JAUHARABAD

Jauharabad is named after Maulana Muhammad Ali Jauhar, a prominent figure from
the Pakistan independence movement. Jauharabad was developed in 1953 under a
master plan. Because of its planned design, open spaces and wide avenues, the
district headquarters of Khushab District was shifted to Jauharabad from Khushab
city. Jauharabad lies at the confluence of the Thal Desert and the Pothohar in flat
agricultural territory immediately south of the Salt Range, marking the end of the
Pothohar Plateau and the start of the Punjab plains. The Jhelum River passes
Seven km southeast of Jauharabad, while canals from Indus River irrigate much
of its planes. On the west of Jauharabad lies the Thal Desert and on the east of
Jauharabad is the Khushab Reserve Forest.

KHUSBAB DISTRICT
Khushab is a combination of two Persian words “Khush” meaning sweet or tasty
and “aab” meaning water. A common belief is that the Persian invaders, from the
west, first used the word “Khush-aab” in admiration of the sweet and tasty water
found in the historical city situated on the bank of Jhelum River. With time the city
started to be known as Khushab.
Khushab is a District of Punjab, situated between Sargodha and Mianwali, near
river Jhelum. Khushab owns mountains, deserts, luxuriant green harvesting land,
lakes and river. People of Khushab are very hardworking and most of them are
associated with farming and agriculture.

2 Jauharabad Sugar Mills Limited

 GEOGRAPHICAL LOCATION
Jauharabad Sugar Mills Limited is the only sugar mill located
in Khushab District of Sargodha Division, in Western North
Punjab. Mills is renamed as Jauharabad Sugar Mills after its
hometown.

Annual Report 2021 3

CORPORATE INFORMATION
Board Of Directors Phone No. 042 35213491,
Fax No. 042 35213490,
Mr. Syed Anwar Hussain Shahid Chief Executive
E-mail: [email protected]
Mr. Farhan Ilyas Independent Director
Mr. Muhammad Aamir Beg Independent Director Mills
Ms. Faiza Iftikhar Independent Director
Jauharabad, District Khushab, Pakistan.
Mr. Ghias-ul-Hasan CPL Nominee
Phone No. 0454 720063-6, Fax No. 0454 720880
Mr. Kamran Zahoor CPL Nominee
Mr. Saif-ur-Rehman CPL Nominee Bankers of The Company
Askari Bank Limited JS Bank Limited
Audit Committee Soneri Bank Limited Habib Metropolitan Bank Limited
MCB Bank Limited Samba Bank Limited
Mr. Farhan Ilyas Chairman
National Bank of Pakistan United Bank Limited
Mr. Muhammad Aamir Beg Member
Habib Bank Limited Bank Alfalah Limited
Mr. Kamran Zahoor Member
Allied Bank Limited
Human Resource Committee ISLAMIC BANKERS OF THE COMPANY
Mr. Muhammad Aamir Beg Chairman
Albaraka Bank Pakistan Limited
Mr. Syed Anwar Hussain Shahid Member
MCB Islamic Bank Limited
Mr. Ghias-ul-Hasan Member
Dubai Islamic Bank Limited
Faysal Bank Limited
CHIEF FINANCIAL OFFICER
Mr. Imran Ilyas
National Tax Number
Company Secretary 0225972-9
Mr. Al-Yousuf
Sales Tax Registration Number
0409170300137
Head of Internal Audit
Syed Muhammad Usman Afzaal
Company Website
Auditors
www.jsml.com.pk
UHY Hassan Naeem & Co.
(Chartered Accountants)
193-A, Shah Jamal
Lahore, Pakistan.
Phone No. 042 35403550,
Fax No. 042 35403599,
E-mail: [email protected]
SHARE REGISTRAR
Corplink (Pvt.) Limited
Wings Arcade, 1-K Commercial,
Model Town, Lahore, Pakistan.
Phone No. 042 35916714,
Fax No. 042 35869037,
E-mail: [email protected]
Legal Advisor
Siddiqui Bar Kasuri & Co.
Advocates & Corporate Legal Consultants
179/180-A Scotch Corner Upper Mall Lahore.
Phone No. 042-35758573-74, Fax No. 042-35758572

Registered Address
125-B, Quaid-e-Azam Industrial Estate,
Kot Lakh Pat, Lahore, Pakistan

4 Jauharabad Sugar Mills Limited

CORPORATE INFORMATION

CORPORATE PROFILE
Jauharabad Sugar Mills Limited is a Public Limited Company, and has a privilege of being one
of the pioneer sugar mills of Pakistan. Initially it was setup by THAL Development Corporation
of Pakistan which was later privatized and was listed as on December, 1973 at Pakistan Stock
Exchange Limited and has been in operation for the last sixty-seven years. Further in March 2013
the current management acquired major shareholding of the Company by taking over its assets
and liabilities, paying-off old sponsors and renaming it as Jauharabad Sugar Mills Limited from
Kohinoor Sugar Mills Limited.
This takeover enabled the Company to settle previous bank /grower/creditor debts. A major
Balancing, Modernization and Replacement of Machinery has been carried out thus enabling
the Company to achieve stated capacity to 7,000 TCD of its currently operating crushing line-II, in
addition to non-operating crushing line -I having stated capacity to 5,500 TCD. The new sponsors
have shown their commitment by conducting this BMR and repair works through their own
resources. The Company has successfully consolidated its Sugar Mills operations and financially
strengthened its position over period of seven crushing seasons.
The Company in June 2016 following its vision and strategy of diversification has opted to install
biomass based 15MW Co-generation Power Plant, under Captive Power Plant regime with upfront
determined tariff, to export electricity. Power project is currently in finalization stage with expected
commencement of commercial operations by upcoming financial year. The Company is playing
its role for developing regional agronomy, generating employment and bringing happiness among
the people directly and indirectly associated with it.

Annual Report 2021 5

VISION AND MISSION

VISION STATEMENT
Sustainably produce green energy and
chemicals by exploiting locally available raw
materials and resources.

MISSION STATEMENT
To Continuously help, rise, self-worth of all
the associated entities and stake holders.

6 Jauharabad Sugar Mills Limited

Annual Report 2021 7
CALENDAR OF MAJOR EVENTS

First Quarter Results

Monday, January 25, 2021

Second Quarter Results

Tuesday, May 25, 2021

Third Quarter Results

Friday, July 16, 2021

Appointment of Chief Executive

Thursday, September 23, 2021

Annual Results
Tuesday, December 28, 2021

53rd Annual General Meeting

Friday, January 28, 2022

8 Jauharabad Sugar Mills Limited

GRAPHICAL REPRESENTATION
Operational
Operating Days In days Cane Crushed In metric tons in 000

131
130

546.86

533.77
124

441.65

431.12
104

425.43
340.52
96
95
93

252.99
2015 2016 2017 2018 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021

Sugar Produced In metric tons in 000 Sugar Recovery in Percentage

53.97

09.91
09.87
52.92
44.78

10.39
09.75
42.85

09.70
09.68
41.15

09.67
33.21
24.5

2015 2016 2017 2018 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021

Molasses Produced In metric tons in 000 Molasses Recovery in Percentage

04.94
25.26

04.74
22.92
21.84

04.71
20.30

04.70

04.62
20.18
15.99

04.46
11.29

04.23

2015 2016 2017 2018 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021

Bagasse Produced In metric tons in 000 VF Cake Produced

16.41
166.59

16.01
160.21

13.49
13.25
133.19

127.63
127.70

12.76
10.21
102.16

07.59
76.07

2015 2016 2017 2018 2019 2020 2021 2015 2016 2017 2018 2019 2020 2021

Annual Report 2021 9

NOTICE OF 53rd
ANNUAL GENERAL MEETING
Notice is hereby given that the Fifty Third Annual General Meeting (AGM)
of the members of Jauharabad Sugar Mills Limited (the “Company”)
will be held on Friday, January 28, 2022 at 11:00 a.m., at its Register
Office 125-B, Quaid-e-Azam Industrial Estate, Kot Lakhpat, Lahore
to transact the following business:
MONDAY JANUARY 28TH

ORDINARY BUSINESS

1. To confirm the minutes of Annual General Meeting

held on January 28, 2021.

2. To receive, consider and adopt the audited annual

financial statements of the Company for the year ended
September 30, 2021 together with Auditors’ Reports and
Directors’ and Chairman’s Review Report thereon.

3. To consider and approve, as recommended by the Board of

Directors, the payment of final cash dividend for the year ended
September 30, 2021 @ 10% i.e., Re.1/- per ordinary share.

4. To appoint Auditors for the next financial year ending September 30, 2022 and to
fix their remunerations. M/S UHY Hassan Naeem & Co., Chartered Accountants, being eligible,
have offered themselves for re-appointment.

5. Corporate Briefing Session as per requirement of PSX.

6. To transact any other business with the permission of the chair.

By order of the Board

Lahore Al Yousuf
Dated: January 06, 2022 Company Secretary

10 Jauharabad Sugar Mills Limited

NOTE:
11. Section 244 of the Companies Act 2017 requires that any shares that remain
1. The share transfer books of the Company will remain closed from January 21, unclaimed for a period of three years (or more) are to vest with Federal
2022 to January 28, 2022 (both days inclusive). Transfer received in order by the Government. The law requires the Company to deposit any unclaimed or
Company’s Share Registrar, M/s Corplink (Private) Limited, Wings Arcade, 1-K, unpaid amount to the credit of the Federal Government, if no claim is made
Commercial, Model Town; Lahore up to the close of business on January 20, before the Company after giving due notices to the shareholders. Through
2022 will be treated in time for entitlement to attend the Meeting. this notice all shareholders who by any reason could not claim their dividend
2. A member entitled to attend and vote at the meeting may appoint another or shares are advised to immediately collect / enquire about their unclaimed
member as his/her proxy to attend and vote on his/her behalf. In case of dividend or pending shares, if any, with Company’s Share Registrar.
corporate entity, the Board of Directors’ Resolution/Power of Attorney with 12. Corporate Analyst Briefing Session as mandated by the Pakistan Stock
specimen signature of the representative shall be submitted along with Proxy Exchange according to its notification PSX/N-92 dated January 28, 2019 of
Form of the Company. Proxies, in order to be affective, must be received at the Jauharabad Sugar Mills Limited will also be held at its Register Office 125-B,
registered office of the Company 48 hours before the time of holding of the Quaid-e-Azam Industrial Estate, Kot Lakhpat, Lahore on Friday, January 28,
meeting. 2022 shortly after the completion of AGM in which performance and results
3. Those members who have deposited their shares with the Central Depository for the year ended September 30, 2021 will be provided.
Company of Pakistan Limited (CDC) are requested to bring their original 13. Transmission of Annual Financial Statements through email
CNIC, Account and Participation’s Numbers. Such members will further The Securities and Exchange Commission of Pakistan vide SRO 787(1)/2014
have to follow the guidelines as laid down in the Securities and Exchange dated September 08, 2014 has allowed companies to circulate annual balance
Commission of Pakistan’s Circular No. 1 dated January 26, 2000. sheet, profit & loss account, auditor’s and Directors’ reports and Chairman’s
4. The members should quote their folio number in all correspondence with the Review Report along with notice of annual general meeting to its members
Company and at the time of attending the Annual General Meeting. through email. Members who have provided their email addresses are
5. Members are requested to notify the change of their registered addresses, being sent the same by email. Members who have not provided their email
Zakat Declaration, and tax exemption status, if any, duly accompanied with its addresses and wish to avail this facility may send their consent along with
valid certificates, immediately to Company’s Share Registrar. email address to the Company. Hard copies of the annual audited accounts
will be provided on demand.
6. As per provisions of Section 242 of the Companies Act, 2017, any dividend
payable in cash shall only be paid through electronic mode directly into the 14. In accordance with section 132(2) of the Companies Act, 2017, if the Company
bank account designated by the entitled members. Accordingly, all members receives consent from members holding in aggregate 10% or more
are requested to provide Dividend Mandate Information to the Company’s shareholding residing at a geographical location, to participate in the meeting
Share Registrar, member broker, participant/CDC investor Account Services. through video conference at least 7 days prior to date of meeting, the Company
In case of shares held in CDC, the same information should be provided will arrange video conference facility in that city subject to availability of
directly to the CDS. A notice of the foregoing seeking information from the such facility in that city. The Company will intimate to such shareholder’s
members was sent earlier. Standard Request form has also been placed on information regarding venue of video conference facility at least 5 days before
the Company’s website www.jsml.com.pk. In case of failure to provide the the date of the Annual General Meeting to enable them to access to such
information, the Company will be unable to pay the dividend. facility.
7. The current withholding tax rates on dividend payments as prescribed by 15. Members can exercise their right to demand a poll subject to meeting
the Income Tax Ordinance, 2001 (the Ordinance) are 15% for persons whose requirements of section 143 to Section 145 of the Companies Act, 2017 and
names are appearing in the active taxpayers’ list (ATL) and 30% for persons applicable clauses of the Companies (Postal Ballot) Regulations, 2018.
whose names are not appearing in the ATL. To enable the Company to make 16. Deposit of Physical Share into CDC Account:
tax deduction on the amount of Cash Dividend @ 15% instead of 30%, all the As per Section 72 of the Companies Act, 2017, the Company is required to
shareholders whose names are not entered into the ATL available on the replace its physical shares into book-entry form. In order to ensure full
website of the Federal Board of Revenue, are advised to make sure that their compliance with the provisions of Section 72 of the Companies Act, 2017 and
names are entered into ATL before the date of dividend payment, otherwise to be benefitted of the facility of holding shares in the Book-Entry-Form, all
they shall not be treated as Active Taxpayers (despite the fact that they are such members/ shareholders who still hold shares in physical form, requiring
filers of income tax return) and tax on their Cash Dividend will be deducted @ them to convert their shares in the Book-Entry-Form.
30%. 17. Precautionary Measures to attend Meeting:
8. The Corporate members having CDC account are required to have their The health of the members, staff and stakeholders of the Company (the
National Tax Number (NTN) updated with their respective participants, attendees) is of paramount importance to us. In view of the ongoing COVID-19
whereas corporate physical members should send a copy of their NTN pandemic, the Company will implement the following measures at the
certificate to the Company’s Share Registrar. Annual General Meeting to safeguard the health and safety of the attendees:
9. As per FBR’s clarification, the valid Exemption Certificate under Section 159 a) Compulsory body temperature will be conduct for every attendee at
of the Ordinance is mandatory to claim exemption of withholding tax under the entrance of the AGM venue. Any person with a body temperature of over
Clause 47B of Part-IV of Second Schedule to the Ordinance. Those who fall 37.5 degrees Celsius will be denied entry into the AGM venue or be required to
in the category mentioned in above Clause must provide valid Tax Exemption leave AGM venue.
Certificate to the Company’s Share Registrar; otherwise, tax will be deducted
b) Each attendee would be provided with and wear a surgical face mask
on dividend amount as per prescribed rates.
throughout the AGM and inside the AGM venue.
10. The FBR has clarified that shareholders’ accounts jointly held by Filers and
c) The Company will maintain safe distance between seats and attendees
Non-Filers shall be dealt with separately and in such particular situation, each
are advised to avoid any contacts, stay in your accommodation, at least one
account holder is to be treated as either a Filer or a Non-Filer and tax will be
meter away from others and try to minimize the spread of the virus by covering
deducted according to his shareholding. If the share is not ascertainable then
coughs, cleaning surfaces, and washing or sanitizing your hands regularly.
each account holder will be assumed to hold equal proportion of shares and
the deduction will be made accordingly. Therefore, in order to avoid deduction 18. The Annual Audited Financial Statements of the Company for the year ended
of tax at a higher rate, the joint account holders are requested to provide the September 30, 2021 along with Auditors’ and Directors’ Report and Chairman’s
below details of their shareholding to the Company’s Share Registrar latest by Review Report thereon have been placed on the Company’s website: www.
the AGM date. jsml.com.pk.
19. The Company has placed the notice of AGM along with form of proxy in English
Folio/CDC Name of CNIC Shareholding Total Principal/Joint and Urdu languages on its website: www.jsml.com.pk.
Account Shareholder Shareholder
No.

