contentsfatima-group.com/updata/files/files/205_20201020091142.pdf · 21 fatima sugar officers’...

CONTENTSBUSINESS OVERVIEW 2 Company Information

4 Vision, Mission and Values

6 Company Profile

8 Nature of Business

10 Key Highlights

11 Company’s Credit Rating

12 Directors’ Profile

16 Key Management

18 Organizational Chart

COMMUNITY DEVELOPMENT ACTIVITIES 19 Health, Safety and Environment

21 Fatima Sugar Officers’ Club

22 Farmer Community Services

24 Event & Activities

25 FSRDC Research Activities and Achievements

30 CSR Activities

34 Health Care CSR Activities through Fatima Group

DIRECTORS’ REVIEW 36 Chairman’s Review

37 Directors’ Report to the Shareholders

45 Key Performance Indicators

45 Operational Trends

46 Graphical Presentation

49 BS Horizontal Analysis

50 BS Vertical Analysis

51 PL Horizontal Analysis

51 PL Vertical Analysis

52 Notice of Annual General Meeting

54 Pattern of Shareholding

FINANCIAL STATEMENTS 57 Auditors’ Report

60 Statement of Financial Position

61 Statement of Profit or Loss

62 Statement of Comprehensive Income

63 Statement of Cash Flows

64 Statement of Changes in Equity

65 Notes to the Financial Statements

1Annual Report | 2019

COMPANY INFORMATION

BOARD OF DIRECTORS Mr. Fawad Ahmed Mukhtar Chairman

Mr. Faisal Ahmed Mukhtar CEO

Mr. Fazal Ahmed Sheikh Director

Mr. Fahd Mukhtar Director

Mrs. Farrukh Mukhtar Director

Mrs. Farah Faisal Director

Ms. Shanza Sheikh Director

BOARD AUDIT COMMITTEEMr. Fazal Ahmed Sheikh Chairman

Mrs. Farah Faisal Member

Mr. Fahd Mukhtar Member

HR COMMITTEEMs. Shanza Sheikh Chairman

Mr. Faisal Ahmed Mukhtar Member

Mr. Fahd Mukhtar Member

CHIEF FINANCIAL OFFICERMr. Mukhtar Baloch, FCA

COMPANY SECRETARYMr. Aftab Ahmed Qaiser, FCA

EXTERNAL AUDITORSEY Ford RhodesChartered Accountants Lahore

2 Fatima Sugar Mills Limited

BANKERSAllied Bank Ltd.Askari Bank Ltd.Bank Al-Falah Ltd.Bank Islami Pakistan Ltd.Dubai Islami Bank Ltd.Faysal Bank Ltd.Habib Bank Ltd.Meezan Bank LimitedNational Bank of PakistanNBP (Aitemaad) Islamic BankingSamba Bank Ltd.Soneri Bank Ltd.The Bank of KhyberThe Bank of PunjabUnited Bank Ltd.Bank Al-Habib Ltd.

HEAD OFFICE2nd Floor Trust Plaza, LMQ Road, MultanTel: 061-4509700Fax: 061-4511677, 061-458428

REGISTERED OFFICEE-110 Khayaban-e-Jinnah LahoreCantt., LahoreTel: 042-111-328-462

PLANT SITEFazal Garh Sanawan, Tehsil Kot Addu,District MuzaffargarhTel: 066-2250512-4Fax: 066-2250515

WEBSITEwww.fatima-group.com


OUR VISION MISSION AND VALUES

OUR VISIONOur vision is to transform into a modern and dynamic industry, highly indulgent in the well being of the investors, workforce and the agriculture community of the area. We want to fully equip the company to play a pivotal role on sustainable basis in the economic and social development of the country and protect the environment.

OUR MISSIONOur Mission is to gain and maintain leadership in the sugar industry.

Our aim is to produce the best quality products with lowest possible cost to benefit our customers.

In striving to serve our stakeholders better, our goal is not only to attain technological advancements, but also to inculcate the most efficient, ethical and time tested business in our management.

Our focus is to work with our farmers as partners developing their expertise and profitability.

We continue to pursue environment friendly policies and effectively and efficiently use all energy resources aiming for zero waste and a clean healthy environment in its vicinity.We want to be a socially responsible corporate citizen spirting education, health, environment and socio economic development of the society.


OUR VALUES

LOYALTYLoyal to organization

INTEGRITYHonest and upright

PROFESSIONALISMStrive for excellence

COHESIVENESSUnited, trust and respect for each other

SERVICE TOSOCIETYHealth, Safety, Environment and Corporate Social Responsibility


COMPANY PROFILE

Fatima Sugar Mills Ltd. was incorporated in 1988 as Public Limited company and obtained certificate of commencement of business in 1989. The Company in 2011 through a demerger process transferred its Sugar business through a Special Purpose Vehicle (SPV) Reliance Sugar Mills Ltd. to a new Company again named as Fatima Sugar Mills Ltd. Fatima Sugar is principally engaged in the production and sale of white refined sugar.

Fatima Sugar is flagship Company of Fatima Group being one of the three pioneer companies of the group. Since its incorporation the company achieved many mile stones, it started its mills plant with crushing capacity of 4000 metric tons per day and now its crushing capacity has reached at 10500 metric tons per day. This sugar mill project was established with the help of Investment Corporation of Pakistan led consortium of bankers and equity capital of around Rs. 128 million. Since then it kept on widening its capital base through injecting fresh capital from time to time and now its paid up capital is over Rs. 2,102 million.


Fatima Sugar is flagship Company of Fatima Group

Obtained certificate of incorporation in

1988 and certificate of commencement of

business in 1989

crushing capacity has reached at 10,500 metric tons per day

paid up capital of the company is Rs.

million2,102


NATURE OF BUSINESSMain business of Fatima Sugar Mills Ltd. is production of white refined sugar from best Sugarcanes of the Country on state of the art production facility near Sanawan Tehsil Kot Addu . The Company sells its best quality Sugar within the country and to foreign customers as well. The Company also sells its byproduct molasses, in the local and international markets.

Best Quality Sugar

Within Pakistan

International Market


KEY HIGHLIGHTS

Total Assets

PKR 8,291Million

Sugar Production

107,116Metric Tons

Profit After Tax

PKR 370Million

Contribution to National Exchequer

PKR 166Million

Return on Equity

10.28%Percentage

Sales Revenue

PKR 6,767Million

Gross Profit

PKR 1,266Million

Return on Capital Employed

8.05%Percentage

Earnings Per Share

1.76Rupees per share

Return on Total Assets

4.46%Percentage


COMPANY’S CREDIT RATINGCredit Rating of our Company is in process from VIS Credit Rating Company Ltd. We are expecting to lead the industry in Credit Rating of our Company.


Mr. Fawad Ahmed MukhtarChairman / Director

Mr. Fawad Ahmad Mukhtar is Chairman of Fatima Sugar Mills Limited. He has rich experience of manufacturing and industrial management and in addition to being a successful business leader, he is also a renowned philanthropist. Following his graduation, he has spent 30 years in developing his family business into a sizable conglomerate. Mr. Fawad leads several community service initiatives of the Group including the Fatima Fertilizer Trust and Welfare Hospital, Fatima Fertilizer Education Society and School and Mukhtar A. Sheikh Welfare Trust, etc. He is also the Chairman of Reliance Weaving Mills Limited, Fatima Energy Limited, Reliance Commodities (Private) Limited, Fatima Holding Limited, Air One (Private) Limited, Fatima Management Company Limited and is also the CEO of Fatima Fertilizer Company Ltd., Pakarab Fertilizers Limited, Fatimafert Limited and Fatima Cement Limited.

He is also the Director of Fatima Transmission Company Limited, Fatima Electric Company Limited and Pakarab Energy Limited. In addition, he is a member of the Board of Directors of the National Management Foundation, asponsoring body of Lahore University of Management Sciences (LUMS).

Mr. Faisal Ahmed MukhtarChief Executive Officer / Director

Mr. Faisal Ahmed Mukhtar is a Chief Executive Officer and Director of the Company. He is the former Mayor and City District Nazim of Multan and continues to lead welfare efforts in the city. He is also the Chief Executive Officer of Fatima Trade Company Limited. He is also the Chairman of the Workers Welfare Board at Pakarab Fertilizers Limited and is a member of the Board of Directors at Fatima Fertilizer Company Ltd., Pakarab Fertilizers Limited, Fatimafert Limited, Fatima Energy Limited, Fatima Electric Company Limited, Pakarab Energy Limited, Reliance Weaving Mills Limited, Reliance Commodities (Private) Limited, Fazal Cloth Mills Limited, Air One (Private) Limited and Fatima Cement Limited. Additionally, he was also a member in the Provincial Finance Commission (Punjab), Steering Committee of Southern Punjab Development Project and Decentralization Support Program. Mr. Mukhtar has also served as the Chairman of Multan Development Authority and was also a member of a syndicate of Bahauddin Zakariya University, Multan.

DIRECTORS’ PROFILE


Mr. Fazal Ahmed SheikhDirector

Mr. Fazal Ahmed Sheikh is a Director of the Company. He holds a degree in Economics from the University of Michigan, Ann Arbor, USA. He has played a strategic role in Fatima Group’s expansion and success. He is the CEOof Reliance Weaving Mills Limited, Fatima Energy Limited, Fatima Electric Company Limited, Fatima Transmission Company Limited, Fatima Management Company Limited, Pakarab Energy Limited and Air One (Private) Limited. He is also a member of the Board of Directors at Fatima Fertilizer Company Ltd., Pakarab Fertilizers Limited, Fatimafert Limited, Reliance Commodities (Private) Limited, Fatima Holding Limited, Fazal Cloth Mills Limited, Fatima Cement Limited and Fatima Trade Company Limited.

Mr. Fahd MukhtarDirector

Mr. Fahd Mukhtar is Director of the Company. He holds a Bachelor of Economics Degree from the Philadelphia University of USA. Besides this being Director of the Company he is the Chief Executive Officer of Fatima Packaging Limited. He is also a member of the board of Directors of Fazal Cloth Mills Ltd., Fatima Energy Ltd., and Reliance Weaving Mills Ltd.

Annual Report | 2019 13

FSML HEAD OFFICE TEAM

FSML SITE MANAGEMENT TEAM


KEY MANAGEMENT

Mr. Mukhtar BalochChief Finance Officer

Mr. Mukhtar Baloch is a fellow member of the Institute of Chartered Accountants of Pakistan and is also a Computer Graduate from BZU. He is associated with Fatima Group since 2003, where he joined in Textile Sector and is currently working as CFO of Fatima Sugar since 2006. In addition to Sugar Sector he is also looking after the affairs of Fatima Group’s CSR Projects. He is also serving as executive member of the Governing Body of Mukhtar A. Sheikh Hospital – Workers Welfare Board.

Mr. M. Javed Shah Manager Sales and Marketing

Mr. Muhammad Javed Shah is commerce Graduate from Bahaudin Zakariya University, Multan. He joined the Company in 1994 and has work experience of more than 25 years with the Company. He is working as manager sales and marketing of the Company.

Mr. Ashiq Ali ChandioManager Internal Audit

Mr. Ashiq Ali Chandio is working as Manager Internal Audit of the Company since 2007. He did M. Phil from Bahauddin Zakaria University Multan. Currently he is doing Ph.D (Business Administration) from Air University. He has 22 years of working experience in Audit and Accounts divisions of Textile and Sugar manufacturing industries.

Mr. Amir NaqviManager Accounts

Mr. Muhammad Amir Hussain Naqvi completed article ship from Riaz Ahmad and Co. a member firm of Nexia International and is a CA finalist student. He is supervising Accounts and ERP functions of the Company and continuously working on improvement of the system. He has total experience of 8 years in textile & sugar division of Fatima Group.

Mr. Muhammad Sabir BhattiDGM Procurement

Mr. Muhammad Sabir Bhatti is a Fellow Member of the Institute of Cost and Management Accountants of Pakistan and associated with Fatima Group since 1996. Currently, he is serving as Head of Procurement Department of Sugar & Textile Divisions of Fatima Group. Previously, he has served as Head of Internal Audit and DGM Accounts in Sugar & Textile Divisions of the Group.

Mr. Amanullah KhanGeneral Manager Corporate

Mr. Amanullah Khan joined the Company in 1989. He has total work experience of more than 55 years in different Companies including group companies of Fatima Group. He is working as a GM Corporate of the company.

Mr. Aftab Ahmed QaiserCompany Secretary

Mr. Aftab Ahmed Qaiser is a qualified Chartered Accountant from the Institute of Chartered Accountants of England & Wales, UK and a fellow Member of the Institute of Chartered Accountants of Pakistan. Mr. Qaiser is a Certified Director of Corporate Governance from the Pakistan Institute of Corporate Governance. He has illustrious career spanning over 41 years, in the fields of Financial Management, Internal Audit, Taxation, Legal and Corporate Affair matters of Listed Companies. He has held several key positions in Company’s like, Lawrencepur Woolen and Textile Mills Limited, The Burewala Textile Mills Limited and Dawood Hercules Chemicals Limited. He is part of Fatima Group since March 2014.

Mr. Jawad Ahmad BhuttaDGM Finance

Mr. Jawad Ahmad is serving as DGM Finance of the Company. He is fellow Member of the Institute of Chartered Accountants of Pakistan and Science Graduate from Bahauddin Zakaria University Multan. He is associated with Fatima Group since 2004 after completing articleship from Deloitte Yousuf Adil. He possesses varied experience of working in different areas of Textile and Sugar industries including Financial Accounting and Reporting, Oracle ERP, Financial Management, Taxation, Corporate Laws and Planning and Decision Making.


Mr. Mushtaq Ahmed TabassumResident Director

Mr. Mushtaq Ahmad Tabassum is Resident Director of the Company. He completed his B.Sc. Mechanical Engineering from UET Lahore in 1988. He joined the Company in 2014 as General Manager Mills. He possesses total work experience of 30 years of Sugar Industry. He has good experience of installation, commissioning, maintenance and operation of the Sugar plants.

Mr. Baqa MuhammadGeneral Manager (Production & Co-ordination)

Mr. Baqa Muhammad did B.E Chemical Engineering from University of Engineering & Technology Lahore having Experience of 33 Years in Sugar Manufacturing. He was awarded Gold Medal from Pakistan Society of Sugar Technologist on Presenting Research Paper

Mr. Rana Jamil Ahmad General Manager Technical

Mr. Jamil is B.E Industrial Engineering from NED University of Engineering & Technology Karachi and DAE Mechanical from Pak Swedish College of Technology Karachi. He attended 18 technical short courses from different Technical & Engineering Institutes. He was awarded gold medal from sindh board of technical education against securing 1st class 1st positions in Sindh. He possesses 28 years of experience of oil & sugar industries. He is working as a General Manager Technical of the Company since August 2014.

Mr. Zulfiqar Waseem MalikGeneral Manager Cane

He completed B.Sc. (Hons.) & M.Sc (Hons.) Agri. from University of Agriculture, Faisalabad. He has vast experience of 27 years of Sugar industry. He has done a lot of work in Sugarcane Research & Development. He got distinction throughout his academic career. On the basis of his work, he expressed his uphill view point and presented thought provoking research papers in national and international conferences / congress. He was honored with best research paper on sugarcane development and gold medal in 50th Golden Jubilee PSST International Conference at Lahore 2016. He introduced dynamic productive procurement strategies and brought the FSML to the forefront of leading Sugar Mills in the Country.

Mr. Azmat Ali QureshiDeputy General Manager (E&I)

Mr. Azmat Ali Qureshi has done B.E., Electrical Engineering (Power) from university of Engineering & technology Jamshoro, M.E Mechatronics Engineering (In progress) from university of Engineering & technology Jamshoro, With Experience of 15 years of Sugar and Tiles Industry, holding position of H.O.D (E &I) since the last 11 years in different organizations, joined FSML in November 2017 as a DGM (E&I).

Mr. Malik Muhammad SubhanSr. Manager Accounts - Site

Mr. Malik Muhammad Subhan working as Sr. Manager Accounts at Mills site .He completed Article ship from M/S Mehboob Sheikh & Co. Chartered Accountants. He got CA inter correspondence course completion certificate from the Institute of chartered Accountants of Pakistan. He has 25 years’ experience in Accounts, finance, procurement and audit divisions of Fatima Group.

Dr. Syed Zia-ul-HusnainDGM Research and Development

Dr. Syed Zia-ul-Husnain joined the Fatima Group in 2014. He is Ph. D Agriculture in Plant Pathology. He has 29 years of experience in sugarcane research for the evaluation of new sugarcane varieties. He has the membership of International Society of Sugar Cane Technologists (ISSCT) and also the membership of American Society of Sugar Cane Technologists (ASSCT). He is HEC approved Ph. D supervisor.

Mr. Muhammad Asim Farooqi Manager Admin & Security

Mr. Muhammad Asim Farooqi is Graduate from Pakistan Military Academy. He has served in Armed Forces of Pakistan for more than 28 years on various Command & Staff appointments and reached at rank of Lieutenant Colonel . He is performing duties of Manager Admin & Security of Fatima Sugar Mills Limited since May 2019.


ORGANIZATIONAL CHART

Board ofDirectors

HR andRemuneration

Committee

AuditCommittee

ChiefExecutive

Officer

Head ofInformationTechnology

Head ofHuman

Resource

GeneralManager

Production andCo-ordination

GeneralManagerTechnical

GeneralManager

Cane

DGMElectrical

DGMResearch andDevelopment

Head ofMarketingand Sales

Head ofProcurement

ChiefFinancialOfficer

ResidentDirector

CompanySecretary

Head ofInternal Audit

Head ofAdmin and

Security


HEALTH, SAFETY AND ENVIRONMENT

OCCUPATIONAL SAFETY AND HEALTHSafety remains a top priority across all FSML operations. Adhering to our HSE policy we ensure that unsafe behaviours are treated as completely non-negotiable in the Company. FSML continues to persist in mainstreaming a safety mind-set through reinforced leadership messaging, responsible employee behaviours, safety focused plant designs, facilities and products in addition to the implementation of safe procedures and systems across FSML. The Company also sustains focus on safety through routine awareness campaigns, including sessions held by the site leadership. These initiatives have contributed towards zero incidents.

FSML always remains committed to protecting the physical and mental health of its employees, extending the scope and coverage of occupational health services, and

constantly improving its occupational health management system. The Company regularly organizes medical camps through its CSR projects. Further, all management employees and their dependents have been provided with health insurance facility to meet medical emergencies and hospitalization expenses.

SAFETY AUDITSSafety audits in FSML are integral part of overall safety culture which includes formulation of effective system implementation. This ranges from safe handling of equipment to safe start and shut down procedures by providing proper awareness at work place. All these efforts at FSML are conducted through management of safety audit team and behavioral based audits with an aim to preventing accidents and ill health.

Board ofDirectors

HR andRemuneration

Committee

AuditCommittee

ChiefExecutive

Officer

Head ofInformationTechnology

Head ofHuman

Resource

GeneralManager

Production andCo-ordination

GeneralManagerTechnical

GeneralManager

Cane

DGMElectrical

DGMResearch andDevelopment

Head ofMarketingand Sales

Head ofProcurement

ChiefFinancialOfficer

ResidentDirector

CompanySecretary

Head ofInternal Audit

Head ofAdmin and

Security


ENVIRONMENTAL PROTECTIONEnvironment protection is the key focus area and the Company regularly invests to safeguard and protect environment. The importance of protecting environment has increasingly become a concern all over the world as the disposal of industrial waste is the major cause of pollution. A significant amount of waste is generated during the manufacture of sugar namely suspended solid organic matters sludge press mud and bagasse.

