Mirza Cost Audit Report 2009

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Mirza Sugar Mills Limited

Cost Audit Report, 2008-2009

COST AUDITORS’ REPORT, 2008-2009 MIRZA SUGAR MILLS LIMITED INDEX
Section – 1
1. 2. Corporate Information The Company & its Manufacturing Process Page # i ii

Section – 2
Cost Auditors’ Report (1) Capacity (2) Costing Accounting System (3) Production (4) Raw Material (5) Wages & Salaries (6) Stores & Spare Parts (7) Depreciation (8) Overheads (9) Royalty / Technical Aid Payment (10) Abnormal Non-Recurring Features (11) Cost of Production (12) Sales (13) Profitability (14) Cost Auditors’ Observations and Conclusions (15) Reconciliation with Financial Account (16) Cost Statements (17) Miscellaneous Statement of Capacity Utilization Statement of Stock in Trade 1 2 2 2 3 4 5 5 6 7 7 8 8 8 9 10 10 10

Section – 3
Cost Accounting Records: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Production Data Cost of Production and Sale of White Bagged Sugar Sugar Cane Produced Cost of Sugar Cane Crushed Cost of Beet Consumed Cost of Process Material Consumed Cost of Salaries, Wages & Benefits Cost of Steam / Generated Consumed Cost of Electric Power Purchased / Generated and Consumed Other Factory Overheads Administrative Expenses Selling Expenses Schedule 1 Annexures I II III IV V VI VII VIII IX X XI

*****

Section - 1
Page #

1. Corporate Information

i

2. The Company & its Manufacturing Process

ii

Mirza Sugar Mills Limited

Cost Audit Report, 2008-2009

01. CORPORATE INFORMATION
Board of Directors Chairperson & Chief Executive Dr. Mrs. Fehmida Mirza Directors Dr. Zulfiqar Ali Mirza Ms. Farida Abbasi Arshad Abid Abbasi Ms. Fareha Abid Kazi Mirza Saulat Raza Irshad Hussain Mirza Audit Committee Mirza Saulat Raza, Chairman Ms. Farida Abbasi, Member Irshad Hussain Mirza, Member Company Secretary & Chief Financial Officer Tariq Mahmood Coordinator Rizwan Ahmed Statutory Auditors Rahman Sarfaraz Rahim Iqbal Rafiq Chartered Accountants Cost Auditors SIDDIQI & COMPANY Cost & Management Accountants Legal Advisor Ghulam Qadir Zargar Registered Office 10 Floor, Portion `B’, Lakson Square, Building No. 1, Sarwar Shaheed Road, Karachi.
th

Factory Deh Chharo Tappo, Lowari shariff, District Badin, Sindh.
[i]

Mirza Sugar Mills Limited

Cost Audit Report, 2008-2009

The Company & Manufacturing Process
1) The Company: The company was incorporated as Public Limited Company in Pakistan on January 16, 1990. The company is listed on Karachi and Lahore Stock Exchanges.

2)

Capacity: Installed cane crushing capacity is 3,500 MTD.

3)

Operations: Basically the main objective of the company is to manufacture and sell White Sugar and its Byproducts.

4)

Manufacturing Process: The process consists of the following departments:i) Sugar Cane Procurement ii) Cane Cutting and Shredding iii) Milling ( Juice Extraction) iv) Purification (Addition of Lime, Bleaching Powder, Phosperic Acid) v) Clarification vi) Multiple Effect Evaporation vii) Crystallization viii) Centrifuge ix) Drying on Hoppers x) Packing (Polypropylene bags of 50 Kg each are used in packing)

5)

Clarification Process: Defication, Re-Melt and Phosphitation.

6)

Registered Office: 10th Floor, Portion `B’, Lakson Square, Building No. 1, Sarwar Shaheed Road, Karachi.

7)

Factory Location: The company’s sugar manufacturing plant is located at Deh Chharo (Lowari Sharif), District Badin, Sindh.

[ ii ]

Cost Auditors’ Report Section - 2
Cost Auditors’ Report (1) Capacity (2) Cost Accounting System (3) Production (4) Raw Material (5) Salaries, Wages & Benefits (6) Stores & Spare Parts (7) Depreciation (8) Overheads (9) Royalty / Technical Aid Payment (10) Abnormal Non-Recurring Features (11) Cost of Production (12) Sales (13) Profitability (14) Cost Auditors’ Observations and Conclusions (15) Reconciliation with Financial Account (16) Cost Statements (17) Miscellaneous Statement of Capacity Utilization Statement of Stock in Trade 1 2 2 2 3 4 5 5 6 7 7 8 8 8 9 10 10 10

SIDDIQI & COMPANY
Cost & Management Accountants

COST AUDITORS’ REPORT
We, SIDDIQI & COMPANY, Cost & Management Accountants having been appointed to conduct an audit of cost accounts of MIRZA SUGAR MILLS LIMITED, have examined the books of account and the statements prescribed under clause (e) of sub-section (1) of section 230 of the Companies Ordinance, 1984 and the other relevant record for the year ended September 30, 2009, and report that1. 2. We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of this audit. In our opinion: (a) proper cost accounting records as required by clause (e) of sub-section (1) of section 230 of the Companies Ordinance, 1984 (XLVII of 1984), and as required by these rules, have been kept by the company; (b) proper returns, statements and schedules for the purpose of audit of cost accounts relating to branches were not required as the Company has no branches in or outside Pakistan; (c) the said books and records give the information required by the rules in the manner so required; and 3. in our opinion and, subject to best of our information(a) The annexed statement of capacity utilization and stock-in-trade are in agreement with the books of account of the company and exhibit true and fair view of the Company’s affairs; and (b) Cost accounting records have been properly kept so as to give a true and fair view of the cost of production, processing, manufacturing and marketing of the under mentioned products of the company, namely, (i) Main Product – White Sugar

(ii) By Products – – Molasses Baggasse

The matters contained in the ANNEXED Forms are part of this report.