Annual Report 2021 11

12 Jauharabad Sugar Mills Limited
 Chairman’s Review
It is a great honor and I feel privileged on being entrusted with the Chairmanship of Jauharabad
Sugar Mills Limited’s Board of Directors. I pledge all my faculties to contribute immensely
towards the growth of the Company.
I am pleased to present the 67th annual report of the Company for the year ended September
30, 2021. During the year under consideration, economic activity in Pakistan has normalized and
overall business environment has improved backed by various fiscal and monetary measures of
the government. Further it is anticipated that relaxation in Covid-19 restrictions and aggressive
vaccination drive will result in revival of economic activities.
Sugar industry remains a key driver of economic empowerment in rural belt of our country.
Having been at cross-roads for the last few years, it has got traction and positive cues to emerge
as a value-accretive industry across its value-chain of system. Amidst these fundamental
changes in the industry, our financial performance this year demonstrates the resilience within
our company’s business model. Our total revenues grew by around 40.57% to Rs. 4,924 million,
whereas our EBITDA was recorded at Rs. 389 million, driven by growth in sales.
Despite the challenges in the sugar industry, your Company’s capital and financial resources are
well-positioned. In fact, next year will be marked as turnaround year for our Company with an
increase in crushing capacity utilization mainly aligning power plant with mills.
JSML under its brand name ‘Kohinoor’ has continued its growth journey during FY 2020-21. We
expanded our footprint in different parts of the country during this year. Our mid-term objective
has always been on educating and encouraging consumers to switch hygienically packed sugar
i.e., “Kohinoor” with minimum human interaction, by ISO 9001:2015 and FSSC 22000 certificated
manufacturer. Moving forward, we further aim to strengthen our business through our
association with the e-commerce platforms and increasing the presence of “Kohinoor” across
the length and breadth of the country.
In such challenging times, we have emerged out stronger than ever. Since reopening of economy
in the second half, our team has demonstrated exemplary abilities to ensure we bounce back
faster. We also implemented ‘work from home’ model, prioritizing the safety of our employees
and their families.
I am pleased to report that the performance of the Board of Directors of the Company remained
par excellence throughout the year. The composition of Board reflects mix of seasoned portfolio,
contributing regular strategic guidance, creating new benchmarks, approving budgets, ensuring
competent team, evolving risk mitigation strategies, implementing diversification strategy,
while maintaining its reputation for good governance besides providing steady value addition to
its shareholders. All significant issues throughout the year were presented before the Board or
its committees to strengthen and formalize the corporate decision-making process, which led
to a harmonious partnership with management.
Lastly, I would like to express my heartfelt appreciation to everyone at JSML for their commitment,
passion and hard work. Our business is positioned to grow from the sustained investments we
have made in recent past. Favorable regulatory policies and growing consumer demand for
products across our sugar value-chain make us optimistic for sustained business performance.
I would also like to thank our valued shareholders, employees, customers, suppliers, distributors
and bankers for their constant support and belief in us.

Mr. Muhammad Aamir Beg

Chairman
Lahore
December 28, 2021

Annual Report 2021 13

Mr. Anwar Hussaain
Chief Executive

14 Jauharabad Sugar Mills Limited

DIRECTOR REVIEW REPORT
In the name of Allah, the most Gracious, the most Merciful. The Directors of the Company are pleased to present their report together with audited
financial statements for the year ended September 30, 2021 along with the Auditors’ Report thereon
GLOBAL ECONOMY
The outbreak of COVID-19 pandemic in the beginning of year 2020 has acutely impacted global socio - economic fabric. Global trade first witnessed
supply shocks due to abrupt closure of businesses which has subsequently resulted into demand side shocks; both creating uncertainties for
businesses. Social and economic activities witnessed unprecedented restrictions.
Health care system across the globe remained under immense pressure and to counter this health and economic crises, world governments
took multiple measures including fiscal and monetary interventions to mainly focus on ensuring employment continuity and providing assistance
to businesses. Recent global indicators suggest commencement of economic revival. However, the speed of recovery depends on measures
including financial coordination of economies and country specific characteristics.

DOMESTIC ECONOMY
Despite the fact that economy was already volatile caused by frequent boom and bust cycles, structural discrepancies, long outstanding energy
sector inconsistencies and loss-making state-owned entities. Government responded through business incentivization schemes including
reduction in policy rate and construction stimulus package etc. to minimize adverse impacts of economic and business restrictions.
State Bank of Pakistan (SBP) has adopted a market-based exchange rate policy which has benefited exporters, and helped the sectors to revive
its economic activities, reduced markup rates on loans are also allowed to corporate sectors with few restrictions. During the last couple of years,
inflation has been a challenge for the business, devaluation of rupee and increased fuel prices in international market has contributed to the
production cost to all time high. Current year, food inflation was main contributor to CPI triggered by extended monsoon season as well as rise in
prices of agrarian products internationally.

SUGAR INDUSTRY
Agricultural sector is indispensable to the country’s economic growth, food security, employment generation and poverty alleviation particularly at
the rural level. It contributes 19.2 percent to the GDP and provides employment to around 38.5 percent of the labor force. More than 65-70 percent of
the population depends on agriculture for its livelihood.

Sugarcane production accounts for 3.4 percent in agriculture’s value addition and 0.7 percent in GDP. During 2020-21, the crop was cultivated on 1,165
thousand hectares, an increase of 12.0 percent compared to last year’s sown area of 1,040 thousand hectares. Production increased by 14.49 percent
to 76 million tons against 66.380 million last year. The crop experienced a significant increase in area under cultivation and yield. It was mainly due to
favorable weather conditions, better management, timely availability of quality inputs and higher economic returns.
Sugar production for this year remained close to 5.8 million tons, roughly equating historical demand for the year after incorporating annual increase
in demand of sugar within the Country. Current year turned to be a challenging one as the Government had increased support price of sugarcane to
Rs. 200 per maund (CY2019/20: 190 per maund). Sugarcane price disparity among provinces coupled with intense competition between the millers to
ensure availability of sugarcane for optimal crushing, led to an aggregate sugarcane procurement price hike of approximately forty-five (45) percent
over the minimum support price. Higher cost of production, lack of high yield variety of sugarcane and inadequacy of working capital with majority
players in the industry were the major hurdles and causes for increased sugar prices in the market.

OPERATIONAL REVIEW
JSML started crushing on 15 November 2020 in compliance with the directives as issued by Govt of Pakistan. The comparative summarized operating
result of your mills for season 2020-21 is as follows:
Description Units FY 2020/21 FY 2019/20 YOY Change
Working Days Days 124 104 19.23%
Sugarcane Crushed M. Tons 533,772 425,433 25.46%
Sugar Produced M. Tons 52,925 41,150 28.61%
Sugar Recovery Percentage 9.91% 9.67% 2.48%
Sugar Sold - Domestic M. Tons 55,550 44,649 24.49%
Sugar Sold - International M. Tons - - -
Sugar Sold – Total M. Tons 55,550 44,649 24.49%
Sugar Closing Stock M. Tons - 2,624 (100%)
Molasses Produced M. Tons 22,923 20,180 13.59%

Annual Report 2021 15

 Molasses Recovery Percentage 4.23% 4.74% (10.75%)
This crushing year Company had started the season 15 days earlier and operated around 124 days, 20 days more than the corresponding period last
year. During this crushing period the Company has crushed 533,772 M. Tons of sugarcane [ FY2019/20 : 425,433 M. Tons ] and produced 52,925 M. Tons
of white sugar [ FY2019/20 : 44,649 M. Tons ] as compared to last year. Despite the challenges and rigorous competition between the surrounding
mills the Company through its sustained effort and timely payments to growers has managed to crush 25.46% more cane in comparison to same
period last year. The Company has also produced 22,923 M. Tons of molasses [ FY2019/20: 20,180 ].

During the current financial year Company has invested heavily to improve its operational efficiency, that includes evaporator, spray ponds to
improve the steam efficiency by reduced consumption of bagasse, to reduce the power consumption, replacement of old mill gears was carried
out thus resulting in improved output of bagasse. i.e., dried and lessor contents of sugar. In line with management vision of maximizing shareholders’
equity, focus is shifted to automation of plant and few improvements in mill machinery was carried out that included automation of Conti pans and
upgradation of refine batch pans to improve the quality of our finished good.

FINANCIAL PERFORMANCE
The Comparison of the key financial results of your organization for the year ended as at 30 September 2021 is as follows:
Description FY2020/21 FY2019/20 YOY Change
Sales – Net 4,924,089 3,502,836 40.57%
Cost of Sales 4,342,510 2,898,771 49.80%
Gross Profit 581,579 604,065 -3.72%
Selling and Distribution Expenses 15,442 14,141 9.20%
Administrative and General Expenses 176,701 157,059 12.50%
Operating Profit 389,437 432,865 -10.03%
Other Operating income (5,099) (5,296) -3.72%
Financial Cost 212,316 231,178 -8.16%
Profit Before Tax 172,021 196,391 -12.40%
Taxation 67,628 16,937 499.29%
Profit After Tax 104,393 213,329 -50.59%
Earnings Per Share (Rs. /Share) 3.06 6.25 -51.04%

The company registered topline of Rs. 4,924 million against Rs. 3,503 million in the corresponding financial year showing YOY increase of 40.57%.
Cost of sales of the Company increased due to high prices of sugar cane i.e. to Rs. 4,343 million against Rs. 2,899 million reflecting YOY change of
49.80%. Even though the unprecedented increase in COS, Gross Profit (GP) only decreased by 3.72% due to management strategy of holding sugar
holding and reaping maximum advantage of sugar prices in the last quarter of the financial year, posting GP of Rs. 582 million as compared to Rs.
604 million to corresponding period last year. Due to efficient monitoring of operating procedures, administration, distribution and other operating
expenses are kept in check. The company recorded bottom line of Rs. 104 million during current year against net profit of Rs. 213 million in the
corresponding year. Earnings per share for the current financial year remained Rs. 3.06 against Rs. 6.25 in last financial year.

CREDIT RATING
Pakistan Credit Rating Agency (PACRA) - a Credit Rating Agency, has maintained the Credit Rating of the Company to “BBB+” with respect to long-
term bank facilities whereas short-term bank facilities rating was maintained at “A2”

DIVIDEND
Your Company had adopted a dividend distribution policy that balances the dual objectives of appropriately rewarding members through dividends
and retaining capital, in order to maintain a healthy capital adequacy ratio to support long term growth of your Company. There has been no change
in this policy during the year under review. The Company does not intend to carry any amount to special reserve. Consistent with this policy, your
Board has recommended a dividend of Re. 1/- on Equity Shares and 10% bonus share for the financial year 2020-21 to the Members of your Company.
The proposal is subject to the approval of the Members at the 53rd Annual General Meeting (AGM) of your Company scheduled to be held on January
28, 2022. The dividend together with implication of taxes will entail a cash outflow of Rs. 34.12 million.

HOLDING COMPANY
Cane Processing Company (Pvt) Limited, incorporated under the laws of Pakistan having its registered office at Lahore is the holding Company of
Jauharabad Sugar Mills Limited with 63.66 percent of shares.

16 Jauharabad Sugar Mills Limited

STATUTORY AUDITORS AND THEIR AUDIT REPORT:
UHY Hassan Naeem and Chartered Accountants are Auditors of the Company and shall continue to be Statutory Auditors till the conclusion of Fifty
fourth Annual General Meeting to be held in the year 2023. The report given by the Auditors on the Financial Statements of the Company for the
year ended September 30, 2021 forms part of this Annual Report and there is no qualification, reservation, adverse remark or disclaimer given by the
Auditors in their reports.

HUMAN RESOURCES
The Company continued to create a productive, learning and caring environment by implementing robust and comprehensive HR processes,
fair transparent performance evaluation and taking new initiatives to further align its Human Resource policies to meet the growing needs of its
business.

CHANGE IN THE NATURE OF BUSINESS

During the year, there was no material change in the nature of business of the Company.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENT

Details of Loans, Guarantees and Investments covered under the provisions of the Companies Act, 2017 are given in the notes to Financial Statements
forming part of this annual report.

INTERNAL FINANCIAL CONTROL

The Company’s Internal Control system with reference to the financial statements are adequate and commensurate with the nature of its business
and the size and complexity of its operations. Periodic Audits and checks are conducted and the controls to prevent, detect and correct irregularities
in the operations have been laid down by the Company.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis Report on the operations of the Company, as required under SECP (Listing Obligations and Disclosure
Requirements) is provided in a separate section and forms an integral part of this report.

RISK MANAGEMENT
The Company has a Risk Management Committee to identify, assess, monitor and mitigate various risks to key business objectives. Major risks
identified are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit
Committee and the Board of Directors of the Company.

GOING CONCERN
These financial statements are prepared on going concern basis and there is no concern on Company’s ability to continue as Going Concern.

STATEMENT OF COMPLIANCE
There has been no material departure from the Best Practices of Corporate Governance, as detailed in the Listing Regulations of Pakistan Stock
Exchange, applicable to the Company for the year ended September 30, 2021.

PATTERN OF SHAREHOLDINGS
Pattern of Shareholding of the Company in accordance with the Companies Act, 2017 and Code of Corporate Governance as at September 30, 2021
is annexed

QUALIFICATION OF CFO AND HEAD OF INTERNAL AUDIT

The Chief Financial Officer and the Head of Internal Audit possess the requisite qualifications and experience as prescribed in the code of Corporate
Governance.

INSIDER TRADINGS
The board has developed the policy that no person shall indulge in insider trading as per listing regulation applicable in Pakistan. During the financial
year none of the director, CEO, CFO, Head of internal audit and Company Secretary traded in the share of the Company.

RISK ANALYSIS AND MITIGATION TECHNIQUES

As an agricultural industry, sugar mills face additional risks affecting the performance of production processes derived from raw materials due to
their seasonal, perishable, bulky, and diverse quality. Therefore, risk management becomes very important. The purpose of this study was to identify,
analyze, and define risk mitigation strategies.

Annual Report 2021 17

AVAILABILITY OF CANE
The major risks faced by sugar business are the availability of cane, regulatory risks, price of sugar and competition within the surrounding mills.
Sugar cane is the key raw material for sugar and any difficulty in getting cane at right time will have impact on the business. The key factors that
influence cane availability are climatic condition, availability of cane harvesting labor and farmers opting for competitive crops.
Jauharabad Sugars strongly believes that the availability of sugar cane is ensured by fostering good relationship with the cane growers. This is done
by undertaking various measures in supporting them in cultivating cane besides making payment for their supplies in time. These are in the form
of providing assistance in drip irrigation, mechanical and manual harvesting and improved cane varieties. Apart from that financial assistance and
mill transport also provided to the growers for bringing the cane crop in mill yard.

TECHNOLOGICAL OBSOLESCENCE
JAUHARABAD SUGARS’s philosophy is to ‘Modernize, Indigenize. Technological obsolescence is evaluated on a continual basis and the necessary
investments are made to bring in the best of the prevailing technology. Jauharabad Sugars spent considerable amount of investment in Capital
Goods bring efficiency in steam saving resulting lesser consumption of Bagasse and also made capital investment in evaporation and spray ponds
to reduce to ZERO pollution in production. Jauharabad Sugars policies also include a favorable dispensation for replacement of Machinery and
Equipment on a constant basis to take advantage of such technological movements.

REVENUE CONCENTRATION
High concentration in any single business segment exposes the company to the risks inherent in that segment. The quest for diversified activities
within the existing realm of overall management after due consideration of the advantages and disadvantages of each activity is consistent with
company policy of increasing business volumes with minimum exposure to undue risks.

INFLATION AND COST STRUCTURE

The cost of revenues consists primarily of raw materials including Sugar cane, Chemicals, Stores, Repairs and maintenance and finance cost. The
cost of revenues has a very high degree of inflationary certainty. To de-risk, the Company has established specific policies for procurement of cane
and allied store required for manufacturing.

Jauharabad Sugars at organizational level, cost optimization and cost reduction initiatives are implemented and are closely monitored. The Company
controls costs through budgetary mechanism and its review against actual performance with the key objective of aligning them to the financial
model. The focus on these initiatives has inculcated across the organization the importance of cost reduction and control.

LEGAL RISK
Legal risk is the risk in which the Company is exposed to legal action As the Company is governed by various laws and the Company has to do its
business within four walls of law, where the Company is exposed to legal risk exposure.

JSML have an experienced team of professionals, advisors who focus on evaluating the risks involved in a contract, ascertaining our responsibilities
under the applicable law of the contract, restricting our liabilities under the contract, and covering the risks involved so that they can ensure
adherence to all contractual commitments.

The Audit Committee, number of meeting held, attendance, among others are given separately in the attached Corporate Governance Report.

BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors of the Company as at September 30, 2021 consists of:
Total Number of Directors:
Male 06
Female 01
COMPOSITION
Executive Directors 02
Independent Directors 03
Non-Executive Directors 05
Female Directors 01

The names of the directors as at September 30, 2021 are as follows.

