PROJECT REPORT

ON
ENVIRONMENT AND ECONOMIC ANALYSIS

GROUP MEMBERS
ALI HASSAN - BME203038
HAMZA KAYANI– BME203072
MAQSOOD AKBAR KHAN– BME203045

COURSE: ENGINEERING ECONOMICS – HMME3712

SEMESTER: 5TH
SUBMITTED TO: SIR HASSAN SHAH

DEPARTMENT OF MECHANICAL ENGINEERING - CAPITAL UNIVERSITY OF SCIENCE AND

TECHNOLOGY, ISLAMABAD

COPYRIGHT@2022
TABLE OF CONTENTS
Contents
CHAPTER 1..............................................................................................................................................3
INTRODUCTION.......................................................................................................................................3
LITURATURE REVIEW:.......................................................................................................................3
CHAPTER 2..........................................................................................................................................5
ECONOMICS ANALYSIS.....................................................................................................................5
FINANCIAL STATEMENT:......................................................................................................................5
CASH FLOW STATEMENT:.................................................................................................................8
PROFIT AND LOSS STATEMENT:......................................................................................................9
Financial liabilities:.................................................................................................................................9
Financial assets:.....................................................................................................................................10
PRODUCTION:....................................................................................................................................11
BALANCE SHEET:..............................................................................................................................12
CHAPTER 3......................................................................................................................................14
Environmental Analysis..........................................................................................................................14
1) Impacts of Dust and Exhaust Emissions:...................................................................................14
2) Soil Erosion and Contamination:...................................................................................................14
3) Noise Pollution:.............................................................................................................................15
CHAPTER 4............................................................................................................................................16
Improvement Suggestions.......................................................................................................................16
CHAPTER 5............................................................................................................................................16
References:...............................................................................................................................................16
CHAPTER 1
INTRODUCTION

Ashraf Sugar Mills Limited (ASML) is primarily involved in production and sale of crystalline
sugar, molasses and other by-products. Majority of the shareholding is vested with the
sponsoring family. The company is a part of ‘Ashraf Group of Industries’ having presence in
sugar, coal mining, stone quarry, livestock & dairy, power, corporate agriculture farming and
real estate. Crushing capacity of the mill stands at 10,000 tpd while power requirements of the
company are entirely met through bagasse-based captive power source of 26.5 MW. The Mill
was established in an economically and industrially backward area of Pakistan to endow with
employment opportunities to local population and also to exploit major crop of sugar-cane grown
in the area. At present over 1500 persons are working in the mill. Its installation has amplified
the earnings of the sugar cane growers in the mill zone area. It has facilitated to bring about
substantial improvement in the income and consequently the standard of living of workers and
peasants alike thereby transforming the prevalent socio-economic conditions of the area. Sugar
Industry is one of the major industries which help in improving the means of communications in
the remote and backward areas in the country-side by means of construction of roads and bridges
and Ashraf Sugar Mills has played imperative role in this respect. The mill is rated as one of the
finest quality sugar manufacturers in Pakistan.

LITURATURE REVIEW:

AGI’S core competency is Cane Sugar Manufacturing through our entity Ashraf Sugar Mills
Limited (ASML). Founded in 1978, by the late Ch. Muhammad Ashraf, in Bahawalpur, as
Bahawalpur Sugar Mills, the mill has undergone massive identity and infrastructural evolution to
retain its position at the top for quality sugar producers. Through job creation and raising
farmer’s income, ASML has been instrumental in socio-economic and infrastructural uplift in
this underdeveloped region of South Punjab. One of the best sugar manufacturers in Pakistan,
ASML has won global recognition by winning the 9th International Food Award in 1986 at
Barcelona. Spain and 10th International American Award at New York, USA. ASML believes in
setting the achieving high standards, which has made us complaint with ISO 90001:2015, ISO
14001: 2015, Halal Food Safety Management System PS 3733:2013 and GMP + B@. ASML
HACCP and hygiene procedures comply with Global Food Safety Initiatives (GFSI) recognized
standard FSSC 22000.Since 2015 ASML Bonsurco; this has created an international certification
standard that aims to improve social, environmental and financially sustainable aspects of
Sugarcane growing. ASML is also member of Sedex and comply with SMETA 4 Pillar (Health
& Safety, Labor Standards, Environmental and Business Ethics) audit protocols. Refined Sugar
is the specialties of ASML. The Mill has the capacity to produce white crystalline, soft brown
and castor sugar for domestic, industrial and commercial consumption and can further maintain
best quality parameters of its sugar truly suitable to its valued customers. Bagasse; Molasses and
Press-mud are by-products of sugar cane and are used power generation, fuel substituents and
fuel for kiln bricks respectively. Latest Technologies are being developed for more viable use of
these products like Bio-Diesel, Bio-Fertilizer and Bio-Phosphate. The ratings assigned
incorporate top line growth on back of higher sugar off take coupled with increase in sugar
prices. However, gross margins of the company are largely on the lower side vis-à-vis other
industry players mainly due to lower sucrose recovery. The management has been striving for
quality improvement and process efficiencies through extensive BMR to meet quality standards
of corporate clientele which contributes towards more than two-third of the revenue. The ratings
also factor in capital expenditure contemplated by the management in the near term to conserve
energy and reduce production losses which is likely to augur well for the company. The capex
would also include upgradation of power house and installation of furnaces in view of the
management’s plan to tap steel business, going forward. This would allow the company to
remain competitive and curtail the risk emanated from cyclicality of sugar sector to some extent
through diversification. Furthermore, liquidity is considered adequate and capitalization
indicators are sound. While decrease in recovery rates due to early start of crushing season and
increase in sugarcane procurement cost may put strain on profitability in the ongoing year, the
same is expected to partially offset given positive outlook for average retail prices of sugar.
Meanwhile, the ratings remain sensitive to business risk emanating from inherent cyclicality in
crop levels, raw material prices and any adverse changes in regulatory duties. Completion of
efficiency and severity initiatives with improvement in gross margins while maintaining leverage
and liquidity at comfortable level is considered important, going forward.
CHAPTER 2
ECONOMICS ANALYSIS