SIDDIQI & COMPANY
Cost & Management Accountants Karachi: 23 JAN 2010

Suite # 147, First Floor, Haroon Shopping Emporium, Sector 15-A/1, North Karachi, Karachi-75850. (PAKISTAN) Phones: (92-21) 36971814, 36931527, Fax: 36931527, e-mail <[email protected]>

Mirza Sugar Mills Limited

Cost Audit Report, 2008-2009

1.

CAPACITY (Tonne)
Licensed / Installed Capacity Utilised Capacity 176,738 Qty. in Tonne % of Installed Capacity 28%

(a) Cane crushing

626,400

(b) The company is not engaged in any other activity except manufacturing of white sugar and its by products.

2. –

COST ACCOUNTING SYSTEM Manufacturing of sugar is a continuous process. The company, however, uses financial and cost integrated accounting system which shows overall cost of production. There is however the need to develop process cost accounting system so as to be able to develop cost data at each stage of production process. The company is operating a computer based inhouse software, which generates cost statements relating to manufacturing of sugar.



3. (a)

PRODUCTION
Qty. in Tonne Installed Capacity Production YEARS 2009 2008 18,000 31,090 % of Installed



Main Product: – White Sugar Bagged

2009 62,640

2008 62,640

2009 29

2008 50



By Product: – – – Molasses Baggasse V. Filter Cake
31,320 219,240 18,792 31,320 219,240 18,792 8,198 56,659 5,302 17,520 113,124 10,042 26 26 28 Qty. in Tonne 56 52 53

Standard Recovery:
– – – Molasses Baggasse V.Filter Cake 5% 35% 3%

(b) Non-availability of sugar cane in sufficent quantity was the limiting factor due to which year ended with low
production.

(c) There was no addition to the production capacity during the year under review or in the last two years.
[2]

Mirza Sugar Mills Limited

Cost Audit Report, 2008-2009

4.

RAW MATERIAL

(a) Major Raw Materials Consumed
2009 Rupees in '000 2008 Rupees in '000

Quantity (Tonne)

Rate per Ton

Quantity (Tonne)

Rate per Ton

Sugar Cane (See Annexure - III)

176,738

478,457

2,707

334,735

544,276

1,626

Process Material (See Annexure - V)

-

5,286

-

-

9,001

-

(b) Major Raw Materials consumption per unit of production compared with standard requirements.
ACTUAL 2008 Tonne

*Standard Tonne

2009 Tonne

2007 Tonne

Sugar Cane

10.00

9.82

10.77

10.46

* Standard: 10.00 tonne sugar cane = 1 tonne sugar

(c) Explanation of Variances – Sugar cane yield depends upon the quality of sugar cane; and the quality varies with the periods / days of maturity of the crop. Higher maturity of crop means higher quality and higher yield.

(d) Method of Accounting – Sugar cane is purchased from local growers on the basic price fixed by Government / negotiated price and it is crushed immediately to extract the juice by processing. Other chemicals are purchased from the market after due approval of competent authority. The company is maintaining raw material perpetual inventory records.



[3]

Mirza Sugar Mills Limited
5. SALARIES, WAGES & BENEFITS (a) Total salaries, wages and benefits paid for all categories of employees

Cost Audit Report, 2008-2009

Increase / Decrease 2009 Rs. in 000 i) Direct labour cost on production 26,409 2,186 24,067 – 52,662 2,840 – ii) Indirect employees cost on production iii) Employees cost on administration iv) Employees cost on selling & distribution v) Total Employees cost ( i to iv ) vi) Bonus to workers already included above vii) Other employees cost – 2008 Rs. in 000 26,344 2,087 21,863 – 50,294 5,166 – 2007 Rs. in 000 20,062 1,852 16,039 – 37,953 2,159 – As compared to 2008 Rs. in 000 65 99 2,204 – 2,368 (2,326) – – – 5 (45) – % 0 5 10 As compared to 2007 Rs. in 000 6,347 334 8,028 – 14,709 681 – – 39 32 % 32 18 50

Salaries and wages increased mainly due to annual increments.

(b) Salaries and perquisites of chief executive and directors
Increase / Decrease No. of Persons – – Chief Executive Directors 1 2 2009 Rs. in 000 2,662 238 2,900 2008 Rs. in 000 2,673 243 2,916 2007 Rs. in 000 243 243 As compared to 2008 Rs. in 000 (11) (5) (16) % (0) (2) (1) As compared to 2007 Rs. in 000 2,662 (5) 2,657 % 100 (2) 1,093

– The chief executive and directors are entitled to free use of company maintained cars. Chief executive is also provided telephone and utility facilities.

(c) Total men-days of direct labour
209 men x 59 = 12,331 (worked) 209 men x 89 = 18,601 (available)

Worked

Available

%Worked

12,331

18,601

66

(d) Average number of production workers employed

2009 209

2008 215

Increase/(Decrease) % (2.79)

(e) Direct labour cost per ton
2009 Production of white sugar (Tonne) Direct Labour (Rs. in '000) Direct Labour Cost (Rs. per Tonne) 18,000 26,409 1,467 2008 31,090 26,344 847 2007 20,132 22,160 1,101

Increase / Decrease As compared to 2008 % (13,090) 65 620 (42) 0 73 (2,132) 4,249 366 As compared to 2007 % (11) 19 33

(f) Brief explanations for variances
– Increase in per tonne direct labour cost was due to lower volume of production as compared to last two years.

(g) Comments on Incentives Scheme ( Staff retirement benefits )
– The company contributes to an approved provident fund scheme.

