BABA FARID

S U G A R M I L L S L I M I T E D

CONDENSED INTERIM FINANCIAL INFORMATION

For the 1st Quarter Ended 31 December 2021 (Un-audited)

QUARTERLY

REPORT

2 0

CONTENTS

Company Information

2

Directors' Review

3

Condensed Interim Statement of Financial Position

10

Condensed Interim Statement of Profit or Loss

11

Condensed Interim Statement of Comprehensive Income

12

Condensed Interim Statement of Cash Flows

13

Condensed Interim Statement of Changes in Equity

14

Selected Notes to the Condensed Interim Financial Information

15

First Quarterly Report 2021

1

COMPANY INFORMATION

BOARD OF DIRECTORS

Mrs. Qaiser Shamim Khan

Chairperson

Mr. Adnan Ahmed Khan

Chief Executive

Mr. Muhammad Shamim Khan

Executive Director

Mr. Nauman Ahmed Khan

Non-Executive

Mrs. Sarah Hajra Khan

Non-Executive

Mr. Farid ud Din Ahmed

Independent Director

Mr. Malik Manzoor Hussain Humayoon

Independent Director

CHIEF FINANCIAL OFFICER

AUDIT COMMITTEE

Mr. Wasif Mahmood

Mr. Farid-ud-Din Ahmad

Chairman

COMPANY SECRETARY

Mrs. Sarah Hajra Khan

Member

Mr. Malik Manzoor Hussain Humayoon

Member

Mr. Muhammad Imran

NOMINATION COMMITTEE

AUDITORS

Mr. Malik Manzoor Hussain Humayoon

Chairman

BDO Ebrahim & Co.

Mr. Farid-ud-Din Ahmad

Member

RISK MANAGEMENT COMMITTEE

Chartered Accountants

F-2, First Floor, Grace Centre,

Canal Bank Road, 1-B Canal Park,

Mr. Malik Manzoor Hussain Humayoon

Chairman

Gulberg-II, Lahore

Mr. Farid-ud-Din Ahmad

Member

Tel: 042-35875709-10

SHARE REGISTRAR

Fax: 042-35717351

Email: info@bdo.com.pk

M/s Corplink (Pvt) Limited

MILLS

Share Registrar, Wings Arcade,

1-K Commercial Model Town, Lahore.

5 K.M. Faisalabad Road, Okara

Tel: 042-35916714,

Tel: 044-2714418-21

Fax: 042-35869037

Fax: 044-2522978

Email: corplink786@gmail.com

BANKERS

REGISTERED OFFICE

Habib Bank Limited

2-D-1, Gulberg III, Lahore

Bank Al-Habib Limited

Tel: 042-35771066-71

MCB Bank Limited

Fax: 042-35756687

Meezan Bank Limited

Email: info@bfsml.com

Bank Alfalah Limited

Website: www.bfsml.com

Soneri Bank Limited

LEGAL ADVISOR

Allied Bank Limited

Askari Bank Limited

M/S Ahmed & Pansota

HUMAN RESOURCES &

Advocate and Legal Consutants

REMUNERATION COMMITTEE

20 - Sir Gangaram Mansions

The Mall Lahore

Mr. Farid-ud-Din Ahmad

Chairman

Tel: 042-37313549, 37313520

Mr. Adnan Ahmed Khan

Member

Tel: 042-36672102

Mr. Malik Manzoor Hussain Humayoon

Member

2 BABA FARID SUGAR MILLS LIMITED

DIRECTORS' REVIEW

The Directors of your Company are pleased to present the Un-Audited Accounts of the Company for the Ist Quarter Ended December 31, 2021 in compliance with the section 237 of the Companies Act, 2017.

INDUSTRY OVERVIEW

During the period under review, cultivated area of sugarcane crop is expectedly higher and yield per acre being reported by the growers is also reportedly higher as compared to corresponding period of last year. The early start of crushing season can also affect the yield and recovery of cane. Despite of above facts we are expecting better sugar recoveries in the area as compared to last year due to extra ordinary efforts made by agri team to promote better varieties of sugar cane and good practices.

For current crushing season 2021-22, notified support price of sugarcane is Rs. 225/- per 40 kg in Punjab & KPK. However, sugarcane is being procured at considerably higher cost than notified support price.

Due to early start of crushing season from November 15, 2021 tough competition has been observed in cane procurement that resulted into price war like situation in the region. Average sugarcane purchase cost is higher as compared to last year.

