CONTENTS

Company Information 2

Vision/Mission and Six Year Review 3

Chairman’s Report 4

Notice of Annual General Meeting 6

Statement under section 134 of The Companies Act, 2017 8

Director’s Report 9

Director’s Statement on Corporate Governance 16

Auditor’s Review Report on Statement of Corporate Governance 20

Auditor’s Report of the Members 22

Pattern of Shareholdings 25

Statement of Financial Position 27

Statement of Profit or Loss 28

Statement of Comprehensive Income 29

Statement of Change in Equity 30

Statement of Cash Flows 31

Notes to Financial Statement 32

Annual Report 2021 01

 COMPANY INFORMATION

BOARD OF DIRECTORS MR. JAWAID AHMED - CHAIRMAN

MR. GHULAM AHMED ADAM - CHIEF EXECUTIVE
LT. COL. (RTD) MUHAMMAD MUJTABA
MR. JUNAID G. ADAM
MR. OMAR G. ADAM
MRS. NABIAH OMAR ADAM
MR. MUSTAFA G. ADAM

AUDIT COMMITTEE
CHAIRMAN MR. JAWAID AHMED
MEMBER MR. JUNAID G. ADAM
MEMBER MR. MUSTAFA G. ADAM

HUMAN RESOURCES AND REMUNERATION

COMMITTEE

CHAIRMAN LT. COL. (RTD) MUHAMMAD MUJTABA

MEMBER MR. JUNAID G. ADAM
MEMBER MR. OMAR G. ADAM

CHIEF FINANCIAL OFFICER FAISAL HABIB

DIRECTOR FINANCE / CORPORATE SECRETARY QAMAR RAFI KHAN

HEAD OF INTERNAL AUDIT NOMAN IQBAL

REGISTERED OFFICE HAJI ADAM CHAMBERS,

ALTAF HUSSAIN ROAD,
NEW CHALLI , KARACHI-2
TEL NO. 32417812 & 32401139-43
FAX NO. 32427560
WEBSITE: www.adam.com.pk/adamsugar.html

FACTORY CHAK NO. 4, FORDWAH, CHISHTIAN

DISTRIC BAHAWALNAGAR

STAUTORY AUDITORS REHMAN SARFARAZ RAHIM IQBAL RAFIQ

CHARTERED ACCOUNTANTS

SHARE REGISTRAR C & K MANAGEMENT ASSOCIATES (PVT) LTD

4TH FLOOR, 404 TRADE TOWER,
ABDULLAH HAROON RAD, KARACHI
TEL NO. 35685930
FAX NO. 35687839

02 Annual Report 2021

 VISION
To be the leader in sugar industry by building the company's image through quality improvement,
competitive prices and meeting social obligations.

MISSION
- To Endeavour to be the market leader by offering high quality sugar to our customers at competitive
prices.

- To continue improving operating performance and profitability thereby ensuring growth for the
company while serving best interest of shareholders.

SIX YEAR'S REVIEW AT A GLANCE

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

Cane Curshed (Matric Tons) 337,875 312,955 363,306 606,623 710,053 464,014
Recovery 8.74% 10.21% 8.91% 9.53% 9.17% 9.48%
Sugar Produced (Matric Tons) 29,543 31,952 32,204 57,835 65,097 43,979

Rs Rs Rs Rs Rs Rs
Paid up Capital 172,909,620 172,909,620 172,909,620 172,909,620 172,909,620 172,909,620
Reserve & Surplus 3,596,257,434 3,471,567,653 3,142,836,964 914,860,007 980,249,233 1,045,801,693
Shareholders Equity 3,769,167,054 3,644,477,273 3,315,746,584 1,087,769,627 1,153,158,853 1,218,711,313
Fixed Assets 4,844,990,238 4,939,030,383 5,115,456,052 1,814,659,566 1,580,825,659 1,531,192,067
Sales 2,880,598,200 3,553,991,007 2,314,623,158 3,762,793,904 1,849,979,187 3,261,246,962
Cost of Sales 2,470,296,287 2,846,000,169 2,295,798,406 3,658,075,471 1,787,420,927 2,948,835,097
Gross profit/(Loss) 410,301,913 707,990,838 18,824,752 104,718,433 62,576,260 312,411,865
Profit / (Loss) Before Tax 174,818,608 415,760,363 (315,480,488) 2,595,718 (5,732,576) 168,520,042
Profit / (Loss) After Tax 195,674,295 318,557,054 (254,059,293) (30,738,650) (2,988,340) 124,459,437
Earning / (Loss) Per Share 11.32 18.42 (14.69) (1.78) (0.17) 7.20
Break up Value of Share
(Including Revaluation Reserve) 217.98 210.77 191.76 62.91 66.69 70.48

Annual Report 2021 03

 CHAIRMAN’S REPORT

The Composition of the Board of Directors represents mix of varied back grounds and rich experience in
the field of business, banking etc.

The Board provides strategic directions to the Company and directs the management to achieve objectives
and goals of the Company.

Annual evaluation of the Board of Directors as required under the code of Corporate Governance has been
carried out to measure the performance and effectiveness of the Board against the objectives of the Company
set at the beginning of the year and I report that:

1. The overall performance of the Board for the year under review was satisfactory.

2. The Board had full understanding of the vision and mission statements and frequently revisits them
to up -date with the changing market conditions.

3. The Board members attended Board meeting during the year and participated in important company's
matter.

4. The Board undertook and overall review of business risks ensuring effectiveness of risk identification,
risk management and internal controls to safeguard assets and interest of the company and shareholders.

5. The Board members regularly received reports on finance / budgets, production and other important
matters which helped them take effective decisions.

6. The Board members were updated with regard to achievement of financials results through regular
presentations by the management and accordingly received directions and oversight on a timely
basis

I would like to thank the Board members for their commitments and untiring efforts by overcoming
the difficulties posed by the unstable market environments.

Jawaid Ahmed
Chairman
Karachi
Dated: January 06, 2022

04 Annual Report 2021

 2022 06

Annual Report 2021 05

 NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that 56th Annual General Meeting of the shareholders of the Company will
be held at 10:00 a.m. on Friday, January 28, 2022 at The Arts Council of Pakistan, M.R.Kiyani
Road, Karachi to transact the following business:

ORDINARY BUSINESS

1) To confirm the Minutes of 55th Annual General Meeting held on March 09, 2021.

2) To receive, consider and adopt the Audited Financial Statements of the Company for the year ended
September 30, 2021 together with Directors' and Auditors' Reports thereon.

3) To approve the payment of dividend @ 20% (Rupees 2.00 per share) as recommended by the Board
of Directors.

4) To appoint auditors of the Company for the year 2021-2022 and to fix their remuneration.

SPECIAL BUSINESS

5) To consider and approve the revision in remuneration payable to Chief Executive and Executive
Directors of the Company.
6) To consider and ratify related party transactions as required by the Companies Act, 2017.
7) To transact any other business with the permission of the Chair.

Karachi: January 06, 2022

By Order of the Board
QAMAR RAFI KHAN
Director Finance / Corporate Secretary
NOTES:

1) Members who are not able to attend the meeting in person may send their respective proxies duly
signed and stamped in the usual form. Such proxies should reach the Registered Office of the
Company at least 48 hours before the meeting.

2) The Share Transfer Book of the Company will remain closed from January 18, 2022 to January 28,
2022 (both days inclusive). Transfer received at Company Share Registrar M/s C & K Management
Associates (Pvt.) Ltd, 4th Floor, 404 Trade Tower, Abdullah Haroon Road, Karachi at the close of
business on January 17, 2022 will be treated in time.

3) The members having physical shares are requested to provide copies of their CNIC and Bank account
details enabling the Company to credit their cash dividend directly into their respective Bank
accounts.

4) Shareholders are requested to notify the Company of any change in address immediately.

5) CDC Account holders will further have to follow the following guidelines:

06 Annual Report 2021

l For Attending the Meeting:

a) In case of individuals, the account holder or sub-account holder and /or the person whose
securities are in group account shall authenticate their identity by showing original NIC or
original passport at the time of the meeting.

b) In case of corporate entity, the Board of Directors' resolution / power of attorney with specimen
signature of the nominee shall be produced at the time of the meeting.
l For Appointing Proxies:

a) In case of individuals, the account holder or sub-account holder and /or the person whose
securities are in group account shall submit the duly filled proxy form along with attested copies
of NIC cards or passport of the beneficial owners.

b) In case of corporate entity, the Board of Directors' resolution / power of attorney with specimen
signature of the nominee shall be submitted along with duly filled proxy form.

c) Proxy shall produce original NIC or passport at the time of meeting.

Statement under section 134 of The Companies Act, 2017

The statement sets out material facts concerning "Special Business" to be transacted at the Annual General
Meeting of the Company to be held on Friday, January 28, 2022. The approval of the members of the
Company will be sought for.

Annual Report 2021 07

 Statement under section 134 of The Companies Act, 2017

The statement sets out material facts concerning "Special Business" to be transacted at the Annual General
Meeting of the Company to be held on Friday, January 28, 2022. The approval of the members of the
Company will be sought for:

Increase in Remuneration of the Directors

Subject to approval of members of the Company, the Board has recommended to increase the remuneration
of Chief Executive and Directors of the Company in order to bring the remuneration of the Chief Executive
and Directors at par with the remuneration paid to the Chief Executive and Directors of other listed
Companies.

Existing Proposed
Name Designation Remuneration per remuneration per
month month
Mr. Ghulam Ahmed Adam Chief Executive PKR 3,000/- PKR 2,650,000/-
Mr. Junaid G. Adam Director PKR 156,000/- PKR 1,275,000/-
Mr. Omar G. Adam Director PKR 290,000/- PKR 1,275,000/-

The aforesaid Directors have interest to the extent of remuneration received by them and other Directors
have no special interest in the said increase of remuneration.

Related Party Transactions

During the financial year ended September 30, 2021, the Company carried out transactions with its associated
and related parties in accordance with its policies and applicable laws and regulations.
The members are requested to ratify the transactions which have been disclosed in Note no.33
of the Financial Statements for the year ended September 30, 2021 and further to authorize the Board of
Directors to conduct transactions with related parties or associated companies for the year ending
September 30, 2022.

Party wise breakup of transactions as disclosed in Note no.33 of the Financial Statements for the year ended
September 30, 2021 are given below:

Name of Related Party Nature of Transaction Amount (Rs.)

Adam Lubricants Limited Purchases made during the year 6,090,485
Payment made during the year 6,318,545
Balances payable at the year end 44,227

Loan Received during the year 176,000,000

Loan Payable at the year end 176,000,000
Mr. Ghulam Ahmed Adam Short term Loan payable at the year end 32,164,394
Chief Executive Subordinated loan payable at the year end 24,959,713

08 Annual Report 2021

 DIRECTORS REPORT

IN THE NAME OF ALLAH, THE BENEFICENT, THE MERCIFUL

Dear Members,

On behalf of the Board, we welcome you to the 56th Annual General Meeting of the Company and place
before you the audited accounts of the Company for the year ended September 30, 2021.

FINANCIAL RESULTS: Rs.

Profit after taxation 195,674,295

Incremental depreciation, net off deferred tax

transferred from surplus on revaluation of Property,
Plant and Equipment 99,300,837

Un-appropriated profit brought forward 317,373,684

Un-appropriated profit carried forward 541,364,302

OPERATING RESULTS

2021 2020
Cane Crushed-Metric Tons 337,875 312,955
Cane Crushed-Metric Tons 8.74% 10.21%
Sugar Produced-Metric Tons 29,543 31,952
Commenced Crushing on 10/11/2020 26/11/2019
Stopped Crushing on 19/03/2021 18/03/2020
Number of Season Days 130 114
EPS - basic & diluted Rs.11.32 Rs. 18.42

The Punjab Government had fixed the minimum support price of sugarcane at Rs. 200 per 40 Kgs, whereas
the Sindh Government fixed the price at Rs.202 per 40 Kgs.

Recovery was low due to wide spread crop disease and pest attack in our region during the season which
led to lower than expected production thus impacting our results.

Annual Report 2021 09

BOARD MEETINGS

During the four meetings of the Board of Directors were held. Participation of directors is as follows:

NAME OF DIRECTORS NUMBER OF MEETINGS ATTENDED

Mr. Ghulam Ahmed Adam 4

Mr. Jawaid Ahmed 4
Lt. Col (Rtd) Muhammad Mujtaba 4
Mr. Junaid G. Adam 4
Mr. Omar G. Adam 4
Mrs. Nabiah Omar Adam 4
Mr. Mustafa G. Adam 2

Leave of absence was granted to Directors who could not attend the meetings.

Statement of Corporate and Financial

Reporting Framework.

As required by the Code of Corporate Governance, your Directors are pleased to report that:

* The financial statements, prepared by the Management, present fairly its state of affairs, the results
of its operations, cash flows and changes in equity.

* The company has maintained proper books of accounts as required by the law.

* Appropriate accounting policies have been consistently applied in preparation of financial statements
and accounting estimates are based on reasonable and prudent judgment.

* The accounting policies and disclosures are in accordance with the approved Accounting Standards
applicable in Pakistan, unless otherwise disclosed.

* The system of internal control is sound in design and effectively implemented.

* There is no significant doubt as to the ability of the company to continue as an on-going concern.

* There has been no material departure from the best practices of corporate governance as detailed in
the listing regulations.

* No trading in the shares of the Company was carried out by the directors, CEO, CFO, Company
Secretary and their spouses and minor children.

10 Annual Report 2021

FUTURE PROSPECTS

The minimum support price of sugarcane has been increased by the Government from Rs. 200 to Rs. 225
per 40 kgs. During the cane crushing season 2021-2022, we have already crushed 250,576 M.Tons of
sugarcane at an average recovery of 9.12% and have produced 22,353 M. Tons of sugar.

However the current average purchase price of sugarcane is already much higher than the indicative support
price of Rs.225 per 40 Kgs.

EMPLOYEE RELATIONS

Your directors appreciate the spirit of cooperation shown by the officers, staff and workers and we hope that
their dedication will continue in future.

AUDITORS

M/s. Rehman Sarfaraz Rahim Iqbal Rafiq, Chartered Accountants, the auditors of the Company retires and
offers them for reappointment. The Audit Committee has recommended their reappointment for the year
2021-2022.