FINANCIAL STATEMENT:
CASH FLOW STATEMENT:
PROFIT AND LOSS STATEMENT:

Financial liabilities:
All financial liabilities are recognized at the time when the Company becomes a party to the
contractual provisions of the instrument. Financial liabilities at amortized costs are initially
measured at fair value minus transaction costs. Financial liabilities at fair value through profit or
loss are initially recognized at fair value and transaction costs are expensed in the profit or loss.
Financial liabilities, other than those at fair value through profit or loss, are subsequently
measured at amortized cost using the effective yield method. A financial liability is derecognized
when the obligation under the liability is discharged, cancelled or expired. Where an existing
financial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an 113 SANGHAR SUGAR
MILLS LIMITED Annual Report 2021 exchange and modification is treated as a derecognition
of the original liability and the recognition of a new liability, and the difference in respective
carrying amounts is recognized in the profit or loss.

Financial assets:

The Company recognizes loss allowances for Expected Credit Losses (ECLs) in respect of
financial assets measured at amortized cost. The Company measures loss allowances at an
amount equal to lifetime ECLs, except for the following, which are measured at 12-month ECLs:
– Other debt securities and bank balance for which credit risk (i.e. the risk of default occurring
over the expected life of the financial instrument) has not increased significantly since initial
recognition. Loss allowances for trade receivables are always measured at an amount equal to
lifetime ECLs. When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECLs, the Company considers
reasonable and supportable information that is relevant and available without undue cost or
effort. This includes both quantitative and qualitative information and analysis, based on the
Company's historical experience and informed credit assessment and including forward-looking
information. The Company assumes that the credit risk on a financial asset has increased
significantly if it is more than past due for a reasonable period of time. Lifetime ECLs are the
ECLs that result from all possible default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within
the 12 months after the reporting date (or a shorter period if the expected life of the instrument is
less than 12 months). The maximum period considered when estimating ECLs is the maximum
contractual period over which the Company is exposed to credit risk.
PRODUCTION:

Production capacity remained at 10,000 tpd. The mill was operational for 109 days during 2019-
20 season (2018-19: 101 days; 2017-18: 132 days) and crushed 834.2K tons (2018-19: 859.4K
tons; 2017-18: 1,062.7K tons) of sugarcane leading to lower capacity utilization of 76.5% (2018-
19: 85.1%; 2017-18: 80.5%). Sucrose recovery rate decreased to 9.79% (2018-19: 10.23%;
2017-18: 10.06%) during the outgoing season. Resultantly, total sugar produced decreased to
81,636 tons (2018-19: 87,879 tons; 2017-18: 106,845 tons). VIS Credit Rating Company Limited
www.vis.com.pk with lower crushing and recovery rate of 4.28% (2018-19: 4.59%; 2017-18:
5.16%), molasses production decreased to 35,726 tons (2018-19: 39,395 tons; 2017-18: 54,800
tons) during 2019- 20 season. As per directives of government, the mill started crushing earlier
from November 10, 2020 for 2020-21 season (2019-20: from November 27, 2019). ASML has
crushed 416,239 tons of sugarcane as of December 31, 2020 and has produced sugar of 37,128
tons yielding a recovery rate of 8.92%. As per management, the ongoing crushing season is
expected to last for 110 days and recovery rate is expected to decrease by 0.5% owing to earlier
start of crushing which may lead to production losses of around 4K tons in sugar output. A
snapshot of production statistics is given below:

Total power requirement of the company while running at full capacity is around 17 MW which
is entirely met through bagasse-based captive power source of 26.5 MW capacity. The company
has two low pressure turbines of 15 MW and 1 turbine of 5 MW. Another turbine of 6.5 MW is
used as a backup source.
BALANCE SHEET:
CHAPTER 3

Environmental Analysis
1) Impacts of Dust and Exhaust Emissions:
Air quality is expected to deteriorate locally mainly due to fugitive dust emission and
exhaust gaseous emission from vehicular movement. This will cause short-term but
moderate impacts on local environment. Soil erosion may occur in small area and they
will be prone to wind erosion. Air pollutants such as; NOx, SOx and CO emissions may
be generated from the working of the construction machinery on-site which includes;
hauling vehicles, loaders, trucks, mixers, etc. This machinery will generate, smoke and
other potential pollutants in the air. This impact is considered to be negative of minor
magnitude. The effect due to construction is however, of temporary nature and will have
no permanent impact on environment.

Mitigation Measures:
Dust control measures are need to be taken to control the same; as the area is located in
semi-arid zone having dry soil conditions and it is vulnerable to spread during high
winds. Following mitigation measures will be adopted to mitigate the anticipated impact:

 Ensure that the trucks carrying the raw-material should be covered with sheets to
reduce fugitive dust emissions. Water spraying/sprinkling should be done on the
regular basis.
 Ensure that all equipment and vehicles, used during the construction phase, are
properly tuned and maintained in good working condition, in order to minimize
the exhaust emissions and it will be regulated by the concerned authority.
 Ensure that high quality fuel having low sulfur contents will be used in the
vehicles engaged in the construction activity.
 Ensure that dust emission generated due to vehicular movement is minimized by
restricted speed limit and vehicular movement impacts which will be minimized
through good traffic management at site.
 Ensure that dust emission during the construction phase will be minimized by
implementing best management practices.

2) Soil Erosion and Contamination:

On-site disposal of solid waste and leakage from construction machinery/vehicles can cause soil
contamination. Improper disposal of domestic wastewater may contaminate the soil which would
result in groundwater contamination.
Mitigation Measures:
The following practices will be adopted to minimize the risk of soil contamination:

Removal of the tree will be avoided up to the extent possible. In case of unavoidable
circumstances, the exposed soil will be re-vegetated quickly and compensatory plantation (five
trees for each one removed) will be carried out as soon as possible.

 Maintenance and washing of vehicles and equipment should be carried out at designated
areas.
 Regular inspections should be carried out to detect leakages in construction vehicles
and equipment.
 It is mandatory to instruct and train workforce in the storage and handling of materials
that can potentially cause soil contamination.
 Solid waste bins should be installed at strategic positions.
 Proper segregation of solid waste should be done. Solid waste generated during
construction will be properly and safely disposed of as per practices of area.
 Segregated organic waste may be converted into compost which will be utilized for on-
site horticultural activities.

3) Noise Pollution:

Noise pollution is not expected to occur at all during the operational phase. The mechanical and
electrical components of the proposed technology work within the permissible noise limit levels.
Moreover, even if the noise level exceeds the allowable levels during unexpected conditions, this
will have no significant impact since the nearby residential areas are found at the safe distance
from the treatment plant.

Mitigations:
In general, the following methods will be adopted to control the noise pollution from the
proposed unit:
 Personal protective equipment’s like ear plugs and ear muffs should be provided to
employees working in the noise prone areas.
 Time to time oiling and servicing of machineries should be done.
 The plant will ensure the ambient noise levels standards set by PEQS.
 A thick greenbelt will be developed all around the plant which will be act as noise
barrier.
CHAPTER 4

Improvement Suggestions

Thus, we see that for growth of Pakistan Sugar Mill industry and to maintain one’s position in
today’s competitive world market one must strictly adhere to standard norms. To earn fairly
reasonable export earnings, and meet the buyers demands quality goods production and on-time
deliveries are a key to success. And to achieve quality goods production efficient online
monitoring of production processes is important. And to deliver on-time it’s necessary to fulfill
commitments. Once an industry achieves control over their business and profitability then it can
go for modernization with latest technology machines.
We might have the best of technologies and experts in our own country but we must ensure that
we also have adequate resources and other utilities to use these technologies and expertise to our
advantage. And once our people understand and implement the above tips our Sugar Mill
industries will grow and flourish and prosper. This will also bring additional jobs to a vast
number of people.

CHAPTER 5
References:

 ASHRAF SUAGR MILL PVT LTD. BAHAWALPUR PAKISTAN ANNUAL REPORT

2020 (https://s3.us-west-2.amazonaws.com/) [Accessed: Dec 12, 2022].
 https://agipk.com/ [Accessed: Dec 12, 2022].
 http://environmentclearance.nic.in/ [Accessed: Dec 13, 2022].