Agricultural Industry of Pakistan

AGRICULTURAL

INDUSTRY OF

PAKISTAN

Submitted By:

Muhammad Shahrukh (F13BB022)

Nimra Malik (F13BB026)

Hafiz Uzair (F13BB032)

Sakran Khan (F13BB044) Submitted To: Miss. Rabia Javed 2/18/2015

Table of Contents

Executive Summary ................................................................................................. 1

Agricultural Industry of Pakistan .......................................................................... 2

Contribution of Agriculture in the Economic Development of Pakistan ........... 3

Sugar Industry .......................................................................................................... 4

Al-Moiz Industry ...................................................................................................... 5

Operations & Strengths and Weaknesses of the Company ................................. 6

Performance of Al-Moiz Industries .................................................................. 7

Cost & Profit Overview .................................................................................... 8

Revenue & Expenses Overview ........................................................................ 9

Competition & Challenges Faced By the Company ........................................... 9

Fixed and Variable Costs .................................................................................. 10

Cost Curves .................................................................................................... 10

Recommendations ................................................................................................. 13

References .............................................................................................................. 14

1 Agricultural Industry of Pakistan

Executive Summary

Agriculture Sector is a key sector of the economy and accounts for 21 percent of

GDP. The supportive policies of the government resulted in a growth of 3.1

percent against 2.4 percent last year. Major Crops registered an accelerating

growth of 3.2 percent compared to a negative growth of 0.2 percent last year. The

major crops including Cotton, Sugarcane and Rice witnessed growth in production

of 18.6 percent, 4.9 percent and 27.7 percent respectively.

Pakistan is the 15th largest producer of sugar in the world, 5th largest in terms of

area under sugar cultivation and 60th in yield. The sugar industry plays an

important role in the economy of the country. It is the second largest industry after

textiles. The Sugar industry employs over 75000 people, including management

experts, technologists, engineers, and financial experts, skilled, semiskilled and

unskilled workers. It contributes around 4 billion rupees only under the head of

excise duty and other levies to the Government are also paramount significance.

Al-Moiz Sugar Mills Limited incorporated in 2004 as a limited company and

certificate of commencement of business was granted in 2005. This is the only

Pakistani company with state of the art technology and is one of the very few mills

in Pakistan that is providing Wapda with electricity. This firm is a role model for

the whole sector in Pakistan as well as Asia and can manufacture sugar from

processing 8000 tons per day sugar cane as well as 6000 tons per day sugar beet.

Almoiz Industries Limited is a major contributor to the government of Pakistan

and national exchequer revenues in the shape of Income tax, sales tax, customs and

excise duties. Almioz Industries Limited has the capacity to produce 27MW

electricity and the same is used for manufacturing of sugar and is also sold to local

electric supply company.


Agricultural Industry of

Pakistan

Introduction:

The history of Pakistan bears testimony to the fact that agriculture is the largest contributing sector and

backbone of economy. Agriculture has played a dominant role as a driving force for our country’s

growth and development since country's creation. As we know that Industrialization is the period of

social and economic change that transforms a country from an agrarian society to an industrial one. As

the time proceeded Pakistan turned into more diversified country as industrialization took place.

Though the share of agriculture has reduced considerably since its birth but the development of

industries had not removed the agricultural presence in Pakistan.

Ranking:

Pakistan has significant world rankings in many of the important agricultural products (see Table below).

The country produces very good quality of basmati rice which earn very high value in the world market.

The country earned more than US$ 2billion dollars from export of rice alone in 2007-08. Similarly in

cotton production, we are almost self-sufficient and are able to fulfill the demand of a large (almost US$

10 billion dollar) domestic textile industry. However, in the case of mangoes country is in the process of

negotiating market access with USA that will further enhance the ranking of this category.

Pakistan Agriculture Products Production/Exports - World's Ranking

Production Export Quantum Export Value

Rice 12th 4th N-A

Cotton 4th N-A N-A

Milk 5th Nill Nill

Kino 12th 5th 12th

Dates 4th 2nd 5th

Mangoes 4th 6th 7th

Apricots 4th 45th 72nd

Sugarcane 5th 6th 27th

Chickpeas 3rd 7th 12th


Contribution of Agriculture in

the Economic Development of

Pakistan

Agriculture is an important sector, providing food to the fast-growing population of the country.