On behalf of the Directors

Karachi: January 06, 2022 OMAR G. ADAM GHULAM AHMED ADAM

Director Chief Executive

Annual Report 2021 11

 2021 56

195,674,295

99,300,837

317,373,684

541,364,302

21
312,955 337,875

10.21% 8.74%

31,952 29,543

26/11/2019 10/11/2020

18/03/2020 19/03/2021

114 130

18.42 Rs.11.32

12 Annual Report 2021

 40 202 40 200

4
4
4
4
4
4
2

Annual Report 2021 13

 2021-2022 225 200

22,353 9.12% 250,576

2021-2022

2022 06

14 Annual Report 2021

DETAILS OF SHARE HOLDING
AS ON 30-09-2021

NUMBER SHARE HELD

ASSOCIATED COMPANIES, UNDERTAKING
AN RELATED PARTIES:

Adam Pakistan Limited 1 3,503,389

Adam Lubricants Limited 1 4,057

ICP:
Investment Corporation of Pakistan 1 117

DIRECTORS, CEO AND THEIR SPOUSE AND.

MINOR CHILDREN:
Mr. Ghulam Ahmed Adam 1 8,666,197
Mr. Jawaid Ahmed 1 7,500
lt. Col. (Rtd) Muhammad Mujtaba 1 7,500
Mr. Junaid G. Adam 1 7,500
Mr. Omar G. Adam 1 7,500
Mrs. Nabiah 1 2,500
Mr. Mustafa G. Adam 1 7,500

Executive - -

Public Sector Companies and Corporation - -

BANK DFIs INSURANCE COMPANIES

MODARBAS AND MUTUAL FUND

United Bank Limited 1 178

MCB Bank Limited 1 223
State Life Insurance Company 1 190

SHAREHOLDING 10% OR MORE

VOTING INTREST

Mr. Ghulam Ahmed Adam 1 8,666,197

Adam Pakistan Limited 1 3,503,389

Annual Report 2021 15

STATEMENT OF COMPLIANCE WITH LISTED COMPANIES (CODE
OF CORPORATE GOVERNANCE) REGULATIONS, 2019
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Name of Company : ADAM SUGAR MILLS LIMITED
Year Ending : September 30, 2021

The company has complied with the requirements of the Regulations in the following manner :

1. The total number of directors are 7 as per the following:

Male: 06
Female: 01

2. The composition of the Board is as follows:

i. Independent Directors Mr. Jawaid Ahmed

Mr. Lt. Col. (R) Muhammad Mujtaba
ii. Other Non-Executive Directors Mr. Mustafa G. Adam
Mrs. Nabiah Omar Adam
Mr. Junaid G. Adam
iii) Executive Directors Mr. Ghulam Ahmed Adam
Mr. Omar G. Adam
iv) Female Director Mrs. Nabiah Omar Adam

3. The directors have confirmed that none of them is serving as a director on more than seven listed
companies, including the Company;

4. The Company has prepared a Code of Conduct and has ensured that appropriate steps have been taken
to disseminate it throughout the Company along with its supporting policies and procedures;

5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies
of the Company. The Board has ensured that a complete record of particulars of significant policies
along with their date of approval or updating is maintained by the Company;

6. All the powers of the Board have been duly exercised and decisions on relevant matters have been
taken by the Board/shareholders as empowered by the relevant provisions of the Act and the Regulations;

7. The meetings of the Board were presided over by the Chairman, and in his absence, by a director
elected by the Board for this purpose. The Board has complied with the requirements of the Act and
the Regulations with respect to frequency, recording and circulating minutes of meetings of the Board;

8. The Board have a formal policy and transparent procedure for remuneration of directors in accordance
with the Act and the Regulations;

16 Annual Report 2021

9. Five out of seven directors are exempt from directors training program due to having 14 years of
education and 15 years of experience on Board of listed company. The remaining two directors
intend to acquire necessary training program in due course.

S No. Name of Director Director Since Exempt / Not Exempt

1 Mr. Jawaid Ahmed 2001 Exempt
2 Mr. Ghulam Ahmed Adam 1965 Exempt
3 Lt. Col (R) Muhammad Mujtaba 2001 Exempt
4 Mr. Junaid G. Adam 1996 Exempt
5 Mr. Omar G. Adam 2002 Exempt
6 Mrs. Nabiah Omar Adam 2020 Not Exempt
7 Mr. Mustafa G. Adam 2011 Not Exempt

10. The Board has approved the appointment of the Chief Financial Officer, Company Secretary and
Head of Internal Audit, including their remuneration and terms and conditions of employment and
complied with relevant requirements of the Regulations;

11. The Chief Financial Officer and Chief Executive Officer duly endorsed the financial statements
before approval of the Board;

12. The Board has formed committees comprising of members given below:
Audit Committee
Mr. Jawaid Ahmed Chairman
Mr. Junaid G. Adam Member
Mr. Mustafa G. Adam Member
HR & Remuneration Committee
Lt. Col. (R) Muhammad Mujtaba Chairman
Mr. Mr. Omar G. Adam Member
Mr. Junaid G. Adam Member

13. The terms of reference of the aforesaid committees have been formed, documented and advised to
the committees for compliance;

14. The frequency of meetings (quarterly/ half yearly/ yearly) of the committees were as per following;

Audit Committee Quarterly

HR & Remuneration Committee Yearly

15. The Board has set-up an effective internal audit function which is considered suitably qualified and
experienced for the purpose and are conversant with the policies and procedures of the Company;

Annual Report 2021 17

16. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating
under the quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP)
and registered with Audit Oversight Board of Pakistan, that they and all their partners are in compliance
with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the
Institute of Chartered Accountant of Pakistan and that they and the partners of the firm involved in
the audit are not close relative (spouse, parent, dependent and non-dependent children) of the Chief
Executive Officer, Chief Financial Officer, Head of Internal Audit, Company Secretary or a director
of the Company;

17. The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the Act, these Regulations or any other regulatory requirement
and the auditors have confirmed that they have observed IFAC guidelines in this regard;

18. We confirm that all requirements of the regulations 3, 6, 7, 8, 27, 32, 33 and 36 of the Regulations
have been complied with except for the following:

Regulation Type of the

S. no. reference Description of non-compliance
requirement
no.
(1) 06 Mandatory In terms of Section 166(1) of the Companies Act, 2017, an
independent director to be appointed under any law, rules,
regulations or code, shall be selected from a data bank containing
names, addresses and qualifications of persons who are eligible
and willing to act as independent directors, maintained by any
institute, body or association, as may be notified by the Securities
and Exchange Commission of Pakistan (SECP). However, the
names of the independent directors re-elected by the Company
in January 2020 (i.e., Mr. Jawaid Ahmed and Lt. Col. (R)
Muhammad Mujtaba) do not appear in the said data bank
maintained by the Pakistan Institute of Corporate Governance
(PICG).

Further, as per the proviso to Section 166(2) of the Companies

Act, 2017, no director shall be considered independent if he
has served on the Board for more than three (03) consecutive
terms. However, Mr. Jawaid Ahmed and Lt. Col. (R) Muhammad
Mujtaba, elected by the Company as independent directors,
have already served on the Board for more than three (03)
consecutive terms.

18 Annual Report 2021

 Regulation Type of the
S. no. reference Description of non-compliance
requirement
no.

(2) 06 Explanation As per Section 06 of the Regulations, a listed company shall

for non- have at least two or one-third members of the Board, whichever
compliance is higher, as independent directors. Further, it requires a listed
is required
company to explain the reasons, in its Statement of Compliance,
if any fraction contained in such one-third numbers is not
rounded up as one.
Since the total number of directors of the Company is 7, its
one-third fraction comes to 2.33. In contrast, during the year
ended September 30, 2021, the number of independent directors
of the Company has been 2. The Company intends to round
up the said fraction of 0.33 by electing another independent
director in the next election of directors.
(3) 27(1)(ii) Mandatory As per section 27(1)(ii) of the regulations, the Chairman of the
Audit Committee and chairman of the Board shall not be the
same individual. However, Mr. Jawaid Ahmed, the chairman
of the Board of the Company also acts as the chairman of the
Audit Committee.

19. We further confirm that there has been no non-compliance with the non-mandatory provision of the
Regulations (i.e. regulation other than 3,6,7,8,27,32,33 and 36).

Jawaid Ahmed

Chairman of the Board of Directors

Adam Sugar Mills Limited

Annual Report 2021 19

INDEPENDENT AUDITOR’S REVIEW REPORT
To the members of M/s. Adam 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 Adam Sugar Mills Limited ('the Company') for the year ended
September 30, 2021 in accordance 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 any non-compliance with the requirements of the Regulations. A review
is limited primarily to inquiries of the Company's personnel and review of 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 an 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 Directors
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, 2020.

Further, we highlight below the instances of non-compliance made by the Company with certain requirements of the Code as
stated in paragraphs 18 of the Statement of Compliance:

S. Nature of the Paragraph Description of the Non-Compliance

No. Requirement No.
In terms of Section 166(1) of the Companies Act, 2017, an independent
director to be appointed under any law, rules, regulations or code, shall
be selected from a data bank containing names, addresses and
qualifications of persons who are eligible and willing to act as
independent directors, maintained by any institute, body or association,
as may be notified by the Securities and Exchange Commission of
(1) Mandatory 18
Pakistan (SECP). However, the names of the independent directors re-
elected by the Company in January 2020 (i.e., Mr. Jawaid Ahmed and
Lt. Col. (R) Muhammad Mujtaba) do not appear in the said data bank
maintained by the Pakistan Institute of Corporate Governance (PICG).
(continued on the next page)

20 Annual Report 2021

 S. Nature of the Paragraph Description of the Non-Compliance (continued)
No. Requirement No.
(continued from the previous page)

Further, as per the proviso to Section 166(2) of the Companies Act,

2017, no director shall be considered independent if he has served on the
(1) Mandatory 18 Board for more than three (03) consecutive terms. However, Mr. Jawaid
Ahmed and Lt. Col. (R) Muhammad Mujtaba, elected by the Company
as independent directors, have already served on the Board for more
than three (03) consecutive terms.
As per Regulation 06 of the Regulations, a listed company shall have at
least two or one-third members of the Board, whichever is higher, as
independent directors. Further, it requires a listed company to explain
the reasons, in its Statement of Compliance, if any fraction contained in
Explanation such one-third number is not rounded up as one.
for non-
(2) 18
compliance is Since the total number of directors of the Company is 7, its one-third
required fraction comes to 2.33. In contrast, during the year ended September 30,
2021, the number of independent directors of the Company has been 2.
T he Company intends to round up the said fraction of 0.33 by electing
another independent director in the next election of directors.
As per Regulation 27(1)(ii) of the Regulations, the Chairman of the
Audit Committee and the Chairman of the Board shall not be the same
(3) Mandatory 18 individual. However, Mr. Jawaid Ahmed, the Chairman of the Board of
the Company also acts as the Chairman of the Audit Committee.

Karachi RAHMAN SARFARAZ RAHIM IQBAL RAFIQ

Date: January 06, 2022 Chartered Accountants

Annual Report 2021 21

INDEPENDENT AUDITORS' REPORT
To the members of M/s. Adam Sugar Mills Limited

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the annexed financial statements of Adam Sugar Mills Limited ('the Company'), which comprise the statement
of financial position as at September 30, 2021, and the statement of profit or loss, the statement of 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 ('the financial statements'), 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, the statement of 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, total comprehensive income,
changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with the 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 are 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. However, we have determined
that there are no key audit matters to communicate in our report.

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, 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. However, we have nothing to report in
this regard.

22 Annual Report 2021

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 the 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 the financial statements.

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

l 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.

l 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.

l Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.

l 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 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.

l 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.

Auditor's Responsibilities for the Audit of the Financial Statements (continued)

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.

Annual Report 2021 23

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, the statement of 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. Muhammad Waseem.

RAHMAN SARFARAZ RAHIM IQBAL RAFIQ

Chartered Accountants

Karachi
Date: January 06, 2022

24 Annual Report 2021

PATTERN OF HOLDING OF THE SHARES HELD BY THE
SHAREHOLDERS AS AT 30 SEPTEMBER, 2021

NUMBER OF SHAREHOLDERS SIZE OF SHAREHOLDING TOTAL SHARES HELD

1,677 FROM 1 TO 100 59,146

392 FROM 101 TO 500 103,853

99 FROM 501 TO 1,000 84,534

210 FROM 1,001 TO 5,000 627,758
67 FROM 5,001 TO 10,000 472,500
10 FROM 10,001 TO 15,000 131,453

12 FROM 15,001 TO 20,000 221,500

5 FROM 20,001 TO 25,000 120,500
4 FROM 25,001 TO 30,000 104,100

3 FROM 35,001 TO 40,000 114,352

3 FROM 40,001 TO 45,000 123,004

2 FROM 45,001 TO 50,000 100,000

1 FROM 55,001 TO 60,000 55,836

1 FROM 60,001 TO 65,000 62,000
1 FROM 65,001 TO 70,000 66,000
1 FROM 120,001 TO 125,000 121,000
1 FROM 130,001 TO 135,000 131,500
1 FROM 155,001 TO 160,000 158,157
1 FROM 195,001 TO 200,000 200,000
1 FROM 255,001 TO 260,000 256,479
1 FROM 295,001 TO 300,000 295,500
1 FROM 450,001 TO 455,000 451,000
1 FROM 455,001 TO 460,000 457,683
1 FROM 855,001 TO 860,000 860,000
1 FROM 3,500,001 TO 3,505,000 3,503,389
1 FROM 8,405,001 TO 8,410,000 8,409,718
2,498 17,290,962

Annual Report 2021 25

CATAGORIES OF SHAREHOLDERS NUMBERS SHARES HELD PERCANTAGE

Individuls 2,474 13,722,884 79.36 %

Investment Companies 1 117 0.00 %
Insurance Companies 1 190 0.00 %

Joint Stock Companies. 17 3,566,762 20.64 %

Financial Instutions 2 401 0.00 %
Others (See below) 3 608 0.00 %
2,498 17,290,962 100 %

OTHERS:

Administrator abandoned Properties 91

Ismail Usman & Co. 17

Trustee Karachi Sheraton Hotel & Tower Employees 500

608

26 Annual Report 2021

ADAM SUGAR MILLS LIMITED
STATEMENT OF FINANCIAL POSITION
AS AT SEPTEMBER 30, 2021
2021 2020
ASSETS Note ––––––––––––– Rupees ––––––––––––
Non-current assets
Property, plant and equipment 5 4,840,678,847 4,938,997,983
Long term deposits 4,311,481 121,900
Intangible assets 6 - -
4,844,990,328 4,939,119,883
Current assets
Stores and spares 7 109,727,672 113,987,091
Stock in trade 8 278,834,430 204,914,346
Short term investments 9 25,323,290 25,323,290
Trade debts - unsecured 10 410,047,952 244,685,999
Short term loans and advances 11 202,596,231 214,750,414
Trade deposits and short term prepayments 12 1,502,052 743,439
Other receivables 13 12,746,469 13,160,858
Cash and bank balances 14 191,784,566 100,036,414
1,232,562,662 917,601,851
Total assets 6,077,552,990 5,856,721,734

EQUITY AND LIABILITIES

Share capital and reserves
Authorized capital 250,000,000 250,000,000

Issued, subscribed and paid up capital 15 172,909,620 172,909,620

Capital reserves:
Revaluation surplus on property, plant and machinery - net 16 2,663,381,821 2,762,682,658
Share premium 172,909,620 172,909,620
Capital contribution from director 18,601,691 18,601,691
Revenue reserves:
Unappropriated profits 541,364,302 317,373,684
General reserve 200,000,000 200,000,000
3,769,167,054 3,644,477,273
Non-current liabilities
Subordinated loan from the Chief Executive 17 16,692,752 15,095,634
Long term finance - secured 18 188,194,445 113,194,445
Deferred liabilities 19 794,518,087 845,360,857
Provident fund payable 9,486,443 9,090,756
1,008,891,727 982,741,692
Current liabilities
Short term borrowings 20 770,635,475 592,160,889
Trade and other payables 21 361,865,809 521,803,489
Accrued markup 20,270,153 15,060,728
Current maturity of long term finance 18 89,444,444 72,569,444
Unclaimed dividend 7,332,915 5,672,993
Taxation-net 49,945,413 22,235,226
1,299,494,209 1,229,502,769
Contingencies and commitments 22 - -

Total equity and liabilities 6,077,552,990 5,856,721,734

The annexed notes from 1 to 39 form an integral part of these financial statements.