Sr. No. Director Category Meetings Attended
1 Mr. Jamal Ahmed (Late) Chief Executive 04
2 Mr. Syed Anwar Hussain Shahid Chief Executive -

18 Jauharabad Sugar Mills Limited

 3 Mr. Muhammad Aamir Beg Chairman 05
4 Mr. Farhan Ilyas Independent/Non-Executive 04
5 Ms. Ayesha Rasheed (Resigned) Independent/Non-Executive 01
6 Mr. Amjad Bashir Hussain (Resigned) CPL Nominee/Non-Executive 02
7 Mr. Ghias Ul Hassan CPL Nominee/Non-Executive 05
8 Mr. Saif Ur Rehman CPL Nominee/Executive 05
9 Ms. Nazia Waheed (Resigned) Independent/Non-Executive 01
10 Mr. Kamran Zahoor CPL Nominee/Non-Executive 03
11 Ms. Faiza Iftikhar Independent/Non-Executive 01

The Directors who could not attend the Board Meeting and requested for leave were duly granted leave for absence from the meeting by the Board
with the law.

PERFORMANCE EVALUATION OF BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD

The evaluation of Board’s role of oversight and its effectiveness is appraised by the Board itself. The main areas of focus are:
• Achieving corporate goals and objectives as defined in the Company’s vision and mission statements.
• Strategy formulation and dissemination of directions to the management for sustainable planning and operation; and
• Evaluation of Board’s Committees performance in relation to discharging their responsibilities as per defined TOR’s.

AUDIT COMMITTEE
As on date of this report, the Audit Committee comprises of three Directors, two of whom are independent directors, and one of them is non-
executive director viz., Mr. Farhan Ilyas as Chairman, and Mr. Kamran Zahoor and Mr. Muhammad Aamir Beg as Members. The details of terms of
reference of the Audit Committee, number and dates of meeting held, attendance, among others are given separately in the attached Corporate
Governance Report.

HUMAN RESOURCE & REMUNERATION COMMITTEE (HR&R) COMMITTEE

The committee consists of three members; consisting of non-executive directors including an independent director. The terms of reference of this
Committee have been determined in accordance with guidelines provided in the Code of Corporate Governance, 2019, “the Code”. The Committee
meets to review and recommend all elements of the compensation, organization and employee development policies relating to the senior
executives’ remuneration and to approve all matters relating to the remunerations of the executive directors and members of the management
committee. The committee held one meeting during 2020-2021.

RELATED PARTY TRANSACTIONS

All the transactions carried out with related parties for the year under review were on arm’s length basis, which were duly approved by the Audit
Committee and are in compliance with the applicable provisions of the Companies Act, 2017 and SECP Listing Regulations. There are no material
significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential
conflict with the interest of the Company at large. The Related Party Transactions Policy as approved by the Board is uploaded on the Company’s
website at www.jsml.com.pk.

REMUNERATION POLICY
The Company has adopted a Remuneration Policy for executive and non-executive directors and persons who may be appointed in Senior
Management and Key Managerial positions and to determine their remuneration as approved by the Board of Directors on the recommendation of
Nomination and Remuneration Committee. The remuneration so approved is subject to the approval by the shareholders and such other authorities
as the case may be. The remuneration policy is also placed on the Company’s website.

On behalf of the Board

Syed Anwar Hussain

Chief Executive
Lahore: December 28, 2021

Annual Report 2021 19

PATTERN OF SHAREHOLDING
As on September 30, 2021
1.1 Name of the Company Jauharabad Sugar Mills Limited
2.1 Pattern of holding of the shares held by the shareholders as at September 30, 2021

2.2 No. of Shareholders From To Total Shares Held

626 1 100 16,423
235 101 500 59,285
93 501 1,000 69,563
146 1,001 5,000 371,552
28 5,001 10,000 198,907
13 10,001 15,000 176,052
5 15,001 20,000 86,944
7 20,001 25,000 162,039
2 30,001 35,000 64,651
1 35,001 40,000 40,000
1 40,001 45,000 43,500
1 45,001 50,000 50,000
1 50,001 55,000 54,000
2 55,001 60,000 119,500
1 65,001 70,000 65,170
2 85,001 90,000 173,308
2 95,001 100,000 196,485
1 105,001 110,000 107,103
1 150,001 155,000 152,000
1 195,001 200,000 200,000
1 200,001 205,000 200,300
1 230,001 235,000 230,626
1 240,001 245,000 244,000
1 260,001 265,000 264,000
1 325,001 330,000 329,000
1 330,001 335,000 332,000
1 390,001 395,000 392,897
1 1,025,001 1,030,000 1,028,582
1 1,045,001 1,050,000 1,047,530
1 1,150,001 1,155,000 1,151,335
1 1,595,001 1,600,000 1,600,000
1 3,175,001 3,180,000 3,175,816
1 21,725,001 21,730,000 21,725,885
1182 34,128,453

2.3 Categories of shareholders Share held Percentage

2.3.1 Directors, Chief Executive Officer, and their spouse and minor children 5,000 0.0147%
2.3.2 Associated Companies, undertakings and related parties. (Parent Company) 21,725,885 63.6592%
2.3.3 NIT and ICP 1,033,239 3.0275%
2.3.4 Banks Development Financial Institutions, Non Banking Financial Institutions. 5,871 0.0172%
2.3.5 Insurance Companies 231,357 0.6779%
2.3.6 Modarabas and Mutual Funds 0 0.0000%
2.3.7 Shareholders holding 10% or more 21,725,885 63.6592%
2.3.8 General Public
a. Local 6,849,082 20.0685%
b. Foreign 690 0.0020%

2.3.9 Others (to be specified)

- Investment Companies 2,425 0.0071%
- Joint Stock Companies 4,148,874 12.1566%
- Pension Funds 99,459 0.2914%
- Others 26,571 0.0779%

20 Jauharabad Sugar Mills Limited

CATEGORIES OF SHAREHOLDING
Required under Code of Corporate Governance (CCG)
As on September 30, 2021
S. No. Name No. of Shares Held Percentage

Associated Companies, Undertakings and Related Parties (Name Wise Detail):

1 CANE PROCESSING (PVT) LTD. (CDC) 21,725,885 63.6592%

Mutual Funds (Name Wise Detail) -- --

Directors and their Spouse and Minor Children (Name Wise Detail):
1 MR. SYED ANWAR HUSSAIN SHAHID (CPL Nominee) -- --
2 MR. MUHAMMAD AAMIR BEG 500 0.0015%
3 MR. KAMRAN ZAHOOR (CPL Nominee) -- --
4 MR. GYAS-UL-HASAN (CPL Nominee) 2,500 0.0073%
5 MR. SAIF UR REHMAN (CPL Nominee) -- --
6 MR. FARHAN ILYAS 1,500 0.0044%
7 MS. FAIZA IFTIKHAR 500 0.0015%

Executives: 1,603 0.0047%
Public Sector Companies & Corporations: -- --

Banks, Development Finance Institutions, Non Banking Finance

Companies, Insurance Companies, Takaful, Modarabas and Pension Funds: 336,687 0.9865%


Shareholders holding five percent or more voting intrest in the listed company (Name Wise Detail)

S. No. Name Holding Percentage

1 CANE PROCESSING (PVT) LTD. (CDC) 21,725,885 63.6592%
2 MRS. GHAZALA AMJAD (CDC) 3,175,816 9.3055%

All trades in the shares of the listed company, carried out by its Directors, Executives and their

spouses and minor children shall also be disclosed:

S. No. NAME SALE PURCHASE
1 MR. IMRAN ILYAS 125,082 -
2 MR. FARHAN ILYAS 1,000 -
3 MR. MUHAMMAD AAMIR BEG - 500
4 MS. FAIZA IFTIKHAR - 500

Annual Report 2021 21

STATEMENT OF COMPLIANCE
As on September 30, 2021
The Company has complied with the requirements of the Regulations in (CFO), Company Secretary and Head of Internal Audit, including
the following manner: their remuneration and terms and conditions of employment and
1. The total number of directors are seven as per the following: complied with relevant requirements of the Regulations.
11. Chief Financial Officer and Chief Executive duly endorsed the
Gender Number financial statements before approval of the Board.
Male 6 12. The Board has formed committees comprising of members given
Female 1 below:
2. The composition of the Board is as follows: Audit Committee Chairman: Mr. Farhan Ilyas
Member: Mr. Muhammad Aamir Beg
Category Names Member: Mr. Kamran Zahoor
Independent Directors Mr. Muhammad Aamir Beg HR & Remuneration Chairman: Mr. Muhammad Aamir Beg
Mr. Farhan Ilyas Committee Member: Mr. Syed Anwar Hussain
Shahid
Ms. Faiza Iftikhar Member: Mr. Ghias-Ul-Hasan
Non-Executive Directors Mr. Ghias-Ul-Hassan 13. The terms of reference of the aforesaid committees have been
Mr. Kamran Zahoor formed, documented and advised to the committee for compliance.
14. The frequency of meetings of the committee were as per following:
Executive Director Mr. Syed Anwar Hussain Shahid
Mr. Saif-Ur-Rehman Meetings Frequency

Female Director Ms. Faiza Iftikhar Audit Committee Four quarterly meetings were held
during the financial year ended
3. The directors have confirmed that none of them is serving as September 30, 2021
a director on more than seven listed companies, including this
Company. HR & Remuneration One meeting was held during the
Committee financial year ended September 30, 2021
4. The Company has prepared a Code of Conduct and has ensured that
appropriate steps have been taken to disseminate it throughout 15. The Board has set up an effective internal audit function.
the Company along with its supporting policies and procedures. 16. The statutory auditors of the Company have confirmed that they
5. The Board has developed a vision/mission statement, overall have been given a satisfactory rating under the quality control
corporate strategy and significant policies of the Company. A review program of the ICAP and registered with Audit Oversight
complete record of particulars of significant policies along with Board of Pakistan, that they or any of the partners of the firm, their
the dates on which they were approved or amended has been spouses and minor children do not hold shares of the company
maintained. and that the firm and all its partners are in compliance with
International Federation of Accountants (IFAC) guidelines on code
6. All the powers of the Board have been duly exercised and decisions of ethics as adopted by the Institute of Chartered Accountants of
on relevant matters have been taken by Board/ Shareholders as Pakistan (ICAP)and that they and the partners of the firm involved
empowered by the relevant provisions of Companies Act 2017 (the in the audit are not a close relative (spouse, parent, dependent
Act) and CCG Regulations. and non-dependent children) of the chief executive officer, chief
7. The meetings of the Board were presided by the Chairman and, in financial officer, head of internal audit, company secretary or
his absence, by a director elected by the Board for this purpose. director of the company;
The Board has complied with the requirements of the Act and the 17. The statutory auditors or the persons associated with them have
Regulations with respect to frequency, recording and circulating not been appointed to provide other services except in accordance
minutes of meeting of the Board. with the Act, CCG Regulations or any other regulatory requirement
8. The Board have a formal policy and transparent procedures for and the auditors have confirmed that they have observed IFAC
remuneration of directors in accordance with the Act and these guidelines in this regard.
Regulations. 18. We confirm that all the mandatory requirements of the Regulations
9. In terms of Regulation 19 of Chapter VI of the Code of Corporate have been complied with.
Governance, the Companies are required to ensure that all the
directors on their board have acquired the prescribed certification
under Director Training Program by June 30, 2022. Presently, six (6) Mr. Muhammad Aamir Beg
directors of the Company have already completed this program.
Chairman
The remaining one (1) director shall obtain certification under the
DTP in due course of time. Dated: December 28, 2021

10. The Board has approved appointment of Chief Financial Officer

22 Jauharabad Sugar Mills Limited

INDEPENDENT AUDITORS’ REVIEW REPORT
To the members of Jauharabad Sugar Mills Limited
Review Report on the statement of Compliance contained in Listed Companies (Code of Corporate Governance) Regulations, 2019

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance) Regulations, 2019 (“the
Regulations”) prepared by the Board of Directors of Jauharabad Sugar Mills Limited (“the Company”) for the year ended September 30, 2021 to
comply with the requirements of regulation 36 of the regulations.

The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our responsibility is to review whether the
Statement of Compliance reflects the status of the Company’s compliance with the provisions of the Regulations and report if it does not and to
highlight the any non-compliance with the requirements of the regulations. A review is limited primarily to inquiries of the Company’s personnel and
review of the various documents prepared by the Company to comply with the Regulations.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems
sufficient to plan the audit and develop and effective audit approach. We are not required to consider whether the Board of Directors’ statement
on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company’s corporate
governance procedures and risks.

The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the
Board of Directors for their review and approval, its related party transactions. We are only required and have ensured compliance of this requirement
to the extent of the approval of the related party transactions by the Board of Director upon recommendation of the Audit Committee.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect
the Company’s compliance, in all material respects, with the requirements contained in the Regulations as applicable to the Company for the year
ended September 30, 2021.

UHY Hassan Naeem & Co.

Lahore December 28, 2021 Chartered Accountant

Annual Report 2021 23

 AUDITOR’S
REPORT TO
MEMBERS

24 Jauharabad Sugar Mills Limited

INDEPENDENT AUDITOR’S REPORT
To the members of Jauharabad Sugar Mills Limited
Report on the Audit of the Financial Statements

Opinion
We have audited the annexed financial statements of Jauharabad Sugar Mills Limited (the Company), which comprise the statement of financial
position as at September 30, 2021, and the statement of profit or loss and other comprehensive income, the statement of changes in equity, the
statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and
other explanatory information, and we state that we have obtained all the information and explanations which, to the best of our knowledge and
belief, were necessary for the purposes of the audit.

In our opinion and to the best of our information and according to the explanations given to us, the statement of financial position, statement of profit
or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows together with the notes forming part
thereof conform with the accounting and reporting standards as applicable in Pakistan and give the information required by the Companies Act,
2017 (XIX of 2017), in the manner so required and respectively give a true and fair view of the state of the Company’s affairs as at September 30, 2021
and of the profit and other comprehensive income, the changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent
of the Company in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as
adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with
the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the
current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.

Following are the Key audit matters:

S. No. Key audit matters How the matter was addressed in our audit

1 Revenue Our audit procedures to assess recognition of sales, amongst

others, included the following:
Refer to the statement of profit or loss and note 4.12 and 28 to the • Obtained an understanding of the process relating
financial statements. to recognition of revenue and testing the design,
implementation and operating effectiveness of key
The Company generates revenue from sale of sugar and its by- internal controls over recording of revenue;
products to both local and export customers. • Assessed the appropriateness of the Company’s
accounting policies for recording of sales and compliance
We identified recognition of sales as a key audit matter because of those policies with applicable accounting standards;
sales are one of the key performance indicators of the Company • Compared, on a sample basis, specific sale transactions
and gives rise to an inherent risk of misstatement to meet recorded just before and just after the financial year
expectations or targets. end date to determine whether the revenue has been
recognized in the appropriate financial period;
• Performed scanning analytics to identify any manual
journal entries relating to sales during the year which
were considered to be material or met other specific risk-
based criteria for inspecting underlying documentation;
• Performed test of details over a sample of revenue
transactions recorded during the year with sales orders,
sales invoices, delivery challans and other relevant
underlying documents; and
• Assessed the adequacy of disclosures in the financial
statements to be in accordance with the applicable
accounting standards.

Annual Report 2021 25

 2 Borrowings and finance costs • Inspected financing arrangement and relevant
supporting documents to identify terms and conditions of
Refer to notes 4.13, 19, 20 and 32 to the financial statements. the facilities.
• Circularized confirmations to financial institutions for
The Company has obtained a range of financing facilities from verification of borrowings as at September 30, 2021;
different financial institutions with varying terms and tenure. • Re-calculated the mark-up recognized during the year;
Further, compliance with debt covenants is a key requirement of • Inquired and recalculated mark-up capitalized on
these financing arrangements. qualifying assets;
• Identified and assessed whether these facilities were
This was considered to be a key audit matter as this affects accounted for in accordance with approved accounting
Company’s gearing, liquidity and solvency. standards as applicable in Pakistan; and
• Assessed the adequacy of the disclosures in the financial
statements.

Information Other than the Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information comprises the information included in the annual report for the year
ended September 30, 2021, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.

Responsibilities of Management and Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting and reporting
standards as applicable in Pakistan and the requirements of Companies Act, 2017 (XIX of 2017) and for such internal control as management
determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.

Board of Directors are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue

26 Jauharabad Sugar Mills Limited

 as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable,
related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the
financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.

