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Success is a Journey

not a Destination

annual report 2016

m e h r a n s u g a r . c om

Success is a Journey
This year’s annual report is structured in a way that it
gives the reader a conceivable view of the
Company’s future strategic plans and outlines our
not a
Destination continual journey with qualitative and quantitative
milestones.

At Mehran Sugar we are always looking at new possibilities as well as
opportunities with the intention of continual growth. Through this constant
movement towards progress, we hope to discover new horizons. We are cognisant
of the fact that success is not a destination but a continual journey. This concept
lies at the core of our theme for this year’s annual report.

Key Figures

Turnover (Rs.) Sucrose Recovery Sugar Production(M.Tons) Molasses production(M. Tons)
7,674,145,009 11.31% 106,400 38,604

Profit before tax (Rs.) Earnings per share (Rs.) Dividend declared Market Capitalization (Rs.)
668,006,756 16.91 65% 5,767,225,662

Vision Mission
We remain focused on being one of Pakistan’s leading and largest sugar producers. A modern sugar mill must utilise its raw materials efficiently to produce sugar, ethanol and power at the Our
mostMission
competitive
remains
pricing.
to ensure
Our vision
we canremains
provideto
sustainable
be the most
results
economic
and

Basic Purpose:

The basic purpose of our Enterprise is to perpetuate as a Public Limited Company
engaged in manufacturing and marketing white refined cane sugar and brown sugar while utilising its by-products such as molasse

“Perfection is not attainable,
but if we chase perfection
we can catch excellence”
Vince Lombardi

Energy Efficiency & Steam Conservation

To ensure our Journey towards success, we aim to become one of the most energy
efficient sugar mills in Pakistan. In a modern sugar mill energy conservation is the key to
success since every ton of steam saved means an additional unit of electricity sold to the

We at Mehran are focused on this so that we can play our part in generating renewable and indigenous electricity and help eliminating the energy shortage of Pakistan. .national grid.

schools i. safety and environmental impacts by reducing wastes for them. to make sure we can create a establishing a fly ash discharge system and a conducive state of the art Effluent Treatment Plant (ETP). our growers and assist them stakeholders as they are part and Education in the rural sector is direly needed and we continue in whatever way possible within parcel of our quest in enhancing our to play a strong role in ensuring to fulfill this need. 2 Binding Associations 3 Empowering Growers 6 Providing Education We maintain a long-term We live by our principle of corporate social responsibility and We are committed to facilitate working relationship with relevant make a difference through our social development programs. DMS. business opportunities. TCF I and TCF II have combined enrolment of more than 1. We pay dividends on regular environment. basis to our shareholders and we intend to HSE department and continually strive Mehran is proud to be one of the pioneers in be progressive. .Our Core Values 1 Maximizing Returns 4 Ensuring Safety 5 Cleaner Environment Our shareholders are a key stakeholder We conduct our business with We are committed to minimizing and we continually strive to create value high regard for the health.e. Our three our resources. We have established an and emissions.000 students. work environment.

Important Events In 2016 Our profit after tax is We paid the highest In our efforts to be a Our Board approved The Board also approved After reducing our quantum highest this year sustainable energy investment in a joint investment in a project of discharge water dividend of Rs. million. 542 24% interest in the project. 184.000 Kwh of investment in the new the season. figure of Rs. . 200 project cost would be Rs. which we installed a Solar PV initiated to install a world to cross the half a “Baking and cogeneration Power” is 5% higher than last facility for 118 KW. A new company which will make us a 100% the name Mehran Energy million beating the electricity consumption by by the name Uni-Food compliant company to the Limited has been Supply of electricity to 18%. generate an estimated for this. Total estimated renewable power venture would be Rs. The has the potential to been incorporated National Grid through estimated investment in standards”.18 whereby we are proud producer and consumer venture project of of “Bagasse based substantially We this year million this year.0 Billion. Our solar facility Industries Limited has province’s “environmental previous highest of Rs. 1.4 Billion. We supplied million.16 million kwh annually. 5. 700 180. has allowed us Treatment Plant”. 430 million in 2015. year. incorporated for this. project cost would be Rs. Total estimated electricity to the grid this 3. This class “Effluent billion figure with a final confectionery” having having 100% share in the year. A new company by to reduce our off-season project. The estimated HESCO continued during the new venture is Rs.

Organogram Sugar Plant Unicol-Ethanol Plant 20. Key Achievements 56. Directors’ Report (Urdu) 32. Our Mills Profile 90. Investing in Mehran Sugar 85. Corporate Governance Framework Values 30. Code of Conduct and Ethical 69. Horizontal & Vertical Analysis 88. Directors’ Report 28. Chairman’s Review 22. SWOT Analysis 62. Board of Directors 82. Auditors’ Report to the Members 50. DuPont Analysis Mehran-Corporate Office Mehran- 16. Statement of Compliance with the CCG 38. Management Committees 81. Financial Statements Tando Allahyar 51. Company Information 57. Corporate History 55. Investor Relations 87. Review Report to the Members on Statement of Compliance with the Mirpurkhas 40. Corporate Social Responsibility 31. How we Added Value 125. Management Team Code of Corporate Governance 44. Six Years’ Sugarcane Trends Analysis A R A B I A N S E A . Business Strategy & Goal 71. Pattern of Shareholding Karachi 52. Geographical Location Azad Kashmir Contents 14. Notice of the Annual General Meeting 36. Six Years’ Review at a Glance Proxy Form 54.

SPV named UniEnergy which is in process of setting up a 50 MW Wind Power Project. 1965 Year 2014 was an extension of our success and Company accomplished many landmarks such as 2014 In 1965. 2015 percent which was the highest achieved in the country. 2003 In the year 2003. in 2001 Mehran Sugar achieved a milestone of 1. set-up the factory in Tando Allahyar which was very conducive for plantation of sugar cane. Total initial investment was USD 10 Million. 1994 caster in consumer packs under the umbrella of our brown sugar brand “Sugarie”. 14 Mehran Sugar Mills Annual Report 2016 Limited . 2010 By 2010.000 TCD. Second parallel milling unit of Mehran Sugar started commercial production in the year 1994 resultantly the crushing capacity was enhanced to 7.210 M.000 to 10. values and creating value addition by diversification policy which is evident from our future strategic plans adequately covered in this annual report.500 176 Million. through investment in BMR crushing capacity of Mehran Sugar reached at TCD. Mehran Sugar continually spent on BMR and operational 2007 factory.500 TCD.0 Billion and UniCol an annual capacity of 1. MSML crossed 4.42 Stock Exchange and in parallel the Plant commenced its trial production.0 Billion Turnover milestone and in the year 2013 Mehran Sugar first time ever crossed sucrose recovery of 11 percent and production of 100. OUR HISTORY 1930 Mehran has a long. Mehran Sugar will remain focused on our core operations through our business in next five years the Turnover showed a growth of 100% and reached to 2. In 1968. Unicol Limited commenced its commercial production in the year 2007. the Company was Re-diversified ourselves by entering in renewable energy sector and finalized plans to set up a new awarded ISO-9002 QMS Certification. shares of the Company were listed on the Karachi In year 2015 our growth trend continued as Mehran Sugar recorded highest sucrose recovery of 11. Mehran Sugar launched three new variants of retail sugar moist.000 liters per day.000 TCD. Mehran Sugar invested in a JV ethanol company. Haji Hasham started his business career by trading in commodities in the 1930’s in the efficiencies resultantly the crushing capacity increased from 7. 2001 Continuing our progress. rich heritage with Haji Hasham and his son Usman’s vision to set up a sugar At different intervals from 2007 to 2013. Tons of sugar. Turnover crossed 6. Indo-Pak Subcontinent. Karachi Stock Exchange as one of the Top 25 Companies in the year 1983 and yet again in the year 1986. In 1998. Limited doubled its ethanol production to 200.0 Billion Turnover and Going ahead. in addition Company crossed half a billion profit before tax. icing. Unicol Limited.0 Billion milestone. through steady re-engineering Mehran Sugar increased its crushing capacity to 3. For better market penetration.000 TCD.00 M. MSML procured a modern sugar plant from Mitsubishi Japan. started supplying electricity to the National Grid and paid its highest dividend of 1978 In 1978. Further. Within a span of 18 years from the date of incorporation Mehran Sugar was recognized by the level of 11. Mehran Sugar Mills Limited (MSML) was incorporated as a public limited company with recorded highest sugar production of 123. Tons.

42 percent. 650 million profit before tax. Company paid its highest dividend of Rs. Started supply of co-generated electricity to the National Grid.000 commences M. 184 million. 4. The joint The Company crosses the Company first time ever venture Rs.0 The Company crosses the Rs. Billion. Company crossed Rs. Associated Company Unicol Company crossed half a billion Limited doubled its ethanol profit before tax. Sales crossed Rs. milestone. 2. Sales crossed Rs.210 M. Company Award for the Award for the year.500 TCD. 7 billion in the history of the company. 11 percent. The Company Unicol Limited crossed the100. tons milestone production for commercial the first time. achieved in the country.0 Billion sales crossed sucrose recovery of distillery. which was the highest year. 16 Mehran Sugar Mills Annual Report 2016 Limited . 2016 2007 2010 2013 Record highest Sales milestone of more than Rs. 1. QMS Certification. tons. 6. 11. production. of 123. production to 200.0 Billion sales milestone.000 LPD. Key Achievements 1978 1983 1986 Steady re-engineering increase the Recognised by the Karachi Stock Exchange Again selected by the Karachi Stock Exchange 2014 2015 crushing capacity as one of the Top 25 for its Top 25 Company Record highest sugar production Record highest sucrose recovery of to 3.0 Billion. 1998 2001 The Company is 2006 awarded ISO-9002 .

sustainable and carbon free energy 18 Mehran Sugar Mills Annual Report 2016 Limited . “The journey of a thousand miles begins with one step” Lao Tzu Our quest towards renewable.

At our mill we have installed a 118 KW Solar PV facility with the objective to reduce our off season electric load and eventually be self-sustainable with the aim to produce all our power from indigenous sources. We at Mehran want to be part of the renewable energy revolution which has made this form of electricity the fastest growing energy production source globally for all new power installations. 18 Mehran Sugar Mills Annual Report 2016 Limited . To harness electricity from natures reserves such as wind and solar at commercially viable rates is an extremely new phenomenon. We have dwelled into both.

FCIS BankIslami Pakistan Limited www. Block-4. Tando MCB Bank Limited Chartered Accountants Meezan Bank Allahyar. Dolmen Chartered Accountants Mr.com Habib Bank Limited Share Registrar Habib Metropolitan Bank Limted Auditors C&K Management Associates (Pvt. Tel:(022) 3414501. Mohammed Hussain Hasham – Limited Allied Bank Limited City.Secretary Sayeed & Sayeed Limited Bank 75600 Advocate & Legal Consultants Alfalah Limited Tel : (92 21) 35297814-17 CFO and Company Bank of Punjab Fax : (92 21) 35297818. Distt. Khurram Kasim . Limited 3414502.Member Legal Advisor Bank Al Habib Clifton.Chairman Haroon Zakaria & Company Al Baraka Bank (Pakistan) Executive Tower. Karachi- Mr.mehransugar. 14th Floor. Muhammad Advocates & Corporate Consultants Limited msm@mehransugar. Tando Adam Road. Muhammad Iqbal.) Mills JS Bank Limited EY Ford Rhodes Ltd.Company Information Audit Committee Cost Auditors Bankers Registered Office Mr.com Hanif Aziz FCMA. Mr.Member Askari Bank Limited Marine Drive. Member Mr. Haseeb Atif . 3414503 Standard Chartered Bank Fax:(022) 3414504 Limited . Amjad Waheed . 35297827 KMS Law Associates Secretary Mr.

20 Mehran Sugar Mills Limited Annual Report 2016 21 .

profitable allowed it to establish a strong balance Sheet which is not heavily leveraged. Sugarcane required continuous research for development of new varieties which are Company to explore other business avenues to maximise Shareholder return. This gives the Company a comparative advantage as government intervention especially considering cane and sugar compared to most other sugar mills in Pakistan. • Mehran’s investment in Unicol Limited has diversified its income base and allowed it to add value to its by product. which was being flared in the air • Sugar prices have continued to remain extremely volatile which doesn’t allow one to forecast future earlier. • Mehran also manages an equity portfolio. Sadly public or private institutions have not been able to establish any quality research institutes in the country which could eventually make sugarcane farming and sugar milling globally in competitive. innovation is the need of hour to remain competitive. 1 • Sugar cane prices are set by the government on the basis of cost of sugarcane production. This investment started paying dividends from this year which shall become a recurring revenue streams. Swot Analysis S strengths • Over 95 percent of cane in Mehran’s cane zone is early maturing and high yielding which allows the Company to achieve sucrose recoveries which are approximately 10% higher than the national W weakness • The nature of the sugar industry remains a controlled one. 22 Mehran Sugar Mills Annual Report 2016 Limited . This reliance on average. quantity and pricing. Dividends and capital gains from this portfolio allow a continual income stream which further farmer yields have meant that this price is set higher than the global average.000 LPD. thus holding inventory is a risk. The high sugar strengthens the balance sheet. competitive crops. year. • Mehran has a crushing capacity which is 50% larger than the national average of Pakistan sugar mills • Since sugar is a commodity. Low billion. The provincial government sets cane prices which at times are not in line with sugar sales prices. This has • With changing global environment. sales continue throughout the source of revenue for Mehran in the future. • Mehran’s strength lies in its policy to grow in a conservative yet sustainable manner. While sugar production is a seasonal operation. is the timing of its sales keeping in mind the market movements. Sugarcane crop sizes vary depending on the weather. advantage as compared to its competitors. molasses. besides establishing a CO2 plant which uses raw carbon dioxide. the Company does not have much pricing power or any relative which allows it to produce sugar at a lower cost per ton due to better absorption of overheads. hence allowing the and sustainable. disease resistant and have high farm and factory yields. cane price makes sugar production at times unviable for sale in the global market. can be politically sensitive can have a negative impact on the overall business. Unicol has recently doubled its ethanol capacity to 200. a by-product. water availability and pricing of • Mehran’s goodwill in the region for payment and commitment allows it to procure cane competitively. The only advantage the Company has. • Change in the size of the sugarcane crop can have an effect on the financial results of the Company. The market value of the portfolio has now exceeded Rs. yields which could also affect profitability. Sugarcane disease can have a detrimental effect on both farmer and factory The Company is thus able to get a preference in terms of quality. especially in a high interest rate environment like Pakistan. • The country’s law and order situation has at times created hindrances to attract foreign quality manpower in areas of innovation for farm and factory.

00 % and higher. a major breakdown could affect financial results for the study and suggest ways and means to increase farm yield. While Pakistan’s national recovery remains between 9. The movement of our cane team as well as farming team in specific areas can also be The sugar industry has the potential to produce over 3. research and development needs to be given preferred attention for investment for expanding the capacity as well as robust maintenance activity.50-10. business. Hence their competitiveness is affected. grow at a healthy rate. • Growing awareness has paved the way for brand loyalty. By realizing the further • Inflation affects the business due to cost increases. industry. It requires huge sugar production. This will also become a regular source of income. we have embarked upon putting up a co-gen plant of Bank of Pakistan regularly intervenes and revises interest rates which affect the cost of doing 26. It also reduces the consumer buying power. though frequent intervention by other remains a huge one. entire year. In order to curb inflation. The population growth along with income prosperity means that demand for sugar is expected to grow continually for the foreseeable future allowing for future growth in the • Sugar cane requires abundant quantity of water for cultivation. bagasse. Mehran at its • Proper maintenance during the off-season enables the plant to run smoothly during the season. • There also lies potential in increasing farm yields which would reduce the cost of the farmer • In the last two decades the industry has consistently increased its sugarcane crushing thus making sugar cane cheaper as a raw material. which may not be continuous improvement. capacities without objectively ensuring an increase in the size of crop. sugar mills has some what dilated this advantage. ethanol and power producer. mills can set up plants as large as 100 MW.5 MW. The quantity of cane in the area allows the company to pay minimal transport costs for cane arrivals which gives it a comparative advantage.50% there are possible for every mill due to variety of factors. varieties being developed which could fetch recoveries of 12. • Sugar mills are typically located in rural areas which are more susceptible to Law and Order • Pakistan remains a power deficit nation and the opportunity to produce power remains huge. A sudden surge in borrowing rates could adversely effect the Company’s financials. A major challenge going ahead is to ensure increased sugarcane cultivation to match crushing capacity. 24 Mehran Sugar Mills Annual Report 2016 Limited . though at present the rate has been declining.000 MW of power whereby individual difficult and restricted. State sugar mill. Therefore. Mehran has also stepped into power generation and its supply to the national grid by signing a 5 MW PPA with NEPRA. Sugar Mills have to • The need of the time is to bring new varieties with high sucrose recovery to improve our overall produce specific quantity which allows them to get benefit of economies of scale. These products have yet to tap the full potential of the niche market. This population continues to availability of sufficient water but also motivation to growers towards sugarcane crop. While we at Mehran have tapped sugar production and recently ethanol production the opportunity to produce power T threats • Mehran has one of the most densely populated cane zones in Pakistan. potential of generating power from our indigenous source of fuel i. This requires not only • Pakistan has a large indigenous population of close to 200 Million. We foresee sugar demand growing at 4-5 percent annually while many developed can in the future face such water constrains which could mitigate the growth of sugarcane and the countries are seeing stagnant growth. own has initiated a research project with the assistance of Mauritius Sugar Research Institute to Since the season is for a limited duration. Swot Analysis o opportunities • A modern sugar complex is a sugar. Mehran has also ventured into retail segment by launching Branded Sugar through its two brands “Sugarie” and “Chashnik”. With increasing inflation. situation. Such varieties would make Pakistan globally competitive thus enhancing both farmer and miller revenue.e. Pakistan with its growing population industry. a by product of Pakistan has been suffering from inflation since last few years.

We feel it›s important for us to partake in this journey of becoming a full fledged power producing company from our own indigenous fuel. Considering the potential we are planning to set up a 26. casts the shadow of our burden behind us” Samuel Smiles Baggasse Based Indigenous Power One of the main objectives of a modern sugar mill is to use its excess steam to produce power. as we journey toward it. which. “Hope is like the sun.5 MW Cogeneration 26 Mehran Sugar Mills Annual Report 2016 Limited . Baggasse.

The high efficiency cogeneration Power Plant not only uses the available bagasse efficiently but also produces power for exporting to the national grid. Key benefits of the project includes optimum resource utilization. 26 Mehran Sugar Mills Annual Report 2016 Limited . reduction in oil imports for Pakistan. socio economic benefits to the rural population through job creation and to our farmers in the form of better prices of their produce. Power Project. addition of a sustainable source of power in our country’s energy mix.

as part of our commitment to the health and safety of our employees. marketing plans. safe and clean working environment in line w i t h local laws. Code of Conduct and Ethical Values HEALTH AND SAFETY The Company’s reputation and its actions as a legal entity depend on the conduct of its employees. and other information which is not generally known to the public. financial information. We expect employees to keep all information confidential. personal differences and free of discrimination and harassment. We measure. their family and close MSML respects and highly values its diverse employee population. We will make sure that they are aware of t h e i r obligations and also expect them to take steps to p re v e n t u n i n t e n t i o n a l disclosure. research and development. product formulation. Employees. regulations and highest standards of conduct and business ethics. We each must assure that our personal conduct is beyond doubt and complies with the healthy. Our environment policy and its management processes deal not only with the • provide healthy and safe working environment environmental issues connected to our manufacturing processes and facilities. 28 Mehran Sugar Mills Annual Report 2016 Limited . management of our supply chain. suppliers. This might include plans to buy or sell business. selling and consumption of our products. • promote ethical business practices • respect the environment and communities in which we operate THE ENVIRONMENT • assure equal employment opportunities We recognize our environmental responsibilities and our contribution to sustainable • value dive rsity in the workplace development. and distributing. advertising. appraise and report performance. m a n u f a c t u r i n g processes. but also with • respect human rights and trade ethically Protecting the ecosystems from which we derive our raw materials. customers. CONFIDENTIALITY WORK ATMOSPHERE Confidential business information must not be shared with others outside the company or used for the personal gain of oneself or others. personnel and employment matters. the company acquaintances should not buy or sell company shares if they have material information that has an unwavering ethical commitment toward promoting a workplace that is respectful of has not been made public and could affect our share price. industrial practice. These obligations apply to all Employees. including those who leave the company.Accordingly. This principle applies in our hiring and interviewing process as well as all aspects of our work environment.We seek to provide a applicable laws. contractors and everyone who works on or visits These principles highlight our responsibility to: our sites. Each employee must commit to act according to the highest ethical standards and to know and abide by We recognize the importance of health and safety within our business. concepts.

The Committee comprises of Mehran Sugar Mills Limited is a progressive and diversified sugarcane milling company with an objective to Cane/Development are the members of the Chairman. It is also Committee while Managing Director. We invest in our production facility and latest Human Resource technologies on a systematic basis to achieve maximum productivity. Resident Director. A brief description of the composition and their related tasks are as follows: The Committee meets to discuss and The Human Resource Development coordinate various operational activities of Committee is responsible for necessary the Company. it is responsible to ensure that all functions of the Company operations are regularly audited and their reports are reviewed regularly for ensuring the work as per Company policy. a non-executive Director and achieve growth through maximum capacity utilization. Director compensation. It consists of a Chairman and two other Directors (including one non-executive Director). Chief responsible for staff annual appraisal and Financial Officer. without Committee. Business Strategy & Goals Management Committees Various committees have been formed to look after the operational and financial matters of the Company. 30 Mehran Sugar Mills Annual Report 2016 Limited . economies of scale and cost rationalization. Audit Committee It is a statutory Committee formed as per requirements of Code of Corporate Governance. Chief Executive Officer. Our ultimate goal is to ensure maximum Executive Committee Development Committee returns to the shareholders within our resources. compromising the premium quality of products produced. The Chief Executive Officer training and capacity building of staff at of the Company is the Chairman of the mill site as well as at Head office.

Com. Accountant (Business Administration) Institute of Chartered Accountants 32 Mehran Sugar Mills Annual Report 2016 Limited . D C.A (Management) B. Board of Directors Muhammad Kasim Muhammad Ebrahim Muhammad Hussain Ahmed Ebrahim Hasham Khurram Kasim Muhammad Bashir Dr.A – Finalist Karachi University. LLB. Chapman University. (Economics and IR) (Marketing) Babson College.A (Business) Bachelor of Arts Bachelor of Science B. Chartered Ph. Chapman University. Amjad Waheed Muhammad Iqbal Hasham Chairman Hasham Chief Executive Officer Hasham(Non-Executive) Director Managing Director Director (Non-Executive) Director (Independent) Director (Independent) Director (Non-Executive) Bachelor’s Degree from M.

