - 443 (443) - - - - 12,777 (12,777) - Balances at March 31, 2018 211,187 80,000 (1,885) 957,429 533,930 1,780,661 The annexed notes from 1 to 13 form an integral part of this condensed interim financial information. YUSUF AYOOB Managing Director ZIA ZAKARIA Director 9 IQBAL UMER Chief Financial Officer
NOTES TO THE CONDENSED INTERIM FINANCIAL INFORMATION FOR THE HALF YEAR ENDED MARCH 31, 2018 1. The Company and its Operations The Company was incorporated in Pakistan as a public limited company on April 9, 1979. Its shares are quoted at the Pakistan Stock Exchange. The Company owns and operates Sugar and Ethanol manufacturing units which are located at Jhoke Sharif, District Sujawal in the province of Sindh. The company's registered office is located at 96-A, Sindhi Muslim Cooperative Housing Society, Karachi, Sindh. 2. Basis of Preparation 2.1 This condensed interim financial information have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprise of : - International Accounting Standard (IAS) 34, Interim Financial Reporting, issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and - Provisions of and directives issued under the Companies Act, 2017. Where the provisions of and directives issued under the Companies Act, 2017 differ with the requirements of IAS 34, the provisions of and directives issued under the Companies Act, 2017 have been followed. The condensed interim financial information does not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the company's annual financial statements for the year ended September 30, 2017. 2.2 This condensed Interim financial information comprises of the condensed Interim Statement of Financial Position as at March 31, 2018 and the condensed interim statement of profit & loss, condensed interim statement of comprehensive income, condensed interim statement of changes in equity and the condensed interim statement of cash flow together with notes forming part thereof for the half year then ended which have been subjected to review and are not audited. This also includes the condensed interim statement of profit and loss and the condensed interim statement of comprehensive income for the quarter ended March 31, 2018. The comparative Statement of Financial Position presented in this condensed interim financial information has been extracted from the audited financial statements of the company for the year ended September 30, 2017, whereas the comparative condensed interim statement of profit and loss, condensed interim statement of comprehensive income, condensed interim statement of changes in equity and condensed interim statement of cash flow figures have been extracted from the unaudited condensed interim financial information for the half year ended March 31, 2017. 2.3 The figures of the condensed interim statement of profit and loss and the condensed interim statement of comprehensive income for the quarter ended March 31, 2018 and 2017 are not subject to review by the auditor. 3. Significant accounting policies and disclosures 3.1 The accounting policies and methods of computation followed for the preparation of this condensed interim financial information are consistent with those followed in the preparation of the company's annual financial statements for the year ended September 30, 2017, except revaluation surplus on property plant and equipment as stated below in note 3.5. 10
3.2 Due to the seasonal availability of sugarcane, the manufacture of sugar is carried out during the period of availability of sugarcane and costs incurred/accrued up to the reporting date have been accounted for. Accordingly, the costs incurred/accrued after the reporting date will be reported in the subsequent interim and annual financial statements. 3.3 Certain new IFRSs and amendments to existing IFRSs, effective for periods beginning on or after October 01, 2017 do not have any impact on the condensed interim financial information, and are therefore not disclosed. 3.4 The preparation of this condensed interim financial information requires management to make estimates, assumptions and use judgements that affect the application of policies and reported amounts of assets and liabilities and income and expenses. Estimates, assumptions and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events. Revisions to accounting estimates are recognized prospectively commencing from the period of revision. Judgements and estimates made by the management in the preparation of this condensed interim financial information are the same as those that were applied to financial statements as at and for the year ended September 30, 2017. 3.5 Effective from 30 May 2017, the Companies Act, 2017 (the Act) was enacted which replaced and repealed the previous Companies Ordinance, 1984 (the repealed Ordinance). The Companies Act introduces new disclosure and presentation requirements and also section 235 of the repealed Ordinance relating to treatment of surplus arising on revaluation of property, plant and equipment has not been carried forward in the Act consequently the Company has to account for and classify revaluation surplus in accordance with the requirements of IAS 16 Property, Plant and Equipment. The Company used to transfer such surplus to an account called ' Surplus on revaluation of property plant and equipment ' which was shown separately in statement of financial position after Capital and Reserves (i.e. Equity) whereas the IAS 16 requires same to be treated as part of equity and also there is change in treatment of loss on revaluation. Accordingly the Company has made the changes in its accounting policy as per the requirements of the Companies Act, 2017; however, there is no significant change in the reported amounts so no restatement is required with respect to amount, the only change required is reclassification revaluation surplus as part of equity. In respect of additional disclosures required by the Act will be made in the annual financial statements of the Company. 4. Property, Plant and Equipment Un-Audited March 31, Audited September 30, 2018 2017 Operating fixed assets 4.1 2,442,189 2,467,576 Capital work in progress 4.2 1,465,751 584,737 3,907,940 3,052,313 11