[4]

Mirza Sugar Mills Limited
6. STORES AND SPARE PARTS

Cost Audit Report, 2008-2009

(a) The expenditure per unit of output on stores, etc.
2009 (i) Total amount of expenditure (Rs. in '000) 5,286 18,000 294 2008 9,001 31,090 290 2007 4,733 20,132 235

(ii) Production of white sugar (Tonne) (iii) Amount per tonne of white sugar produced (Rs. per Tonne) –

Insignificant variance in per tone stores & spares as compared to last year.

(b) System of stores


The cost is determined on moving average basis having bin cards for each type of material in stores.

(c) Proportion of closing inventory of stores representing items which have not moved for over twenty four months.
– Slow moving items are stated to value Rs. 2.460 million as per financial accounts.

7.

DEPRECIATION

(a) Method of depreciation
– Depreciation is charged to income applying the reducing balance method. Depreciation on additions of fixed assets is charged from the quarter in which the assets are put to use while no depreciation is charged in the quarter in which the assets are dispossed off. Gains or losses on disposal of assets, if any, are recognized as and when incurred.

(b) Basis of allocation of depreciation on common assets to the different departments.
– Depreciation on common assets is allocated as under:
2008-2009 Rs.in'000 % 2007-2008 Rs.in'000 %

(i) (ii)

Cost of Sales Admin. Expenses

20,558 996 21,554

95 5 100

21,887 1,059 22,946

95 5 100

(c) Basis of charging depreciation to cost of products –
The depreciation is allocated to cost of production on the value of assets employed.

[5]

Mirza Sugar Mills Limited
8.
(a)

Cost Audit Report, 2008-2009

OVERHEADS
Total amounts of the overheads (i) Factory (ii) Administration (iii) Selling & distribution (iv) Financial

2009 Rs.in '000 5,523 35,374 835 6,822 48,554

2008 Rs.in '000 5,931 32,757 2,360 17,451 58,499

2007 Rs.in '000 5,292 24,342 409 21,246 51,289

Increase / Decrease (i) Factory Overheads Rent, rate & taxes Printing & stationery Postage & telegram Telephone, fax & telex Travelling & conveyance Fees & subscription etc. Entertainment Vehicle running expenses Insurance Freight & handling charges Removal of baggase, mud & boilder as Other expenses 2009 Rs.in '000 19 215 12 252 259 200 82 1,290 60 1,311 1,796 27 5,523 2008 Rs. in '000 14 218 15 365 235 120 75 1,516 5 1,109 2,224 35 5,931 2007 Rs. in '000 289 28 305 362 101 122 1,611 816 1,632 26 5,292 As compared to 2008 Rs. in 000 5 (3) (3) (113) 24 80 7 (226) 55 202 (428) (8) (408) % 36 (1) (20) (31) 10 67 9 (15) 1,100 18 (19) (23) (7) As compared to 2007 Rs. in 000 19 (74) (16) (53) (103) 99 (40) (321) 60 495 164 1 231 % (26) (57) (17) (28) 98 (33) (20) 61 10 4 4

– There was no significant variance in factory overheads as compared to last year. Increase / Decrease (ii) Administration Overheads Salaries, wages & benefits Rent, rate & taxes Insurance Gas & electricity Printing & stationery Postage & telegram Telephone, fax & telex Repair & maintenance Travelling & conveyance Subscriptions, books & periodicals Entertainment Legal & professional expenses Auditors remuneration Vehicle running expenses Charity & donation Depreciation Others Electricity for staff colony 2009 Rs.in '000 24,067 150 225 61 324 20 466 2,128 520 670 160 570 546 2,623 39 996 1,077 732 35,374 2008 Rs. in '000 21,863 140 107 40 339 25 566 1,414 563 567 134 1,052 413 2,275 29 1,059 1,605 566 32,757 2007 Rs. in '000 16,147 152 271 344 229 53 439 725 323 905 78 519 357 1,118 105 786 1,526 265 24,342 As compared to 2008 Rs. in 000 2,204 10 118 21 (15) (5) (100) 714 (43) 103 26 (482) 133 348 10 (63) (528) 166 2,617 % 10 7 110 53 (4) (20) (18) 50 (8) 18 19 (46) 32 15 34 (6) (33) 29 8 As compared to 2007 Rs. in 000 7,920 (2) (46) (283) 95 (33) 27 1,403 197 (235) 82 51 189 1,505 (66) 210 (449) 467 11,032 % 49 (1) (17) (82) 41 (62) 6 194 61 (26) 105 10 53 135 (63) 27 (29) 176 45

– There was increase in salaries, wages & benefits, repair & maintenance and vehicle running expenses as comapred to last two years.

[6]

Mirza Sugar Mills Limited

Cost Audit Report, 2008-2009

Increase / Decrease 2009 (iii) Selling Overheads Freight outwards Staking / restaking Loading / unloading Advertisements Rs. in '000 17 270 487 61 835 2008 Rs. in '000 1,607 146 572 35 2,360 2007 Rs. in '000 76 333 409 As compared to 2008 Rs. in 000 (1,590) 124 (85) 26 (1,525) % (99) 85 (15) 100 (65) As compared to 2007 Rs. in 000 17 194 154 61 426 % 100 255 46 100 104

– There was decrease in selling overheads on account of freight, & loading & unloading expenses.

Increase / Decrease 2009 (iv) Financial Expenses Interest on long term financing interest on WPPF Bank & other charges Rs. in '000 5,371 234 1,217 6,822 2008 Rs. in '000 16,197 1,254 17,451 2007 Rs. in '000 20,305 941 21,246 As compared to 2008 Rs. in 000 (10,826) 234 (37) (10,629) % (67) 100 (3) (61) As compared to 2007 Rs. in 000 (14,934) 234 276 (14,424) % (74) 100 29 (68)

– There was decrease in financial cost due to repayments of loan as compared to last year.

(b) –

Brief explanations for variance Comments on variances have already been given under the respective heads of accounts as shown above.