PERFORMANCE OF THE COMPANY

As the crushing is in process and so far Company is able to crush 200,100.40 M. Tons sugarcane and produced 15,900.00 M. Tons white refined sugar at an average recovery of 8.36% during the first quarter ending December 31, 2021 as compared to corresponding period of last year sugarcane crushing of 170,860.00 M. Tons and production of 14,215.00 M. Tons white refined sugar at an average recovery of 8.65%.

Net sales were recorded at Rs. 545.633 million during the first quarter of current financial year as compared to Rs. 504.376 million against the corresponding period of last year.

The Company earned pretax loss of Rs. 24.426 million during the quarter under review as compared to pretax profit of Rs. 13.751 million in the corresponding period of last year. Decrease in profitability is attributed to increase in sugarcane procurement cost.

All out efforts are being made to increase the production and profitability of the Company through process efficiency, installing modern and latest technology, reducing production cost by close supervision, developing good quality cane by providing the latest improved seed varieties, fertilizer, pesticides etc. and facilitating the cane growers constantly, which ultimately will result in higher sugar recovery and also financial benefit to the cane growers.

RESEARCH AND DEVELOPMENT

Agricultural R&D is an integral part of the Company's policy which entails identification and multiplication of promising new sugarcane varieties and their subsequent commercial sowing through progressive growers with best agricultural practices. This not only increases per acre yield of sugar cane but also enhances growers earning and creates more enthusiasm for sowing sugarcane compared to competing crops. It also increases the sugarcane supply to the Company and boosts overall sugar recovery, directly improving the bottom line of the Company.

RELATIONSHIP WITH GROWERS

As usual growers' payment has remained our top priority being one of the main keys of our success and we are trying our level best to make growers' payment on priority basis. We regularly provide financial

First Quarterly Report 2021

3

and technical support to our growers. Due to these policies and preferential treatment to growers, the Company enjoys excellent relationship with them.

FUTURE OUTLOOK AND GOING CONCERN ASSUMPTION

According to surveys, the sugarcane crop size in current crushing season 2021-22 is estimated to be approx. 10-15% higher than last year but keeping in view the low sucrose content in South & Centeral Punjab, we are expect the sugar production will expectedly be higher as compared to last year. In view of all this, it is expected that sugarcane prices would play a vital role in the determination of sugar prices. Even after the substantial increase in support prices of sugarcane by the Provincial Governments, the industry is procuring sugarcane at much higher prices as growers are not willing to supply sugarcane at notified support prices. This will result in increase in the production cost of the sugar, consequently sugar prices in the market may remain on the higher side. Government needs to take appropriate measures to ensure availability of sugarcane to sugar mills at support prices.

The increase in discount rate by the State Bank of Pakistan (SBP) by 275 bps has ultimately increased the KIBOR rate, that will result in increasing the financial cost of the Company. Any further increase in mark-up rates may adversely affect the profitability of the Company.

Sales tax evasion and undocumented sugar trade were two major challenges being faced by the sugar industry. These issues were the root causes of instability in the prices of sugarcane, sugar and hurdle in planning by the Government for availability of sugar in the country. To curb these issues on 11 November 2021, FBR has issued Sales Tax General Order No. 05 of 2021-22 with subject of Implementation of Track & Trace System. As per order, no sugar bags shall be allowed to be removed from production site or factory without affixation of Tax Stamps / Unique Identification Marking (UTMs) with effect from 11 November 2021, which are to be obtained / procured from FBR Licensed vendor only. FBR has achieved marvelous success in the implementation of Track & Trace System and results are quite satisfactory. This is a milestone achieved by FBR which will result in giving level playing fields to fully compliant sugar mills and substantial increase in the revenue of FBR. Now FBR should also find out practical ways out to document the sugar trade which is another uphill task.

CORPORATE GOVERNANCE

Best Corporate Practices

Directors are committed to good corporate governance and comply with the requirements of the Listed Companies (Code of Corporate Governance) Regulations, 2017 and the Rule Book of Pakistan Stock Exchange. The statement of compliance with the CCG is enclosed. The composition of the Board of Directors (the Board") is as follows:

The total number of Directors are seven as per following:

  • Male: Five
  • Female: Two

Category

Names

Independent Director

Mr. Farid-ud-Din Ahmad

Mr. Malik Manzoor Hussain Humayoon

Executive Directors

Mr. Adnan Ahmed Khan (CEO)

Mr. Muhammad Shamim Khan

Non-Executive Director

Mrs. Qaiser Shamim Khan

Mr. Nauman Ahmed Khan

Mrs. Sarah Hajra Khan

The Board has formed committees comprising of members given below:

4 BABA FARID SUGAR MILLS LIMITED

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Baba Farid Sugar Mills Ltd. published this content on 31 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 January 2022 04:50:08 UTC.