Report on Other Legal and Regulatory Requirements

Based on our audit, we further report that in our opinion:

a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
b) the statement of financial position, the statement of profit or loss and other comprehensive income, the statement of changes in equity
and the statement of cash flows together with the notes thereon have been drawn up in conformity with the Companies Act, 2017 (XIX of
2017) and are in agreement with the books of account and returns;
c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company’s business; and
d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980) was deducted by the Company and deposited in the
Central Zakat Fund established under section 7 of that Ordinance.

The engagement partner on the audit resulting in this independent auditor’s report is Mr. Imran Iqbal.

Place: Lahore UHY Hassan Naeem & Co.

Date: December 28, 2021 Chartered Accountants

Annual Report 2021 27

 FINANCIAL
STATEMENTS

28 Jauharabad Sugar Mills Limited

Jauharabad Sugar Mills Limited
Statement of Financial Position
As at September 30, 2021

2021 2020
Note Rupees Rupees
Non-current assets
Property, plant and equipment 5 5,122,358,505 5,125,094,780
Intangible assets 6 116,153 173,363
Long-term deposits 7 2,800,300 2,786,800
5,125,274,958 5,128,054,943
Current assets
Stores, spare parts and loose tools 8 95,464,679 91,673,389
Stock-in-trade 9 93,460,919 193,621,434
Loans and advances 10 214,563,613 69,597,556
Trade debts 11 573,125 1,345,521
Trade deposits and short term prepayments 12 8,697,401 3,102,985
Other receivables-unsecured considered good 13 22,220,756 31,340,756
Tax refunds due from the Government 14 86,147,455 116,665,800
Short term investments 15 17,686,738 17,128,849
Cash and bank balances 16 68,442,035 223,833,689
607,256,721 748,309,979
Current liabilities
Trade and other payables 17 232,536,031 345,925,065
Unclaimed dividend 1,509,621 1,156,796
Accrued mark-up 18 3,680,582 3,054,333
Short term borrowings 19 190,166,362 198,320,645
Current portion of:
-Long term loans from banking companies-secured 20 94,886,345 74,183,077
Provision for taxation 22 61,619,284 55,205,499
584,398,225 677,845,415
Working capital employed 22,858,496 70,464,564
5,148,133,454 5,198,519,507
Contingencies and commitments 23
Non-current liabilities
Long term loans from banking companies-secured 20 20,747,754 147,932,831
Deferred taxation 24 365,211,617 354,304,212
385,959,371 502,237,043
Net capital employed 4,762,174,083 4,696,282,464


Represented by:

Share capital and reserves
Share capital 25 341,284,530 341,284,530
Capital reserve - share premium 372,402,633 372,402,633
Loan from sponsors 26 610,096,898 611,827,898
Revenue reserve - Accumulated profits 594,462,438 481,288,027
Revaluation surplus on property, plant and equipment - net of tax 27 2,843,927,584 2,889,479,376
4,762,174,083 4,696,282,464
The annexed notes 1 to 45 form an integral part of these financial statements.

Lahore: Syed Anwar Hussain Ghias Ul Hasan Imran Ilyas

December 28, 2021 Chief Executive Officer Director Chief Financial Officer

Annual Report 2021 29

Jauharabad Sugar Mills Limited
Statement of Profit or Loss
For the year ended September 30, 2021
2021 2020
Note Rupees Rupees
Sales - net 28 4,924,089,175 3,502,836,509
Cost of sales 29 4,345,577,879 2,898,771,289
Gross profit 578,511,296 604,065,220

Operating expenses:
Distribution cost 30 15,441,560 14,140,541
Administrative expenses 31 175,750,510 157,059,000
(191,192,070) (171,199,541)
Operating profit 387,319,226 432,865,679

Finance cost 32 (219,555,138) (231,178,175)

Other income 33 12,379,767 7,911,244
Other expenses 34 (11,854,666) (13,207,530)

Profit before taxation 168,289,189 196,391,218

Taxation 35 (66,538,117) 16,937,529

Profit after taxation 101,751,072 213,328,747

Earning per share - basic and diluted 36 2.98 6.25

The annexed notes 1 to 45 form an integral part of these financial statements.

Lahore: Syed Anwar Hussain Ghias Ul Hasan Imran Ilyas

December 28, 2021 Chief Executive Officer Director Chief Financial Officer

30 Jauharabad Sugar Mills Limited

Jauharabad Sugar Mills Limited
Statement of Other Comprehensive Income
For the year ended September 30, 2021
2021 2020
Rupees Rupees

Profit after taxation 101,751,072 213,328,747

Other comprehensive income for the year

Items that will not be reclassified subsequently to profit or loss account

Gain on revaluation of land, building and plant & machinery - net of tax - 1,615,997,304

Total comprehensive income for the year 101,751,072 1,829,326,051

The annexed notes 1 to 45 form an integral part of these financial statements.

Lahore: Syed Anwar Hussain Ghias Ul Hasan Imran Ilyas

December 28, 2021 Chief Executive Officer Director Chief Financial Officer

Annual Report 2021 31

Jauharabad Sugar Mills Limited
Statement of Cash Flows
For the year ended September 30, 2021
2021 2020
Note Rupees Rupees
Cash flow from operating activities
Profit before taxation 168,289,189 196,391,218
Adjustments for:
Depreciation 5.1.1 135,701,609 110,973,001
Amortization 6.3 57,210 85,388
Balances written-off 47,691 -
Gain on foreign currency transaction 33 - (342,634)
Provision for Workers’ Profit Participation Fund 34 8,857,326 10,336,380
Finance cost 32 219,555,138 231,178,175
Government grant (4,733,836) -
Loss/(Gain) on disposal of property, plant and equipment 5.1.5 2,081,725 (1,035,674)
361,566,863 351,194,636
Operating profit before working capital changes 529,856,052 547,585,854
Working capital changes
Stores, spare parts and loose tools (3,791,290) (13,885,032)
Stock-in-trade 100,160,515 196,380,975
Loans and advances (144,966,057) 55,237,293
Trade debts 772,396 269,263,440
Trade deposits and short term prepayments (5,594,416) (1,077,751)
Other receivables-unsecured considered good 9,120,000 1,395,161
Trade and other payables (111,957,667) (263,146,513)
Unclaimed dividend 352,825 34,401
Short term loan from sponsors - 111,750,000
(155,903,694) 355,951,974
Cash generated from operations 373,952,358 903,537,828

Tax paid (24,623,469) (19,669,310)

WPPF paid (10,336,380) (13,540,480)
Finance cost paid (212,187,225) (272,526,934)
(247,147,074) (305,736,724)
Net cash generated from operating activities 126,805,284 597,801,104

The annexed notes 1 to 45 form an integral part of these financial statements.

Lahore: Syed Anwar Hussain Ghias Ul Hasan Imran Ilyas

December 28, 2021 Chief Executive Officer Director Chief Financial Officer

32 Jauharabad Sugar Mills Limited

Jauharabad Sugar Mills Limited
Statement of Cash Flows
For the year ended September 30, 2021
2021 2020
Note Rupees Rupees
Cash flow from investing activities
Purchase of property, plant and equipment (139,049,813) (167,968,779)
Sale proceeds from disposal of property, plant and equipment 4,002,754 2,053,741
Long term deposits (13,500) (400,000)
Net cash used in from investing activities (135,060,559) (166,315,038)
Cash flow from financing activities
Repayment of long term finances - net (102,564,754) (5,656,696)
Lease rentals paid - net - (139,357)
Dividend paid (34,128,453) (34,128,469)
Proceeds from sponsors’ loan - net (1,731,000) 1,150,748
Net cash used in financing activities (138,424,207) (38,773,774)
Net (decrease)/increase in cash and cash equivalents (146,679,482) 392,712,292
Cash and cash equivalents at the beginning of the year 42,641,893 (350,070,399)
Cash and cash equivalents at the end of the year (104,037,589) 42,641,893

Cash and cash equivalents comprise of following
statement of financial position amounts:

- Short term investments 15 17,686,738 17,128,849

- Cash and bank balances 16 68,442,035 223,833,689
- Short term borrowings 19 (190,166,362) (198,320,645)
(104,037,589) 42,641,893

The annexed notes 1 to 45 form an integral part of these financial statements.

Lahore: Syed Anwar Hussain Ghias Ul Hasan Imran Ilyas

December 28, 2021 Chief Executive Officer Director Chief Financial Officer

Annual Report 2021 33

 Jauharabad Sugar Mills Limited
Statement of Changes in Equity
For the year ended September 30, 2021

34
Share Capital Revenue
Capital Reserves Reserves
Issued
Share Revaluation Accumulated Loan from
subscribed and Total
Premium Surplus Profits Sponsors
paid-up capital
--------------------------------------------------(Rupees)---------------------------------------------------------
Balance as at October 01, 2019 341,284,530 372,402,633 1,301,433,384 274,136,437 610,677,150 2,899,934,134
Repayment of loan during the year - - - - (12,176,000) (12,176,000)
Loan received during the year - - - - 13,326,748 13,326,748
Dividend paid @ Re.1/- per share - - - (34,128,469) - (34,128,469)
Profit after taxation - - - 213,328,747 - 213,328,747
Other comprehensive income for the year - - 1,615,997,304 - - 1,615,997,304
Total comprehensive income for the year - - 1,615,997,304 213,328,747 - 1,829,326,051
Transfer of incremental depreciation (net of tax) - - (27,951,312) 27,951,312 - -
Balance as at September 30, 2020 341,284,530 372,402,633 2,889,479,376 481,288,027 611,827,898 4,696,282,464

Balance as at October 01, 2020 341,284,530 372,402,633 2,889,479,376 481,288,027 611,827,898 4,696,282,464
Repayment of loan during the year - - - - (432,031,000) (432,031,000)
Loan received during the year - - - - 430,300,000 430,300,000
Dividend paid @ Re.1/- per share - - - (34,128,453) - (34,128,453)
Profit after taxation - - - 101,751,072 - 101,751,072
Other comprehensive income for the year - - - - - -
Total comprehensive income for the year - - - 101,751,072 - 101,751,072
Transfer of incremental depreciation (net of tax) - - (45,551,792) 45,551,792 - -
Balance as at September 30, 2021 341,284,530 372,402,633 2,843,927,584 594,462,438 610,096,898 4,762,174,083

The annexed notes 1 to 45 form an integral part of these financial statements.

Lahore: Syed Anwar Hussain Ghias Ul Hasan Imran Ilyas

Jauharabad Sugar Mills Limited

December 28, 2021 Chief Executive Director Chief Financial Officer
Jauharabad Sugar Mills Limited
Notes to the Financial Statements
For the year ended September 30, 2021

1 Reporting entity

1.1 Jauharabad Sugar Mills Limited “the Company” (formerly known as Kohinoor Sugar Mills Limited) was incorporated
in Pakistan in 1968 under the repealed Companies Act 1913 (now Companies Act, 2017). The shares of the Company
are listed on the Pakistan Stock Exchange. The registered office of the Company is situated at 125-B, Quaid-e-Azam
Industrial Estate, Gate No. 4, Kot Lakhpat, Lahore, and the mill is located at Jauharabad, District Khushab, Pakistan.
The production plant is located at Industrial Area Jauharabad City District Khushab in the province of Punjab. The
principal activity of the Company is manufacturing and sale of sugar and its by-products.

1.2 Summary of significant events and transactions in the current reporting period

The Company’s financial position and performance were particularly affected by the following events and
transactions during the reporting period:

a) The Company is in the process of installation of a power plant with generation capacity of 15 MW /hour, which will
significantly affect the business volume and profitability of the Company. Refer to note 5.2 for capital expenditures
and advances against the same incurred till September 30, 2021. In this regard, the Company has arranged long term
finance facilities aggregating Rs. 350 million (note 20 ).

2 Basis of preparation

2.1 Statement of compliance
These financial statements have been prepared in accordance with the accounting and reporting standards as
applicable in Pakistan. The accounting and reporting standards applicable in Pakistan comprise:

- International Financial Reporting Standards (IFRS) issued by the International Accounting Standards
Board (IASB) as notified under the Companies Act, 2017;

- Provision of and directives issued under the Companies Act, 2017

Where provision of and directives issued under the Companies Act, 2017 differ from the IFRS, the provision of and
directives issued under the Companies Act, 2017 have been followed.

2.2 Basis of measurement

These financial statements have been prepared under historical cost convention except for the certain property,
plant and equipment that are at revalued amounts.

Other areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are
significant to the financial statements are as follows.
- -
- Estimation of net realizable value
- Computation of deferred taxation
- Disclosure of contingencies

3 Use of estimates and judgements

The preparation of these financial statements in conformity with approved accounting standards requires
management to make judgments, estimates and assumptions that affect the application of policies and reported
amounts of assets, liabilities, income and expenses. The estimates and related assumptions are based on historical
experience and various other factors that are believed to be reasonable under circumstances, and the results of
which form the basis for making judgment about carrying value of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which estimates are revised if the revision affects only that period, or in the period of the
Annual Report 2021 35
 revision and future periods if the revision affects both current and future periods.

The areas where assumptions and estimates are significant to the Company’s financial statements or where
judgment was exercised in application of accounting policies are as follows:

3.1 Property, plant and equipment
The Company reviews the useful lives and residual values of property, plant and equipment on a regular basis. Any
change in estimates in future years might affect the carrying amounts of the respective items of property, plant and
equipment with a corresponding effect on the depreciation charge and impairment.

3.2 Revaluation of property, plant and equipment
Revaluation of property, plant and equipment is carried out by independent professional valuers. Revalued amounts
of non depreciable items are determined by reference to local market values and that of depreciable items are
determined by reference to present depreciated replacement values.

3.3
Stores, spare parts and loose tools
The Company reviews the stores, spare parts and loose tools for possible impairment on an annual basis. Any change
in estimates in future years might affect the carrying amounts of the respective items of stores, spare parts and
loose tools with a corresponding effect on the provision.

3.4 Stock-in-trade
The Company reviews the carrying amount of stock-in-trade on a regular basis. Carrying amount of stock-in-trade
is adjusted where the net realizable value is below the cost. Net realizable represents the estimated selling price
less cost necessarily to be incurred for such sale

3.5 Impairment
The management of the Company reviews carrying amounts of its assets and cash generating units for possible
impairment and makes formal estimates of recoverable amount if there is any such indication.

3.6 Taxation
The Company takes into account the current income tax law and the decisions taken by appellate authorities.
Instances where the Company’s view differs from the view taken by income tax department at the assessment
stage and where the Company considers that its views on items of material nature is in accordance with the law,
the amounts are shown as contingent liabilities.

3.7 Impairment of trade debts, advances and other receivables
The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets.

The expected loss rates are based on the payment profiles of sales over a period of time before the reporting date
and the corresponding historical credit losses experienced within this period. The historical loss rates are adjusted
to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers
to settle the receivables.

3.8 Provisions and contingencies
The Company reviews the status of all pending litigations and claims against the Company. Based on its judgment
and the advice of the legal advisors for the estimated financial outcome, appropriate disclosure or provision is
made. The actual outcome of these litigations and claims affect the carrying amounts of the liabilities recognized
at the balance sheet date.

3.9 Expected credit loss

ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all
the cash flows that the Company expects to receive. The shortfall is then discounted at an approximation to the
assets’ original effective interest rate.

The Company has elected to measure loss allowances for trade debts using IFRS 9 simplified approach and has
calculated ECLs based on lifetime ECLs. The Company has established a provision matrix that is based on the
Company’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the
economic environment. When determining whether the credit risk of a financial asset has increased significantly
since initial recognition and when estimating ECLs, the Company considers reasonable and supportable information

36 Jauharabad Sugar Mills Limited

 that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information
and analysis, based on the Company’s historical experience and informed credit assessment including forward-
looking information.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Company
is exposed to credit risk. Loss allowances for financial assets measured at amortized cost are deducted from the
gross carrying amount of the assets.

The Company limits its exposure to credit risk by investing only in liquid debt securities and only with counterparties
that have a good credit rating. The Company monitors changes in credit risk by tracking published external credit
ratings. 12-month and lifetime probabilities of default are based on historical credit ratings of the issuer.

Impairment on cash and cash equivalents has been measured on a 12-month expected loss basis and reflects the
short maturities of the exposures. The Company considers that its cash and cash equivalents have low credit risk
based on the external credit ratings of the counterparties. The Company uses a similar approach for assessment of
ECLs for cash and cash equivalents to those used for debt securities.