(c) –

Basis of allocation of overheads The allocation was made on activity based on %age basis.

(d)

Cost of Packing
2009 Rs. in'000 Packing Material (empty polypropylene bags) 4,539 8,475 5,182 (3,936) 2008 Rs. in '000 2007 Rs. in '000 Rs. in 000

Increase / Decrease As compared to 2008 % (46) As compared to 2007 Rs. in 000 (643) % (12)

– There was decrease in packing material cost due to decrease in production volume as compared to last two years.

9.

ROYALTY / TECHNICAL AID PAYMENTS
= NOT APPLICABLE =

10. ABNORMAL NON-RECURRING FEATURES
(a) Features affecting production = NONE = (b) Special expenses = NONE =

[7]

Mirza Sugar Mills Limited
11. COST OF PRODUCTION
White Sugar Production (Tonne)
2009 18,000 2009 Rs.in '000 Rs.PerTon 29,091

Cost Audit Report, 2008-2009

2008 31,090 2008 Rs. in '000 559,672 Increase / (Decrease) % 62

Rs.PerTon Rs.PerTon 18,002 11,090

Cost of Production (See Annexure - I)

523,642



Per tonne cost of production increased mainly due to increase in sugar cane prices, cane subsidy and quality premium.

12. SALES
(a) Net Sales Realization - White Sugar Sales (Tonne)
2009 18,108 2009 2008 28,945 2008 Rs. in '000 649,384 (105,131) (105,131) 544,253 Increase / (Decrease) % 67 31 #DIV/0! 31 74

Gross sales - White Sugar Less: Sales tax & excise duty Brokerage & commission Net Sales –

Rs.in '000 680,240 (85,832) (558) (86,390) 593,850

Rs.PerTon 37,566 (4,740) (31) (4,771) 32,795

Rs.PerTon Rs.PerTon 22,435 15,131 (3,632) (3,632) 18,803 (1,108) (31) (1,139) 13,992

The per tonne selling price increased as compared to last year.

(b) Export Sales – There was no export sales during the year under review.

13. PROFITABILITY
White Sugar Sales (Tonne)
2009 18,108 2009 Rs.in '000 Rs.PerTon 32,795 29,091 27,773 5,022 2008 28,945 2008 Rs. in '000 544,253 559,672 (38,894) 520,778 23,475 Increase / (Decrease) % 74 62 54 519

Rs.PerTon Rs.PerTon 18,803 18,002 17,992 811 13,992 11,090 9,781 4,211

Net sales Cost of production Inv. Adjustment (Finished goods) Cost of goods sold (Annexure-1) Gross profit / (loss) Less: Selling expenses Admin. Expenses Financial charges Other expenses (WWF, WPPF & Others) Other income Profit / (loss) before tax –

593,850 523,642 (20,734) 502,908 90,942

835 35,374 6,822 21,170 (140,055) (75,854) 166,796

46 1,953 377 1,169 (7,734) (4,189) 9,211

2,360 32,757 17,451 1,670 (62,490) (8,251) 31,726

82 1,132 603 58 (2,159) (285) 1,096

(35) 822 (226) 1,111 (5,576) (3,904) 8,115

(43) 73 (38) 100 (258) 1,369 (740)

The company has improved its profitability in the current year due to increase in selling price and secondly prior year's adjustment taken as other income.

[8]

Mirza Sugar Mills Limited 14. COST AUDITORS' OBSERVATIONS AND CONCLUSIONS

Cost Audit Report, 2008-2009

(a) Matters which appear to him to be clearly wrong in principle or apparently unjustifiable. – No such matters appear to have been found so far except the company had the accumulated loss of Rs. 777.157 million as at September 30, 2009 as against Rs. 939.241 million of the previous year; and its current liabilities have exceeded to current assets by Rs. 321.535 million as of the same date. The equity has become negative by Rs. 636.157 million at the close of the year under review.

(b) Cases where the company funds have been used in a negligent or inefficient manner. = NONE =

(c) Factors which could have been controlled but have not been done resulting in increase in the cost of production. – Availability of sugar cane remains the limiting factor in production which is beyond the control of management.

(d) (i) –

The Adequacy or otherwise of Budgetary Control System, if any, in vogue in the company. The company prepares annual budget for planning purpose.

(ii) The scope and performance of Internal Audit, if any. – The company has constituted an internal audit committee.

(e) Suggestions for improvements in performance. (i) – rectification of general imbalance in production facilities The mill is running smoothly with the existing facilities.

(ii) fuller utilisation of installed capacity – Fuller utilisation of installed capacity rests on availability of sufficient quantity of sugar cane.

(iii) Comments on areas offering scope for (a) Cost reduction – Cost reduction may be achieved by operating the plant at maximum capacity to achieve savings in overhead cost.

(b) Increased productivity – Same observation as at para (ii) item 14(e) above. [9]

Mirza Sugar Mills Limited
(c) Key limiting factors causing production bottle necks –

Cost Audit Report, 2008-2009

Non-availability of sugar cane in sufficient quantity is limiting factor in the production.

(d) Improved inventory policies – Present inventory policies are satisfactory.

(e) Energy conservancy – Electricity power is self generated. Bagasse is the cheapest source of fuel, which is being used to the maximum extent.

(iv) State of technology, whether modern or obsolete. – Modern technology having defecation, melt and phosphitation process.

(v) Plant, whether new or second hand when installed. – The plant was new when installed after the incorporation of the company in 1990. It has completed approxmiately nineteen years of its useful life.

15. RECONCILIATIONS WITH FINANCIAL STATEMENTS After the auditor appointed under section 252 of Companies Ordinance, 1984, submits his report, the cost auditor shall submit a supplementary report on reconciliation with financial accounts, to the directors before the date fixed for holding the annual general meeting of the company. – Reconciliation statement of cost of sales with audited financial statements for the year ended September 30, 2009 is enlcosed herewith.

