Shahmurad Sugar Mills : Transmission of Quarterly Report for the Period Ended 31 03 2024

SHAHMURAD SUGAR MILLS LIMITED

Half Yearly Results for the period

1st October 2023 to 31st March, 2024

MR. RUMI MOIZ	(Independent Director)
MR. SHEIKH ASIM RAFIQ	(Independent Director)
MR. RUMI MOIZ
MR. RUMI MOIZ
www.shahmuradsugar.co
REGISTRAR & SHARES REGISTRATION OFFICE	FACTORY
C & K Management Associates (Pvt) Ltd.		Jhok Sharif,
M-13, Progressive Plaza, Civil Lines Quarter		Taluka Mirpur Bathoro,
Near P.I.D.C., Beaumont Road, Karachi-75530	District Sujawal (Sindh)

DIRECTORS' REPORT

Asslamu-o- Alaikum

With great pleasure, I present to you, on behalf of the Board, the unaudited financial statements of your company for the period ended March 31, 2024. The financial statements have been reviewed by the Auditors as required under the Code of Corporate Governance.

Salient features of production and Financial Statements are as under:

PRODUCTION DATA	March 31, 2024	March 31, 2023
Sugarcane crushed (M Tons)	654,604	567,913
Sugar produced (M Tons)	71,905	60,303
Sugar recovery percentage	10.98	10.60
Molasses produced (M Tons)	30,450	26,720
Ethanol Production (M Tons)	28,734	34,537
FINANCIAL DATA	(Rupees in thousands)
Sales revenue	10,930,915	9,578,117
Cost of sales	(9,555,970)	(7,145,690)
Gross profit	1,374,945	2,432,427
Distribution cost	(59,135)	(81,170)
Administrative expenses	(233,099)	(184,500)
Other expenses	(78,965)	(122,824)
Other income	372,845	412,561
Financial cost	(767,894)	(407,192)
Profit before taxation	608,697	2,049,302
Provision for taxation	(183,620)	(152,775)
Profit after taxation	425,077	1,896,527
Earnings per share	Rs. 20.13	Rs. 89.80

Segment wise performance is elaborated as under:

SUGAR DIVISION

The sugarcane crop was comparatively better than in the corresponding period last year. For the crushing season, the Government set the minimum support price of sugarcane at Rs. 425 of cane, compared to Rs. 302 per 40 kgs last year. This reflects a 40.73% increase in the cost of raw materials, which has impacted the cost of sugar production.

The mill crushed 654,604 metric tons of cane compared to 567,913 metric tons last year. Sugar production increased to 71,905 metric tons from 60,303 metric tons last year, a rise of 11,602 metric tons or 19.24%. This increase was primarily due to the greater availability of raw material in the mill's vicinity. The recovery rate improved from 10.60% to 10.98%.

Due to increased sugar production and carryover stock from the previous year, sugar prices remain under pressure. It is crucial for the Government to allow sugar exports to sustain the minimum support price of sugarcane paid to farmers in the current year and protect the future of the industry as a whole.

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ETHANOL DIVISION

During the period under review, the Ethanol Division produced 28,734 metric tons of ethanol, compared to 34,537 metric tons last year. The Company exported 29,272 metric tons of ethanol, down from 33,463 metric tons in 2023. The decline in sales volume was due to higher inventory levels in European markets, supply chain disruptions caused by conflicts in the Middle East, and increased sea freight costs. The ethanol sale price has also shown a declining trend since the last quarter.

Additionally, the cost of molasses rose by 17% per ton compared to the previous year. Financial charges increased substantially due to higher interest rates. These factors have contributed to a higher cost of production, which has adversely affected the company's profitability.

FUTURE OUTLOOK

In the current crushing season, the Government of Sindh increased the raw material cost from Rs. 302 to Rs. 425 per 40 kgs. This has benefited growers with higher returns on their crops, which is expected to boost sugarcane cultivation in the next season.

It is very important for the Government of Pakistan to note that due to the favorable support price of sugarcane, Pakistan has evolved into a surplus sugar-producing country. Prudent and positive export policies are required to ensure the sustainability of the sugar industry and the farmers, as well as to gain valuable foreign exchange for the country.