GHULAM AHMED ADAM OMAR G. ADAM FAISAL HABIB

Chief Executive Director Chief Financial Officer

Annual Report 2021 27

ADAM SUGAR MILLS LIMITED
STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
2021 2020
Note ––––––––– Rupees –––––––––

Sales revenue - net 23 2,880,598,200 3,553,991,007

Cost of sales 24 (2,470,296,287) (2,846,000,169)
Gross profit 410,301,913 707,990,838

Administrative expenses 25 (110,720,229) (74,977,234)

Selling and distribution costs 26 (6,292,153) (9,047,378)
(117,012,382) (84,024,612)
293,289,531 623,966,226

Finance costs 27 (103,234,874) (185,625,721)

190,054,657 438,340,505
Other income 28 6,011,705 17,052,301
Other operating expenses 29 (21,247,754) (39,632,443)
Profit before taxation 174,818,608 415,760,363

Taxation 30 20,855,687 (97,203,309)

Profit after taxation 195,674,295 318,557,054

Earnings per share - basic and diluted 31 11.32 18.42

The annexed notes from 1 to 39 form an integral part of these financial statements.

GHULAM AHMED ADAM OMAR G. ADAM FAISAL HABIB

Chief Executive Director Chief Financial Officer

28 Annual Report 2021

ADAM SUGAR MILLS LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED SEPTEMBER 30, 2021
2021 2020
––––––––– Rupees –––––––––

Profit after taxation 195,674,295 318,557,054

Other comprehensive (loss) / income for the year

Items that will not be reclassified subsequently to profit or loss

(Loss) / gain on remeasurement of defined benefit liability (1,820,666) 309,556

Total comprehensive income for the year 193,853,629 318,866,610

The annexed notes from 1 to 39 form an integral part of these financial statements.

GHULAM AHMED ADAM OMAR G. ADAM FAISAL HABIB

Chief Executive Director Chief Financial Officer

Annual Report 2021 29

ADAM SUGAR MILLS LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 2021
Capital reserves Revenue reserves
Surplus on
Issued, Capital
revaluation of Share General Unappropriated Total
subscribed and contribution
property and premium reserve profits / (losses)
paid up capital from director
equipment - net
––––––––––––––––––––––––––––––––––––––––– Rupees ––––––––––––––––––––––––––––––––––––––––
Balance as at September 30, 2019 172,909,620 2,867,668,114 172,909,620 8,737,612 200,000,000 (106,478,382) 3,315,746,584

Total comprehensive income for the year

ended September 30, 2020
- Profit after taxation - - - - - 318,557,054 318,557,054
- Other comprehensive income - - - - - 309,556 309,556
- - - - - 318,866,610 318,866,610
Incremental depreciation transferred from
surplus on revaluation of plant and
equipment - net of tax - (104,985,456) - - - 104,985,456 -

Effect of discounting of Subordinated loan

from Chief Executive - - - 9,864,079 - - 9,864,079

Balance as at September 30, 2020 172,909,620 2,762,682,658 172,909,620 18,601,691 200,000,000 317,373,684 3,644,477,273

Total comprehensive income for the year

ended September 30, 2021
- Profit after taxation - - - - - 195,674,295 195,674,295
- Other comprehensive loss - - - - - (1,820,666) (1,820,666)
- - - - - 193,853,629 193,853,629
Incremental depreciation transferred from
surplus on revaluation of plant and
equipment - net of tax - (99,300,837) - - - 99,300,837 -

Transaction with owner

Final cash dividend @ 40% for the year
ended September 2020 - - - - - (69,163,848) (69,163,848)

Balance as at September 30, 2021 172,909,620 2,663,381,821 172,909,620 18,601,691 200,000,000 541,364,302 3,769,167,054

The annexed notes from 1 to 39 form an integral part of these financial statements.

GHULAM AHMED ADAM OMAR G. ADAM FAISAL HABIB

Chief Executive Director Chief Financial Officer

30 Annual Report 2021

ADAM SUGAR MILLS LIMITED
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 2020
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES Note ––––––––– Rupees –––––––––
Profit before taxation 174,818,608 415,760,363
Adjustments for non cash and other items :
- Depreciation on property, plant and equipment 5.1 221,455,981 227,859,390
-Provision for gratuity 19.2.2 3,909,661 438,616
-Finance costs 27 103,234,874 185,625,721
-Gain on sale of operating fixed assets 28 (652,951) (2,357,179)
-Profit on saving accounts 28 (2,967,589) (1,868,018)
- Profit on term deposit receipts 28 (1,165,271) (2,252,503)
-Liabilities no longer payable written off 28 - (8,192,570)
-Provision for Workers Profit Participation Fund 29 9,388,755 22,328,698
-Provision for Worker Welfare Fund 29 3,567,727 8,484,905
-Stores and spares written off 29 4,349,473 -
-Advance to supplier written off 29 - 8,818,840
-Provision for provident fund 1,762,269 908,133
342,882,929 439,794,033
Operating profit before working capital changes 517,701,537 855,554,396
Working capital changes:
Decrease / (increase) in current assets
-Stores and spares (90,054) 8,622,656
-Stock in trade (73,920,084) 723,954,431
-Trade debts (165,361,953) (216,723,358)
-Short term loans and advances 12,154,183 (135,940,846)
-Trade deposits and short term prepayments (758,613) 749,712
-Other receivables 412,004 336,718

Decrease in current liabilities

-Trade and other payables (150,565,464) (234,908,693)
(378,129,981) 146,090,620
Cash generated from operations 139,571,556 1,001,645,016

Finance costs paid (96,428,331) (221,587,957)

Payment to Provident fund (1,366,582) (243,219)
Payment of gratuity (441,735) -
Payment of workers' profit participation fund (22,328,698) -
Taxes paid (7,565,488) (6,110,208)
(128,130,834) (227,941,384)
Net cash generated from operating activities 11,440,722 773,703,632

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property, plant and equipment 5.1 (123,541,244) (52,226,542)
Proceeds from sale of operating fixed assets 1,057,350 3,150,000
Long term deposit paid (4,189,581) -
Profit received on saving accounts 2,967,589 1,868,018
Profit received on term deposits 1,167,656 2,193,858
Net cash used in investing activities (122,538,230) (45,014,666)

CASH FLOWS FROM FINANCING ACTIVITIES

Long term loan obtained 120,000,000 -
Long term loan repaid (28,125,000) (96,521,771)
Short term borrowing - net 179,346,196 (523,635,535)
Dividend paid (67,503,926) (169,354)
Net cash generated in financing activities 203,717,270 (620,326,660)
Net (decrease) / increase in cash and cash equivalents 92,619,762 108,362,306
Cash and cash equivalents at the beginning of the year (99,960,082) (208,322,388)
Cash and cash equivalents at the end of the year 32 (7,340,320) (99,960,082)

The annexed notes from 1 to 39 form an integral part of these financial statements.

GHULAM AHMED ADAM OMAR G. ADAM FAISAL HABIB

Chief Executive Director Chief Financial Officer

Annual Report 2021 31

ADAM SUGAR MILLS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2021
1. STATUS AND NATURE OF BUSINESS

Adam Sugar Mills Limited ('the Company') was incorporated in Pakistan on October 19, 1965 in the name of Bahawalnagar
Sugar Mills Limited as a public limited company under the provisions of the Companies Act, 1913 (repealed with the
enactment of the Companies Ordinance, 1984, and subsequently, the Companies Act, 2017, promulgated in May 2017).
In 1985, the name of the Company was changed to Adam Sugar Mills Limited. The shares of the Company are quoted on
Pakistan Stock Exchange ("the Exchange"). The Company is principally engaged in the manufacturing and sale of white
sugar.

The geographical location and address of the Company's business units, including plant, are as under:

Head office: The Company's registered office is situated at first floor, Haji Adam Chambers, Altaf Hussain Road, New
Challi, Karachi.

Mill: The Company's plant is located at Chak # 4, Fordwah, Chishtian, District Bahawalnagar, Punjab.

2. BASIS OF PREPARATION

2.1 Statement of compliance with the applicable accounting and reporting standards

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

2.2 Basis of measurement of items in these financial statements

Items included in these financial statements have been measured at their historical cost except for freehold land, factory
building, non-factory building and plant and machinery which are carried at revalued amounts less accumulated depreciation
charged thereon.

2.3 Functional and presentation currency

Items included in these financial statements are measured using the currency of the primary economic environment in
which the Company operates. These financial statements are presented in Pak Rupees which is the Company’s functional
and presentation currency.

2.4 Use of estimates and judgments

In preparing these financial statements, management has made judgements and estimates that affect the application of the
Company's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may
differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

32 Annual Report 2021

 (a) Judgements

Information about judgements made in applying accounting policies that have the most significant effects on the
amounts recognised in the financial statements is included in the following notes:

Area of judgement Brief description of the judgement applied

Property, plant and equipment Whether the consumption of future economic benefits embodied in the
Company's fixed assets is reduced over time and, accordingly, whether it is
appropriate to use 'diminishing balance method' as the depreciation method.

Timing of revenue recognition Local sales revenue:

Whether control of the promised goods is transferred to the customer when the
goods are dispatched from the Company's premises.

Export sales revenue:

Whether control of the promised goods is transferred to the customer when the
goods are loaded onto the shipping vessel and, as an acknowledgement thereof,
a bill of lading is issued by the shipping company.

(b) Assumptions and other major sources of estimation uncertainty

Information about assumptions and estimation uncertainties at the reporting date that have a significant risk of resulting
in a material adjustment to the carrying amounts of assets and liabilities in the next financial year is included in the
following notes:

Area of estimation uncertainty Brief description of the assumption or the source of estimation uncertainty
Property, plant and equipment - Estimation of useful lives and residual values of the operating fixed assets

- Estimation of revalued amounts of freehold land, factory building, non-

factory building and plant and machinery.

Deferred taxation "Recognition of deferred tax assets on unused tax losses and unused tax credits-
availability of future taxable profit against which deductible temporary differences
and unused tax losses and unused tax credits can be utilised".

3. NEW ACCOUNTING PRONOUNCEMENTS

3.1 Amendments to approved accounting standards effective during the year ended September 30, 2021:

During the year, certain new accounting and reporting standards / amendments / interpretations became effective and
applicable to the Company. However, since such updates do not have any effect on these financial statements, the same
have not been disclosed here.

3.2 New / revised accounting standards, amendments to published accounting standards and interpretations that are not
yet effective

The following International Financial Reporting Standards (IFRS Standards) as notified under the Companies Act, 2017
and the amendments and interpretations thereto will be effective for accounting periods beginning on or after the dates
specified below:

- Interest Rate Benchmark Reform – Phase 2 which amended IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 is applicable
for annual financial periods beginning on or after January 01, 2021, with earlier application permitted. The amendments

Annual Report 2021 33

 introduce a practical expedient to account for modifications of financial assets or financial liabilities if a change results
directly from IBOR reform and occurs on an ‘economically equivalent’ basis. In these cases, changes will be accounted
for by updating the effective interest rate. A similar practical expedient will apply under IFRS 16 for lessees when
accounting for lease modifications required by IBOR reform. The amendments also allow a series of exemptions from
the regular, strict rules around hedge accounting for hedging relationships directly affected by the interest rate benchmark
reforms. The amendments apply retrospectively with earlier application permitted. Hedging relationships previously
discontinued solely because of changes resulting from the reform will be reinstated if certain conditions are met. The
application of the amendment is not likely to have an impact on the Company's financial statements.

- COVID-19-Related Rent Concessions (Amendment to IFRS 16) – the International Accounting Standards Board (the
Board) has issued amendments to IFRS 16 (the amendments) to provide practical relief for lessees in accounting for
rent concessions. The amendments are effective for periods beginning on or after June 01, 2020, with earlier application
permitted. Under the standard’s previous requirements, lessees assess whether rent concessions are lease modifications
and, if so, apply the specific guidance on accounting for lease modifications. This generally involves remeasuring the
lease liability using the revised lease payments and a revised discount rate. In light of the effects of the COVID-19
pandemic, and the fact that many lessees are applying the standard for the first time in their financial statements, the
Board has provided an optional practical expedient for lessees. Under the practical expedient, lessees are not required
to assess whether eligible rent concessions are lease modifications, and instead are permitted to account for them as
if they were not lease modifications.

Rent concessions are eligible for practical expedient if they occur as a direct consequence of the COVID-19 pandemic
and if all the following criteria are met:

a. the change in lease payments results in revised consideration for the lease that is substantially the same as, or less than,
the consideration for the lease immediately preceding the change;

b. any reduction in lease payments affects only payments originally due on or before June 30, 2022; and

c. there is no substantive change to the other terms and conditions of the lease.

The above amendments are not likely to affect the financial statements of the Company.

- Onerous contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) effective for the annual periods beginning
on or after January 01,2022 amends IAS 37 by mainly adding paragraphs which clarifies what comprises the cost of
fulfilling a contract. Cost of fulfilling a contract is relevant when determining whether a contract is onerous. An entity
is required to apply the amendments to contracts for which it has not yet fulfilled all its obligations at the beginning
of the annual reporting period in which it first applies the amendments (the date of initial application). Restatement
of comparative information is not required, instead the amendments require an entity to recognize the cumulative effect
of initially applying the amendments as an adjustment to the opening balance of retained earnings or other component
of equity, as appropriate, at the date of initial application. The amendments are not likely to affect the financial
statements of the Company.

- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16) effective for annual periods
beginning on or after January 01, 2022 clarifies that sales proceeds and costs of items produced while bringing an item
of property, plant and equipment to the location and condition necessary for it to be capable of operating in the manner
intended by management e.g. when testing etc., are recognized in profit or loss in accordance with applicable Standards.
The entity measures the cost of those items applying the measurement requirements of IAS 2. The standard also
removes the requirement of deducting the net sales proceeds from cost of testing. An entity shall apply those amendments
retrospectively, but only to items of property, plant and equipment that are brought to the location and condition
necessary for them to be capable of operating in the manner intended by management on or after the beginning of the
earliest period presented in the financial statements in which the entity first applies the amendments. The entity shall
recognize the cumulative effect of initially applying the amendments as an adjustment to the opening balance of
retained earnings (or other component of equity, as appropriate) at the beginning of that earliest period presented. The
amendments are not likely to affect the financial statements of the Company.

- Amendments to IFRS 3 'Business Combinations' - Reference to the Conceptual Framework, issued in May 2020,

34 Annual Report 2021

 amended paragraphs 11, 14, 21, 22 and 23 of and added paragraphs 21A, 21B, 21C and 23A to IFRS 3. An entity shall
apply those amendments to business combinations for which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after January 01, 2022. Earlier application is permitted if at the same
time or earlier an entity also applies all the amendments made by Amendments to References to the Conceptual
Framework in IFRS Standards, issued in March 2018. The amendments are not likely to affect the financial statements
of the Company.

- Amendments to IAS 1 'Presentation of Financial Statements' - Classification of liabilities as current or non-current

amendments apply retrospectively for the annual periods beginning on or after January 01, 2023. These amendments
in the standards have been added to further clarify when a liability is classified as current. The standard also amends
the aspect of classification of liability as non-current by requiring the assessment of the entity’s right at the end of
the reporting period to defer the settlement of liability for at least twelve months after the reporting period. An entity
shall apply those amendments retrospectively in accordance with IAS 8. The Company is currently in the process of
assessing the impact of these amendments on its prospective financial statements.

- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) – the Board has issued
amendments on the application of materiality to disclosure of accounting policies and to help companies provide useful
accounting policy disclosures. The key amendments to IAS 1 includes:

a. requiring companies to disclose their material accounting policies rather than significant accounting policies;

b. clarifying that accounting policies related to immaterial transactions, other events or conditions are themselves
immaterial and as such need not be disclosed; and

c. clarifying that not all accounting policies that relate to material transactions, other events or conditions are themselves
material to an entity's financial statements.

The Board also amended IFRS Practice Statement 2 to include guidance and two additional examples on the application
of materiality to accounting policy disclosures. The amendments are effective for annual reporting periods beginning
on or after January 01, 2023 with earlier application permitted.

The Company is currently in the process of assessing the impact of above amendments on its prospective financial
statements.

- Definition of Accounting Estimates (Amendments to IAS 8) – The amendments introduce a new definition for accounting
estimates clarifying that they are monetary amounts in the financial statements that are subject to measurement
uncertainty.

The amendments also clarify the relationship between accounting policies and accounting estimates by specifying that
an entity develops an accounting estimate to achieve the objective set out by an accounting policy. The amendments
are effective for periods beginning on or after January 01, 2023, and will apply prospectively to changes in accounting
estimates and changes in accounting policies occurring on or after the beginning of the first annual reporting period
in which the entity applies the amendments. The amendments are not likely to affect the financial statements of the
Company.

- Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12) – The
amendments narrow the scope of the initial recognition exemption (IRE) so that it does not apply to transactions that
give rise to equal and offsetting temporary differences. As a result, entities will need to recognise a deferred tax asset
and a deferred tax liability for temporary differences arising on initial recognition of a lease and a decommissioning
provision. For leases and decommissioning liabilities, the associated deferred tax asset and liabilities will need to be
recognised from the beginning of the earliest comparative period presented, with any cumulative effect recognised
as an adjustment to retained earnings or other components of equity at that date. The amendments are effective for
annual reporting periods beginning on or after January 01, 2023 with earlier application permitted. The amendments
are not likely to affect the financial statements of the Company.

- Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and
IAS 28) – The amendment amends accounting treatment on loss of control of business or assets. The amendments

Annual Report 2021 35

 also introduce new accounting for less frequent transaction that involves neither cost nor full step-up of certain retained
interests in assets that are not businesses. The effective date for these changes has been deferred indefinitely until the
completion of a broader review.

- The following annual improvements to IFRS standards 2018 - 2020 are effective for annual reporting periods beginning
on or after January 01, 2022:

a. IFRS 9 – The amendment clarifies that an entity includes only fees paid or received between the entity (the borrower)
and the lender, including fees paid or received by either the entity or the lender on the other’s behalf, when it applies
the ‘10 per cent’ test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognize a financial liability.

b. IFRS 16 – The amendment partially amends Illustrative Example 13 accompanying IFRS 16 by excluding the illustration
of reimbursement of leasehold improvements by the lessor. The objective of the amendment is to resolve any potential
confusion that might arise in lease incentives.

c. IAS 41 – The amendment removes the requirement in paragraph 22 of IAS 41 for entities to exclude taxation cash
flows when measuring the fair value of a biological asset using a present value technique.

The above amendments are not likely to affect the financial statements of the Company.

4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies
have been consistently applied to all the years presented.

4.1 Property, plant and equipment

Operating fixed assets

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses except freehold land,
factory building, non-factory buildings and plant and machinery which are stated at revalued amounts less accumulated
depreciation charged thereon.

Subsequent costs are included in an asset's carrying amount or recognized as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Company and its cost can be measured
reliably. Cost incurred to replace a component of an item of property, plant and equipment is capitalized, the asset so
replaced is retired from use and its carrying amount is derecognized. Normal repairs and maintenance are charged to the
statement of profit or loss during the period in which they are incurred.

Major spare parts qualify for recognition as property, plant and equipment when an entity expects to use them during more
than one year. Transfers are made to relevant operating assets category as and when such items are available for use.

Depreciation on additions is charged from the date when the assets become available for use till the date of disposal.
Depreciation on all property, plant and equipment is charged to the statement of profit or loss using the reducing balance
method over the asset's useful life at the rates specified in note 5.1 to these financial statements.

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss in the year in which
the asset is derecognized.

Any revaluation increase arising on the revaluation of freehold land, buildings and plant and machinery is recognised in
other comprehensive income and presented as a separate component of equity except to the extent that it reverses a
revaluation decrease for the same asset previously recognised in statement of profit or loss, in which case the increase is
credited to statement of profit or loss to the extent of the decrease previously charged. Any decrease in carrying amount
arising on the revaluation of land, buildings and plant and machinery is charged to statement of profit or loss to the extent
that it exceeds the balance, if any, held in the surplus on revaluation relating to a previous revaluation of that asset. The

36 Annual Report 2021

 surplus on revaluation to the extent of incremental depreciation charged is transferred to unappropriated profits. The surplus
realized on disposal of revalued fixed assets is credited directly to unappropriate profits.

Capital work-in progress

Capital work-in-progress is stated at cost less impairment if any, and consists of expenditure incurred in respect of property,
plant and equipment in the course of their construction and installation. Transfers are made to operating fixed assets as
and when the assets become available for use.

4.2 Intangible assets - accounting software

An intangible asset is recognised if it is probable that future economic benefits attributable to the asset will flow to the
enterprise and the cost of such asset can be measured reliably. Costs directly associated with an identifiable software that
will have probable economic benefits exceeding costs beyond one year, are recognised as an intangible asset. Direct costs
include the purchase cost of software and other directly attributable costs of preparing the software for its intended use.

Intangible assets are stated at cost less accumulated amortisation and impairment losses, if any, and are amortised using
the straight-line basis over its estimated useful life.

4.3 Stores and spares

Stores and spares excluding items in transit are valued at lower of average cost and net realizable value. Items in transit
are valued at cost comprising invoice values plus other charges incurred thereon accumulated to the reporting date.

Provisions are made in the financial statements for obsolete and slow-moving inventory based on the management's best
estimate regarding their future usability.

4.4 Stock-in-trade

Basis of valuation

All items of stock-in-trade are valued at the lower of cost and their net realizable value as of the reporting date.

Determination of cost

The cost of inventories comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories
to their present location and condition.

The costs of purchase of inventories comprise the purchase price, duties and other taxes (other than those subsequently
recoverable by the company from the taxing authorities), and transport, handling and other costs directly attributable to
the acquisition of materials and services. Trade discounts, rebates and other similar items are deducted in determining the
costs of purchase.

The costs of conversion of inventories include costs directly related to the units of production, such as direct labour. They
also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials
into finished goods. The allocation of fixed production overheads to the costs of conversion is based on the normal capacity
of the production facilities (which is the production expected to be achieved on average over a number of periods or seasons
under normal circumstances, taking into account the loss of capacity resulting from planned maintenance). However, in
periods of abnormally high production, the amount of fixed overhead allocated to each unit of production is decreased so
that inventories are not measured above cost. Variable production overheads are allocated to each unit of production on
the basis of the actual use of the production facilities.

The cost of the items consumed or sold and those held in stock at the reporting date is determined using the weighted
average cost formula.

Annual Report 2021 37

 Determination of net realizable value

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion
and the estimated costs necessary to make the sale. The cost of inventories may not be recoverable if their selling prices
have declined. The cost of inventories may also not be recoverable if the estimated costs to be incurred to make the sale
have increased.

The Company estimates the net realisable value of inventories based on the most reliable evidence available, at the reporting
date, of the amount the inventories are expected to realise. These estimates take into consideration fluctuations of price
or cost directly relating to events occurring after the end of the reporting period to the extent that such events confirm
conditions existing at the end of the reporting period.

While estimating the net realisable value, the Company also takes into consideration the purpose for which the inventory
is held. For example, the net realisable value of the quantity of inventory held to satisfy firm sales contracts is based on
the contract price. If the sales contracts are for less than the inventory quantities held, the net realisable value of the excess
quantity is based on general selling prices.

A new assessment is made of net realisable value in each subsequent period. When the circumstances that previously caused
inventories to be written down below cost no longer exist or when there is clear evidence of an increase in net realisable
value because of changed economic circumstances, the amount of the write-down is reversed (i.e. the reversal is limited
to the amount of the original write-down) so that the new carrying amount is the lower of the cost and the revised net
realisable value.

4.5 Trade debts

These are carried at their transaction price less any allowance for lifetime expected credit losses. A receivable is recognized
when the customer obtain control of the goods sold this is the point in time that the consideration is unconditional because
only the passage of time is required before the payment is due.

4.6 Cash and cash equivalents

Cash and cash equivalents are carried at cost. For the purpose of the statement of cash flows, cash and cash equivalents
comprise cash in hand, bank balances and short term borrowings from banks, if any, which are repayable on demand and
form an integral part of the Company's cash management.

4.7 Financial assets

4.7.1 Initial recognition, classification and measurement

The Company recognizes a financial asset when and only when it becomes a party to the contractual provisions of the
instrument evidencing investment. The Company classifies its financial assets into either of following three categories:

(a) financial assets measured at amortized cost.

(b) fair value through other comprehensive income (FVOCI); and
(c) fair value through profit or loss (FVTPL);

(a) Financial assets measured at amortized cost

A financial asset is measured at amortized cost if 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.

Such financial assets are initially measured at fair value plus transaction costs that are directly attributable to the
acquisition or issue thereof.

38 Annual Report 2021

 (b) Financial assets at FVOCI

A financial asset is classified as at fair value through other comprehensive income when it is held within a business
model whose objective is achieved by both collecting contractual cash flows and selling financial assets and its
contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.

Such financial assets are initially measured at fair value plus transaction costs that are directly attributable to the
acquisition or issue thereof.

(c) Financial assets at FVTPL

A financial asset shall be measured at fair value through profit or loss unless it is measured at amortised cost or at fair
value through other comprehensive income, as aforesaid. However, for an investment in equity instrument which is
not held for trading, the Company may make an irrevocable election to present in other comprehensive income
subsequent changes in the fair value of the investment.

Such financial assets are initially measured at fair value.

4.7.2 Subsequent measurement

(a) Financial assets measured at amortized cost

These assets are subsequently measured at amortized cost (determined using the effective interest method) less
accumulated impairment losses.

Interest / markup income, foreign exchange gains and losses and impairment losses arising from such financial assets
are recognized in the statement of profit or loss.

(b) Financial assets at FVOCI

These are subsequently measured at fair value less accumulated impairment losses.

A gain or loss on a financial asset measured at fair value through other comprehensive income in accordance is
recognised in other comprehensive income, except for impairment gains or losses and foreign exchange gains and
losses, until the financial asset is derecognised or reclassified. When the financial asset is derecognised, the cumulative
gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a
reclassification adjustment. Interest is calculated using the effective interest method and is recognised in profit or loss.

(c) Financial assets at FVTPL

These assets are subsequently measured at fair value.

Net gains or losses arising from remeasurement of such financial assets as well as any interest income accruing thereon
are recognized in the statement of profit or loss. However, for an investment in equity instrument which is not held
for trading and for which the Company has made an irrevocable election to present in other comprehensive income
subsequent changes in the fair value of the investment, such gains or losses are recognized in other comprehensive
income. Further, when such investment is disposed off, the cumulative gain or loss previously recognised in other
comprehensive income is not reclassified from equity to profit or loss.

4.7.3 Impairment

The Company recognises a loss allowance for expected credit losses in respect of financial assets measured at amortised
cost.

Annual Report 2021 39

 For trade receivables, the Company applies the IFRS 9 'Simplified Approach' to measuring expected credit losses which
uses a lifetime expected loss allowance.

For other financial assets, the Company applies the IFRS 9 'General Approach' to measuring expected credit losses whereby
the Company measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses if the credit risk on that financial instrument has increased significantly since initial recognition. However, if, at
the reporting date, the credit risk on a financial instrument has not increased significantly since initial recognition, the
Company measures the loss allowance for that financial instrument at an amount equal to 12 month expected credit losses.

The Company measures expected credit losses on financial assets in a way that reflects an unbiased and probability-weighted
amount, time value of money and reasonable and supportable information at the reporting date about the past events, current
conditions and forecast of future economic conditions. The Company recognises in profit or loss, as an impairment loss,
the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date.

Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets.

4.7.4 De-recognition

Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Company has transferred substantially all risks and rewards of ownership.

The Company directly reduces the gross carrying amount of a financial asset when the Company has no reasonable
expectations of recovering the financial asset in its entirety or a portion thereof. A write-off constitutes a derecognition
event.

4.8 Financial liabilities

Financial liabilities are classified as measured at amortized cost or 'at fair value through profit or loss' (FVTPL). A financial
liability is classified as at FVTPL if it is classified as held for trading, it is a derivative or it is designated as such on initial
recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest
expense, are recognized in the statement of profit or loss.

Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense
and foreign exchange gains and losses are recognized in the statement of profit or loss. Any gain or loss on de-recognition
is also recognized in the statement of profit or loss.

Financial liabilities are derecognized when the contractual obligations are discharged or cancelled or have expired or when
the financial liability's cash flows have been substantially modified.

4.9 Off-setting of financial assets and financial liabilities

Financial assets and liabilities are offset when the Company has a legally enforceable right to offset and intends to settle
either on a net basis or to realise the asset and settle liability simultaneously.

4.10 Provisions and contingent liabilities

Provisions

A provision is recognised in the statement of financial position when the Company has a legal or constructive obligation
as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the amount of obligation. Provisions are not recognised for
future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with
respect to any one item included in the same class of obligations may be small.

40 Annual Report 2021

 Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the
provision due to the passage of time is recognised as interest expense.

As the actual outflows can differ from estimates made for provisions due to changes in laws, regulations, public expectations,
technology, prices and conditions, and can take place many years in the future, the carrying amounts of provisions are
reviewed at each reporting date and adjusted to take account of such changes. Any adjustments to the amount of previously
recognised provision is recognised in the statement of profit or loss unless the provision was originally recognised as part
of cost of an asset.

Contingent liabilities

A contingent liability is disclosed when the Company has a possible obligation as a result of past events, whose existence
will be confirmed only by the occurrence or non-occurrence, of one or more uncertain future events not wholly within the
control of the Company; or the Company has a present legal or constructive obligation that arises from past events, but it
is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation, or the
amount of the obligation cannot be measured with sufficient reliability.

4.11 Employee benefits

Post-employment benefits - Defined contribution plan

A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate
fund and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets
to pay all employee benefits relating to employee service in the current and prior periods. As a consequence, actuarial risk
(that benefits will be less than expected) and investment risk (that assets will be insufficient to meet expected benefits) fall,
in substance, on the employee.

The Company operates an unfunded provident scheme for its mills employees which is classified as a defined contribution
plan. Equal monthly contributions are made by the Company and the workers and officers to the plan.

When an employee has rendered service to the Company during a period, the Company recognises the contribution payable
to a defined contribution plan in exchange for that service as an expense in profit or loss and as a liability in the statement
of financial position (accrued expense), after deducting any contribution already paid. If the contribution already paid exceeds
the contribution due for service before the end of the reporting period, the Company recognises that excess as an asset
(prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund.

Post-employment benefits - Defined benefit plan

A defined benefit plan is a post-employment benefit plan under which an entity regularly pays contributions into a separate
fund but will continue to have legal or constructive obligation to pay further contributions if the fund does not hold sufficient
assets to pay all employee benefits relating to employee service in the current and prior periods. As a consequence, actuarial
risk (that benefits will be less than expected) and investment risk (that assets will be insufficient to meet expected benefits)
fall, in substance, on the entity.

The Company operates an unfunded gratuity scheme for its employees which is classified as a defined benefit plan.

The Company’s obligation in respect of the defined benefit plan is calculated by estimating the amount of future benefit
that employees have earned in the current and prior periods and discounting that amount. The calculation of defined benefit
obligation is performed annually by a qualified actuary using the Projected Unit Credit Method.

Remeasurements of the defined benefit liability (i.e. the actuarial gains or losses) are recognised immediately in other
comprehensive income. The Company determines the interest expense on the defined benefit liability for the period by

Annual Report 2021 41

 applying the discount rate to the defined benefit liability at the beginning of the annual reporting period, taking into account
any changes in the defined benefit liability during the period as a result of contributions and benefit payments. Interest
expense and other expenses related to the defined benefit plan are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service
or the gain or loss on curtailment is recognised immediately in profit or loss. The Company recognises gains and losses on
the settlement of a defined benefit plan when the settlement occurs.

4.12 Revenue

Revenue from sale of goods

Typically, all the contracts entered into by the Company with its customers contain a single performance obligation i.e. the
transfer of goods promised in the contract.

The Company does not expect to have contracts with its customers where the period between the transfer of the promised
goods the customer and payment by the customer exceeds one year. As a consequence, the Company does not adjust any
of the transaction price for the time value of money.

Revenue from sale of goods is recognised when the customer obtains control of the promised goods. This is further analysed
as below:

(a) In case of local sale of goods, the customer is deemed to have obtained control of the promised goods being when
the goods are delivered to the customer and there is no unfulfilled obligation that could affect the customer's acceptance
of the goods.

Delivery occurs when the goods have been dispatched from the Company's premises and either the customer has
accepted the goods in accordance with the sales contract, the acceptance provisions have elapsed, or the Company
has objective evidence that all criteria for acceptance have been satisfied.

(b) Revenue from export sales is recognised when the customer obtains control of the goods being when the goods are
loaded on to the shipping vessel, and in case of export through land transportation, when the goods are dispatched
from the Company's premises, and there remains no other unfulfilled obligation to be satisfied by the Company.

Export subsidy

Export subsidy is recognized as income in the period in which it becomes receivable i.e. when all the prescribed eligibility
criteria have been met and the receipt of the related proceeds from the concerned government authority is probable.

4.13 Other income

Return on bank deposits is recognized on a time proportion basis on the principal amount outstanding and at the applicable
rate of return.

4.14 Impairment of non-financial assets

At each reporting date, the Company reviews the carrying amounts of its non-financial assets (other than inventories and
deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s
recoverable amount is estimated.

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or Cash Generating Units (CGUs).

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in

42 Annual Report 2021

 use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset or CGU.

An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.

Impairment losses are recognised in profit or loss. They are allocated to reduce the carrying amounts of the assets in the
CGU on a pro rata basis.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. A reversal of
impairment loss for a cash generating unit is allocated to the assets of the unit pro rata with the carrying amounts of those
assets. The increase in the carrying amounts shall be treated as reversal of impairment losses for individual assets and
recognized in profit or loss.

4.15 Taxation

Tax expense for the year comprises current and deferred tax. Tax is recognized in the statement of profit or loss, except to
the extent that it relates to items recognized in other comprehensive income or directly in equity. In that case, the tax is also
recognized in other comprehensive income or directly in equity, respectively.

Current tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.

Deferred tax

Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. However, deferred taxes are not accounted for if they
arise from the initial recognition of an asset or liability in a transaction other than a business combination that, at the time
of the transaction, affects neither accounting nor taxable profit or loss. Deferred tax is measured using tax rates (and laws)
that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses and credits only if it is probable
that future taxable amounts will be available to utilise those temporary differences and unused tax losses and credits.

Judgment and estimates

Significant judgment is required in determining the income tax expenses and corresponding provision for tax. The Company
recognizes liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final
tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the
current and deferred tax assets and liabilities in the period in which such determination is made.

Further, the carrying amount of deferred tax assets is reviewed at each reporting date and is adjusted to reflect the current
assessment of future taxable profits. If required, carrying amount of deferred tax asset is reduced to the extent that it is no
longer probable that sufficient taxable profits to allow the benefit of part or all of that recognised deferred tax asset to be
utilised. Any such reduction is reversed to the extent that it becomes probable that sufficient taxable profit will be available.

Offsetting

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities

Annual Report 2021 43

 and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where
the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle
the liability simultaneously.

4.16 Translation of foreign currency transactions and balances

On initial recognition, a foreign currency transaction is recognized, in the functional currency, by applying to the foreign
currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.

At the end of each reporting period, foreign currency monetary items are translated using the closing rate (i.e. the spot
exchange rate at the end of the reporting period).

Exchange differences arising on the settlement of monetary items or on translating monetary items at rates different from
those at which they were translated on initial recognition during the period or in previous financial statements are recognised
in profit or loss in the period in which they arise.

4.17 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are
recognised in profit or loss in the period in which they are incurred.

To the extent that the Company borrows funds specifically for the purpose of obtaining a qualifying asset, the Company
determines the amount of borrowing costs eligible for capitalisation as the actual borrowing costs incurred on that borrowing
during the period less any investment income on the temporary investment of those borrowings.

To the extent that the Company borrows funds generally and uses them for the purpose of obtaining a qualifying asset, the
Company determines the amount of borrowing costs eligible for capitalisation by applying a capitalisation rate to the
expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs applicable to all borrowings
of the Company that are outstanding during the period. However, the Company excludes from this calculation borrowing
costs applicable to borrowings made specifically for the purpose of obtaining a qualifying asset until substantially all the
activities necessary to prepare that asset for its intended use or sale are complete. The amount of borrowing costs that the
Company capitalises during a period does not exceed the amount of borrowing costs it incurs during that period.

The Company begins capitalising borrowing costs as part of the cost of a qualifying asset on the 'commencement date' which
is the date when the Company first meets all of the following conditions: (a) it incurs expenditures for the asset; (b) it incurs
borrowing costs; and (c) it undertakes activities that are necessary to prepare the asset for its intended use or sale.

The Company suspends capitalisation of borrowing costs during extended periods in which it suspends active development
of a qualifying asset.

The Company ceases capitalising borrowing costs when substantially all the activities necessary to prepare the qualifying
asset for its intended use or sale are complete.

4.18 Dividend distribution

Dividend distribution is recognised as a liability in the period in which the dividends are approved by the Company’s
shareholders.

2021 2020
5. PROPERTY, PLANT AND EQUIPMENT Note ––––––––– Rupees –––––––––

Operating fixed assets 5.1 4,840,678,847 4,938,997,983

44 Annual Report 2021

 5.1 Operating fixed assets

2021
Cost Accumulated depreciation
Written down value
As at October 01, As at September As at October 01, Charge for the As at September as at September
Additions Disposals Disposals
2020 30, 2021 2020 year 30, 2021 30,2021

Free hold land 873,884,000 - - 873,884,000 - - - - 873,884,000

Factory buildings on freehold land 266,020,520 669,952 - 266,690,472 99,340,412 16,698,282 - 116,038,694 150,651,778

Annual Report 2021

Non-factory buildings on freehold land 87,685,253 - - 87,685,253 15,587,231 3,604,901 - 19,192,132 68,493,121
Plant and machinery 4,778,227,779 96,707,696 - 4,874,935,475 1,013,892,017 190,269,248 - 1,204,161,265 3,670,774,210
Building construction machinery 12,553,248 - - 12,553,248 2,353,586 917,970 - 3,271,556 9,281,692
Railway slidings 2,191,346 - - 2,191,346 2,178,991 1,236 - 2,180,227 11,119
Vehicles 44,852,810 6,231,500 (2,299,500) 48,784,810 31,473,565 3,609,616 (1,895,101) 33,188,080 15,596,730
Office equipments 3,096,985 82,550 - 3,179,535 2,212,661 91,417 - 2,304,078 875,457
Computer and other equipments 7,363,931 1,322,700 - 8,686,631 4,583,615 332,837 - 4,916,452 3,770,179
Furniture and fixtures 6,016,326 427,600 - 6,443,926 4,064,872 207,843 - 4,272,715 2,171,211
Electrical equipments 15,785,394 - - 15,785,394 6,998,927 790,782 - 7,789,709 7,995,685
Water connections and electrical installations 9,395,957 7,692,206 - 17,088,163 4,339,052 981,003 - 5,320,055 11,768,108
Tools and other equipments 33,212,851 10,287,040 - 43,499,891 14,725,361 3,893,250 - 18,618,611 24,881,280
Arms and ammunations 401,000 - - 401,000 187,833 12,790 - 200,623 200,377
Air conditioners and refrigerators 1,905,150 120,000 - 2,025,150 1,656,444 44,806 - 1,701,250 323,900
6,142,592,550 123,541,244 (2,299,500) 6,263,834,294 1,203,594,567 221,455,981 (1,895,101) 1,423,155,447 4,840,678,847

2020
Cost Accumulated depreciation
Written down value
As at October 01, As at September As at October 01, Charge for the Disposals / As at September as at September
Additions Disposals
2019 30, 2020 2019 year transfers 30, 2020 30,2020
Free hold land 873,884,000 - - 873,884,000 - - - - 873,884,000
Factory buildings on freehold land 265,182,062 838,458 - 266,020,520 80,902,842 18,437,570 - 99,340,412 166,680,108
Non-factory buildings on freehold land 87,685,253 - - 87,685,253 11,792,598 3,794,633 - 15,587,231 72,098,022
Plant and machinery 4,742,216,412 36,011,367 - 4,778,227,779 816,727,299 197,164,718 - 1,013,892,017 3,764,335,762
Building construction machinery 12,553,248 - - 12,553,248 1,344,828 1,008,758 - 2,353,586 10,199,662
Railway slidings 2,191,346 - - 2,191,346 2,177,618 1,373 - 2,178,991 12,355
Vehicles 45,603,010 3,294,250 (4,044,450) 44,852,810 31,533,246 3,191,948 (3,251,629) 31,473,565 13,379,245
Office equipments 3,096,985 - - 3,096,985 2,114,403 98,258 - 2,212,661 884,324
Computer and other equipments 6,868,496 495,435 - 7,363,931 4,295,190 288,425 - 4,583,615 2,780,316
Furniture and fixtures 5,975,055 41,271 - 6,016,326 3,850,905 213,967 - 4,064,872 1,951,454
Electrical equipments 15,785,394 - - 15,785,394 6,129,936 868,991 - 6,998,927 8,786,467
Water connections and electrical installations 8,643,473 752,484 - 9,395,957 3,857,523 481,529 - 4,339,052 5,056,905
Tools and other equipments 22,419,574 10,793,277 - 33,212,851 12,473,636 2,251,725 - 14,725,361 18,487,490
Arms and ammunations 401,000 - - 401,000 174,227 13,606 - 187,833 213,167

45
Air conditioners and refrigerators 1,905,150 - - 1,905,150 1,612,555 43,889 - 1,656,444 248,706
6,094,410,458 52,226,542 (4,044,450) 6,142,592,550 978,986,806 227,859,390 (3,251,629) 1,203,594,567 4,938,997,983
 2021 2020
Note ––––––––– Rupees –––––––––
5.2 The depreciation for the year has been allocated as follows:

Cost of finished goods manufactured- Conversion costs 24.1.1 217,214,268 224,066,792

Administrative expenses 25. 4,241,713 3,792,598
221,455,981 227,859,390
5.3 Particulars of the Company's immovable fixed assets are as follows:

Asset class Location Total area

Freehold land Chistian 207.92 acres
Factory building Chistian 247,625 Sq.ft
Non-factory building Chistian 102,897 Sq.ft

5.4 The latest valuation of the freehold land, factory building, non-factory building and plant and machinery was carried out
by an independent valuer, M/s. Iqbal A. Nanjee and Company (Private) Limited, as at September 16, 2019. According to
that valuation, the fair value and forced sale value of the assets were as follows:

Fair value Forced sale

value
–––––––––– Rupees ––––––––––
Freehold land 873,884,000 699,107,200
Building- factory and non-factory 259,354,268 207,483,414
Plant and machinery 3,900,000,000 3,120,000,000

5.5 Had the freehold land, factory building, non-factory building and plant and machinery been carried under the cost model
of accounting, their carrying amounts, at the reporting date, would have been as follows:

2021 2020
Particulars ––––––––– Rupees –––––––––
Freehold land 18,855,030 18,855,030
Building, plant and machinery 1,342,943,262 1,316,277,717
1,361,798,292 1,335,132,747

6. INTANGIBLE ASSETS - Computer software

Cost 1,209,500 1,209,500

Accumulated amortization (1,209,500) (1,209,500)
Net book value - -

7. STORES AND SPARES

Stores inventory in hand 88,940,634 123,157,019

Spares inventory in hand 20,787,038 16,039,909
109,727,672 139,196,928
Provision for slow-moving and obsolete stores and spares - (25,209,837)
109,727,672 113,987,091

46 Annual Report 2021

 2021 2020
7.1 Provision for slow-moving and obsolete stores and spares ––––––––– Rupees –––––––––

Opening Balance 25,209,837 -

Charged during the year 4,349,473 25,209,837
Written off during the year (29,559,310) -
Closing Balance - 25,209,837

8. STOCK IN TRADE

Work-in-process 5,293,746 4,099,195

Finished goods- Sugar 273,540,684 200,793,701

Finished goods- Molasses - 21,450
273,540,684 200,815,151
278,834,430 204,914,346

9. SHORT TERM INVESTMENTS

This represents investments in term deposit receipts maintained with the various banks. The rates of return on these investments
range from 4.7% to 4.9% (2020: 4.7% to 11.608%).
2021 2020
10. TRADE DEBTS - unsecured, considered good Note ––––––––– Rupees –––––––––
Receivable against sales of sugar 410,047,952 244,685,999

11. SHORT TERM LOANS AND ADVANCES

Loans to staff 11.1 1,538,716 1,671,470

Advances:
- to growers 2,174,653 1,211,136
- to contractors 1,102,245 1,656,665
- to suppliers 187,748,470 199,754,484
- against expenses 373,911 798,423
- others 9,658,236 9,658,236
201,057,515 213,078,944
202,596,231 214,750,414

11.1 This represents interest free loan provided to employees in accordance with the Company's policy and are recoverable in
equal monthly installments.

2021 2020
12. TRADE DEPOSITS AND SHORT TERM ––––––––– Rupees –––––––––
PREPAYMENTS

Short term prepayments 1,502,052 514,093

Trade deposits - 229,346
1,502,052 743,439

Annual Report 2021 47

 2021 2020
Note ––––––––– Rupees –––––––––
13. OTHER RECEIVABLES- considered good

Rebate receivable 10,822,087 10,822,087

Interest accrued on term deposit receipts 1,215,464 1,217,849
Others 708,918 1,120,922
12,746,469 13,160,858

14. CASH AND BANK BALANCES

Cash in hand 13,710 -

Cash at bank
- Current accounts 178,131,485 85,726,143
- Deposit accounts 14.1 13,639,371 14,310,271
191,770,856 100,036,414
191,784,566 100,036,414

14.1 These represent balances held with banks in saving accounts carrying profit at the rate of 4% to 5% (2020: 4% to 5.5%).

15. AUTHORIZED, ISSUED, SUBSCRIBED AND PAID UP CAPITAL

2021 2020 2021 2020

----(Number of shares)---- ––––––––– Rupees –––––––––

Authorized capital
25,000,000 25,000,000 Ordinary shares of Rs. 10/- each 250,000,000 250,000,000

Issued, subscribed and paid up capital

Ordinary shares of Rs.10/- each:

14,968,221 14,968,221 - fully paid in cash 149,682,210 149,682,210

- issued to Pakistan Industrial Credit and Investment

250,000 250,000 Corporation under terms of loan agreement 2,500,000 2,500,000

2,072,741 2,072,741 - issued as fully paid bonus shares 20,727,410 20,727,410

17,290,962 17,290,962 172,909,620 172,909,620

15.1 There are no agreements among shareholders in relation to voting rights, board selection, right of first refusal and block
voting.

48 Annual Report 2021

 2021 2020
16. REVALUATION SURPLUS ON PROPERTY, Note ––––––––––– Rupees –––––––––––
PLANT AND MACHINERY - net

On freehold land

Gross surplus
Balance as at the beginning of the year 855,028,970 855,028,970
Revaluation increase recognized during the year - -
855,028,970 855,028,970
On buildings / plant and machinery

Gross surplus
Balance as at the beginning of the year 2,686,836,175 2,834,703,014
Revaluation increase recognized during the year - -
Incremental depreciation transferred to unappropriate profits (139,860,328) (147,866,839)
2,546,975,847 2,686,836,175

Related deferred tax charge

Balance as at the beginning of the year (779,182,487) (822,063,870)
Revaluation increase recognized during the year - -
Incremental depreciation transferred to unappropriate profits 40,559,491 42,881,383
(738,622,996) (779,182,487)
2,663,381,821 2,762,682,658

17. SUBORDINATED LOAN FROM THE

CHIEF EXECUTIVE- unsecured

Outstanding amount of the loan

(on undiscounted basis) 24,959,713 24,959,713

Outstanding amount of the loan

(on discounted basis):

Balance as at the beginning of the year 15,095,634 22,898,819

Add: Interest on unwinding of the loan during the year 1,597,118 2,060,894
16,692,752 24,959,713

Less: Effect of re-discounting upon extension in

maturity of the loan 17.1 - (9,864,079)
16,692,752 15,095,634

17.1 During the previous year, the outstanding carrying amount of the loan was fully amortized to its nominal value (i.e. Rs.
24.96 million) with a corresponding interest charge of Rs. 2.061 million recognized in the statement of profit or loss.
However, as of September 30, 2020, the terms of the loan were renegotiated with the Chief Executive of the Company
whereby the contractual maturity of the loan was extended for a further period of five (05) years ending on September 30,
2025. Accordingly, in view thereof, the nominal value of the loan was, again, discounted to its present value, as of September
30, 2020, determined using the discount rate of 10.58% (computed as 1-year KIBOR + 3% credit spread).

Annual Report 2021 49

 2021 2020
18. LONG TERM FINANCE - secured Note ––––––––– Rupees –––––––––
From conventional banking companies
Habib Bank Limited 18.1 120,000,000 -
JS Bank Limited 18.1 88,888,889 88,888,889
208,888,889 88,888,889
From Islamic banking companies
Al Baraka Bank (Pakistan) Limited 18.1 68,750,000 96,875,000
277,638,889 185,763,889
Current maturity shown under current liabilities (89,444,444) (72,569,444)
188,194,445 113,194,445

18.1 The principal terms and conditions of the above financing facilities are as under:

Term Finance Diminishing Musharaka

Bank: JS Bank Habib Bank Al Baraka Bank
Purpose: For procurement of plant and machinery / Optimal Capacity Utilization
Facility availed amount (Rs.): 200 million 120 million 150 million
Principal repayment frequency Semi-annually Quarterly Monthly
Mark up payment frequency Quarterly Quarterly Monthly
Date of the first installment May 17, 2018 July 21, 2022 December 13, 2018
Date of the last installment May 17, 2023 April 21, 2026 July 14, 2023
Total number of installments 9 16 48
Principal repayable in each installment (Rs.): 22,222,222 7,500,000 3,125,000
Markup rate (formula): 6 month KIBOR + 2.5% 3 month KIBOR + 2% Matching KIBOR + 3%
1) First Pari Passu 1) First Pari Passu equitable mortgage 1) First Pari Passu charge over all
Hypothetication charge of Rs. 301 charge of Rs. 267 Mn over mills present and future fixed assets (land,
million over plant & Machinery, tools, premises (land & building). building, plant and machinery) of the
spares & Equipment with 25% Margin. Company with 25% margin
2) First Pari Passu hypothecation charge amounting to Rs. 200 million.
2) Additional First Pari Passu for Rs. 267 million over present and
Hypothetication charge of Rs. 40 million future plant & machinery of company. 2) Personel guarantees of the
Security: on present & further machenry, directors, Mr. Ghulam Ahmed
equipment, furniture, fixture appliance, 3) Personal gurantee of Mr. Ghulam Adam, Mr. Junaid Ahmed Adam &
stores, spare tools & accessories Ahmad Adam for Rs. 667 million with Mr. Omar Adam amounting to Rs.
constructed or to be installed at factory 25%. 396.9 million.
premises.

3) Personal Gurantee of directors along

with net worth statement.

2021 2020
19. DEFERRED LIABILITIES Note ––––––––– Rupees –––––––––
Deferred taxation - net 19.1 786,756,331 842,887,693
Staff retirement benefits - gratuity 19.2 7,761,756 2,473,164
794,518,087 845,360,857

50 Annual Report 2021

19.1 Deferred taxation-net

For the year ended September 30, 2021

Balance at Recognized in Recognized in Balance at
beginning of profit or loss other end of
the year comprehensive the year
income
------------------------------------------- (Rupees) -------------------------------------------
Deferred tax liability in respect of:
Surplus on revaluation of property,
plant and equipment 782,621,578 (43,998,582) - 738,622,996
Accelerated tax depreciation 238,876,862 14,252,266 - 253,129,128
1,021,498,440 (29,746,316) - 991,752,124
Deferred tax asset in respect of:
Provision for gratuity (714,216) (1,536,693) - (2,250,909)
Provision for slow moving and obsolete stores and spares (7,310,853) 7,310,853 - -
Excess of Alternative Corporate Tax over Corporate Tax (16,094,202) (79,185) - (16,173,387)
Unused tax losses (16,790,493) (67,921,816) - (84,712,309)
Excess of Minimum Tax over normal tax liability (137,700,983) 35,841,795 - (101,859,188)
(178,610,747) (26,385,046) - (204,995,793)

Net deferred tax liability 842,887,693 (56,131,362) - 786,756,331

For the year ended September 30, 2020

Balance at Recognized in Recognized in Balance at
beginning of the profit or loss other end of the year
year comprehensive
income
------------------------------------------- (Rupees) -------------------------------------------
Deferred tax liability in respect of:
Surplus on revaluation of property,
plant and equipment 822,063,874 (39,442,296) - 782,621,578

Accelerated tax depreciation 248,630,846 (9,753,984) - 238,876,862

1,070,694,720 (49,196,280) - 1,021,498,440
Deferred tax asset in respect of:
Provision for gratuity (679,790) (34,426) - (714,216)
Provision for slow moving and obsolete stores and spares (7,310,853) - - (7,310,853)
Excess of Alternative Corporate Tax over Corporate Tax - (16,094,202) - (16,094,202)
Unused tax losses (117,036,040) 100,245,547 - (16,790,493)
Excess of Minimum Tax over normal tax liability (132,004,882) (5,696,101) - (137,700,983)
(257,031,565) 78,420,818 - (178,610,747)

Net deferred tax liability 813,663,155 29,224,538 - 842,887,693

Annual Report 2021 51

19.2 Staff retirement benefits - gratuity

As disclosed in note 4.11, the Company operates an unfunded gratuity scheme for its head office staff employees. The latest
actuarial valuation of the plan was carried out as at September 30, 2021 by M/s. Nauman Associates, using the Projected
Unit Credit Method.
2021 2020
19.2.1 Movement in net liability in the statement ––––––––– Rupees –––––––––
of financial position

Opening defined benefit obligation 2,473,164 2,344,104

Expense charged to statement of profit or loss 3,909,661 438,616
Remeasurements recognized in other
comprehensive income 1,820,666 (309,556)
Benefit paid (441,735) -
Closing defined benefit obligation 7,761,756 2,473,164
19.2.2 Expense recognized in the statement of
profit or loss

Current service cost 644,251 145,603

Past service cost 3,045,811 -
Interest cost on defined benefit obligation 219,599 293,013
3,909,661 438,616

19.2.3 Remeasurement gains recognised in other

comprehensive income

Actuarial loss / (gain) on defined benefit obligation due to

experience adjustments 1,820,666 (309,556)

19.2.4 Year end sensitivity analysis of defined

benefit obligation

Discount rate + 100 bps 7,303,126 2,408,960

Discount rate - 100 bps 8,302,674 2,546,489

Rate of salary increase + 100 bps 8,297,406 2,545,781

Rate of salary increase -100 bps 7,299,269 2,408,407

19.2.5 Principal assumptions used in valuation of gratuity 2021 2020

Discount rate used for interest cost in profit and loss 9.75% 12.50%
Discount rate used for year end obligation 10.50% 9.75%
Expected rate of increase in salary level (per annum) 10.50% 9.75%
Mortality rates SLIC 2001- 2005 SLIC 2001- 2005

19.2.6 As of the reporting date, the weighted average duration of the defined benefit obligation was 6 years
(2020: 3 years)

19.2.7 The current service, past service and interest cost amounting to Rs. 3,909,661 (2020: Rs. 438,616) has been classified under
administrative expenses.

52 Annual Report 2021

 2021 2020
20. SHORT TERM BORROWINGS Notes ––––––––– Rupees –––––––––
Unsecured - interest free
- from Chief Executive 20.1 32,164,394 32,164,394
- from Adam Pakistan Limited (a related concern) - 260,000,000
- from Adam Lubricants Limited (a related concern) 20.2 176,000,000 -
208,164,394 292,164,394
Secured
- from Conventional banking companies
- JS Bank Limited 20.3 199,124,886 199,996,496
- Habib Bank Limited 20.4 32,346,195 99,999,999
231,471,081 299,996,495
- from Islamic banking companies
- Dubai Islamic Bank Limited 20.5 121,000,000 -
- Askari Bank Limited 20.6 210,000,000 -
331,000,000 -
770,635,475 592,160,889

20.1 This represents a loan granted by Mr. Ghulam Ahmed Adam, the Chief Executive of the Company, to meet working capital
requirements of the Company. The loan is interest free and is repayable on demand.

20.2 This represents loan granted by M/s. Adam Lubricant Limited to meet working capital requirements of the Company. The
loan is interest free and is repayable on demand.

20.3 This represents the amount availed under the running finance facility obtained from M/s. JS Bank Limited in order to meet
the working capital requirements of the Company. As of September 30, 2021, the limit of the facility amounted to Rs. 200
million (2020: Rs. 278.5 million). The facility carries markup at the rate of 1-Month KIBOR + 3%. (2020: 1-Month KIBOR
+ 3.5%) and is secured against equitable mortgage on the property of the Directors (to the extent of market value) as well
as their personal guarantees. Further, the said facility is due to expire in November 2021.