California. Medford MA. USA. 32 Mehran Sugar Mills Annual Report 2016 Limited . Tufts University. Massachusetts. California. Institute of Chartered Southern Illinois University. USA Accountants of Pakistan. of Pakistan. USA. USA. USA.

“Pursuit of excellence is the desire for divine fulfilment.” Lailah Gifty Akita Investment in Food and Bakery products 34 Mehran Sugar Mills Annual Report 2016 Limited .

This will be a paradigm shift for us from the commodity business to the consumer food business. In our continual journey to grow as a company and improve returns for our shareholder we feel it is important to tap into the huge potential of the food sector. 35% of our population falls under the age group of 15-25 years. we have decided to invest in a confectionery and baking business. considering this demography of the population and also the growing potential in consumer food business. To partake in this we have decided to invest up to 24% in a new food company called UniFoods Industries Limited. 34 Mehran Sugar Mills Annual Report 2016 Limited .

00 115.000 Shareholders’ Remuneration 200.00 Long-term shareholder return 205.037%.074 300. 50.000 2008 2009 2010 2011 2012 2013 2014 2015 2016 50.864 82.000 80. at a price of Rs.000 and acquired 1. The average annual return of the Mehran share over this period was 69% versus the average annual return of the KSE 100 index was 21. 175.000 150.000 134.300.00 invested.000 101. Investing in Mehran Sugar Share performance 2016 220.00 100. 145.000 1.000 176. 1.00 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 2015 2015 2015 2016 2016 2016 2016 2016 2016 2016 2016 2016 Long-term shareholder Mehran Sugar Mills Limited assigned Rs. 1.18%.550.000 0 2012 2013 2014 2015 2016 2011 36 Mehran Sugar Mills Annual Report 2016 Limited . and if all the dividends received were re.18 millions to Dividends in 2015-16. 2016 representing a 160.667 50.00 190.000 return which is 5% higher than 2014-15 Shares Value (Rupees) 1. would have Mehran shares worth Rs.416 on September 30.84 per share.050.800.172 184.00 Share Price (Rupees) A shareholder. who on October 1.568. 2008 invested Rs.00 130.00 cumulative gain of 3.000 (Rupees in thousand) 550. 184. 26.180 800.863 shares of Mehran Sugar Mills Ltd.000 1.429 100.

62 45. Trade Tower.72 51. Abdullah Share price Haroon Road.99 10 8.66 3.436.031.000 Contact Person Mr.93 180.95 3.79 885.01 64.43 (Rupees) 110. 10 25 20 20 50 (Rupees) 101.91 100 15.64 8. 2.02 18.05 110.78 49.253.58 58.40 0 Highest price during the year 210.12 51.91 13.500.037.245 32.397.700 2.56 69.031.321.245 25.031.193.43 8.000.49 54.926.46 3.99 42.093.67 16.40 437. 793 million in 2011 to Rs. Investor Relations Share Registrar C & K Management Associates (Pvt) Mehran's Shares Turnover Ltd.500.525.32 131. 35685930 200 1.70 Cash Dividend 65 60 26 25 25 35 15 13.225. 404.10 42.330 69.00 101. Near Metropole Hotel.40 15.99 68.06 5 45.700 947.402.56 Shares % 2.00 143.70 13.00 % Bonus .84 54.767.314.10 1.67 Mehran’s Shereholders Equity has increased from Rs.02 13.50 41.25 2.245 32.30 2011 2012 2013 2014 2015 2016 38 Mehran Sugar Mills Annual Report 2016 Limited .680 2 0 2 9 200 Market value of share on 30 September th 180. 250 trend 2.000.000 31/01/2017 50 437.26 38.24 1.330 100 1.500 (Number of Shares) Karachi 2. 0 Date of Board of Directors meeting 1st Qtr Half Year 3rd Qtr Annual 2011 2012 2013 2014 2015 2016 (Tentative) 26/01/201 25/05/2017 27/07/2017 21/12/2017 7 2011 2016 201 2014 201 2012 2011 5 3 Number of Shares (Issued / Paid-up) 32.05 20 18.62 72.100 500.037. thus representing an increase of 193% in six years Break-up value per share 72.682 Earning per share 16.72 49.523.700 2.12 Lowest price during the year 108. .09 4.294.143 20.30 54.323 million in 2016.772.503 985.400 2.84 Market Capitalization 5.000 Ph: +92 . Muhammad Zakir (Rupees) 150 1.00 79.21 -35687839.78 Breakup vs Market value Earnings per share 150 P/E Ratio 10.54 58.99 75.00 50.525.503 1.40 56.58 54.565 17.500 1.19 12.397.000 2012 2013 2014 2015 2016 .226.314.000 Date of Annual General meeting 985.

Investor Relations 0 2012 2013 2014 2015 2016 2011 Market value per share Break-up value per share 38 Mehran Sugar Mills Annual Report 2016 Limited .

A. (Management) Bachelor of Arts Chapman University. IKHLAS AHMED KHAN . Management Team MR.Joined Mehran in 2011 MR. AHMED EBRAHIM HASHAM . California Work Experience: Work Experience:35 years of practical experience in the sugar Industry. USA Work Experience: Work Experience: 34 years of practical experience in the sugar Industry. SYED EHTESHAM-UD-DIN . B.Jamshoro University. MR. MUHAMMAD HANIF AZIZ .Jamshoro Work Experience:Work Experience: 32 years of practical experience with multinational and national companies.Joined Mehran in Work Experience: 2007 Resident Director 35 years of practical experience in the sugar industry.23 years of practical experience in the sugar Industry. 43 years of practical experience in the sugar industry. Physics.Joined Mehran in 2004 GM Production CFO & Company Secretary FCMA .Joined Mehran in MR. 40 Mehran Sugar Mills Annual Report 2016 Limited . Mathematics) FCIS . MOHAMMED EBRAHIM HASHAM .Institute of Corporate Secretaries of PakistanFrom Mehran University of Engineering . SANAULLAH . Sc & PGD in Chemical Engineering & Technology From University of Punjab – Lahore MR.Joined Mehran in 1973 MR. MR. Medford MA. UBAID-UR-REHMAN .Institute of Cost & Management Accountants of PakistanBachelor of Science (Chemistry.Joined Mehran in 2012 2000 Managing Director GM Technical B-Tech (Hons) in Mechanical Engineering Bachelor of Arts (Economics and IR) Tufts From Mehran University of Engineering .Joined Mehran in 2004 Chief Executive Officer Director Cane/Development M. 16 years of practical experience in various sectors.

PhD in Public Administration. 40 Mehran Sugar Mills Annual Report 2016 Limited .A Economics from R reputable universities of Pakistan A Work Experience: S 29 years of practical experience in various H industries. LLB & M.Joined Mehran in 2007 GM R Human Resource & Administration . Management Team M ID ALI BALOCH .

42 Mehran Sugar Mills Annual Report 2016 Limited .” Archibald Marwizi Wind Power as a future growth opportunity In our journey to search for Sustainable investments which can give us steady returns our board has approved an investment of up to 20% in an associated company UniEnergy Limited which is in the process of setting up a 50 MW Wind Farm in the Jhimpir Wind corridor of Sind. “Self-discovery is a journey of questioning yourself.

000 MW. We feel Pakistan has a huge wind power generation potential of up to 50. With commercial viability making wind as cost efficient a power producer as other sources of power we feel this company and Pakistan itself has huge potential in this form of renewable power generation. 42 Mehran Sugar Mills Annual Report 2016 Limited .

92) (90.34) (43. % Rs.25) (5.46 Other operating income 183.04 13.44) 13.46 (132.89) (8.04 378.33) (2.00 4.88 10.43) 80.13) (2.11 100.36 100.39 Finance costs (98.97 2.97) (90.150.59 Gross Profit 631.84) 60.18 21.00) 11.03 2.09 Cost of sales Gross Profit 742.46) (103.16) (0.54) 30.84) (33.87) (209.63 Share of Profit from an associates 93.37 (6.14 40.41) (5.370.81 25.88 353.78) Administrative expenses (173.64) 18.00) 183.00 6.150.54 80.08) (13.92) 240.56 161.15 52.02 (5.98 431.62 Profit after taxation 430.58) (81.88 (173.46) (89.84) 114.56 6.56 (15.36) (209.67 4. % Rs.54 (102.15) ) 541.64) 12.80) (133.63 (116.01) (67.58 2.01 22.498.771.88 69.30) (2.71) (146.14 (34.98) (154.56 Cost of sales (3.88 9.37) (41.20 (22.41 44 Mehran Sugar Mills Annual Report 2016 Limited .71) 4.26 23.23 63.65) ) 742.10) 171.22 100.64 (15.22) (186.09 (14.45) (84.54 323.94) 431.28) (102.22 12. % Rs.64) (86.88 12.95) (93.113.09 5.03 323.36 (32.04) (3.35) (15.20 5 Taxation (116.47 39.93) (106.80 269.41) (93. % Rs.86 (186.44) 149.69 4.11 (4.32) (2.12) (197.64) (22.74) (0.02 7.58) 322.03 149.52) (0.54) (1.57) (3.30 8.47 582.96) 581.44) (2.90) (40.29) (5.773.74) 21.11 (32.84) (3.87 1.50 6.00 Turnover 4.02 21.26 1.70 132.77 Taxation (116.35) 73.86 7.27) (14.03 9.39 (33.72 93.215.73 (15.11 581.98 132.03 13.50 9.38) 12.54 (24.86 269.84) (2.22) (116.27 (3.08) (2.12) Administrative expenses (197.86 272.96) (3.92) 12.13) (1.57 63.771.98 (58.70) 12.99 430.63) (1.72 582.44) 62.49) (0.68) (54.866.83) (43.22 171.00 4.361.49) (62.65) (93.64 8.52) (58.21) 48.84 272.370.88) 6.01 10.00 5.84 (98.361.12) (106.90) 13.113.63) (32.92) (1.37) (132.44) (0.60 (27. % Rs.14 9.01 53.53 (154.32 ) 8.70) (0.70 631.23 100.54 4. % 7.89) (0.11 4.67 322.92 378.09) 416. Horizontal & Vertical Analysis Profit & Loss Account 2016 2015 2014 2013 2012 2011 HORIZONTAL ANALYSIS Rs. % Rs.58) Other operating expenses (27.82 128.36 52.08) (1.38) (3.797.40 13.64 (54.65) (81.82 (93.98 0.81 7.24 Share of Profit from an associates 116.91 7.56 (126. % Rs.30) 397.94 Profit before tax 668.89) (0.26 1.20 133.07) 116.03 59.00) (3.87 (20.04) (133.58) 434.08) 16.13 (11.57 322.89) 45.64 2.80) 128.62) (27.64 0.09 Other operating expenses (41.50 29.39) Finance costs (146. % Rs.30) 29.58 (25.17) (103.46 Distribution costs (36.66) (5.57) (29.35) (89.681.10 4.93 668.57 Other operating income 161.64) (2.04 (3.14 397.97 77.681.70 (126.01 541.797.26 679.39 Profit before tax 546.215. % Rs.1 546.91 15.13 2.20) (1.52 416.33) 26.56 (27.52) Distribution costs (40.35 (36.46) 38.18 3.01 9.89) (3.45) (37.42 Profit after taxation 2016 2015 2014 2013 2012 2011 VERTICAL ANALYSIS Rs.01) (0.32) (13.498.44 679.49 (5.20 2.355.97) (0.21) (0.40 40.58) (0.62 63.26 105. % Rs.50 45.866.40 22.16) (5.355.773.47 100.86 33.43 353. % Turnover 7.098.00 (6.90) (1.76) 81.30 9.76) (3.04 100.

% ASSETS NON-CURRENT ASSETS 46 Mehran Sugar Mills Annual Report 2016 Limited . % Rs. % Rs. % Rs. % Rs. % Rs.Balance Sheet 2013 2012 2011 2016 2015 2014 Rs. Horizontal Analysis .

45 15.28 2.7 1.27 (12.87 ) 330.74 731.767.8 558.13 135.27) 112.50 6 ) ) (24. 119.4 505.55 227.57 474. .50 253.9 1. .21 58.78 14.89 63.0 Short term investments 52.09 2.26 20.77 49.83 5 ) )42.187.750.68 (1.2 2 TOTAL ASSETS (5. 320.44 1. .49 14.7 23.34 (10.00 5. .91 54.46 Other receivables (45.4 )13.316.61) 4.516.76 22.83) 1.05 9.57 43.84 (5.48 6. - 10.96 792.79 (37.05) 1. 5 18.74 619.43 ) 73.88 5.00 .59 61. Horizontal Analysis .04 33.29 .41 (89.22 (7.017.62 (2.69 57.458.17 4 Advance Income Tax (100.19 ) 442.43 100.75) 29.56 17.1 2.32 224.61 (44.69 28.74 4.06 46.652.96 ) (86.52 2.30 ) (24.31 . - fee Income tax payable 15. .29 28.68 (94.28) 11.113.51 79.97 480.30 18.89 (58.84 51.805.80 36.20 Sales tax / excise duty 9.00 .8 73.14 288.6 1.00 56.00 Reserves 29.66 60.770.003.00 .34 (35. .64 53. 119.30 113.35 )59. .10 (1.38) 1.11 204.17 1.71 payable 3.323.7 39.09 158.21 21.79 126.94 17.71 1.37 1. .14 ) 62.584.66) 95.316.13 169. .05 1.42 32.57 735.98 12.088.83 12.00) 20.76 NON-CURRENT LIABILITIES 320.4 155.88 Current maturity of liabilities agaisnt assets subject to finance lease .96 5 ) Provision for quality premium 11.secured 11.88 42.67 515.2 1.388. .31 397. .17 230.15 1.3 30.28 234.76 6.92) Short term borrowings .82 Current portion of market committee 2 (81.26 42.54 8.40 25.030.63) 59.48 1.97 57.55 ) 37.60) 9.3 16.34 100. .38 2.24 19.23 (14.18 22.10 (5.11) 2.40 (18.8 216.94 40. 320.17 318.70) 2.67) 1.97 1.68 1.05) Deferred taxation 304.51 79.04 83.0 27.269.31 50.70 3.4 34.00) .21) 36.91 1.3 652.092.095.797.14 412.26) 3.78 144.35 (29.62 8.85 6.00 .89 35.80 292.414.40 EQUITY AND LIABILITIES 4.35 (13. . - Provision for market committee fee - 1 ) 14. (100. 1.secured 1.36 2.unsecured 43.38 3.83 (17.97 (33.2 26.58 Stock-in-trade (71.51 17.35 24.2 ) ) Trade deposits and short term prepayments (33. .80 (39. .34 7.77) 455.31 26. .03 (36.70 11.92 1.74 14.27 72.20 (5.60) 95.02 11.(100.6 3 100.854.92 4.90 46.65 0.32 0. - unsecured Long term 17.80 38.96 3.63 1.76 100.06 .81) 42.95 21.00 209.63 218.14 3.68 487.1 100.784.43 ) (37.61) 6.0 Long term deposits 1.4 10.38 ) 73. 119.41 ) 17. subscribed and paid-up capital .58 829.05 35.84 ) 151.68 27.00 (14.97 63.32 175.8 42.516.9 1.8 289.61) TOTAL EQUITY AND LIABILITIES 4.3 ) 6.144.314.94 40.07 20.01 1.35) 147.03 ) (63.43 198.44 725.82 (65.62 CURRENT LIABILITIES 322.51 30.07 33.5 Biological assets 6 48.462.56) 1.41 162. .73 1.24 33.11 (95.43 (38.1 376.6 Trade and other payables 4 842.57 273.54 4.30 (1. .35 12.00 98.29 ).5 Cash and bank balances ) 45.94 201.06 (62. .16 67.1 )34.04 (6.54 1.67 56.29 - 21.25 23.35 (5.89) Provision for market committee fee 167.42 48.92 454.414.05 .36 (28.62 13.97 (82.670.40) (27.93 ) (33.00 172.91 77.06 (13.55 114.44 380.99 )78.119.42 Liabilities against assets subject to finance leases 15.2 19.32) 457.24 108.07 30.31 117.04 (6.76 46 Mehran Sugar Mills Annual Report 2016 Limited .4 1.634.16 18.07 4.20) Stores and spare parts (24.00 16. .44) 1.19 14.14 3.19 688.20 8.12 87.26 0 029.40 3.64 9.27 72.59 4.20 837.13 58.27 9.719.46 240.385. .unsecured 205.02 (8. .80 12. .63) 1.78 28.14 11.28 2.29 .112.50 (61.50 43.52 1.82 7.169.44 )13.70 472.25 1.34 36.331.00 190. .06 14.038.10 7.16 (7.60 16.29 2.69 8.3 1 Long-term financing .55 119. 11.59 146.89 7.Balance Sheet Property.67) 15.537.119.84 45.59 )40.97 15.509.82 CURRENT ASSETS 765. 119.13 (100.77 1.43 Long term receivable .35 4.00 9.02 34.32 128.57 ) 22.00) Current portion of long term financing 8.68 1.22 (28.36 38.40 3.81 749.462.42 Accrued mark-up (23.350. .61 Trade debts .62 13.952.5 33.75 221.27 21.94 (89.47 (16.12 12.64 (45.29 .537.20 1.649. .43 4.01 459.05 325.59 (31.92) Loans and advances .26) 3.43 22.40 18.298. .87 (6. .83 5 (74.07 (14.32 5.541.132.90 66.93 29.78 30.784. plant and equipment 1.36 33.63 (10.49 4.53 (60.09 31.96 3.74 SHARE CAPITAL AND RESERVES Issued.29 (25.12 6.33) Deferred liabilities (50.

20 0.49 10.76 0.08 22.21 0.516.23 10.3 7.6 2.40 108.56 2.9 6 5 2.25 1.2 842.10 4.84 0.41 0.323.516.113. - 765.21 3. % Rs.13 0. % ASSETS NON-CURRENT ASSETS 1. - 167.719.09 1 44.8 - 0 1.23 29.13 24.47 21.0 9.8 6.105.7 3.97 72.75 5 0. % Rs.14 322.90 4.08 6. Vertical Analysis .92 43.74 100.35 2.76 39.64 8.4 3.79 4.21 43.66 1.34 9.797.85 0.7 2 1 15.52 24.003.24 .65 7.60 412.16 1.Balance Sheet 2013 2012 2011 2016 2015 2014 Rs.72 8 1.12 4 0.350.56 119. % Rs.2 0.34 60.40 0.952. % Rs.5 16.97 18.14 2 0. % Rs.35 0.64 4 1.00 48 Mehran Sugar Mills Annual Report 2016 Limited .44 304.1 2.42 51.74 100.00 320.20 .

017.537.41 42.095.62 100.00 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES Issued.00 3.97 6.87 38.59 1.92 1.29 292.33 62.43 20.27 5.088.08 4.80 2.03 42.61 39.00 3. 20.70 0.14 3.53 158.82 67.00 62.55 41.16 487.462. .04 12.40 9.80 2.21 7.00 0.29 3.00 5.02 73.9 Long term receivable .87 0.84 1.40 5.30 0.06 0.38 0. .61 0.144.95 5.4 16.39 1.20 8. .05 5.43 619. - Cash and bank balances 45.97 34.30 73.38 Accrued mark-up 11.78 1.12 0.00 3.36 0.07 Provision for quality premium 119.88 TOTAL ASSETS 100. .458.47 688.91 1.42 1.04 1. .48 12.47 Other receivables 6.94 1.07 3.07 34.31 10.30 30.Balance Sheet Property.42 837. .92 288.57 459.secured 273.62 100.59 59.3 505.34 0.96 0.10 49.54 Reserves 1.62 36.35 1.62 43.41 0.70 0.51 1.04 23.42 60.21 1.30 1.55 0.57 46.12 2.97 13.38 51.24 59.17 2.02 3.99 5.29 3.26 9.74 15.269.26 749.03 8.92 172.66 14.13 CURRENT LIABILITIES Trade and other payables 1.45 Deferred liabilities 9. .51 2.78 50.649.13 8.unsecured 42.71 318.00 48 Mehran Sugar Mills Annual Report 2016 Limited .89 19.13 52.19 1.29 3.2 376.88 46.76 1.31 6.46 1.71 1.18 11.29 2.15 50.00 1.414.10 1.25 230.43 9. subscribed and paid-up capital 320.092.20 2.537. . .28 100.79 32. .67 0.21 21.32 454. 0 unsecured Long term 652.66 Sales tax / excise duty payable 98.97 0.54 0.49 119.385.13 Provision for market committee fee 49.47 0.805. .15 Loans and advances .99 Trade deposits and short term prepayments 9.414.49 119. .584.00 0.22 Advance Income Tax 9.31 9.331.20 .7 - Long term deposits 1.69 83.298.132.47 12.36 0.119. .66 16. . .86 22. .01 53.22 1. - Income tax payable .39 45.34 1.74 1.28 100.80 20.06 0.18 5.20 Current maturity of liabilities agaisnt assets subject to finance lease 14.94 100.89 3.82 0.25 48.23 5.784.316.316.95 1.12 1.84 25.15 20.40 0. .35 792. .06 0.05 234.80 147.03 2.77 4.90 6.75 175.119.47 57.68 0.82 204.06 0.37 7.3 13.6 558.83 .78 1.01 1. .56 0.16 0. .35 0.15 829.8 10.59 0.36 33.45 TOTAL EQUITY AND LIABILITIES 4.19 4.030.82 Provision for market committee fee 26.88 1.06 61.38 253.32 1.16 15.42 NON-CURRENT LIABILITIES Long-term financing .76 1.03 0.38 731.70 25.80 0.34 34. - secured Current portion of long term financing 151.14 4.09 15.78 162.02 2.95 31. 190.652.87 1.54 7.93 13.66 2.30 29.94 0.88 42.07 4.10 0.63 0.02 Short term investments 725.84 30.35 14.21 57.31 Short term borrowings .634.61 33.60 119. plant and equipment 1.55 0.95 33.00 3.20 21.50 13.63 30.07 77.95 0.73 56.37 119.24 13.02 1.23 6.16 1.19 0.52 63.39 Stores and spare parts 95.83 38.18 144.16 1.22 1.27 0.53 0.75 4. .541.23 7.04 0.20 6.6 216.26 0.388.27 48.41 397.09 11.16 128.767.38 22.96 1.94 39.84 0.68 39.91 2.07 0.21 28.47 1.46 49.00 3.509.90 14.43 1. .169.58 14.99 457.68 0.70 380.18 472.55 28.25 6.50 8.42 1.24 29.00 3.51 1. .42 15.31 135.51 100.61 Liabilities against assets subject to finance leases 18.70 57.770. - 735.62 6. .87 240.44 0.78 34.64 209. .06 1.80 .750.55 6.83 1.37 Current portion of market committee fee .76 Trade debts .00 3.25 1.69 320.20 1.854.670.98 325.00 3.49 Stock-in-trade 1.96 1.04 42.11 0. Vertical Analysis .64 0.4 15.29 0. .04 100.20 45.unsecured 35. .12 CURRENT ASSETS Biological assets 48.74 34.89 3.35 9.98 126.29 3.038.93 0.04 100. .27 0.51 100.95 37.44 455.02 58.18 Deferred taxation 289.45 32.314.

of Apprentice at Vocational Training Salaries.187.462 10 and a Hostel consisting of 60 rooms for Workers and Shareholders as Dividend/Bonus shares 356.311.40 05 20 1 11 208. Videos and other facilities. 1. WPPF. School/ College Bus facility.08 419. Tennis Court.ft for accommodation has been built for seasonal workers and staff of various contractors engaged during crushing season.000 sq.800.566.775 24 100 Retained with the business 1.  New hostel of 36.801.413. Retained within Government Financial.879. Officers and Workers Mark-up on borrowed funds 7 20 146.726 Expenses 535 MSM Colony 5. Park and Rose Garden. TV.875.31 09 Facilities at our Mills Retained profit 6 21 289.  Cricket Ground.145.Factory & Colony. of Students 7.39 Depreciation 130.32 610 Acres Centre cost 7 98.394. Employees as the business  Transport Facility for City & Adjoining Areas.639.270.00 % 4.492. 28% 37% 19% 16% 50 Mehran Sugar Mills Annual Report 2016 Limited .674.61 Start of Commercial Production The Citizens Foundation – 2 1.313 14 Contractors 8 338.399 30  Two Mosques .036 21 338.801.  Mobile Dispensary along with a qualified MBBS Doctor and trained staff. Our Mills How We Added Profile Value Date of Incorporation Population of the Staff 2016 2015 December 22.  Clean Water Supply with UV Filters.55 28 192.394.82 08 375 96 Family Homes for Executives.145. Income Tax.792 100 Wealth generated January 1969 336 Piyaro Lund 7 The Citizens Foundation – Installed Capacity 122 Hurri WEALTH DISTRIBUTED 11.725.500 Tons Cane Crushing Per Day No.39 100 1.162.753.582 25 Total Land Area The Citizens Foundation – 8 127 Acres 22 To Employees 19 Total Farming Area No.792 10 0  Recreation Centre at officers messs equipped with Indoor Games.11 347.73 493.518 revenue March 19.245.872. WWF 662.265.830.681.017.311. of Faculty members To Government 37 Daood Memorial School – 21 Sales Tax.879.  Private Electric Generator for Uninterrupted Power Supply.39 16 3 Permanent Employees Housing To Providers of capital 137.99 306. 1966 Daood Memorial School – 9 3. Benefits and Other related 288. as taxes Dividend and remuneration bonus shares  Accommodation for Officers and Company Guests with all facilities. 1965 Colony 1110 WEALTH GENERATED Rupees % Rupees Date of Commencement of Net Business No.595.203.626. Road Cess.410.