At Fatima Sugar, environmental aspects are considered in depth and suitable actions are taken accordingly; steps like plantations, cleanliness, pollution free atmosphere, energy conservation measures, noise pollution reduction are worth mentioning.

Key environmental protection measures include:• Took measures to improve the quality standards of

effluent discharge and boilers stack emissions.

• Installed waste water treatment plant during the year 2018-19 which is operational since December 2019.

• Installed two oil skimmers to avoid mixing of oil and grease in the effluent discharge.

• Initiated tree plantation campaign with the involvement of local community in order to create awareness regarding sustainable environment and clean & green Pakistan.

Fatima Sugar is highly committed to implement its environmental protection policy and to achieve National Environment Quality Standards (NEQS).


FATIMA SUGAR OFFICERS’ CLUB (FSOC)Fatima Sugar Officers’ Club (FSOC) was founded with a vision of facilitating the management personnel to take part in healthy activities after hectic job routines. Club members regularly meet and participate in different games in healthy environment including Gym., Table Tennis and Badminton etc.

EXECUTIVE BOARDChief Patron Mr. Mushtaq Ahmed

President Mr. Baqa Muhammad

Secretary General Mr. Zulfiqar Waseem

Secretary Finance Mr. Muhammad Subhan

Secretary Audit Mr. Abdul Rauf Qamar

Secretary Information Mr. Ali Ahmad


FARMER COMMUNITY SERVICES

Fatima Sugar has highly qualified, trained and talented staff, which remains in close contacts with sugarcane growers from cane sowing to its harvesting. It informs growers about latest production technology of sugarcane. The aforementioned cane staff works hectically to synchronize per Hectare cane yield with international standards. Because of their highly devoted efforts yield per Hectare output has increased up to 74 Tons/hectare in FSML area; while the national output is only 54 Tons/hectare.

FIELD STAFF RESPONSIBILITIES / ACTIVITIES:The field staff monitors the sugarcane crop management on scientific basis. It also controls the sugarcane supply chain management (from sugarcane sowing till supply to Mills) with its maximum capacity and competency as per Mills policy.

1. Sugarcane Varieties Replacement Programme

Cane variety plays significant role among all other factors which influence the recovery % age of sugar. Cane department focuses its attention on sugarcane variety replacement program every year and propagates the sugarcane latest promising varieties with high sucrose contents, in fields.


2. Growers Training and GroomingGrowers are trained and groomed by Cane Staff through:

Sugarcane Sowing Field Demonstration

• In field demonstrations latest proceedings/practices of sugarcane sowing are educated to growers.

Kissan Mela’s

• Kissan Mela’s are conducted to pass on sugarcane latest production technology to growers. In these events growers are invited and scholars of Cane department, FSRDC and PFL (Pakarab Fertilizers Ltd.) deliver lectures on latest sugarcane sowing techniques, latest sugarcane varieties and balance use of fertilizers.

Meeting with progressive growers

• Meetings are organized with progressive growers in which precious knowledge is shared.

Print Media

• Through print media latest technologies regarding sugarcane sowing to harvesting are conveyed to growers in the forms of banners, pamphlets, research papers and magazines.

3. Sugarcane Survey and growers’ database

Area-wise survey is conducted periodically, on scientific norms to get basic information about growers, cane varieties, distance of cane fields to the Mills, irrigation sources of growers, mode of transport, per acre yield etc. In this way FSML has succeeded in having updated grower’s database.

4. Sugarcane Disease Identification & Control

Sugarcane crop is affected by many seed/soil borne diseases. Cane staff identify the sugarcane disease symptoms and provide guidance to control thereof.

5. Applications of Bio CardsCane staff annually distributes 1 Million Bio Cards (Trichogramma chilonis and Chrysoperla carnea) to itsgrowers to control sugarcane pest biologically. This is environment friendly technology.

6. Achievements of Cane DepartmentThe highly qualified and well trained staff of FSML presents its articles, research papers and thesis on national and international forums and triumphs achievements in the form of appreciation certificates and gold medals.


EVENT & ACTIVITIES MILL OPENING


FATIMA SUGAR RESEARCHAND DEVELOPMENT CENTRE (FSRDC) ACTIVITIES

Fatima Sugar Research and Development Centre (FSRDC) was setup in 2012, with the aim to strengthen research activities in sugarcane agriculture, sugar manufacturing and sugar engineering. In the first phase FSRDC activities in sugarcane agriculture were started which revolve around selection, evolution and development of new sugarcane clones, guidance to sugarcane growers about agronomic, pathological and entomological problems. Principal functions formulated are operated through a team of five scientists. This is the only research centre of its kind in sugar industry of southern Punjab, Pakistan.

OUR MISSIONDevelop and transfer appropriate sugarcane technologies to enhance competitiveness of, and to contribute to expand and develop, the local sugarcane industry, in a sustainable manner.

OUR OBJECTIVES• Increase availability of sugarcane varieties with improved

commercial attributes in local plantations.

• Improve sugarcane crop management practices.

• Ensure efficient utilization of land, soil and water resources in sugarcane production with minimum environment degradation.

• Diversify sugarcane land use.

• Increase stakeholder knowledge of sugarcane technologies and provide necessary institutional coordination and support for adoption / commercialization of such knowledge.

• Biological control of sugarcane complex of insects and diseases.

FSRDC ACTIVITIES DURING THE YEARActivities of FSRDC revolved around evolution and development of new sugarcane varieties acceptable to both cane growers and sugar industry. Main objective is development of cane varieties capable of producing sugar and other products of economic importance at lower cost than could be attained with existing varieties. Standard procedure were developed and adopted from growing of original seedling to final selection. The clones in pipeline and final trials had shown good promise for cane and sugar yield with resistance to major disease.

There has been significant headway in producing two New Sugarcane Clones. These are S2012CPFG-14 and YTFG-236. These two clones are also included in National Uniform Varietal Yield Trials (NUVYT-2017-2021) which is being conducted under PARC, Islamabad and presently under field trials planted on 35 growers land in the FSML area before being released for large-scale plantation. The clones are promising and have the potential of becoming future varieties of sugar industry.

1. Present status of germplasm at FSRDC

Enough germplasm was available for further testing and selection. The detail on status of germplasm under different selection stages during the year under report.


Stage Seedling Year/Source of fuzz Number of Clones

Stage-7 Promising Lines / NUVYT

i Canal Point, USA & FG- lines 03

ii NUVYT (2019) 10

Stage-6 Final lines

S2012 CPFG & Canal Point, USA 02

Stage-5 Semi Final lines

S2015 CPFG , Canal Point, USA 9

Stage-4 Quarter Final lines

S2016 CPFG, Canal Point, USA 14

Stage-3 Advance lines


Stage-2 Progeny lines


Stage-1 Seedling / Source

S2019 CPFG, Canal Point USA 8,214

Grand total 8,463


2. Sugarcane Pathology

(i) Screening of cane varieties for combined resistance

Seven different sources of sugarcane varieties were selected for screening against diseases like red rot, rust, pokkah boeng, smut and sugarcane leaf mosaic. Amongst 1,359 clones, tested against combined resistant to major diseases, only 354 had shown positive reaction. Two clones in final stage and also 02 in semi final has shown combined resistant.


(ii) Damage symptoms of sugarcane nematodes

Nematode feeding disturbs the water and nutrient absorption capacity, and biochemical pathways in the root system. This leads to stunted growth, chlorosis and wilting of leaves. Stubby roots and poor fibrous root growth are seen in plants infected by ecto- parasitic nematodes. Being obligate parasites, nematodes do not kill their hosts instantly, but debilitate them gradually and make them vulnerable to secondary pathogens and abiotic stresses resulting in disease-complexes or syndromes.In advanced stages of infection, the above ground symptoms are often confused with symptoms of nutrient deficiencies or other physiological disorders. On the basis of these observations, identification work for the presence of plant parasitic nematodes in FSML area had started at FSRDC during the year under report.

3. Rearing of Biological agent at FSRDC for the control of Sugarcane borers

FSRDC-FSML Biological Control Laboratory has produced a total of 1,000,000 tricho- cards. The parasitised eggs by Trichogramma were provided at a highly subsidized price of Rs.4/- per card to cane growers of FSML with the strong collaboration of Cane Procurement and Development Department of FSML.

Artificial rearing of Green lacewing (Chrysoperla carnea) was also started. The sheets having 350-400 eggs of Green Lacewing is being applied in the fields @ 5-10 on per acre basis. The applications of the predator will be repeated fortnightly.

4. Technology Transfer Event for Biological Control of Sugarcane Whitefly

A joint venture of technology transfer between FSRDC and Nuclear Institute for Agriculture and Biology (NIAB) was done with the collaboration of SRDB, Faisalabad for the management of Sugarcane Whitefly Aleurolobus barodensis . The main aim of this technology transfer project was to devise a new but comprehensive biological approach for the control of this serious pest nowadays on sugarcane crop in FSML area.

Demonstration of Yellow Sticky Cards was done at FSRDC Farm, Mian Sultan Mehmood Gurmani Farm, Mian Zulfiqar Qureshi Farm Kot Addu and Shahid Nasim Agriculture Farm, Multan. The application requires monitoring of adult whiteflies after 24, 48, & 72 hours and then 7 & 14 days interval. This biological control technique also includes an application of Bio-Spray (a non-chemical formulation) which is safe for crop, human and environment.

5. Soil and water advisory service

Soil laboratory performed basic test of soil and water to the farmer communities and it co- related with FSRDC sugarcane variety development program. Afterward, it became compulsory that cane department will collect the soil and water samples from each plot and deliver to the Soil and Water testing laboratory. Laboratory analyzes the samples and generates a report in which it will be mentioned either the samples are fit or not. Laboratory has analysed 3,927 soil and water samples.


6. Training and demonstration of mechanical planter of sugarcane

The demonstration for new sugarcane planter is very helpful to give awareness about the latest technologies used in the sugarcane fields to reduce production cost.

To introduce this technology at FSML area, FSRDC-FSML planned a Kissan mela with the collaboration of Sugarcane Research and Development Board (SRDB), Faisalabad and cane procurement and development department of FSML.

After getting successful results, prestigious Cane Procurement and Development department of FSML has delivered this technology to Respected Madam Rabia Sultan for the sowing of sugarcane in autumn, 2019.

7. Cane Quality Laboratory

Objective of cane quality laboratory is to analyze the recovery % of sugarcane samples from sugarcane germplasm of breeding material at research farm, varieties from farmer’s field and cane procured during the crushing season. On the basis of analysis during October to end March of each year, varieties may be rejected or selected for further commercial multiplication in the area of Fatima Sugar Mills Limited.

Further, cane samples of trolley / truck / cart are being taken from yard for analysis and prepare trash report according to the bench mark recovery % which sets on weekly basis during the crushing season.

8. Events of visit at FSRDC FarmDr. Nazia Suleman and Dr. Asia visited FSRDC farm during early growing season.


CSR ACTIVITIESFatima Group considers charitable institutions & CSR as a fundamental of sustainable business modelThe Company has always shown strong commitment and support for public health and promotion of education that is why the FSML is a permanent donor to reputable charity organizations, especially Mukhtar A. Sheikh Trust, which contributes towards the well-being of deprived people by not only setting up but also full operational functioning of Hospitals, dispensaries, educational and vocational schools.

FSML consider Social responsibility as an ethical framework and suggests that an entity, be it an organization or individual, has an obligation to act for the benefit of society at large. For us Social responsibility is a duty the management has to perform so as to maintain a balance between the economy and the ecosystems.

FSML is committed to playing an active role with the support of other Fatima Group Companies for the well-being of society. With our talented team we aim to help drive, creation of shared economic and social values across Pakistan. Corporate Social Responsibility (CSR) is one of core values and an integral part of the Company’s overall mission. With operations across the country, FSML’s utilizes its scale of operations as strength to positively impact the underprivileged people nationwide especially in the vicinity where FSML operates. FSML has donated around Rs. 53 million this year for charitable purposes.

FSML has taken up its CSR activities both directly as well as through Mukhtar A. Sheikh Trust and Fatima Group CSR plans.Fatima Sugar Mills Limited has been awarded 2nd position in PCP Corporate Philanthropy Awards 2017 for achieving Corporate Philanthropy and Sustainable Development Goals (SDGs) in Pakistan.


1. CSR ACTIVITIES DIRECTLY SPONSORED BY FATIMA SUGARFSML has been permanent donor of reputable charity organizations including:

• Fatima Model School

• Fatima Model Village

• Donations to different charity organizations:

• Rising Sun Institute

• SOS Children Village

• Major Jahanzaib Shaheed Dispensary

• Fatima Vocational College

• Al Noor Foundation

FSML have been providing free ration during the holy month of Ramadhan to large number of people of vicinity “Ramadhan Package”.

FSML also takes part in disaster management programs and settlement of affected community, provision of basic needs to affected people, co-operation with local governments for the eradication of viral diseases like Dengue, Malaria, Congo, Chicken Gonio etc.

2. MUKHTAR A. SHEIKH TRUST (MAST)Mukhtar A. Sheikh Trust came into existence on 25th August 2000 with the objective to develop and maintain hospitals, nursing homes, schools, industrial homes, research centers, libraries, colleges, hostels and other charitable institutions of similar kind with a view to promote education consistent with the Islamic principles, literature arts and technical/vocational professions, generally to encourage study of medicine, advancement and diffusion of knowledge and to help other needy persons / institutions.

Board of Trustees:a. Mrs. Farrukh Mukhtar (Chief Trustee)

b. Mr. Fawad Ahmed Mukhtar (Trustee)

c. Mr. Fazal Ahmed Sheikh (Trustee)

d. Mr. Faisal Ahmed Mukhtar (Trustee)

I) Education

Trust feels that there is an urgent need to establish educational institutions keeping view low literary rate in the country and equip people with education and technical skills of high standard. With this vision in mind Mukhtar A. Sheikh Trust has built schools & technical education


campuses in different areas in order to promote quality education at the grass-root level specially girls education so that the people can become useful part of the society by contributing towards the economic development of the Country.

A- Formal Education Center

Farrukh Mukhtar Girls High School Samorana established with the aim to provide free and quality education to needy girls of the area. All the running expenses like salaries, furniture, power & fuels etc are borne by the Trust.

B- Vocational Education Centers

• Farrukh Mukhtar Vocational Education Center Madni Chowk Multan

• Farrukh Mukhtar Vocational Education Center Gulshan Colony Multan

These institutions are established by the trust and registered with Technical Education & Vocational Training Authority (TEVTA) and affiliated with Punjab Board of Technical Education (PBTE). After completion of each course, test is conducted under the supervision of PBTE and certificates are issued to the female students.

II) Healthcare

Mukhtar A- Sheikh Trust also undertakes public health and promotion activities for the low income, remote and urban communities with the help of FSML, which contributes towards the well- being of deprived people by setting-up Hospitals, dispensaries etc. The free medical camps are set up in far flung areas of the Country where healthcare is very hard to access. Patients avail free medical check-up along with medicines.

Five free dispensaries are established under the TRUST since, year 2000 with the team of experienced doctors, LHVs and medical staff.

1. Farrukh Mukhtar Dispensary (Madni)

2. Farrukh Mukhtar Dispensary (Gulshan)

3. Farrukh Mukhtar Dispensary (Samorana)

4. Farrukh Mukhtar Mobile Dispensary

5. Farrukh Mukhtar Dispensary (Shakkar Garh)

Facilities provided to patients include:

• Free check up by Doctor / LHV

• Free medicines

• In door admission, if required


HEALTH CARE CSR ACTIVITIES SPONSORED THROUGH FATIMA GROUPTwo major health care projects under the umbrella of Mukhtar A. Sheikh Welfare Trust were launched few years back and now they are successfully providing state of the art health facilities to the people of Multan and surrounding areas. Fatima Sugar is one of the donors’ of these projects to fulfil its commitment to pay back to the society.

• SPRING CLINIC AND INSTITUTE OF PSYCHIATRY• MUKHTAR A. SHEIKH HOSPITAL

SPRING CLINIC AND INSTITUTE OF PSYCHIATRYMental health, as critical as it is, unfortunately, remains one of the most neglected fields of medicine in Pakistan, both regarding infrastructure and awareness among the general public. Countless people, including children, suffering from various sorts of mental disorders remain unidentified and undiagnosed conditions easily treatable and manageable are left to fester and become lifelong issues. Even within Pakistan, there are several levels of neglect towards mental health – Southern Punjab is one area where people have little to no access to mental wellness centers. The Spring Clinic aims to bring some much needed mental health management and awareness to this region and beyond. Supported by highly quailed staff of psychiatrists and psychologists, this Clinic provides essential treatment and therapy to people affected by a variety of psychiatric illnesses. The state-of-the-art treatment completely free for the underprivileged and are also helping train and prepare the next generation of psychiatrists – these thought leaders will pave the way for real policy making at a national level while helping erase the associated stigma among the masses.


The foundations of Mukhtar A. Sheikh Hospital (MASH) are based on a dream by the late Mian Mukhtar Ahmed Sheikh to establish a state of the art medical facility for the people of Southern Punjab regardless of their economic conditions. He envisioned a prosperous Southern Punjab by making quality health care and education available to all in turn empowering people so they can realize their true potential.

• MASH has been designed as a purpose built 500-bedded tertiary care facility with state of the art medical technology and futuristic diagnostic centers.

• Established in the heart of Southern Punjab, MASH is a state of the art facility aimed to serve a population of 6.5 million.

• With a covered area of 420,000 sft., MASH intends to introduce the latest of technologies in healthcare industry under one roof. Aligning ourselves with the most notable medical professionals both nationally and internationally, we want to embrace best international healthcare practices.

• To show our commitment and compassion towards quality healthcare, education and research services, we also foresee being accredited by Joint Commission International (JCI) and ISO (the International Organization for Standardization).

• Our compliance with top of the line HMIS system and HTM standards will enable Mukhtar A. Sheikh to achieve unparalleled efficiency on healthcare industry.

• Considering the emergency needs of the patients, our vicinity will also have a provision of residential apartments for consultants and hostel for paramedical staff.

• We foresee MASH as a teaching hospital by inducting a medical college, research facility as well as paramedical training institute.

• Our aim is to take MASH towards excellence in Pakistan, a country of great potential. We will strive to make MASH a flagship medical facility in Southern Punjab with the comfort and care beyond expectation within the region.

• The MASH family has great compassion for excellence and takes pride in the growth and development of the facility.


CHAIRMAN’S REVIEW

The Company voluntarily complies with the requirements set out in the Section 192(4) of Companies Act, 2017 and Code of Corporate Governance (CCG) Regulations, 2019 applicable to Listed Companies with respect to procedures and meetings of the Board of Directors and its Committees and measures the performance of the Board against expectation benchmarked in the context of objectives set by the Company as far as possible.

As Chairman, I am responsible for leading the Board, fostering culture of openness and constructive debate during which all views are heard and decisions are taken in the best interest of the Company.

