The company has diversified its business into sugar, ethanol, building material and textile yarn. During the year under review its output of sugar was highest and sugar recovery percentage was also high. After including processing of raw sugar data the sugar production figure is also the highest.
All business segments contributed positively in the sales whereas sugar division sales were 83% of total sales. This was followed by 12% of total sales by Textile Division. Nearly 80% of ethanol sales was consigned as export sales but ethanol market has been dampened because of the ending of the General System of Preferences by European Union.
The company recorded an after tax profit of Rs 207.38 million as compared to Rs 155 million in the prior year, a one third increase over the preceding year's. The seven year's financial highlights show that the profitability is continuing its upward trend since 1999 and for the year under review the profit amount is also record high.
The financial backbone of the company remained robust as evidenced from the Financial Ratios appended with this write-up. But gross margin percentage has eroded and finance cost escalated. Increase in working capital was due to higher sales.
Shakarganj Mills Limited is a public limited company incorporated in Pakistan having its registered office located at 4th Floor, Crescent Standard Tower, Gulberg III Lahore.
The company was listed on the Karachi Stock Exchange in 1979. It is also listed on the Lahore and Islamabad stock exchanges. It is principally engaged in manufacture and sale of sugar, ethanol, building material and yarn.
As regards ownership of its equity, the largest category of shareholders who own 30.5% of its shares are its 10 associated undertakings and related parties. Some of these undertakings are Crescent Textile Mills Ltd (8.32%), Crescent Steel and Allied Products Limited (7.14%) Crescent Sugar Mills and Distillery Limited (4.93%), etc Banks, DFIs, NBFIs own 20.11% of the stock and investors from the general public own 13.6% of the stock.
The directors and their spouses and children's shareholdings aggregate to 2.60% of the company's stock.
The share price of the company is rising steadily since the year 2001 when its year end price was Rs 10.50 which improved to Rs 31.50 in 2003 and in 2004 it reached as high as Rs 52 per share. During the last 52 weeks the price peaked at Rs 80.45 per share. On April 3, 2004, the closing price of the share was quoted at Rs 39.30 at KSE which is nearly four times of the par value.
Apart from being a part of a large conglomerate and engaged in diversified business, the other most important reason of its sustained high market capitalization in its excellent profit distribution profile since 2001. This is due to high dividend payout rates and uninterrupted yearly dividend distribution.
For the year under review the company declared bonus stock dividend at 15% and right issue at 25%. Last year the company had announced cash dividend at 17.5% and for preference share the payout was at 8.5%.
During the sugarcane crushing season 2004-05, the company's season lasted for 160 days (2003-05 159 days). According to the production data released with the company's Annual Report under review, the longest season in the last 30 years was recorded at 207 days.
During the season under review, sugar recovery percentage at 8.63 percent was among the high percentages attained by the company. The 30 years data show that the highest percentage was achieved in 1984-85 at 8.96 percent. It may be recalled that the company has the only private sector state-of-the-art well organised sugar research institute manned by reputed scientists in this field.
The Shakarganj Sugar Research Institute (SSRI) is primarily engaged in the research for sugarcane variety development, including cloning, germinating of original seedlings biological control of pyrilla, studies of disease tolerance workshops on sugar crops R&D, publication Pakistan Sugar Journal, Library of SSRI, Training Courses. One of the scientists has completed post doctorate in molecular biology.
During the year under review the company's output of sugar at 177.679 million metric tonnes was the highest in its history. (This output included processing of 67.930 million metric tonnes of raw sugar).
During the year under review the company generated net sales at Rs 4.962 billion (3.498 billion) which was also highest figure. Sugar division's sales accounted for 82.66% of total sales, followed by textile business at 11.6% and after that Ethanol Division and Building Materials Division.
Almost 80% of Ehtanol produced by the company is exported. Towards the end of fiscal 2005, European Union prematurely ended the General Systems of Preference. This resulted in imposition of heavy duty which in turn dampened the market.
In the textile business, the company recorded production of yarn converted into 20/s count at 7.953 million kgs attaining 89.4 percent utilised capacity.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
30th September 2005 2004
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Share Capital-Paid-up: 540.54 388.43
Reserves: 2,449.49 1,500.08
Unappropriated Profit: 156.52 121.09
Shareholders Equity: 3,146.55 2,009.60
Surplus on Revaluation of Fixed Assets: 3.18 3.21
L.T. Debts: 2,077.19 1,720.21
Employee Retirement Benefits: 0.27 1.57
Deferred Income: 5.87 7.99
Deferred Taxation: - 50.48
Current Liabilities: 4,897.89 2,400.16
Tangible Fixed Assets: 4,638.59 2,903.08
Investment-Related Parties: 305.95 81.45
L.T. Loans & Deposits: 44.53 36.68
Deferred Taxation: 7.20 -
Current Assets: 5,134.68 3,172.01
Total Assets: 10,130.95 6,193.22
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Sales, Profit & Pay Out
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Net Sales: 4,962.46 3,498.16
Gross Profit: 481.39 380.54
Other Operating Income: 202.11 174.34
Profit from Operations: 459.14 345.08
Financial (Cost): (279.45) (135.03)
(Depreciation): (169.13) (135.31)
Profit Before Taxation: 179.70 210.05
Profit After Taxation: 207.38 155.50
Dividend Cash %: - 17.50
Dividend Stock (%) Bonus: 15.00 -
Right Issue (%): 25.00 -
Dividend Cash (%): - 17.5
Dividend Cash (%) Preference: - 8.5
Earnings Per Shares (Rs): 5.08 4.00
Share Price (Rs) on 03/04/06: 39.30 -
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Financial Ratios
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Price/Earning Ratio: 7.74 -
Book Value Per Share: 58.21 51.74
Price/Book Value Ratio: 0.68 -
Debt/Equity Ratio: 40:60 46:54
Current Ratios: 1.50 1.32
Assets Turn Over Ratio: 0.49 0.56
Days Receivables: 24 12
Days Inventory: 77 54
Gross Profit Margin (%): 9.70 10.88
Net Profit Margin (%): 4.18 4.44
R.O.A. (%): 4.75 2.51
R.O.C.E. (%): 3.96 4.09
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Actual Production
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A) Sugar Cane Crushing
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(Million M. Tonnes): 1.325 1.615
B) Ethanol (Million Litres): 33.250 35.408
C) Building Materials (Cubic Meters): 3,584 5,025
D) Textile Yarn 20/s Count (Million Kgs): 7.953 8.876
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