According the 1998 census, the total population of Pakistan is 130 million. With a population growth

rate of 2.6 percent there is a net addition of 3.4 million people each year. In 1947 the population of

Pakistan was 32.5 million; in 50 years it has increased fourfold. During this period the production of

wheat, the major food crop, has increased only 2.9 fold. During 1970/71 the amount of wheat imported

was 0.3 million tons; it has increased to 4.1 million tons in 1997. Tremendous efforts have been carried

out to narrow the gap between population growth and food production.

This industrialized work on agriculture has benefited Pakistan’s economy in the following ways:

1) INCREASING GDP OF THE ECONOMY

2) FOREIGN EXCHANGE EARNER

3) SUSTAINING THE POPULATION

4) SOURCE OF EMPLOYMENT

5) INCREASING THE TAX REVENUE OF THE GOVERNMENT

6) SUPPORT OF INDUSTRIES

7) RAW MATERIAL FOR INDUSTRIAL SECTOR

8) MARKETABLE SURPLUS

9) INFRASTRUCTURE DEVELOPMENT 10) DECREASE IN PRICES

11) EXTENSION OF MARKET

12) POLITICAL STABILITY

13) INCREASE IN PER CAPITA INCOME

14) DIRECT FOREIGN INVESTMENT


Sugar Industry

The sugar industry is currently playing a vital role in the national economy of our country. Sugarcane

accounts 3.4 % in agriculture value and 0.7 % in GDP and is considered a high value cash crop of

Pakistan. During July-March 2013-2014, alone sugar export earned foreign exchange of about US$ 236.8

million.

The graph and table of production and yield of Sugarcane according to the Economic survey of Pakistan

(2013-2014) are shown below:


Al-Moiz Industry

Introduction:

Al-Moiz Sugar Mills Limited incorporated in 2004 as a limited company and certificate of

commencement of business was granted in 2005. The Head Office of the company is located at

Gulberg III Lahore whereas the factory unit is located on Chashma Road in the D.I.KHAN

District Khyber Pakhtunkhwa. The company is recognized in the local and international market

as a fine quality producer of white refined Sugar, Molasses and also holds a substantial share in

the market. The company is also engaged in the export of white refined sugar to Afghanistan and

molasses to Euro countries and is contributing to the national economy in the form of foreign

exchange. The company has strong corporate clients including Engro and Pepsi. This is the only

Pakistani company with state of the art technology and is one of the very few mills in Pakistan

that is providing Wapda with electricity.

The sugar mills basic plant & machinery was acquired and installed by The Heavy Mechanical

Complex Taxila (A State Engineering Company). Other equipment such as turbines and

gearboxes etc. were imported from Germany and United Kingdom. Currently the plant is

working at the crushing capacity of 1oooo MTCD and company is keen to increase it to 12000

MTCD. The sugar mill has a state of the art technology which is the latest technology in

Pakistan. The mill produces sugar by using both sugar cane and sugar beet as a raw material. The

company is committed to invest in IT with an eventual target of implementing ERP system.

Vision of Al-Moiz industries:

The vision of Al-Moiz is to be the world’s leading innovative and sustainable-centric producer of

high quality sweeteners, bio-energy and allied products and services.

(i) Their motto is:

"


Operations & Strengths and

Weaknesses of the Company

Products:

In relation to sugar production, Al-Moiz industries deals with the following products:

Ultra White Refined Sugar ( ICUMSA* –Below 100)

White Refined Sugar (Fine Grain) (ICUMSA –Below 60)

Pressed Beet Pulp

Molasses

Basic Operations:

Sugarcane juice extraction using Diffusers

Sugar Crystallization at Pan Evaporation Stations

Decontamination using Refine Centrifugal machines

Quality assurance monitoring by Distribution Control Systems (DCS) & controlled from the

Central Control Room (CCR)

Strengths:

Attractive salary packages for employees on the site

Top management. The CEO of the company is a Stanford Graduate and is a man of great vision

Friendly and cooperative working environment

Financial resources

Agricultural assistance to the local farmers

State of the art technology

Corporate Social Responsibility

Weaknesses:

Lack of skilled persons available in the region where the mill is located

Shortage of residence available for employees on the site

The site is prone to being affected by the flood and has been affected by the recent floods

Number of accidental reports are increasing

Turnover rate is high

Weak organizational policies

* ICUMSA stands for (International Commission for Uniform Methods of Sugar Analysis) which deals in specifying

standards for different refined sugar types.