The Board is ably assisted by two Committees namely the Board Audit Committee and the Human Resource & Remuneration Committee to support its decision-making in their respective domains. The Board Audit Committee provides an oversight of the financial reporting process, the audit process, the system of internal controls and compliance with laws & regulations. The Human Resource & Remuneration Committee assists the Board in establishing sound & effective employee’s development program, recognizing & creating future leaders, developing workforce and improving their skills through training to increase the productivity and quality of work. We believe our strength lies in our employees who are the most precious assets of the Company and recognizes their contribution to the continued success of the Company.

The Company has an independent Internal Audit department, which provides assurance that internal control processes are operating effectively, with objectives that all business assets have been properly secured, safeguarded and Company policies in vogue are intact.

I wish to thank our customers, regulators suppliers, bankers, employees and other stakeholders for their confidence and support.

We will continue to strive for taking Fatima Sugar Mills Limited to even greater heights.

Fawad Ahmed MukhtarChairman


DIRECTORS’ REPORT TO THE SHAREHOLDERS

On behalf of the Board of Directors, I am pleased to present 31st Annual Report of your company along with Annual Financial Statements and Auditors’ Report thereon for the year ended 30 September 2019.

PAKISTAN ECONOMY REVIEWPakistan’s economy has experienced frequent boom and bust cycles during past decades. Typically, each cycle comprised of 3-4 years of relatively higher growth followed by a crisis which necessitated the stabilization programs. The foremost challenge to the economy is the rising aggregate demand without corresponding resources and the tethering issue of fiscal and current account deficits. The government has taken some tough measures to control fiscal deficit through increase of energy tariffs, expenditure controls and tightening of monetary policy while to control current account deficit the imports has been reduced through regulatory duties and withdrawal of exemptions and exports has been increased by increase of exchange rate parity and direct subsidies to exporters. The impact of macroeconomic adjustment policies started to become visible in financial year 2020.Major highlights of Pakistan’s Economy are as under

a. The outgoing fiscal year 2018-19 witnessed a muted growth of 3.29 percent against the ambitious target of 6.2 percent. The sectoral performance VS targets has a

huge gap like agriculture was 0.85% VS 3.8%, industry was 1.4% VS 7.6% and services was 4.7% VS 6.5%.

b. In Agriculture all major crops witnessed negative growth as Sugarcane production declined by 19.4 percent, Cotton 17.5 percent and Rice 3.3 percent. Wheat and Maize production has slightly increased from previous year.

c. The domestic production of fertilizers during 2018-19 (July-March) increased by 2.6 per cent over the same period of previous year. This increase is due to functioning of two urea manufacturing plants (Agritech & Fatima Fert) as supply of LNG was available on subsidized rates. The imported fertilizer increased by 4.8 percent. Therefore, total availability of fertilizer increased by 3.2 percent during current fiscal year.

d. The large-scale manufacturing sector shows a decline of 2.06 percent.

e. The total investments as a percentage of GDP was recorded at 15.4 percent against the target of 17.2 percent.

f. The exports declined by 1.9 percent despite exchange rate depreciation, while imports declined by 4.9 percent which helped in reducing the trade deficit.


g. Total revenue marginally increased to Rs 3,583.7 billion (9.3 percent of GDP) from Rs 3,582.4 billion (10.3 percent of GDP) during the comparable period of last year, showing almost zero growth VS 13.9 percent growth during the last year.

h. Decelerated performance of total revenues primarily was due to marginal growth of 1.8 percent in tax revenues and negative growth of 16.7 percent in non-tax revenues.

i. The CPI has witnessed a rising trend during the current financial year, accumulated CPI for 2019 remained 12.4 % VS 6.2% in 2018.

AGRICULTURE PERFORMANCE REVIEWThe performance of Agriculture during 2018-19 remained subdued. The Growth was only 0.85 percent against the target of 3.8 percent. The under-performance of agriculture sector is because of reduction in crop cultivation area, less water availability and drop in fertilizer use.

Agriculture contributes 18.5 percent to country’s Gross Domestic Product (GDP) and provides 38.5 percent employment to national labor force but it remains backward sector of the economy while the fact is high performing agriculture is a key to economic growth and poverty alleviation factor of any agriculture economy. The outlook of agriculture sector is likely to rebound under Prime Minister’s Agriculture Emergency Program. The water availability is expected to be better as compared to current year. There is substantial increase in Agriculture Credit disbursement which is recorded

at Rs. 805 billion during July-April FY2019 compared to Rs.666.2 billion during the corresponding period of last year, posting a growth of 20.8 percent. The import of agriculture machinery has recorded a growth of 10.95 during July-April FY2019 which is a good indicator. The base effect will also support growth in agriculture.

SUGAR INDUSTRY PERFORMANCE REVIEWSugarcane is high value cash crop and its production accounts for 2.9 percent in agriculture’s value addition and 0.5 percent of overall GDP. During 2018-19, sugarcane production was reduced by 19.4 percent to 67.174 million tones VS 83.333 million tones year 2017-18. This decline in sugarcane output is due to shrinking of cultivated area, by 17.9 percent 1,102 thousand hectares VS 1,343 thousand hectares of last year, on account of Water shortage and low rate of return to farmers. Provincial Sugarcane cultivation area distribution is Punjab 65%, Sindh, 25% and KPK 10%.

Average Sugar recovery rate in Pakistan 9.6% is much lower than Brazil 14% and India 11.5%. In Pakistan Sugar recovery in different part of Pakistan is variant with soil texture and environmental conditions, Sucrose content in Sindh is higher than Punjab and KPK.

OPERATING RESULTSThe operating results of your company for the year under review compared to the last year are tabulated below:

Year Ended30 September 2019


Rs. In Millions Rs. In Millions

Crushing start date 14.12.2018 29.11.2017

Crushing closing date 20.03.2019 26.04.2018

Total crushing days 96 148

Total Season Hours Available 2,305 3,544

Actual Crushing Hours 2,151 3,329

Stoppage Hours 154 215

Crushing Capacity TCD 10,500 10,500

Total Sugarcane crushed (M. Tons) 997,081 1,460,568

Average crushing per day (M. Tons) 10,279 9,869

Sugar produced (M. Tons) 107,116 146,798

Sugar Recovery (%) 10.74 10.05

Molasses Production (M. Tons) 42,180 65,022

Molasses Recovery (%) 4.23 4.45

The Sugar Production in season 2018-19 was reduced from 107,116 MT VS 146,798 MT in the season 2017-18, the less production is attributed to Less availability of Sugarcane.


FINANCIAL RESULTSThe Company during the year managed to earn after tax net profit of Rs. 370 mln as compared to Rs. 54 mln of previous year registering a significant increase of Rs. 316 mln. Reason of high profitability is mainly attributable to increase in sale price of Sugar during last two quarters of financial year and freight support subsidy on export of Sugar. Despite a decline in quantitative sale of Sugar the Gross profit has significantly improved by 70% to Rs. 1,266 mln VS Rs. 745 mln. Distribution cost has decreased by Rs. 34 mln due to no shifting of molasses to Karachi for

Export during the current year. Administration expenses has marginally increased by Rs. 13 mln during the year. Financial charges have doubled and reached to Rs. 649 mln VS Rs. 317 mln of last year because of 55% increase in Average Kibor rate 11.40% VS 7.4 % and 20% increase in average utilization of Cash Finance limits due to carry over stocks.

The financial results of your company for the year under review compared with the preceding year are tabulated below:

Description Year Ended30 September 2019


Rs. In Millions Rs. In Millions

Gross Profit 1,266 745

Operating profit 1,057 411

Profit before taxation 407 94

Profit after taxation 370 54

Earnings per share – basic and diluted (Rupees) 1.76 0.26

FUTURE OUTLOOKForecast of Sugarcane production for the season 2019-20 is 64 mln tons which is 4.4% lower than 67 mln tons of previous year. Sugar production target for the coming season is 5.1 mln tons as against 5.4 mln tons of previous year. Government of Punjab has announced Sugarcane support price for the coming season as Rs. 190 per 40kg. In the fiscal budget Federal Government has increased sales tax on Sugar sale from 8% to 17% on fixed price of Rs.60 per kg and have abolished further sales tax of 3% on sale of sugar to unregistered parties. In next Financial year the less forecasted production of sugar will stabilize the price and profit margins will remain stable.

CORPORATE AND FINANCIAL REPORTING FRAMEWORKThe following statements are a manifestation of Company’s commitment toward compliance with best corporate practices adopted by the industry:

a. The financial statements together with the notes thereon have been drawn up in conformity Companies Act, 2017. The financial statements prepared by the management of the Company present fairly its state of affairs the results of its operations cash flows & changes in equity.

b. The Company has maintained Proper books of account as required by the Companies Act, 2017.

c. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are based on reasonable and prudent judgment;

d. International Financial Reporting Standards, as applicable in Pakistan, have been followed in preparation of financial statements and any departures therefrom has been adequately disclosed and explained;

e. The system of internal control is sound in design and has been effectively implemented and monitored; There are no significant doubts upon the Company’s ability to continue as a going concern:


Composition of board of the directors:The Board of the Directors comprises of eminent individuals with diverse experiences & expertise and are visionary persons. It comprises of seven Directors including three female Directors namely Mrs. Farrukh Mukhtar, Mrs. Farah Faisal and Ms. Shanza Sheikh.

Election of directors:Pursuant to Section 159 of Companies Act 2017, the election of Directors was held on January 15, 2019 and the following Directors were elected un-opposed.

COMPOSITION OF THE BOARD AUDIT COMMITTEE:The Board Audit Committee comprises of three Directors.

The composition of Audit Committee is as under:

Mr. Aftab Ahmed Qaiser acts as the Secretary of the Committee.

The Board of directors has determined the Terms of Reference of the Audit Committee and provides adequate resources and authority to evaluate the Audit Committee to carry out its responsibilities effectively.

The Committee assists the Board of Directors to fulfill its corporate responsibilities including the entity’s financial reporting and internal control system.

COMPOSITION OF HUMAN RESOURCE & REMUNERATION COMMITTEE:The Composition of the Committee is as under:

Sr. # Name of Participants Designation

1. Ms. Shanza Sheikh Chairman

2. Mr. Faisal Ahmed Mukhtar Member

3. Mr. Fahd Mukhtar Member

OFFICES OF THE CHAIRMAN AND CHIEF EXECUTIVE OFFICER:In compliance with good governance practices, the position of Chairman of the Board of Directors and the office of the Chief Executive Officer are held by separate persons with clarity in their duties / responsibilities.

Sr. # Name of Participants

1. Mr. Fawad Ahmed MukhtarChairman

2. Mr. Faisal Ahmed MukhtarCEO

3. Mr. Fazal Ahmed SheikhDirector

4. Mr. Fahd Mukhtar Director

5. Mrs. Farrukh Mukhtar Director

6. Mrs. Farah Faisal Director

7. Ms. Shanza Sheikh Director

Sr. # Name of Participants Designation

1. Mr. Fazal Ahmed Sheikh Chairman

2. Mrs. Farah Faisal Member

3. Mr. Fahd Mukhtar Member


The Human Resource & Remuneration Committee focuses on Succession Planning of human resources, including assessment of compensation structure & amount to ensure availability of talented functionaries in each area of critical Company operation.

The Board of Directors has determined the Term of Reference of Human Resource & Remuneration Committee, which includes recommendation on Human Resource Management, Organizational Development, Training and Management Succession.

HEALTH, SAFETY AND ENVIRONMENT (HSE)From a health & safety standpoint, it involves creating organized efforts and procedures for identifying workplace hazards, reducing accidents and exposure to harmful situations and substances. It also includes training of personnel in accident prevention, accident response, emergency preparedness, and use of protective clothing and equipment.

FSML as a prime objective of its core values always strive to provide healthy and safe environment to its employees, workers, contractors, customers and public at large. We make sure compliance of all relevant laws and regulations for this purpose. Training programs to equip employees with latest information about workplace safety are conducted. As well as risk assessment drills are carried out to verify the consistency of the safety arrangements.

The company’s Human Resource Division monitors HSE compliance on regular basis while HRD site ensures that HSE requirements are met at the site of FSML. Use of relevant safety equipment at work is mandatory for workers. Adequate resources are made available to ensure the success of HSE policy.

From an environment point of view, it involves creating a systematic approach to complying with environmental regulations, such as managing waste or air emissions all the way.

MANAGEMENT / LABOR RELATIONSThe Company is committed to promoting effective, fair, and professional relationships between the management and its employee groups. The management team partners with labor and supervisors to administer employment strategies which support the Company’s mission and strategic initiatives. Relationships of the management with labor and workers have been pleasant.We continue to invest in work place professional development and improvement of silks of our human resources, since we believe that by investing in our people we invest in our future. Company’s human resource policy is based on the underlying values of fairness, merit, equal opportunity employer as our social responsibility.


RELATIONSHIP WITH GROWERSThe Company enjoys cordial relationship with the farmers’ community as it considers the growers to be its backbone. To maintain and further strengthen the relationship, the Company as a matter of principle gives priority and endeavors to;

i. Fatima Sugar, an authentic market player has been reaching out to farmers and growers, particularly in south Punjab region. Our programs equip farmers with specially devised skill development training focused on modern farming and growing techniques, helping them increase the life expectancy of their products and gain higher yields. Ultimately, our program assists farmers in reaching optimum profitability and enjoying better living standards.

ii. We consistently follow the policy of timely payments of sugarcane to growers.

iii. Company also fulfils farmers’ financial requirements by providing them financial assistance from own sources and by arranging loans for them from banks and also through different financial schemes of National Rural Support Program (NRSP). During period under review, agriculture loans were advanced to growers in the form of seed, agricultural implements, turbines & tube wells, fertilizers and pesticides.

iv. Procure and provide latest agriculture equipment on subsidized rates to growers on easy installment basis.

v. Enhance technical skills through various extension and advisory programs.

vi. Provide better quality and better yield varieties of sugarcane resulting in increased productivity in sugarcane yield per acre.

STATEMENT OF ETHICS & BUSINESS PRACTICESThe Statement of Business Ethics and Core Values provide the framework on which the Company conducts its business. The Board of Directors and the employees of the Company are the custodians of the excellent reputation for conducting our business according to

the highest principles of business ethics. The following principles constitute the business ethics & the core values of the Company.

• Demonstrate honesty integrity, fairness and ethical behavior when interacting within or outside the organization.

• Compliance with all Laws & Regulations as a good corporate citizen.

• Commitment to run the business in an environment that is sound & sustainable.

• Belief in the principles of reliability, credibility and transparency in business transactions.

• To be an equal opportunity employer

• Ensure Health & Safety environment to protect our people, neighbors, customers & visitors.

• Encourage the business challenges.

• Investment in Human Capital.

• Accountability & responsibility.

• Good & effective public relations.

• Customer satisfaction for continued growth

• Encourage employees to be creative & innovative

• Respect for all stakeholders

INTERNAL CONTROL ENVIRONMENT The management of the Company acknowledges its responsibility for the establishment and maintenance of the company’s system of Internal Control to identify and manage risk faced by the company. In order to achieve this responsibility, management has set up a robust control environment, human resource competence & development framework, a mechanism to maintaining independence amongst functions and continuous improvement of information system.

Control environment is strengthened by setting up a tone at the top. This is done by ensuring commitment to competence, building a culture of openness and complying with best practices of governance framework and developing standard operating procedures by the organization.


As part of Control System, Company has state of the art information system using Oracle EBS database to track and record business transactions. This system helps to establish independence and segregation of duties amongst various operational functions. Oracle EBS has increased efficiency and reliability of data resulting is exercising better budgetary control and detailed performance analysis.

This system of internal control provides reasonable assurance that assets are safeguarded against theft and unauthorized use, all business transactions and events are recorded and accounting records are accurate and all applicable laws and regulations are complied with.

The Company has internal audit department as part of internal control system to exercise oversight function over operations.

Internal audit is staffed with competent professionals and its oversight function is strengthened by establishing independent reporting lines. Internal Audit Department reports to Board Audit Committee. Over the period, Department has shifted its framework of audit from traditional auditing to risk based approach and updating of audit plan is carried out through regular risk assessment exercises.

Board Audit Committee is fully functional and works under the framework set out by Board of Directors of the Company. Board Audit Committee meets on regular intervals to discuss report of internal audit department and issues instructions to relevant departments.

Emphasis continues to be on internal compliance measured against set standards and best practices. The Company’s organizational structure embodies clearly defined levels of responsibility and delegation of authorities. Each division operates with in framework of policies / procedures, and personnel are required to comply with these policies / procedures. Policies and Procedures are developed on the basis of thorough risk assessment keeping in mind the Company’s commitment to highest levels of integrity & ethics.

INFORMATION TECHNOLOGY Information Technology Division (ITD) continues to be a key component and provides an extensive range of computing and communication service facilities and infrastructure for use by its employees. The ITD is aligned to the business needs of the organization ensuring that the solutions delivered are relevant to the needs of the business. Our Vision involves strengthening decision making, using improved analytics and dashboards capability and as a strategy will focus on other state of the art applications, reduce paper footprint and increase its reach to customers by deploying latest technology.

BUSINESS CONTINUITY PLANNING AND SAFETY PROCEDURES FOR DATA PROTECTIONThe Company has a comprehensive disaster recovery plan in place which entails backup facilities at different areas. This system is also subject to regular system checks to ensure continued effectiveness and uptime in case of any emergency. Detailed Standard Operating Procedures (SOPs) and ready reference checklists has also been developed where situations/areas of high risk that could hamper Company operations have been identified and explored in detail. Accordingly, action plans have been prepared to manage strategic business risks of the Company considering the general economic conditions, competitive realities and possible scenarios and ensuring that risk management process and culture are embedded throughout the Company.

VERTICAL AND HORIZONTAL ANALYSISVertical and horizontal analysis of the Company is annexed with this report.


CORPORATE SOCIAL RESPONSIBILITY (CSR)Your Company considers CSR as a fundamental of sustainable business practice to contribute voluntarily towards better society and strives to be a good corporate citizen. We have always shown strong commitment and support for public health and promotion of education. The Company is a permanent donor of reputable charity organizations including Mukhtar A. Sheikh Trust, which contributes towards the well-being of deprived people by setting-up Hospitals and Medical Camps etc. The free medical camps are set up in far flung areas of the Country where healthcare is very hard to access. Patients avail free medical check-up along with medicines.

SHAREHOLDINGThe pattern of shareholding and categories of shareholders as at September 30, 2019 have been annexed with this report.

EARNINGS PER SHAREThe Company’s earnings per share during the year was Rs. 1.76 per share for the year as compared to Rs. 0.26 per share previous year.

EXTERNAL AUDITORSM/s EY Ford Rhodes, Chartered Accountants have completed the Annual Audit for the year ended September 30, 2019 and have issued un-qualified audit report. The Auditors will retire on the conclusion of the upcoming Annual General Meeting of the Company and being

eligible have offered them for reappointment for the year ending September 30, 2020.

The Audit Committee has recommended the reappointment of M/s EY Ford Rhodes Chartered Accountants as external auditors of the company for the forthcoming financial year at a fee mutually agreed upon.

