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S SURAJ COTTON MILLS LIMITED · PDF file SURAJ COTTON MILLS LIMITED S SURAJ COTTON MILLS LIMITED 7-B III, Aziz Avenue, Gulberg-V, Lahore – Pakistan Tel: +92 42 35711138, 35760379,

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  • SURAJ COTTON MILLS L IMITED

    SURAJ COTTON MILLS L IMITEDS

    7-B III, Aziz Avenue, Gulberg-V, Lahore – Pakistan Tel: +92 42 35711138, 35760379, 35760381 Fax: +92 42 35760376 E-mail: [email protected]

    Concept, Design & Printed by: Al-Imran www.alimranprinters.com

    Ha l f Yea r l y Repo r t | for the hal f year ended December 31, 2013 (Un-Audited)

  • 02 Company Information

    03 Directors’ Report

    04 Auditor Report to the Members

    06 Balance Sheet

    08 Profit & Loss Account

    09 Statement of Comprehensive Income

    10 Cash Flow Statement

    11 Statement of Changes in Equity

    12 Notes to the Financial Statements

    Contents

  • Board of Directors

    Mr. Khalid Bashir (Chairman)

    Mr. Nadeem Maqbool (Chief Executive)

    Mr. Ahsan Bashir

    Mr. Amjad Mahmood

    Mr. Asif Bashir

    Mr. Humayun Maqbool

    Mr. Mohammad Iqbal

    Chief Financial Officer

    Farooq Ahmad

    Companay Secretary

    Muhammad Saleem Hussain

    Audit Committee

    Mr. Humayun Maqbool (Chairman)

    Mr. Khalid Bashir (Member)

    Mr. Asif Bashir (Member)

    Mr. Khaleeque Ahmad (Secretary)

    HR & R Committee

    Mr. Ahsan Bashir (Chairman)

    Mr. Asif Bashir (Member)

    Mr. Humayun Maqbool (Member)

    Share Registrar

    Crescent Group (Pvt) Ltd. 306, 3rd Floor, Siddiq Trade Centre,72 Main Boulevard, Gulberg, Lahore.

    Auditors

    Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants

    Bankers

    Allied Bank Limited Habib Bank Limited MCB Bank Limited Standard Chartered Bank (Pakistan) Limited United Bank Limited Dubai Islamic Bank Limited

    Registered Office

    7-B-III, Aziz Avenue, Gulberg-V, Lahore. Ph:+92-423-576 0379, 576 0382 Fax: +92-423-576 0376 Email: [email protected] Web: www.suraj.com

    Project Locations

    Nooriabad, District Dadu, Sindh. Kotla Kahloon, District Nankana Sahib, Punjab, Bhaikot, Raiwind, District Lahore, Punjab

    Company Information

    2

  • 3

    Half Yearly Report December 31, 2013 | Suraj Cotton Mills Limited

    Directors’ Report

    We are pleased to present the six-month financial statements for the period up to 31 December 2013, which have been reviewed by the auditors.

    For the period under review the Company’s performance was excellent and net profit for the period was Rs. 507.657 million with earnings per share of Rs. 23.31 (2012: Rs. 18.72). Net sales of the company were Rs. 5.097 billion as compared to Rs. 4.726 billion for the corresponding period, an increase of approximately 8%. Demand for cotton yarn and grey fabric both in the domestic as well as international markets remained robust. Distribution costs increased by about 5% and administrative costs by 10%. These increases were due to higher exports and inflation. Financial charges were Rs. 41.905 million as compared to Rs. 39.572 million which is about 5% higher, mainly due to higher borrowing costs for raw material inventory.

    The current year had opened on the back of strong demand for our products and mainly stable prices for raw cotton. However, during the second quarter, we witnessed a significant slowing down in demand in the international markets. Raw cotton prices remained largely within range as the international raw material prices also showed a weaker trend. The crop was expected to be around 14 million bales and the latest figures show arrivals to be around 13.3 million bales, very close to target. However, prices, which remained largely in control have now started showing an upward trend which is serving to depress mills viability as yarn and fabric prices are not rising in tandem.

