Habib Sugar Mills : Transmission of Half Yearly Accounts for the period ended March 31, 2023

Habib Sugar Mills Limited

Report and Condensed Interim

Financial Statements for the Half Year ended March 31, 2023 (Unaudited)

Contents

Company Information	2
Directors' Report	3
Independent Auditors' Review Report	5
Unconsolidated Condensed Interim Statement of Financial Position	6
Unconsolidated Condensed Interim Statement of Profit or Loss	7
Unconsolidated Condensed Interim Statement of Comprehensive Income	8
Unconsolidated Condensed Interim Statement of Changes in Equity	9
Unconsolidated Condensed Interim Statement of Cash Flows	10
Notes to the Unconsolidated Condensed Interim Financial Statements	11
Consolidated Condensed Interim Statement of Financial Position	20
Consolidated Condensed Interim Statement of Profit or Loss	21
Consolidated Condensed Interim Statement of Comprehensive Income	22
Consolidated Condensed Interim Statement of Changes in Equity	23
Consolidated Condensed Interim Statement of Cash Flows	24
Notes to the Consolidated Condensed Interim Financial Statements	25
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Company Information

Board of	Asghar D. Habib	Chairman
Directors	Murtaza Habib
	Hasnain Habib
	Farouq Habib Rahimtoola
	Sohail Hussain Haji
	Muhammad Salman Husain Chawala
	Tyaba Muslim Habib	Chief Executive
	Khursheed A. Jamal
Audit	Farouq Habib Rahimtoola	Chairman
Committee	Tyaba Muslim Habib	Member
	Sohail Hussain Haji	Member
Human Resource &	Tyaba Muslim Habib	Chairperson
Remuneration Committee	Hasnain Habib	Member
	Khursheed A. Jamal	Member
Chief Financial Officer	Amir Bashir Ahmed
Company Secretary	Imran Amin Virani
Registered Office	3rd Floor, Imperial Court,
	Dr. Ziauddin Ahmed Road,
	Karachi-75530
	Phones	:	([phone] Lines
	Fax	:	([phone]
	E-mail	: [e-mail]
Mills	Sugar & Distillery Division
	Nawabshah District Shaheed Benazirabad
	Phones	:	([phone] Lines
	Fax	:	([phone]
	Textile Division
	D-140/B-1 Mangopir Road
	S.I.T.E. Karachi-75700
	Phones	:	([phone], 32572119
	Fax	:	([phone]
Bulk Storage	Terminal
	60/1-B Oil Installation Area
	Keamari Karachi-75620
	Phones	:	([phone]
	Fax	:	([phone]
Bankers	Allied Bank Limited
	Bank AL Habib Limited
	First Women Bank Limited
	Habib Bank Limited
	Habib Metropolitan Bank Limited
	MCB Bank Limited
	Meezan Bank Limited
	National Bank of Pakistan
	United Bank Limited
Statutory Auditors	Grant Thornton Anjum Rahman
	Chartered Accountants
Cost Auditors	Reanda Haroon Zakaria & Co.
	Chartered Accountants
Share Registrar	THK Associates (Pvt.) Limited
	Plot No. C-32, Jami Commercial Street-2
	D.H.A. Phase VII, Karachi - 755500
	UAN	:	([phone]
	Phone	:	([phone]
	E-mail	:	[e-mail]

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Directors' Report

Dear Members - Assalam-o-Alekum

On behalf of the Board of Directors, we are pleased to present you the unaudited consolidated and unconsolidated condensed interim financial statements duly reviewed by the auditors of the Company for the half year ended March 31, 2023. The Company has earned pre-tax profit of Rs. 1,008.56 million (2022: Rs. 905.71 million). The financial results of the Company for the half year are summarized below:

Financial Results
		Half year ended	Variance
	31 March 2023	31 March 2022
			Rupees in Million
Profit before taxation	1,008.56	905.71		102.85
Less: Taxation	(160.00)	(165.00)		5.00
Profit after taxation	848.56		740.71		107.85
Add: Realized (loss)/gain on
sale of investments	(229.11)	33.29		(262.40)
Unappropriated profit brought forward	5.19	5.11		0.08
Unappropriated profit carried forward
624.64	779.11		(154.47)
Earnings per share - Basic and diluted - Rs.	5.66	4.94		0.72

Sugar Division

The crushing season 2022-23 commenced on November 29, 2022 and the plant operated upto February 26, 2023 for 89 days as against 125 days in the preceding season. Sugarcane crushed during the current season was 844,841 M. Tons with average sucrose recovery of 10.96 % and sugar production of 92,595 M. Tons as compared with sugarcane crushing of 1,126,516 M. Tons with average sucrose recovery of 10.61 % and sugar production of 119,531 M. Tons during the preceding season.

The Government of Sindh on November 23, 2022 issued a notification fixing the minimum sugarcane support price at Rs.302 per 40 kgs for the crushing season 2022 - 23 as against Rs.250 per 40 kgs for the crushing season 2021 - 2022. In addition, the sugar mills in Sindh are also required to pay quality premium at the rate of Re. 0.50 for every 0.1 percent sucrose recovery in excess of the bench mark of 8.7%.

The sugar division earned operating profit of Rs. 223.32 million (2022: Rs. 366.93 million). The decrease in operating profit was mainly due to higher cost of production on account of lower quantum of crushing and production.

Considering the surplus quantity of sugar in the Country, the Sugar advisory Board (SAB) in principal recommended the Economic Coordination Committee (ECC) to allow export of 500,000 M. Tons of sugar. The ECC in their meeting had allowed and approved export of 250,000 M. Tons in phases.

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Thereafter, the Cane Commissioner-Sindh vide his letter dated January 25, 2023 allocated equal Quota of 2,500 M. Tons for export of sugar to each of the 32 operational sugar mills in Sindh (i.e., 80,000 M. tons representing Sindh's share of 32% out of total 250,000 M. Tons of export allowed by the ECC) without taking into account the crushing capacity of Sindh sugar mills.

The above allocation was challenged by certain sugar mills before the Sindh High Court who suspended the above allocation and declared the same as illegal and unlawful. Against the above order, the sugar mills preferred an appeal before the High Court who vide order dated March 9, 2023 allowed the quota of 1,500 M. Tons to each sugar mill till further orders/final outcome of the appeal. The Company exported 1,500 M. Tons of sugar in the month of April 2023 in accordance with the High Court's order.

Distillery Division

The ethanol production during the half year ended March 31, 2023 was 15,923 M. Tons (2022: 14,704 M. Tons). The division earned operating profit of Rs. 764.85 million

(2022: Rs. 327.88 million). The increase in the profit of Rs. 436.97 million during the half year was mainly due to better Ethanol selling prices in the international market and devaluation of Pakistani Rupee against foreign currencies.

The liquidified carbon dioxide (CO2) unit produced 4,501 M. Tons (2022: 3,134 M. Tons). The contribution of the unit is included in the profit of the division.

Textile Division

The division earned profit of Rs. 11.54 million during the half year under review (2022: loss of Rs. 6.32 million). The increase in profit was mainly attributable to better selling prices and devaluation of Pakistani Rupee against foreign currencies.

Trading Division

Trading division earned operating profit of Rs. 3.35 million (March 31, 2022: Rs. 0.97 million).

Acknowledgement

The Directors of the Company would like to thank all the staff, shareholders, financial institutions and other stakeholders of the Company for their continued support and cooperation.

On behalf of the Board of Directors

Khursheed A. Jamal	Murtaza Habib
Chief Executive	Director
Karachi: May 16, 2023

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