ACKNOWLEDGEMENTI would like to place on record my appreciation for the dedication and hard work of the employees of the company. I would also like to pay tribute to our customers / farmers who have placed their confidence in the company. I also thank bankers for the financial assistance and co-operation they have extended to the company.At the end the Board of Directors appreciated the support extended by the SECP and other regulatory authorities for the betterment of the Company.

FOR AND ON BEHALF OF BOARD OF DIRECTORSOF FATIMA SUGAR MILLS LIMITED

Faisal Ahmed Mukhtar Fazal Ahmed SheikhCHIEF EXECUTIVE OFFICER DIRECTOR

Date: 02 January 2020Place: Lahore


Unit 2019 2018 2017 2016 2015 2014

PROFITABILITY Gross profit % 18.71 8.71 11.76 7.53 9.39 9.53 EBITDA % 17.14 5.97 7.53 10.37 13.35 8.81 Operating profit % 15.62 4.81 6.12 8.77 11.95 7.21 Profit before tax % 6.02 1.09 3.12 5.40 8.16 2.44 Net Profit % 5.46 0.63 2.18 5.09 7.64 2.31 Return on equity % 10.29 1.68 4.84 10.40 19.79 5.67 Return on capital employed % 8.05 1.44 4.37 8.98 16.76 4.91 Return on total assets % 4.46 0.62 1.93 5.41 10.43 2.43 Interest cover Times 1.63 1.30 2.04 2.60 3.15 1.51 LIQUIDITY / ACTIVITY Current ratio Times 1.18 1.06 1.03 1.13 1.03 0.88 Quick / Acid test ratio Times 0.62 0.63 0.34 0.65 0.54 0.34 Debt to assets Times 0.57 0.63 0.60 0.48 0.47 0.57 Inventory turnover Times 2.63 3.00 2.98 5.60 5.16 3.42 Stock holding period Days 137 120 121 64 70 105 Fixed assets turnover Times 1.77 2.56 2.14 1.94 2.25 1.90 Total assets turnover Times 0.82 0.98 0.88 1.06 1.37 1.05 CAPITAL STRUCTURE Debt to equity % 27 10 7 12 11 19 Financial leverage Times 1.07 1.51 1.28 0.64 0.65 1.06 INVESTMENT / MARKET Book value per share Rs. 17.10 15.34 15.09 14.35 12.86 11.53 Earnings per share - basic and diluted Rs. 1.76 0.26 0.73 1.49 2.55 0.65

KEY PERFORMANCE Indicators

OPERATIONAL Trends

Unit 2019 2018 2017 2016 2015 2014

Crushing Capacity Per Day M.Tons 10,500 10,500 10,500 10,500 10,500 10,500

Season Duration Days 97 148 151 112 120 128

Sugarcane Crushed M.Tons 997,081 1,460,568 1,607,499 1,103,618 1,123,015 1,089,800

Average Crushing Achieved Per day M.Tons 10,279 9,869 10,646 9,854 9,358 8,514

Crushing Efficiency % 97.90% 93.99% 101.39% 93.85% 89% 81%

Sugar Produced - Sugarcane M.Tons 107,116 146,798 162,925 111,923 117,720 109,940

Molasses Production - Sugarcane M.Tons 42,180 65,022 67,845 46,431 45,737 47,956

Average Sucrose Recovery % 10.74 10.05 10.14 10.14 10.48 10.09

Average Molasses Recovery % 4.23 4.45 4.22 4.21 4.07 4.40


2019 2018 2017 2016 2015 2014

Gross profit Profit before tax Net Profit

0

5

10

15

20

2019 2018 2017 2016 2015 20140

5

10

15

20

25

30

2019 2018 2017 2016 2015 20140.5

1.0

1.5

2.0

2019 2018 2017 2016 2015 20140

1.00

2.00

Current ratio Quick / Acid test ratio

ProfitabilityPercentage

Liquidity RatiosPercentage

Financial leverageTimes

2019 2018 2017 2016 2015 20140.0

0.5

1.0

1.5

2.0

2.5

3.0

2019 2018 2017 2016 2015 20140

5

10

15

20

Book value per shareRs.

Earnings per share - basic and dilutedRs.

Debt to EquityPercentage

GRAPHICAL PRESENTATION


2019 2018 2017 2016 2015 20145,000

10,000

15,000

Crushing Capacity Per Day Average Crushing Achieved Per day

2019 2018 2017 2016 2015 20140

500000

1000000

1500000

2000000

Crushing Capacity per day (M.Tons)

Sugarcane Crushed(M.Tons)

2019 2018 2017 2016 2015 20140

100000

200000

300000

2019 2018 2017 2016 2015 20140

25000

50000

75000

100000

Sugar Produced (M.Tons)

Molasses Production - Sugarcane(M.Tons)

2019 2018 2017 2016 2015 20149.00

10.00

11.00

12.00

2019 2018 2017 2016 2015 20144.00

4.10

4.20

4.30

4.40

4.50

Average Sucrose Recovery (%)

Average Molasses Recovery(%)


2018

2018

2019

2019

BREAK UP OF REVENUERevenue from sugar sale Other revenue Revenue from bagasse sale Revenue from molasses sale

DISTRIBUTION OF REVENUECost of revenue Other operating expenses TaxationAdministrative expenses Distribution cost

Finance cost Profit for the year

GRAPHICAL PRESENTATION

5,889

588

290

184

8,155

308

88

55

(5,501)

(124)

(194)(75)

(649)

(38)

(370)

(7,806)

(158)(182)(49)

(317)(40)(54)

Rs. million Rs. million

Rs. million Rs. million


HORIZONTAL ANALYSISBalance Sheet

2019 19 vs 18 2018 18 vs 17 2017 17 vs 16 2016 16 vs 15 2015 15 vs 14 2014

Rs in M % Rs in M % Rs in M % Rs in M % Rs in M % Rs in M

ASSETS

Non-current Assets

Property, plant and equipment 3,824 14% 3,341 2% 3,283 3% 3,186 2% 3,119 0% 3,127

Intangible assets 4 -24% 5 -19% 7 -15% 8 -14% 9 -13% 11

Investment property 99 0% 99 0% 99

Long term security deposits 13 0% 13 13% 11 0% 11 6% 11 0% 11

3,940 14% 3,459 2% 3,401 6% 3,206 2% 3,139 0% 3,149

Current Assets

Stores, spares and loose tools 264 9% 242 31% 185 -10% 205 2% 201 28% 158

Stock-in-trade 2,044 -4% 2,140 -30% 3,065 178% 1,102 18% 936 -39% 1,524

Trade debts 367 -49% 724 287% 187 340% 43 -49% 84 325% 20

Loans and advances 1,178 -12% 1,334 85% 722 18% 613 67% 367 -8% 398

Trade deposits and short term prepayments 11 -33% 16 6% 15 3% 14 16% 12 73% 7

Other receivables 150 -74% 570 277% 151 -59% 368 138% 155 -6% 165

Tax refunds due from the Government 260 7% 242 7% 227 13% 201 -6% 214 5% 203

Cash and bank balances 78 899% 8 59% 5 -89% 46 137% 20 -5% 21

4,351 -18% 5,274 16% 4,557 76% 2,592 30% 1,989 -20% 2,494

TOTAL ASSETS 8,291 -5% 8,733 10% 7,957 37% 5,798 13% 5,128 -9% 5,642

EQUITY AND LIABILITIES

Share capital and reserves

Share capital 2,102 0% 2,102 0% 2,102 0% 2,102 0% 2,102 0% 2,102

Revenue reserve - unappropriated profit 1,492 33% 1,123 5% 1,069 17% 915 52% 601 87% 322

3,594 11% 3,224 2% 3,170 5% 3,017 12% 2,703 12% 2,424

Non-current Liabilities

Long term financing 802 179% 288 229% 88 -58% 207 11% 187 -39% 305

Long term deposits 4 12030% -36% -32% 410% -70%

Employee benefits - gratuity 14 15% 12 78% 7 -58% 16 26% 13 63% 8

Deferred taxation 178 -20% 222 -11% 248 -2% 255 -12% 289 369% 62

998 91% 522 52% 343 -28% 479 -2% 489 31% 375

Current Liabilities

Trade and other payables 443 56% 284 -18% 346 -27% 476 81% 263 -46% 489

Accrued mark-up and profit 135 177% 49 4% 47 55% 30 12% 27 -54% 59

Short term financing 2,876 -37% 4,531 18% 3,845 145% 1,573 8% 1,461 -30% 2,101

Current portion of long term liabilities 163 188% 57 -57% 133 -22% 170 41% 120 -23% 156

Provision for taxation 82 22% 67 -8% 73 36% 53 -18% 65 62% 40

3,699 -26% 4,987 12% 4,444 93% 2,302 19% 1,936 -32% 2,844

TOTAL EQUITY AND LIABILITIES 8,291 -5% 8,733 10% 7,957 37% 5,798 13% 5,128 -9% 5,642


VERTICAL ANALYSISBalance Sheet

2019 2018 2017 2016 2015 2014

Rs in M % Rs in M % Rs in M % Rs in M % Rs in M % Rs in M %

ASSETS

Non-current Assets

Property, plant and equipment 3,824 46% 3,341 38% 3,283 41% 3,186 55% 3,119 61% 3,127 55%

Intangible assets 4 0% 5 0% 7 0% 8 0% 9 0% 11 0%

Investment property 99 1% 99 1% 99 1%

Long term security deposits 13 0% 13 0% 11 0% 11 0% 11 0% 11 0%

3,940 48% 3,459 40% 3,401 43% 3,206 55% 3,139 61% 3,149 56%

Current Assets

Stores, spares and loose tools 264 3% 242 3% 185 2% 205 4% 201 4% 158 3%

Stock-in-trade 2,044 25% 2,140 25% 3,065 39% 1,102 19% 936 18% 1,524 27%

Trade debts 367 4% 724 8% 187 2% 43 1% 84 2% 20 0%

Loans and advances 1,178 14% 1,334 15% 722 9% 613 11% 367 7% 398 7%

Trade deposits and short term prepayments 11 0% 16 0% 15 0% 14 0% 12 0% 7 0%

Other receivables 150 2% 570 7% 151 2% 368 6% 155 3% 165 3%

Tax refunds due from the Government 260 3% 242 3% 227 3% 201 3% 214 4% 203 4%

Cash and bank balances 78 1% 8 0% 5 0% 46 1% 20 0% 21 0%

4,351 52% 5,274 60% 4,557 57% 2,592 45% 1,989 39% 2,494 44%

TOTAL ASSETS 8,291 100% 8,733 100% 7,957 100% 5,798 100% 5,128 100% 5,642 100%



Share capital 2,102 25% 2,102 24% 2,102 26% 2,102 36% 2,102 41% 2,102 37%

Revenue reserve - unappropriated profit 1,492 18% 1,123 13% 1,069 13% 915 16% 601 12% 322 6%

3,594 43% 3,224 37% 3,170 40% 3,017 52% 2,703 53% 2,424 43%

Non-current Liabilities

Long term financing 802 10% 288 3% 88 1% 207 4% 187 4% 305 5%

Long term deposits 4 0%

Employee benefits - gratuity 14 0% 12 0% 7 0% 16 0% 13 0% 8 0%

Deferred taxation 178 2% 222 3% 248 3% 255 4% 289 6% 62 1%

998 12% 522 6% 343 4% 479 8% 489 10% 375 7%

Current Liabilities

Trade and other payables 443 5% 284 3% 346 4% 476 8% 263 5% 489 9%

Accrued mark-up and profit 135 2% 49 1% 47 1% 30 1% 27 1% 59 1%

Short term financing 2,876 35% 4,531 52% 3,845 48% 1,573 27% 1,461 28% 2,101 37%

Current portion of long term liabilities 163 2% 57 1% 133 2% 170 3% 120 2% 156 3%

Provision for taxation 82 1% 67 1% 73 1% 53 1% 65 1% 40 1%

3,699 45% 4,987 57% 4,444 56% 2,302 40% 1,936 38% 2,844 50%

TOTAL EQUITY AND LIABILITIES 8,291 100% 8,733 100% 7,957 100% 5,798 100% 5,128 100% 5,642 100%


HORIZONTAL ANALYSISProfit & Loss

VERTICAL ANALYSISProfit & Loss

2019 19 vs 18 2018 18 vs 17 2017 17 vs 16 2016 16 vs 15 2015 15 vs 14 2014

Rs in M % Rs in M % Rs in M % Rs in M % Rs in M % Rs in M

Revenue from contracts with customers 6,767 -21% 8,551 21% 7,041 14% 6,166 -12% 7,006 18% 5,939

Cost of revenue -5,501 -30% -7,806 26% -6,212 9% -5,702 -10% -6,348 18% -5,373

Gross profit 1,266 70% 745 -10% 828 79% 464 -29% 658 16% 566

Distribution cost -124 -21% -158 -9% -174 278% -46 -26% -62 137% -26

Administrative expenses -194 7% -182 2% -178 1% -176 13% -156 -3% -161

Other operating expenses -75 53% -49 -26% -66 -1% -67 -3% -69 56% -44

-393 1% -389 -7% -418 45% -289 -16% -286 189% -232

Other income 184 238% 55 156% 21 -94% 366 -22% 466 395% 94

Operating profit 1,057 157% 411 -5% 431 -20% 541 -35% 837 95% 428

Finance cost -649 105% -317 50% -211 2% -208 -22% -266 -6% -283

Profit before taxation 407 335% 94 -57% 220 -34% 333 -42% 571 294% 145

Taxation -38 -5% -40 -40% -66 243% -19 -47% -36 373% -8

Profit for the year 370 584% 54 -65% 154 -51% 314 -41% 535 290% 137

2019 2018 2017 2016 2015 2014

Rs in M % Rs in M % Rs in M % Rs in M % Rs in M % Rs in M %

Revenue from contracts with customers 6,767 100% 8,551 100% 7,041 100% 6,166 100% 7,006 100% 5,939 100%

Cost of revenue -5,501 -81% -7,806 -91% -6,212 -88% -5,702 -92% -6,348 -91% -5,373 -90%

Gross profit 1,266 19% 745 9% 828 12% 464 8% 658 9% 566 10%

Distribution cost -124 -2% -158 -2% -174 -2% -46 -1% -62 -1% -26 0%

Administrative expenses -194 -3% -182 -2% -178 -3% -176 -3% -156 -2% -161 -3%

Other operating expenses -75 -1% -49 -1% -66 -1% -67 -1% -69 -1% -44 -1%

-393 -6% -389 -5% -418 -6% -289 -5% -286 -4% -232 -4%

Other income 184 3% 55 1% 21 0% 366 6% 466 7% 94 2%

Operating profit 1,057 16% 411 5% 431 6% 541 9% 837 12% 428 7%

Finance cost -649 -10% -317 -4% -211 -3% -208 -3% -266 -4% -283 -5%

Profit before taxation 407 6% 94 1% 220 3% 333 5% 571 8% 145 2%

Taxation -38 -1% -40 0% -66 -1% -19 0% -36 -1% -8 0%

Profit for the year 370 5% 54 1% 154 2% 314 5% 535 8% 137 2%


NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of the Members of FATIMA SUGAR MILLS LIMITED will be held on Tuesday, January 28, 2020, at 11:00 am at the Registered Office of the Company at E-110, Khayaban-e-Jinnah, Lahore-Cantt, to transact the following business:

ORDINARY BUSINESS1. To confirm the minutes of the Annual General Meeting held on January 28, 2019.

2. To receive, consider and adopt the audited financial statements of the Company together with the Directors’ and Auditors’ Reports thereon for the year ended September 30, 2019.

3. To appoint Auditors for year ending September 30, 2020 and to fix their remuneration. The retiring Auditors, M/s. EY Ford Rhodes, Chartered Accountants, being eligible, have offered themselves for re-appointment.

4. To transact any other business with the permission of Chair.

SPECIAL BUSINESS5. To ratify and approve the transactions carried out by the Company with related parties

as disclosed in the financial statements for the year ended September 30, 2019 and to pass the following Special Resolution(s), with or without modification(s):

“RESOLVED, that the related party transactions carried out by the Company during the year in which the majority of Directors are interested, as disclosed in Note 36 of the financial statements for the year ended September 30, 2019, be and are hereby ratified, approved and confirmed.

RESOLVED FURTHER, that the Board of Directors of the Company, be and are hereby authorized to approve the transactions to be conducted with related parties during the financial year ending September 30, 2020.

RESOLVED FURTHER, that the transactions approved by the Board shall be deemed to have been approved by the shareholders and shall be placed before the shareholders in the next General Meeting for their formal ratification/approval.”

Statement under Section 134(3) of the Companies Act, 2017 concerning special business is annexed to the notice of meeting circulated to the shareholders of the Company.

By Order of the Board

Place: LahoreDated: January 7, 2020

Aftab Ahmed QaiserCompany Secretary


NOTES:1. The Share Transfer Books of the Company will remain

closed from January 22, 2020 to January 28, 2020 (both days inclusive). Transfers received, in order, at the Registered Office of the Company, by the close of business on January 21, 2020 will be treated in time to attend and vote at the meeting.

2. A Member entitled to attend and vote at the meeting may appoint another Member as his/her proxy, who shall have such rights as respects attending, speaking and voting at the meeting as are available to a Member.

3. Proxies, in order to be effective, must be received by the Company at the Registered Office not later than 48 hours before the time for holding meeting, duly signed, stamped and witnessed by two persons with their names, address, CNIC number and signatures.

4. Members are requested to immediately notify the change of their address, if any.

STATEMENT UNDER SECTION 134(3) OF THE COMPANIES ACT, 2017The transactions carried out with associated companies/related parties have been approved by the Board as recommended by the Audit Committee on quarterly basis pursuant to the provisions of applicable laws. However, the majority of Company Directors were interested in related party transactions due to their common directorship and holding of shares in the associated companies. The Board has recommended the same for placement before the Members of the Company in the general meeting for ratification/approval.

All the related party transactions for the year ended September 30, 2019 were executed at Arm’s Length basis in the normal course of business and there were no departures from the guidelines in the Code of Corporate Governance for such transactions. Pursuant to above, these transactions have to be approved/ratified by the Members in the General Meeting. The Directors and their relatives do not have any direct or indirect interest in the aforesaid except to the extent of their shareholding/common directorship with related parties.


Categories of Shareholders Shareholders Shares Held Percentage

Directors and their spouse(s) and minor children

Mr. Fawad Ahmed Mukhtar 1 1 -

Mr. Faisal Ahmed Mukhtar 1 1 -

Mr. Fazal Ahmed Sheikh 1 1 -

Mr. Fahd Mukhtar 1 1 -

Mrs. Farrukh Mukhtar 1 1 -

Mrs. Farah Faisal 1 1 -

Ms. Shanza Sheikh 1 1 -

7 7

Associated Companies, undertakings and related parties

Fatima Holding Limited 1 210,170,891 100

Total 8 210,170,898 100

No. of Shareholders Shareholdings’Slab Shares Held

7 1 to 100 7

1 210,170,890 to 210,170,895 210,170,891

Total 210,170,898

Shareholders holding 5% or more Shares Held Percentage

Fatima Holding Limited 210,170,891 100

PATTERN OF SHAREHOLDINGAs At 30 September 2019

As At 30 September 2019


FINANCIAL STATEMENTS

Year ended September 30, 2019

Report on the Audit of Financial Statements

Opinion

We have audited the annexed financial statements of the Fatima Sugar Mills Limited (the “Company”), which comprise the statement of financial position as at 30 September 2019 and the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, 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 the audit.