16. COST STATEMENTS – Copies of all cost statements on the formats prescribed by Securities and Exchange Commission of Pakistan under clause (e) of sub-section (1) of section 230 of the Companies Ordinance, 1984, duly authenticated by the Chief Executive and Chief Financial Officer of the company, and verified by us are appended to the report.

17. MISCELLANEOUS – Figures have been rounded off to nearest thousand and rupee one. Previous year's figures have been rearranged and regrouped where necessary to facilitate comparison.

SIDDIQI & COMPANY
Cost & Management Accountants
Karachi: 23 JAN 2010 [ 10 ]

Mirza Sugar Mills Limited

Cost Audit Report, 2008-2009

Reconciliation of Cost of Sales with Audited Financial Accounts
For the year ended September 30, 2009

2008-2009 Rs. in '000

2007-2008 Rs. in '000

COST OF SALES

Cost of sales (as per financial accounts)

556,161

601,107

Less: – Realizable value of by products as shown below: – Molasses – Admin. expenses relating to cost of sales 55,607 (2,354) 53,253 82,959 (2,630) 80,329

Cost of sales (as per cost accounts) – Annexure-I

502,908

520,778

MIRZA SUGAR MILLS LIMITED
10th Floor, Portion `B', Lakson Square, Building No. 1, Sarwar Shaheed Road, Karachi, (Pakistan).

STATEMENT OF CAPACITY UTILIZATION
under Rule 4(1)(a) of Companies (Audit of Cost Accounts), Rule 1998 As at September 30, 2009 as compared with September 30, 2008

CANE CRUSHING CAPACITY
Licensed and Installed Capacity No. of Days Tons Per Day Crushing Tons No. of Days Actual Capacity Utilization Tons Per Day Crushing Tons Capacity Utilization %

Season / Year

Year 2008-2009

180

3,500

626,400

59

2,996

176,738

28%

Year 2007-2008

180

3,500

626,400

110

3,043

334,735

53%

REASONS FOR SHORTFALL: – The actual production is lower than installed capacity on account of short availability of sugar cane during the year.

Director

Director

Chief Financial Officer

Karachi: 23 JAN 2010

MIRZA SUGAR MILLS LIMITED
10th Floor, Portion `B', Lakson Square, Building No. 1, Sarwar Shaheed Road, Karachi, (Pakistan).

STATEMENT OF STOCK IN TRADE
under Rule 4(1)(b) of Companies (Audit of Cost Accounts), Rule 1998 As at September 30, 2009 as compared with September 30, 2008

Qty in Tonne Rupees in '000 Current Year 2008-2009 Qty. in Tonne Rs. in '000 Finished Goods – White Sugar (Tonne) 2,038 65,590 2,146 44,856 Previous Year 2007-2008 Qty. in Tonne Rs. in '000

Notes:01. In terms of clause 3(2) of Companies (Audit of Cost Audit) Rules, 1998 (SRO:846/(1)/98 dt. July 24, 1998, the Cost Auditor was appointed by the directors with the prior approval of Securities & Exchange Commission of Pakistan within sixty days of the close of financial year of the company.

02. In view of the above mentioned constraints appointing the Cost Auditors after the close of the financial year; they were not present on the date of physical stock taking as of the close of the financial year. Under the situation, the physical stock taking carried out by the management and witnessed and certified by the statutory auditors as of September 30, 2009 was relied upon for the purpose of the above metnioned statement of stock in trade (under clause (4)(1)(b) of Companies (Audit of Cost Accounts) Rules, 1998.

Director

Director

Chief Financial Officer

Karachi: 23 JAN 2010

Section - 3
Cost Accounting Records
1. Production Data Schedule 1 Annexures 2. 3. 4. 5. 6. 7. 8. 9. Cost of Production and Sale of White Bagged Sugar Sugar Cane Produced Cost of Sugar Cane Crushed Cost of Beet Consumed Cost of Process Material Consumed Cost of Salaries, Wages & Benefits Cost of Steam / Generated Consumed Cost of Electric Power Purchased / Generated and Consumed I II III IV V VI VII VIII IX X XI

10. Other Factory Overheads 11. Administrative Expenses 12. Selling Expenses

MIRZA SUGAR MILLS LIMITED
PRODUCTION DATA
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Schedule-I
S.# 1. Particulars (a) Cane Crushed: Date Started Date Finished Duration of run days Total No. of days of actual crushing Total No. of hours in duration Total No. of hours of actual crushing Total No. of hours lost Total cane milled (Tonne) Converted Maunds Total mixed juice obtained (Tonne) (b) Gur Melted: 2. Juice & Added Water: Average mixed juice % cane Average water added % cane Sugar Made: Total Sugar bagged of all grade (100) kg. Total Sugar bagged of all grade (50) kg. Sugar bagged (Tonne) Sugar in Process (Tonne) Molasses Extracted: Total Molasses sent out (Tonne) Molasses in Process (Tonne) Recovery Percent: Average recovery of Marketing white sugar % cane Average production of final molasses % cane By Products: Baggasses % cane - calculated (Tonne) V.F. Cake % cane (Tonne) Clarification Process : (Specify) Defecation, Re-Melt and Phosphitation 2008-2009 2007-2008

15-12-2008 13-03-2009 89 59 2,120 1,417 702 176,738 4,418,450 183,513 –

19-11-2007 14-04-2008 148 110 3,534 2,645 888 334,735 8,368,386 337,834 –

103.833 35.891

100.926 34.721

3.

– 360,000 18,000 26

– 621,800 31,090 34

4.

8,198 8

17,520 10

5.

10.180 4.638

9.280 5.230

6.

32.058 3.000

33.795 3.000

7.