However, there are significant internal and external uncertainties affecting the future outlook. Global recessionary trends, declining demand, supply chain disruptions due to the prolonged Russia-Ukraine conflict, and Middle East tensions are major concerns. Domestically, Pakistan faces financial challenges, higher financial costs, and increased taxation.

The Company's management is aware of these challenges and is taking necessary measures to mitigate negative impacts and enhance the contributions of the ethanol and sugar divisions to the company's overall performance.

BOARD OF DIRECTORS

There was no change in the composition of the Board of Directors during the period under review.

May Allah SWT grant His blessings and mercy for the continued success and growth of Shahmurad Sugar Mills Limited. Ameen.

ZIA ZAKARIA	ABDUL AZIZ AYOOB
Managing Director & CEO	Director
Karachi:
Dated: May 27, 2024

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Independent Auditor's Review Report

To the member of Shahmurad Sugar Mills Limited

Report on Review of Condensed Interim Financial Statements

INTRODUCTION:

We have reviewed the accompanying condensed interim statement of financial position of SHAHMURAD SUGAR MILLS LIMITED ("the Company") as of March 31, 2024, and the related condensed interim statement of profit or loss, condensed interim statement of comprehensive income, condensed interim statement of changes in equity and condensed interim statement of cash flows and notes to the condensed interim financial statements for the half year then ended (here-in-after referred to as the "condensed interim financial statements"). Management is responsible for the preparation and presentation of these condensed interim financial statements in accordance with the accounting and reporting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on these condensed interim financial statements based on our review.

The figures of the condensed interim statement of profit or loss and condensed interim statement of comprehensive income for quarters ended March 31, 2024 and March 31, 2023 have not been reviewed, as we were required to review only the cumulative figures for the half year ended March 31, 2024.

SCOPE OF REVIEW:

We conducted our review in accordance with the International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of condensed interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

CONCLUSION:

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial statements are not prepared, in all material respects, in accordance with accounting and reporting standards as applicable in Pakistan for interim financial reporting.

The engagement partner of the review resulting in this independent auditor's report is Taswar Hussain.

Chartered Accountants

Karachi

Dated: May 27, 2024

UDIN: RR202410729KxubweFkz

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CONDENSED INTERIM STATEMENT OF FINANCIAL POSITION

AS AT MARCH 31, 2024		Un-audited	Audited
		March	September
		2024	2023
ASSETS	Note	(Rupees in thousand)
NON CURRENT ASSETS
Property, plant and equipment	4	10,879,025	10,859,038
Intangible asset	5	-	-
Long term investment in associate	6	973	973
Long term loans to employees		2,078	1,867
Long term deposits		3,149	3,149
CURRENT ASSETS		10,885,225	10,865,027
Stores, spare parts and loose tools		579,035	356,283
Stock-in-trade		16,039,429	4,562,106
Trade debts		1,194,422	870,395
Loans and advances		1,646,383	710,205
Trade deposits and short term prepayments		15,569	1,168
Other receivables		6,424	109,064
Short term investment		24,277	24,242
Cash and bank balances		473,541	5,099,535
		19,979,080	11,732,998
EQUITY AND LIABILITIES		30,864,305	22,598,025
SHARE CAPITAL AND RESERVES
Authorised Capital
25,000,000 ordinary shares of Rs. 10 each		250,000	250,000
Issued, subscribed and paid-up capital		211,187	211,187
Revenue reserve
General reserve		80,000	80,000
Unappropriated profit		7,710,505	7,563,144
Share of associate's unrealized loss on re-measurement of
its investment at fair value through other comprehensive income	(2,268)	(2,268)
Revaluation surplus on property, plant and equipment		5,821,798	5,966,455
NON CURRENT LIABILITIES		13,821,222	13,818,518
Long term financing		299,542	388,654
Deferred taxation		958,055	956,059
		1,257,597	1,344,713
CURRENT LIABILITIES
Trade and other payables		2,268,808	2,437,950
Accrued finance cost		451,801	127,089
Short term borrowings		12,754,475	4,562,307
Loan from related parties		-	8,032
Unclaimed dividend		24,643	22,330
Current portion of long term financing		178,223	178,223
Income tax provision-net of payments		107,536	98,863
		15,785,486	7,434,794
CONTINGENCIES AND COMMITMENTS	7	-	-
		30,864,305	22,598,025

The annexed notes from 1 to 17 form an integral part of these condensed interim financial statements.