In our opinion and to the best of our information and according to the explanations given to us, the statement of financial position, statement of profit or loss, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes forming part thereof conform with the accounting and reporting standards as applicable in Pakistan and give the information required by the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give a true and fair view of the state of the Company’s affairs as at 30 September 2019 and of the income and the comprehensive income, the changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information Other than the Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information comprises the Directors’ report, but does not include the financial statements and our auditors’ report thereon. The Directors’ report is expected to be made available to us after the date of this auditors’ report.

Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

INDEPENDENT AUDITOR’S REPORTTo the members of Fatima Sugar Mills Limited


INDEPENDENT AUDITOR’S REPORTTo the members of Fatima Sugar Mills Limited

Responsibilities of Management and Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017(XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Board of directors are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.


• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on Other Legal and Regulatory Requirements

Based on our audit, we further report that in our opinion:

a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);

b) the statement of financial position, the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes thereon have been drawn up in conformity with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;

c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company’s business; and

d) no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

Other Matter

The financial statements of the company for the year ended 30 September 2018 were audited by another auditor who expressed on unmodified opinion on those statements on 07 January 2018.

The engagement partner on the audit resulting in this independent auditors’ report is Sajjad Hussain Gill.

Chartered AccountantsLahoreDate: 07 January 2020


2019 2018 Note Rupees Rupees

ASSETS

Non-current assets

Property, plant and equipment 5 3,823,565,044 3,341,022,189 Intangible assets 6 4,190,439 5,478,116 Investment property 7 99,330,000 99,330,000 Long term security deposits 12,792,836 12,792,836

3,939,878,319 3,458,623,141 Current assets

Stores, spare parts and loose tools 8 263,855,917 241,747,370 Stock-in-trade 9 2,044,495,872 2,139,655,000 Trade debts 10 366,741,937 723,711,055 Loans and advances 11 1,177,705,807 1,334,270,421 Trade deposits and short term prepayments 12 10,533,198 15,678,820 Other receivables 13 150,007,661 569,756,853 Tax refunds due from the Government 14 259,907,332 241,858,125 Cash and bank balances 15 77,709,592 7,782,248

4,350,957,316 5,274,459,892

TOTAL ASSETS 8,290,835,635 8,733,083,033



Share capital 16 2,101,708,980 2,101,708,980 Revenue reserve - unappropriated profit 1,492,472,652 1,122,767,369

3,594,181,632 3,224,476,349 Non-current liabilities

Long term financing 17 801,875,000 287,500,000 Long term deposits 18 3,566,290 29,400 Employee benefits - gratuity 19 14,140,203 12,348,631 Deferred taxation 20 178,225,217 221,697,913

997,806,710 521,575,944 Current liabilities

Trade and other payables 21 443,233,015 283,591,818 Accrued mark-up and profit 22 134,893,380 48,669,970 Short term financing 23 2,875,634,816 4,531,061,244 Current portion of long term liabilities 24 163,227,119 56,653,834 Provision for taxation 81,858,963 67,053,874

3,698,847,293 4,987,030,740

CONTINGENCIES AND COMMITMENTS 25

TOTAL EQUITY AND LIABILITIES 8,290,835,635 8,733,083,033

The annexed notes, from 1 to 43, form an integral part of these financial statements.

STATEMENT OF FINANCIAL POSITIONAs at September 30, 2019

Chief Executive Director



Revenue from contracts with customers 26 6,766,531,771 8,551,401,978 Cost of revenue 27 (5,500,540,208) (7,806,197,465)

Gross profit 1,265,991,563 745,204,513

Distribution cost 28 (124,258,817) (158,106,122)Administrative expenses 29 (194,349,966) (181,879,110)Other operating expenses 30 (74,741,120) (48,814,107)

(393,349,903) (388,799,339)Other income 31 184,203,297 54,518,064

Operating profit 1,056,844,957 410,923,238

Finance costs 32 (649,418,950) (317,295,131)

Profit before taxation 407,426,007 93,628,107

Taxation 33 (37,720,724) (39,608,703)

Profit for the year 369,705,283 54,019,404 Earnings per share - basic and diluted 34 1.76 0.26 The annexed notes, from 1 to 43, form an integral part of these financial statements.

STATEMENT OF PROFIT OR LOSSFor the year ended September 30, 2019



2019 2018 Rupees Rupees

Profit for the year 369,705,283 54,019,404 Other comprehensive income for the year – –

Total comprehensive income for the year 369,705,283 54,019,404 The annexed notes, from 1 to 43, form an integral part of these financial statements.

STATEMENT OF COMPREHENSIVE INCOMEFor the year ended September 30, 2019




CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 407,426,007 93,628,107

Adjustments for non-cash charges and other items:

Depreciation on property, plant and equipment 5 101,973,541 97,872,395 Amortization on intangibles 6 1,287,677 1,318,140 Profit on saving accounts 31 (90,842,850) (35,837,101)(Gain) / loss on disposal of operating fixed assets 31 (1,158,699) 107,595 Finance cost 32 649,418,950 317,295,131 Provision for Workers’ Profit Participation Fund 21 21,406,060 4,574,505 Net exchange (gain) / loss 31 (63,699,271) 3,004,454 Provision for gratuity 19 16,329,802 14,606,519 Provision for doubtful receivables 29 (4,951,283) – Allowance for expected credit losses 29 (1,105,889) – Payable balances written-off 31 (710,869) (230,116)

627,947,169 402,711,522

Profit before working capital changes 1,035,373,176 496,339,629

Effect on cash flow due to working capital changes:

Decrease / (increase) in current assets:

- Stores, spares and loose tools 8 (22,108,547) (56,544,463) - Stock-in-trade 9 95,159,128 925,100,000 - Trade debts 10 420,668,389 (539,484,430) - Loans and advances 11 161,515,897 (51,583,469) - Deposits and prepayments 12 5,145,622 (825,527) - Other receivables 13 420,855,081 (418,674,376)

Increase / (decrease) in current liabilities:

- Trade and other payables 21 138,946,006 (66,948,178)

1,220,181,576 (208,960,443)

Cash flows generated from operations 2,255,554,752 287,379,186

Income tax paid (84,437,538) (87,083,103)Employee benefits paid 19 (13,646,995) (14,207,134)

(98,084,533) (101,290,237)

Net cash flows generated from operating activities 2,157,470,219 186,088,949

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (586,491,452) (158,404,545)Proceeds from sale of operating fixed assets 3,133,755 2,595,840 Advances made - net – (562,306,996)

Net cash used in investing activities (583,357,697) (718,115,701)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long term finances 17 620,000,000 136,748,896 (Repayment of) / proceeds from short term financing 23 (1,655,426,428) 677,554,449 Profit on saving accounts 31 90,842,850 35,837,101 Finance cost paid 22 (563,195,540) (315,228,448)Long term deposits - net 18 3,593,940 (4,600)

Net cash flows (used in) / generated from financing activities (1,504,185,178) 534,907,398

Net increase in cash and cash equivalents 69,927,344 2,880,646

Cash and cash equivalents at beginning of the year 7,782,248 4,901,602

Cash and cash equivalents at end of the year 15 77,709,592 7,782,248 The annexed notes, from 1 to 43, form an integral part of these financial statements.

STATEMENT OF CASH FLOWSFor the year ended September 30, 2019



Issued, Revenue

Total subscribed reserve - and paid up unappropriated share capital profit

Rupees Balance as at 01 October 2017 2,101,708,980 1,068,747,965 3,170,456,945 Profit for the year – 54,019,404 54,019,404 Other comprehensive income – – –

Total comprehensive income for the year – 54,019,404 54,019,404

Balance as at 30 September 2018 2,101,708,980 1,122,767,369 3,224,476,349 Profit for the year – 369,705,283 369,705,283 Other comprehensive income – – –

Total comprehensive income for the year – 369,705,283 369,705,283

Balance as at 30 September 2019 2,101,708,980 1,492,472,652 3,594,181,632 The annexed notes, from 1 to 43, form an integral part of these financial statements.

STATEMENT OF CHANGES IN EQUITY For the year ended September 30, 2019

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –



1. LEGAL STATUS AND NATURE OF BUSINESS

Fatima Sugar Mills Limited (“the Company”) was incorporated in Pakistan as Public unlisted Company, limited by shares, under the repealed Companies Ordinance 1984 (now the Companies Act, 2017).

Fatima Holding Limited is the Company’s parent company holding 100% share capital of the Company. The

principal activity of the Company is manufacturing and sale of white sugar. The geographical locations and addresses of the Company’s business units, including production facility are as under:

- Registered office: E-110, Khayaban-e-Jinnah, Lahore Cant., Lahore.

- Head office: 2nd Floor Trust Plaza, LMQ Road, Multan, Pakistan.

- Manufacturing facility: Fazal Garh, Sanawan, Kot Addu, District Muzaffargarh, Pakistan.” 2. STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise of:

– International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards

Board (IASB) as notified under the Companies Act, 2017 (the Act); and

– Provisions of and directives issued under the Act. Where provisions of and directives issued under the Act differ from the IFRS, the provisions of and directives

issued under the Act have been followed. 3. BASIS OF PREPARATION

These financial statements have been prepared under the historical cost convention.

3.1 Functional and presentation currency

These financial statements have been prepared in Pak Rupees which is the Company’s functional currency. All financial information, presented in Pak Rupees, has been rounded off to the nearest rupee, unless, stated otherwise.

3.2 Significant accounting judgments and critical accounting estimates / assumptions

The preparation of financial statements in conformity with the approved accounting standards requires use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Company’s accounting policies. Estimates and judgments are continually evaluated and are based on historical experience, including expectation of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the Company’s financial statements or where judgments were exercised in application of accounting policies are as follows:

Note

Useful lives of property, plant and equipment 4.6 Impairment of assets 4.2.2 and 4.6 Provision for taxation 4.5

NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2019



4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies which have been adopted in the preparation of financial statements of the Company are consistent with previous year except as discussed in Note 4.1 & 4.2 to these financial statements as follows:

4.1 Standards, interpretations and amendments to published approved accounting standards

effective during the year

The accounting policies adopted in the preparation of these financial statements are consistent with those of the previous financial year except as described below:

IFRS 15 – Revenue from Contracts with Customers IFRS 9 – Financial Instruments IFRIC 22 – Foreign Currency Transactions and Advance Consideration IAS 40 – Transfers of Investment Property (Amendments) IFRS 2 – Classification and Measurement of Share Based Payment Transactions

The adoption of the above amendments, improvements to accounting standards and interpretations

did not have any material impact on the financial statements. 4.2 Changes in accounting policies and disclosures

New and amended standards and interpretations

4.2.1 IFRS 15 Revenue from Contracts with Customers

IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenue and related interpretations and it applies, with limited exceptions, to all revenue arising from contracts with its customers. IFRS 15 establishes a five-step model to account for revenue arising from contracts with customers and requires that revenue be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

IFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires relevant disclosures.

The Company is in the business to manufacture and sale white sugar locally and also in the international

markets and in addition to white sugar, other by-products such as molasses and bagasse are also sold. White sugar, molasses and bagasse are sold both on their own in separately identifiable contracts.

The management reviewed and assessed the Company’s existing contracts with the customers in accordance with the guidance included in IFRS 15. There is normally one performance obligation and the revenue recognition meets the criteria for recognition at a point in time. Hence there is no material impact on the revenue recognition of the Company.

Changes in accounting policies resulting from application of IFRS 15

i) Revenue Recognition

Revenue from contracts with customers for sale of white sugar, molasses and bagasse:

The Company recognizes revenue from contracts with customers based on a five step model as set out in IFRS 15:


Step-1 Identify contract(s) with a customer: A contract is defined as an agreement between two or more parties that creates enforceable rights and obligations and sets out the criteria for every contract that must be met.

Step-2 Identify performance obligations in the contract: A performance obligation is a promise in a contract with a customer to transfer a good or service to the customer.

Step-3 Determine the transaction price: The transaction price is the amount of consideration to which

the Company expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties.

Step-4 Allocate the transaction price to the performance obligations in the contract: For a contract that

has more than one performance obligation, the Company allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for satisfying each performance obligation.

Step-5 Recognize revenue when (or as) the Company satisfies a performance obligation.

Mentioned below are different revenue streams of the Company and their terms of recognition of

revenue after satisfying all the five steps of revenue recognition in accordance with IFRS 15. a) Sale of goods

The Company’s contracts with customers for the sale of goods generally include one performance obligation and recognized at a point of time. Revenue is recognized when goods are dispatched to customers and bill of lading is prepared for local sales and exports sales respectively. It is the time when control (significant risk and rewards) relating to ownership of goods and control over these goods has been transferred to the buyer.

b) Interest income

Interest income is recognized using effective interest rate method. Impact of adoption of IFRS 15 on the financial statements

The Company has applied IFRS 15 using the modified retrospective approach for transition. This approach requires entities to recognize the cumulative effect of initially applying IFRS 15 as an adjustment to the opening balance of unappropriated profit in the period of initial application. Comparative prior year periods would not be adjusted. The application of IFRS 15 does not have any significant impact on the revenue recognition of the Company because there is mostly one performance obligation and revenue is recognized at a point in time except for the terminologies that are to be used in accordance with IFRS 15 as mentioned in respective note to the financial statements and therefore, the cumulative effect of initially applying this standard as an adjustment to the opening balance of unappropriated profit in the period of initial application is nil.

ii) Presentation and disclosure requirements

As required for the financial statements, the Company disaggregated revenue recognized from contracts with customers into categories that depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company has also disclosed information about the relationship between the disclosure of disaggregated revenue and revenue information disclosed for each reportable segment.


4.2.2 IFRS 9 Financial Instruments

Changes in accounting policies resulting from application of IFRS 9

Financial instruments: assets

The Company applied IFRS 9 effective from 01 July 2018. All comparative numbers for financial year 2018 were prepared under IAS 39. This is the first year of IFRS 9 adoption and comparatives have not been restated.

i) Classification and measurement of financial instruments

IFRS 9 Financial Instruments: Recognition and Measurement outlines the requirements for the recognition and measurement of financial assets and liabilities and replaces IAS 39.

Financial instruments are initially recognized when an entity becomes a party to the contractual

provisions of the instrument, and are classified into various categories depending upon the type of instrument, which then determines the subsequent measurement of the instrument.

IFRS 9 classification is based on two aspects; the business model within which the asset is held (the

business model test) and the contractual cash flows of the asset which meet the solely payments of principal and interest (‘SPPI’) test.

IFRS 9 includes three principal classification categories for financial assets: measured at amortized

cost, fair value through other comprehensive income (FVTOCI) and fair value through profit or loss (FVTPL). The Company determines the classification at initial recognition.

Financial assets at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

– The asset is held within a business model whose objective is to hold assets to collect

contractual cash flows; and

– The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at FVTOCI

A debt instrument is measured at FVTOCI only if it meets both of the following conditions and is not designated as at FVTPL:

– The asset is held within a business model whose objective is achieved by both collecting

contractual cash flows and selling financial assets; and

– The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in fair value in other comprehensive income. This election is made on an investment by investment basis.

In addition, on initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at FVTOCI as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

The Company does not have any financial asset designate fair value through other comprehensive income.



Financial assets at fair value through profit or loss

A financial asset is mandatorily classified in this category if it is acquired principally for the purpose of selling in the short term, or if it fails the SPPI test. Derivatives are classified as FVTPL as they do not meet the SPPI criteria.

A financial asset can be classified in this category by choice if so designated by management at inception. This designation is because the relevant assets and liabilities (including derivatives) are managed together and internal reporting is evaluated on a fair value basis.

The Company defines fair value as the price, as at the measurement date, that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

ii) Initial recognition

At initial recognition, an entity shall measure a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.

iii) Subsequent measurement

Gains and losses arising from changes in the fair value of assets classified as fair value through profit or loss are included in the statement of profit or loss in the period in which they arise.

Gains and losses arising from changes in the fair value of debt instruments classified as fair value

through other comprehensive income are recognized as other comprehensive income until the financial asset is derecognized or impaired, at which time the cumulative gain or loss previously recognized as other comprehensive income is recognized in the statement of profit or loss. Any premium or discount paid on the purchase of securities held at amortized cost is amortized through the statement of profit or loss using the effective interest rate method.

The fair values of quoted investments in active markets are based on current bid prices. In other cases,

the Company establishes fair value by using appropriate valuation techniques. Financial assets are derecognized when the rights to receive cash flows from the financial assets

have expired or where the Company has either transferred substantially all of the risks and rewards of ownership or the Company deems that it no longer retains control of the risks and rewards of ownership.

The Company has no modified financial instruments. iv) Impairment of financial assets

IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with an ‘expected credit loss’ model. IFRS 9 requires impairment assessment on all of the following financial instruments that are not measured at FVTPL:

– financial assets that are debt instruments measured at amortized cost or FVTOCI

– lease receivables; and

– loan commitments and financial guarantee contracts issued. Under IFRS 9, no impairment loss is recognized on equity investments. IFRS 9 requires a loss allowance

to be recognized at an amount equal to either 12-month Expected Credit Loss (ECL) or lifetime ECLs. Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument, whereas 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date.


The term ‘expected credit loss’ does not imply that losses are anticipated, rather that there is recognition of the potential risk of loss.

The Company has applied the simplified approach to measuring expected credit losses, which uses

a lifetime expected loss allowance. To measure the expected credit losses, trade debts have been grouped based on days overdue.

Financial instruments: liabilities

i) Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and

payables, net of directly attributable transaction costs. The Company’s financial liabilities include trade and other payables, loans and borrowings.

ii) Subsequent measurement

Financial liabilities are subsequently measured at amortized cost.

iii) Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.

Impacts of adoption of IFRS 9 on the financial statements as on 01 July 2018

On 01 July 2018, the Company’s management has assessed which business models apply to the financial assets held by the Company at the date of initial application of IFRS 9. The management has reviewed and assessed the Company’s existing financial assets for impairment in accordance with the guidance included in IFRS 9, to determine the credit risk associated with the respective financial assets and has incorporated the same in the financial statements of the Company. The management has also concluded that the impact of impairment of these financial assets under IFRS 9 is insignificant for the Company’s financial statements of prior year and accordingly no adjustment has been made to the figures reported in previous year. In addition to this, in the current year, management has assessed and concluded that impact of ECL is not material for the Company’s financial statements. Therefore, the cumulative effect of initially applying this standard as an adjustment to the opening balance of unappropriated profit in the period of initial application is nil.

4.3 Employees benefits - gratuity

The Company operates an unfunded gratuity scheme covering all its full time permanent workers who have completed the minimum qualifying period of one year as per the Company’s policy. Provision for gratuity is calculated for each year and paid on annual basis, after retaining one year’s gratuity.



4.4 Provisions

Provisions are recognized in the statement of financial position when the Company has legal or constructive obligation as a result of past events, and it is probable that outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. The amount recognized as a provision reflects the best estimate of the expenditure required to settle the present obligation at the end of the reporting period.

Contingent liabilities

Contingent liability is disclosed when:

– there is possible obligation that arises from past events and whose existence will be confirmed only by occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company; or

– there is present obligation that arises from past events but it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.