4.1 OPERATING FIXED ASSETS Opening book value 2,467,576 2,483,345 Direct additions during the period / year Furniture, Fixture and Fittings 100 386 Office Equipment 1,141 3,224 Vehicle 8,304 8,470 9,545 12,080 Transfer from CWIP during the period / year Owned Non Factory building 1,330 21,902 Plant and Machinery 31,797 88,158 33,127 110,060 Disposals - Operating assets (net book value) Plant and Machinery (1,037) (650) Vehicles (3,094) (3,971) (4,131) (4,621) Depreciation Charged for the period / year (63,928) (133,288) Closing book value 2,442,189 2,467,576 4.2 CAPITAL WORK IN PROGRESS Un-Audited March 31, Audited September 30, 2018 2017 Opening balance 584,737 57,730 Additions during the period / year Civil Works 180,987 158,875 Plant & Machinery 733,154 478,192 914,141 637,067 Capitalization during the period/year Civil Works (1,330) (21,902) Plant & Machinery (31,797) (88,158) (33,127) (110,060) Closing balance 1,465,751 584,737 5. CONTINGENCIES AND COMMITMENTS 5.1 Contingencies There is no material change in status of contingencies as disclosed in note No. 24 (a) of the annual financial statements for the year ended September 30, 2017, except for the following; 5.1.1 During the period under review, the Government of Sindh issued a notification no. 8(142)/ S.O(EXT)2017, according to which, the minimum price of sugarcane has been fixed at the rate of Rs. 182 per 40 kg for the crushing season 2017-2018. The Sugar mills, against the said notification, have filed a petition in the High Court of Sindh. Thereafter, the Honourable 12
Court after deliberations with all stakeholders announced the judgement fixing the purchase price at Rs. 160 to be paid to growers and the balance of Rs. 22 per 40 kg to be decided by the Supreme Court of Pakistan. However, the Company, as a matter of prudence accounted for the said difference of Rs. 22 per 40 kg in this condensed interim financial information aggregating to Rs.405.974 million. 5.1.2 During the period under review, the appeal of the quality premium, as disclosed in note no 24.4 of the annual financial statements of the Company, has been decided by the Honourable Supreme Court of Pakistan against the Company. The Legal Counsel of the Company is of the view that the Honourable Supreme Court has now simply prescribed the criteria for future, which if followed properly, would make quality premium applicable in the future, and in relation to the past (other than crushing season 1998 1999) it appears that no liability arose as no legally binding notification under section 16(v) can be said to be in the field in the light of the decision of the Honourable Supreme Court. Accordingly, no liability arises for the past except for the year 1998 99 for which quality premium amounted to Rs. 93.7 million against which no provision is made as the Company has already paid price higher than the minimum notified price for the said year. 5.2 Commitments Un-Audited March 31, Audited September 30, 2018 2017 Commitments for capital expenditure 101,861 705,043 Commitments for stores and spares - 27,444 101,861 732,487 Bank Gurantees in favor of Excise and Taxation Department 500 500 6. COST OF SALES For the half year October to March 2018 2017 For the Quarter January to March 2018 2017 Opening stock of finished goods 1,762,935 851,715 481,983 662,161 Cost of goods manufactured 4,473,422 4,297,114 3,569,679 2,574,085 6,236,357 5,148,829 4,051,662 3,236,246 Closing stock of finished goods (Note 6.1) (2,360,560) (3,158,431) (2,360,560) (3,158,431) 3,875,797 1,990,398 1,691,102 77,815 6.1 Finished goods costing Rs. 2,448.740 million (March 2017: Rs. 3,000.467 million) have been written down to their net relaizable value of Rs. 2,268.645 million (March, 2017 : Rs. 2,937.393 million). At period end stock pledged against short term borrowings amounted to Rs. 1,317 million (March 2017 : 2,036 million). 13
7. TRANSACTION WITH RELATED PARTIES Related parties comprises of associated entities, staff retirement funds, directors and key management personnel. The transactions with balances of related parties during the period/as at period end are given below: Transactions: Relationship with the Company Nature of Transactions March, 2018 March, 2017 Associates Al-Noor Sugar Mills Limited -Purchase of Goods 176,795 265,842 Reliance Insurance Company Ltd. -Insurance premium 16,829 14,200 Other related parties Directors' and key management personnel -Directors remuneration 11,910 12,020 -Executive remuneration 23,473 33,973 -Non-executive directors' meeting fee 65 70 Staff provident fund excluding Directors -Company's Contribution during the period 2,613 2,364 Balances: Relationship with the Company Associates Nature of Transactions March, 2018 September, 2017 Al-Noor Sugar Mills Limited Trade & other payables 4,294 - Reliance Insurance Company Ltd. Trade & other payables 12,356 - Staff provident fund Trade & other payables 935 287 14