88 11.31 11.580 74.36 6.952.% 11.19 279.71 10.45 1.59 Total Equity & Liabilities 4.94 Sugarcane crushed .M.63 14.11 13.854.56 322.46 508.323.31 320.86 Capital Expenditure Operational Trends 216.784.120 809.187.02 353.30 582.04 9.2102 103.361.298.69 26.20 837.M.31 10.05 565.27 Profitability Indicators 172.42 10.07 1.84 Return on total assets ( % ) 12.59 653.784.29 509.59 13.06 12.943 5.29 43.10 1.61 1.73 4.76 1.94 1.82) (396.805.66) (118.46 1.140.94 Balance Sheet Rupees in million Share capital 320.86 6.64 416.28 10.10 1.32 367.797.28 7.871 1.79) 75.41 1.50 792.81 11.385.034 (additions during the year) Sugar produced .84 1.56 489.01 378.11 397.894 Cash Flows Rupees in million Average sucrose recovery .400 108.52 Financial Trends Rupees in million Turnover 7.25 40.316.62 3.31 253.537.70 22.11 4.132.93 3.72 Shareholders’ equity 2.70 749.18 Operating activities 993.482.119.47 479.73 4.57 7.414.861.20 1.767.21 EBITDA margin ( % ) 12.70 10.48 225.61 52 Mehran Sugar Mills Annual Report 2016 Limited .70) (396.269.478 6.86 503. Tons 106.35 2.71 18.03 269.038.150.42 559. Tons 8.652.47 4. Tons 940.33) (230.41 619.88 323.32 Cash and Cash equivalents at the end of the year 34.41 225.626 946.34 829.37 472.65) (445.19 211.14 581.331.17 408.40 EBITDA 904.82 Operating profit 650.70) (389.21 26.797.21 209.10 16.55 33.509.584.119.516.27 Current assets 1.09 Current liabilities 1.25 1.136 123.316.34 27.95 Gross profit margin ( % ) 10.23 4.29 3.78 Non current assets 766.088.350.113.767 9.35 Reserves 2.81 430.88 1.91 631.20 16.649.44 1.00 8.29 28.414.516.44 15.99 7.85 625.52 Fixed Assets 1.79 26.43 1.958 8.88 679.88 10.95 1. Six Years’ Review at a Glance 2016 2015 2014 2013 2012 2011 Pre-tax profit 668.25 317.04 Net profit margin ( % ) 7.666 722.01 546.19 19.030.59 9.68 1.19 6.750.092.003.44 45.77 11.42) Average crushing per day .31 Return on capital employed ( % ) 24.355.36 854.541.32 23.22 5.37 599.55 258.62 9.35 Non current liabilities 842.28 298.92 1.537.31 320.04 823.97 735.55 1.47 Total assets 4.04 3.29 Crushing days 105 108 122 108 104 156 Investing activities (634.348 8.99 7.388.42 653.39 2.201 84.29 3.14) (262.89 Return on shareholders’ equity ( % ) 23.93 3.86 4.11 144.23 381.50 After-tax profit 541.50 272.74 731.498.54 431.79 1.M.50 915.186 Financing activities (369.14 6.62 3.04 Gross profit 742.04 3.59 730.

35 Quick ratio/Acid test ratio 1.76 Earnings per share 16.70 4.80 322.42 2.10 Debt Ratio 0.58 54.00 20.40 15.68 30.86 50.40 184.24 3.45 2.67 Retained within the business 493.18 5.2 192.84 Price earning ratio 10.25 2.77 4.68 2.92 19.09 4.07 96.49 Bonus Shares (%) .77 Debtors turnover in days 22 28 16 41 49 47 Financial gearing Creditors turnover ratio 17.43 44.33 : 1 1.56 69.43 89.56 3.53 1.31 4.78 Inventory turnover in days 58 103 40 67 131 89 Cash Dividend (%) 65.89 352.70 13.00 60.00 20.60 262.58 : 1 0.87 7.00 3.38 : 1 0.03 : 1 0.00 25.02 82.20 4.49 347.00 26.77 167. Six Years’ Review at a Glance 2016 2015 2014 2013 2012 2011 Break-up value per share 72.95 15.16 274.00 7.63 146.54 22.52 : 1 0.55 3.05 110.79 173.99 42.19 282.64 13.47 : 1 0.56 : 1 0.54 18.54 58.19 : 1 4.72 49.25 Liquidity measurement 1.25 1. 10.79 : 1 0.19 : 1 1.75 : 1 36.91 5.57 209.20 16.32 133.00 30.84 8.61 2.46 3.01 : 1 0.93 1.02 Shareholders as dividend and bonus shares 208.28 357.75 397.73 2.19 109.49 : 1 0.32 Value addition Rupees in million 3.23 : 1 1.00 211.06 1.00 25.93 Capital Efficiency / Operating Performance Dividend yield (%) 3.08 22.54 9.13 : 1 1.80 Debt : Equity Ratio 12 : 88 14 : 86 17 : 83 25 : 75 27 : 73 19 : 81 Creditors turnover in days 21 17 4 5 7 10 Interest cover ratio 7.50 Capital employed turnover ratio 2.00 25.07 4.00 101.09 80.71 : 1 0.49 121.09 Market value per share on 30 th September 180.43 8.95 2.00 298.64 8.00 Investment Valuation Financial charges to providers of finance 98.68 419.48 Inventory turnover ratio 6.12 51.04 4.62 45.30 54.61 5.11 Operating cycle in days 59 114 52 103 173 126 Total assets turnover ratio 1.44 Employees as remuneration 338.69 52 Mehran Sugar Mills Annual Report 2016 Limited .97 : 1 Fixed assets turnover ratio 3.79 Current ratio 1.79 Dividend payout (%) 38.52 Government as taxes 662.57 5.61 : 1 0.73 2.00 Debtors turnover ratio 16.19 12.88 288.84 116.00 186.91 13.69 1. .

342 127 150 40 100 20 50 54 Mehran Sugar Mills Annual Report 2016 Limited .919. 7.32% + Current Assets Rs.62% 4 Admin. Levies - Total Cost & (%) Rs.113.703.738. 2. Rs.18 10. Expenses 541. Turnover 1.987 x Assets + 299. ++ + 7.954 7.284. 2.145.553 Current Liabilities ÷ ÷ Ownership ratio 23.225.987 157% Assets Turnover ÷ 23.225.81 4.4210.738. 98.145.113. Net Profit Margin ÷ 6 2.974.066 Net Revenue x Return on Rs.896 98.300 4.009 Rs.113.44% 100 0 Total Liabilities 99.066 12. Recovery % of Mehran vs Sindh 11.455 Support price vs Actual price paid (per maund) Cost of Cane as a % of Total -Assets Rs. ÷ Margin 7.543 ÷ Owners Equity Rs. Six Years’ Sugarcane Trends Dupont Analysis Analysis Avg.516.38 10. 1. 541.674.797.53 10.645.516.099 1.987 Assets 12. Rs.009 11.703.870.0 Rs. Rs.096 157% Return on Equity Non Current Assets Rs.284. Selling and Rs.199.31 Sugarcane Purchases Revenue Rs.00 250 0 2011 2012 2013 2014 2015 2016 + 80 Rs.396.113.657 4.797.719.42 11.802 Rs.31 9. +expenses Finance Cost 6.396.896 Cost of Sales.225.099 Rs.096 200 2011 Non Current Liabilities 60 (Rupees) Rs. 2.954 Net Profit & Govt.674.876. - 9. 6.225. 842.00% Direct Taxes Rs. 126.641 Total Assets Rs.43 Indirect Taxes 10.626.919.72 10 & Govt.870.987 Net Profit (Rupees in billion) 8 3. 7.193.802 Current Assets ÷ Net Revenue Equity Assets Turnover Return on Rs.0 4.415. 7.32% Rs.553 Rs.626.975 Revenue Net Revenue 10. Expenses Rs. Total Assets 7.987 Net Revenue 10.876.279 4.350.022 Cost of Sales. 7.225.341. 299. 126.401 Rs. Selling and 6.299 51.62% + 0 0 Admin.0 560.401 Other Income Rs.0 other expenses Total Cost & Net Profit Net Revenue 2 Rs. 1.806.28 12 5. 4.348.322.21 4.113.987 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 other Rs.806. 7.00% Finance Cost Direct Taxes Other Income Net Revenue Return on Rs. 4.645.058 - Rs.975 Rs.199.0 2. Rs.323.022 Indirect Taxes . 6.113. Levies 7. 560.225.

Six Years’ Sugarcane Trends Dupont Analysis Analysis + 3 93.322.350.. 2.096 Ownership ratio 1 415.37 - 54 Mehran Sugar Mills Annual Report 2016 Limited . 4. 842. 2.4 Non Current 51. 5 6 Rs.193.323.81 1.719.738.70 0 Total Liabilities rs Total Assets 65.05 R ÷ 213 201 2013 2014 2015 8 s 172 2 172 2016 Non Current .341.348. .4 4 165 9 Rs.00 174172 198 73. 154 187 71. 7 + 2.516.641 Equity Rs.44% 6 55 .974. Owne 182182 77.

Organogram Chairman’s Review DIRECTO CHIEF FINANCIAL OFFICER R CANE/ DEVELOPM BOARD OF ENT DIRECTORS HUMAN EXECUTIVE COMMITTEE RESOURCE COMMITTEE AUDIT COMMITTEE CHIEF EXECUTIVE OFFICER MANAGING DIRECTOR RESIDENT DIRECTOR 56 Mehran Sugar Mills Annual Report 2016 Limited .

values. create even expect e towards greater value and to givin growth To enforce the importance of good we express our realize g and in governance and setting the right sincerest thanks consist bett doing so standard throughout the Group. While Campus) at a 16 KM distance from our for to lay the doing so we are sugar mill. decision to This will dy invest in by aggressive to help upcoming Mohammad Kasim Hasham competition. Our safety. you are dities kets continually evaluate our directors and the value they facilitating us to and still henc look add to our Board. In doing commo mar Thus we We follow strict measures to ensure we so. keeping us firmly growth s decision financial controls and business integrity. year. intact and and and to invest ensuring we work Touching on our values we continue to diversifi grea in our towards creating give back to society through the cation is ter plants sustainable establishment of a 2nd Citizens therefor inco energy shareholder Foundation School (TCF . diversity. you place produci rnat consistentl that a robust governance structure is in trust and invest ng ion y positive place to enable the business to succeed your capital in this primary al results. conduct of employees. power ensure our being one of the first mills in the increasi project is business does not We province to set up a state of the art ETP ng one compromise our at facility at the industrial site. company. Organogram Dear Shareholders agricult goo challenges Chairman’s Review as Wind Power and Bakery and food ural d in a products through UniEnergy and On the eve of yet produce pric positive UniFoods respectively is an exciting another successful rs to es manner initiative. I welcome focus in and you.Hasham e key me efficiency to wealth. It tack our industries Chairman has become le challenging for product such s to get the 56 Mehran Sugar Mills Annual Report 2016 Limited . Board of The global successful path together with you. This Your trust is our value prod shareholde covers issues such as health and driving force. Our commitment to be an reducin the foundation cognizant of the environmentally friendly mill is g cou for a fact that we must exemplified by us leading the industry by poverty. and Meh Also our We look forward to continuing along our promoti ran. income valu value for setting out the values and standards we s. income example. The e to our expect in the conduct of business. As solely the endeavor Our Board is responsible for setting the stakeholders in on inte to achieve right tone from the top and ensuring Mehran. chain ucer rs. ntry. we for your trust in ent er creating have emphasized on Code of Conduct us. and deliver long term sustainable growth. ng are Directors’ economy today rea is characterized growth.

The Besides Brown Sugar. 58 Mehran Sugar Mills Annual Report 2016 Limited . we also have extended the Brand to its ancillary products like Moist Brown Sugar for baking. excellent Quality and premium packaging. Caster and Icing Sugar under the Brand name Sugarie. Different SKUs are available for consumer convenience. The Brand Sugarie has a good future and we expect exponential growth in the coming years. Sugarie – Sprinkle the Magic Premium Brown Sugar Sales under the Brand name “Sugarie” in selected A class outlets is picking momentum due to Consumer Awareness and Preference.

things don’t go right. When we stop. Pope Francis Environment 60 Mehran Sugar Mills Annual Report 2016 Limited . Life is a journey.

We started this journey by setting up 2 fly ash plants at a cost of Rs. While being a commercially viable entity we need to ensure that we continue investing in our ethical commitment towards protection of the environment and nature. We than took up the challenge to reduce our effluent quantity and were able to reduce it by 100 percent. We always remain cognisant of the environment we live in. Now as a final step we are installing a State of the Art Effluent Treatment Plant. at a cost of Rs. 125 Million that will make us 100 percent compliant thus fulfilling all our environmental obligations as a manufacturing facility. 60 Mehran Sugar Mills Annual Report 2016 Limited . 100 Million to control the fly ash emission.

er per the usual 45 Billion CPEC projects which that conditi practice in are primarily related to energy theBrazil’s positiveproduction is expected to rise ons November 2015. Foreign their absorbed by a remittances mostly from those recover corresponding Pakistanis working abroad totaled y increase in sugar USD 19. GDP growth was is dependent mainly on top four recorded at sugar 4.967 million metric tons the previous year. be the major source of foreign rably.5 million tons toll in the country at the offer and has thus been a catalyst on higher area under cultivation and yields.6 million tons due cane the season price of Exports declined by 8. This has increase by 300. and infrastructure are a huge foundation 3.898 million metric tons as compared to 1. exchange inflows in the country and The The sugarcane crop a strong source to stabilise our Thai and subsequent currency and reserves. see Pakistan to further reduce the different planting trends. Macro Economic indicators Global Sugar Scenario metric tons the previous year. We feel that the USD We down amidst rebuilding of supplies despite strong prices. Foreign Direct Investment also followed by $ 650/ton however. off late. Despite high prices. 180/.000 tons on account of higher yields. 172/-40 Kgs while could The low Inflation environment area.898 ed to 62 Mehran Sugar Mills Annual Report 2016 Limited . However. Thailan government to growth in the economy as well Russia and Mexico may also record improved sugar production. consumption shows increase. Global sugar production for 2016-17 is expected to for reserves touched USD 23. had shown signs of require Industry Review Pakistan’s budgetary deficit.75%.822 million metric decades which is critical to ensure tons the previous year.2 million on higher sugar El.3 increase by 5 million tons to 171 million tons as gains in domes billion.837 million metric tons as compared to 2. The harvest and production outlook is generally Nino in Punjab it was continue to compelled the State Bank of satisfactory but varies from country to country because of have Rs. Australia. Global tic continued to help in reducing prudent sugar prices. e season 2015- largely due to the CPEC government. sugar sugar production product in Sindh remained With effect from July 2016. CPI inflation declined to a historic low Global surplus or deficit of sugar of 2. growth of Pakistan.e.000 tons to 9. The global sugar deficit narrows weath 2016 started as projects. flat. after falling for over a year. d prescribed rates. and foreign decline by Thailand. Sugar ion is Pakistan has come out of the IMF production totaled estimat funding regime in view of improved 1. Brazil.8% primarily to lower area under cultivation and yield. Punjab also recorded a decline in production and the final number Financial Year 2016 was another job creation for our young reached 2.9 billion and continue to conside price. Pakistan to rebound 1. policies improvement to touch ment. their smoothly all over been one of the lowest rates on China’s production is up by 700. Indian fields sugar cane due to set back to textile industry Government has said that there will be enough sugar affecti increased. Declining oil prices have reserves million. EU expects d by in Sind was Rs.114 million metric tons as compared to 5.Kgs.9 billion the but are still attractive for exporters. Brazil and EU offset declines in India and Thailand.1 exchange 470.7% and foreign exchange producer i. sugar Towards the end of India’s production is expected to drop 3. as valuations on the stock market. Similarly. EU. USA sugar production is expected to taken Crushing began economic Bank Rate to 5. Directors’ Report Pakistan National Economy prosperity in the next few Sugar production in Sindh totaled 1. prices have again come down Extrem The crushing increased to USD 1.9%. But this owing to shortfall in cotton output ng increase was and power shortages. India.9 million tons to 16.1 million tons to 38 million tons on favorable weather and cause The notified price stimulus for the future economic laid higher diversion of sugarcane to sugar production. promising year in the recent population.000 to 9. Overall national production totalled 5. continued to improve.162 million economic history of the country.

This The reason for the reduced kept Sindh sugar mills ineligible to export and the 5. Lower price in International was 9. increase by 10-15%. the Afghanistan market. allowing prices to Considering the healthy production numbers surplus stock of sugar was previous year’s sugar cane in Punjab and KPK.822 million metric tons the previous year.909 tons was actually The average national During the off crop period md which was made mandatory. Under the circumstances the purchase price at Rs.94%. was 10.837 exported with most of it bound for recovery was 10. while that of Punjab rise due to shortages in the Indian they were not eligible to export.000 Tons of Sugar. 62 Mehran Sugar Mills Annual Report 2016 Limited . 253. Since Mills in Punjab also recorded a decline in production and the final number reached 2.114 million metric tons as compared to was 9.million metric tons as compared to 1. This measure Overall national production totalled 5.000 M Tons. Our 60.000 tons.000 square feet State-of-the-Art Godown caters 35. estimated at around 750.162 million metric tons the previous year.967 million metric tons the previous year.07% global sugar prices continued to Sind as per notification had payed lower prices million metric tons as compared to 2.65%.53% and created a positive sentiment export was the linkage of the entire quantity was exported by sugar mills located KPK locally as well. Sindh and Brazilian market.180/ market at that time were also responsible for government allowed an export policy of 500. However against this lower export volumes.

000 123.Financial HighlightsHighlights Operational 2015-2016 2014.000 324 80.000 1.478 417 106.39% 12. Local Sales 7.580 110.62% 9.13 6 7 100.000 7.999 2014 Season Ended 07-03-2016 30-03-2015 Export Sales .31 .Tons 106.025. .879 679.201 4.871 Gross Profit 742.000 (Rupees in million) 9 (Percentage) 0 0 0 809.000 2 64 Mehran Sugar Mills Annual Report 2016 Limited .81 11.136 (Rupees in million) 5.355 300 6.000 620 829 12 10.000 4 0 722.361 6.000 915.25% Earnings per share 16.797 (metric tons) 103.D 560.726 Crushing Days 105 108 Total Turnover 7. 10 4 200. 8 0 0 0 6 0 6 150.18 2 2 0 0 50.140.91 13.31 1 1 8 600.54% Molasses Production-M.28 10.877 Sugar Production-M.145 4.639.136 Profit before tax margin 9.06% 4.150 100 3.145 4.674.50 1 250.000 4. .666 9 0 0 . 0 2 10.498 8.000 500 (metric tons) 8.725 Sales Tax / F.000 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 Sucrose Recovery Cane Reserves Shareholders equity (metric tons) Crushed 4 11.E.366 Crushing-M.604 39.674.907 Capacity Utilization 78% 80% Gross Profit margin 10.113 668 9.894 354 5.Tons 38.000 84.034 0 .943 4.332 0 0 8 2 6 1.034 Net Profit margin 7.000 800 140.000 4. 2015-2016 2014-2015 2015 (Rupees in Thousand except EPS) Season Started 24-11-2015 08-12.44% 15. 0 200.000 50.59% Sucrose Recovery 11.000 200 74.807 430.400 400 8.186 2011 2012 2013 2014 2015 2016 2.400 108.86% Molasses Recovery 4.000 0 0 0 .958 600 547 (Rupees in million) 108.43 Sugar Pre-tax profit Average Crushing per Produced Turnover day 8.767 431 8.000 4.000 400. 1.348 700 10.000 20.210 7.42 11.Tons 940. 613.919 278.027 Net Profit after tax 541.12 .000 6.007 546.31% 11.626 946.42% Profit before tax 668.000 0 5.000 6.

200 793 1 (Rupees in million) 3 1.500 1.862 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 0 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 600 2011 64 Mehran Sugar Mills Annual Report 2016 Limited .038 1.652 2.400 1.00 2.100 1.323 1.54 1.386 2.800 900 1. 2.