4.5 Taxation

Income tax expenses comprises current and deferred tax. Income tax expense is recognized in the statement of profit or loss, except to the extent that it relates to items recognized directly in other comprehensive income or below equity, in case it is recognized in other comprehensive income or below equity respectively.

Current

Current tax is the amount of tax payable on taxable income for the year, using tax rates enacted or substantively enacted by the reporting date, and any adjustment to the tax payable in respect of previous years. Provision for current tax is based on current rates of taxation in Pakistan after taking into account tax credits, rebates and exemptions available, if any. The amount of unpaid income tax in respect of the current or prior periods is recognized as a liability. Any excess paid over what is due in respect of the current or prior periods is recognized as an asset.

Deferred tax

Deferred tax is provided, using the balance sheet method, on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are

recognized for all deductible temporary differences to the extent it is probable that taxable profits will be available against which the deductible temporary differences can be utilized. Deferred tax asset is recognized for the carry forward of unused tax losses and unused tax credits to the extent it is probable that future taxable profits will be available against which the unused tax losses and unused tax credits can be utilized.

The carrying amount of all deferred tax assets is reviewed at each statement of financial position date

and adjusted to the appropriate extent, if it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax assets to be utilized.


Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset will be realized or the liability will be settled, based on the tax rates, that have been enacted or subsequently enacted at the statement of financial position date.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax

assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

4.6 Property, plant and equipment

Owned

All operating fixed assets are stated at cost less accumulated depreciation and any identified impairment loss, except capital work-in-progress. Cost of property, plant and equipment consists of historical cost, borrowing cost pertaining to erection / construction period of qualifying assets and other directly attributable costs of bringing the asset to working condition.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repair and maintenance costs are charged to statement of profit or loss during the period in which they are incurred.

Capital work in progress

Capital work-in-progress represents expenditure on property, plant and equipment which are in the course of construction and installation. Transfers are made to relevant property, plant and equipment category as and when assets are available for use.

Capital work-in-progress is stated at cost less any impairment loss. Cost also includes applicable

borrowing cost, if any. Depreciation

Depreciation on property, plant and equipment is charged from the month in which an asset is available for use while no depreciation is charged for the month in which the asset is de-recognized. Depreciation is charged to statement of profit or loss applying the reducing balance method so as to write off the cost / depreciable amount of the assets over their expected useful lives at the rates mentioned in Note 5.1.1.

Residual value and the useful life of assets are reviewed at each financial year end and if expectations differ from previous estimates the change is accounted for as change in accounting estimate in accordance with IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors.

De-recognition

An item of property, plant and equipment is de-recognized upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset is included in statement of profit or loss in the year the asset is de-recognized.

Impairment

The Company assesses at each statement of financial position date whether there is any indication that assets excluding inventory may be impaired. If such indication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amounts. Where the carrying value exceeds the recoverable amount, assets are written down to the recoverable amount and the difference is charged to the statement of profit or loss.



4.7 Intangible assets

Intangible assets are recognized when it is probable that the expected future economic benefits will flow to entity and cost of the assets can be measured reliably. Intangible assets having finite useful life are stated at cost less accumulated amortization and accumulated impairment losses, if any. Cost of the intangible assets includes purchase cost and directly attributable expenses incidental to bring the asset for its intended use.

Amortization is based on the cost of an asset less its residual value, if any. Amortization is recognized

in statement of profit and loss on a straight line basis over the estimated useful lives of intangible assets. Amortization methods, useful lives and residual values are reviewed at each reporting date and adjusted, if appropriate.

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditures are recognized in statement of profit or loss as incurred.

4.8 Investment properties

The Company’s investment property comprises of land which is carried at cost less identified impairment loss, if any. The Company assesses at each reporting date whether there is any indication that investment property may be impaired. If such indication exists, the carrying amount of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount. Where carrying value exceeds the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss is recognized in the statement of profit or loss for the year. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use.

The gain or loss on disposal or retirement of an asset represented by the difference between the sale

proceeds and the carrying amounts of the asset is recognized as an income or expense. 4.9 Stores, spare parts and loose tools

These are valued at lower of weighted average cost and net realizable value, except items in transit, which are stated at invoice amount plus other charges paid thereon. Provision for slow moving, damaged and obsolete items are charged to statement of profit or loss. Value of items is reviewed at each statement of financial position date to record provision for any slow moving items, damaged and obsolete items.

Net realizable value signifies the selling price in the ordinary course of business less estimated cost

necessarily to be incurred in order to make the sale, which is generally equivalent to the estimated replacement cost.

4.10 Stock in trade

These are valued at lower of cost and net realizable value. Cost comprises all costs of purchase, cost of conversion and other costs incurred in bringing the

inventories to their present location and condition, and valuation has been determined as follows:

Finished goods - sugar - at lower of average manufacturing cost and net realizable value

Work-in-process - at lower of average manufacturing cost and net realizable value

Molasses and bagasse - by products - at net realizable value

Stock in transit - at invoice value plus other charges


Net realizable value signifies the estimated selling price in the ordinary course of business less estimated costs of completion and estimated costs necessary to make the sale.

Provision is made in the financial statements for obsolete and slow moving stock in trade based on

management estimate 4.11 Trade debts

Trade debts are initially measured at their transaction price under IFRS 15 and subsequently measured at amortized cost less any allowance for expected credit losses (ECL).

4.11.1 Allowance for expected credit losses (ECL)

Allowance for expected credit losses (ECLs) are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Company expects to receive. The shortfall is then discounted at an approximation to the asset’s original effective interest rate. For trade and other receivables, the Company has applied the standard’s simplified approach and has calculated ECLs based on lifetime expected credit losses. The Company has established a provision matrix that is based on the Company’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. However, in certain cases, the Company may also consider a financial asset to be in default when internal or external information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Company.

4.12 Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand, cash at banks in current, savings and deposit accounts and other short term highly liquid instruments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

4.13 Trade and other payables

Liabilities for trade and other amounts payable are initially recognized at fair value which is normally the transaction cost.

4.14 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are charged to statement of profit or loss as and when incurred.

4.15 Foreign currency translation

The financial statements are presented in Pak Rupees, which is the Company’s functional currency. Transactions in foreign currency during the year are initially recorded in the functional currency at the rate prevailing at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated into functional currency rates of exchange prevailing at reporting date. All resulting differences are taken to the statement of profit or loss. Non-monetary assets and liabilities are not translated at the end of financial year.

4.16 Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit after tax attributable to ordinary shareholders of the Company by the total number of ordinary shares outstanding during the year.



Diluted EPS is calculated by adjusting basic EPS with weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares and post-tax effect of changes in profit or loss attributable to ordinary shareholders of the Company that would result from conversion of all dilutive potential ordinary shares into ordinary shares.

4.17 Standards, Interpretations and Amendments to Approved Accounting Standards that are not

yet effective

The following standards, amendments and interpretations with respect to the approved accounting standards as applicable in Pakistan would be effective from the dates mentioned below against the respective standard or interpretation:

Effective date (annual periods Standard or Interpretation beginning on or after) IFRS 3 – Definition of a Business (Amendments) 01 January 2020

IFRS 3 – Business Combinations: Previously held interests in a joint operation 01 January 2019

IFRS 4 – Insurance Contracts: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendments) 01 July 2019

IFRS 9 – Prepayment Features with Negative Compensation (Amendments) 01 July 2019

IFRS 10 – Consolidated Financial Statements and IAS 28 Investment in Associates and Joint Ventures - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendment) Not yet finalized

IFRS 11 – Joint Arrangements: Previously held interests in a joint operation 01 January 2019

IFRS 16 – Leases 01 January 2019

IAS 1 & IAS 8 – Definition of Material (Amendments) 01 January 2020

IAS 12 – Income Taxes: Income tax consequences of payments on financial instruments classified as equity 01 January 2019

IAS 19 – Plan Amendment, Curtailment or Settlement (Amendments) 01 January 2019

IAS 23 – Borrowing Costs - Borrowing costs eligible for capitalization 01 January 2019

IAS 28 – Long-term Interests in Associates and Joint Ventures (Amendments) 01 January 2019

IFRIC 23 – Uncertainty over Income Tax Treatments 01 January 2019 The above standards and amendments are not expected to have any material impact on the Company’s

financial statements in the period of initial application.


In addition to the above standards and amendments, improvements to various accounting standards have also been issued by the IASB in December 2016 and December 2017. Such improvements are generally effective for accounting periods beginning on or after 01 January 2018 and 01 January 2019 respectively. The Company expects that such improvements to the standards do not have any impact on the Company’s financial statements in the period of initial application.

The International Accounting Standards Board (IASB) has also issued the revised Conceptual Framework for Financial Reporting (the Conceptual Framework) in March 2018 which is effective for annual periods beginning on or after 1 January 2020 for preparers of financial statements who develop accounting policies based on the Conceptual Framework. The revised Conceptual Framework is not a standard, and none of the concepts override those in any standard or any requirements in a standard. The purpose of the Conceptual Framework is to assist IASB in developing standards, to help preparers develop consistent accounting policies if there is no applicable standard in place and to assist all parties to understand and interpret the standards.

Further, the following new standards have been issued by IASB which are yet to be notified by the Securities and Exchange Commission of Pakistan (SECP) for the purpose of applicability in Pakistan:

IASB effective date (annual periods Standard or Interpretation beginning on or after)

IFRS 1 – First-time Adoption of International Financial Reporting Standards 01 July 2009

IFRS 14 – Regulatory Deferral Accounts 01 January 2016

IFRS 17 – Insurance Contracts 01 January 2021 The Company expects that adoption of above new standards will not have any material impact on the

Company’s financial statements in the period of initial application.


5. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 5.1 3,564,375,191 3,304,432,004 Capital work in progress (CWIP) 5.2 259,189,853 36,590,185

3,823,565,044 3,341,022,189



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9

–

468

,900

,865

–

–

– –

4

68,9

00,8

65

Bu

ilding

s on

free

hold

land

3

53,6

75,0

28

4,19

9,26

6*

–

357

,874

,294

3

62,

719,

115

8

,815

,808

–

7

1,53

4,92

3

286

,339

,371

Pl

ant a

nd m

achin

ery

2,9

48,0

71,0

50

30,

585,

993

–

3

,076

,841

,654

3

528

,322

,622

7

5,44

8,48

7

–

603

,771

,109

2

,473

,070

,545

98

,184

,611

*

El

ectri

c ins

talla

tions

1

1,70

1,90

7

2,9

13,0

32

–

14,

614,

939

10

7

,248

,744

6

75,3

54

– 7

,924

,098

6

,690

,841

Fu

rnitu

re a

nd fix

ture

s 1

8,50

4,16

8

90,

104

–

1

8,59

4,27

2

10

8,6

74,4

90

706

,181

–

9,3

80,6

71

9,2

13,6

01

O

ffice

equip

men

t 4

1,11

6,03

2

2,1

51,7

15

(1,5

99,3

82)

41,

668,

365

10

1

9,24

6,50

9

2,5

50,6

53

(908

,882

) 2

0,88

8,28

0

20,

780,

085

Ve

hicles

1

18,0

60,5

02

4,7

21,5

85

(7,4

94,4

95)

115

,287

,592

20

7

1,65

6,54

5

9,6

75,9

12

(5,4

81,5

61)

75,

850,

896

3

9,43

6,69

6

3,8

75,5

91,0

53

227

,284

,805

(9

,093

,877

) 4

,093

,781

,981

697

,868

,025

9

7,87

2,39

5

(6,3

90,4

43)

789

,349

,977

3

,304

,432

,004

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –


5.1.1 Depreciation charge for the year has been allocated as follows:


Cost of revenue 27 88,145,138 84,939,649 Administrative expenses 29 13,828,403 12,932,746

101,973,541 97,872,395 5.1.2 Freehold land costing Rs. 2.06 million is jointly owned by the Company and its associated companies

i.e. Reliance Weaving Mills Limited, Fazal Cloth Mills Limited, Amir Fine Exports (Pvt.) Limited and Fatima Fertilizer Company Limited in equal proportion. This land is utilised for the purpose of staff residence of the stated companies.


5.2 Capital work in progress (CWIP)

Buildings on freehold land 5.2.1 37,203,117 8,559,537 Plant and machinery 5.2.1 65,946,646 28,030,648 Stores and spare parts - in transit 156,040,090 –

259,189,853 36,590,185

5.2.1 Movement in capital work in progress is as follows:

Building Plant and machinery Total

2019 2018 2019 2018 2019 2018

Rupees

Opening balance 8,559,537 3,875,006 28,030,648 93,035,902 36,590,185 96,910,908

Additions during the year 28,643,580 8,883,797 224,750,817 33,179,357 253,394,397 42,063,154

Transferred to property,

plant and equipment – (4,199,266) (186,834,819) (98,184,611) (186,834,819) (102,383,877)

Closing balance 37,203,117 8,559,537 65,946,646 28,030,648 103,149,763 36,590,185

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –



6.

INTA

NG

IBLE

AS

SE

TS

2019

Cost

Amor

tizat

ion

As

at

As a

t Ra

te

As a

t Fo

r

As a

t Ne

t boo

k Pa

rticu

lars

No

te

01 O

ctob

er

Addi

tion

Disp

osal

30

Sep

tem

ber

(%)

01 O

ctbe

r th

e Di

spos

al

30 S

epte

mbe

r va

lue

as a

t

2018

20

19

20

18

year

2019

30

Septe

mber

2019

(Rup

ees)

(R

upee

s)

So

ftwar

e 6.

1 6

,499

,217

–

– 6

,499

,217

10

- 25

3

,719

,059

6

52,8

63

–

4,3

71,9

22

2,1

27,2

95

Lic

ense

6.

1 6

,530

,921

–

–

6,5

30,9

21

10 -

25

3,8

32,9

63

634

,814

–

4,4

67,7

77

2,0

63,1

44

1

3,03

0,13

8

– –

1

3,03

0,13

8

7

,552

,022

1

,287

,677

–

8,8

39,6

99

4,1

90,4

39

2018

Cost

Amor

tizat

ion

As

at

As a

t Ra

te

As a

t Fo

r

As a

t Ne

t boo

k Pa

rticu

lars

No

te

01 O

ctob

er

Addi

tion

Disp

osal

30

Sep

tem

ber

(%)

01 O

ctbe

r th

e Di

spos

al

30 S

epte

mbe

r va

lue

as a

t

2018

20

19

20

18

year

2019

30

Septe

mber

2019

(Rup

ees)

(R

upee

s)

So

ftwar

e 6.

1 6

,499

,217

-

-

6

,499

,217

10

- 25

3

,066

,196

6

52,8

63

-

3,7

19,0

59

2,7

80,1

58

Lic

ense

6.

1 6

,530

,921

-

-

6

,530

,921

10

- 25

3

,167

,686

6

65,2

77

-

3,8

32,9

63

2,6

97,9

58

1

3,03

0,13

8

-

-

13,

030,

138

6,2

33,8

82

1,3

18,1

40

-

7,5

52,0

22

5,4

78,1

16

6.1

This

repr

esen

ts o

racl

e so

lutio

ns im

plem

ente

d by

the

Com

pany

and

rela

ted

licen

se.

6.2

Am

ortiz

atio

n ch

arge

for t

he y

ear h

as b

een

allo

cate

d to

adm

inis

tratio

n ex

pens

es.

6.3

As

at y

ear e

nd, f

ully

am

ortiz

ed in

tang

ible

ass

ets

are

amou

ntin

g to

Rs.

701

,573

(201

8: 7

01,5

73).

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –

– –



7. INVESTMENT PROPERTY - at cost

Freehold land 7.1 99,330,000 99,330,000 7.1 This represents land of 21 kanals stated at cost and the land is located at Mouza Jahangirabad, Multan.

As at 19 September 2018 the fair values of this land was Rs. 131,250 thousand. The valuation has been performed by an independent accredited valuer, K. G Traders (Private) Limited, who has recognized professional qualification and recent experience in the location and category of the properties being valued. The valuation is based on comparable market transactions that consider sales of similar properties that have been transacted in open market.

7.2 The Company has no restriction on the realisability of its investment property and no contractual obligation to purchase or develop the investment properties.


8. STORES, SPARE PARTS AND LOOSE TOOLS

Stores - in hand 115,055,343 81,262,739 - in transit – 46,202,231 Spare parts 147,745,205 113,197,078 Loose tools 1,055,369 1,085,322

263,855,917 241,747,370 9. STOCK-IN-TRADE

Sugar 2,025,038,148 1,804,930,000 Molasses 7,421 192,304,000 Bagasse 18,238,799 141,335,000

2,043,284,368 2,138,569,000 Work in process - Sugar 1,152,440 1,059,000 - Molasses 59,064 27,000

1,211,504 1,086,000

2,044,495,872 2,139,655,000 10. TRADE DEBTS - unsecured

Related party 10.1 320,504,426 158,044,221 Others 46,237,511 565,666,834

366,741,937 723,711,055 10.1 This represents amount receivable from Fatima Energy Limited (“an associated undertaking”) against

sale of bagasse. The maximum aggregate amount outstanding during the year with respect to month end balances amounted to Rs. 321 million (2018: Rs. 158 million). The age analysis is as follows:




Upto 6 month 262,460,000 – 6 to 12 months – 14,441,148 More than 1 year 58,044,426 143,603,073

320,504,426 158,044,221

11. LOANS AND ADVANCES

Loans to associated undertakings - unsecured 11.1 891,424,314 1,049,833,121 Advances - unsecured

- to holding company 125,838,010 125,838,010 - to associated undertakings 11.2 997,584 1,312,749 Advance to employees - secured

Executives: - against salary 1,661,756 – Other employees: - against salary 11.3 3,442,860 3,808,158 Advance - unsecured

- to sugarcane growers 76,043,771 75,639,191 - to suppliers and contractors 83,248,795 77,839,192

159,292,566 153,478,383 Provision for doubtful receivables 29 (4,951,283) –

1,177,705,807 1,334,270,421 11.1 Loans to associated undertakings

Maximum aggregate Balance balance with respect to outstanding month end balances

2019 2018 2019 2018 Rupees Rupees Rupees Rupees

Fatima Energy Limited 367,461,699 301,244,138 354,385,431 301,244,138 Reliance Commodities (Private) Limited 672,092,311 712,092,311 515,945,058 712,092,311 Reliance Weaving Mills Limited 247,882,363 229,036,081 – 28,221,688 Mukhtar Agri Farm 20,790,843 13,813,443 21,093,825 8,274,984

891,424,314 1,049,833,121 11.1.1 These loan carry markup at the rate of 3 month Kibor plus 3% (2018: 3 month Kibor plus 3% ) per

annum.


11.2 Advances to associated undertakings Maximum aggregate Balance balance with respect to outstanding month end balances

2019 2018 2019 2018 Rupees Rupees Rupees Rupees

Pakarab Fertilizers Limited 16,162,594 40,826,714 605,683 917,601 Fazal Cloth Mills Limited 303,123 303,123 303,123 303,123 Fatima Trading Company (Private) Limited 257,670 92,025 – 92,025 Fatima Cement Limited 523,022 – 88,778 –

997,584 1,312,749 11.3 Advances to staff are interest free and settled against immediate salary. Any outstanding advance due

from an employee at the time of leaving the service of the Company is adjusted against final settlement of staff provident fund.