4 Significant accounting policies

4.1 IFRS 15 - Revenue from Contracts with Customers

“IFRS 15 ‘Revenue from contracts with customers’ - IFRS 15 replaces the previous revenue standards:
IAS 18 ‘Revenue’, IAS 11 ‘Construction Contracts, and the related interpretations on revenue recognition.
IFRS 15 introduces a single five-step model for revenue recognition with a comprehensive framework based on core
principle that an entity should recognize revenue representing the transfer of promised goods or services under
separate performance obligations under the contract to customer at an amount that reflects the consideration to
which the entity expects to be entitled in exchange for those promised goods or services.”

Based on the assessment performed by the management, there is no significant impact of the changes laid down
by IFRS 15 on these financial statements of the Company.

4.2 IFRS 16 - Leases

“IFRS 16 replaces the previous lease standard IAS 17 Leases. It resulted in almost all leases being
recognized in the condensed interim statement of financial position, as the distinction between operating
and finance leases has now been eliminated. Under the new standard, an asset and a lease liability
to pay rentals are required to be recognized. The only exceptions are short term and low value leases.
“
Impact on financial position of the company

The company has adopted IFRS 16 and it has no material impact on the company’s financial position as the only
lease appearing is finance lease.

4.3 IFRS 9 - Financial instruments

IFRS 9 ‘Financial instruments’ – This standard replaces the provisions of IAS 39 that relate to the recognition,
classification and measurement of financial assets and financial liabilities, derecognition of financial instruments,
impairment of financial assets and hedge accounting. It also includes an expected credit losses model that replaces
the incurred loss impairment model included in IAS 39. The details of new significant accounting policies adopted
and the nature and effect of the changes to previous accounting policies are set out below

4.3.1 Classification and measurement of financial instruments

IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of
financial liabilities. However, it eliminates the previous IAS 39 categories for financial assets of held
to maturity, loans, receivables and available for sale. Under IFRS 9, on initial recognition, the Company
classifies its financial assets in the following measurement categories:

- those to be measured subsequently at fair value either through Other Comprehensive Income
(FVOCl), or through profit or loss (FVTPL); and

Annual Report 2021 37

 - those to be measured at amortized cost.

The classification depends on the Company’s business model for managing the financial assets and the
contractual terms of the cash flows.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not
designated as at fair value through profit or loss:

- it is held within business model whose objective is to hold assets to collect contractual cash
flows; and
- its contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on principal amount outstanding.

Financial assets at amortized cost are subsequently measured using the effective interest rate method.
Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any
gain on derecognition is recognized in profit or loss.

Equity investments at fair value through other comprehensive income are measured at fair value. Net
gains and losses are recognized in statement of other comprehensive income and dividend income is
recognized in statement of profit or loss account.

4.3.2 Standards, interpretations and amendments to published approved accounting standards that are not
yet effective:

The following revised International Financial Reporting Standards (IFRS), amendments and improvements
with respect to the approved accounting standards as applicable in Pakistan would be effective from the
dates mentioned below against the respective standard or interpretations:

Effective date
Standards or Interpretation (beginning on or after)
Amendments to IFRS 7, IFRS 4 and IFRS 16 for interest rate July 1, 2021
benchmark (IBOR) reform
Classification of Liabilities - Amendments to IAS 1 July 1, 2023
Amendments to IAS 1 and IFRS Practice Statement July 1, 2023
2 - Disclosure of Accounting Policies


4.4 Staff retirement benefits

Defined contribution plan
The Company operates a defined contribution provident fund scheme (the Fund) for its permanent employees. Equal
monthly contributions are made to the fund both by the Company and employees at the rate of 10% of basic salary.
The Company’s contribution is charged to the statement of comprehensive income.

4.5
Taxation
Income tax expense comprises current and deferred tax. Income tax expense is recognized in the profit and loss
account, except to the extent that it relates to items recognized directly in equity or below equity, in which case it is
recognized in equity or below equity respectively.

Current
Provision for current taxation is based on taxable income, as adjusted for tax purposes, at the current rate of tax after
taking into account all tax credits, rebates and available tax losses determined in accordance with prevailing tax
laws. The charge for current tax also includes adjustments, where considered necessary, to provision for tax made
in previous years arising from assessments made during the year for such years.

Deferred
Deferred tax is provided, using the balance sheet liability method, on all temporary differences at the balance sheet
date between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes.

38 Jauharabad Sugar Mills Limited


Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized
for all deductible temporary differences and carry forward of unused tax losses and tax credits to the extent that it is
probable that future taxable profits will be available against which deferred tax asset can be utilized, except where
the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability that, at the time of transaction, affects neither the accounting nor taxable profits.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it
is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to
be utilized.

Deferred tax asset and liability is measured at the tax rates that are expected to apply to the period when the asset is
realized or the liability is settled, based on the rates (and tax laws) that have been enacted or substantively enacted
at the balance sheet date.

4.6 Earnings per share (“EPS”)

Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares outstanding during the year.

Diluted EPS is calculated by adjusting basic EPS by the weighted average number of ordinary shares that would be
issued on conversion of all dilutive potential ordinary shares into ordinary shares and post-tax effect of changes in
profit and loss attributable to ordinary shareholders of the Company that would result from conversion of all dilutive
potential ordinary shares into ordinary shares.

4.7 Property, plant and equipment

4.7.1
Owned
Recognition and measurement
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses, if any, except for freehold land which is stated at revalued amount, building and
plant & machinery which is stated at revalued amount less subsequent accumulated depreciation and
subsequent impairment losses, if any. Cost includes purchase cost together with any incidental expenses
of acquisition. Depreciation on additions is charged from the month when the asset is available for
use, while no depreciation is charged for the month in which the asset is disposed off. Depreciation is
charged to profit or loss account at the rates specified in Note 5.1 to these financial statements using
the reducing balance method unless specifically stated otherwise. Estimate of useful life of depreciable
assets is based on assessment of industry trends, technical obsolescence and past experiences. Residual
value and useful life of assets are reviewed, at each date of statement of financial position and adjusted
expectations differ significantly from previous estimates.

Surplus on revaluation is booked by restating gross carrying amounts of respective assets being revalued,
proportionately to the change in their carrying amounts due to revaluation. The accumulated depreciation
at the date of revaluation is also adjusted to equal difference between gross carrying amounts and the
carrying amounts of the assets after taking into account accumulated impairment losses. The surplus on
revaluation of fixed assets to the extent of the annual incremental depreciation based on the revalued
carrying amount of the asset and the depreciation based on the assets’ original cost is transferred
annually to retained earnings net of related deferred tax. Upon disposal, any revaluation reserve relating
to the particular assets being sold is transferred to retained earnings. All transfers to / from surplus on
revaluation of fixed assets account are net of applicable deferred income tax.

Subsequent expenditure
Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated
with the expenditure will flow to the Company.

De-recognition
Gain or loss arising from de-recognition of property, plant and equipment is measured as the difference
between the net disposal proceeds and the carrying amount of an asset and is charged to the profit or loss
account.

Annual Report 2021 39

 Capital work in progress
Capital work in progress is stated at cost less identified impairment loss, if any, and includes the cost of
material, labour and appropriate overheads directly relating to the construction, erection or installation
of an item of operating fixed assets. These costs are transferred to operating fixed assets as and when
related items become available for intended use.

4.7.2 Leased
Right of use Asset
The Company assesses whether a contract is or contains a lease at the inception of the contract. The
Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before the commencement date, plus any initial direct
costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the
underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the
commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the
lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those
of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the lease liability.

Where the Company determines that the lease term of identified lease contracts is short term in nature
i.e. with a lease term of twelve months or less at the commencement date, right of use assets is not
recognized and payments made in respect of these leases are expensed in the statement of profit or
loss.

Lease liability
Minimum lease payments made under finance leases are apportioned between the finance expense and
the reduction of the outstanding liability. The finance expense is allocated to each period during the lease
term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

4.8 Intangibles
Recognition and measurement
Intangibles, with finite useful lives, are measured at cost less accumulated amortization and impairment losses, if
any. Amortization is charged to profit or loss account using the reducing balance method over its useful life.

Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific
asset to which it relates. All other expenditure, is charged to profit or loss account as incurred.

De-recognition
Gains or losses arising from de-recognition of intangibles are measured as the difference between the net disposal
proceeds and the carrying amount of assets and are charged to the profit or loss account.

4.9 Impairment
Financial assets
The Company records impairment based on lifetime expected credit loss at the time of initial recognition of financial
instrument at a default rate calculated using own historical credit loss experience and forward looking factors.
However, in certain cases, the Company may also consider a financial asset to be in default when internal or external
information indicates that the Company is unlikely to receive the outstanding contractual amounts in full before
taking into account any credit enhancements held by the Company.

Non-financial assets
The carrying amount of the Company’s non-financial assets is reviewed at each year end to determine whether
there is any indication of impairment loss. If any such indication exists, the recoverable amount is estimated in
order to determine the extent of the impairment loss, if any. The recoverable amount is the higher of fair value less
costs to sell and value in use. In the absence of any information about the fair value of a cash-generating unit, the
recoverable amount is deemed to be value in use. Impairment losses are recognized as an expense in the statement
of other comprehensive income.

40 Jauharabad Sugar Mills Limited

 4.10 Stores, spare parts and loose tools
These are valued at lower of cost and net realizable value. Cost is determined at average running cost. Items
considered obsolete are carried at nil value. Items in transit are valued at cost comprising invoice value plus other
charges incurred thereon. Cost is determined at average running cost.

4.11 Stock in trade
These are valued at lower of cost and net realizable value (NRV) except molasses, bagasse and VF cake which
is valued at NRV. Cost in relation to raw material, work in process and finished goods represents average cost
comprising direct material, labour and appropriate manufacturing overheads. NRV represents the estimated selling
price less cost necessarily to be incurred for such sale. Cost is determined as follows:

Work-in-process: At estimated cost.
Finished goods - sugar: Lower of weighted average cost and net realizable value

4.12 Revenue recognition
According to the core principle of IFRS 15, the Company recognizes revenue to depict the transfer of promised goods
and services to customers in an amount that reflects the consideration to which the Company expects to be entitled
in exchange for those good and services. The Company recognizes revenue in accordance with that core principle by
applying the following steps:

- Identify the contract with a customer;
- Identify the performance obligations in the contract;
- Determine the transaction price;
- Allocate the transaction price to the performance obligations in the contract;
- Recognize revenue when the entity satisfies a performance obligation.

Revenue is measured at the fair value of consideration received or receivable, and represents amount receivable for
goods supplied. Revenue from sale of goods is recognized when the Company satisfies a performance obligation
(at a point of time) by transferring promised goods to customer being when the goods are invoiced and delivered to
customers. This criteria of revenue recognition for its timing and amount is consistent with the previously adopted
accounting standard therefore, the management concludes that the adoption of IFRS 15 does not have impact on
the timing and amount of revenue recognition of the Company.

4.13 Borrowings and borrowing costs
Borrowings are recorded at the proceeds received. Finance costs are accounted for on an accrual basis and are
included in current liabilities to the extent of the amount remaining unpaid.

Borrowing costs are recognized as an expense in the period in which these are incurred except to the extent of the
borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.
Such borrowing costs are capitalized as part of the cost of that asset up to the date of its commissioning.

4.14 Provisions
A provision is recognized in the statement of financial position when the Company has a legal or constructive
obligation as a result of past event, and it is probable that an out flow of resource embodying economic benefits will
be required to settle the obligation and a reliable estimate can be made of the amount of obligation.

4.15 Trade debts and other receivables
These are classified at amortized cost and are initially recognized when they are originated and measured at fair
value of consideration receivable. These assets are written off when there is no reasonable expectation of recovery.
Actual credit loss experience over past years is used to base the calculation of expected credit loss.

4.16 Trade and other payables
Liabilities of trade and other amounts payable are carried at cost, which is the fair value of the consideration to be
paid in future for goods and services received, whether or not billed to the Company.

4.17 Dividend
The dividend distribution to the shareholders is recognized as a liability in the period in which it is approved by the
board of directors.

Annual Report 2021 41

 4.18 Financial instruments
Financial assets and financial liabilities are recognized at the time when the Company becomes a party to the
contractual provisions of the instrument and derecognized when the Company loses control of contractual rights
that comprise the financial assets and in the case of financial liabilities when the obligation specified in the contract
is discharged, cancelled or expired. Any gain or loss on derecognition of financial assets and financial liabilities is
included in the profit or loss for the year. All financial assets and liabilities are initially measured at cost, which is the
fair value of the consideration given and received respectively. These financial assets and liabilities are subsequently
measured at fair value, amortized cost or cost as the case may be. The particular measurement methods adopted
are disclosed in individual policy statement associated with each item.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when
there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis
or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on
future events and must be enforceable in the normal course of business and in the event of default, insolvency or
bankruptcy of the Company or the counter party.

4.19
Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of the
statement of cash flows, cash and cash equivalents consist of cash and bank balances, cheques in hand, deposits
held at call with banks, other short term highly liquid investments with original maturities of three months or less,
running finance under mark-up arrangements and short term loans which form an integral part of the Company’s
cash management.

4.20 Foreign currencies transactions
Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the rate of exchange prevailing
at the balance sheet date, except those covered by forward contracts, which are stated at contracted rates. Foreign
currency transactions are translated into Pak Rupees at the rates prevailing at the date of transaction except for
those covered by forward contracts, which are translated at contracted rates. Non monetary items are translated
into Pak Rupees on the date of transaction or on the date when fair values are determined. Exchange differences
are included in income currently.

4.21 Related party transactions

All transactions with related parties are carried out as arms’ length transactions by the Company using the methods
prescribed under the Companies Act, 2017.

4.22Functional and presentation currency

These financial statements are presented in Pak Rupees, which is the Company’s functional and presentation
currency.

2021 2020
Note Rupees Rupees
5 Property, plant and equipment

Property, plant and equipment 5.1 4,580,856,118 4,630,504,304

Capital work-in-progress 5.2 541,502,387 494,590,476
5,122,358,505 5,125,094,780

42 Jauharabad Sugar Mills Limited

 Jauharabad Sugar Mills Limited
Notes to the Financial Statements
For the year ended September 30, 2021

5.1 Property, plant and equipment

Annual Report 2021

Owned assets Leased Assets

Particulars Service Grand Total

Freehold Building on Plant and Furniture Office
and other Vehicles Vehicles
Land freehold land machinery and fixture equipment
equipment
------------------------------------------------------------(Ruees)--------------------------------------------------------------
Cost
Balance at October 01, 2019 817,868,000 337,922,218 2,709,854,473 10,177,778 9,945,277 11,807,631 68,879,564 1,853,223 3,968,308,164
Revaluation surplus 1,238,468,000 36,222,160 495,509,253 - - - - - 1,770,199,413
Additions - 21,284,185 114,676,873 - 443,475 472,300 5,789,800 - 142,666,633
Disposal - - - - - (78,535) (63,500) (1,853,223) (1,995,258)
Balance at September 30, 2020 2,056,336,000 395,428,563 3,320,040,599 10,177,778 10,388,752 12,201,396 74,605,864 - 5,879,178,952

Balance at October 01, 2020 2,056,336,000 395,428,563 3,320,040,599 10,177,778 10,388,752 12,201,396 74,605,864 - 5,879,178,952
Additions 27,766,000 9,245,269 53,341,492 - 474,003 459,949 851,189 - 92,137,902
Disposal - - - - - (392,670) (12,653,917) - (13,046,587)
Balance at September 30, 2021 2,084,102,000 404,673,832 3,373,382,091 10,177,778 10,862,755 12,268,675 62,803,136 - 5,958,270,267

Depreciation

Balance at October 01, 2019 - 138,850,878 947,638,813 8,576,781 5,992,784 5,165,407 31,588,362 865,813 1,138,678,838
For the year - 10,787,947 90,820,931 160,100 420,041 699,875 8,034,736 49,371 110,973,001
Disposal - - - - - (29,348) (32,659) (915,184) (977,191)
Balance at September 30, 2020 - 149,638,825 1,038,459,744 8,736,881 6,412,825 5,835,934 39,590,439 - 1,248,674,648

Balance at October 01, 2020 - 149,638,825 1,038,459,744 8,736,881 6,412,825 5,835,934 39,590,439 - 1,248,674,648
For the year - 12,573,530 114,975,918 144,090 419,959 631,286 6,956,826 - 135,701,609
Disposal - - - - - (107,847) (6,854,261) - (6,962,108)
Balance at September 30, 2021 - 162,212,355 1,153,435,662 8,880,971 6,832,784 6,359,373 39,693,004 - 1,377,414,149

Carrying value 2020 2,056,336,000 245,789,738 2,281,580,855 1,440,897 3,975,927 6,365,462 35,015,425 - 4,630,504,304
Carrying value 2021 2,084,102,000 242,461,477 2,219,946,429 1,296,807 4,029,971 5,909,302 23,110,132 - 4,580,856,118

43
Rates of depreciation 0% 5% 5% 10% 10% 10% 20% 20%

Jauharabad Sugar Mills Limited
Notes to the Financial Statements
For the year ended September 30, 2021
5.1.1 Depreciation for the year has been allocated as under:
2021 2020
Note Rupees Rupees
Cost of sales 29 132,987,577 108,753,541
Administrative expenses 31 2,714,032 2,219,460
135,701,609 110,973,001

5.1.2 All assets are acquired with the funds of the Company and are held by and in the possession and control
of the Company.
5.1.3 The latest valuation of the Company’s assets was carried out by Tristar International Consultant (Private)
Limited as at September 30, 2020 and the forced sale value as at that date is given below:

Amount in Rupees
Freehold land 1,645,068,800
Building on freehold land 184,342,303
Plant, machinery and equipment 1,825,379,065
3,654,790,168

5.1.4 Buildings, plant and machinery are located at freehold land measuring 497.68 Kanals located at industri-
al area Jauharabad City District Khushab.