20.4 This represents the amount availed under the cash finance facility obtained from M/s. Habib Bank Limited in order to meet
the working capital requirements of the Company. As of September 30, 2021, the limit of the facility amounted to Rs. 300
million (2020: Rs. 300 million). The facility carries markup at the rate of 1-Month KIBOR + 1.25%. (2020: 1-Month KIBOR
+ 1.25%) and is secured against pledge over stock of sugar bags with 25% margin amounting to Rs. 200 million, ranking
charge over fixed assets amounting to Rs. 300 million and personal guarantee of Director amounting to Rs. 667 million with
25% margin. Further, the said facility is due to expire in February, 2022.

20.5 This represents the amount availed under the Istisna cum Wakala facility obtained from M/s. Dubai Islamic Bank Limited
in order to meet working capital requirements of the Company. As of September 30, 2021, the limit of the facility amounted
to Rs. 300 million (2020: 200 million). The facility carries markup at the rate of relevant KIBOR + 2.25%. (2020: KIBOR
+ 2.25%) and is secured against pledge of sugar stock of Rs. 375 million with 20% margin, sixth charge over stocks and
fifth charge over receivables for Rs. 267 million with 25% margin, subordination of director's loan amounting to Rs. 16.2
million and personal guarantee of Ghulam Ahmed Adam (Director). Further, the said facility is due to expire in February,
2022.

20.6 This represents the amount availed under the salam facility obtained from M/s. Askari Bank Limited in order to meet working

Annual Report 2021 53

 capital requirements of the Company. As of September 30, 2021, the limit of the facility amounted to Rs. 300 million (2020:
Nil). The facility carries markup at the rate of Matching KIBOR + 1.50%. (2020: Nil) and is secured against pledge of sugar
stock of Rs. 400 million with 25% margin, charge over current assets for Rs. 400 million and personal guarantee of directors
of the company namely Mr. Ghulam Ahmed Adam and any other two other directors. Further, the said facility is due to
expire in June, 2022.

2021 2020
Notes ––––––––– Rupees –––––––––
21. TRADE AND OTHER PAYABLES

Trade creditors 21.1 46,795,188 120,337,519

Accrued liabilities 18,217,428 15,745,513
Advance from customers 69,569,243 29,427,126
Sales tax payable 179,364,309 299,113,707
Withholding tax payable 12,442,294 12,184,961
Retention money 114,656 308,799
Provision for Workers' Participation Fund 9,388,755 22,328,698
Provision for Workers' Welfare Fund 21.2 23,910,769 20,343,042
Others 2,063,167 2,014,124
361,865,809 521,803,489

21.1 This includes an amount of Rs. 44,227 (2020: Rs. 272,287) due to Adam Lubricants Limited, an associated undertaking,
as at reporting date.

2021 2020
21.2 Provision for Workers' Welfare Fund ––––––––– Rupees –––––––––
Opening balance 20,343,042 11,858,137
Allocation for the year 3,567,727 8,484,905
23,910,769 20,343,042

22. CONTINGENCIES AND COMMITMENTS

22.1 During the period ended September 30, 2021, the Commissioner, Inland Revenue (defunct) Zone II, LTU, selected the case
of the Company for tax years 2014 to 2019, for audit under section 177(1). During the pending proceedings, the jurisdiction
was transferred to Audit Unit-12 under Commissioner Inland Revenue, Audit-I, LTO. The Assistant Deputy Commissioner
(Audit-1) Inland Revenue, after notice and hearing, then passed orders in terms of Section 122(1) of identical nature resulting
in demand of Rs. 487.06 million against declared loss of Rs. 23.16 million for tax year 2014; demand of Rs. 4,426.9 million
against declared loss of Rs.79.73 million for tax year 2015; demand of Rs. 4,092.9 million against declared loss of Rs. 79.9
million for tax year 2016; demand of Rs. 4,554 million against declared income of Rs. 102 million for tax year 2017; demand
of Rs. 4,359.7 million against declared loss of Rs. 43.62 million for tax year 2018; demand of Rs. 4,320.9 million against
declared loss of Rs. 115.07 million for tax year 2019 respectively.

The Company filed appeals against the impugned orders and impugned demand for the aforesaid years before the Commissioner
Inland Revenue (Appeals) for the above mentioned tax years, whereby the Company failed to get desired relief, and therefore,
filed appeals in respect of tax years from 2015 to 2019, before the Appellate Tribunal which are pending for adjudication.
Further, the Company also filed Constitutional Petitions before the Honorable Sindh High Court, Karachi in respect of tax
years from 2014 to 2019, and the Court, vide its order dated January 25, 2021 in respect of tax year 2014, and orders dated

54 Annual Report 2021

 November 11, 2021, in respect of tax years 2015, 2016, 2017, 2018 and 2019, has directed the Department not to take
coercive action against the Company for recovery of impugned demand. The legal counsel is of the view that there is no
likelihood of any unfavourable outcome against the Company. Therefore, based on the view of its legal counsel and SHC's
order as mentioned above, management is confident that the case will be decided in its favour. Accordingly, no provision
has been made in these financial statements.

22.2 The Deputy Commissioner (Audit-I) Inland Revenue after reviewing declarations from e-portal of FBR issued show cause
notices under section 161(1) of Income Tax Ordinance, 2001 and created demand in respect of tax years 2015, 2016, 2017,
and 2019, amounting to Rs.24.3 million, Rs.14.1 million, Rs. 16.4 million and Rs.35.1 million respectively.

The Company filed Appeals against the impugned orders and impugned demand for the aforesaid years before the Commissioner
Inland Revenue (Appeals) along with application seeking stay of demand.

The Company also filed Constitutional Petitions before the Honorable Sindh High Court, Karachi and the Court, vide order
dated May 28, 2021, in respect of tax years of aforesaid tax years, has restrained the Department not to take coercive action
against the Company, based on which no provision has been made in these financial statements.

22.3 The Deputy Commissioner, Inland Revenue, LTO selected the case of the Company for the financial years 2016-17 (Tax
year 2018) and 2017-18 (Tax year 2019) u/s 25 of the Sales Tax Act, 1990, and after issue of notices and hearing, passed
identical orders dated April 8, 2021, for recovery of Sales tax under section 11(2) of the Sales Tax Act, 1990, thereby creating
demand amounting to Rs. 907.6 million and Rs. 1,003.2 million for tax years 2018 and 2019 respectively.

The Company filed Appeals against the impugned orders before the Commissioner Inland Revenue (Appeals). The Company
also filed Constitutional Petitions before the Honorable Sindh High Court, Karachi and the Court, vide its order dated May
7, 2021 in respect of the above years has directed the respondents not to take coercive measures for recovery of impugned
demand.

22.4 During the current financial year, the Competition Commission of Pakistan vide order dated August 13, 2021 in the matter
of PSMA and member undertakings in the enquiry F.No: 366/SUGAR ENQUIRY/C&TA/CCP/2020 has imposed collective
penalty on PSMA and member mills.

The CCP has imposed a penalty of Rs.277,754,779/- on Adam Sugar Mills Limited. PSMA and member mills have filed
an appeal before the Competition Appellate Tribunal against the impugned demand.

The PSMA and member mills have also filed Constitutional Petitions before the Honorable Sindh/Punjab High Court(s)
against legality, correctness, propriety and legitimacy of the Casting Vote of Chairperson of The Competition Commission
of Pakistan along with application seeking stay of demand against the impugned order.

22.5 Commitments

Guarantees issued by banking companies on behalf of the Company are as follows:

2021 2020
–––––––––– Rupees ––––––––––
Market Committee Chishtian 130,000 130,000
Excise duty collection Multan 50,000 50,000
Punjab Employees Social Security Institution 15,311,000 15,311,000

Annual Report 2021 55

 2021 2020
Note –––––––––– Rupees ––––––––––

23. SALES REVENUE - net

Revenue from export sale of sugar - 78,058,928

Revenue from local sales - net 23.1 2,880,598,200 3,475,932,079
2,880,598,200 3,553,991,007

23.1 Revenue from local sales - net

Revenue from sale of sugar - gross 2,887,016,082 3,722,112,979

Less: sales tax (299,138,827) (453,180,900)
2,587,877,255 3,268,932,079
Revenue from sale of molasses (by-product) 292,720,945 207,000,000
2,880,598,200 3,475,932,079

24. COST OF SALES

Opening stock of finished goods

- Sugar 200,793,701 924,577,774
- Molasses 21,450 -
200,815,151 924,577,774

Cost of finished goods manufactured 24.1 2,543,021,820 2,122,237,546

2,743,836,971 3,046,815,320

Closing stock of finished goods

- Sugar (273,540,684) (200,793,701)
- Molasses - (21,450)
(273,540,684) (200,815,151)
2,470,296,287 2,846,000,169

24.1 Cost of finished goods manufactured

Raw materials consumed 2,053,722,385 1,651,224,103

Conversion costs incurred 24.1.1 490,493,986 470,821,635
2,544,216,371 2,122,045,738

Opening stock of work in process 4,099,195 4,291,003

Closing stock of work in process (5,293,746) (4,099,195)
(1,194,551) 191,808
2,543,021,820 2,122,237,546

56 Annual Report 2021

 2021 2020
Note –––––––––– Rupees ––––––––––

24.1.1 Conversion costs incurred

Depreciation 5.2 217,214,268 224,066,792

Salaries, wages and allowances 24.1.1.1 148,450,232 140,356,038
Repairs and maintenance 61,754,481 43,612,469
Stores and spares consumed 24.1.1.2 33,678,542 31,436,874
Fuel and power 18,075,645 16,899,362
Insurance 7,458,673 10,902,985
Flying ash removal expenses 2,174,272 1,983,988
Market committee fees 1,687,873 1,563,127
490,493,986 470,821,635

24.1.1.1 This includes Rs. 383,073 (2020: Rs.363,766) in respect of staff retirement benefits.

24.1.1.2 It includes an amount of Rs. 6,090,485/- (2020: Rs. 10,282,387) against purchase of lube oil from M/s. Adam Lubricants
Limited (a related concern).

2021 2020
25. ADMINISTRATIVE EXPENSES Note ––––––––––– Rupees –––––––––––
Salaries, wages and other allowances 52,025,954 42,301,001
Directors' remuneration 38.3 5,756,182 5,729,384
Printing and stationery 2,438,047 2,157,062
Postage and telephone 5,305,419 2,319,003
Vehicle running expenses 2,295,262 2,331,537
Conveyance and travelling expenses 900,459 1,099,479
Auditors' remuneration 25.1 1,424,000 1,250,000
Legal and professional charges 15,093,192 1,102,415
Rent, rates and taxes 945,454 828,358
Electricity charges 3,559,023 2,705,849
Fees and subscription 2,703,864 786,290
Entertainment 1,729,343 1,453,176
General expenses 1,671,372 1,054,112
Repair and maintenance 3,741,697 591,114
Charity and donation 25.2 823,148 569,011
Computer expenses 542,069 488,548
Depreciation 5.2. 4,241,713 3,792,598
Bank charges 5,524,031 4,418,297
110,720,229 74,977,234
25.1 Auditors' remuneration
Annual audit 1,050,000 900,000
Review of half yearly financial statements 324,000 300,000
Other certifications 50,000 50,000
1,424,000 1,250,000

25.2 None of the directors or their spouse had any interest in the donees. Further, there is no single party to whom the donation
exceeds the higher of 10% of the Company's total amount of donation expense for the year or Rs. 1 million.

Annual Report 2021 57

 2021 2020
26. SELLING AND DISTRIBUTION COSTS ––––––––––– Rupees –––––––––––
Commission expenses 511,130 3,915,101
Shifting expenses 4,047,873 3,049,264
Loading and unloading expenses 702,448 1,544,397
Export expenses - 405,616
Advertisement expenses 1,030,702 133,000
6,292,153 9,047,378

27. FINANCE COSTS

Markup charge on long term borrowings:
- on conventional financing - Term finance 8,965,163 16,147,288
- on Islamic financing - Diminishing Musharka 8,369,080 16,415,469
17,334,243 32,562,757
Interest on unwinding of the long term loan
from the Chief Executive 1,597,118 2,060,894
Markup charge on short term borrowings:
- on conventional financing 44,630,961 96,962,526
- on Islamic financing 39,672,552 54,039,544
84,303,513 151,002,070
103,234,874 185,625,721

28. OTHER INCOME

Profit on saving accounts 2,967,589 1,868,018
Profit on term deposit receipts 1,165,271 2,252,503
Gain on sale of operating fixed assets 652,951 2,357,179
Liabilities no longer payable written off - 8,192,570
Miscellaneous 1,225,894 2,382,031
6,011,705 17,052,301

29. OTHER OPERATING EXPENSES

Provision for Workers' Welfare Fund 3,567,727 8,484,905
Provision for Workers' Profit Participation Fund 9,388,755 22,328,698
Advance to supplier written off - 8,818,840
Stores and spares written off 4,349,473 -
Surcharge on sales tax 3,941,799 -
21,247,754 39,632,443

30. TAXATION

Current 35,275,675 67,978,771

Deferred (56,131,362) 29,224,538
(20,855,687) 97,203,309

30.1 Except as disclosed in note 22.1 to these financial statements, income tax assessments of the Company are deemed to have
been finalized up to, and including, the tax year 2021 (accounting year ended September 30, 2020) based on the returns of
income filed by the Company with the concerned taxation authority. As per section 120 of the Income Tax Ordinance, 2001
('the Ordinance'), a tax return filed by a taxpayer is treated as an assessment order issued by the concerned taxation authority
unless the same is selected for re-assessment / audit as per the legal provisions stipulated in the Ordinance.

