Dewan Sugar Mills Limited (Dewan Sugar) is a public limited company incorporated on June 27, 1982 under the Companies Act, 1913 (now the Companies Ordinance, 1984) and its shares are listed on Karachi and Lahore Stock Exchanges in Pakistan.
It is principally engaged in production and sale of white crystalline refined sugar, and trading of by-products and other related activities and allied products. The company had 691 employees on September 30 2005 (2004: 450 employees).
Dewan Sugar has a number of related parties including the following: Dewan Salman Fibre Limited, Dewan Farooque Spinning Mills Limited, Dewan Farooque Motors Limited, Delta Innovations Limited, Dewan Mushtaq Motor Company (Private) Limited and Dewan Trade International Limited. Khoski Sugar Mills Limited has also been acquired by Dewan Sugar during the year.
Authorised capital of the company is Rs 500 million, comprising 50 million shares of Rs 10 each. As on September 30, 2005 the paid up capital was Rs 365.120 million (doubled during the year through 100% right shares) held by 1,801 shareholders. Of the total capital, the individuals hold nearly 33% shares. The directors/Chief Executive and their spouses hold about 34%. NIT/NBP (Trustee Department) hold 14% shares. The rest of the shares are distributed among a small number of corporate entities including banks and DFIs.
Dewan Sugar, besides sugar operations, has a Polypropylene Plant and a Chip Board Plant, both of which are in operation. A Distillery Plant has also been installed, which is said to be under trial production. Moreover, the company has incurred substantial expenditure on Biogas plant, aiming at decreasing furnace oil consumption to a greater extent and helping improve its results. The company produced on its own account 44,925 MT of sugar during 2004-2005 season compared to 72,055 MT sugar produced in the last season. In addition, the company produced 41,356 MT of sugar this year under tolling arrangements with Al-Asif Sugar Mills Limited, Bawany Sugar Mills Limited and acquisition of Khoski Sugar Mills Limited. Production capacities and actual production data is given below.
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Season Season
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Sugar Unit 2004-2005 2003-2004
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Daily Crushing Capacity - MT: 8,000 8,000
Actual Crushing - MT: 418,812 746,663
Sugar produced (MT): 44,925 72,055
Recovery %: 9.82% 9.65%
Duration, crushing season-Days: 129 120
Molasses Production-(MT): 20,783 NA
Cane crushed, Tolling Arrange: 434,276 0
Sugar Produced, Tolling arrange: 41,356 0
Board and Panel Unit
Daily Capacity (No of sheets): 1,000 1,000
Capacity utilization: 83% 100%
Polypropylene Unit
Per Month Capacity (No of Bags): 3,000,000 2,500,000
Capacity Utilization: 100% 100%
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The Directors in their Report state that the reduced production of sugarcane has put in pressure on its price which has touched an unprecedented height during the season. The government has allowed import of raw sugar due to gap between production and consumption. Four companies imported 31,224 metric tons of raw sugar, out of which the company was able to refine 4,822 tons of raw sugar. Due to lesser availability of sugarcane, the company imported sugar of around 6,317 MT to meet the market demand.
Total assets of Dewan Sugar as on September 30, 2005 at Rs 6,606 million are 54% higher over the total assets of Rs 4,284 million as on the same date last year. The deployment of resources as on September 30, 2005 in non-current assets is 49% (2004: 60%) and the rest are current assets, largely stock in trade and loans and advances. The current ratio is slightly below unity. Debt to equity ratio as on September 30, 2005 was 65:35 (2004: 73:27) due to heavy borrowings for financing increase in assets particularly in plant and machinery and stock-in trade. However, it may be noted that as of September 30, 2005, total debt is Rs 1,299 million of which Rs 422 million is loan from sponsors.
Net sales for 2004-05 at Rs 2,902 million were 164% higher over net sales at Rs 1,098 million for previous year. Cost of Goods Sold for 2004-05 was 93% of net sales as compared to 85% of net sales for previous year. This reduced profit margins and the company also had reduced profit before tax at Rs 57 million (2004: Rs 72million). The company closed the year with after tax profit of Rs 11 million (2004: Rs 150 million). The company's share price is around Rs 22/- as against par value of Rs 10/-. According to the Directors Report, the Board of Directors has decided not to recommend any dividend, considering the substantial fund requirements in the coming year as still the alcohol plant has not as yet commenced commercial operations and the sugar industry is passing through its worst crises. Performance statistics are given below.
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Performance Statistics -
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Balance Sheet (Audited) (Rs in 000)
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As on September 30, 2005 2004
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Share Capital-Paid-up: 365,120 182,560
Reserves & un-app. Profit: 333,188 205,918
Total Equity: 698,308 388,478
Revaluation surplus, FA: 601,822 634,192
LT Debt: 1,299,362 1,024,104
Deferred Liability: 273,786 287,523
Total - NC Liabilities: 1,573,148 1,311,627
Capitalization: 2,873,278 2,334,297
Current Liabilities: 3,732,466 1,950,057
Total Liabilities & Equity: 6,605,744 4,284,354
Operating Fixed Assets: 2,889,958 2,271,569
Long term investments: 333,060 286,650
Long term deposits: 25,133 10,369
Stores and spares: 250,446 162,458
Stock-in-Trade: 1,797,218 898,687
Trade Debts: 158,695 84,262
Current Assets: 3,357,593 1,715,766
Total Assets: 6,605,744 4,284,354
Conting.& Commitments: 2,930 2,430
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Ratios:
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Current Ratio: 0.90 0.88
Debt-Equity Ratio: 65:35 73:27
Book Val./share - Rs: 19.13 21.28
Quoted Price- (28-7-06)- Rs: 22.05 -
Price/Book Value Ratio: 1.15 -
Contin. & commit./Equity -X: 0.00 0.01
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Income Statement 2005 2004
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Net Sales: 2,901,704 1,097,706
COGS: 2,693,634 938,366
Gross Profit: 208,070 159,340
Operating Profit: 122,044 108,696
Other operating income: 28,810 46,380
Profit from operations: 150,854 155,076
Profit before Taxation: 57,518 71,861
Profit after Taxation: 10,724 150,016
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Ratios:
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Gross Profit/Net Sales: 7% 15%
Operating Profit/Net Sales: 4% 10%
Profit After Tax/Net Sales: 0.4% 14%
Net Profit/Equity: 1.5% 39%
Earnings/Share (Y. end capital)-Rs: 0.29 8.22
ROA: 0.2% 4%
ROCE: 0.4% 6%
Cash Dividend: 0.0% 0.0%
Stock Dividend: 0.0% 0.0%
Inventory Turnover-X: 1.50 1.04
Receivable Turnover-X: 18 13
Price/Earning Ratio: 75.07 -
Asset Turnover-X: 0.44 0.26
Days Inventory: 244 350
Days Receivable: 20.0 28.0
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Cash flow Summary 2005 2004
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Net Cash flow, Operations: 198,716 216,453
Net Cash flow, Investing: -830,843 -628,315
Net Cash flow, Financing: 636,399 410,417
Change in net Liquidity: 4,272 -1,445
Net Liquidity at beginning: 14,478 15,923
Net Liquidity at end: 18,750 14,478
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