5.1.5 Disposal of property, plant and equipment

Gain/ (loss) Mode of Name of
Particulars Cost Net Book Value Sale proceeds
on proceeds Disposal purchaser
‘----------------------------------------------------------------------2021-----------------------------------------------------------
Amount in Rupees
Vehicles
Suzuki Cultus Tariq Mahmood-
1,418,510 590,675 347,750 (242,925) Sale
LED-17-8015 Employee
Suzuki Cultus Amanat Ali-
1,556,830 742,357 504,240 (238,117) Sale
LED-18-7522 Employee
Toyota Corolla Saif ur Rehman-
2,031,490 918,432 496,750 (421,682) Sale
LEB-17A-8717 Employee
Honda City Usman Afzaal-
1,776,167 846,551 597,570 (248,981) Sale
LED-18-6687 Employee
Honda City Arsalan Ahmed-
1,970,777 1,033,871 787,914 (245,957) Sale
LE-18-7075 Employee
Suzuki Mehran Kazim Ali-
753,295 291,819 183,000 (108,819) Sale
LEH-17-5315 Employee
Suzuki Mehran Al Yousuf-
752,495 291,501 183,000 (108,501) Sale
LEH-17-5701 Employee
Honda BRV Amjad
LEB-18-7375 2,394,360 1,084,450 843,630 (240,820) Sale Mahmood-
Employee
Sub total 12,653,917 5,799,656 3,943,854 (1,855,802)

44 Jauharabad Sugar Mills Limited

 Office equipment
Having book 392,670 284,823 58,900 (225,923) Sale Employees
value less than
Rs. 500,000
Total- 2021 13,046,587 6,084,479 4,002,754 (2,081,725)

Gain/ (loss) Mode of Name of

Particulars Cost Net Book Value Sale proceeds
on proceeds Disposal purchaser
Mr. Amjad
Honda City
1,853,223 938,039 2,010,461 1,072,422 Sale Mahmood
Aspire
Employee
Having book
value less than 63,500 30,841 31,500 659 Sale Employees
Rs. 500,000
Sub total 1,916,723 968,880 2,041,961 1,073,081

Office equipment
Having book
value less than 78,535 49,187 11,780 (37,407) Sale Employees
Rs. 500,000
Total- 2020 1,995,258 1,018,067 2,053,741 1,035,674

5.1.6 If the freehold land, building and plant and machinery were measured using the cost model, the carrying
amount would be as follows:

Particulars Cost “Accumulated “Net book value”
depreciation”
2021 -----------------(Rupees)------------------
Freehold land 1,648,310 - 1,648,310
Building on freehold land 263,751,761 116,189,794 147,561,967
Plant and machinery 1,902,474,646 845,588,729 1,056,885,917
2,167,874,717 961,778,523 1,206,096,194
2020
Freehold land 1,648,310 - 1,648,310
Building on freehold land 254,506,492 108,423,375 146,083,117
Plant and machinery 1,849,133,154 789,963,154 1,059,170,000
2,105,287,956 898,386,529 1,206,901,427

5.2 Capital work-in-progress

This cost incurred at Balancing Modernization and Replacement Program (BMR) of the Company in previous year
and transferred to fixed assets is follows:

Opening Additions Transferred Closing

Particulars
Balance during the year to/ (from) balance
2021 -----------------(Rupees)------------------
Plant and machinery 487,958,046 45,303,160 - 533,261,206
Advances for capital
6,632,430 1,608,751 - 8,241,181
expenditure
494,590,476 46,911,911 - 541,502,387

Annual Report 2021 45

 2020
Plant and machinery 437,112,928 50,465,588 379,530 487,958,046
Advances for capital 7,011,960 - (379,530) 6,632,430
expenditure
444,124,888 50,465,588 - 494,590,476

5.2.1
Capital work in progress includes mark-up capitalized amounting to Rs. Nil in plant and machinery
(2020: Rs. 25,163,443).

5.2.2 Advances for capital expenditure relates to the purchase for Power Plant.

2021 2020
Note Rupees Rupees
6 Intangible assets

Software 6.1 116,153 173,363

6.1 Software
Cost 1,100,000 1,100,000
Additions during the year - -
Disposal during the year - -
Accumulated amortization 6.2 (983,847) (926,637)
At the end of the year 116,153 173,363

6.2 Accumulated Amortization

At beginning of the year 926,637 841,249

Amortization for the year 6.3 57,210 85,388
At the end of the year 983,847 926,637
Amortization rate - % per annum 33% 33%

6.3 Amortization for the year has been allocated as under:
Cost of sales 29 56,066 83,680
Administrative expenses 31 1,144 1,708
57,210 85,388
7 Long-term deposits

This represents interest free deposits to sub division canal officer for provision of utilities at plant and are refundable on
disconnection of services.

8 Stores, spare parts and loose tools

Stores 55,388,236 54,264,127
Spare parts 37,402,035 34,569,778
Loose tools 2,674,408 2,839,484
95,464,679 91,673,389
9 Stock-in-trade
Work-in-process 3,751,911 3,810,289
Finished goods 89,709,008 189,811,145
93,460,919 193,621,434
10 Loans and advances
Advances-considered good-unsecured
-Suppliers 152,196,561 30,906,763
-Employees 12,569,854 5,647,985
-Agricultural loan 10.1 33,109,570 28,131,008
197,875,985 64,685,756
L.C Deposit 10.2 16,687,628 4,911,800
214,563,613 69,597,556

46 Jauharabad Sugar Mills Limited

 10.1
This represents interest free advances to sugarcane growers, which are adjustable against supply of sugarcane.
10.2
This comprises deposits against letter of credits for consumables.

2021 2020
Rupees Rupees
11 Trade debts
Local Debtors
Local debtors considered good - unsecured 573,125 1,345,521
Export debtors considered good - secured - -
573,125 1,345,521

12 Trade deposits and short term prepayments
Prepaid expenses 12.1 5,096,867 2,818,167
Others 3,600,534 284,818
8,697,401 3,102,985
12.1 This mainly includes insurance premiums.

13 Other receivables - unsecured considered good
Excise duty recoverable 13.1 10,500,922 10,500,922
Export fund refund 13.2 2,746,250 2,746,250
Special excise duty refundable 13.3 505,200 505,200
Rebate receivable on export of sugar 13.4 8,323,540 8,323,540
Sales tax refundable 13.5 144,844 9,264,844
22,220,756 31,340,756

13.1 This represents refund allowed by the Central Excise Appellate Tribunal, Lahore, in the light of criteria set up by
the Supreme Court of Pakistan against Central Excise Duty paid during the season 1988-89. The Company’s legal
counsel expects that case to be decided in the favour of the company.

13.2 This represents relief granted by the Lahore High Court against previous years’ demand. However the same is still
pending for final adjudication. The Company’s legal counsel expects that case to be decided in the favor of the
company.

13.3 This represents an amount paid under protest as 1% Special Excise Duty on the goods manufactured prior to Finance
Bill 2007, whereas it was leviable on goods manufactured/ imported from July 01, 2007, vide Circular No. 1(3) Fed
2007 dated 28th August, 2007.The Company’s legal counsel expects that case to be decided in the favour of the
company.
13.4 This represents rebate receivable from Government against export of sugar.

13.5 This represents sales tax amount recoverable against purchase/sale of goods.

2021 2020
Rupees Rupees
14 Tax refunds due from the Government
Opening balance 116,665,800 128,183,170
Add: Tax deducted during the year 24,623,469 19,669,310
Less: Adjusted against prior year taxes (55,141,814) (31,186,680)
86,147,455 116,665,800

14.1 This represents income tax refundable from government. The assessments of the Company have been completed
for and up to financial year ended on September 30, 2020.

15 Short term investments
Investment at fair value through profit or loss 15.1 17,686,738 17,128,849
17,686,738 17,128,849

15.1 This represents the investment made in Securities of JS Investment Limited.

Annual Report 2021 47

 2021 2020
Note Rupees Rupees
16 Cash and bank balances
Cash in hand 18,680 320,703
Cash at banks - current accounts 67,626,186 183,476,300
Cash at banks - saving accounts 16.1 797,169 40,036,686
68,442,035 223,833,689

16.1 The balances in saving accounts carry mark-up at 3% to 5.5% per annum (2020: 1.1% to 1.8%).

17 Trade and other payables
Trade Creditors 46,763,074 84,028,467
Salaries and wages payable 24,300,495 19,580,287
Accrued liabilities 22,934,382 14,095,647
Advances from customers 17.1 1,101,081 55,001,804
Income tax deducted at source 212,788 118,024
Sugarcane cess payable 17.2 3,001,109 3,001,109
Provident fund payable 617,731 551,935
Sales tax payable 17.3 5,797,889 41,063,705
Security deposit 5,845,630 5,043,181
Workers’ Profit Participation Fund (WPPF) 17.4 8,902,852 10,381,906
Other payable 17.5 1,309,000 1,309,000
Short term loan from sponsors 17.6 111,750,000 111,750,000
232,536,031 345,925,065

17.1 This represents advances received from customers for sale of sugar.

17.2 This represents sugarcane cess demanded by Cane Commissioner, Lahore against sugarcane purchased from
Khyber Pakhtunkhwa

17.3 This represents provision against pending cases of sales tax for the year 1999-2000 amounting to Rs. 3.44 million
(2020: 3.44 million) and sales tax payable for the month of September 2021 amounting to Rs. 1.31 million (2020: Rs.
37.62 million ).

17.4 Workers’ Profit Participation Fund (WPPF)

Balance at beginning of the year 10,381,906 13,586,006

Add: Charge for the year 8,857,326 10,336,380
19,239,232 23,922,386
Less: Payments made to the fund during the year (10,336,380) (13,540,480)
Balance at end of the year 8,902,852 10,381,906

17.5 This represents labor colony land at Jauharabad against which a case is pending with Housing and Physical Planning
Department (PHATA), Jauharabad. On account of legal proceedings the management expects that the payment
against this liability shall arise after September 30, 2021.

17.6 This represents interest free loans provided to the Company by its Sponsors. These loan have been agreed to be
repayable at the Sponsor’s discretion.

18 Accrued mark-up
Accrued mark-up on:
- Long term finances from banking companies-secured 708,760 2,076,939
- Short term borrowings 2,971,822 977,394
3,680,582 3,054,333

48 Jauharabad Sugar Mills Limited

 Sanction limit 2021 2020
‘Rupees in Million’ Note Rupees Rupees
19 Short term borrowings
Mark-up based borrowings from Conventional Banks
Running finance 250 19.1 190,166,362 198,320,645
Cash finance 2,000 19.1 - -
Islamic mode of financing
Murabaha/Istisna 500 19.2 - -
Bai Salam/Istisna 1,350 19.2 - -
4,100 190,166,362 198,320,645

19.1 “These facilities have been obtained from various conventional banks to meet working capital requirements and
are secured by charge over current and future assets (fixed and current) of the Company, pledge of sugar stock,
lien over import documents and personal guarantees of sponsors and corporate guarantee of Cane Processing
(Private) Limited (Holding Company).
These facilities carry mark-up at the rates ranging from 1 month KIBOR + 2.00% to 3 months KIBOR + 2.50% per annum
payable quarterly.

The aggregate available short term funded facilities amounts to Rs. 2.25 billion (2020: Rs. 2.25 billion).”

19.2 “These facilities have been obtained from various Islamic banks to meet working capital requirements and are secured
by charge over current and future assets (fixed and current) of the Company, pledge of sugar stock, pledge of share of
company, lien over import documents, and personal guarantees of sponsors and corporate guarantee of Cane Processing
(Private) Limited (Holding Company).
These facilities carry mark-up at the rates ranging from matching KIBOR + 2.25% to matching KIBOR + 2.75% per
annum.
The aggregate available short term funded facilities amount to Rs.1.85 billion (2020: Rs. 1.15 billion).”

19.3 The loans from sponsors of the Company are subordinated under subordination agreement.

2021 2020
Note Rupees Rupees
20 Long term loans from banking companies-secured
Mark up bearing finance from conventional bank:
Soneri Bank Limited - Term Finance 20.1 - 60,404,982
Islamic mode of financing:
Al Baraka Bank (Pakistan) Limited - Diminishing Musharaka - II 20.2 70,023,042 95,584,513
70,023,042 95,584,513
Faysal Bank Limited - DM I + II 20.3 45,611,057 66,126,413
115,634,099 222,115,908
Less: Current portion (94,886,345) (74,183,077)
20,747,754 147,932,831
20.1 Soneri Bank Limited - Term Finance
This includes long term loan against sanctioned term finance facility of Rs. 200 million obtained from Soneri Bank
Limited to finance procurement/installation of 15+5MW second hand power plant in terms of arrangement auxiliary
equipment, completion of erection and civil work and interconnecting fees.

Total estimated cost of project is Rs. 500 million out of which 30% shall be incurred from equity resources and rest
of Rs. 350 million shall be arranged from bank’s borrowing (Rs. 200 million from Soneri Bank Limited and Rs. 150
million from Al Baraka Bank (Pakistan) Limited.

Principal repayment
The said loan has been repaid.

Rate of return
It carries mark-up at the rate of three months KIBOR plus 2.75 % per annum and mark-up is payable on quarterly
basis.

Security
This loan is secured by way of Soneri Bank charge amounting to Rs. 267 million over fixed assets of the Company

Annual Report 2021 49

 (land, building, plant and machinery including but not limited to sugar mill and power plant) duly registered with
SECP. The facility shall also be secured against charge of Rs. 267 million on receivables of the Company specifically
generated from power outlay 15+5 MW power plant. Further corporate guarantee of Cane Processing Private Limited
(Holding Company) and personal guarantees of the directors/sponsors of the Company.

20.2 Al Baraka Bank (Pakistan) Limited - Diminishing Musharaka - II
This represents long term loan against sanctioned limit of Rs. 150 million obtained to finance procurement/
installation of 15+5MW second hand power plant as referred in note 20.1 above.

Principal repayment
The loan is to be repaid in 12 quarterly instalments within 3 years after installation of power plant commencing from
March 2019 and ending in December 2022.

Rate of return
It carries profit at the rate of matching KIBOR plus 3.00 % per annum and profit is payable on quarterly basis.

Security
This loan is secured by way of bank’s exclusive charge over Diminishing Musharaka assets amounting to Rs.150
million including power plant and allied parts, accessories, erections, civil construction etc. registered with SECP,
Further corporate guarantee of Cane Processing Private Limited (Holding Company) and personal guarantees of the
directors/sponsors of the Company.

20.3
Faisal Bank Limited - Mark-up bearing finance from conventional bank
This represents long term loan obtained from SBP through Faisal Bank under Islamic refinance scheme against
sanctioned limit of Rs. 110 million for payment of wages & salaries to the workers and employees of company via
SBP IH&SMEFD circular no 07 of 2020.

Principal repayment
The loan is to be repaid in quarterly instalments starting from March 2021 within 2.5 years including 6 month of grace
period.

Rate of return
It carries profit at the rate of matching SBP base rate plus 3.00 % per annum and applicable rental is payable without
any grace period.

Security
This loan is secured by charged over all fixed assets (present and future) of the company and corporate guarantee
of Cane Processing Private Limited (Holding Company) and personal guarantees of the directors/sponsors of the
Company.

“The Loan from sponsors of the company are subordinated under subordination agreement.”