Director
Karachi: 23 JAN 2010

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
COST OF PRODUCTION AND SALE OF SUGAR
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-I
Quantitative Data- Bagged Sugar Opening Stock (M.Tons) Production (M.Tons) Closing Stock (M.Tons) Sales (M.Tons) Current Year 2,146 18,000 20,146 2,038 18,108 Current Year 2008-2009 Cost Rs. in '000 Per Ton 478,457 5,180 21,490 3,342 19,700 5,399 11,461 3,634 20,558 5,489 574,710 574,710 (55,607) 519,103 4,539 523,642 523,642 44,856 (65,590) 502,908 35,374 835 6,822 545,939 26,581 288 1,194 186 1,094 300 637 202 1,142 305 31,928 31,928 (3,089) 28,839 252 29,091 29,091 27,773 1,953 46 377 30,149 Previous Year 1 31,090 31,091 2,146 28,945 Previous Year 2007-2008 Cost Rs. in '000 Per Ton 544,276 8,821 21,647 1,996 11,308 4,705 8,861 3,514 21,887 5,895 632,910 1,246 634,156 (82,959) 551,197 8,475 559,672 559,672 5,962 (44,856) 520,778 32,757 2,360 17,451 573,346 17,506 284 696 64 364 151 285 113 704 190 20,357 20,397 (2,668) 17,729 273 18,002 18,002 17,992 1,132 82 603 19,808

S.#

Particulars

1

2 3 4 5 6 7 8 9 10 11 12 13 14 15

16 17 18 19 20 21 22 23 24 25 26 27

Raw Materials: (a) Sugar Cane (Annexure-III) (b) Beet (Annexure-IV) (c) Gur (d) Raw Sugar (e) Process Material (Annexure-V) Salaries / wages benefits (Annexure-VI) Consumable Stores Repair & Maintenance Utilities: Steam (Annexure-VII) Electric Power (Annexure-VIII) Water & Gas Insurance Depreciation Other Factory Overheads (Annexure-IX) Total Cost Add: Opening Stock of W.I.P Less: Closing Stock of W.I.P Total Cost of goods Manufactured Less: Realisable Value of By-Products: Molasses Bagasse Net Cost of goods Manufactured Add: Packing Material & Handling Net Cost of Bagged Sugar Add: Excise Duty/ Sales Tax Total Cost of Bagged Sugar Add: Opening Stock of Sugar Less: Closing Stock of Sugar Cost of Sales Administrative Expenses(Annexure-X) Selling & Distribution Expenses (Annexure-XI) Financial Expenses Other Charges Total Cost to Make & Sale

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING COST OF SUGAR CANE PRODUCED
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-II
S.# Particulars 2008-2009 Qty. in Rs. Tons in '000 2007-2008 Qty. in Rs. Tons in '000

1.

Seeds and Other Inputs Seed Fertilizers, herbicides etc. Insecticides Abiana / Water Charges Total Cost of Inputs

2.

Labour Land preparation Plantation Maintenance of cane crop / ratoons Operation of tractors Harvesting Total Labour Cost

3.

Other Cost Fuel for tractors operation Maintenance and over haul of tractors Insurance Interest expenses Depreciation of equipments Rent of agriculture equipments (if any) Total other costs

Total Cost of own production (1 + 2 + 3) Sales value at controlled price Profit / Loss on own production

Notes: 1. 2. This Annexure will be prepared by those enterprises which cultivate sugarcane on their own farms. Similar Annexure will be prepared by those enterprises which cultivate beet on their own farms.

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING COST OF SUGAR CANE CRUSHED
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-III
Current Year 2008-2009 Rate Rs. in '000 M. Tons 2,025 357,895 Previous Year 2007-2008 Qty Rate Rs. in '000 M. Tons M. Tons 334,735 Nil Nil 2,025 25 185 4 357,895 4,428 32,696 699 334,735 334,735 1,584 3 530,124 994 1,584 530,124

S.#

Particulars

Qty M. Tons 176,738 Nil Nil 176,738 176,738 176,738 176,738

1

Sugar cane purchased at Govt rate Sugar cane produced from own farm Less: Loss in transit Sugar cane received at factory gate

2 3 4 5 (a) (b) (c) (d) 6 (a) (b) (c) (c) (e) 7 (a) (b) (c) 8 (a) (b) (c) (d)

Commission / Cane subsidy Quality premium Loading / unloading charges Cane development expenses: Salaries & wages (Annex-VI) Sugar cane development & procurement Supply staff & transportation expenses Other expenditure Taxes & levies: Cane cess / purchase tax Market committee fee Road cess Octroi Other levies Transportation charges: Delivery expenses Transport subsidy Others Expenditure at cane collection centers: Salaries & wages Stores Repair & maintenance Others – Sector office rent – Sector office expenses

176,738 176,738 -

28 0

4,919 67 -

334,735 334,735 -

14 0

4,697 20 -

176,738 -

6 -

1,105 -

334,735 -

6 -

2,092 -

176,738 -

431 -

76,093 -

334,735 -

18 -

6,192 -

-

-

-

-

-

-

176,738 176,738 176,738

1 3 2,707

101 454 478,457

334,735 334,735 334,735

0 0 1,626

101 56 544,276

9

Total Cost of Cane Purchased

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING COST OF BEET CONSUMED
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-IV
S. # Particulars Qty. in Tons 2008-2009 Cost Per Rs. Ton in '000 Qty. in Tons 2007-2008 Cost Per Rs. Ton in '000

1. Total beet purhcased at Govt. fixed rate Less : Loss in transit Beet received at factory gate 2. Commission paid 3. Loading / Unloading 4. Beet development expenses a) Salaries & Wages of Supply & Development Staff b) Sugar Cane Development Research c) Supply Staff & transportation expenses d) Other expenditure 5. Taxes & Levies (if any): a) Purchase Tax b) Market Committee Fee c) Road Cess d) Freight handling and Octroi e) Other levies 7. Transportation Charges: a) Delivery expenses / travelling from purchases centre to mill gate b) Transport subsidy c) Others 8. Other Expenditure at Beet Collection Centers: a) Salaries and Wages b) Stores c) Repairs & Maintenance d) Sector Office Rent e) Sector Office expenses 9. Total Cost of 'BEET' transferred to production processe (Annexure-I)