244 164.12 million. of its prompt payment system and efficiency. grid. at the notified cane price.in 4.49.881 obligations promptly and regularly. Rs.474 4.244 174. This capacity expansion is expected to come The crushing campaign 2015. main objective of the system is to alterations and plan automation.257 metric tons and to plant to plant choice varieties.93. These contracts are expected to significantly improve the profitability of Company.Tons 6.255 655.257 57.76 Our current year’s BMRE was Pretax Profit ‘000’ Rs. 174.65% was 8% per share.58 Billion which is another we sincerely hope to be fully On the financial front. which meant that in performance and growth in sales erection and installation phase.20.713 million to Rs.540 Rs.81 million to Rs. The plant is in its 325. • Substantial savings in finance confidence of the Improvement in 2 business encouraged sponsors to increase its capacity.750 4.626 million on account of have brought positive impact by Beverage makers. though lower than 2014-2015. country.53 cane in its vicinity. Solar PV plant at the mills at a Rs. turnover and profit before tax in This year we have also made the history of the Company. The highest market of God we are glad to report that we compliant with all environmental capitalisation for the year was laws.in 725.31%.541.674 Billion is the highest cost of Rs.713 a choice buyer for growers in view mainly focused on plant energy After Tax Profit ‘000’ Rs.72 producer supplying to the national Because of this policy our area 2 continues to flourish in sugar cane million. Boundry June 30.43.244 million. As the reducing overall distribution cost reduction in mark-up rate as Table below shows a few highlights of the Company.713 million to Rs. 4. Sugarie brand have been gaining the end of January 2017 by which 6.079 purchase of sugarcane. measure has helped produce an average of 550 units of electricity Production and sales of ethanol • Profit from Unicol improved to daily. 200 Retail Division has shown consistency 125 million. Turnover Rs. However Rs. Our strategy is to ‘000’ Earnings per Share Rs. behind Mehran and was higher market capitalization surpassed turnover.591 metric 66 Mehran Sugar Mills Annual Report 2016 Limited .81 reduce off season electricity cost and CO2 production and sales showed healthy The recovery trend at 11. The Power supply to HESCO remained substantial progress on entire Mehran team is appreciated smooth and similarly payment improving infrastructure and for achieving this milestone. This year’s turnover of main road during the season. The average Sind sucrose of the Company crossed Rs.968 million in Our PBT and PAT amounting adding a further 60 KW capacity. Mehran was increased from Rs.843 metric tons respectively. rom HESCO was also realized by landscape of the mills.in 325.540 continues to honour its purchase efficiency and thus become a Portfolio improved from sustained Baggasse based power Production-CO M. Coordination with walls have been rebuilt while Our highest ever profitability was HESCO has been very good and we mainly supported by following pavers have been laid inside the hope that this power production and mills at different locations.133. recovery at 10. the share price Plant at an estimated cost of Rs. state of the art Effluent Treatment Profit after tax also showed healthy selling price by 7%.964 price. 2014-2015. highest in our corporate history.7.319 million compared management has embarked on metric tons and 54.in 335.668 million and Rs. decreased marginally from 57.727 Billion. we also operational and has helped year round dispatches of successfully installed a 118 KW eliminate traffic congestion on the sugar. Rs. But the rate resulting in adequate cash representative office in Lahore and Unicol Limited Unit 2015-2016 2014-2015 remained manageable in view of generation.70 2. By that time the Company expects to sign long term supply contracts with multinational of sugarcane supply to most mills 98. off crop.566 million to Structural changes in the division on line by March 2017.116. CO 16 started with a consistent source from Rs. Despite competition for • Supply of Power to HESCO Gross Profit Rs. This Unicol Limited in the history of the Company. • Improvement in average million respectively are the have a self reliant power source for the This year we have also installed a growth of 33% and 30% respectively. have started distribution in key s improvement in sugar selling outlets of Lahore and Islamabad. The are planning on doing through tons to 53. Satisfied with its success. 52.39.333. The way to achieve this is cultivation and we are able to reduce our plants steam demand which we to communicate with our farmer to Rs.47 million.53%. 6. cost consumer. by the grace milestone. The factors: distribution remains beneficial for new cane yard located across the both parties. We now have a amongst sugar mills. growth from Rs. The company continue to invest in energy • Dividend Income from Equity Production-Ethanol M. was amongst highest in the For the first time.Tons 53. have achieved the highest ever recorded at Rs.146. 2016. main road has been fully • Increase in turnover due to During the year. season progressed prices and yet not compromising on increased due to competition well as regular sales of sugar retail penetration. Various products of our We expect its commissioning by than the previous year’s 10.

Kgs. Grid Inter Connectivity Study attaining higher crushing levels. the Company has pray for the success of this representatives of growers In line with past few years. has slowed down due to UniFoods Limited completed by September 2017. Alternate Energy The situation is expected to 50 MW wind power plant in erection work is expected to be 17 has been relatively Development Board (AEDB) has improve in the latter half of Jhimpir. We are which is expiring in May 2017. The Company has been sugarcane continues to be in line determine our future strategy. Government. we hesitation at the early state of the art crushing and sucrose recovery. It was also decided sugarcane in its vicinity. arrangement to establish a introduction of new products and Support Price of Rs. The Future Outlook sugarcane arrivals have not of arrangements. A contribute toward sustained Provincial as well as Federal using renewable sources. Presence Despite this stalemate. venture established for setting up a new company. Construction and 2016- from international institutions.5 MW Co. accordingly. We sincerely with sugar mills and has been conducted and submitted to the NEPRA determined tariff has policy. However. We growers and government’s established with the objective of with past which revolves around will thus have a clear picture in call and started their factories establishing a 26. UniEnergy Limited As regards its financial plant has been selected and a letter Generation power plant. We are plant at Hub Industrial Estate. good capacity and efficiency revival of this project. process for issuance of yet to be announced. evacuation of power. project.. smooth. a joint credit is being established by the also exploring foreign funding and financial consultant for the forced to run at 50 % capacity. we are arrangements will be initiated.182/40 advantage of availability of Generation License and financial baking and confectionary a future growth opportunity. a our next quarterly report. After its also expired and a new one has entered into a joint venture project as it will pave the way for has announced a Minimum Mehran has geared itself to take approval. cakes and cup cakes 2016. Grid review panel have established a 100% owned start of the season subsidiary by the name of Mehran Payment policy for purchase of meetings in December 2016 will responded positively to the Energy. The Provincial issued a formal Letter of Intent in this December 2016 with mills non-availability of the grid for Plant will hopefully be operational Government in consultation respect. management is Company has appointed a technical The start of crushing campaign been encouraging and mills were Work on UniEnergy Ltd. varieties. through process house actively pursuing the matter with Encouraged by favourable policy for throughout the country with a improvement is expected to the relevant departments in the establishing power generation plant Sugar Mills despite their national distribution network. the HESCO for their approval. In addition In line with our diversification by December 2017. that sugar mills are to start of early maturing sugarcane hopeful for an early solution and a Mehran Energy Limited aiming to apply for the Up Front Tariff The plant will initially market crushing by November 15. initially 66 Mehran Sugar Mills Annual Report 2016 Limited .

2016. Name of Directors Meetings attended what happens at the start of the crushing season. four nonexecutive overall recovery trend for Mehran seems similar to last year and we hope to end with a similar recovery rate (including the Chairman) and two executive Directors. we would like to appreciate the devotion and efforts of the workers. a total of four meetings of the Board were convened and the attendance of the energy efficiency measures is eventually the foundation we are laying for the 26. comprising two independent. No. If exports were to 4 Khurram Kasim 2 thus be allowed we are optimistic that sugar prices shall remain stable for the year. External Audit The Company wishes to place on record its appreciation for the services rendered by the Company’s auditors M/s. For and on behalf of the Board of Directors Audit Committee The Audit Committee of the Company comprises of three non-executive and one independent (the Chairman) Directors.8%. transparently monitoring the performance of the Company and taking strategic decisions to achieve sustainable growth in the Company operations. country or ill health. They will also be determined by International prices and the governments export policy. The The Board of Directors of the Company consists of eight members. 2016 Chief Executive Officer 1 Dr. Our steam and During the year under review. sugar prices have corrected locally due to influx of new season production which is usually S. Tons of cane at an average recovery of 9. challenge this year will be to see how successful we are in achieving this.56 M. The Board is responsible for independently and which would be a positive situation. Written notices of the Board meetings were sent to the members seven days One of the major investments this year has been towards reducing the steam requirement of our sugar plant. staff and executives and anticipate that in the future as well they will contribute towards the enhancement of the productivity and well The leave of absence was granted to the directors who could not attend some of the meetings due to being out of being of the Company with greater zeal and spirit. Domestic sugar prices will be dictated largely by national production numbers which are expected to be 10% 1 Mohammed Kasim Hasham 3 higher than last year. Attendance of the members was as follows: Mohammed Ebrahim Hasham S. shareholders and suppliers for the valued support and co-operation extended by them for the betterment and prosperity of the Company. No. A total of four meetings of the audit committee were held during the year. Our before the meetings. Amjad Waheed (Chairman) 2 2 Mohammed Hussain Hasham 3 3 Khurram Kasim 2 4 Mr.Ton in the last quarter. 2 Mohammed Ebrahim Hasham 4 Slightly worryingly International prices have fallen by USD 100/. Framework Board of Directors Till 15th December 2016 your mill has crushed 4. Hence.5 MW Co-Generation project. The Board has adopted the statement of Ethics & business practices. Chartered Accountants. members was as follows: On the marketing front. Corporate Governance payment cycle of not more than one week. 5 Ahmed Ebrahim Hasham 4 Acknowledgment 6 Muhammad Iqbal 4 7 Dr. associations. For 8 Muhammad Bashir 4 enhancing our efforts. 68 Mehran Sugar Mills Annual Report 2016 Limited . suppliers and regulations. Name of Directors Meetings attended Karachi: December 21. Amjad Waheed 2 We are trying to cultivate our future with a sharpened focus on delivering greater shareholders’ satisfaction. All employees are informed of this statement and are required to observe these rules of conduct in relation to customers. who completed the audit of financial statements of the Company for the year ended September 30. The eventual result shall be measured by the volume of Baggasse we are able to save as compared to the previous year. we are hopeful to attain our crushing and production targets. banking and financial Statement of Ethics & Business Practices institutions. However Pakistan still 3 Mohammed Hussain Hasham 2 remains the most competitive source of sugar into the Afghan and Central Asian market. The Board further extends its gratitude to the government functionaries. EY Ford Rhodes. Muhammad Iqbal 4 The leave of absence was granted to the members who could not attend some of the meetings due to being out of country or ill health.

The The pattern of shareholding as on growth. as disclosed not entered into any commitment. CEO. A total of estimates are based on • Chairman of the Company and his spouse purchased 27. congenial and Statements. as disclosed to the SECP and sugar conference. opportunities. a net liability of line with the changing maintained proper books of Rs. seminar in Lahore on departures there from has been Company Secretary and their sugarcane diseases. its state of affairs. been modernized. 2016 has During this year we law. doubts upon the Company’s and discussed future ideas with verified by the audit committee and the Board. ability to continue as a going our team for improvements at and provides the information about the strategy. shares of the Company from the market during the year days in Lahore • International Financial under review. and the proportion of relations far more who were recommended for and financial data for last six receivables from related parties provided importantly than a mere Investment in our appointment by the Board of years is annexed. of the Company. On the basis program is continually changes in equity. PICG as well as other statements and accounting training forums. 1998. if any. • The summary of key operating balance sheet date. Transactions Capital The Company’s Accounts were monitored. your safe working • The Company is operating a environment. 70 Mehran Sugar Mills Annual Report 2016 Limited . seedling and explained. date. as doubtful debts. been provided. CFO. professional new instrument block has also been permanent employees. job mosque has also been modernized Directors are pleased to report Pattern of Shareholding in its facade and internal areas. comprising our working environment for of Federal. legal and ethical Directors and duly approved by Working Environment obligation. which was attending the PSST Reporting Standards. 4. cash flows and • There is also an un-funded gratuity scheme.000 14 members from the reasonable and prudent Mehran team spent 3 judgment. amount due from related parties at the regards its employee efficiency. The Company Mehran in terms of energy and plant Chartered Accountants performed concern. development and made considering the future • The financial statements. the cost audit of the Company. M/s. contribution towards the culture for our most invested Rs. A that: Provident Fund Scheme for its satisfaction. which compensation and Mills. also subject to cost audit under Our sugar technology partners from It is confirmed that the transactions Focus on our human the Companies (Audit of Cost • There are no significant Germany. areas of our corporate Haroon Zakaria & Company. Provincial and local September 30. Corporate Social Responsibility Responsibility to Stakeholders Cost Audit • The system of sound in design and has been Certificate of Related Parties Investment in Human conducted by Mauritius Sugarcane internal control is effectively implemented and Research Institute. 2016 and the Company has Reporting Framework of satisfactory employees at both Head office and taxes and levies.64 million as at needs of our Company. 2016 is included in the competitive career prepared by the management September 30. We are the Securities and Exchange • The Company has made Material Changes committed to creating a We have in the last 3 years Commission of Pakistan (SECP). 2016 is programs at PIM and in preparation of financial annexed. 50 Million on uplifting national exchequer in the form There have been no material changes since Corporate & Financial valued asset. At the mill our Management in annexed Financial would affect its financial position at the House and technical House have As required by the Code of benefits. The old factory Corporate Governance. value of the fund as at September 30.558 million (approx). We applicable in Pakistan. fairly present 136. 2016 was Rs annexed shareholders’ information. have KSE according to the relevant also had our cane team been followed in preparation of rules and regulations. its adequately disclosed and spouses and minor children control. the result of Our employee-training its operations. modified to remain in of actuarial valuation conducted • The Company has during 2016. continued to invest in our Human resource • Appropriate accounting policies • The Pattern of Shareholding as through training have been consistently applied at 30th September. carried out any transaction in water treatment the shares of the Company during the year under review. IPRO also visited our site entered with related parties have been capital is one of the core Accounts) Rules. accounts as required under the September 30. None of attending 4 days financial statements and any the other directors.

the school is with the best industrial practices and educational environment around school has been with The Citizens Foundation growing steadily and developed in ensuring adherence to the requirements of its vicinity. We take pride in running to provide quality and generally for the youth training programs • TCF School . collaboration with the health and safety codes. Craft Wise HSE social development programs is to (DMS) The school is standards of the Sugar. having a very proactive and education to our students. premises of the mills benchmarked members.build. the Company is education base by embarking on providing full operational. emergency Response provide education in the rural areas situated within the schools.26 Million funded by Mehran requirement for quality human resource. initiative for broadening the Investment in employee HSE Contribution towards 1998. Corporate Social Responsibility needs to automate the factory and thus employees on the subjects of: HSE One of the core initiatives of our • Daood Memorial School on the education 11. Fire Drills and For this reason. The corporate strategy of the Company. of the surrounding areas. in addition pavers plan Awareness Sessions. Since its incorporation in our students. Currently 336 students The entire boundary wall facing the main training.5 Million. 535 students are at a cost of Rs. in line assist in strengthening the education initiative. • TCF School – Education in Rural Pakistan the development of yet Ensuring the health and safety of the financial and logistic support Haji Hasham another school at Hurri.99. the local community. we school was academic session from April workers. The HSE located in the rural areas of enrolled and 21 faculty The Citizen which Mehran Sugar department is entrusted with the Pakistan they have an ideal members are entrusted to Foundation in contributed in large interest of responsibility of monitoring of HSE opportunity to contribute where provide quality education. Since sugar mills are currently. The extreme. and continuous efforts In order to broaden core objective of the Company is to create sugar mill must play its role to school is again being of the management and the the horizon of our conducive working environment. specifically near our mill premises. students increases. enrolled with 6 faculty members.Hurri Campus ways. Piyaro Lund area. The God. This is are enrolled with 16 faculty road has been re. have been laid in most parts of the practical Drills. The compliance and ensures mandatory usage of the need for education is most While the number of 13 kilometers from campus has started its relevant safety equipment at work for our factory. 70 Mehran Sugar Mills Annual Report 2016 Limited . The department has conducted have continued to ensure established in 2011 2016. three schools are primarily for our employees through teacher residential colony and the factory area walk evacuation Drills.12 MSML employees are at the heart of the to the school. a developed in collaboration teachers. orientation. as well as results of MSML has again taken an coordinated HSE team. By the grace of Campus We strongly believe that every kms from our factory. So far 122 students are more than 90 sessions during the year for that there is no compromise at a cost of Rs. 16.

We pledge to observe installing this system as well as maintaining all the governing laws of the it to ensure it runs at capacity and functions jurisdiction in which we operate accordingly. 80 million in the last five years on reputation. Our of health services in the major benefactor to create rural negotiated a Power purchase Contribution towards associated company UNICOL Limited was surrounding areas of Tando import bill of furnace oil but also wealth in our region for both miller agreement with HESCO for supply also able to export USD 38 million of ethanol Allahyar. The success of operational since 2004. Health services has the potential to contribute We cultivate high yielding varieties 1. We strive to Company is in the process of license from national power The Company’s governance number of patients treated are make sure that the impact of our business is Regulatory Authority (NEPRA) structure has helped to achieve best 4. which provides basic monitor the implementation of share the latest research and training to the women of the relevant policies. Throughout the year. country. a Vocational growth. cooking and RESPONSIBILITY TO SOCIETY providing them seeds to grow stitching to the women of the Power generation high yielding sugarcane crop. society and the environment. practice and drive performance from the boardroom to our employees. Accordingly. A dedicated full time Mehran Sugar Mills limited is of setting up a 26. dispensary unit has been environment-friendly and would both farm and factory yields.824. The business Mehran is proud to state that we are one of integrity has led to long term the few mills in Pakistan which has installed success and we are committed to modern fly ash systems on 100% of its conduct our business boilers thus ensuring zero fly ash discharge. corporate governance. responsibility towards provision purposes. that it’s our responsibility to ensure international as well as “PSQCA” grid. colony and surrounding areas. Power generation to connect to the national grid. Emission and discharges customers. Mehran Sugar Mills limited Governance structure During the period from October compliance so as to be of no concern to the standards. We are conscious quality sugar which qualifies contribute its share to the national been assigned for this unit. MSML successfully income tax and other statutory levies. For quality assurances surrounding areas. embroidery. Vocational training Farmer support services establishing the Quality Management System based on the In order to bring some improvement We believe that the farmers are requirements of ISO 9001:2015 in life style of the women of the enablers of our sustainable standards. the national economy services to the needy free of larger scale. The help mitigate greenhouse gas The Company is a dispensary is fully equipped and this 5 MW power plant stimulate RESPONSIBILITY TO ENVIRONMENT emissions from the country’s noteworthy contributor to provides basic health care Customer satisfaction us to initiate Co-generation on power sector. from January 2015. 662 million in respects of its like to farmers for commercial bagasse. the has obtained the power generation 2015 to September 2016. the management. responsibility and with integrity The Company has invested approximately with an aim to strengthen our Rs. doctor and relevant staff have compliant in all respects.500 MW of renewable at our farms and after cultivating them for The Company recognizes three years we give them on loan energy through biomass fuel and made necessary investments practices of the code of exchequer Rs. sustainable. its production facility is environmentally always keen to produce premium Seeking the opportunity to generation Power Plant. Power supply has started in the last financial year. The MSML mobile efficient use of bagasse is economy and farmer as it has helped improve of 5 MW. we are in the process Mehran is highly conscious of ensuring that cost. a dedicated training Centre has been Company’s representatives management representation is established within the MSML interact with the farmers to entrusted to implement and Staff Colony. ensuring a better crop in our socioeconomic development of a area. payments towards Federal excise duty.5 MW Co. the communities where we operate. developments in emerging new colony and surrounding areas for varieties of sugarcane and sewing. Pakistan’s sugar industry Infrastructure improvment around Management House and Colony Mosque/Fair Price Shop. Our supply of Energy is considered to be the This year the entire center has seed as loan to growers has life line of any economy and the been renovated to give a modern been extremely beneficial in most vital instrument of look. and to comply with the best 72 Mehran Sugar Mills Annual Report 2016 Limited . This program has been a from bagasse will not only reduce Further.

5 Million on the project and are presently in the proud to say that this plant will Mehran have been striving to our water discharge remaining water is are proud to state that our waste process of erecting a be first of its kind in the entire create an efficient waste water system whereby we used in our farms water system was created in state of the art waste sugar industry of the country. engineering team. The 17. We world renowned supplier. 72 Mehran Sugar Mills Annual Report 2016 Limited . have accomplished 90 adjoining the factory.Waste Water Treatment management system. Work is being completed on our State-of-the-Art ETP facility. We have house by our capable water treatment plant with a We have recently percent reuse of waste already invested a total of Rs. Night shot of our new and has contributed to the national Caneyard. We are Over the last 3 years we at completed stage three of water at the plant.

74 Mehran Sugar Mills Annual Report 2016 Limited .

76 Mehran Sugar Mills Annual Report 2016 Limited .

78 Mehran Sugar Mills Annual Report 2016 Limited .

80 Mehran Sugar Mills Annual Report 2016 Limited .

The retiring Directors are: 1. Ahmed Ebrahim Hasham\ 6. The shareholders are requested to notify the Company immediately the change in their address.P. SPECIAL BUSINESS 5. The retiring auditors M/s. 4. 2017 to January 31. Clifton.e. Proxies in order to be effective must be received by the Company at its Registered Office not later than 48 hours before the time fixed for holding the Annual General Meeting. To appoint auditors for the year ending September 30. Muhammad Iqbal 7.5% i. 2016 as recommended by guidelines as contained in SECP’s circular 1 of 26th January. The share transfer books of the Company will remain closed from January 25. Chartered Accountants Avenue. Muhammad Basheer 8. 4. EY Ford Rhodes. for which statement as required by S. Auditorium. for verification. The shareholders are also requested to intimate us their CNIC # to implement the requirements of Annual Returns (Form appointment. 2017 and to fix their remuneration. To confirm the minutes of the Extraordinary General Meeting held on November 22.O 27(I)/2012 dated January 16. 2000 to be followed. the Board of Directors of the Company.C. To consider and approve Final Cash Dividend @22. 1984. Dr. if any.25 per share interim dividend already paid for the year ended September 30. Rs. To receive. In case of appointment of proxy by such account holders and sub-account holders the Rs. Chartered Accountants being eligible. A member entitled to attend and vote at the Annual General Meeting may appoint another member as his/her 1. January 31. 2016. 2016 Company Secretary 82 Mehran Sugar Mills Annual Report 2016 Limited . Mohammed Hussain Hasham 4. Amjad Waheed (ii) To apprise and review the status of investments in Associated Companies. A)which the Company is required to file with the SECP under section 156 of the Companies Ordinance 1984. 2012 is annexed. 4. Karachi on Tuesday. consider and adopt the Audited Financial Statements of the Company together with the Directors’ and Auditors’ Reports for the year ended September 30. Mohammed Ebrahim 3. Hasham Khurram Kasim 5. Mohammed Kasim Hasham 2. 2016. 3. 2017 (both days inclusive). 2. have offered themselves for re. The shareholders whose shares are registered in their account/sub-account with Central Depository System (CDS) are requested to bring their CNIC along with their account number in CDS and participant’s ID number 3.R.5% i.25 per share in addition to 42. 5. 6. (i) To elect eight (8) Directors as fixed by the Board for the term of three years. To transact any other business with the permission of the Chair. in accordance with the provisions of Section 178 of the Companies Ordinance. ORDINARY BUSINESS 2. 2017 at 1600 PST to transact the following business: 1. Notice of the Annual General Meeting Notice is hereby given that the 51st Annual General Meeting of the members of the Company will be held at NOTES I. 2. proxy to attend and vote in his/her behalf. By order of the of Board of Directors Muhammad Hanif Aziz Karachi: December 21.A.e.