8. RELATIONSHIP WITH THE ISLAMIC AND CONVENTIONAL FINANCIAL INSTITUTION The Company in the normal course of business deals with sole Islamic financial institutions as well as the financial institutions who operate both the conventional side and Islamic window. The details segregation between Shariah complaints and conventional assets/liabilites and income/expenditure are given below: As at March 31, 2018 Rupees in thousand Islamic Mode Conventional Total As at September 30, 2017 Rupees in thousand Islamic Mode Conventional Total Long term financing-musharka and others finance 1,143,750 651,305 1,795,055 1,206,250 335,984 1,542,234 Current portion of long term finance 125,000 78,472 203,472 93,750 78,472 172,222 1,268,750 729,777 1,998,527 1,300,000 414,456 1,714,456 Trade and other payables - Murabaha/Istisna 110,000-110,000 120,000-120,000 Accrued finance cost 4,952 27,629 32,581 12,739 12,921 25,660 Short term borrowings - 3,466,269 3,466,269-2,602,820 2,602,820 Cash at banks (1,270) (53,687) (54,957) (7,097) (31,395) (38,492) 1,382,432 4,169,988 5,552,420 1,425,642 2,998,802 4,424,444 Half year ended March 31, 2018 Rupees in thousand Islamic Mode Conventional Total Half year ended March 31, 2017 Rupees in thousand Islamic Mode Conventional Total Finance cost 28,201 52,123 80,324 25,448 51,844 77,292 Income from PLS bank account - (7) (7) - - - 28,201 52,116 80,317 25,448 51,844 77,292 15
9. SEGMENT INFORMATION The Company's operating businesses are organized and managed separately according to the nature of products produced with each segment representing a strategic business unit that offer different products and serves different markets. The sugar segment is engaged in manufacturing and sale of the sugar and its by-products whereas ethanol segment is engaged in manufacturing and sale of ethanol. The following tables represents revenue and profit information regarding business segment for the half year ended March 31, 2018 and March 31, 2017 and assets and liabilities information regarding business segments as at March 31, 2018 and September 30, 2017. Sugar Ethanol Consolidated Half year ended Half year ended Half year ended March 31, March 31, March 31, 2018 2017 2018 2017 2018 2017 REVENUE External Sales 2,440,772 1,338,291 1,587,849 1,012,761 4,028,621 2,351,052 Inter segment transfer 201,189 261,375 - - 201,189 261,375 Total 2,641,961 1,599,666 1,587,849 1,012,761 4,229,810 2,612,427 RESULTS (Loss)/profit from operation (652,096) 29,813 337,182 119,818 (314,914) 149,631 Other operating expenses (15,882) (7,083) Other income - including Export subsidy announced by Federal and Provincial Governments on export sale of sugar 571,970 6,687 Finance cost (80,324) (77,292) Profit before tax 160,850 71,943 Taxation (47,649) 5,250 Profit for the period 113,201 77,193 SEGMENT ASSETS AND LIABILITIES March 2018 September 2017 March 2018 September 2017 March 2018 September 2017 Assets Segment assets 5,148,806 3,614,453 4,414,408 2,918,431 9,563,214 6,532,884 Un-allocated assets 154,982 141,613 Long term investment 2,673 2,673 Total assets 9,720,869 6,677,170 Liabilities Segment liabilities 5,465,248 3,097,499 2,463,038 1,901,652 7,928,286 4,999,151 Unallocated liabilites 11,923-7,940,209 4,999,151 Half year ended Half year ended Half year ended March 31, March 31, March 31, 2018 2017 2018 2017 2018 2017 OTHER INFORMATION Additions to property, plant and equipment 64,207 79,574 859,479 34,442 923,686 114,016 Depreciation 36,295 36,935 27,633 28,894 63,928 65,829 16
Revenue from major customers During the period external sales to major customers amounted to Rs. 2,262 million. (2017: Rs. 1,135 million) Geographical information All non-current assets of the Company are located in Pakistan. Company's local external sales represent sales to various external customers in Pakistan as well as outside Pakistan as follows: Pakistan 708,109 781,052 Asian countries other than Pakistan 2,774,418 1,080,000 Europe 546,094 490,000 4,028,621 2,351,052 10. WORKERS PROFIT PARTICIPATION FUND, WORKERS WELFARE FUND AND TAXATION Allocation to the Worker's Profit Participation Fund, Worker's Welfare Fund and provision for taxation are provisional. Final Liability would be determined on the basis of annual results. 11. FAIR VALUES Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. The Company while assessing fair values uses calcuation techinques that are appropriate in the circumstances using relevant observable data as far as possible and minimizing the use of unobservable inputs. Fair values are categorized into following three levels based on the input used in the valuation techinques: - Level 1: Quoted prices in active markets for identical assets or liabilities that can be assessed at measurement. - Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) - Level 3: Inputs are unobservable inputs for the asset or liability. Inputs for the asset or liability that are not based on observation market data (that is, unobservable inputs). Financial assets and liabilities of the Company are either short term in nature or are repriced periodically therefore; their carrying amounts approximate their fair values. 12. AUTHORIZATION This condensed interim financial information was authorized for issue on May 24, 2018 by the Board of Directors of the Company. 13. GENERAL 13.1 Figures have been rounded off nearest to thousand rupees. YUSUF AYOOB Managing Director ZIA ZAKARIA Director 17 IQBAL UMER Chief Financial Officer
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2.5 48,630 19
2017 2018 20
BOOK POST PRINTED MATTER If undelivered please return to : SHAHMURAD SUGAR MILLS LTD. 96-A, SINDHI MUSLIM SOCIETY, KARACHI-74400.