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING COST OF PROCESS MATERIAL CONSUMED
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-V
S.# Particulars Current Year 2008-2009 Rs. in '000 Cost Per Ton 18,000 506 185 682 82 98 385 951 127 77 4 7 2 1 1 2 384 1,471 321 TOTAL 5,286 28.11 10.28 37.89 4.56 5.44 21.39 52.83 7.06 4.28 0.22 0.39 0.11 0.06 0.06 0.11 21.33 81.72 17.83 293.67 Previous Year 2007-2008 Rs. in '000 Cost Per Ton 31,090 862 315 1,161 140 167 656 1,619 216 131 7 12 3 2 2 3 654 2,504 547 9,001 27.73 10.13 37.34 4.50 5.37 21.10 52.07 6.95 4.21 0.23 0.39 0.10 0.06 0.06 0.10 21.04 80.54 17.59 289.51

Sugar Produced (M.Tons) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Unslaked lime Polyelectrolyte Talofloc Talofloat Soda ash Caustic soda Phosphoric acid Bleaching powder Sewing thread Common salt Formaline Sulphur Filter acid Anti foam Filter cloth Laboratory chemicals Lubricants and grease Other (specify)

2008-2009 ALLOCATED TO: a) b) c) d) e) f) Steam Generation (Annex-VII) Electric Generation (Annex-VIII) Raw Material - Cane (Annex-III) Admin. expenses (Annex-X) Selling & distribution expenes (Annex-XI) Balance to Production Process (Annex-I) TOTAL 5,180 5,286 Rs. in '000 53 53 % 1% 1% 98% 100%

2007-2008 Rs. in '000 90 90 8,821 9,001 % 1% 1% 98% 100%

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING COST OF SALARIES,WAGES & BENEFITS
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-VI
Current Year 2008-2009 Rs. in '000 Total Sugar Produced (M. Tons) COST 1 (i) (ii) 2 (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Salaries / Wages Officers, permanent, daily wages & contract staff Bonuses Benefits Medical expenses Canteen expenses Welfare, Recreation Transport and travelling Education cess Group insurance / workmen Provident fund (employers' contribution) Gratuity / pension Other benefits: – EOBI – Social security – Others TOTAL 804 636 52,662 45 35 2,926 918 583 50,294 30 19 1,618 600 867 65 13 442 1,069 6 1 25 59 0 33 48 4 564 788 42 23 506 968 26 1 16 31 1 18 25 1 45,320 2,840 2,518 158 40,710 5,166 1,309 166 18,000 Cost Per Ton Previous Year 2007-2008 Rs. in '000 31,090 Cost Per Ton

S.#

Particulars

ALLOCATED TO: a) b) c) d) e) f) Electricity Generation (Annex-VIII) Steam Generation (Annex-VII) Raw Material - Cane (Annex-III) Admin Expenses (Annex-X) Selling & distribution expenses (Annex-XI) Balance to production Process (Annex-I) TOTAL

2008-2009 Rs. in '000 1,870 316 4,919 24,067 21,490 52,662

2007-2008 Rs. in '000 1,785 302 4,697 21,863 21,647 50,294

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING COST OF STEAM GENERATED / CONSUMED
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-VII
S.# Particulars Unit Current Year 2008-2009 Unit Previous Year 2007-2008

Type of Steam Boiler used 1 2 3 4 No. of days worked Installed Capacity (Steam in Tons Utilised Capacity (Steam in Tons Production: a) High Pressure Steam b) Medium Pressue Steam c) Low Pressure Steam d) Less: Transit losses e) TOTAL Percentage of Capacity Utilization

Bagasse Fired Water Tube Boiler Tons Tons 89 days 120 tons / hour 52 tons / hour

Bagasse Fired Water Tube Boiler Tons Tons 148 days 120 tons / hour 64 tons / hour

Medium Pressure Steam Tons Tons Tons 111,786 5,589 106,197 43.33% Current Year 2008-2009 Rate/ Qty. Unit Rs. in '000 111,786 0.09 10

Medium Pressure Steam 226,376 11,318 215,058 53.33% Previous Year 2007-2008 Rate/ Qty. Unit Rs. in '000 226,376 0.04 8

5

S.# 1 2

Description Water Charges Fuels: (a) Bagasse: (i) Own (ii) Purchased (b) Pith (c) Coal (d) Furnance oil (e) Fire wood (f) Gas (g) Other fuels, (if any) Quantity of waste heat from the plant, if any Consumable stores (Annex-V) Direct salaries, wages & benefits (Annex-VI) Repair & Maintenance Other expenses (Annex-IX) Insurance Depreciation Total cost of steam raised Less: Out side sale Total cost of steam for self consumption Add: Cost of steam purchased Total cost of steam consumed

3 4 5 6 7 8 9 10

11

111,786 111,786 111,786 111,786 111,786 111,786 111,786 111,786 111,786 111,786 111,786

0.29 1.48 2.93 1.49 0.47 2.83 67.01 0.07 76.66 76.66 76.66

32 165 327 167 53 316 7,491 8 8,569 8,569 8,569 2008-2009 Rs. in '000 5,399 3,171 8,569

226,376 226,376 226,376 226,376 226,376 226,376 226,376 226,376 226,376 226,376

1.45 1.54 0.57 0.40 1.33 27.62 0.04 32.99 32.99 32.99

328 349 130 90 302 6,253 9 7,469 7,469 7,469 2007-2008 Rs. in '000 4,705 2,763 7,469