58 Annual Report 2021

 2021 2020
31. EARNINGS PER SHARE ––––––––––– Rupees –––––––––––

31.1 Basic earnings per share

Profit after taxation 195,674,295 318,557,054

––––––––––– Number –––––––––––

Weighted average number of ordinary shares
outstanding during the year 17,290,962 17,290,962

––––––––––– Rupees –––––––––––

Earnings / (loss) per share - basic 11.32 18.42

31.2 Diluted earnings / (loss) per share

There was no dilutive effect on the basic earnings per share of the Company, since there were no potential ordinary shares
in issue as at the reporting date.
2021 2020
32. CASH AND CASH EQUIVALENTS Note –––––––––– Rupees ––––––––––
Cash and bank balances 14. 191,784,566 100,036,414
Short term borrowings - running finance 20. (199,124,886) (199,996,496)
(7,340,320) (99,960,082)

33. RELATED PARTY TRANSACTIONS AND BALANCES

Related parties of the company comprise of Adam Pakistan Limited, Adam Lubricants Limited, key management personnel,
directors and their close family members. Remuneration of the Chief Executive and directors is disclosed in note 38.3 to
the financial statements. Transactions entered into, and balances held with, related parties, are as follows:

Basis of
Name of the related party relationship with Particulars
the party 2021 2020
––––––––– Rupees –––––––––
Adam Lubricants Limited Company under Puchases made during the year 6,090,485 10,282,387
common control Payment made during the year 6,318,545 11,101,080
Balances payable as at the year end 44,227 272,287
Loan received during the year 176,000,000 -
Loan payable as at the year end 176,000,000 -

Adam Pakistan Limited Company under Loan received during the year - 260,000,000
common control Loan payable as at the year end - 260,000,000

Chief Executive (Mr. Key management Short term loan payable as at the year end 32,164,394 32,164,394
Ghulam Ahmed Adam) personnel Subordinated loan payable as at the year end 24,959,713 24,959,713

34. SEGMENT INFORMATION

These financial statements have been prepared on the basis of single reportable segment i.e. sale and manufacturing of sugar.
The entity-wide disclosures required by IFRS 8 'Operating Segments' are given below:

Annual Report 2021 59

 (a) Revenue from sale of sugar represents 90.92% (2020: 94.18%) of the total revenue whereas remaining represent
revenue from sale of molasses.

(b) 100% (2020: 98%) gross sales of the Company were made to customers based in Pakistan.

(c) As at September 30, 2021 and September 30, 2020 all non-current assets of the Company were located in Pakistan.

(d) Following are the customers from whom 10% or more of the entities revenue has been generated during the year:

2021 2020
-------------- Rupees --------------
Customer- A 937,099,111 1,090,809,710
Customer- B 537,119,410 677,167,764
Customer- C - 353,586,887
Customer- D - 474,336,016

35. FINANCIAL INSTRUMENTS

35.1 Categories of financial assets and financial liabilities

2021 2020
35.1.1 Financial assets -------------- Rupees --------------
At amortised cost
Long term deposits 4,311,481 121,900
Short term investments 25,323,290 25,323,290
Trade debts 410,047,952 244,685,999
Short term loans 1,538,716 1,671,470
Trade deposits - 229,346
Other receivables 1,924,382 2,338,771
Cash and bank balances 191,784,566 100,036,414
634,930,387 374,407,190

35.1.2 Financial liabilities

Subordinated loan from the Chief Executive 16,692,752 15,095,634

Long term finance 277,638,889 185,763,889
Short term borrowings 770,635,475 592,160,889
Trade and other payables 67,190,439 138,405,955
Accrued markup 20,270,153 15,060,728
1,152,427,708 946,487,095

35.2 Risks arising from financial instruments

The Board of Directors of the Company has overall responsibility for the establishment and oversight of the Company's
risk management framework. The Company has exposure to the following risks from its use of financial instruments:

- Credit risk
- Liquidity risk
- Market risk

60 Annual Report 2021

35.2.1 Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to
discharge an obligation.

A financial asset is regarded as credit impaired as and when it falls under the definition of a 'defaulted' financial asset. For
the Company’s internal credit management purposes, a financial asset is considered as defaulted when it is past due for 90
days or more.

The Company writes off a defaulted financial asset when there remains no reasonable probability of recovering the carrying
amount of the asset through available means. Written off financial assets are not subject to enforcement activity.

Maximum exposure to credit risk and its management strategies

Following is the quantitative analysis of the Company's maximum exposure to credit risk as at the reporting date:

2021 2020
-------------- Rupees --------------

Long term deposits 4,311,481 121,900

Short term investments 25,323,290 25,323,290
Trade debts (see note 'a' below) 410,047,952 244,685,999
Short term loans 1,538,716 1,671,470
Trade deposits - 229,346
Other receivables 1,924,382 2,338,771
Bank balances (see note 'b' below) 191,770,856 100,036,414
634,916,677 374,407,190

Note 'a' - Credit risk management of trade debts

The Company attempts to control credit risk arising from dealings with customers by monitoring credit exposures and
continually assessing the creditworthiness of its customers. As part of its credit risk management strategy, the Company
receives advances from customers against sales of goods. In addition, the Company has a system of assigning credit limits
to its customers based on an extensive evaluation of customer profile and payment history. Outstanding customer receivables
are regularly monitored.

As of the reporting date, the aging analysis of trade debts was as follows:

2021 2020
Gross Provision for Gross Provision for
carrying expected carrying expected
amount credit losses amount credit losses

–––––––––––––––––––––– Rupees ––––––––––––––––––––––

Not past due 409,728,832 - 244,366,879 -
Past due 3 months -1 year - - - -
Past due 1 year to 3 year 319,120 - 319,120 -
410,047,952 - 244,685,999 -

Annual Report 2021 61

 Based on past experience, consideration of financial position, past track records and recoveries, the Company believes that
trade debtors considered good do not require any impairment. The Company trades on advance basis instead of credit basis,
therefore, credit risk is usually not involved. Further, substantial amount of debtors have been collected post year end,
therefore, expected credit loss has not been considered.

Note 'b' - Credit risk management of bank balances

To minimize its exposure to credit risk, the Company maintains its cash balances only with banks with high quality credit
worthiness. As of the reporting date, the external credit ratings of the Company's major bankers were as follows:

Bank Name Credit Rating

Rating
Short term Long term
Agency

Habib Metropolitan Bank Limited PACRA A1+ AA+

United Bank Limited VIS A-1+ AAA
Soneri Bank Limited PACRA A1+ AA-
Bank of Punjab Limited PACRA A1+ AA+
Al Baraka Bank (Pakistan) Limited PACRA A1 A
Faysal Bank Limited PACRA A1+ AA
Askari Commercial Bank Limited PACRA A1+ AA+
Allied Bank Limited PACRA A1+ AAA
Dubai Islamic Bank Limited VIS A-1+ AA
MCB Bank Limited PACRA A1+ AAA
Habib Bank Limited VIS A-1+ AAA
Bank Alfalah Limited PACRA A1+ AA+
Bank Al Habib Limited PACRA A1+ AAA
Meezan Bank Limited VIS A-1+ AAA

Concentration of credit risk

Concentration of credit risk arises when a number of financial instruments or contracts are entered into with the same party,
or when counter parties are engaged in similar business activities, or activities in the same geographic region, or have similar
economic features that would cause their ability to meet contractual obligations to be similarly affected by change in
economics, political or other conditions. Concentrations of credit risk indicate the relative sensitivity of the Company's
performance to developments affecting a particular industry. As of the reporting date, the Company was exposed to following
concentration of credit risk:

2021 2020
-------------- Rupees --------------
Customer- A 299,295,209 163,845,874
Customer- B 125,622,209 50,700,000

35.2.2 Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting its financial obligations as they fall due.
Liquidity risk arises because of the possibility that the Company could be required to pay its liabilities earlier than expected
or difficulty in raising funds to meet commitments associated with financial liabilities as they fall due. The Company’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities

62 Annual Report 2021

 when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the
Company's reputation. The following are the contractual maturities of financial liabilities:

September 30, 2021

Carrying Contractual Twelve months One to five
amount cash flows or less years
-------------------------------------- (Rupees) --------------------------------------
Non-derivative financial liabilities
Long term finance (including accured markup) 284,501,902 326,205,366 111,079,908 215,125,458
Subordinated loan from the Chief Executive 16,692,752 24,959,713 - 24,959,713
Short term borrowings 770,635,475 770,635,475 770,635,475 -
Accured markup on short term borrowings 13,407,141 13,407,141 13,407,141 -
Trade and other payables 67,190,439 67,190,439 67,190,439 -
1,152,427,709 1,202,398,134 962,312,963 240,085,171

September 30, 2020

Carrying Contractual Twelve months One to five
Amount cash flows or less years
-------------------------------------- (Rupees) --------------------------------------
Non-derivative financial liabilities
Long term finance (including accured markup) 190,029,863 216,334,318 91,488,827 124,845,491
Subordinated loan from the Chief Executive 15,095,634 24,959,713 - 24,959,713
Short term borrowings 592,160,889 592,160,889 592,160,889 -
Accured markup on short term borrowings 10,794,755 10,794,755 10,794,755 -
Trade and other payables 138,405,955 138,405,956 138,405,956 -
946,487,096 982,655,631 832,850,427 149,805,204

35.2.3 Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in
market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.

a) Currency risk

Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due
to a change in a foreign exchange rate. It arises mainly where receivables and payables exist due to transactions in
foreign currency. As of the reporting date, the Company was not exposed to any foreign currency risk.

b) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. As of the reporting date, the Company was exposed to cash flow interest rate risk
on the long term and short term financing obtained from banks.

Since all the borrowings of the Company are variable rate borrowings, as of the reporting date, the Company was not
exposed to fair value risk on its borrowings.

Annual Report 2021 63

 Exposure to interest rate risk

At the reporting date, the interest rate profile of the Company's significant interest bearing financial instruments was
as follows:

2021 2020 2021 2020

Effective interest rate (%) Carrying amount (Rs.)
Financial liabilities

Long term finance 9.47%-9.51% 9.92%-10.3% 277,638,889 185,763,889

Short term borrowings 8.64%-10.51% 8.85%-10.92% 770,635,475 592,160,889

Financial assets
Short term investments 4.7% - 4.9% 4.7% - 11.608% 25,323,290 25,323,290

Bank deposits - pls account 4% - 5% 4% - 5.5% 13,639,371 14,310,271

Sensitivity analysis:

As of the reporting date, if average KIBOR interest rate on borrowings had been 100 basis points higher / lower with
all other variables held constant, profit before taxation for the year would have been lower / higher by Rs 7.383 million
(2020: Rs. 14.384 million) respectively, mainly as a result of higher / lower net interest expense.

c) Other price risk

Other price risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in the market prices (other than those arising from interest/ mark up rate risk or currency risk),
whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors
affecting all or similar financial instruments traded in the market. As of the reporting date, the Company was not
exposed to any other price risk.

36. FAIR VALUE OF ASSETS AND LIABILITIES

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.

The Company measures fair values using the following fair value hierarchy that reflects the significance of the inputs used
in making the measurements:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in 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 (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then

64 Annual Report 2021

 the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input
that is significant to the entire measurement.

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the management
recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change
has occurred. However, during the year, there were no transfers between the levels of the fair value hierarchy.

Following is the fair value hierarchy of the assets carried at fair value:

Level 1 Level 2 Level 3 Total

–––––––––––––––––– Rupees ––––––––––––––––––
September 30, 2021
- Freehold land - 873,884,000 - 873,884,000
- Factory building - 150,651,778 - 150,651,778
- Non - factory building - 68,493,121 - 68,493,121
- Plant and machinery - 3,670,774,210 - 3,670,774,210

September 30, 2020

- Freehold land - 873,884,000 - 873,884,000
- Factory building - 166,680,108 - 166,680,108
- Non - factory building - 72,098,022 - 72,098,022
- Plant and machinery - 3,764,335,762 - 3,764,335,762

37. CAPITAL MANAGEMENT

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence, sustain
future development of the business, safeguard the Company's ability to continue as a going concern in order to provide
returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure to reduce the cost
of capital. The Board of Directors monitors the return on capital, which the Company defines as net profit after taxation
divided by total shareholders' equity. The Board of Directors also monitors the level of dividend to ordinary shareholders.
There were no changes to the Company's approach to capital management during the year and the Company is not subject
to externally imposed capital requirements.

Following is the quantitative analysis of what the Company manages as capital:

2021 2020
-------------- Rupees --------------
Borrowings
Long term finance 277,638,889 185,763,889
Subordinated loan from the Chief Executive 24,959,713 24,959,713
302,598,602 210,723,602

Share capital and reserves

Issued, subscribed and paid up capital 172,909,620 172,909,620
Share premium 172,909,620 172,909,620
Unappropriated profits 541,364,302 317,373,684
General reserve 200,000,000 200,000,000
1,087,183,542 863,192,924
1,389,782,144 1,073,916,526

Annual Report 2021 65

38. DISCLOSURES REQUIRED BY THE COMPANIES ACT, 2017

38.1 Plant capacity and actual production

2021 2020
Quantity Quantity
No. of Days No. of Days
(Metric Tons) (Metric Tons)

Crushing capacity 826,000 180 826,000 180

Cane crushed 337,875 130 312,955 114
Production - sugar 29,543 130 31,952 114

38.1.1 During the crushing season 2020-21, mill operated 130 days (2020: 114 days) out of 180 days, therefore the production
capacity of the Company remained under utilized mainly due to non-availability of sugar cane.

2021 2020
38.2 Number of employees -------------- Number --------------

Total number of employees as at the year end 479 452

Average number of employees during the year 622 631

38.3 Remuneration of the Chief Executive, Directors and Executives

The aggregate amounts charged in the financial statements for remuneration, including certain benefits to Directors, Chief
Executive and Executives of the Company, as follows:

2021
Chief Executive Directors Executives Total
------------------------------------- Rupees -------------------------------------

Basic salary 36,000 5,352,000 - 5,388,000

Vehicle expenses 91,891 236,291 - 328,182
Meeting Fee - 40,000 - 40,000
127,891 5,588,291 - 5,756,182

Number of persons 1 5 -

2020
Chief Executive Directors Executives Total
------------------------------------- Rupees -------------------------------------
Basic salary 36,000 5,352,000 - 5,388,000
Vehicle expenses 96,344 245,040 - 341,384
132,344 5,597,040 - 5,729,384
Number of persons 1 2 -

66 Annual Report 2021

38.3.1 The Chief Executive and two directors of the Company have been provided with free use of the Company maintained cars.

39. GENERAL

39.1 Reclassification of corresponding figures

The corresponding figures have been rearranged and reclassified, wherever considered necessary for the purposes of
comparison and better presentation. Major reclassifications of corresponding figures made in these financial statements is
as follows:

Reclassified from component Reclassified to component –– Rupees ––

Others Receivable
- Others Long Term Deposit 89,500

Advance to suppliers Advance to others 9,658,236

(Short term loans and advance) (Short term loans and advance)

39.2 Non - adjusting event after the reporting date

The Board of Directors in their meeting held on Jan 06, 2022 has proposed a final cash dividend of Rs. 2/- per share
(2020: Rs. 4 per share) for approval of the members at the Annual General Meeting to be held on Jan 28, 2022. These
financial statements do not reflect this appropriation.

39.3 Date of authorization of the financial statements for issue

These financial statements have been authorized for issue by the Board of Directors of the Company in their meeting held
on Jan 06, 2022.

39.4 Level of rounding

Figures in these financial statements have been rounded off to the nearest rupee.

GHULAM AHMED ADAM OMAR G. ADAM FAISAL HABIB

Chief Executive Director Chief Financial Officer

Annual Report 2021 67

 56

Friday
January 28, 2022

2022

68 Annual Report 2021

Annual Report 2021 69