12. TRADE DEPOSITS AND SHORT TERM PREPAYMENTS

Deposits 4,100,000 6,250,000 Prepayments 6,433,198 9,428,820

10,533,198 15,678,820 13. OTHER RECEIVABLES

Insurance claim receivable 192,900 247,259 Sugar export subsidy receivable 13.1 116,500,288 536,058,128 Excise duty refundable 13.2 32,318,942 32,318,942 Others 2,101,420 1,132,524

151,113,550 569,756,853 Allowance for expected credit losses 29 (1,105,889) –

150,007,661 569,756,853 13.1 Sugar export subsidy receivable

Balance at the beginning of the year 536,058,128 116,500,288 Claimed during the year (13.1.1) 248,406,680 1,254,499,114 Received during the year (667,964,520) (834,941,274)

116,500,288 536,058,128 13.1.1 The Company, during the current year, accrued subsidy amounting to Rs. 248 million at the rate of Rs.

5.35 per kg and received subsidy amounting to Rs. 668 million (2018: accrued amounting to Rs. 1,254 million at the rate of Rs. 10.70 per kg and received subsidy amounting to Rs. 835 million).



13.2 This represents special excise duty pertaining to the period from July 2008 to March 2011 paid under the amnesty announced by the Federal Government vide S.R.O. No. 648(I)/2011 dated 25 June 2011. The Company, exercising abundant precaution, had paid this duty based on whole sale price prevailing during the period instead of fixed price as directed by the Federal Board of Revenue (FBR). The Company’s application for refund of excess duty is under process at FBR.


14. TAX REFUNDS DUE FROM THE GOVERNMENT

Income tax refundable 259,907,332 241,108,318 Sales tax receivable – 749,807

259,907,332 241,858,125 15. CASH AND BANK BALANCES

Cash in hand 307,512 227,888 Balance with banks: - Current accounts 15.1 76,426,144 7,407,295 - Saving accounts 15.2 975,936 147,065

77,402,080 7,554,360

77,709,592 7,782,248 15.1 It includes USD 209 (2018: USD 209) held in foreign currency. 15.2 Rate of profit on saving accounts ranges from 6.50% to 11.25% (2018: 3.75% to 5.50%) per annum. 2019 2018 2019 2018

Number of shares Rupees

16. SHARE CAPITAL

Authorized share capital Ordinary shares of Rs. 10 each 220,000,000 220,000,000 2,200,000,000 2,200,000,000 Issued, subscribed and paid up share capital Ordinary shares of Rs. 10 each - fully paid in cash 35,000 35,000 350,000 350,000 - allotted for consideration other than cash 210,135,898 210,135,898 2,101,358,980 2,101,358,980

210,170,898 210,170,898 2,101,708,980 2,101,708,980 16.1 The Company is fully owned subsidiary of Fatima Holding Limited.

– – – – – – – – – – – – – – – – – – – – – –– – – – – – – – – –


17.

LON

G T

ER

M F

INA

NC

ING

Fr

om b

anki

ng c

ompa

nies

- se

cure

d

Loan

Am

ount

Ba

nking

Com

panie

s No

te Lim

it Op

ening

Re

ceive

d Cu

rrent

Clos

ing

Rate

of int

erest

Repa

ymen

t Ma

turity

(R

upee

s ba

lance

portio

n ba

lance

comm

ence

ment

date

in

millio

n)

date

(Rup

ees)

Du

bai Is

lamic

Bank

17

.1

200

3

7,50

0,00

0

– (3

7,50

0,00

0)

–

3 M

onth

KIB

OR

+ 1

.10%

30

-Sep

tem

ber-2

016

30-J

une-

2020

Ba

nk Is

lami

17.2

25

0

250

,000

,000

–

(4

6,87

5,00

0)

203

,125

,000

3

Mon

th K

IBO

R +

0.7

0%

21-M

arch

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0 21

-Dec

embe

r-202

3

Na

tiona

l Ban

k of P

akist

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17.3

12

0

–

120

,000

,000

(1

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0)

105

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3

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th K

IBO

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0%

02-A

pril-2

020

02-J

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024

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tiona

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k of P

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0

–

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–

2

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00

3 M

onth

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02

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uary

-202

1 02

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ober

-202

4

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ited

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0

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287

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6

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00

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01,8

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.1

This

faci

lity

has

been

ava

iled

for r

e-pr

ofilin

g an

d fo

r cap

ital e

xpen

ditu

res.

The

teno

r of l

oan

is 4

yea

rs w

ithou

t any

gra

ce p

erio

d an

d th

e pr

inci

pal i

s to

be

repa

id in

six

teen

qua

rterly

inst

allm

ents

, sec

ured

aga

inst

firs

t par

i pas

su c

harg

e am

ount

ing

to R

s. 2

67 m

illio

n ov

er a

ll pr

esen

t and

futu

re fi

xed

asse

ts o

f th

e C

ompa

ny in

clus

ive

of 2

5% m

argi

n an

d pe

rson

al g

uara

ntee

s of

all

Dire

ctor

s of

the

Com

pany

. 17

.2

This

faci

lity

has

been

ava

iled

for

enca

shm

ent o

f Sta

nd b

y le

tter

of c

redi

t (S

BLC

) on

beh

alf o

f Fat

ima

Ene

rgy

Lim

ited

(FE

L). T

he te

nor

of lo

an is

5 y

ears

w

ith 1

yea

r gra

ce p

erio

d an

d th

e pr

inci

pal i

s to

be

repa

id in

six

teen

qua

rterly

inst

allm

ents

, sec

ured

aga

inst

firs

t par

i pas

su c

harg

e ov

er fi

xed

asse

ts o

f the

C

ompa

ny a

mou

ntin

g to

Rs.

667

mill

ion

incl

usiv

e of

25%

mar

gin.

17

.3

This

faci

lity

has

been

ava

iled

for i

mpo

rt of

par

ts o

f pla

nt a

nd m

achi

nery

. The

teno

r of l

oan

is 5

yea

rs w

ith 1

yea

r gra

ce p

erio

d an

d th

e pr

inci

pal i

s to

be

repa

id

in s

ixte

en q

uarte

rly in

stal

lmen

ts, s

ecur

ed a

gain

st fi

rst p

ari p

assu

cha

rge

amou

ntin

g to

Rs.

160

mill

ion

on p

lant

and

mac

hine

ry o

f the

Com

pany

. 17

.4

This

faci

lity

has

been

ava

iled

for i

mpo

rt of

pla

nt a

nd m

achi

nery

. The

teno

r of l

oan

is 5

yea

rs w

ith 1

yea

r gra

ce p

erio

d an

d th

e pr

inci

pal i

s to

be

repa

id in

si

xtee

n qu

arte

rly in

stal

lmen

ts, s

ecur

ed a

gain

st fi

rst p

ari p

assu

cha

rge

amou

ntin

g to

Rs.

334

mill

ion

on fi

xed

asse

ts o

f the

Com

pany

. 17

.5

This

faci

lity

has

been

ava

iled

for r

e-pr

ofilin

g an

d fo

r cap

ital e

xpen

ditu

re w

ith li

mit

amou

ntin

g to

Rs.

200

mill

ion

and

Rs.

100

mill

ion

resp

ectiv

ely.

The

teno

r of

loan

is 5

yea

rs w

ith 1

yea

r gr

ace

perio

d an

d th

e pr

inci

pal i

s to

be

repa

id in

six

teen

qua

rterly

inst

allm

ents

, se

cure

d ag

ains

t fir

st p

ari p

assu

cha

rge

amou

ntin

g to

Rs.

400

mill

ion

over

fixe

d as

sets

of t

he C

ompa

ny.

17

.6

All

char

ges

are

regi

ster

ed w

ith S

ecur

ity E

xcha

nge

Com

mis

sion

of P

akis

tan

(SE

CP

).

– –

– –

– –

– –

– –

– –

– –

––

– –

– –

– –

– –

– –

– –

– –




18. LONG TERM DEPOSITS - unsecured

Interest free deposits from employees 18.1 3,858,840 264,900 Less: current portion 24 (292,550) (235,500)

3,566,290 29,400 18.1 It represents the deposits from employees in respect of vehicles and is adjusted against the cost of

vehicle at the time of transfer of vehicle to employee. The management believes that time value of money is insignificant at financial statement level hence not been accounted for.


19. EMPLOYEE BENEFITS - GRATUITY

Opening balances 18,766,965 18,367,580 Provision for the year 16,329,802 14,606,519 Payment during the year (13,646,995) (14,207,134)

21,449,772 18,766,965 Less: current portion 24 (7,309,569) (6,418,334)

14,140,203 12,348,631

20. DEFERRED TAXATION

Taxable temporary difference: - accelerated tax depreciation 318,627,259 312,390,969 Deductible temporary difference: - minimum tax recoverable against tax charge in future years (140,402,042) (90,693,056)

178,225,217 221,697,913

Movement in deferred taxation is as follows:

2019

Charged to Opening statement of Closing profit or loss

Rupees

Taxable temporary difference

- accelerated tax depreciation 312,390,969 6,236,290 318,627,259 Deductible temporary difference

- minimum tax recoverable against tax charge in future years (90,693,056) (49,708,986) (140,402,042)

221,697,913 (43,472,696) 178,225,217

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –


2018

Charged to Opening statement of Closing profit or loss

Rupees

Taxable temporary difference:

- accelerated tax depreciation 441,123,862 (128,732,893) 312,390,969 Deductible temporary difference

- minimum tax recoverable against tax charge in future years (192,646,322) 101,953,266 (90,693,056)

248,477,540 (26,779,627) 221,697,913


21. TRADE AND OTHER PAYABLES

Creditors - related parties 21.1 75,395,499 70,114,579 - others 100,699,067 116,696,005 Loans from associated companies 21.2 14,623,810 4,837,162 Contract liabilities 22,312,390 17,420,087 Accrued liabilities 51,127,264 44,728,580 Due to statutory authorities 120,625,055 4,446,226 Workers’ Profit Participation Fund 21.3 41,559,757 17,505,449 Other payables 16,890,173 7,843,730

443,233,015 283,591,818 21.1 Creditors - related parties

Fatima Energy Limited 37,254,215 36,287,649 Reliance Weaving Mills Limited 14,603,470 118,420 Pakarab Fertilizers Limited 11,120,395 11,430,814 Fatima Fertilizer Company Limited 7,793,004 8,168,833 Fatima Packaging Limited 3,139,415 12,623,863 Reliance Commodities (Private) Limited 1,485,000 1,485,000

75,395,499 70,114,579 21.2 Loans from associated companies

Reliance Weaving Mills Limited 14,623,810 – Reliance Cotton (Private) Limited – 2,800,000 Reliance Fabrics Limited – 1,250,000 Fatima Fibers Limited – 787,162

14,623,810 4,837,162

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –




21.3 Workers’ Profit Participation Fund

Opening balance 17,505,449 11,747,252 Provision for the year 30 21,406,060 4,574,505 Interest for the year 32 2,648,248 1,183,692

Closing balance 41,559,757 17,505,449 21.3.1 The Company retains Workers’ Profit Participation Fund on its business operations till the date of allocation

to workers. Interest is paid at prescribed rate under the Companies Profit (Workers’ Participation) Act, 1968 on funds utilized by the Company till the date of allocation to workers.

2019 2018

Note Rupees Rupees

22. ACCRUED MARK-UP AND PROFIT

Mark-up accrued on

- term finances 11,319,781 – - short term borrowings 118,227,735 48,647,388 Profit payable on

- shirkat-ul-milk finance 15,349 22,582 - musharakah finances 5,330,515 –

134,893,380 48,669,970 23. SHORT TERM FINANCING

From banking companies - secured

- Short term cash finance 23.1 1,533,360,302 3,437,086,166 - Short term running finance 23.2 929,013,633 1,089,442,407 - Short term istisna finance 23.3 402,000,000 –

23.4 2,864,373,935 4,526,528,573 From banking companies - unsecured

- Bank overdraft 11,260,881 4,532,671

2,875,634,816 4,531,061,244

23.1 Short term cash Finance Limit Pricing

Sanctioned Limit amounting to At the rate of 1 month KIBOR to 3 months KIBOR Rs. 4,020 million. plus 0.45% to 1.00% (2018: 1 month KIBOR to 3 Unavailed limit amounting to months KIBOR plus 0.35% to 0.75%) p.a. Rs. 2,487 million.

23.2 Short term running finance Limit Pricing

Sanctioned Limit amounting to At the rate of 1 month KIBOR to 3 months KIBOR Rs. 1,042 million. plus 0. 65% to 1.50% (2018: 1 month KIBOR to 3 Unavailed limit amounting to. months KIBOR plus 0.65% to 1.50% ) p.a. Rs. 113 million


23.3 Short term istisna finance Limit Pricing

Sanctioned Limit amounting to At the rate of 1 month KIBOR to 3 months KIBOR Rs. 1,400 million. plus 0.50% to 1.00% (2018: 1 month KIBOR to 3 Unavailed limit amounting to months KIBOR plus 0.40% to 1.00% ) p.a. Rs. 998 million.

23.4 These facilities are secured against first exclusive pledge charge amounting to Rs. 6,572 million, first pari passu charge over current assets amounting to Rs. 1,256 million and ranking charge amounting to Rs. 1,067 million and personal guarantee of all directors of the Company.


24. CURRENT PORTION OF LONG TERM LIABILITIES

Current portion of long term financing 17 155,625,000 50,000,000 Current portion of employee benefits - gratuity 19 7,309,569 6,418,334 Current portion of long term deposits 18 292,550 235,500

163,227,119 56,653,834

25. CONTINGENCIES AND COMMITMENTS

25.1 Contingencies

i) The Company received a notice from Trustees of Karachi Port Trust (KPT) on 19 February 2004, raising a demand of Rs. 3.86 million with 14% mark up in respect of storage and demurrage charges. The Company preferred filling a Constitutional Petition in the Sindh High Court on 3 March 2004. However, the matter was decided against the Company by Sindh High Court. The Company preferred appeal before Supreme Court of Pakistan, which remanded the case back to Sindh High Court. The matter is pending for decision by the Sindh High Court. Being prudent, the Company has recognise the provision of storage and demurrage charges in these financial statement. However, no provision has been recorded in the financial statements against liquidation damages.

ii) The Company received a notice from Environmental Protection Agency (EPA) on 12 April 2019 regarding violation of environmental laws which was, after hearings, decided against the Company vide an order dated 21 August 2019. The Company has filed an appeal before the Punjab Environmental Tribunal, Lahore (the “Tribunal”) on the grounds that the Company has been compliant with all applicable environmental laws. The matter is pending for decision by the Tribunal. Based on the management assessment of favorable outcome, no provision has been recorded in this regard.

iii) The Company received a notice from Federal Board of Revenue (FBR) on 29 December 2015 regarding non-compliance of section 236G (Advance tax on sales to distributors, dealers and wholesalers) and 236H (Advance tax on sales to retailers) of Income Tax Ordinance 2001, raising a demand of tax amounting to Rs. 10.81 million. The Company has filed an appeal before the Lahore High Court on the grounds that the Company has been compliant with Income Tax Ordinance 2001. The matter is pending for decision by the Lahore High Court. Based on the management assessment of favorable outcome, no provision has been recorded in this regard.



iv) The Company received a notice from Deputy Commissioner Inland Revenue on 31 March 2010 raising a demand of Rs. 40.95 million as tax on specie dividend . The Company has filed an appeal before the Lahore High Court on the grounds that clause 103B relating to specie dividend is a beneficial explanatory clause and has retrospective effect at the time of receipt of specie dividend and hence the Company is not liable to pay tax. However, the matter was decided against the Company in Lahore High Court. The Company preferred an appeal before Supreme Court of Pakistan and the matter is pending for decision by the Supreme Court of Pakistan. Based on the management assessment of favorable outcome, no provision is recorded in the financial statements in this regards.

25.2 Commitments

i) Commitments for irrevocable letters of credit outstanding as at 30 September 2019 amounting to Rs. 31.53 million (2018: Rs. 29.91 million).

ii) Guarantees issued by various commercial banks on behalf of the Company in favor of the following

counterparties:


Sui Northern Gas Pipelines Limited 43,500,000 43,500,000 Trustees of Karachi Port Trust 4,100,000 4,100,000

47,600,000 47,600,000 iii) A commercial bank, on behalf of the Company, has issued stand-by letters of credit (SBLCs) aggregating

to Rs. 48 million (2018: Rs. 48 million) in favor of lenders of Fatima Energy Limited (FEL - an associated company) guaranteeing equity participation of the Holding Company in FEL. SBLC amounts have been reduced on pro-rata basis as the Holding Company has injected the required equity in FEL. These SBLCs are valid up to December, 2019.


26. REVENUE FROM CONTRACTS WITH CUSTOMERS

Export sales 26.1 3,463,404,380 6,116,103,364 Local sales 26.1 3,750,313,694 2,731,155,576

7,213,718,074 8,847,258,940 Less: sales tax (447,186,303) (295,856,962)

6,766,531,771 8,551,401,978 26.1 Set out below the disaggregation of the Company’s revenue from contracts with customer.



Segments

Export Sales:

Sugar 26.1.1 3,234,989,648 5,907,909,239 Molasses 228,414,732 208,194,125

3,463,404,380 6,116,103,364 Local Sales:

Sugar 3,020,243,653 2,527,620,246 Molasses 389,334,122 100,000,000 Bagasse 340,735,919 103,535,330

3,750,313,694 2,731,155,576 Less: Sales tax (447,186,303) (295,856,962)

3,303,127,391 2,435,298,614

Total revenue from contracts with customers 6,766,531,771 8,551,401,978 Geographic markets:

Pakistan 3,551,534,071 3,689,797,728 Afghanistan 1,586,934,690 3,728,607,727 China 1,058,090,204 – Tajikistan 341,558,066 27,042,502 Europe 228,414,740 50,697,400 Singapore – 202,694,362 Uzbekistan – 150,549,729 United Kingdom – 700,229,766 North America – 1,782,764

Total revenue from contracts with customers 6,766,531,771 8,551,401,978

Timing of revenue recognition

Goods transferred at a point in time 6,766,531,771 8,551,401,978 26.1.1 This includes sugar export subsidy as explained in Note 13.1.




27. COST OF REVENUE

Raw materials consumed 27.1 4,708,256,061 6,182,668,739 Salaries, wages and other benefits 27.2 264,610,061 296,816,000 Stores, spare parts and loose tools consumed 171,019,954 144,543,167 Depreciation 5.1.1 88,145,138 84,939,649 Packing materials consumed 67,556,648 73,868,477 Fuel and power 44,854,765 53,732,394 Repair and maintenance 29,449,436 16,151,225 Insurance 16,768,635 14,442,325 Vehicles’ running and maintenance 9,737,186 7,979,655 Travelling 1,842,538 2,191,378 Miscellaneous expenses 3,140,658 3,764,456

5,405,381,080 6,881,097,465 Work-in-process Opening stock 1,086,000 1,046,000 Closing stock 9 (1,211,504) (1,086,000)

(125,504) (40,000)

Cost of goods manufactured 5,405,255,576 6,881,057,465 Finished goods Opening stock 2,138,569,000 3,063,709,000 Closing stock 9 (2,043,284,368) (2,138,569,000)

95,284,632 925,140,000

5,500,540,208 7,806,197,465 27.1 Raw materials consumed

Opening stock – – Add: Purchased during the year 4,708,256,061 6,182,668,739

4,708,256,061 6,182,668,739 Closing stock – –

4,708,256,061 6,182,668,739 27.2 Salaries, wages and other benefits include Rs. 13.01 million (2018: Rs. 11.98 million) in respect of

provision of gratuity.


