BABA FARID

https://bfsml.com

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

CONDENSED INTERIM

FINANCIAL INFORMATION

For the Half Year Ended

31 March 2023 (Un-audited)

HALF YEARLY

REPORT

2023

CONTENTS

Company Information

2

Directors' Review

3

Independent Auditors' Review Report

10

Condensed Interim Statement of Financial Position

11

Condensed Interim Statement of Profit or Loss

12

Condensed Interim Statement of Comprehensive Income

13

Condensed Interim Statement of Cash Flows

14

Condensed Interim Statement of Changes in Equity

15

Selected Notes to the Condensed Interim Financial Information

16

Half Yearly Report 2023

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

Office No.4, 6th Floor

Askari Corporate Tower,

Mr. Malik Manzoor Hussain Humayoon

Chairman

75/76 D-1 Main Boulevard III, 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

MCB Islamic Bank Limited

Email: info@bfsml.com

Meezan Bank Limited

Website: www.bfsml.com

Bank Alfalah Limited

LEGAL ADVISOR

Soneri Bank Limited

Allied Bank Limited

Askari Bank Limited

M/S Ahmed & Pansota

National Bank of Pakistan - Aitemad

Advocate and Legal Consultants

HUMAN RESOURCES &

20 - Sir Gangaram Mansions

The Mall Lahore.

REMUNERATION COMMITTEE

Tel: 042-37313549, 37313520

Mr. Farid-ud-Din Ahmad

Chairman

Tel: 042-36672102

Mr. Adnan Ahmed Khan

Member

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 Half Year Ended 31 March 2023 in compliance with the section 237 of the Companies Act, 2017.

INDUSTRY OVERVIEW

During the period under review, crop volume was lesser than last year partially due to flood and partially due to comparatively low yield per acre. However better sugar recoveries & increase in the area under cultivation mitigated to some extent the negative impacts of low yield per acre.

For current crushing season 2022-23, notified support price of sugarcane was Rs. 300/- per 40 kg in Punjab & KPK and Rs. 302/- per 40 kg in the province of Sindh as compared to Rs 225 & 250 corresponding period in Punjab & Sind respectively. Crushing started on 25th November 2022. The 33% increase in support price of sugarcane ultimately resulted in increase in the production cost of the sugar.

PERFORMANCE OF THE COMPANY

The Company was able to crush 455,913.605 M. Tons sugarcane and produced 45,338.900 M. Tons of white refined sugar at an average recovery of 9.956% during the Period ended 31 March 2023 as compared to 31 March 2022, sugarcane crushing of 604,762.396 M. Tons and the production of 54,026.500 M. Tons white refined sugar at an average recovery of 8.936%.

Net sales were recorded at Rs. 1,205.687 million during the period under review as compared to Rs. 1,100.741 million during the corresponding period of last year.

The Company incurred pretax loss of Rs. 49.235 million during the period under review as compared to pretax loss of Rs. 73.353 million in the corresponding period of last year. The decrease in loss is mainly because of better sugar rates and export of sugar.

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

FUTURE OUTLOOK

Year 2023 is expected to be much more challenging for business being the election year and as it has inherited a prolonged political uncertainty, depressed sugar prices, economic chaos, high inflation, under pressure local currency, sky high interest rates, difficulty in imports, global economic recession, Russia-Ukraine conflict among others.

Half Yearly Report 2023

3

Cane crushing in current season is already completed. Sugar production in the country was around 6.70 million tons as compared to last year 7.10 million tons. Due to carryover sugar stocks of about 1.00 million tons and compulsion of cane payment to growers within 15 days kept sugar prices under tremendous pressure throughout the first half of the year. Increased production cost partially due to 33% higher cane cost, massive devaluation of Pak Rupee and substantial increase in KIBOR rate ultimately will result in higher conversion cost.

Nevertheless, option of sugar export is not only important for sugar industry but also for country for earning foreign exchange, the Federal Government, allowed only 250,000 tons of sugar export. However, sugar prices in international market dropped from US$ 700 to US$ 500-530 per ton by the time export was allowed.

According to recent surveys the sugarcane crop size of next crushing season is expected to be slightly lower in Punjab than what was in last year due to opportunity of better prices in alternative crops whereas in Sind around 20% lesser crop is expected due to lesser sowing owing to flood. Overall sugar production of next year is expected to be slightly lower as compared to last year.

State Bank of Pakistan (SBP) has increased policy rate by 6.40% since September 2022 which has jacked up the mark up rates and has resultantly increased borrowing cost substantially and there are indications that Govt might further increase this policy rate that will adversely affect the profitability. Inflationary pressure and restriction on import of machinery spares may further increase cost of business.

Govt strategy on controlling sugar prices, without considering inflationary pressure on prices of fertilizers, pesticides, sowing/harvesting cost etc. is discouraging sugar cane growers. The growers are switching from sugarcane crop to other crops and resultantly there may be shortage in sugar production in the country in coming years and the sugar industry, that is presently capable of export will be converted into import category industry like previously it was.

Going forward the Company is expected to perform better. Though the impact of higher sugarcane prices, higher interest rates and inflationary pressure may subdue the profitability while sugar prices to determine the extent of profitability. It is expected that Company will improve further in its operations and this is essentially due to better management and commitment by professional management and its team. These ingredients will hopefully revive the Company on overall basis.

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 composition of the Board of Directors (the Board") is as follows:

  1. The total number of directors are seven as per the following:
    • Male: Five
    • Female: Two
  3. The composition of the Board of Directors (the Board") is as follows:

Category

Names

Independent Director

Mr. Muhammad Ashraf Khan Durani

Mr. Farid Ud Din Ahmad

Executive Directors

Mr. Muhammad Shamim Khan (CEO)

Mr. Nauman Ahmed Khan

Non-Executive Director

Mrs. Qaiser Shamim Khan

Mr. Adnan Ahmed Khan

Mr. Muhammad Khan

4

BABA FARID SUGAR MILLS LIMITED

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Baba Farid Sugar Mills Ltd. published this content on 31 May 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 May 2023 05:20:52 UTC.