    The energy situation in Punjab remained slightly better than last year but gas shortages meant that we had to switch to national grid and alternate fuels, as a result of which our operating costs increased manifold. Gas avail- ability in Punjab was restricted to 2 days a week and in Sind, gas supplies remained suspended one day a week.

    Upgrade of our spinning facilities in Nooriabad was completed on time. This modernization is helping us achieve optimum production and quality and lower costs through better efficiencies.

    Future Prospects

    In view of slack demand for yarn and fabrics, we expect the second half of FY2014 to remain sluggish in terms of profitability. Both domestic and international demand for our products has become very weak especially China which is depicting a sharp downturn. Pakistan textile products are also facing severe competition from India which is eroding our market share in China. International and local cotton prices remain firm and in view of weakening end product prices, we expect that the results for the next six months will not be as robust as the period under review.

    The energy crisis remains endemic even though the government has taken some initiatives to improve the supply to industry. However, these steps, although welcome are not enough and we need some major overhaul of the power sector to fulfill the needs of the industry.

    Our cotton crop output has become stagnant and initial optimism always gives in to some kind of problem in terms of pest attack or weather. We have always been writing about employing advanced scientific measures to improve cultivation and output of cotton. We have failed to exploit new research in genetics and better seeds. India is an example of how cotton output can be increased to our advantage and help us in maintaining our com- petitive edge. Higher output leading to stable prices will also help in maintaining our margins for better profitability.

    Acknowledgements

    We would take this opportunity to thank all our shareholders and partners for their valued support and our em- ployees for their dedication. We would also like to thank the Board of Directors for their guidance and advice at all times.

    Nadeem Maqbool Chief Executive

    February 26, 2014 Lahore

  • 4

    Auditor Report to the Members On Review of Interim Financial Information

    Introduction

    We have reviewed the accompanying condensed interim balance sheet Suraj Cotton Mills Limited as at 31 December 2013 and the related condensed interim profit and loss account, condensed interim statement of comprehensive income, condensed interim cash flow statement and condensed interim statement of changes in equity together with the notes forming part thereof, for the six-month period then ended (here-in-after referred to as the “interim financial information”). Management is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this interim financial information based on our review.

    Scope of Review

    We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

    Conclusion

    Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting.

    ____________________ Chartered Accountants

    Engagement Partner: Farooq Hameed Ernst & Young Ford Rhodes Sidat Hyder

    February 26, 2014 Lahore

  • 5

    Half Yearly Report December 31, 2013 | Suraj Cotton Mills Limited

    Condensed Interim Financial Statements

    For the Half Year Ended December 31, 2013

  • 6

    Condensed Interim Balance Sheet As At December 31, 2013

    Un-Audited Audited

    31 December 2013

    30 June 2013

    Note (Rupees in thousand)

    EQUITY AND LIABILITIES

    Share capital and reserves

    Authorized share capital

    50,000,000 (30 june 2013: 50,000,000) ordinary

    shares of Rupees 10 each 500,000 500,000

    Issued, subscribed and paid up share capital 217,800 198,000

    Capital reserves 41,886 33,984

    Revenue reserves 3,546,069 3,177,012

    Total equity 3,805,755 3,408,996

    Non-current liabilities

    Long term financing 5 313,628 336,807

    Liabilities against assets subject to finance lease 750 854

    Deferred tax 212,186 212,186

    526,564 549,847

    Current liabilities

    Trade and other payables 838,707 770,582

    Accrued interest on loans 20,734 21,132

    Taxation- net 1,863 -

    Short term borrowings 434,071 224,216

    Current portion of non current liabilities 106,384 84,060

    1,401,759 1,099,990

    Total liabilities 1,928,323 1,649,837

    Total equity and liabilities 5,734,078 5,058,833

    CONTINGENCIES AND COMMITMENTS 6

    The annexed notes from 1 to 19 form an inte

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