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Ai-Abbas Suger Mills Limited: A Case
Studey by Amna Qadir
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Al Abbas Sugar Mills Limited: A Case Study By Amna Qadir Student of MBA 3.5Yrs (Finance),
COMSATS Institute of Information and Technology, Abbottabad. amna_qadir@yahoo.com Project Supervisor
Mr. Zaheer Ahmed Swati Lecturer Accounting, COMSATS Institute of Information and Technology,
Abbottabad. zaheerswati@ciit.net.pk Department of Management Sciences COMSATS Institute of
Information and Technology, Abbottabad. Al Abbas Sugar Mills Limited: A Case Study Chapter 1: ?
INTRODUCTION: 1.1. Brief of Sugar: th Pakistan is the 5 largest country in the world in terms of area under
sugarcane cultivation, th th 11 by production and 60 in yield (Shaukat). Sugarcane is the primary raw
material for the production of sugar. Sugar is one of the most essential commodities used in every house
and it also plays a significant role in the diet of human beings. Sugar is the most widely used form of
carbohydrates. 1.2. Sugar Manufacturing Process: Sugar exists in various forms and may be utilized from
different sources in nature. It can be produced by many sources like sugarcane, sugar beet, maple palm,
coconut and apple, but the most convenient for production on large scale and considerable quantities is the
sugarcane and sugar beet (Memon). Thus, like many other countries all over the world, sugarcane is the
major source of production of sugar in Pakistan. The process for sugarcane refining after its cultivation
involves the following stages: ? Pressing of the sugarcane to extract the juice. ? Boiling this extracted juice
until it begins to thicken and sugar begins to crystallize. ? Spinning the crystals in a centrifuge to remove the
syrup, producing raw sugar. ? Refining the raw sugar by washing and filtering to remove remaining non-sugar
ingredients and color. ? Crystallizing, drying and packaging the refined sugar. 1.3. Significance of the study:
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There is not much evidence of work done in sugar industry in Pakistan. This project is an attempt to
contribute to the study on Al-Abbas Sugar Mills Limited. The broad objective of this study is to analyze the
companys financial data since its inception, whereas the specific objectives of the study include analyzing
the data using various financial techniques including the horizontal and vertical analysis. Besides, analysis
of the variables in terms of measures of central tendency and dispersion, correlations and line graphs help
analyze the major shifts in the data. The results of this study can be used by the public and private sectors.
The authorities concerned can use the results for taking special steps to improve future production. Also, the
advisors, researchers and scholars can use the findings of the study for future refinement. 1.4. Breakdown
of the study: An overview of the global scenario followed by the industry and company profile is given in
Chapter-2. The next chapter quotes the products and services offered by Al-Abbas Sugar Mills Limited.
Chapter-4 describes the best practices observed by the company in accordance with the code of corporate
governance. Financial analysis including methodology, descriptive statistics, data analysis using various
financial techniques, swot analysis and comparison of the company with the industry leading to limitations of
the study and recommendations are described in Chapter-5. Fig 1.1 Process of the Case Study Sugar
Sector Industry Overview Data Collection Selection of Company Data Processing Data Analysis and
Interpretation Recommendations Chapter 2: ? THEORETICAL REVIEW : 2.1. Global Scenario: The
international trade in sugar has changed dramatically over the past fifty years. Sugar is imported or exported
in huge quantities all around the world and has become an integral component of the economic relationships
among nations. Because of that unique position, the trade in sugar has been affected by a wide range of
different forces, including global politics, health consciousness, the emergence of developing nations as
suppliers and consumers, and many others. Sugar is mainly produced from two sources, Sugarcane and
Beet. The costs of producing sugar from sugarcane are lower with respect to processing the sugar beets.
The world market price has historically been one of the most volatile of all commodity prices because of the
residual nature of the world market (M.Ammar Arif Nakhuda, 2010). The global sugar market is also
experiencing a scenario of sugar deficit, as production has failed to meet the consumption. Consumption is
also expected to increase in the global sugar market, thus creating a balance in the global sugar scenario.
With global oil prices remaining firm, significant amount of sugarcane diversion may happen for ethanol
production, which will hamper sugar production (Malu, 2007). 2.2. Sugar Industry in Pakistan: After Textiles,
the sugar industry is the second largest agro based industry in Pakistan. The share of sugar industry in
value added of agriculture and GDP are 3.2 percent and 0.7 percent respectively (Saeed, 2013). Pakistan
Sugar Mills Association (PSMA) has 83 sugar mills of Pakistan listed province vise. Among these 83 names
of Sugar Mills listed on their website, 45 are located in Punjab, 30 in Sindh and 8 in KPK (Pakistan Sugar
Mills Association, Islamabad, 2011). 2.3. Production of Sugar in Pakistan: Sugarcane is grown on around a
million hectares and provides the raw material for Pakistans 83 sugar mills. These 83 mills have the
capacity to produce 7.0 million tons of sugar but since the per hectare production of sugar in Pakistan is
60th probably the lowest in world because of using ancient technology, Pakistan produces only 3 to 3.5
million tons sugar on average. In Pakistan, the sugar is mainly produced as molasses which is the less
refined forms of sugar and the sugar produced by the sugar mills owned by organized players of the industry.
2.4. Background of Al-Abbas Group: Al-Abbas Sugar Mills Limited is a member of a group of companies
called Al-Abbas Group. (Al-Abbas Sugar Mills Limited, 2012) The group has made an impression on the
sugar, industrial alcohol, fiber board, alloys industry as well as leaving an incredible mark on the sugar
industry. The Al-Abbas Group includes the following: ? Al-Abbas Sugar Mills Limited. ? Al-Abbas Industries
Limited. ? Al-Abbas Cement Industries Limited. ? Javedan Cement Company Limited. 2.5. Company
Analysis:
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3Al-Abbas Sugar Mills Limited is a progressive company that was
incorporated in May, 1991. The shares of the Company were listed on