We are elected by the Board for this purpose and the The independent directors meet the criteria of actively pursuing the matter with Board met at least once in every quarter. Companies Investment complete investments so of associated made to date compliance with the best practices of corporate Approved far company since resolution governance. A complete d NEPRA. other evacuation of power. Ahmed Ebrahim Hasham 8. independence under clause 5. whereby a listed company is managed in the current year.00 Million 50. in his absence.19. non-executive directors and statement. being a broker of a stock exchange. Statement of Compliance with the Code of Corporate Governance For the year ended September 30. The directors have confirmed that none of them Government. There was no casual vacancy on the Board in Associated Total Reasons for not having made Statements Investment governance. 5. The Board has developed a Vision/Mission y prepared on independent. a DFI or with their duties and responsibilities as directors of corporate bodies. 9. (excluding the listed subsidiaries of listed holding companies where applicable). Kodvawala Work on UniEnergy Ltd has slowed down Mr. including appointment and Limited achieving the target date. were 2.00 Million Mr. 7. The Company has prepared a “Code of Conduct” and has ensured that appropriate steps have been Project is expected to be operational The Company has applied the principles contained in taken to disseminate it throughout the Company in December 2018 and approved the CCG in the following manner: along with its supporting policies and procedures. All the powers of the Board have been duly Industrie per estimated fund requirements. Independent Mr. along Provincial as well as Federal with agenda and working papers. In addition the Directors Hasham Mr. Amjad Waheed exercised and decisions on material s Presently we are facing no constraints in Directors Mr. Mohammed Kasim Hasham determination of remuneration and terms and due to non-availability of the grid for Non-Executive Mr. Mohammed Ebrahim Hasham 650. by a director and a revival of this project. 2016 Statement as required by S.1 (b) of the CCG. circulated at least seven days before the is serving as a director on more than seven meetings. have been NEPRA’s determined tariff has also expired Mr. Mehran investment amount will be incurred as No material Energ 750. At present the record of particulars of significant policies along constraints in achieving the target Board includes: with the dates on which they were approved or Project is expected to be operational UniFood in December 2017 and approved amended has been maintained. The Company encourages representation of 6.0 Million 20.19 of Listing exchange. 16. All defaulted in payment of any loan to a banking the directors on the Board are fully conversant company. 1. 5. All the resident directors of the Company are Program and two directors are certified from registered as taxpayers and none of them has Pakistan Institute of Corporate Governance. by the Chairman and. overall corporate strategy and Limite the basis of guideline issued by directors representing minority interests on its significant policies of the Company. Six directors of the Company are exempted from the requirement of the Directors’ Training 3. 84 Mehran Sugar Mills Annual Report 2016 Limited . UniEnergy No material Executive Directors Mr. The meetings of the Board were presided over Limited We are hopeful for an early solution change.00 Million No material s investment amount will be incurred as Category Names change. Mohammed Hussain conditions of employment of the CEO.00 Million 10.R. 200. Presently we are facing no Board of directors (the Board). in financial Regulations of Pakistan Stock Exchange Limited for Amount of the purpose of establishing a framework of good 4. the relevant departments in the Written notices of the Board meetings.O 27(I)/2012 dated January This statement is being presented to comply with an NBFI or. Muhammad Bashir transactions. 2012 the Code of Corporate Governance (the CCG) has been declared as a defaulter by that stock Material Change contained in Regulation No. The minutes of the meetings were listed companies. and a new one has yet to be announced.00 Million per indicative implementation schedule change. Muhammad Iqbal executive and non-executive directors. including this Company appropriately recorded and circulated. Khurram Kasim taken by the Board/shareholders.

The Board has formed an HR and Remuneration Committee. Chief Executive Officer 18. The directors’ report for this year has been Federation of Accountants (IFAC) guidelines on prepared in compliance with the requirements of code of ethics as adopted by the ICAP. in all material respects. 2016 function. For and on behalf of the Board 17. transactions were undertaken at arm’s length price or not. and upon recommendation of the Audit 23. The Board has formed an Audit Committee. intimated to directors. of whom two are non-executive appropriately reflect the Company’s compliance. place before the Board of Directors for their review and approval its related party transactions 16. CEO and executives do not hold and to highlight any non-compliance with the requirements of the Code. of whom three are 22. transactions and transactions which are not executed at arm’s length price and recording proper justification for interim and final results of the Company and as using such alternate pricing mechanism. satisfactory rating under 86 Mehran Sugar Mills Annual Report 2016 Limited . to the extent where such compliance can be objectively verified. The Board has setup an effective Internal Audit Karachi: December 21. We have not carried out any procedures to determine whether the related party the committee for compliance. whether the IFAC guidelines in this regard. and business decisions. Statement reflects the status of the Company’s compliance with the provisions of the Code and report if it does not 13. or to form an opinion on the effectiveness of such internal controls. Mohammed Ebrahim Hasham non. the quality control review program of the ICAP. Review Report to the Members on Statement of Compliance with the code of Corporate 10. The Code requires the Company to place before the Audit Committee. auditors have confirmed that they have observed responsibility is to review. which may materially affect the market price of 14. It controls. Chartered Accountants 19. The financial statements of the Company were appointed to provide other services except in duly endorsed by CEO and CFO before approval accordance with the listing regulations and the The responsibility for compliance with the Code is that of the Board of Directors of the Company.executive director. The ‘closed period’. once through stock exchange. We confirm that all other material principles Committee. The terms of reference of the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the committee have been formed and advised to the Audit Committee. The statutory auditors of the company have confirmed that they have been given a Date: December 21. as applicable to the Company for the year ended 30 September 2016. prior to the announcement inquiries of the Company’s personnel and review of various documents prepared by the Company to comply than that disclosed in the pattern of shareholding. The directors. non. Material/price sensitive information has been governance procedures and risks. We have reviewed the enclosed Statement of Compliance (the statement) with the best practices contained in the the CCG and fully describes the salient matters Code of Corporate Governance (the Code) prepared by the Board of Directors of Mehran Sugar Mills Limited required to be disclosed. of interim/final results. Our of the Board. The Company has complied with all the corporate Company’s securities. the Company’s corporate comprises four members. shares of the company and that the firm and all its partners are in compliance with International 11. with the Code. nothing has come to our attention which causes us to believe that the Statement does not members. employees and stock internal control systems sufficient to plan the audit and develop an effective audit approach. We are only required and have ensured compliance of this requirement to required by the CCG. that they or any of the partners of the firm. The meetings of the audit committee were held at distinguishing between transactions carried out on terms equivalent to those that prevail in arm‘s length least once every quarter prior to approval of enshrined in the CCG have been fully complied with. 20. 12. required to consider whether the Board of Directors’ statement on internal control covers all risks and 15. The statutory auditors or the persons (the Company) for the year ended 30 September 2016 to comply with the requirements of Rule Book of associated with them have not been Pakistan Stock Exchange Limited where the Company is listed.executive directors and the chairman of the disseminated among all market participants at committee is an independent director. A review is limited primarily to any interest in the shares of the Company other 21. We are not exchange. It comprises of three Based on our review. was determined and As part of our audit of the financial statements we are required to obtain an understanding of the accounting and and financial reporting requirements of the CCG. with the best practices contained in the directors and the chairman of the committee is a Code. Company secretary and Head of internal audit their spouses and minor children do not hold Governance was made during the year. No new appointment of Chief Financial officer.

2 16 Place: Karachi 0 86 Mehran Sugar Mills Annual Report 2016 Limited .

for the year then ended and we state changes in equity together with the notes forming part thereof. were as applicable in Pakistan. Auditors’ Report to the Members We have audited the annexed balance sheet of Mehran Sugar Mills Limited (the Company) as at 30 September c) in our opinion and to the best of our information and according to the explanations given to us. Our responsibility is to express an opinion on these d) in our opinion. deducted by the Company and deposited in the Central Zakat Fund established under section 7 of that Ordinance. 1984. profit and loss account. to the best of our knowledge and belief. conform with approved accounting standards that we have obtained all the information and explanations which. hence. the balance 2016 and the related profit and loss account. its comprehensive income. investments made and the expenditure incurred during the year were in accordance with the objects of the Company. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the above said We draw attention to the contents of note 27. Our accounting policies and significant estimates made by management. b) in our opinion: Chartered Accountants Audit Engagement Partner: Khurram Jameel i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with the Companies Ordinance.3 to the financial statements. in the necessary for the purposes of our audit. presentation of the above said statements. except for changes as stated Date: December 21. and prepare and present the above said statements in conformity with the approved accounting standards and the requirements of the Companies Ordinance.1 to the financial statements in respect of contingencies. 88 Mehran Sugar Mills Annual Report 2016 Limited . cash flows and changes in equity for the year It is the responsibility of the Company’s management to establish and maintain a system of internal control. and. as well as. statement of comprehensive income. 1984. Place: Karachi ii) the expenditure incurred during the year was for the purpose of the Company’s business. with which we concur. 1980 (XVIII of 1980). cash flow statement and statement of statement of changes in equity together with the notes forming part thereof. proper books of account have been kept by the Company as required by the Companies Ordinance. and are in agreement with the books of account and are further in accordance with accounting policies consistently applied. We believe that our audit provides a reasonable basis for our opinion and. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. 1984. The statements are free of any material misstatement. we report that: a) in our opinion. on a test basis. 2016 in note 2. was statements based on our audit. Zakat deductible at source under the Zakat and Usher Ordinance. manner so required and respectively give a true and fair view of the state of the Company’s affairs as at 30 September 2016 and of the profit. and then ended. evaluating the overall opininon is not qualifie in respect of these matters. statement of comprehensive income. evidence ultimate outcome of the matters referred therein cannot presently be determmined with certainty and. and iii) the business conducted. give the information required by the Companies Ordinance. An audit also includes assessing the provision for any liability that may arise from such matters has been made in the financial statements. no supporting the amounts and disclosures in the above said statements. after due verification. cash flow statement and sheet. An audit includes examining. 1984.

190.273 Basic and diluted earnings per share 36 16.974.312.485 Trade deposits and short-term prepayments 13 6.253 Taxation – net .318 Current maturity of liabilities against assets subject to finance lease 19 3.511 289.633 SHARE CAPITAL AND RESERVES Taxation 35 (126.204 Current portion of long-term financing 18 15.91 13.180.580) Stock-in-trade 10 412.003.43 NON-CURRENT LIABILITIES 304.339 Long-term receivable 6 . 2016 For the year ended September 30.160) (3.743.113.719.611 137.005 1.939.332 45.006.817.209 151.709 Cash and bank balances 16 34.263 47.232.543 2.970.net 10.771 Short-term borrowings 25 167.405.361.972 Trade debts 11 10.323.846 652.347.432.866.876.019 Accrued mark up .738.080 Finance costs 34 (98.561 Trade and other payables 24 8.494.103.199. .504.067 (92.420.587) Property.302.888.096 4.814 Long-term deposits 853.474. 9.380.441 161.389 Sales tax and federal excise duty payable 1.987 4. plant and equipment 5 1.835.310 9.935 42.258.437.414.329.554.841.886.210.105.248.919 Provision for quality premium 23 842.367 6.350.019 725.074.849) (40.643.757.954 430.829.175.589 11.800 Operating profit 650.848.787 1.065 Long-term investments 7 765.295) (80.450 Reserves 2.525.060) Other expenses 32 (41.532 599.334.553 Provision for market committee fee 26 22.438.161. Gross profit 742.527 1.000 Current portion of market committee fee payable 20 9.348.299 2.128.722 9.652 2.962) (27. Balance Profit and Loss Sheet Account As at September 30.462) TOTAL ASSETS 4.765.949 95.290.806.924.360) Share capital 17 320.097.633 EQUITY AND LIABILITIES Profit before taxation 668.474 18.460 273.290.827 679.462.115 Share of profit from an associate – net of tax 7 116.341.113.127 Other income 33 183.422 Deferred liability 21 322.925) (173.202.815 Chief Executive Officer Director Chief Executive Officer Director 90 Mehran Sugar Mills Limited Annual Report 2016 91 .055.626.919 119.861.968.037 1.717.401) (146.351.797.020.737.712 The annexed notes from 1 to 47 form an integral part of these financial statements.935 Stores and spare parts 9 72.909.505) CURRENT ASSETS Biological assets 8 43.364.289. 2016 2016 2015 2016 2015 Note Rupees Rupees Note Rupees Rupees ASSETS Turnover 28 7.516.338 Net profit for the year 541. Long-term financing 18 21.400 Distribution costs 30 (36.480 CURRENT LIABILITIES 1.254.563.134.455 1.802) (116.450 320.038 1.452.632.035.610 Short-term investments 15 1.312.681.034.000 Market committee fee payable 20 4.649.415.256 26.553 Administrative expenses 31 (197.396.878.950) 2.520 98.025.760 Deferred taxation 22 119.490.553 2.225.541.895 14.026 Loans and advances 12 108.452.667 Liabilities against assets subject to finance lease 19 70.243 48.914.656.221.374.205.370.584.625 93.772.133 - Taxation .888 2.756 546.406.716.974 Other receivables 14 3.848.566.422.652 NON-CURRENT ASSETS Cost of sales 29 (6.359.559.885.646.952.519.907.396.842.342 735.170 1.801.160.

516.633 The annexed notes from 1 to 47 form an integral part of these financial statements.914.738.096 4. Balance Profit and Loss Sheet Account CONTINGENCIES AND COMMITMENTS 27 .886. - TOTAL EQUITY AND LIABILITIES 4. Chief Executive Officer Director Chief Executive Officer Director 90 Mehran Sugar Mills Limited Annual Report 2016 91 .

438.107 (43.059.506.883.401.418.756 546.234 372.708 99.954 430.401 146.831.037 33.329.389 (32.996) (196. 2016 2016 2015 2016 2015 Rupees Rupees Note Rupees Rupees Net profit for the year 541.625) (93.705) 12.947.036) (74.222.648.636 1.718 (11.054) Provision for market committee fee 418.529) Actuarial gain / (loss) on defined benefit plan 4.141.726.311.731.554.753 (29.633 Adjustments for non-cash charges and other items: Items to be classified to profit and loss account in subsequent periods Depreciation 137.066 4.324 (1.332.652) - Long term deposits 202.507) Provision for gratuity 9.230 - Total comprehensive income for the year 645.577.610) Unrealised gain / (loss) on revaluation of investments – net of tax 88.406.888.462 Finance costs (54.734 Cash and cash equivalents at the end of the year 16 34.235) Loss / (gain) on disposal of fixed assets 98.528.037 Chief Executive Officer Director Chief Executive Officer Director 92 Mehran Sugar Mills Limited Annual Report 2016 93 .309.273 CASH FLOWS FROM OPERATING ACTIVITIES Other comprehensive income Profit before taxation 668.662.359.968.024 490.770.876 550.978) (396.888.251) Dividend paid (205. Statement of Comprehensive Income Cash Flow Statement For the year ended September 30.258.156) Short-term borrowings repaid (190.578 Net cash generated from operating activities 993.054.725) (143.421 CASH FLOWS FROM INVESTING ACTIVITIES The annexed notes from 1 to 47 form an integral part of these financial statements.032 854.973) Net (decrease) / increase in cash and cash equivalents (11.243 investments Dividend received from associated 23.145.770 Working capital changes 37 500.566.827 130.358.193) (18.112.095 385.596.168.332 45.500.127.831) (164.115.342.431.316 (116.824.410.303 Cash and cash equivalents at the beginning of the year 45.509) Market committee fee paid (1.806.361.006.192. Fixed capital expenditure (438.759) (445.827.283.258.771) (267.573 - company Net cash used in investing activities (634.141.016) (5.195) Income taxes paid (71.181) Proceeds from disposal of operating fixed assets 16.646) Proceeds from disposal of short-term 1.547) Share of profit from an associate 6.302) (758.876.524.454.145) CASH FLOWS FROM FINANCING ACTIVITIES Long term financing obtained / (repaid) 48.959.034.592) Net cash used in financing activities (369.034 (667.974) Liabilities against assets subject to finance lease (21.647.468.235.144.554.497) (753.021 Items that may not be reclassified subsequently to profit and loss account Gratuity paid (1.251) Reclassification to profit and loss account Gain on disposal of investments 804.439 Investments made during the year (1.083.988.677.626.263 9.279.689.861 for loss / (gain) on sale of investments 11.641) Finance costs paid (101.044.

Chief Executive Officer Director Chief Executive Officer Director 92 Mehran Sugar Mills Limited Annual Report 2016 93 . Statement of Comprehensive Income Cash Flow Statement For the year ended September 30. 2016 The annexed notes from 1 to 47 form an integral part of these financial statements.

450 63. (48.024. . .107 4.034. . .031.475 2.245) First interim dividend for the year ended September 30.039.047. (40.107 4.780 (667.641) . .155) (40. 2015 320. .038.641) 1.281. (32.578 Balance as at September 30. .765.695) Total comprehensive income for the year . .312. sub- Capital scribed and Unrealized gain Actuarial gain / Total reserve . (43.031.455 The annexed notes from 1 to 47 form an integral part of these financial statements.047.800) (40. .271) Net profit for the year .344.323. 1.000.031.287) First interim dividend @ 12.452.578 385.142) (40.003.141.860.024.273 430. .883.887 3.954 541.5% .000 90.245) (32. 2015 @ 10% .704.047. .054) (667.141 104.054) (667.415. (32. . .155) Fourth interim dividend for the year ended September 30.287) (48.047.000.047.695) (44.039.954 645.Rupees ------------------------------------------------------------------------------- Balance as at September 30.312.541. (32.031. (40. 2015 @ 12. (40. . . 104.278) (48.245) (32. .031. 2014 @ 10% .278) Third interim dividend @ 15% .271) (48.287) (48.499 1. .039. 94 Mehran Sugar Mills Annual Report 2016 95 Limited .806. (48. .000. .831.473.031. (48.273 430.935. . 2016 Reserves Chief Executive Officer Director Issued.450 63. .450 Final dividend for the year ended September 30. .000 1.883.954 541. 2016 320. .800) 12.103.031.141.831. .861. 2014 320.806. .095 Balance as at September 30. .806.800) (40. .034.005 2. General Unappropriated Total paid-up capital on revaluation (loss) on defined Share reserve profit reserves of investments benefit plan premium ------------------------------------------------------------------------------.273 Other comprehensive loss .677.281.271) (48.034.278) (48.537.5% Third interim dividend for the year ended September 30.047.034 .039. .247.888 1.093. .689. .000 146.641) 430.141 Total comprehensive income for the year .250 85. (44. 430. .338 Final dividend for the year ended September 30.047.281.652. .047. (43. .031. . .031.245) (32.095 645. 99.245) Second interim dividend for the year ended September 30.142) (40.038. . Statement of Comprehensive Income Notes to the Financial Statements For the year ended September 30.344. . 2015 @ . .038.142) Second interim dividend @ 15% .331. . .916 1.346.245) Net profit for the year .034 541. .245) (32.000 46.155) (40.677.245) (32. .604.393 1.806. .834 .743.039.273 385.312.245) (32. . 99. . . . .039.047. 2015 @ 10% . 541.250 85. .689. 2015 @ 15% .115.034.250 85.450 63. . .978.954 Other comprehensive income .5% . .

Tando Allahyar.3 New standards and amendments Mehran Sugar Mills Limited (the Company) was incorporated in Pakistan as a public limited company on The accounting policies adopted in the preparation of these financial statements are consistent with those of December 22. Block 4. Clifton. THE COMPANY AND ITS OPERATIONS 2. Sindh. as are notified under the Companies Ordinance. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB) and Islamic Statements IAS 28 – Investments in Associates and Financial Accounting Standards (IFASs) issued by the Institute of Chartered Accountants of Pakistan. the provisions or directives of the Companies Ordinance. 1913 (now the Companies Ordinance. The adoption of the above standards and amendments to accounting standards did not have any effect on the financial statements. The mill of the IFRS 10 – Consolidated Financial Company is located at Distt. 1984. In case requirements differ. Statements IFRS 11 – Joint Arrangements 2. 1965 under the Companies Act.2 Accounting convention 2. 1984 shall prevail. The the previous financial year except that the Company has adopted the following standards which became shares of the Company are quoted on Pakistan Stock Exchange Limited. BASIS OF PREPARATION IFRS 12 – Disclosure of Interests in Other 2. Marine Drive. provisions of and directives issued under the Joint Ventures Companies Ordinance. The registered office of the Company is situated at 14th floor.1 Statement of compliance Entities IFRS 13 – Fair Value Measurement These financial statements have been prepared in accordance with approved accounting standards as IAS 27 – Equity Method in Separate Financial applicable in Pakistan.4 Standards not yet effective These financial statements have been prepared under the historical cost convention except for available for sale investments and biological assets which are carried at fair value and fair value less The following standards and amendments with respect to the approved accounting standards as applicable in costs to sell respectively. The Company is principally effective for the current year: engaged in the manufacturing and sale of sugar. 2. Karachi. 1984. Pakistan would be effective from the dates mentioned below against the respective standards: 94 Mehran Sugar Mills Annual Report 2016 95 Limited . 1984). Dolmen City Executive Tower. Statement of Comprehensive Income Notes to the Financial Statements For the year ended September 30. 2016 1.

expenses. improvements to various accounting standards have also been issued by the IASB. Such improvements are generally effective for accounting periods beginning on or 96 Mehran Sugar Mills Annual Report 2016 97 Limited . assets and liabilities. following new standards have been issued by IASB which are yet to be notified by the SECP for the Other Entities and IAS 28 Investment in Associates – Investment purpose Entities: of applicability in Pakistan: Applying the Consolidation Exception (Amendment) 01 January 2016 IASB Effective date (accounting periods IFRS 10 – Consolidated Financial Statements and IAS 28 Investment in Associates and Joint Ventures – beginning on or after) Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendment) IFRS 9 – Financial Instruments: Classification and Measurement 01 January 2018 Not yet finalized IFRS 14 – Regulatory Deferral Accounts 01 January 2016 IFRS 15 – Revenue from Contracts with Customers 01 January 2018 IFRS 11 – Joint Arrangements – Accounting for Acquisition of Interest in IFRS 16 – Leases 01 January 2019 Joint Operation (Amendment) 01 January 2016 IAS 1 – Presentation of Financial Statements – Disclosure Initiative (Amendment) 01 January 2016 IAS 7 – Financial Instruments: Disclosures – Disclosure Initiative (Amendment) 01 January 2017 IAS 12 – Income Taxes – Recognition of Deferred Tax Assets for Unrealized losses (Amendment) 01 January 2017 IAS 16 – Property. In addition to the above standards and amendments. at the end of the reporting period. Plant and Equipment and IAS 38 intangible assets – Clarification of Acceptable Method of Depreciation and Amortization (Amendment) 01 January 2016 IAS 16 – Property. IFRS 10 – Consolidated Financial Statements. The Company expects that such improvements to the standards will not have any material 2018 impact on the Company’s financial statements in the period of initial application. and the disclosure IFRS 2 – Share based Payments – Classification and Measurement of Share. of contingent liabilities. IFRS 12 Disclosure of Interests in Further. Notes to the Financial Notes to the Financial Statements Effective date Statements 3. Plant and Equipment IAS 41 Agriculture – Agriculture: Bearer Plants (Amendment) 01 January 2016 IAS 27 – Separate Financial Statements – Equity Method in Separate Financial Statements (Amendment) 01 January 2016 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. uncertainty about these judgments and estimates could result in outcomes based Payments Transactions (Amendments) 01 January after 01 January 2016. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES (accounting periods beginning on or after) The preparation of the Company’s financial statements requires management to make judgments and estimates that affect the reported amounts of revenues. However.