ZIA ZAKARIA	AZIZ AYOOB	ZAID ZAKARIA
Managing Director & CEO	DIRECTOR	Chief Financial Officer

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CONDENSED INTERIM STATEMENT OF PROFIT OR LOSS (UN-AUDITED)

FOR THE HALF YEAR ENDED MARCH 31, 2024

		For the half year	For the Quarter
		October to March	January to March
		2024	2023	2024	2023
	Note		(Rupees in thousand)
Sales		10,930,915	9,578,117	3,937,506	5,494,987
Cost of sales	8	(9,555,970)	(7,145,690)	(3,908,635)	(4,057,110)
Gross profit		1,374,945	2,432,427	28,871	1,437,877
Profit from trading activities		2,076	1,432	889	548
Distribution cost		(59,135)	(81,170)	(24,092)	(40,846)
Administrative expenses		(233,099)	(184,500)	(111,065)	(104,292)
Other expenses		(78,965)	(122,824)	12,396	(83,022)
		(371,199)	(388,494)	(122,761)	(228,160)
Operating profit		1,005,822	2,045,365	(93,001)	1,210,265
Other income		370,769	411,129	61,483	242,607
		1,376,591	2,456,494	(31,518)	1,452,872
Finance cost		(767,894)	(407,192)	(539,964)	(292,814)
Profit /(loss) before taxation		608,697	2,049,302	(571,482)	1,160,058
Taxation
-Current		(181,624)	(118,609)	(16,126)	(66,616)
-Deferred		(1,996)	(34,166)	46,139	(38,716)
			(152,775)	30,013	(105,332)
Profit /(loss) for the period		425,077	1,896,527	(541,469)	1,054,726
Earning / (loss) per share
- Basic and diluted - Rupees		20.13	89.80	(25.64)	49.94

The annexed notes from 1 to 17 form an integral part of these condensed interim financial statements.

ZIA ZAKARIA	AZIZ AYOOB	ZAID ZAKARIA
Managing Director & CEO	DIRECTOR	Chief Financial Officer

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CONDENSED INTERIM STATEMENT OF

COMPREHENSIVE INCOME (UN-AUDITED)

FOR THE HALF YEAR ENDED MARCH 31, 2024

	For the half year	For the Quarter
	October to March	January to March
	2024	2023	2024	2023
		(Rupees in thousand)
Profit / (loss ) for the period	425,077	1,896,527	(541,469)	1,054,726
Other comprehensive income	-	-	-	-
Total comprehensive income / (loss)
for the period	425,077	1,896,527	(541,469)	1,054,726

The annexed notes from 1 to 17 form an integral part of these condensed interim financial statements.

ZIA ZAKARIA	AZIZ AYOOB	ZAID ZAKARIA
Managing Director & CEO	DIRECTOR	Chief Financial Officer

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CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UN-AUDITED)