2021 2020
Rupees Rupees
21 Liabilities against assets subject to lease-secured
Opening balance - 135,805
Add: Assets acquired during the year - -
- 135,805
Less: Payments/adjustments - (135,805)
- -
Less: Current portion - -
Closing balance - -

21.1 The Company had entered into lease agreement with JS Bank for vehicle. Lease rentals were payable on monthly
basis and includes finance cost at the rate of 3 months KIBOR plus 2.25 % (2020: 3 months KIBOR plus 2.25 %),
which has been used as discounting factor. The Company had exercised the option and disposed the assets upon
completion of lease period.

50 Jauharabad Sugar Mills Limited

 2021 2020
Note Rupees Rupees
22 Provision for taxation
Balance at beginning of the year 55,205,499 42,451,685
Add: Provision for the year 35 61,619,284 55,205,499
116,824,783 97,657,184
Less: Prior year adjustments/ payments (55,205,500) (42,451,685)
Balance at end of the year 22.1 61,619,284 55,205,499

22.1 Provision for current tax is calculated as per provisions of Income Tax Ordinance, 2001 at the applicable rates.

23 Contingencies and commitments

23.1 Contingencies
The following are known contingencies as on September 30, 2021.

23.1.1 Since Federal Excise Duty (FED) is leviable on goods produced or manufactured, therefore, FED is not
leviable on sale of sugar produced prior to the Finance Bill, 2011. Hence, FED amounting to Rs. 58.88 mil-
lion has not been accounted for in these financial statements. The Company has filed a writ petition in
the Honorable Lahore High Court against FBR show cause notice dated 19-09-2012 against the demand
of Rs. 58.88 million.

23.1.2 The Income Tax Department raised a demand of Rs. 197.07 million on account of non-deduction of tax
while making payment to sugar cane suppliers. The demand was deleted by the Commissioner appeals
except for Rs. 5.9 million which was confirmed under section 34(5) of the Income Tax Ordinance, 2001
However, the Department has filed an appeal against the Commissioner’s order. The Company is hopeful
that the tribunal’s decision will be in its favour.

23.1.3 The Company has filed a writ petition against the amendments of Finance Act 2014 on “Alternate Cor-
porate Taxes”, implication on Tax Year 2013 of Company against which a demand of Rs.50.26 million has
been established, the said amendments would not be implemented as the income realized was before
the said amendments, amendments become applicable after July 1, 2014.

23.1.4 The Company has filed an appeal and stay application before Commissioner Inland Revenue (Appeals-I)
against demand of Rs. 82.16 million created by Assistant Commissioner Inland Revenue vide order under
section 161(1A)/205(3) which is decided in favour of the Company creating the demand of Rs.1.37 million.
The Department has filed an appeal before ATIR against the decision.

23.2 Commitments
23.2.1 In respect of:
2021 2020
Rupees Rupees

-irrevocable letter of credits for stores and spares 100,007,492 46,921,021

100,007,492 46,921,021
24 Deferred taxation
Deferred grant from Government 5,924,886 -
Deferred Taxation 359,286,731 354,304,212
365,211,617 354,304,212

Deferred tax liability on taxable temporary differences arising in respect of:
Surplus on revaluation of related assets 324,506,096 343,111,758
Accelerated depreciation / amortization 183,553,210 169,780,930
Leased assets - -

Deferred tax asset on deductible temporary differences arising in respect of:
Liabilities against assets subject to finance lease - -
Tax credits / Unused tax losses (148,772,575) (158,588,476)
359,286,731 354,304,212

Annual Report 2021 51

 2021 2020
Note Rupees Rupees
24.1 Movement in deferred tax balances is as follows:
At beginning of the year 354,304,212 260,980,126
Deferred tax liability on addition in revaluation surplus - 154,202,109
Recognized in statement of profit or loss:
Accelerated tax depreciation/amortization on fixed assets 13,772,280 19,937,069
Incremental depreciation (18,605,662) (11,416,733)
Liabilities against assets subject to finance lease - (217,330)
Tax credits / unused tax losses 9,815,901 (69,181,029)
4,982,519 (60,878,023)
At end of the year 359,286,731 354,304,212

25 Share capital

2021 2020 2021 2020
25.1 Authorized share capital Rupees Rupees
Ordinary shares
70,000,000 70,000,000 700,000,000 700,000,000
of Rs. 10/- each
25.2 Issued, subscribed and paid-up capital
Shares allotted on
reorganization of
873,180 873,180 8,731,800 8,731,800
Kohinoor Industries
Limited of Rs.10/- each
Shares issued for
125,008 125,008 1,250,080 1,250,080
cash of Rs. 10 each
Shares issued as
13,651,899 13,651,899 fully paid bonus shares 136,518,990 136,518,990
of Rs. 10/ -each
Right shares
7,905,650 7,905,650 79,056,500 79,056,500
of Rs. 10/- each
Issue of shares against
11,572,716 11,572,716 115,727,160 115,727,160
loan from sponsors
34,128,453 34,128,453 341,284,530 341,284,530

26 Loan from sponsors
Loan from sponsors 26.1 610,096,898 611,827,898

26.1This represents interest free loan provided to the Company by its sponsors. These loans have been agreed to be
repayable at the Company’s discretion/to be converted into equity. Loan was repaid and received during the year to
abridge the working capital requirements of the Company.

27 Revaluation surplus on property, plant and equipment - net of tax

Land 2,054,687,690 816,219,690
Buildings 136,815,158 100,592,998
Plant and machinery 1,350,551,657 855,042,404
3,542,054,505 1,771,855,092
Add: Addition in revaluation surplus
Land - 1,238,468,000
Buildings - 36,222,160
Plant and machinery - 495,509,253
- 1,770,199,413
Less: Accumulated incremental depreciation (373,620,825) (309,463,371)
3,168,433,680 3,232,591,134
Less: Deferred tax liability

52 Jauharabad Sugar Mills Limited

Opening balance 343,111,758 200,326,382
Deferred tax liability on addition in revaluation surplus - 154,202,109
Tax on Incremental depreciation for the year (18,605,662) (11,416,733)
324,506,096 343,111,758
2,843,927,584 2,889,479,376

2021 2020
Note Rupees Rupees
28 Sales - net
Sugar - local 5,190,746,163 3,596,765,002
Sugar - export - -
5,190,746,163 3,596,765,002
By-products:
-Molasses 439,390,515 330,780,002
-Bagasse 90,530,691 131,187,037
-Mud 9,250,488 5,768,130
539,171,694 467,735,169
5,729,917,857 4,064,500,171
Less:
Sales tax 800,375,137 557,418,012
Commission on sale 5,453,545 4,245,650
805,828,682 561,663,662
4,924,089,175 3,502,836,509

29 Cost of sales
Sugarcane purchased and consumed 3,786,668,085 2,326,990,669
Salaries, wages and other benefits 29.1 150,221,389 130,033,314
Chemicals and stores consumed 39,658,406 32,782,199
Packing material consumed 26,271,788 20,850,481
Fuel 756,272 733,228
Power 20,740,970 19,883,760
Repairs and maintenance 65,227,955 43,952,061
Workers’ welfare expense 1,585,042 1,315,423
Insurance 5,385,744 2,807,218
Vehicle running and maintenance 7,435,112 5,720,927
Travelling and conveyance 2,302,821 2,153,917
Carriage and freight 2,690,029 2,542,670
Rent rate and taxes 1,894,527 517,403
Printing and stationery 578,493 651,914
Depreciation 5.1.1 132,987,577 108,753,541
Amortization 6.3 56,066 83,680
Other factory expenses 957,088 2,617,909
4,245,417,364 2,702,390,314
Opening work-in-process 3,810,289 2,674,488
Closing work-in-process 9 (3,751,911) (3,810,289)
58,378 (1,135,801)
Cost of goods manufactured 4,245,475,742 2,701,254,513
Opening stock of finished goods 189,811,145 387,327,921
Closing stock of finished goods 9 (89,709,008) (189,811,145)
100,102,137 197,516,776
4,345,577,879 2,898,771,289

29.1 This includes Company’s contributions to provident fund amounts to Rs. 1,750,482 (2020: Rs. 1,514,312).

30 Distribution cost
Salaries, wages and other benefits 30.1 10,744,172 10,250,601
Communication 128,398 122,622
Vehicles running and maintenance 35,598 76,481
Miscellaneous 30.2 4,533,392 3,690,837
15,441,560 14,140,541

Annual Report 2021 53


30.1 This includes Company’s contributions to provident fund amounts to Rs. 106,971 (2020: Rs. 105,098).
30.2 This includes the penalty paid by the Company on Export quota .

2021 2020
Note Rupees upees
31 Administrative expenses
Salaries, wages and other benefits 31.1 123,544,872 117,565,915
Staff welfare 5,114,841 4,266,879
Legal and professional charges 20,048,927 9,122,789
Rent, rate and taxes 2,830,265 3,974,723
Fuel and power 1,769,537 2,020,849
Vehicles running and maintenance 5,246,605 4,881,985
Travelling and conveyance 1,134,460 880,622
Printing and stationery 935,003 827,494
Telecommunication 427,170 427,366
Repair and maintenance 251,373 394,952
Postage and telegrams 338,575 237,235
Advertisement 253,400 423,500
Auditors’ remuneration 31.2 655,000 613,000
Charity and donations 31.3 1,802,933 2,184,595
Depreciation 5.1.1 2,714,032 2,219,460
Amortization 6.3 1,144 1,708
Insurance 7,715,244 5,502,694
Miscellaneous 967,129 1,513,234
175,750,510 157,059,000

31.1 This includes Company’s contributions to provident fund amounts to Rs. 1,230,167 (2020: Rs. 1,208,633).

31.2Auditors’ remuneration
Annual audit fee 550,000 550,000
Half yearly review 105,000 63,000
655,000 613,000

31.3 None of the Directors of the Company or any of their spouse have any interest in charity and donations.

32 Finance cost
Mark-up on long term loan from banking companies-secured 32.1 18,650,650 768,919
Mark-up on short term borrowings 193,521,545 226,556,119
Bank Commission on exports - 1,228,939
Bank charges 7,382,943 2,624,198
219,555,138 231,178,175

32.1 Finance cost amounting to Rs. Nil (2020: Rs.25.16 million) relating to installation of a power plant with generation
capacity of 15 WM/hour has been capitalized.

33 Other income
Gain on foreign currency transactions - 342,634
Miscellaneous 33.1 7,645,931 6,532,936
Government grant 4,733,836 -
Gain on disposal of property, plant and equipment 5.1.5 - 1,035,674
12,379,767 7,911,244
33.1 This mainly include interest received on saving accounts maintained with banks.

34
Other expenses
Trade parties balance written-off 47,691 -
Loss on disposal of property, plant and equipment 5.1.5 2,081,725 -
Fair value loss on investment 867,924 2,871,150
Provision for Workers’ Profit Participation Fund (WPPF) 8,857,326 10,336,380
11,854,666 13,207,530

54 Jauharabad Sugar Mills Limited

 2021 2020
Note Rupees Rupees
35 Taxation
Income tax
Current year 35.1 61,619,284 55,205,499
Prior year (63,686) (11,265,005)
61,555,598 43,940,494
Deferred tax 4,982,519 (60,878,023)
66,538,117 (16,937,529)
35.1 Provision for current taxation is based on minimum tax at the rate of 1.5% of net revenue under section 113 of Income
Tax Ordinance, 2001, excess of minimum tax over tax liability shall be carry forward for next five years and adjust
against tax liability. However, the tax credit for the year 2016 has lapsed.

35.2 The numerical reconciliation between the average tax rate and the applicable tax rate has not been presented in
these financial statements, as the total income of the Company falls under section 113 of the Income Tax Ordinance,
2001, and the deferred tax asset was also recorded on unadjusted tax credit under section of 113.

35.3 The provision for current year tax represents tax on taxable income, net of tax credits. As per management’s
assessment the provision for tax made in the financial statements is sufficient. Tax assessment for the year 2020 is
finalized, a comparison of income tax provision of last three years with tax assessment is presented below:

Tax provision as Tax as per
Years per financial statements assessment
2019 42,451,685 31,186,680
2020 55,205,499 55,141,814
2021 61,619,284 -

2021 2020
Rupees Rupees
36 Earnings per share
36.1 Earnings per share - basic
Profit after taxation attributable to members Rupees 101,751,072 213,328,747
Weighted average number of ordinary shares Number 34,128,453 34,128,453
Earnings per share - basic Rupees 2.98 6.25

36.2 Earning per share - diluted
There is no dilutive effect on the basic earnings per share as the Company does not have any convertible instruments
in issue as at 30 September 2021 and 30 September 2020.

37 Remuneration of Chief Executive, Director and Executives
The aggregate amount charged in the financial statements for the year for remuneration, including all benefits, to the
Chief Executive, Directors and Executives of the Company is as follows
Directors
Executives
Chief Executive Executive Directors Non Executive Directors
2021 2020 2021 2020 2021 2020 2021 2020
Managerial remuneration 2,611,785 2,590,200 - - 2,688,000 2,367,000 14,143,704 10,933,704
Utilities - - - - - - - -
2,611,785 2,590,200 - - 2,688,000 2,367,000 14,143,704 10,933,704
No. of key Executives/
1 1 1 2 6 5 6 6
non executive

37.1 The Chief Executive does not hold any shares in the Company.
37.2 Executives are employees whose basic salaries exceed Rs. 1.2 million (2020: 1.2 million) in a financial year.

Annual Report 2021 55

38 Operating segments
38.1 These financial statements have been prepared on the basis of single reportable segment.
38.2 Revenue from sale of sugar represents 90.59 % (2020: 87.64 %) of the total revenue of the Company.
38.3 The Company sold sugar only in Pakistan (2020 : Pakistan).
38.4 Sale of sugar includes 100.00% (2020: 100.00%) that relates to customers in Pakistan.
38.5 All assets of the Company as at September 30, 2021 are located in Pakistan.

39
Financial risk management
The Company is exposed to various risks in relation to financial instruments. The Company’s financial assets and liabilities
by category are summarized in note 39.5. The main types of risks are credit risk, liquidity risk and market risk.
The Company’s risk management is conducted by the Board of Directors. The Company focuses on securing its cash flows
& minimizing its exposure to financial markets. The Company does not actively engage in the trading of financial assets
for speculative purposes. The most significant financial risks to which the company is exposed are described below:

39.1 Credit risk
Credit risk represents the risk that one party to a financial instrument will cause a financial loss for the other
party by failing to discharge an obligation. The carrying amount of financial assets represents the maximum credit
exposure. The maximum exposure to credit risk at the reporting date was as follows:
2021 2020
Rupees Rupees
Long term deposits 2,800,300 2,786,800
Trade debts 573,125 1,345,521
Loans and advances 214,563,613 69,597,556
Trade deposits and short term prepayments 8,697,401 3,102,985
Short term investments 17,686,738 17,128,849
Bank balances 68,423,355 223,512,986

Counterparties with external credit ratings

Credit risk is considered minimal since the counterparties have reasonably high credit ratings as determined by
various credit rating agencies. Due to long standing business relationships with these counterparties and considering
their strong financial standing, management does not expect non-performance by these counterparties on their
obligations to the Company. Following are the credit ratings of counterparties with external credit ratings:

Rating Rating 2021 2020

Short Term Long Term Agency Rupees Rupees
Al Baraka Bank Pakistan Limited A1 A PACRA 482,544 33,573,600
Allied Bank Limited A1+ AAA PACRA 39,380 7,492,790
Bank Alfalah Limited A1+ AA+ PACRA 439,049 165,347
Dubai Islamic Bank A1+ AA JCR-VIS 292,121 66,664
Faysal Bank Limited A1+ AA PACRA 14,213,442 110,644,907
Habib Bank Limited A1+ AAA JCR-VIS 1,846 1,816
JS Bank Limited A1+ AA- PACRA 309,445 243,334
MCB Bank Limited A1+ AAA PACRA 3,172,808 8,930,566
MCB Islamic Bank Limited A1 A PACRA 30,334,078 49,363,663
Meezan Bank Limited A1+ AA+ JCR-VIS 536,619 177,175
National Bank Of Pakistan A1+ AAA PACRA 327,082 300,335
Soneri Bank Limited A1+ AA- PACRA 396,406 10,327,012
United Bank Limited A1+ AAA JCR-VIS 304,083 1,336,893
Askari Bank Limited A1+ AA+ PACRA 10,235,901 225,901
Habib Metropolitan Bank Limited A1+ AA+ PACRA 1,492,920 662,953
Samba Bank Limited A-1 AA JCR-VIS 5,845,631 -
68,423,355 223,512,986

56 Jauharabad Sugar Mills Limited

 39.2 Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with its financial
liabilities.