Net realizable value is estimated with reference to the prospectively. Any change in the estimates in the future might affect the Taxation carrying amount of respective item of property. plant and equipment. with corresponding effects on the depreciation charge and impairment. Such estimates are based on assumptions about a number of factors and actual depreciation. an estimate of the recoverable amount of assets is made for results may differ. Revisions to accounting estimates are recognized diminution in the respective carrying values. Significant management Sindh (GoS) less estimated costs to sell at the harvesting state. In the process of applying the Company’s accounting policies. resulting in future changes to the provisions. the Company takes into account the applicable tax Biological assets laws and the decision by appellate authorities on certain issues in the past. 96 Mehran Sugar Mills Annual Report 2016 97 Limited . In making these estimates. plant and equipment The Company reviews its doubtful trade debts and receivables at each reporting date to assess whether provision should be recorded in the profit and loss account. based upon the likely timing and level of future taxable profits together with future tax planning strategies. The management continually evaluates estimates and judgments which are based on historical experience and other factors. management has made the following estimates and Trade debts and receivables judgments which are significant to the financial statements: Property. judgment by management is required in the estimation of the amount and timing of future cash flows when determining the level of The Company reviews appropriateness of the rate of depreciation and useful life used in the calculation of provision required. In particular. Notes to the Financial Notes to the Financial Statements that require a material adjustment to the carrying amount of the asset or liability affected in future periods. Further. In making the estimate for income tax payable by the Company. possible impairment on an annual basis. including expectations of future events that are believed to be Statements Inventories The Company reviews the net realizable value of stock-in-trade and stores and spare parts to assess any reasonable under current circumstances. judgment is required to determine the amount of deferred tax assets that can be recognized. where applicable. Deferred tax assets are recognized for all unused tax losses and credits to the extent that it is probable that The fair value of standing crop is determined based on the selling prices fixed by the Government of taxable profit will be available against which such losses and credits can be utilized. estimated selling price in the ordinary course of business less the estimated cost necessary to make the sale. the Company uses the technical resources available with the Company.

Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. when a significant portion of the risks and rewards of ownership is retained by the Muj’ir (lessor) and Ijarah agreement has been entered into. which is stated at cost.1. Depreciation is charged to profit and loss account using the reducing balance method. Leased Leases. plant and equipment Owned These are stated at cost less accumulated depreciation and impairment except for freehold land. under the requirements of IFAS 2 – “Ijarah”. An item of property plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Leases are classified as Ijarah. and where the carrying values exceed the estimated recoverable amount. advice of its legal counsel and recent decisions of the relevant authorities. plant and equipment category as the and when assets are available for their intended use. if any. The carrying values of the Company’s property plant and equipment are reviewed at each financial year end for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Provision for quality premium and market committee fee These are stated at cost less accumulated impairment.1 Property. Gain or loss on disposal of property plant and equipment is recognized in the period of disposal. Payments made under Ijarah are charged to profit and loss account on a straight-line basis over the period of Ijarah. 4. recorded under the requirements of IAS 17 – “Leases”. Repairs and maintenance cost is written off to the profit and loss account in the year in which it is incurred. Transfers are made to relevant property. If any such indication exists. Capital work-in-progress 98 Mehran Sugar Mills Annual Report 2016 99 Limited . which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item are capitalized at the inception of the lease. Major renewals and improvements are capitalized when it is probable that respective future economic benefits will flow to the Company. Assets acquired under finance lease are depreciated using the same basis as for owned assets. and represent expenditure on fixed assets in the The Company accounts for provision for quality premium and market committee fee taking into consideration course of construction and installation. at the fair value of the leased property or. Depreciation on additions is charged from the month in which the asset is available for use and on disposals up to the month the asset is in use. if lower at the present value of the minimum lease payments. SIGNIFICANT ACCOUNTING POLICIES 4. at the rates specified in note 5. the assets are written down to their recoverable amount.

as well as through the amortisation process. or the fair value cannot be reasonably calculated. previously reported in other comprehensive income is taken to profit and loss account.5 Stock-in-trade at each balance sheet date. 4.e.4 Stores and spare parts including transaction costs associated with the investment. Investments over positive intent and ability to hold to maturity are classified as held to maturity investments. account for the period in which it arises. are measured at cost. being the fair value of the consideration given including transaction costs to be carried in the balance sheet at cost plus post-acquisition changes in the share of net assets associated with the investment. these investments are remeasured at fair value. These investments are initially recognised at cost. but may be sold in value less costs to sell of a biological asset at the balance sheet date is included in profit and loss response to the need for liquidity or changes in interest rates are classified as available-for-sale. investments initially measured at cost. 98 Mehran Sugar Mills Annual Report 2016 99 Limited . subject to review for impairment 4. associate uses accounting policies other than those of the Company. If an derecognised or impaired. and are subsequently measured at amortised cost using the effective interest of associates.2 Investments Held-to-maturity Associates Investments with fixed or determinable payments and fixed maturity where management has both the Investment in associates are accounted for using equity method of accounting. These are which the Company has “significant influence” are accounted for under this method i. Cost in relation to work-in- Gains or losses on available-for-sale investments are recognised in other comprehensive income until process and finished goods consist of manufacturing cost comprising prime cost and appropriate the investment is disposed of or determined to be impaired. if the impact is considered material. Gain or loss arising on initial recognition of a biological asset at fair value less costs to sell and from a change in fair Investments which the management intends to hold for an indefinite period. if material. being the fair value of the consideration given 4. For investments traded in active market. fair value is determined by These are valued at lower of moving average cost and net realizable value. less any impairment in value. Gains and losses are recognised in profit and loss account when the investments are Company’s share of the results of operations of associates after the date of acquisition.3 Biological assets Available-for-sale These are measured at fair value less costs to sell on initial recognition and at each balance sheet date. adjustments are made to conform the associate’s policies to those of the Company. at which time the cumulative gain or loss proportion of factory overheads. After initial recognition. These are valued at the lower of weighted average cost and net realizable value. The profit and loss account reflects the method. 4.. reference to quoted market price and the investments for which a quoted market price is not available.

7 Cash and cash equivalents 4.094. 4. Bad debts are written-off when identified.10 Trade and other payables Rupees Rupees General disclosures (Unaudited) (Audited) Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be Size of the fund 136.12 Foreign currency transactions and translation Total 131.9 Taxation These are carried at cost. The latest valuation reporting purposes.6 Trade debts and other receivables Compensated absences Trade debts and other receivables are stated at original invoice amount less provision for doubtful debts.965.11 Provisions Break-up of investments Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a 2016 2015 past event if it is probable that an outflow of resources embodying economic benefits will be required (Rupees) (%) (Rupees) (%) to settle the obligation and a reliable estimate can be made of the amount of obligation. 2016 2015 4.773 114. Deferred tax liabilities are recognized for all taxable temporary differences. by way of a charge to profit and loss account. of the aggregate of basic salary. Provision is made Deferred tax is recognized using the balance sheet liability method.165 Percentage of investments 97% 96% 4. 4.949 77. on all temporary differences arising at annually.454. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees using Ordinance.420. whether or not billed to the Company. the exchange rate at the balance sheet date. 4.474 109. Contributions are made by the employees at mill and the employees at head office at the the asset is realized or the liability is settled. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. current salary level. 2001.165 96 Foreign currency transactions are translated into Pak Rupees using the exchange rates prevailing at the dates Investments of provident fund have been made in accordance with the provisions of Section 227 of the Companies of the transactions. Cost of investments 89. calculated in the balance sheet date between the tax base of assets and liabilities and their carrying amounts for financial accordance with the actuarial valuation using the “Projected Unit Credit Method”. The Company operates a recognized provident fund for those permanent employees who have opted for it. 1984 and the rules formulated for this purpose.557. 100 Mehran Sugar Mills Annual Report 2016 101 Limited . if any.891.094.986. Provision for doubtful debts/ receivables is based on the management’s assessment of The Company accrues it’s estimated liability towards leaves accumulated by employees on an accrual basis using customers’ outstanding balances and creditworthiness.986. substantively enacted at the balance sheet date. Deferred tax assets are Provident fund recognized for all deductible temporary differences to the extent that it is probable that the future taxable profits will be available against which the assets may be utilized. has been carried out as at September 30. Current Provision for current tax is based on the taxable income in accordance with the Income Tax Ordinance.280 4 4. Defence Saving Certificates 115.949 12 4. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized. based on the tax rates (and tax laws) that have been enacted or rate of 11% and 10% respectively.420. Equal monthly contributions are made to the fund by the Company and employees in accordance with the Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when fund’s rules. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations at the year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the profit and loss account.510 paid in the future for goods and services received.885 92 Bank balances 16.053.280 Fair value of investments 131.8 Employees’ benefits Deferred Gratuity The Company operates an unfunded gratuity scheme for its permanent mill employees. 2016.965. to cover obligations under the plan.525 85 104.474 97 109.

049. September 30.231) Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet . Office equipment 8.849.933.926 146.16 Revenue recognition Furniture and fittings 10.135 16. Income from sale of electricity is recognized as and when invoiced.551 12.202.600.910.402.608.716 4.430.035.243 7.821.939 231.272 20 % .507 85.482.561 Capital work-in-progress 5.603 10.347 1.436 18. when the obligation is discharged.887 304.611. September 30.081.165 4.917. 83.994 2.400) (179.925) (81.455.636.174 981.435.066.501.524 30 % 4.000) (35.630) EQUIPMENT Operating fixed assets 5.028 20.768 (102.649.593.797.494.841.566.878) these are approved.863 5.194.074.2 295. Gain on sale of investments is recognized in profit and loss account in the year in which it arises. 2015 2016 2016 2015 (deletions) 2016 4.958.025.091 901. machinery and equipment 2.482) 2. Plant.283) Vehicles 28.792.407 59.048. Freehold land 77.221.308 1.769.973) 6.307.389 989.740 10 % (5.073.657.235) (3.914) (2.937 10 % (2.339 102 Mehran Sugar Mills Annual Report 2016 103 Limited .402.657.629 10 % presentation currency.482.425) (83.756 4.382.394.487 (105.915 5.213 115.976.941.366 155.350) .894.754 1. Workshop tools and other equipment 8. year/ September 30.246.080.912 7.200 23.124.880.606 50.557.708.341.597.650 22.429.064 12.847 236.382 4.287. PROPERTY.924.810 1.004.410.447.191 5.844 35.400 95.099.978 1.205 10 % (4.193.494.375 (5.413) (3.921.497.852 Total 2.910.376 3.996. Buildings on freehold land 4.464 5% when the Company has a legally enforceable right to set-off the transaction and intends to settle either (39.070.653.495 7.558.705.147 12.085 7.293.557 1.825 68.163.411.923 6.486.793 20 % 5. .022.15 Offsetting of financial assets and financial liabilities .714 6. 4.131 103.319.937.106) on a net basis or to realize the asset and settle the liability simultaneously.942) (1.207 - cancelled or expired.601.391.035) 1.966 47.500) (1.Factory 247.115 1.018.058) 4.900 8.240.814 216.615 10 % (2.830 17.130) (4.683 36.133.297.114.044 10.952.388 2.539.875 97.164.300 25.402.366 2.405) 2016 2015 Leased Note Rupees Rupees Vehicles 73.944 15.487 83.852 4.690 3.042.561 1.135 826.207 .232 14.641.059 3.227. Dividend income is recognized when the right to receive the same is established.983 1.376 905.276 1.352.143.5 % (70.493.774.387.015. Office premises 84.135.436 864.139 600.222 6.896 (2.624 3.664.500 5.185 926.336.609 262.573.924) (56. Profit on term deposit receipts is recognized on accrual basis.846.422.039 3.18 Functional and presentation currency (1. .155.119. which is the Company’s functional and refrigerators 14.334.772) 11.Non-factory 50.1 Operating fixed assets --------------------------------------------------------------------.075.158.885 2.2016 ----------------------------------------------------------------------------- Interest / mark-up directly attributable to the acquisition / construction / installation of qualifying assets is capitalized.394. Any gain / loss on the recognition and derecognition of the financial assets and liabilities is included in the profit and loss account for the period in which it arises.350 10 % Dividend and appropriation to reserves are recognized in the financial statements in the period in which (199.909.044 411.255) Computers 10.527 1.769 123.057.726 5% .827 1.198) Air conditioners and These financial statements are presented in Pakistani Rupees. Description Cost at (deletions) Cost at Book value at Rate account.024.738.720 5.607.14 Financial instruments Owned -------------------------------------------------------------------------------Rupees------------------------------------------------------------------ Financial assets and liabilities are recognized at the time when the Company becomes party to the contractual provisions of the instrument and are derecognized in the case of assets.825.193 14.591.508 877. (7.451.222) (2.697.068.826.568.439.435.915.692.315 1. .749.743.541 477. which generally coincides with the delivery of goods.339 622. October 01.702.526 2.882.962 137. Sales are recognized as revenue when invoiced.521. .897) 4.677.667) Weighbridge and scales 1.514 191.195. PLANT AND (3.531.1 1.681.278. (4.746.517.17 Dividend and appropriation to reserves Electric installation 16.345.970.856 10 % (3. expired or surrendered and in the case of liability.774. All other finance costs are charged to profit and loss Additions/ Accumulated Depreciation Accumulated Dep.193 1. when the contractual rights under the instruments are realized.926 2.13 Borrowing costs 5.756. depreciation at for the depreciation at October 01.

768) (550.683 . (541.135 6.857.711 6.222 2.571.107 20 % Air conditioners and Refrigerators Refrigerator 100.731) Write-off - Total 2.036 10 % Rs.390 67.414.091 2.031 194.185 7. Ishtiaq Ahmed . Sanaullah – employee 104 Mehran Sugar Mills Suzuki Alto (AWP-559) 771.896 290.774.601.458 Negotiation Mr.114.359.470 6.353.420) Write-off - 2.490.249) Negotiation Mr.703 2.014. (369.429. 2016 Depreciation Disposal (deletions) (Loss) 2015 2016 -------------------------------------------------------------------------------Rupees-----------------------------------------------------------------.875 1.122 426.029.394.558.000 594. 77.553 143.410 15.027.248 10 % Electrical Panels 3.336.329) Write-off - Air conditioners and Other assets with book value less than refrigerators 13.580.804.000 1.924 6.000 each 1.044 .667 579.819.322) Write-off - Split A/C 357.322 .405 1. (194. (38.148 1.769. 50.000 92.879 19.825. Ali Asghar – Karachi Toyota Corolla XLI (AXF-937) 202.150.632 989.174 3.222 1.049) Write-off - 5.202.542 1.000 18.880 4.775.058 449.595) - Other assets with book value less than Rs.044 9. Ghulam Muhammad – Limited Mercedes Benz (ATH 707) 6.631 .006 1.082 139.040.768) (2.826) Split A/C 360.105) Weighbridge and scales 1. September 30.933.375 9.114.232 22.000 each 3.568.774 Wooden Window Frame 267.321 247.591.521 .225.517) Write-off - Office premises 84. 50.541 .814 953. .968. 50. (1.939 .588 52. (81.738) Computers Leased Other assets with book value less than Rs.Non-factory 50.143. (19.198 12.903 4. machinery and equipment .413 3.456.504 .745 (1.043.969) Write-off - Generator 800.653.106 3.631) Write-off - Other assets with book value less than (5.504) Write-off - Vehicles 28.973 2.534 103.227.890.408. (143.494 541.887 2.561.608.681.685 10 % Weighbridge and scales Other assets with book value less than Workshop tools and other equipment 8.564) 4.000 565.202.744) Write-off - Vehicles 67.744 .307 23.600 34.508 18.195 992.482 1.494.896 6.336 70. at September at at 30.016 Policy Mr.307.016.896 . (1.435.530 Negotiation Mr.422.360 864.075.828 56.114.000 each Freehold land 180. 50.846.894 .Factory 236.195 28.885 5.503.371.230 13.255.359 118.640.2 The following operating fixed assets were disposed off during the year: Additions/ Accumulated Depreciation Accumulated Dep.608.969 .5 % Furniture and fittings Furniture and fittings 10.882.708 168.622.797.995.286 268. (205.025.630.000 128.354.107.193 50.984 5% Various 66.000 each 199. 2015 ----------------------------------------------------------------------------- 5. (290.561 6.000 each equipment 1.414.239.246.255 543.276.595 .500 444.517 .743 10. Misal Khan – Karachi .300 13.720 .920.436 87.316 1.435 . --------------------------------------------------------------------.518. 50.420 .476.378 286.387.343 451.768 41.435) Write-off - 35.Karachi Other assets with book value less Plant.513 3.874 2. 50.768) (550.530.939.177 12.595 580. Ishtiaq Ahmed .603 Policy Mr.661.490.372.841.164.148.690 71.008 20.474 777.611.333.309.105 .756.683 12.482.847 2.962 1.069 . machinery and than 4.173 38.145.435.104. Write-off (34.772 5. (476.541 10. (1.400 179.000) (2.000 each 2.399.884. Sajid Wahab – employee Toyota Corolla XLI (AWP-541) 1.210 533.557.329 .222 1.275.000 18.824.168 23.659 289.584.849.051.667 (7.439.950 6.334.973 865. 50.931 81.800 8.231 1.049 .000 73.1. 50.385 755.056) Write-off - Other assets with book value less than Electric installation 16. 50.491 7.250 33.921.493.521) Write-off - Computers 9.139 5.753) Vehicles Suzuki Alto (AVJ-894) 730.210 130.(Rupees) ------------------------------------- Description depreciation for the depreciation Accumulated October 01. (579.179 979.987.630.738) Office equipment Other assets with book value less than Rs.417. (231.115 11.235 3.812.081 865.402.411.960 Policy Mr.400 10.657 382.866 213.035 10 % Other assets with book value less than Rs.339 6. 30.403.000 988.088 .514 939.029.753 .557.720 . 84.287.500 14. 1.678 267.251.155.014.718 .663 200.000 each 1.700 10 % Rs.617 (235.894) Write-off - .683) Buildings on freehold land Buildings on freehold land – Non-factory Other assets with book value less than Rs.236 624.Karachi Rs.276 8.000 each 3.677.080.600 10.515 91. (12.358 6.283 369.000 388.719 1.427.022.769 1.000 77.719 30 % Workshop tools and other equipment Laser Levelers 760.964.792.810 6.185.946 69.049 10 % Rs.671 205.743.795.965.456.000 18.663 109.851 11.619 2.000 3.008.912 7.232 20 % 2.544.970.611. 2015 (deletions) October year/ September Rate Particulars Cost Book Value Sale Proceeds Gain / Particulars of Purchaser 2016 01.845 3.720 77.596 693.852 Rs. (543.853.088) Write-off - Factory Owned Boiler Control Room 1. 8.000 35.057.697.939 212.963 255.214 476.551.448. Buildings on freehold land – 3.731 .435.508 13.942 1.000 each 1. (267.275 188.910.611.366 773.557 38.420.049.232 Policy Mr.184.569.970.963 211.124.410 2.910.221. Mode of Cost at Cost at Book value -------------------------------------.631 1.056 .939) (1.619 2.728.069) Write-off - (4. (289.966.390.108.624 .421 449. 4.565 138.691) Negotiation Mr.145. 50.430.000 each 39.492 10 % Plant.999. Muhammad Annual Pervaiz – Report 2016 105 Habib Motorcycle (KGF-7225) 41.335 443.624 966. (138.914 2.924 3.100 16.566.278. (3.872.154.539.653.300 10.718 231.558) (7.354 5% Electric Installation Office equipment 8.550 3.007.718) 2. 50. .951.944 144.

863.410.932.449 5.390 16.418.138.630 5.035 22.513 10.212.121 20.799 Administrative expenses 31 21.316 104 Mehran Sugar Mills Annual Report 2016 105 Limited .1 Depreciation charge for the year has been allocated as follows: Cost of sales 29 115. 2016 2015 Note Rupees Rupees ployee employee 5.706 109.827 130.803 Total 105.1.518.145.547.066 (6.425 83.902.235.664.324) 137.650 9.980 4.545.127.282.119.