FOR THE HALF YEAR ENDED MARCH 31, 2024

			Share of		Capital
	Issued,		Associate's	Un-	Reserve
	Subscribed	General	unrealised	Surplus on
	appropriated	Total
	& paid up	reserves	(loss)/gain on	revaluation of
	capital		remeasurement	profit	Property Plant
			of investment		& Equipment
			(Rupees in thousand)
Balances as at October 01, 2022 (Audited)	211,187	80,000	(2,195)	4,513,440	1,212,117	6,014,549
During the half year ended March 31, 2023
Transactions with owners
Final Dividend for 30-September-2022
@ Rs. 10.00 Per Share	-	-	-	(211,187)	-	(211,187)
Total Comprehensive income for the half year
ended March 31, 2023
Profit for the period	-	-	-	1,896,527	-	1,896,527
Other comprehensive income	-	-	-	-	-	-
	-	-	-	1,896,527	-	1,896,527
Transfer from surplus on revaluation of property,
plant and equipment on account of incremental
depreciation - net of deferred tax	-	-	-	34,274	(34,274)	-
Balances at March 31,2023	211,187	80,000	(2,195)	6,233,054	1,177,843	7,699,889
Balances as at October 01, 2023 (Audited)	211,187	80,000	(2,268)	7,563,144	5,966,455	13,818,518
During the half year ended March 31, 2024
Transactions with owners
Final Dividend for 30-September-2023
@ Rs. 20.00 Per Share	-	-	-	(422,373)	-	(422,373)
Total Comprehensive Income for the half year
ended March 31, 2024
Profit for the period	-	-	-	425,077	-	425,077
Other comprehensive income	-	-	-	-	-	-
	-	-	-	425,077	-	425,077
Transfer from surplus on revaluation of property,
plant and equipment on account of incremental
depreciation - net of deferred tax	-	-	-	144,657	(144,657)	-
Balances at March 31, 2024	211,187	80,000	(2,268)	7,710,505	5,821,798	13,821,222

The annexed notes from 1 to 17 form an integral part of these condensed interim financial statements.

ZIA ZAKARIA	AZIZ AYOOB	ZAID ZAKARIA
Managing Director & CEO	DIRECTOR	Chief Financial Officer

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CONDENSED INTERIM STATEMENT OF CASH FLOWS (UN-AUDITED)

FOR THE HALF YEAR ENDED MARCH 31, 2024

March March

2024 2023 (Rupees in thousand)

1. CASH FLOWS FROM OPERATING ACTIVITIES

	Profit before taxation	608,697	2,049,302
	Adjustment for :
	Depreciation	276,250	175,289
	Gain on disposal of property, plant and equipment	(481)	(764)
	Provision for obsolescence and slow moving items	-	5,150
	Finance cost	767,894	407,192
		1,043,663	586,867
	(Increase) / decrease in current assets	1,652,360	2,636,169
	Stores, spare parts and loose tools	(222,752)	(120,256)
	Stock in trade	(11,477,323)	(7,359,664)
	Trade debts	(324,027)	10,550
	Loans and advances	(936,178)	(599,724)
	Trade deposits and short term prepayments	(14,401)	(7,746)
	Other receivables	102,640	8,713
	(Decrease) / increase in current liabilities	(12,872,041)	(8,068,127)
	Trade and other payables	(169,142)	244,660
		(11,388,823)	(5,187,298)
	(Increase) in long term loan to employees	(211)	(1,339)
	(Increase) in long term deposits	-	(551)
	Income tax paid	(172,951)	(137,300)
	Finance cost paid	(443,182)	(216,308)
		(616,344)	(355,498)
	Net cash (outflows) from operating activities	(12,005,167)	(5,542,796)
B.	CASH FLOWS FROM INVESTING ACTIVITIES
	Additions in property, plant and equipment	(296,702)	(218,100)
	Sale proceeds from disposal of property, plant and equipment	946	840
	Net cash (outflows) from investing activities	(295,756)	(217,260)
C.	CASH FLOWS FROM FINANCING ACTIVITIES
	Repayment of long term financing	(89,112)	(119,112)
	Loan repaid to related parties	(8,032)	(23,103)
	Short term borrowings	8,142,372	4,269,505
	Dividend paid	(420,060)	(209,121)
	Net cash inflows from financing activities	7,625,168	3,918,169
	Net (decrease) in cash and cash equivalent (A+B+C)	(4,675,755)	(1,841,887)
	Cash and cash equivalent at the beginning of the period	5,069,470	2,016,677
	Cash and cash equivalent at the end of the period	393,715	174,790
	Cash and cash equivalent comprise:
	- Cash and bank balances	473,541	205,742
	- Short term investment	24,277	24,200
	- Short term borrowings - running finance	(104,103)	(55,152)
		393,715	174,790

The annexed notes from 1 to 17 form an integral part of these condensed interim financial statements.

ZIA ZAKARIA	AZIZ AYOOB	ZAID ZAKARIA
Managing Director & CEO	DIRECTOR	Chief Financial Officer

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