FINANCIAL ACCOUNTING

Final Project:

ANALYSIS OF ANNUAL REPORT

Submitted to:

SIR FARHAN AHMAD

Submitted By:

Muhammad HABIBULLAH 084

Zahid yousaf 166
Sharjeel arslan 139

COMSATS INSTITUTE OF
INFORMATION TECHNOLOGY
LAHORE.
NOON SUGAR MILLS LTD. BHALWAL. DISTT SARGODHA.

Company Profile:

Noon Sugar Mills was incorporated in 1964 as a public company listed on all the Stock
Exchanges of Pakistan for setting up of a plant for manufacture of white sugar, in the
province of Punjab. The plant went into production in 1996 with a daily crushing capacity
of 1,500 MT of sugar cane, which has since been raised to 4,000 MT per day in 2002.
Further extension to 9,000 TCD is underway which has become operative in 2006-2007
crushing season.

An Alcohol Distillery of French origin was added during 1986 with a production capacity
of 50,000 liters/day in 2002. Another facility with an option to provide either 30,000 LPD
Industrial of fuel Grade Ethanol was added in 2002. A new Fuel Ethanol plant of 100,000
LPD, based on Molecular Sieve technology has been added in 2005.

The Distillery is ISO 9001 certified since 1998. This upgraded to ISO-9001-2000.

Chairman’s Review:

The financial results of the Company for the year registered

a marked improvement over the last year’s performance. Our Company posted a net
after tax profit of Rs.65.316 million with an EPS of Rs. 4.35 against a net loss of
Rs.72.093 million and negative EPS of Rs. 4.80 Suffered during the corresponding
period of last year, after absorbing heavy operating and financial costs in the sugar
segment.
The national sugar production from sugarcane dropped by 32.5% from a record 4.7
million tons in 2007-08 to 3.2 million tons in 2008-09 Seasons. This was attributed
mainly to short supply of sugarcane as a result of sizeable reduction in the sugarcane
plantation area due to shortage of water and substantial increase in the input costs of
the cane crop. By the time a hefty increase of 33% in the sugarcane purchase price was
announced by the Govt. for the season 2008-2009 to match the returns from alternative
crops, a massive diversion from cane to wheat and rice had taken place.
As reported earlier, the capacity utilization of the distillery plant was severely affected by
a sharp decline in world oil prices, seriously disturbing the economics of Ethanol
blending with Gasoline. This imbalance was reflected by a steep fall in the export prices
of Ethanol from the beginning of the current financial year. The situation was further
compounded by restricted export of molasses by some countries of the region, resulting
in a phenomenal increase in price of molasses in both local and international markets
and its limited availability, owing to poor sugarcane crop during 2008-09 Season. We
managed to export two parcels comprising 4.7 million liters during the period.
Future Outlook
In view of relatively stable sugar market conditions, the overall financial results of the
Company are expected to further improve during the second half of the year, InshaAllah.
The Board is grateful to its shareholders and bankers for their trust and continued
support being extended to the Company for its smooth operation.

Industry Review:
Principally sugar is produced from sugarcane or beet sugar. At
present, out of a total world production of about 113 million tones, about 65% is
produced from sugarcane and the rest from beet. Pakistan is one of the few countries
which produce sugar from both sugarcane and beet.
Pakistan is the 5thlargest country in the world in terms of area under sugar cane
cultivation, 11th by production and 60th in; yield. Sugarcane is the primary raw material
for the production of sugar. Since independence, the area under cultivation has
increased more rapidly than any other major crop. It is one of the major crops in
Pakistan cultivated over an area of around one million hectares. The sugar industry in
Pakistan is the 2nd largest agro based industry comprising 81 sugar mills with annual
crushing capacity of over 6.1 million tones. Sugarcane farming and sugar manufacturing
contribute significantly to the national exchequer in the form of various taxes and levies.
Sugar manufacturing and its by-products have contributed significantly towards the
foreign exchange resources through import substitution.
Key Facts
No. of Mills 81 (71-Operational,2-Under Construction, 4-Completed) Crushing Capacity
6.1 Million tones Contribution to Economy 3.0 – 4.0 Million Tones- Share in GDP
1.9%- Employment 1.5 million (directly & indirectly)- Total Investment PKR 100
Billion (Approx) Average Yield Per Hector 46.8 Tones Total Cane Production 45.0 –
55.0 Million Tones Cane Available 30-43Million Tones Average recovery of sugar 9.1
(vs. world avg. 10.6%) Per Capita Consumption 25.8 Kg Per capita
Contribution to exchequer Rs.12.16 Billion.
The sugar millers and farmers are likely to lock horns over the procurement price of
sugarcane. The industry is not willing to pay more than Rs 60 per 40 kilogram, but the
growers not going to agree upon this. It is learnt that after the decision of Supreme Court
to sell the sugar at a price not more than Rs 40 per kg in the market, the sugar millers
are not willing to pay more than Rs 60 per 40 kg to the growers against their produce.
The farmers on the contrary are insisting to be paid minimum Rs 100 per 40 kg or above
for their produce, otherwise they are inclined not to supply sugarcane to millers.
An Introduction to Pakistan’s Sugar Industry.

Description of Assets:
There are two types of assets held by noon sugar mills.
These are;
Current assets
Non current assets.

Current Assets:
Company has currents assets Cash and bank balances of 32,980
Rs, Investments (Noon Pakistan Ltd. 12% redeemable cumulative preference shares of
Rs. 10 each) of 20,000Rs, deposits & prepayments of 3,934Rs, other receivables
5,135Rs, Loans and advances of 19,753, Trade debts of 40,771, Stores, spares and
loose tools 51,507, Stock-in-trade 318,059 Rs. Income tax refundable, advance income
tax and tax deducted at source was 21,806 Rs.
NON- CURRENT ASSETS:
NSM has total non current assets of Rs
1,457,292.which includes Property, plant and equipment of 1,349,771, Investment
property 17,240 Investments 88,064, Loans and advances 1,505 & Deposits 712 rupees.