2 Capital work-in-progress Associates – unquoted Balance as at September 30.000 2.291.000 56.assets 4.969 239.000 116.321) (68.000 1.814 .814 558.244. Plant.521.1.323.185.364.579 71. the GoS invited bids Aggregate amount of: for the sale of the Mill through Sindh Privatization Commission but it could not succeed. when the Mill was forcibly taken over by the GoS without dioxide (CO ).573) Ordinary shares of Rs. The GoS is now trying to .329.966 7. The principal activity of the UL is to manufacture and sell ethanol and carbon running the Mill from November 1992 up to July 1993.563. expenses incurred (including payment to workers) and loss of profits.628. the Company has .1 Represents under booked profit in prior years on the basis of unaudited financial statements.33 (2015: 33.208 - Transfer to operating fixed assets (12.968.385. 10 7.996 42.416.1 7.144) (79.301.202.360 47. The representative of the GoS has also admitted the fact .996) (42. The summarized financial information of UL is as 2 paying any amount. Umerkot Road.1 42. machinery Total 2016 2015 Buildings on and Note Rupees Rupees freehold land equipment ------------------------. 166 million being the amount of down payment.998 Ordinary shares of Rs.059.856 376.000 made provision against the aforesaid receivable as a matter of prudence and the fact that the debt is outstanding for .000 33.922.301) (116.027 each % of holding: 33.487 % of holding: 20.964.573) - Provision for doubtful receivable (42.763.145.2 UL is incorporated in Pakistan as a public limited company with its registered office situated at Sub Post incurred in Office Sugar Mills.364.396.1.402 million against 2016 2015 the Company.000 4.846 652.814 Balance as at September 30.639.510.125.145.925 Unicol Limited (UL) 23.000 privatize it through the Federal Privatization Commission. 6.000.573 (2015: 23. 2015 1.167.750.310. The Company filed a law suit for Rs.448 58.996 6. 7.347 Prior year adjustment 7.999.814 Capital expenditure incurred / advances made during the year 13.272. - 7.465) UniEnergy Limited (UEL) 1.201. However. LONG TERM INVESTMENTS – stated as per equity method 5.263 Tender earnest money 1.610 Down payment 33.807.000 that the Mill was taken over by the GoS without making any payment to the Company.909.133.143 310.3 19.701 43.510.999.520) 765.456.980 - Balance as at September 30.000.219) (129.revenue 4.285.Rupees ------------------------.414.996 Less : Dividend received during the year (23.487.996) 745.1 Movement of investment 2016 2015 Opening balance 652.33) % Transfer to operating fixed assets (11.638 652.466.059.127 46.364.510.999 Share of loss (64.364.561.liabilities 1.888.330.713. The case is currently pending in the Honorable High Court of Sindh (the Court) for recording of Rupees Rupees evidences.422.125.997 295. While the Company’s suit for recovery of compensation is pending in the Court.00% Capital expenditure incurred / advances made during the year 66.059.628.935.764.908. 2016 55.772) - 19. 106 Mehran Sugar Mills Annual Report 2016 107 Limited .510.profit 325.333. The GoS made a counter claim of Rs.696 50.510.1 Represents down payment made in respect of purchase of Thatta Sugar Mills (the Mill) and other costs 7. LONG-TERM RECEIVABLE Share of profit – net of tax 108.925 56.204 Note Rupees Rupees 6. Mirpurkhas.713.1 745.000 a considerable period.385. 10 each 7. 2014 40.397 93.996 8.638 652.000 Other costs 8.000 174.930.000 4.

333.934.559. TRADE DEPOSITS AND SHORT-TERM PREPAYMENTS Carrying value at the end of the year 43.935 42.assets 100.949 95.829.113 8.1 8.530 2.018 101.298.095 Increase due to cultivation 28. however.867 27.594.800 Reduction due to harvesting (48. 12.2 Includes an amount of Rs.6.113 Note Rupees Rupees 398.935 42.922.334 563.459.893 Less: Provision for doubtful debts 11.Finished goods 412.867 16. TRADE DEBTS – unsecured Considered good 11.120. on account of a dispute regarding the quality of operate and maintain wind power generating project of 50 Mega Watts for the generation and supply of sugar.848.210.856.111 10.559.775 Spare parts 72. Modern Motors House.026 Manufactured sugar 2.2 The Company is engaged in cultivation of different sugarcane varieties. These varieties are then provided to Considered good 398.026 Considered doubtful 16. STORES AND SPARE PARTS Short-term prepayments Considered 13.097.441 10. Consequently.441 563.446.753 2016 2015 Less: Provision for doubtful deposits 13.026 11.018.067 563.1 43.829.026 .972.519 million due from the GoS which was withheld by the GoS from the bills Floor.413 1.972 11.987.829.684.702.081 134.462.473 - .022.677.537. the Company harvested 237.370 107.127 Trade deposits 8.710.588 108.411 good Considered doubtful 6. 2016 2015 Aggregate amount of: Note Rupees Rupees .987.1 Carrying value at beginning of the year 48.867 16.revenue .127 . - Past due but not impaired (within 90 days) 10.441 Stores 59.753 8.2 16. During the year.559. 8.640 358.554.246.196.656 Less: Provision for doubtful prepayments 6.909.to cane growers 15. Karachi.007.632.084. Loans to employees 2. BIOLOGICAL ASSETS 8.196. Accordingly.459.loss (323.611 137. Beaumont Road.640 358. the Company has withheld mark-up due to the GoS.221.374 2.935 42.787 1.to suppliers 29. the matter is under litigation and pending before the Court.333 4.192 million.liabilities 622.825.243 48.14.733 16.097. 97.972 28.454 106.097.758.1 The aging of trade debts is as follows: 108 Mehran Sugar Mills Annual Report 2016 109 Limited .547.814 maunds were supplied to growers for variety multiplication while remaining Considered doubtful 8.232 .254.987. LOANS AND ADVANCES – considered good . 7. The said amount has been fully summarized financial information of UEL is as follows: 2016 2015 provided as a matter of prudence as the case is pending for a considerable long period.461 .376.3 UEL is incorporated in Pakistan as a public limited company with its registered office situated at 1st 11.373 21.against expenses 21.243 48. raised by the Company during the years 1981 to 1983. The principal activity of UEL will be to build.070.455 92.982 Change in fair value less costs to sell of standing crop 15. the Note Rupees Rupees respective liability of mark-up due to the GoS was also written back.035.935 42.113 sugarcane was used for crushing at mill.753.043. electric power in relation thereof. STOCK-IN-TRADE Neither past due nor impaired .196.640 9.859) .351.203.600 .461) 13.829.495.670 9.987.Work-in-process 409.640 growers for multiplication.196.097.870 27.332 .867 10.federal excise duty / sales tax 40.802 59.740 10. - .847.127 58.924.848.977 66.924.1 10.345 Advances 8.441 563.091 maunds sugarcane at the yield of 714 maunds per acre. amounting to Rs.673 . it is in start-up phase and has not commenced its operations.778 8.127) (58.559. The Since then.175.471.113 8.997 11.974.

Although Pakistan Molasses Company (Private) Limited 1.274 2.545.367 6.964. 6. as a matter of prudence.334 2016 2015 6.835. as fully described in note 27.812 3.1 Represents amount paid by the Company during the years 1995 and 1996 to the Director General Defence Procurement (DGDP) as tender money.281 1.572 the matter is under litigation.817.093 4.115 108 Mehran Sugar Mills Annual Report 2016 109 Limited .459. OTHER RECEIVABLES – considered good 13. 2. has made full provision against Mogul Tobacco Company (Private) Limited 207. which was withheld by the DGDP on account of his risk Due from related parties: purchase claim on the Company.186.218. the Company.616.519.362 the deposit in these financial statements.310 9.717.670 9.120.181 3.172.1 to the financial statements.032.934 Others 1.974 Note Rupees Rupees 14.

000 80.681.463.000 Ordinary shares of Rs.199.495 Issued as fully paid bonus shares 257.131.102.2 1.801.600 5.973.200 .000 National Refinery Limited 9.000 33.000 15.291 110 Mehran Sugar Mills Annual Report 2016 111 Limited .028 12.382 Term deposit certificates 15. 300.600 Rupees 6 months KIBOR plus .968.10/.000 .037 Available for sale Equity securities 15.000 .537. subscribed and paid-up capital .000 .000 8.880.1 472.740.120.000 Meezan Bank Limited 55.000 3.460.352.000.000.912.031.000 3 months KIBOR plus 17.500 47.800 500.000 .124.000 Engro Foods Limited .502. 100.51 (2015: 6.561.000.000 Hub Power Company Limited 59.600 . JDW Sugar Mills Limited 39.250 .75% per annum 600.000 150.105.000 32.968.878.019 722.562.605 Jubilee Life Insurance Company Limited 44.000 Nishat Mills Limited 14.912.200.712.600 6 months KIBOR plus 100.375.000 Fatima Fertilizer Company Limited . Indus Motors Limited 22. 375.000 D.332 45.000.000 .950 257.320.000 Bank Al Habib Limited 20 quarterly May 2016 85.400 Allied Bank Limited .000 Pakistan Oil fields Limited 40.687.904. 10/.000 . 1.000 Engro Corporation Limited 2.000.000 3. Bank of Punjab Limited 13.10/. 2016 2015 2016 2015 Note Rupees Rupees 16.900 5.414.687.each 40.312.000 89. 200.800 200. 6.34) percent per annum.700 - 1. Adamjee Insurance Limited 10.000 9.000 8.000 Fauji Fertilizer Company Limited .894.914.000 24.169 43.000.253 17. 3.437.Mari Petroleum Company Limited 57.000 Nishat Power Limited .655 34.616 45.916 750.825 Pakistan Petroleum Limited 16.324.000 Lucky Cement Limited 10.000 375. having maturity up to six months. 250. SHORT-TERM INVESTMENTS BALANCES Held to maturity Cash in hand 15.124.K.000 95.000 125.200 - 1. 11.090.332.000 .172. 5.000 3 months KIBOR plus 60.000 10.293 304.800 .712 499.500 23.700 10. 100.500 59.031.605 83.000 Al Baraka Bank Pakistan Limited 16 quarterly November 2014 82.000 . 2.000 9. Number Commencing from Rupees 83.500.001 1.299. Issued.750 5.219.271.500 .000 .310.000 Bank Islami Pakistan Limited 24 quarterly January 2015 35. 100.404.000 100.000.000 20.460 273.000 K-Electric Limited . 50.000 .622.000 1.699 80.738.438.140 118.897.25% per annum .700.000 350.Attock Refinery Limited 13.each 500.267.924.158.1 Installments Mark-up 2016 2015 90. 34. 20.250 1.000 100.474.each 200. Less: Current portion (167. 350.716 68.000 Nishat Chunian Power Limited 11.300.564.125.209) (151.298.30% per annum 6 months KIBOR plus 100.750.000 - 100. SHARE CAPITAL 1.485.950 400.400 .400.000 Ordinary shares of Rs.000 Engro Powergen Qadirpur Limited .166 49.422. 14.800 Meezan Bank Limited 16 quarterly April 250. 40.012.000 50.500 250.687.450 .929.554.000 Cherat Cement Limited .570. 5.Faysal Bank Limited 11.000 50.000 Engro Fertilizers Limited 12.675.465.75% KIBOR 3 months per annum plus 15.501.252.000 . 18.720 .750 Bank Al Habib Limited 76. 18.000 2.120.505.000 1.500.300 .000 . Packages Limited 33.000 .000. CASH AND BANK Note Rupees Rupees 15.312.30% per annum 4.019 725.000 481.000 2013 1.G.159.000 500.000 5. Meezan Bank Limited 16 quarterly March 2013 1.50% per annum 200.500.020.450 320. LONG TERM FINANCING – secured .000 . International Steel Limited 78.000 25.500 1.684 Habib Bank Limited 88.035.Faran Sugar Mills Limited 21.000 152.253 2016 2015 Note 2016 2015 15.000.422.480.712.300.000 MCB Bank Limited 55.669 424.000.000 Oil Gas Development Corporation Limited 84.855 .573.122.466.010.495 25.000 28.000 Issued for consideration other than cash 3.000 Cash with banks in current accounts 34.Cement Limited 74.1 These carry profit rate of 3. Kohat Cement Limited 20.195.000 Rs.1 3.204) 400.750 Fully paid in cash 59.716.245 320.000 Arif Habib Corporation Limited .848.600 3 months KIBOR plus Bank Al Habib Limited 20 quarterly December 2015 50.232.000 32.825 3.845.007.500 From banking companies 18.000.000 235.000 .825 100. 8.000 Maple Leaf Cement Factory Limited .500 15. 1. (Number of shares) Rupees Rupees Authorized capital 2016 2015 2016 2015 Number of shares of par Rupees Rupees value Quoted companies 50.245 32.000 160.650 43.000 . 10.

000 Pakistan State Oil Company Limited 10.000 .143.575 69.142.252. Pioneer Cement Limited 23.142.75% per annum 3 months KIBOR plus .000 Sui Northern Gas Pipelines Limited .858 MCB Bank Limited 14 quarterly May 2% per annum 1.791.916 2014 110 Mehran Sugar Mills Annual Report 2016 111 Limited .571. 25.290 Bank Al Habib Limited 14 quarterly July 28.019 722.102.669 424.172.000 11. 2014 1.253 472.585.564.250 .571.501.858 225.122.430 57.677 United Bank Limited 89.780.353.430 57.677 475.329 28. 100. 3.000 450.500 3.

------------------------------.136 Unrealised gain on available for sale investments 14.276 Note Rupees Rupees Assets subject to finance leases 7.636 1. DEFERRED LIABILITY (a) Staff gratuity Carryover of alternative corporate tax / minimum tax .636 1.474 21. the lessee has to pay the entire rent for unexpired period.396.554 327.120.990 36.895 17.942. In case of termination of agreement.720 .1 70.59 to 11.919 Actuarial (gain) / loss (4.162 4.100 bps + 100 bps .191 6.262.895 15.100 bps Minimum lease Present Minimum lease Present ----------------------.877 each mill.636 876.1 As required under the provisions of Sugar Factories Control Act.646.992 Market committee fee payable 74.722 9.480 18. MARKET COMMITTEE FEE PAYABLE 342.457. 22. 4. PROVISION FOR QUALITY PREMIUM 23.721.93) percent per annum has been used as discounting factor.210.25% Expected average remaining life of employees 2 years 22 years .861 was decided against the Company.369 33. (15.25% 9.280) (38.128. Financing rates of approximately 7.147.339.864.445.641 Closing balance 4.873.722 9.262.422 (b) Expense for the year 23. The Company had challenged the levy of quality premium before the Court.000 Debit balances arising due to: Less: Current portion 3.843) (22. 623.323 3.25% Annual Report 2016 113 Limited Expected rate of increase in salary level 7.043) (113. determined on the aggregate sucrose recovery of Interest cost 804.182.004.668.128.985 Less: Amount representing finance charges 4.141.414.113.339.474 18.403.072.414.128.438. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASES Represent finance leases entered into with commercial banks for vehicles.396.318 Credit balances arising due to: 21.1 percent of excess Current service cost .564.340. Present value of defined benefit obligation 4.339.866. The movement in the finance lease liability is as follows: (e) Sensitivity analysis (+/.840 borne by the lessee.The above facilities are secured by way of first pari passu charge over fixed assets of the Company amounting to 2016 2015 2014 2013 2012 Rs.985 Less: Current maturity shown under current liability 15. while admitting the appeal against the impugned judgment of the Court.197.73 to 11.239 Investment in associates 64.895 14.115 monthly installments latest by August 2019.004.210.984 sucrose recovery above the benchmark of 8.763.925.(Rupees) ------------------------- Payments Value Payments Value ----------------.667 2016 2015 Accelerated tax depreciation 257. 1.180.646.621 .135.100 bps) on present value of defined benefit obligation 2016 2015 2016 Discount rate Salary increase + 100 bps .866.431.256 26.308. sugar mills in Sindh are required to pay quality premium to cane growers at the rate of 50 paisas per 40 Kg cane for each 0.000 Provisions (20.(Rupees) -------------------------------- (d) Comparisons for five years 19.262.396.318 2016 2015 After one year but not more than five years 23.184.757. The Punjab Government is not levying any quality premium in view of an earlier 112 MehranDiscount rate Sugar Mills 7.371.287 265.017 52.225 14.195) 23.422 8. 1950.335 4.290.500.400.414.652 2.000 26.414.976. the matter 804.091.318 14.908 28.705 33.927 5.643. repairs.210.210.374.7 percent. Lease rentals are payable in equal Present value of defined benefit obligation 4.667 Note Rupees Rupees Total minimum lease payments 40.84 million.160.985 33.369 36.763) 21.334.341 20. replacement and insurance costs are to be 7.919 119.290.646.380.25% 9.115 322.369 37.762 Within one year 17.1 119.200) (20.866.248.667 18.760 Expense for the year 804. Purchase options can be exercised by the lessee in accordance with the respective lease agreements.302) (758.926 21. Taxes.713. Thereafter.(Rupees) ----------------.521.511 289.013.034) 667.500.422 9.064 15. DEFERRED TAXATION Present value of minimum lease payments 36.171 4.722 9.93 (2015: 8.422 8.474 20. the Company filed an appeal with the Honorable Supreme (c) Principal actuarial assumptions Court of Pakistan which then granted stay to the Company.189) Others (106.861 Benefits paid during the year (1.232) Staff gratuityOpening balance 4. however.

wherein the Court had declared the full provision against quality premium pertaining to the period from the year 1999 to 2008. decision of Honorable Lahore High Court. in a similar case. Although the matter is under litigation. 112 Mehran Sugar Mills Annual Report 2016 113 Limited . as a matter of demand of quality premium as unlawful. the Company carries prudence.

525 million (2015: Rs. PROVISION FOR MARKET COMMITTEE FEE 26.085.037.1 9.823 Payments made during the year (18. had been disputed by the Company.229 Allocation for the year 25.527.582.765 245.594 25.862.124. the said liability is recorded as a long term liability in these financial statements (note 20).549 18.970.726 1.553 26.038 1.939. 2016 2015 on the grounds that the goods were delivered in time.942.622 2.591. As per the settlement terms. 2014.124.970.229) Closing balance 25. (ii) DGDP’s risk purchase claim amounting to Rs. 500 million) of which Rs.58 million (2015: Rs.329.197. 525 million (2015: Rs. 2016 2015 Note Rupees Rupees 26.406.329 million.467. for the period July 1987 to August 1990. 3.095. 27.359.387 1.594 44. 38.58 million). TRADE AND OTHER PAYABLES Creditors 90. no provision has been made against the above demand in these financial statements. 3.28 million).659 Workers’ Profits Participation Fund 24. the above amount is now payable in 30 equal yearly installments commencing from July 2016.759 Deposits from employees against purchase of vehicles 14.549 18.32.467. SHORT-TERM BORROWINGS The aggregate facilities for short term running finance available from various banks amounted to Rs.1 Workers’ Profits Participation Fund Opening balance 18.1 Contingencies (i) Contribution demanded by SESSI amounting to Rs.052. the Company entered into a settlement with the Market Committee against provision for market committee fee up to June 2008 amounting to Rs.772.732 Payable to provident fund 2. however.124.782. CONTINGENCIES AND COMMITMENTS 27.848 Advances from customers 555.35 million) remained unutilized as of the balance sheet date.7 million.970. 38.594 8.124.781.594) (8. was disputed by the Company 114 Mehran Sugar Mills Annual Report 2016 115 Limited . As per the settlement terms.696.1 25.012 44. the DGDP failed to lift the goods thereby indulging Note Rupees Rupees 24.549 18. 437.561 24.47.789 Unclaimed dividend 23. Accordingly.113. The Company and its legal counsel are hopeful for a favorable outcome of the case and hence.134.331.993. the Company entered into a settlement with the Market Committee against provision for market committee fee for the years 2008 to 2015 amounting to Rs.143 26.696.555.566 Accrued expenses 356.28 million (2015: Rs.263 47. Further.851.420 36. the above amount is now payable in 15 equal yearly installments.1 During the year ended September 30. during the year.124.262 47.760 10.227 Others 16.594 Workers’ Welfare Fund 27.922 7. The case is currently pending decision before the Court.

11. (vi) During the year ended September 30. Based on the adjustment. and hence financial statements..19 million (note 13. the Company has filed an appeal before the Commissioner (iii) The Company filed an appeal before the Court and was granted a stay against the order of Appeals against the order of the Deputy Commissioner Enforcement and Collection whereby sales tax liability Customs.000 Commitments in respect of operating lease rentals for farms 1.2. upholding allegation of non-payment of along with penalty amounting to Rs.2 Commitments the management is confident of a favorable outcome and hence.181.1) during the year 1995 and 1996. Based on the advise of the legal advisor. view that demand notifications so raised are without any lawful authority under the PSQCA Act-VI of 25. no and hence.087) million. the management is Supreme Court of Pakistan and the Honorable Lahore High Court. the management is confident of a favorable outcome and hence. Capital commitments 52. Karachi.1 Rs. (iv) The Company has filed an appeal before Customs.07 Rupees Rupees (2015: Rs. Excise and Sales Tax Appellate Tribunal. DGDP also withheld tender money paid by the Company amounting to (v) Pakistan Standards and Quality Control Authority (PSQCA) had demanded a fee payment at the rate of 0.908 60. no provision is made in these financial statements. Based on the advice of the tax advisor. which is pending for hearing. no provision has been made for the same in these financial statements. 25.2 million.1 to the financial statements. 11. Excise and Sales Tax Appellate Tribunal. 2015.565 114 Mehran Sugar Mills Annual Report 2016 115 Limited .000 650. amounting to Rs.18 million has been established for claiming inadmissible input tax sales tax on advances etc. Hyderabad to pay off alleged demand of Rs.519. The Company has filed a counter percent of ex-factory price for the year 2008-09 amounting to Rs. no provision has been made in these financial statements.10. in breach of the contract.356. provision is made in these financial statements.815 Commitments in respect of Ijarah rentals . 27. Excise and Sales Tax (Adjudication).729. Karachi. 10.814 Commitments in respect of equity investments 838. Based on the advice of the tax advisor. the management is confident of a favorable outcome advice of the tax advisor. The said cases are pending before the Honorable 1996 and are in violation of the constitution. (vii) Contingency relating to long-term receivable is described in note 6. 8. against the order of the Deputy Collector. The management and legal counsel confident that it would not be liable to pay the said marking fee and hence no provision is made in these of the Company are confident that no liability will arise in respect of the risk purchase claim. The Company is of the claim of Rs.81 million) against the said breach of contract.81 million (2015: Rs.087 (2015: Rs.676. 530.000. Collectorate of 2016 2015 Customs.250 12.07) million along with additional tax and penalty.