ALLOCATED TO: i) White bagged sugar (Annex-I) ii) Electric power house (Annex-VIII) ii) Others: a) Staff Colony b) Office building etc. TOTAL

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING COST OF ELECTRIC POWER PURCHASED/GENERATED & CONSUMED
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-VIII
S.# 1 2 3 4 5 6 7 8 Particulars Installed Capacity (KWH) / Hours No. of Units generated(KWH) from steam No. of Units generated(KWH) from Diesel No. of Units Purchases (KWH) TOTAL Consumption in power house including losses Net units consumed Percentage of consumption and losses to total units available 9 Percentage of power generated to installed Capacity from steam during season Current Year 2008-2009 Rate Previous Year 2007-2008 Rate 42% 58% 3,942,239 8,516,887 Current Year 2008-2009 4,000 3,589,500 174 352,565 3,942,239 Previous Year 2007-2008 4,000 8,169,129 172 347,586 8,516,887

S.#

Description Qty.

Rs. in '000

Qty.

Rs. in '000

1 2 3 4 5 6 7 8

Steam (Annex-VII) Consumable stores (Annex-V) Salaries and wages (Annex-VI) Diesel for generator Repairs & maintenance Duty on electricity Other expenses (Annex-IX) Depreciation TOTAL

3,589,674 3,589,674 3,589,674 3,589,674 3,589,674 3,589,674 3,589,674 3,589,674

0.88 0.01 0.52 0.31 0.50 0.01 0.01 2.24

3,171 53 1,870 1,102 1,787 36 25 8,044

8,169,301 8,169,301 8,169,301 8,169,301 8,169,301 8,169,301 8,169,301 8,169,301

0.34 0.01 0.22 0.12 0.05 0.01 0.00 0.74

2,763 90 1,785 946 388 82 27 6,082

9

Less: a) Credit for exhaust steam used in process etc. b) Other credits, if any 3,589,674 352,565 3,942,239 2.24 11.77 3.09 8,044 4,149 12,193 8,169,301 347,586 8,516,887 0.74 9.62 1.11 6,082 3,345 9,427

10 11 12

Cost of power generated Less: Cost of power sold Add: Cost of power purchased Total Net Cost of Power Consumed

ALLOCATED TO: i) White bagged sugar (Annex-I) ii) Director Director ii) Others: a) Staff Colony (Annex-X) b) Office building etc. c) Others TOTAL

2008-2009 Rs. in '000 11,461 732 12,193

2007-2008 Rs. in '000 8,861 566 9,427

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING OTHER FACTORY OVERHEADS
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-IX
Current Year 2008-2009 Rs. in '000 Total Sugar Produced (M. Tons) 18,000 Cost Per Ton Previous Year 2007-2008 Rs. in '000 31,090 Cost Per Ton

S.#

Particulars

COST 1 2 3 4 5 6 7 8 9 10 11 12 Rent, rate & taxes Printing & stationery Postage & telegram Telephone, fax & telex Travelling & conveyance Fees & subscription etc. Entertainment Vehicle running expenses Insurance Freight & handling charges Removal of baggase, mud & boilder ash Other expenses TOTAL 19 215 12 252 259 200 82 1,290 60 1,311 1,796 27 5,523 1 12 1 14 14 11 5 72 3 73 100 2 307 14 218 15 365 235 120 75 1,516 5 1,109 2,224 35 5,931 0 7 0 12 8 4 2 49 0 36 72 1 191

ALLOCATED TO: i) ii) iii) iv) White bagged sugar (Annex-I) Steam Generation (Annex-VII) Electric Generation (Annex-VIII) Others: a) Staff Colony b) Office building etc. TOTAL

2008-2009 Rs. in '000 5,489 8 25

2007-2008 Rs. in '000 5,895 9 27

5,523

5,931

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-X
Current Year 2008-2009 S.# Particulars Rs. in '000 Cost Per Ton Previous Year 2007-2008 Rs. in '000 Cost Per Ton

Total Sugar Sold (M. Tons) COST 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Salaries, wages & benefits (Annex-VI) Rent, rate & taxes Insurance Gas & electricity Printing & stationery Postage & telegram Telephone, fax & telex Repair & maintenance Travelling & conveyance Fees, subscriptions, newspaper & periodicals etc. Entertainment Legal & professional expenses Auditors remuneration Vehicle running expenses Charity & donation Depreciation Others Electricity for staff colony (Annex-VIII) TOTAL

18,108

28,945

24,067 150 225 61 324 20 466 2,128 520 670 160 570 546 2,623 39 996 1,077 732 35,374

1,329 8 12 3 18 1 26 118 29 37 9 31 30 145 2 55 59 40 1,953

21,863 140 107 40 339 25 566 1,414 563 567 134 1,052 413 2,275 29 1,059 1,605 566 32,757

755 5 4 1 12 1 20 49 19 20 5 36 14 79 1 37 55 20 1,132

Director

Director

Chief Financial Officer

MIRZA SUGAR MILLS LIMITED
STATEMENT SHOWING SELLING EXPENSES
FOR THE YEAR ENDED SEPTEMBER 30, 2009

Annexure-XI
Current Year 2008-2009 S.# Particulars Rs. in '000 1 Total Sugar Sold (M. Tons) 18,108 Cost Per Ton Rs. in '000 28,945 Cost Per Ton Previous Year 2007-2008

2 – – – – – – – – – –

COST Salaries, wages & benefits (Annex-VI) Travelling & conveyance Commission Freight outwards / Octroi Stacking / restacking Loading / unloading Export expenses Vehicle running expenses Advertising for sales promotion Other expenses TOTAL 17 270 487 61 835 46 3 2,360 1 15 27 1,607 146 572 35 82 1 56 5 20

Director

Director

Chief Financial Officer

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