The Company’s approach to manage liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company’s reputation.

39.2.1 Exposure to liquidity risk

The table below analyses the Company’s financial liabilities into relevant maturity groupings based on the
remaining period at year end.
2021
“More than
“Carrying Contractual
“Less than 1 year” 1 year but less
amount” cash flows
than 5 year”
‘----------------------------Amount in Rupees---------------------------
Long-term finances 115,634,099 119,314,681 98,566,927 20,747,754
Unclaimed dividend 1,509,621 1,509,621 1,509,621 -
Trade and other 201,123,778 201,123,778 201,123,778 -
payables
Mark-up accrued 3,680,582 3,680,582 3,680,582 -
Short term borrowings 190,166,362 190,166,362 190,166,362 -

2020
Long-term finances 222,115,908 225,170,241 77,237,410 147,932,831
Unclaimed dividend 1,156,796 1,156,796 1,156,796 -
Trade and other 230,161,245 230,161,245 230,161,245 -
payables
Mark-up accrued 3,054,333 3,054,333 3,054,333 -
Short term borrowings 198,320,645 198,320,645 198,320,645 -

The Company’s current ratio is 1.05 (2020: 1.11). The Company arranged facility from different conventional
and Islamic financial institutions to meet its working capital requirements.

39.3 Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices
will affect the Company’s income or the value of its holdings of financial instruments. The objective of market
risk management is to manage and control market risk exposures within acceptable parameters, while optimizing
return. Market risk comprises of currency risk, interest rate risk and other price risk.

39.3.1 Currency risk
Currency risk is the risk that fair values or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. Currency risk arises from sales, purchases and resulting
balances that are denominated in a currency other than functional currency. The Company’s potential
currency exposure comprises of:
- Transactional exposure in respect of non-functional currency monetary items.
- Transactional exposure in respect of non-functional currency revenues.

The potential currency exposures are discussed below:

Transactional exposure in respect of non-functional currency monetary items
Monetary items, including financial assets and liabilities, denominated in currencies other than the
functional currency of the Company are periodically restated to rupee equivalent, and the associated
gain or loss is taken to the profit and loss account. The foreign currency risk related to monetary items is
managed as part of the risk management strategy.

Annual Report 2021 57

 Transactional exposure in respect of non-functional currency revenues
Monetary items, including financial assets and liabilities, denominated in currencies other than the
functional currency of the Company are periodically restated to rupee equivalent, and the associated
gain or loss is taken to the profit and loss account. The foreign currency risk related to monetary items is
managed as part of the risk management strategy.

Exposure to currency risk

The Company’s exposure to currency risk at the reporting date was as follows:
2021 2020
USD USD
Export debtors considered good - secured - -
Exchange rates applied during the year
The following exchange rate has been applied during the year on transactions involving foreign currency.
Reporting date rate Average Rate for
the year
Buying Selling
------------------------- USD -------------------------
Exchange rate during the year 2021
on transactions involving foreign 170.40 170.9 170.65
currency
Exchange rate during the year 2020
on transactions involving foreign 155.4 156.21 155.81
currency

Sensitivity analysis
At reporting date, if the PKR had strengthened by 10% against the foreign currencies with all other variables held
constant, profit for the year would have been higher by the amount shown below, mainly as a result of net foreign
exchange gain on translation of export debtors.
2021 2020
Rupees Rupees

Effect on Profit or Loss - -

The weakening of the PKR against foreign currencies would have had an equal but opposite impact on the profit.

The sensitivity analysis prepared is not necessarily indicative of the effects on profit/(loss) for the year and
assets/ liabilities of the Company.

39.3.2 Interest rate risk

Interest rate risk is the risk that the fair values or future cash flows of financial instruments will fluctuate
due to changes in market interest rates. Significant interest rate risk exposures are primarily managed
by a mix of borrowings at variable interest rates. At the reporting date the interest rate profile of the
Company’s significant interest bearing financial instruments was as follows:
Effective interest rate Carrying amount
2021 2020 2021 2020
Percentage Percentage Rupees Rupees
Financial assets
Fixed rate instruments
Bank balances - saving accounts 3.0% to 5.5% 1.1% to 1.8% 797,169 40,036,686
Financial liabilities
Floating rate instrument
"Long term loans from banking 3% to 10.25% 10.00% to 16.60% 115,634,099 222,115,908
companies - secured"
Short term borrowings 9.25% to 10.75% 10.25% to 16.85% 190,166,362 198,320,645

58 Jauharabad Sugar Mills Limited

 Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through
profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss
account.

Cash flow sensitivity analysis for floating rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased / (decreased)
profit or (loss) for the year by the amounts shown below. This analysis assumes that all other variables,
in particular foreign currency rates, remain constant.
Profit or loss 100 bp
Incraese Decrease
------Amount in Rupees------
As at 30 September 2021
-Cash flow sensitivity-Variable (3,058,005) 3,058,005
rate financial liabilities
As at 30 September 2020
-Cash flow sensitivity-Variable (4,204,366) 4,204,366
rate financial liabilities

The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and
assets / liabilities of the Company.

Interest rate risk management

The Company manages interest rate risk through risk management strategies where significant changes
in gap position can be adjusted. The short term borrowings and loans and advances by the Company have
variable rate pricing that is mostly dependent on KIBOR as indicated in respective notes.

39.3.3 Concentration of credit risk
Concentration of credit risk exists when the changes in economic or industry factors similarly affect
groups of counterparties whose aggregate credit exposure is significant in relation to the Company’s
total credit exposure. The Company’s portfolio of financial instruments is broadly diversified and all
other transactions are entered into with credit-worthy counterparties there-by mitigating any significant
concentrations of credit risk.

39.3.4 Other price risk
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market prices (other than those arising from interest rate risk or currency risk). The
Company believes that it is not exposed to other price risk.

39.4 Capital risk management

The Board’s policy is to maintain an efficient capital base so as to maintain investor, creditor and market confidence
and to sustain the future development of its business. The Board of Directors monitor the return on capital employed,
which the Company defines as operating income divided by total capital employed. The Board of Directors also
monitor the level of dividends to ordinary shareholders.
The Company’s objectives when managing capital are:
(i) to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders, and
(ii) to provide an adequate return to shareholders.

The Company manages its capital structure in the context of economic conditions and the risk characteristics of
the underlying assets. In order to maintain or adjust the capital structure, the Company may, for example, adjust the
amount of dividends paid to shareholders, issue new shares, or sell assets to reduce debt. The Company monitors
capital on the basis of the debt-to-equity ratio - calculated as a ratio of long term debt to equity.

The gearing ratio as at 30 September were as follows:

Annual Report 2021 59

 2021 2020
Rupees Rupees
Debt 119,314,681 225,170,241
Equity 4,762,174,083 4,696,282,464
Total capital employed 4,881,488,764 4,921,452,705
Gearing ratio 2% 5%
The Company is less geared as compared to previous year.

39.5 Accounting classifications and fair values

September 30, 2021 Carrying amount Fair Value

Fair value
Fair value At
through
through amortized Total Level 1 Level 2 Level 3 Level 4
profit or
OCI cost
loss
Financial assets -------------------------------------------Amount in Rupees-----------------------------------------
Investment 17,686,738 - - 17,686,738 17,686,738 - - 17,686,738
Long term deposits - - 2,800,300 2,800,300 - - - -
Trade debts - - 573,125 573,125 - - - -
Loan and advances - - 214,563,613 214,563,613 - - - -

Trade deposit and short - - 3,600,534 3,600,534 - - - -

term prepayments

Other receivables - - 22,220,756 22,220,756 - - - -

Cash and bank balances - - 68,442,035 68,442,035 - - - -
17,686,738 - 312,200,363 329,887,101 17,686,738 - - 17,686,738
Financial liabilities
Long term finances - - 115,634,099 115,634,099 - - - -
Finance lease - - - - - - - -
Trade and other payables - - 87,447,047 87,447,047 - - - -
Unclaimed dividened - - 1,509,621 1,509,621 - - - -
Accrued mark-up - - 3,680,582 3,680,582 - - - -
Short term borrowings - - 190,166,362 190,166,362 - - - -
- - 398,437,711 398,437,711 - - - -

September 30, 2020

Financial assets
Investment 17,128,849 - 17,128,849 17,128,849 - - 17,128,849
Long term deposits - - 2,786,800 2,786,800 - - - -
Trade debts - - 1,345,521 1,345,521 - - - -
Loan and advances - - 69,597,556 69,597,556 - - - -
Trade deposit and short
- - 31,340,756 31,340,756 - - - -
term prepayments
Other receivables - - 284,818 284,818 - - - -
Cash and bank balances - - 223,833,689 223,833,689 - - - -
17,128,849 - 329,189,140 346,317,989 17,128,849 - - 17,128,849

60 Jauharabad Sugar Mills Limited

 Financial liabilities
Long term finances - - 222,115,908 222,115,908 - - - -
Liabilities against assets - - - - - - - -
subject to finance lease
Trade and other payables - - 116,550,310 116,550,310 - - - -
Unclaimed dividened - - 1,156,796 1,156,796 - - - -
Accrued mark-up - - 3,054,333 3,054,333 - - - -
Short term borrowings - - 198,320,645 198,320,645 - - - -
- - 541,197,992 541,197,992 - - - -

The aforementioned table presents assets and liabilities carried at fair value by valuation method. The different
levels have been defined as follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the asset or liability that are not based on observable market data.

2021 2020
Number Number
40 Number of employees
Average number of employees for the year
Plant 785 778
Head Office 11 11
796 789
Total number of employees at year end
Plant 657 624
Head Office 11 11
668 635

“2021” “2020”
M.Ton M.Ton
41 Plant capacity and production
Cane crushing capacity 12,500 12,500
- Line-I (Non-operational) 5,500
- Line-II (Operational) 7,000

Cane crushed 533,772 425,433

Sugar production 52,925 41,150
Recovery ratio 9.91% 9.67%

41.1 Shortage in capacity utilization is due to the fact that in current year previously non-functional mills have become
operational in the region and low yield of sugarcane crop with lesser sucrose content caused by adverse climatic
conditions.

42 Related party transactions / balances

The related parties comprise directors of the Company, key employees, provident fund trust, associated undertakings
and holding company. Details of transactions with related parties, other than those which have been specially disclosed
elsewhere in these financial statements are as follows:

Annual Report 2021 61

 Relationship and
Transaction during the year and 2021 2020
Party name percentage of
year end balances Rupees Rupees
shareholding
Loan received during the year - -
Holding company Loan repaid during the year 6,531,000 176,000
Cane Processing
holds 63.63 % (2020:
Private Limited
63.63 %) share capital Amount payable at year end 134,062,488 140,593,488
Dividend paid 21,725,885 21,725,885
Loan received during the year 430,300,000 13,250,000
Chief Executive offi-
cer of holding compa- Loan repaid during the year 425,500,000 -
Mrs. Ghazala Amjad
ny (Cane Processing Amount payable at year end 476,034,410 471,234,410
Private Limited)
Dividend paid 3,175,816 3,175,816
Employee benefit Employee benefit
Provident fund contribution 3,087,620 2,828,043
Provident Fund Trust fund
Key management
Chief Executive Remuneration paid 2,611,785 2,590,200
personnel
Immediate family
Mis. Shahida Mazhar Amount payable at year end 111,750,000 111,750,000
member of sponsor
Key management Remuneration
Executive Director 2,688,000 2,367,000
personnel paid
Non-executive Key management 2,500
Dividend paid 18,954
Director personnel

All transactions with related parties have been carried out on commercial terms and conditions.

2021 2020
Unit Rupees Rupees

43 Employees Provident Fund Trust

The following information is based on the financial statements of Provident Fund Trust.

Size of fund - total assets Rupees 39,156,907 34,577,941
Cost of investments made Rupees 26,050,000 26,050,000
Percentage of investments made Percentage 66.53% 75.34%
Fair value of investment Rupees 26,050,000 26,050,000

The breakup of fair value of investments is as follows:

2021 2020
Rupees Percentage Rupees Percentage
Defence Saving Certificates 26,050,000 66.53% 26,050,000 75.34%
26,050,000 66.53% 26,050,000 75.34%


The investments of the Provident Fund Trust are in compliance with the provision of section 218 of the Companies Act,
2017 and the rules formulated for this purpose.

44 Date of authorization for issue

These financial statements have been authorized for issue on December 28, 2021 by the Board of Directors of the Compa-
ny.

62 Jauharabad Sugar Mills Limited


45 General

45.1 Figures have been rounded off to the nearest Rupee.

45.2 Corresponding figures have been re-classified and re-arranged where necessary, for the purpose of comparison, the
effects of which are not material.

Lahore: Syed Anwar Hussain Ghias Ul Hasan Imran Ilyas

December 28, 2021 Chief Executive Officer Director Chief Financial Officer

Annual Report 2021 63

 Jauharabad Sugar Mills Limited
70
   
  
   
                     10

 
   
 
            
         
     
 28        53               
                
           125-B    11:00  2022
    AGM    
 
           
  
      
       202128  1
                2021 30  2
                244   2017    11
      
          
         2021 30  3
 1/- 10%    
     
            
     
          
            2022 30  4
   
      / 

            
          2019  28  PSX/N-92    12  
     PSX  5
 125-B      AGM  2021  28       
      6
          2021  30   

 
      13
 
  20148SRO 787(1)/2014       
   202206 
                   
   
               
          
            
          202228 202221  1
   
    202220    1-K      
         
    
 
     10%      132(2)  2017    14
               2
  7     AGM       
 
                  
          

        
   48         
    5          
  
     
  2018    145 143  2017     15
                   3
       

1                          CNIC
         16
   200026 
72  2017     72  2017 
                       4
 /                       5
          
    
      
   17
   242   2017
      6
        
               
    COVID-19 
              / 

   
    
              
  37.5            AGM a
   www.jsml.com.pk                    
   AGM       AGM 
        
 
        AGM AGM    b
           2001   7
       c
     ATL     15%      (ATL)      

      
    15%    30%     30%
  
   
 

      ATL                
         2021 30  18            ATL    
   

  www.jsml.com.pk    
    30%         
         AGM   19 
 

   (NTN)                          8
  www.jsml.com.pk
                 


       159           9
 

           
 
    47B   IV-  


           

Annual Report 2021 71

 JAUHARABAD SUGAR MILLS LIMITED
125-B, Quaid-e-Azam Industrial Estate, Kot Lakhpat, Lahore-Pakistan.

PROXY FORM

I/We

of

being a member of JAUHARABAD SUGAR MILLS LIMITED hereby appoint

Name (Folio/CDC A/C No. if Member)

of

or failing him /her

Name (Folio/CDC A/C No. if Member)

of
as my/our proxy to attend, speak and vote for and on my/our behalf at the Annual General Meeting of the Company to be
held at its Registered Office, 125-B, Quaid-e-Azam Industrial Estate, Kot Lakh Pat, Lahore, Pakistan, on Friday, January
28, 2022 at 11:00 AM and any adjournment thereof :

As witnessed given under my/our hand(s) _______ day of January, 2022.

1. Witness:

Signature :
Name : Affix Revenue
Stamp of Rs. 15/-
CNIC No. :
Address :

2. Witness: SIGNATURE OF MEMBER /

ATTORNEY
Signature :
Name :
SHARE HELD :
CNIC No. :
Address :

Folio No. CDC Account No.

Participant Account
ID No.

Notes: CNIC No.

1. Proxies, in order to be effective, must be received at the Company's Registered Office, not less than 48 hours
before the time for holding the meeting and must be duly stamped, signed and witnessed.
2. CDC Shareholders, entitled to attend, speak and vote at this meeting, must bring with them their
Computerized National Identity Cards (CNIC) /Passports in original to prove his/her identity, and in case of
Proxy, must enclose an attested copy of his/her CNIC or Passport.
3 In case of corporate entity, the Board of Directors' resolution / power of attorney with specimen signature of
the nominee should be attached with the proxy form.
Jauharabad Sugar Mills Limited
66
 AFFIX
CORRECT
POSTAGE

The Company Secretary

Jauharabad Sugar Mills Limited
125-B, Quaid-e-Azam Industrial Estate,
Kot Lakh Pat, Lahore, Pakistan.
Tel : 042 35213491

Annual Report 2021 67

 Jauharabad Sugar Mills Limited
68
Annual Report 2021 69
Annual Report 2021 65