Performance of Al-Moiz Industries

(Year 2008 -2013)

With the growth rate of above 400% and the revenue ranging between 10 – 50 million US Dollars, Al-

Moiz industries is one of Pakistan’s fastest growing companies and have a huge impact on the country’s

economy.

Sugar Production:

The production of sugar during 2008 -2013 is shown in figure 1:

Figure 1

0

20000

40000

60000

80000

100000

120000

2008 2009 2010 2011 2012 2013

Sugar Production (2008-2013)

Sugar Production(M.Tons)


Cost & Profit Overview:

Below figures represents the 6 year (2008-2013) overview of cost of sales and gross profit of the

company

Figure 2

Figure 3

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

2008 2009 2010 2011 2012 2013

Cost of Sales (Rs. '000)

Cost of Sales (Rs.'000)

650000

700000

750000

800000

850000

900000

2008 2009 2010 2011 2012 2013

Profit including Tax (Rs.'000 )

Profit including Tax (Rs. '000)


Revenue & Expenses Overview:

Figure 4

Competition & Challenges Faced By the Company

Al-Moiz sugar mill has many competitors with Chashma sugar mill and Layyah sugar mill being

its two immediate competitors. The competitors also offer the same range of products with white

refined sugar being the core product and several other by product including molasses however

there isn’t any sugar mill that generates its own electricity as Almoiz sugar mill.

The challenges or threats can be summarized as follows:

Seasonal Variation in sugar cane

Political Instability

Natural Calamities

The region in which the mill is located is very risky in terms of stability

Competitors in the same region can attract the skilled resource of the company by offering them a

better package

External Factor

Weight

Weighted Score

Opportunities

Entering International Markets

4.1E+09

4.2E+09

4.3E+09

4.4E+09

4.5E+09

4.6E+09

4.7E+09

4.8E+09

4.9E+09

5E+09

3.3E+09

3.35E+09

3.4E+09

3.45E+09

3.5E+09

3.55E+09

3.6E+09

3.65E+09

3.7E+09

3.75E+09

2008 2009 2010 2011 2012 2013

6 Year Analysis

Expense (Rs. In billions) Net Revenue (Rs. In Billions)


Fixed and Variable Costs

Fixed Costs:

The following costs which are incurred irrespective of output at Al-Moiz Industries are:

1. Plant & Machinery

2. Buildings

3. Interest

Variable Costs:

1. Labor

2. Repairs

3. Fuel

4. Insurances

5. Packaging

6. Salaries of certain executives

7. Material

Cost Curves

The cost curves for the past 5 years are shown below:

0

200

400

600

800

1000

1200

1400

1600

0 2 4 6 8 10 12

FOR YEAR 2013

AFC AVC ATC


0

200

400

600

800

1000

1200

1400

1600

0 2 4 6 8 1 0 1 2

FOR YEAR 2012

AFC AVC ATC

0

200

400

600

800

1000

1200

1400

0 2 4 6 8 1 0 1 2

FOR YEAR 2011

AFC AVC ATC


0

200

400

600

800

1000

1200

1400

0 2 4 6 8 1 0 1 2

FOR YEAR 2010

AFC AVC ATC

0

200

400

600

800

1000

1200

1400

0 2 4 6 8 1 0 1 2

FOR YEAR 2009

AFC AVC ATC


Recommendations

Since Almoiz has already built a strong corporate clientele with clients, they should shift their

focus towards the domestic consumer now they should launch their own brand however they

should place it at international modern stores like metro habib and hyperstar where an aware and

a conscious consumer comes to purchase sugar and is willing to pay the price being charged.

Sugar should be positioned on the basis of quality, safe to consume, lesser calorie content, less

processed than generic sugar and as something healthy which people can consume with the belief

that it is safe and healthy to use sugar.


References

Moeen Tariq (Assistant Manager HR)

Wasif Mahmood (Chief Financial Officer)

Websites:

http://www.almoiz.com

http://www.finance.gov.pk

http://www.allworldxchange.com

http://www.pakissan.com

http://www.ukessays.com

End of Report

http://www.almoiz.com/

http://www.finance.gov.pk/

http://www.allworldxchange.com/

http://www.pakissan.com/

Documents

Agricultural Industry of Pakistan