2 Auditors’ remuneration 2016 2015 Opening stock of work-in-process 2.1 Include gratuity expense of Rs.041.863.233 1.547.263 9.968 979.273 25.022 278. rates and taxes 317.1 21.361.816 1.702.946.225.740) 29.267.370.376.652 Salaries and other benefits 31.429 29.611 Closing stock of finished goods (409.(2015: Rs.895. 2016 2015 2016 2015 Note Rupees Rupees Note Rupees Rupees Stacking and loading 12.501 28.027.172.(2015: Rs.468 .147.072 6.968.232 456.(2015: Rs.639.279.667 4.655.241 49.Federal excise duty 465.500.922.365.100 3.341 4.437.919.459. electricity and water charges 12.457.642.740 3.369 Market committee fee 9.078 1.Bagasse 42.499 Manufactured sugar: Travelling and conveyance 10. wages and other benefits 29.1.417 Advertising 735.861/-) and contribution to provident 220.150 Legal and professional 4.060 Depreciation 5.1 Include contribution to provident fund of Rs.684.958.742/.160 3.677.077 214.241.212.318.621) 6.359.150 Fuel.392 284.459.477.674.159.925 173.706 109.713 /.113.976.922.815.452.430 197.291 Salaries.468.002.693.689.004.183.532.1.866 Note Rupees Rupees 31.746.208 Opening stock of finished goods 1.710.680 Repairs and maintenance 71.749.206 Road cess on sugarcane 5.564.932.413) (1.636 /. 2016 2015 560. 1.000 Electricity.908.928 .697 Stores and spare parts consumed 211.384 181.535.366 82.882 11.082 14.319.332. .232) 1.1 115. 4.(2015: Rs. 804.012.819 (1.710.838 Printing and stationery 2.701. 3.468 1.671.058.356 272.374) (2.050.664 Insurance 25. 55.079. COST OF SALES Rent.055 Insurance 258.587 116 Mehran Sugar Mills Annual Report 2016 117 Limited .808 21.2 1.219 1.029.701 Cost of sugarcane consumed (including procurement and other expenses) 4.530.681.975 4.727 17.145. Cost of goods manufactured 5.380.974.090 7.755/-).799.400 Vehicle running and maintenance expenses 3.613 Repairs and maintenance 7.518 .127 104.1 192.121 20.006 7.950 Less: 7.885.656.009 4.573 Other expenses 409.878.439.849 40.749.527.100.125 Fees and subscription 2.686.850 6.760/-).119 fund of Rs.647 Vehicle running and maintenance expenses 9.189.839.895.970.906 5.788.725.004/-).093.312.859 Note Rupees Rupees Closing stock of work-in-process (2.490 51.487 /.406.905.921.684.Sales tax 95.319. fax and postage 7.513 Other overheads 24.625 30. 4.490.308 7.3 8.275.089 31.524 Depreciation 5.324.509 36.1 118.450.708 Ijarah rentals 519.803 Insurance 16. telephone. ADMINISTRATIVE EXPENSES 7.056 Donations 31.333.347.987 4. 5. 4.666 5.069.275 31. Auditors’ remuneration 31.549 210.1 Include contribution to provident fund of Rs.

000 Cost audit fee 153.000 Cost audit Review of half yearly financial statements and Haroon Zakaria & Co. 40.233 1.067 139.150 116 Mehran Sugar Mills Annual Report 2016 117 Limited .000 405.000.000 EY Ford Rhodes 1.000 1.150 Other services .070. compliance with Code of Corporate Governance 437. Statutory audit Out of pocket expenses 86.516.593.000 1.746.000 Statutory audit fee 1.655.166 71.166 1.

which is based on: 33. back Scrap sales 5.869.025.403 21.199.3 Include Rs.364 Workers’ Profits Participation Fund 352.income charged at different rates (44. Khurram Kasim and Mr.500.596.620 donee’s fund to which donation was made in both foundations.606.962 27.802 116.508 17.507 88.91 13.557.779.817.672.778.5.094 Tax effects of: 33.941. 103.970.737.205.441 161.761 18.376.528.904. 2.000/-) and Rs.342.863.199.599 Lease finance 3.411) (58. 2015).245 32.596. Mohammed Kasim Hasham.924.245 (2.43 12.072) Gain on disposal of short term investments 54.2 Income tax assessments of the Company have been completed upto the tax year 2016 (accounting year ended Liabilities no longer payable written 18.549 18. Ahmed Ebrahim Hasham who are the trustees of the said Foundation. income exempt from tax (3. Mohammed Ebrahim Hasham.082.614 119.765 - Gain on disposal of fixed assets .426 43.006.828 107.131.996) Dividend income 49.888. Mr.532.205 Short-term borrowings 52.953.256 - 118 Mehran Sugar Mills Annual Report 2016 119 Limited .911 Accounting profit before taxation 668.761 18.(2015: Rs.454 Profit after taxation attributable to ordinary (Rupees) 541.508 126.957) shares Weighted average number of ordinary shares 32.032 65. Usman Memorial Hospital Foundation includes directors namely Mr.596.758. September 30.924.462.529.248.747.536) . OTHER EXPENSES 2016 35.770 51. tax rate adjustment (8.505 Tax at applicable rate of 31% 207.843 20.954 430.371 .360 Note Rupees Rupees 32. Rupees Rupees 35. 31.6.222.474.175. therefore.237 Deferred 22.524 47. tax credits (18.123 2016 2015 126. 6. Farm income – net 33.089 9.721.667.149) Income from financial assets .454 Earnings per share (Rupees) 16.036 74. Ahmed Ebrahim Current 102. prior year tax charge 618.251 .399.612. Mohammed Hussain Hasham and Mr.228 4.009. 1.expenses not deductible for tax purpose (6.964) Change in fair value less cost to sell of standing crop 15.000 (2015: nil/-) paid to Hasham 2016 2015 Foundation and Usman Memorial Hospital Foundation respectively which are the projects of Hasham Group. 570.896 60.500.418.031.205.043.869.811.000/. TAXATION Hasham Foundation include directors namely Mr. Mr.396 .096. Mr.458 .089 183.617 Hasham who are the trustees of the said Foundation.996 51.642) (2.731.235 36. FINANCE COSTS Markup / interest on: Long-term financing 40.461) (4.756.935 There is no dilutive effect on the basic earnings per share of the Company.212.031.756 Loss on disposal of fixed assets 6.1As the Company was subject to Alternative Corporate Tax (ACT) for the previous year.364 35.1 12.127) (4.047) Profit on term deposit receipts 3.594 Workers’ Welfare Fund 8.806.913.842.273 Less: Fair value ofand Harvesting harvested crop other charges (48.000.1 25.827 41. Mohammed Hussain Hasham.490 Income from sale of electricity 39.802 Exchange gain .154. no numerical tax Income from non-financial assets reconciliation was prepared. BASIC AND DILUTED EARNING PER SHARE 75.152 1.246.170.124.229.569.490 34.034.829. No other directors or their spouses have any interest in any Prior 618.1 Farm income – net 2016 2015 Revenue from farms 50. OTHER INCOME .1 Reconciliation between tax expense and accounting profit Rupees Workers’ Profits Participation Fund 24.846 35.324 - 41.

294 98. 96.168 Bank charges 1.243.680.323.626.987 144.414 2.401 146.945.462 118 Mehran Sugar Mills Annual Report 2016 119 Limited .566.

916.500. 120.142 5.468. Sales tax and federal excise duty 37. . DIRECTORS AND EXECUTIVES Rupees Rupees (Increase) / decrease in current assets 40.411.000 .185 (1.112.727 Fees .117.000 Other receivables 3. 2. .146.514 Number of persons 1 1 6 26 34 1 1 6 22 30 Trade and other payables (638.142 38.000 52.525. Transactions and balances with related parties.664 18.360) Non.645) 1. . WORKING CAPITAL CHANGES 2016 2015 40. retirement funds.000 .000) 40. 27. UniEnergy Limited.898.822.529 2.325 ------------------------------------------------------------------------. liquidity risk and Related parties of the Company comprise of associates [Pakistan Molasses Company (Private) Limited.1 The aggregate amount.012 41.484.086.597. The Board of Directors reviews and agrees policies for managing each of these risks which are Tobacco Company (Private) Limited.762 Market committee fee payable .200 418.130.1 Credit risk follows: Credit risk is the risk which arises with the possibility that one party to a financial instrument will fail to 2016 2015 discharge its obligation and cause the other party to incur a financial loss.000 .000 .202.962.494.298.452.854.884 10. 37. directors and key management personnel. Executives Total Chief Executive Chief Executive Executive Executive Stock-in-trade 1.549 . 25.136) Managerial remuneration 6. payable (727.315.566. are as 41.2015 ------------------------------ Stores and spare parts 23. 395. 24. -----------------------------.869) (4. (88.000 8.499. summarised below.000 4.222.814. 120 Mehran Sugar Mills Annual Report 2016 121 Limited .915.703 84.095. Usman Memorial Foundation.395 33.2016 -----------------------------.000 .118 (33. 29. 2.980.234 372.540.200.748 (2.071. REMUNERATION OF CHIEF EXECUTIVE.840.430) Retirement benefits 654.000 120.529 Perquisites and other benefits 6.234. the Chief Executive and Executive Director are provided with free use of the Company maintained cars.519.000 .050.947. 120.000 4. other than those disclosed elsewhere in the financial statements.686.000 60.000 534.873.934.654.526.Rupees ------------------------------------------------------------------------- Loans and advances 29.549 4. Unicol Limited.137.703 10.526.340. 395.000 5.731.360. The Company attempts to control Rupees Rupees credit risk by monitoring credit exposures.818) Trade deposits and short-term prepayments 3.395 Increase / (decrease) in current liabilities 13.502) Executive Director Executive Director Directors Directors Trade debts 31.874.994.770 41.438 in accordance with their terms of service.706. Hasham Foundation].940.000 395.150. Executives Total Non.640. TRANSACTIONS WITH RELATED PARTIES The main risks arising from the Company’s financial instruments are credit risk.537. limiting transactions with specific counterparties and continually assessing the creditworthiness of counterparties.590 1. Mogul market risk.650.879 (1.000 .040.000 .010.189 (103.514 72.000 10.091 774.002. .334 -----------------------------.368.590 35.000 4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES 38.2 In addition. charged in the financial statements for the year are as follows: Biological assets 4.012 5.776) 1.

616 45.800 Deposits 398.483.300.640 Rated capacity Capacity utilisation Other receivables 3.351.000 TCD 105 8. Concentration of credit risk arise when a number of counterparties are engaged in similar business activities or Dividend received during the year 23.663.611 137.935 42.640 358.221.300. 120 Mehran Sugar Mills Annual Report 2016 121 Limited . political or other conditions.e.999.097.980 .998 318.168.057 is: Insurance premium .619 affected by changes in economic. Tons Days 161.000 Rupees Rupees Retirement benefit plans Long term deposits 853.339 236.500. Associates Investment made during the year 19.827.115 Bank balances 34. The maximum exposure to credit risk at the reporting date Expenses shared 1.835.767 TCD 108 The short fall in crushing is due to shortage of raw material i.473.059.092.146.000 3.767 2016 2015 Donations 8. CAPACITY AND PRODUCTION Loans and advances 108.500 TCD 105 8.573 .519 Trade debts 10.942 8. Tons Days M.000 6.055.367 6.000 39.026 Investments 3.655 M.170 1.559. sugar cane.958 TCD 108 Season 2014-2015 11.485.785 983.400 Provident fund contribution 8.636 Season 2015-2016 11.717.500.422. have economic features that would cause their ability to meet contractual obligations to be similarly similar Sales 354.055. 17.

712 424. 33.828 273.667 33.638 31.3.350.954 estimates that a 10% increase in the overall equity prices in the market with all of the factors remaining A1 PACRA 8. 2.551. The table below summarizes the maturity profile of transactions with foreign undertakings.376 117. 11.2Bank balances With external credit rating Equity price risk is the risk of volatility in share prices resulting from their dependence on market sentiments.450 .888. The Company applies the prudent risk management policies by maintaining sufficient cash and change in foreign exchange rates. As of the balance sheet date.331 Company manages the above market risks through diversification of investment portfolio.3Foreign currency risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they Foreign currency risk is the risk that the value of a financial asset or a financial liability will fluctuate due to a fall due.321 128.25 million and a 10% decrease would 34.3 Market risk Long-term financing .159 18.070.396. would decrease the Company’s profit before tax by Rs.Amount in Rupees --------------------------------------- 41.990 240.405.985 Market risk is the risk that the fair value of future cash flows of financial instruments will fluctuate due to Trade and other payables 1.525.370 constant would increase the Company’s profit before tax by Rs.096 122 Mehran Sugar Mills Annual Report 2016 123 Limited .1Trade debts remaining constant.349.232.910 7. The management of the A1+ PACRA 25.262.854.235. The Company’s exposure to the risk of changes about counter party default rates as shown below: in market interest rates mainly relates to long term financing. Accrued markup . 62. Quality of financial assets 41.405. The management A-1+ JCR – VIS 118.698.037. - 41.110.653.655 result in a decrease in the Company’s profit before tax by the same amount.2Equity price risk 41.670. It arises mainly where receivables and payables exist as a result of bank balances and by keeping committed credit lines.405 changes in market variables such as interest rate and foreign exchange rates. 11.956 59.096. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES ---------------------------------------.232 10.716.669 302.068 6. the Company is not exposed to any the Company’s financial liabilities at the following reporting dates: such risk. short term borrowings and lease obligations. Customers with no defaults in the past one year .1Interest rate risk The credit quality of financial assets can be assessed by reference to external credit ratings or the historical Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will information fluctuate because of changes in market interest rates.485.107.422.953. 2016 2015 Rupees Rupees Management of the Company estimates that 1% increase in the market interest rate.525.606 2. with all other factor 41.1.916 Liabilities against assets subject to finance lease . On 1 to 5 42.616 45.019 . Less 3 to 12 On than 3 months Total years demand months 43.5.019 Short term borrowings .376.3. CAPITAL RISK MANAGEMENT Less than 3 to 12 demand 3 months months Total years 1 to 5 which in view of the management is adequate considering the size of the operations.376.865 498.771 2015 1.089 million and a 1% decrease would result in the increase in the Company’s profit before tax by the same amount.863. 41. 190.159 12.527.1.815.490.227 1.156. .956 170.177.3. supply and demand for shares and liquidity in the market.2 Liquidity risk 41.252.096. speculative activities.

Fair value is the amount for which an asset could be exchanged, or a liability can be settled, between Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities,
knowledgeable willing parties in an arm’s length transaction. The carrying values of all financial assets
and liabilities reflected in the financial statements approximate their
-------------------------------------- fair values.
Amount in Rupees -------------------------------------
Level 2: Those involving inputs other than quoted prices included in Level 1 that are observable for the asset or
The primary objective of the Company’s capital management is to maintain healthy capital ratios, strong credit rating
liability, either directly (as prices) or indirectly (derived from prices); and
Long-term
The followingfinancing
table shows financial instruments- recognised39,715,059 128,001,150
at fair value, analysed 304,848,460
between those 472,564,669
whose fair and optimal capital structures in order to ensure ample availability of finance for its existing and potential investment
Liabilities against assets subject to finance lease - 3,782,224 11,346,671 21,210,474 36,339,369 projects, to maximise shareholder value and reduce the cost of capital. The Company manages its capital structure
value is Leveladjustment
3: Those whose inputs for the
Trade and other payables 587,731,559 217,150,927 240,142,823 14,582,760 1,059,608,069 and makes to it, in the light of asset or liability
changes that are
in economic not basedInonorder
conditions. observable market
to maintain or date (unobservable
adjust the capital
based
Accrued on:
markup - 8,841,589 - - 8,841,589 inputs).
structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders or
Short term borrowings - - - - - issue new shares. The Company is currently financing of its operations through long-term and short-term financing
2016 587,731,559 269,489,799 379,490,644 340,641,694 1,577,353,696 in addition to its equity. The Company has a gearing ratio of 16.96% (2015: 26.31%) as of the balance sheet date,

122 Mehran Sugar Mills Annual Report 2016 123
Limited

Notes to the Financial Pattern of Shareholding
Statements
as at September 30, 2016

As of the balance sheet date, the Company has only available-for-sale investments measured at fair value using level Number of Shareholdings Total Number of
1 valuation techniques. Shareholders From To Shares held
895 1 - 100 15,892
44. DATE OF AUTHORIZATION FOR ISSUE 249 101 - 500 61,613
73 501 - 1,000 56,312
These financial statements were authorized for issue on December 21, 2016 by the Board of Directors 121 1,001 - 5,000 286,434
of the Company. 54 5,001 - 10,000 405,144
12 10,001 - 15,000 154,679
9 15,001 - 20,000 155,388
45. NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE
11 20,001 - 25,000 241,818
9 25,001 - 40,000 302,604
45.1 The Board of Directors in its meeting held on December 21, 2016 has recommended a final cash 7 40,001 - 60,000 340,424
dividend on ordinary shares @ 22.5%. The approval of the members for the proposed final cash dividend 1 60,001 - 70,000 65,733
will be obtained at the Annual General Meeting of the Company to be held on January 31, 2017. 1 70,001 - 80,000 70,110
1 80,001 - 85,000 84,185
45.2 The Finance Act, 2015 introduced a tax on every public company at the rate of 10% of such undistributed 2 85,001 - 90,000 177,480
reserves which exceed the amount of its paid up capital. However, this tax shall not be applied in case of a 4 90,001 - 100,000 382,039
public company which distributes cash dividend equal to at least either 40 percent of its after tax profits 1 100,001 - 120,000 102,003
or 50 percent of its paid up capital, within the prescribed time after the end of the relevant tax year. 1 120,001 - 150,000 124,850
1 150,001 - 180,000 150,116
1 180,001 - 185,000 180,538
Based on the above fact, the Board of Directors of the Company has proposed / approved cash dividend 1 185,001 - 190,000 187,264
amounting to Rs. 208,203,906 million for the financial year 2016 and tax year 2017 which exceeds the 1 190,001 - 195,000 193,133
prescribed minimum dividend requirement as referred above. Accordingly, the Company would not be liable 1 195,001 - 215,000 200,000
to pay tax on its undistributed reserves as of 30 September 2016. 1 215,001 - 250,000 219,862
1 250,001 - 265,000 253,000
46. NUMBER OF EMPLOYEES 2 265,001 - 320,000 551,811
3 320,001 - 340,000 982,745
Number of persons employed as at year end were 605 (2015: 555) and the average number of persons 1 340,001 - 425,000 391,565
employed 1 425,001 - 440,000 425,134
during the year were 580 (2015: 562). 4 440,001 - 815,000 2,186,176
2 815,001 - 3,380,000 4,156,927
1 3,380,001 - 4,780,000 3,381,038
47. GENERAL 2 4,780,001 - 5,630,000 9,910,524
1 5,630,001 - 5,635,000 5,634,704
Amounts have been rounded off to the nearest rupee unless otherwise stated. 1,475 Total 32,031,245

Number of Number of
Shareholders’s Category Shareholders Percentage
Shares held

Individuals 1,446 30,710,443 95.88%
Joint Stock Companies 19 930,524 2.91%
Insurance Companies 2 322,992 1.01%
Financial Institutions 4 3,746 0.01%

124 Mehran Sugar Mills Annual Report 2016 125
Limited

Notes to the Financial Pattern of Shareholding
Statements
as at September 30, 2016
Others 4 63,540 0.20%
1,475 32,031,245
Chief Executive Officer Director

124 Mehran Sugar Mills Annual Report 2016 125
Limited

601.090 Important: Mrs.031. Muhammad Basheer 1 24. Mary Hussain 1 825. Khursheed Ebrahim 2 5. If a member appoints more than one proxy and more than one instruments of proxy are deposited by a Maple Leaf Capital Ltd. Mary Hussain 2 5.721 /our absence to attend and vote for me / us and on my / our behalf at the 51 st Annual General Meeting of the Company to be held on January 31. except that a corporation State Life Insurance Corp. c) Directors / CEO and their spouse and minor children As witness my our hand seal this day of 2017 Mr. Abdullah Haroon Road. 2017 at 1600 PST and at any adjournment thereof.038 Mr. Anushey A. Anushey A. 1 1.014 Company Hotel Karachi. Insurance Companies. Mohammed Ebrahim Hasham 1 4.437.861 b) NIT & ICP of whois/are also member(s) of Mehran Sugar Mills Limited as my / our proxy in Investment Corporation of Pakistan 1 1.381. Mohammed Hussain Hasham 1 5.564.529 Mr.299 Mr. of Pakistan 1 322.597 of or failing FShakoo & B Bulk Storage Ltd.634. (Pvt) Ltd. Khurram Kasim 1 3. Investment Corporation of Pakistan 1 639 Muslim Commercial Bank Ltd. 1 70. 1 35 7 326.) Ltd. Muhammad Iqbal 1 8. Mohammed Hussain Hasham & Mrs. Additional Information as at September 30.134 Signature of Five Rupees Mr. NBFIs. address and CNIC numbers shall be g) General Public mentioned on the Form Physical 876 1. Mohammed Ebrahim Hasham & Mrs. 9 24. Kulsoom Kasim 1 472.400 Mrs.holding This Proxy Form.245 g) Shareholders holding 5% or more voting interest Proxy Form Mr. the following requirements have to be met: EFU General Insurance Ltd.107.623 shall be submitted (unless it has been provided earlier) along with Proxy Form to the Company.225 Mr. General the Annual duly completed Meeting. 404 Trade Tower. Kulsoom Kasim 2 6. Dr.304 Mrs.957 3. 1 14.038 Mr. Mr. not less than 48 hours before the time fixed for1.110 (Pvt) 1 11.516. Mohammed Kasim Hasham & Mrs. 1 1 member with the Company. Ahmed Ebrahim Hasham 1 3. 2016 PROXY FORM 51st Annual General Meeting Number of Shares held I / We Categories Shareholders of being member of Mehran Sugar Mills a) Associated undertaking and related parties Limited.565 4 487.162 in the presence of Shareholders Revenue Mr.082 my IDBL (ICP UNIT) 1 639 2 1. f) Bank. holding ordinary shares hereby appoint Pakistan Molasses Company (Pvt) Ltd.613 CDC 599 30. Hasham 1 100. Ahmed Ebrahim Hasham & Mrs.739 i) The Proxy form shall be witnessed by two persons whose names.and signed. of Pakistan 1 322.957 appoint a person who is not a member.772 IDBL (ICP Unit) 1 1.082 For CDC Account Holders / Corporate Entities. Mohammed Kasim Hasham 1 5. Mudarbas & Mutual Funds State Life Insurance Corp. Amjad Waheed 1 3.704 Mr. the Board of Directors’ resolution / power of attorney with specimen Mr. Khursheed Ebrahim 1 819.035 Stamp Mrs.159 e) Public Sectors Companies and Corporations 2. Khurram Kasim 1 3.337.589 him / her Bulk Management Pakistan (Pvt) Ltd.953. Habib Bank Ltd. Near Metropole 19.683 . Hasham 2 3. DFIs. 1 391.381.128.623 Signed by the said Please affix Mr.480. 1 253 In addition to the above.782.632 ii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the 1475 32. must be received at the Share registerar Office d) Executives Muhammad Hanif Aziz (Company Secretary) 2 M/s C&K Management Associates (Pvt.104 iii) The Proxy shall produce his/her original CNIC or original passport at the time of the meeting.000 24.. No person shall act as proxy unless he himself is a member of the Company. all such instruments of proxy shall be rendered invalid.389 iv) In case of corporate entity.466.

126 Mehran Sugar Mills Limited .

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Karachi-75600 Tel : (92 21) 35297814-17 Fax : (92 21) 35297818.com mehransugar. 35297827 info@mehransugar.com . Dolmen City. 14th Floor. Clifton. Executive Tower. Block-4. Marine Drive.

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676.725.747 .399.Molasses 340.28. TURNOVER Sales .752 .510 .061 304.291.Sugar – local 7.222.693.Sugar – exports .447 3.249. 613.