28. DISTRIBUTION COST

Loading, handling and freight 81,790,353 113,375,036 Regulatory duty on export of molasses 34,218,093 31,099,725 Export development surcharge 8,099,239 13,530,603 Insurance 151,132 100,758

124,258,817 158,106,122



29. ADMINISTRATIVE EXPENSES

Salaries, wages and other benefits 29.1 87,847,218 82,559,598 Directors’ travelling and other expenses 43,693,411 39,267,598 Depreciation 5.1.1 13,828,403 12,932,746 Utilities 9,417,175 7,384,382 Provision for doubtful receivables 11 4,951,283 – Vehicles’ running and maintenance 5,694,032 6,490,862 Rent, rates and taxes 4,557,899 5,228,746 Fees and subscription 4,087,902 3,693,208 Repair and maintenance 4,010,943 7,038,652 Travelling and conveyance 3,506,572 2,735,924 Communication 3,259,481 3,174,319 Entertainment charges 1,965,495 1,838,204 Insurance 1,819,604 1,858,700 Amortization 6 1,287,677 1,318,140 Legal and professional charges 1,197,222 3,692,800 Allowance for expected credit losses 13 1,105,889 – Printing and stationery 1,031,761 1,698,639 Auditors’ remuneration 29.2 1,000,000 952,000 Miscellaneous 87,999 14,592

194,349,966 181,879,110 29.1 Salaries, wages and other benefits include Rs. 3.32 million (2018: Rs. 2.63 million) in respect provision

for gratuity.


29.2 Auditors’ remuneration:

Statutory audit 900,000 900,000 Out of pocket expenses 100,000 52,000

1,000,000 952,000

30. OTHER OPERATING EXPENSES

Donations 30.1 53,335,060 44,132,007 Workers’ Profit Participation Fund 21.3 21,406,060 4,574,505 Loss on sale of operating fixed assets – 107,595

74,741,120 48,814,107



30.1 The details of the donations exceeding Rs. 1 million to a single party is as follows:


Mian Mukhtar A. Sheikh Trust 30.1.1 42,400,000 33,600,000 Fatima Model School Sanawan 30.1.2 1,723,274 1,536,826 Other donations not exceeding Rs. 1 million per donee 9,211,786 8,995,181

53,335,060 44,132,007 30.1.1 Mian Mukhtar A. Sheikh Trust is an associated undertaking of the Company. The Executive Directors of

the Company are the Trustees of the Trust and the Trust is recognized from Income Tax Authorities under section 2(36) of the Income Tax Ordinance, 2001.

30.1.2 Fatima Model School Sanawan is an associated undertaking of the Company. It is being managed and

operated by the Directors of the Company.


31. OTHER INCOME

Income from financial assets 31.1 155,252,990 37,042,217 Income from non-financial assets 31.2 28,950,307 17,475,847

184,203,297 54,518,064 31.1 Income from financial assets

Mark on loan from associates 90,842,850 35,837,101 Net exchange gain 63,699,271 - Return on bank deposits 710,869 230,116 Payable balances written-off – 975,000

155,252,990 37,042,217 31.2 Income from non-financial assets

Scrap sales - net of sales tax 16,986,603 6,424,156 Sale of press mud - net of sales tax 8,724,642 10,225,055 Gain on sale of operating fixed assets 1,158,699 – Others 2,080,363 826,636

28,950,307 17,475,847



32. FINANCE COSTS

Mark up on:

- term finances 35,924,630 847,974 - Short term borrowings 560,145,230 298,680,771

596,069,860 299,528,745 Profit on:

- shirkat-ul-milk finance 7,879,993 8,894,849 - musharakah finances 35,276,619 1,230,789

43,156,612 10,125,638 Interest on Workers’ Profit Participation Fund 21.3 2,648,248 1,183,692 Commission on bank guarantees 328,375 457,375 Exchange loss - net – 3,004,454 Bank and other charges 7,215,855 2,995,227

649,418,950 317,295,131

33. TAXATION

Income tax:

Current 81,858,963 66,388,330 Prior year adjustment (665,543) –

81,193,420 66,388,330 Deferred tax:

Relating to origination and reversal of temporary differences (43,472,696) 46,741,017 Relating to change in tax rate – (73,520,644)

(43,472,696) (26,779,627)

37,720,724 39,608,703 33.1 The Company has not recognized deferred tax asset on available tax losses as the Company expects

that future taxable profits will not be available to adjust these losses. Expiry of tax losses carried forward is as follows:

2019 2018 Expiry tax year Nature Rupees Rupees

2024 Tax loss 196,690,951 328,545,481 No Expiry Depreciation Loss 43,584,251 43,584,251

33.2 The numerical reconciliation between the average tax rate and applicable tax rate has not been

presented as the total income of the Company attracted minimum tax under section 113 of the Income Tax Ordinance, 2001.



2019 2018

34. EARNINGS PER SHARE - BASIC AND DILUTED

Profit attributable to ordinary shareholders (Rupees) 369,705,283 54,019,404 Weighted average number of ordinary shares outstanding during the year (Numbers) 210,170,898 210,170,898 Earnings per share - basic and diluted (Rupees) 1.76 0.26

35. NUMBER OF EMPLOYEES

Number of employees at the end of the year 621 615 Average number of employees during the year 723 828 36. REMUNERATION OF CHIEF EXECUTIVE OFFICER, DIRECTORS AND EXECUTIVES

The aggregate amount charged in these financial statements for remuneration including all benefits to Chief Executive Officer, Directors and Executives of the Company is as follows:

Chief executive Directors Executive officer

2019 2018 2019 2018 2019 2018

(Rupees)

Managerial remuneration 27,960,480 30,087,444 – – 14,459,383 5,505,342 Bonus and leave encashment 3,902,817 4,099,320 – – 2,202,040 1,383,648 Retirement benefits – – – – 1,562,284 684,744 Utilities 5,389,076 3,222,935 2,400,775 1,681,152 – – Club subscription 64,950 65,967 64,950 63,950 64,950 65,805 Traveling 9,971,338 9,978,308 25,426,310 21,545,685 – – Other benefits 8,295,763 7,743,605 – – – –

55,584,424 55,197,579 27,892,035 23,290,787 18,288,657 7,639,539

Number of persons 1 1 6 6 8 4 36.1 Chief Executive Officer, Directors and Executives of the Company are provided with Company maintained

vehicles. 36.2 No remuneration was paid to non-executive Directors of the Company.

– – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –


37.

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38. FINANCIAL RISK MANAGEMENT

Financial instruments comprises of long term financing, trade and other payables, accrued mark-up, short term borrowings, long term deposits, trade debts, trade deposits, other receivables, short term investment and cash and bank balances.

The Company has exposure to the following risks from its use of financial instruments: - Market risk - Credit risk - Liquidity risk The Board of Directors has the overall responsibility for the establishment and oversight of Company’s risk

management framework. The Board is also responsible for developing and monitoring the Company’s risk management policies.

This note presents information about the Company’s exposure to each of the above risks, the Company’s

objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. The Company’s risk management policies are established to identify and analyze the risks faced by the Company,

to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to react to changes in market conditions and the Company’s activities. a) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

i) Currency risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. Currency risk arises mainly from future commercial transactions or receivables and payables that exist due to transactions in foreign currencies.

Following is the gross exposure classified into separate foreign currencies:

USD Euro GBP Kr

2019

Cash at bank 209 – – –

Net exposure 209 – – –

USD Euro GBP Kr

2018

Cash at bank 209 – – –

Net exposure 209 – – –


Significant exchange rates applied as at year end were as follows:

Spot rate as at 30 September 2019 2018

Rupees per

USD 156.70 124.08 Sensitivity analysis

If the functional currency, at reporting date, had weakened / strengthened by 5% against the USD, Euro, GBP and KR with all other variables held constant, as a result of exchange gains / losses on translation of foreign exchange denominated financial instruments, the impact on profit after taxation for the year would have been as following:

Increase / Effect on decrease in profit before exchange rates tax (USD)

Rupees Rupees

2019

Pak Rupee +5% 1,638 Pak Rupee -5% (1,638) 2018

Pak Rupee +5% 1,297 Pak Rupee -5% (1,297) Currency risk sensitivity to foreign exchange movements has been calculated on a symmetric basis. In

management’s opinion, the sensitivity analysis is unrepresentative of inherent currency risk as the year end exposure does not reflect the exposure during the year.

ii) Equity price risk

Equity price risk represents the risk that the fair value of equity investments will fluctuate because of changes in levels of indices, whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instrument traded in the market. The Company is exposed to equity price risk as the Company holds investments classified as fair value through profit or loss. The Company mitigates its risk against the exposure by focusing on short-term investment and maintaining adequate bank balances.

iii) Interest rate risk

This represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Company has no significant long-term interest bearing assets. The Company’s interest rate risk

arises from long term financing, short term borrowings and bank deposits. Borrowings obtained at variable rates expose the Company to cash flow interest rate risk. Borrowings obtained at fixed rate expose the Company to fair value interest rate risk.



At the statement of financial position date, the interest rate profile of the Company’s interest bearing financial instruments was:


Floating rate instruments:

Bank balances - saving accounts 975,936 147,065 Financial liabilities

Long term financing 801,875,000 287,500,000 Short term financing 2,864,373,935 4,526,528,573

3,666,248,935 4,814,028,573 Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest rate at the statement of financial position date would not affect profit or loss of the Company.

Cash flow sensitivity analysis for variable rate instruments

If interest rates at the year end date, fluctuates by 1% higher / lower with all other variables held constant, profit after taxation for the year would have been changed as following:

Changes Effect on interest rate profit before tax

Rupees Rupees

Bank balances - saving accounts 2019 +1% 9,759.36 -1% (9,759.36) 2018 +1% 1,470.65 -1% (1,470.65) Long term financing 2019 +1% 8,018,750 -1% (8,018,750) 2018 +1% 2,875,000 -1% (2,875,000) Short term borrowings 2019 +1% 28,643,739 -1% (28,643,739) 2018 +1% 45,265,286 -1% (45,265,286)


This analysis is prepared assuming that the amounts of financial instruments outstanding at statement of financial position date were outstanding for the whole year.

b) Credit risk

Credit risk is the risk which arises with the possibility that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. The Company attempts to control credit risk by monitoring credit exposures, limiting transactions with specific counterparties and continually assessing the creditworthiness of counterparties. The Company does not believe it is exposed to major concentration of credit risk, however to manage any possible exposure the Company applies approved credit limits to its customers.

The management monitors and limits the Company’s exposure to credit risk through monitoring of client’s credit exposure review and conservative estimates of allowance for expected credit losses (ECL), if any, and through the prudent use of collateral policy.

The Company is exposed to credit risk on trade debts, deposits, other receivables, short term investments and bank balances. The Company seeks to minimize the credit risk exposure through having exposures only to customers considered credit worthy and obtaining securities where applicable. The maximum exposure to credit risk at the reporting date is:


Loans 891,424,314 1,049,833,121 Trade debts - unsecured 366,741,937 723,711,055 Short term deposits 4,100,000 6,250,000 Long term deposits 12,792,836 12,792,836 Other receivables 2,294,320 1,379,783 Bank balances 77,402,080 7,554,360

1,354,755,487 1,801,521,155 Credit risk related to trade debts is managed by established procedures and controls relating to

customers credit risk management. Outstanding receivables are regularly monitored. The maximum credit risk exposure at reporting date is carrying value of financial assets stated above. The maximum credit risk exposure at reporting date is carrying value of financial assets stated above.

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external credit ratings (If available) or to historical information about counterparty default rate.



Rating 2019 2018

Bank Short term Long term Agency (Rupees)

Al Baraka Bank Limited A1 A PACRA 26,079 36,789 Allied Bank Limited A1+ AAA PACRA 4,038,068 158,474 Askari Bank Limited A1+ AA+ PACRA 61,316 9,056 Bank Alfalah Limited A1+ AA+ PACRA 243,954 229,506 Bank Islami Pakistan Limited A1 A+ PACRA 266,654 20,139 Dubai Islamic Bank Limited A-1+ AA JCR-VIS 64,245 70,823 Faysal Bank Limited A1+ AA PACRA 571,866 1,228 Habib Bank Limited A-1+ AAA JCR-VIS 4,612,735 1,692,288 Habib Metropolitan Bank Limited A1+ AA+ PACRA 21,991 21,991 JS Bank Limited A1+ AA- PACRA 14,499 14,499 Meezan Bank Limited A-1+ AA+ JCR-VIS 13,373,177 1,256,439 MCB Bank Limited A1+ AAA PACRA 114,633 115,374 National Bank of Pakistan A1+ AAA PACRA 12,065 1,346 NBP Islamic Bank A1+ AAA PACRA 50,925,614 422,519 Silk Bank Limited A-2 A- JCR-VIS 33,401 33,401 Soneri Bank Limited A1+ AA- PACRA 2,862,070 2,624,156 Summit Bank Limited Suspended Suspended JCR-VIS 31,431 29,903 The Bank Of Punjab A1+ AA PACRA 22,754 86,333 The Bank of Khyber A1 A PACRA 25,976 20,022 United Bank Limited A-1+ AAA JCR-VIS 79,552 710,074

77,402,080 7,554,360 Due to the Company’s long standing business relationships with these counterparties and after giving

due consideration to their strong financial standing, the management does not expect non-performance by these counterparties on their obligations to the Company. Accordingly credit risk is minimal.

c) Concentration risk

Concentration of credit risk exists when the changes in economic or industry factors similarly affect groups of counterparties whose aggregate credit exposure is significant in relation to the Company’s total credit exposure. The Company’s portfolio of financial assets is broadly diversified and all other transactions are entered into with credit-worthy counterparties there-by mitigating any significant concentrations of credit risk.


Energy 320,504,426 158,044,221 Paper & board – 7,500 Dealers 46,237,511 565,659,334 Bank 77,402,080 7,554,360 Other 910,611,470 1,070,255,740

1,354,755,487 1,801,521,155


(d) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The table below analysis the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Carrying Contractual Less than Between Over 5 amount cash flows 1 year 1 and 5 years years

(Rupees)

At 30 September 2019

Long term financing 957,500,000 957,500,000 155,625,000 801,875,000 – Employees benefits - gratuity 21,449,772 21,449,772 7,309,569 14,140,203 – Trade and other payables 443,233,015 443,233,015 443,233,015 – – Short term bank borrowings 2,875,634,816 2,875,634,816 2,875,634,816 – – Accrued mark-up on loans 134,893,380 134,893,380 134,893,380 – –

4,432,710,983 4,432,710,983 3,616,695,780 816,015,203 –

Commitments – – – – –

Carrying Contractual Less than Between Over 5 amount cash flows 1 year 1 and 5 years years

(Rupees)

At 30 September 2018

Long term financing 337,500,000 337,500,000 50,000,000 287,500,000 – Employees benefits - gratuity 18,766,965 18,766,965 6,418,334 12,348,631 – Trade and other payables 283,591,818 283,591,818 283,591,818 – – Short term bank borrowings 4,531,061,244 4,531,061,244 4,531,061,244 – – Accrued mark-up on loans 48,669,970 48,669,970 48,669,970 – –

5,219,589,997 5,219,589,997 4,919,741,366 299,848,631 –

Commitments – – – – – The contractual cash flows relating to the above financial liabilities have been determined on the basis

of mark-up rates effective as at 30 September. The rates of mark up have been disclosed in respective notes to the financial statements. Management believes the liquidity risk to be low.

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38.1 Financial instruments by categories

Assets as per statement of financial position:

At amortized cost

Loans 891,424,314 1,049,833,121 Deposits 16,892,836 19,042,836 Trade debts 366,741,937 723,711,055 Other receivables 2,294,320 1,379,783 Bank balances 77,402,080 7,554,360

1,354,755,487 1,801,521,155 Liabilities as per statement of financial position:

Long term financing 957,500,000 337,500,000 Employees benefits - gratuity 21,449,772 18,766,965 Trade and other payables 443,233,015 283,591,818 Short term borrowings 2,875,634,816 4,531,061,244 Accrued mark-up on loans 134,893,380 48,669,970

4,432,710,983 5,219,589,997 38.2 Capital risk management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends to be paid to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry and the requirements of the lenders, the Company monitors

the capital structure on the basis of gearing ratio. This ratio is calculated as borrowings divided by total capital employed. Borrowings represent long term financing, liabilities against assets subject to finance lease and short term borrowings obtained by the Company. Total capital employed includes ‘total equity’ plus ‘borrowings’.


Long term financing 16 801,875,000 287,500,000 Short term borrowing 23 2,875,634,816 4,531,061,244

Total debt 3,677,509,816 4,818,561,244 Cash and bank balances 15 77,709,592 7,782,248

Net debt 3,755,219,408 4,826,343,492

Share capital 16 2,101,708,980 2,101,708,980 Reserves 1,492,472,652 1,122,767,369

Total Equity 3,594,181,632 3,224,476,349

Total capital employed 7,349,401,039 8,050,819,841

Gearing ratio 51% 60%


39. FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

Fair value is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying values of all financial assets and liabilities reflected in the financial statements are stated at cost as the carrying amounts are a reasonable approximation of fair value.

Financial assets and financial liabilities are not measured at fair value as the carrying amounts are a reasonable

approximation of fair value. Due to the short-term nature, carrying amounts of certain financial assets and financial liabilities are considered to be the same as their fair value. For the majority of the non-current financial assets and liabilities, the fair values are also not significantly different to their carrying amounts.

Valuation techniques used to determine fair values

Specific valuation technique used to value financial instruments was the use of quoted market prices. 40. FAIR VALUES OF NON-FINANCIAL ASSETS

Judgements and estimates are used in determining the fair values of the non-financial assets that are recognized and measured at fair value in these financial statements. To provide an indication about the reliability of the inputs used in determining fair value, there are three levels of classification of non-financial assets but the Company used cost for determination of value of assets.

Valuation processes

The Company engages external, independent and qualified valuer to determine the fair value of the Company’s freehold land. As at 19 September 2018, the fair value of freehold land has been determined by KG Traders (Private) Limited.

Changes in fair values are analyzed at each reporting date during the annual valuation discussion between the

Chief Financial Officer and the valuers. As part of this discussion the team presents a report that explains the reason for the fair value movements.

2019 2018

41. PLANT CAPACITY AND ACTUAL PRODUCTION

Crushing capacity (based on 150 days) (M. tons) 1,575,000 1,575,000

Sugar production based on 96 days (2018: 148 days) (M. tons) 107,116 146,798 Lower sugar production is due to less availability of sugar cane. 42. DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorized for issue on 02 January 2020 by the Board of Directors of the Company.

43. CORRESPONDING FIGURES

Corresponding figures have been rearranged or reclassified, wherever necessary, for the purposes of comparison, however, no significant rearrangement / reclassification have been made in these financial statements.




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