April, 1992 at the Karachi Stock Exchange (Guarantee) Limited.
Soon
3after its incorporation the company stood on sound financial and
operational footings that paved the way for its future growth.
Al-Abbas Sugar Mills Limited has two established units. One unit is located at Mirwah Gorchani, Taluka
Mirpukhas and the other at Dhabeji Thatta. The unit at Mirwah Gorchani, Taluka Mirpukhas has
3sugarcane crushing capacity of 7,500 tons per day and its capacity of
processing molasses into quality industrial alcohol is about 170,000 liters per
day. The Company has also installed 6 MW power plants to cater power
requirement of sugar and distillery unit at the
same location. 4 While the unit
3at Dhabeji Thatta has 15 MW captive power coal fired plant and has
capacity to manufacture 27,220 M.T of different alloys per annum. The tank
terminal unit of the company which is located at Kemari Karachi has the
storage capacity of 34,900 M.T of liquids.
It began to produce sugar in 1994. The industrial alcohol production was started
3in 2000, alloys in 2005 and power generation in 2010.
(Al-Abbas Sugar Mills Limited, 2012) The company installed its highly developed ethanol plant in the year
2000. Another major accomplishment for the company was the successful installment of the ethanol distillery
reflecting
2the companys belief in calculated expansion and diversification by

expanding its real financial strength and its ability.
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Granulated white sugar of high commercial value is produced by the company that
3has a definite edge in the market. The company became one of the only
three sugar mills in Pakistan
in 1997-98, that produced sugar according to the international quality standards in all respects. Fine alcohol
of good quality and reputation
3is being exported to Europe, Japan, UAE, Saudi Arabia and Philippine.
The company ventured into inorganic growth by acquiring Al-Abbas Industries Limited in 2007 as part of the
companys strategic planning. It produces
3various types of alloys product to meet the whole country s demand.
Eventually, the Al-Abbas Sugar Mills Limited was amalgamated with the Al-Abbas Industries Limited. The
Company is concerned about preserving the
3environment and well aware of its Corporate Social Responsibility. In
order to achieve this objective, a waste water treatment plant was

installed in 2001
3making significant contribution towards the economy of the sugar plant.
The Management of the Company bears a special interest in improving the

social conditions of its employees and residents around the plant with
evident concern for environment.
The company does so by investing
3in several social projects including establishing a primary school that offers
good quality education at nominal cost, financial support on a continuous

basis to a foundation to develop and maintain a school and medical complex
that spreads over 20 acres.
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2.5.1.
4Vision: Al-Abbas Sugar Mills Limited is committed to earn reputation of
a reliable manufacturer and supplier of good quality white sugar,

industrial alcohol, calcium carbide, and alloys in local and international
markets. 2.5.2. Mission: ? To be a profitable organization and to meet the
expectation of all stakeholders. ? To become competitive in local and
international markets by concentrating on quality of core products. ? To

promote best use and development of human resources in a safe
environment, as an equal opportunity employer. ? To use advance
technology for efficient and cost effective operations.
2.5.3. Objective: The companys objective is to improve in manufacturing, selling and distribution of high
quality sugar in Pakistan, provide leadership to drive new business and to position the company at the
forefront of the sugar industry. Al-Abbas Sugar Mills Limiteds financial objectives focus on achieving
acceptable profitability in pursuit of its vision and mission, long-term health and its ultimate survival. 2.5.4.
Business Profile: The Company's fortunes soared as a result of the impact of sound financial policies,
advanced technology, innovative approach and
3production planning combined with creative marketing and management
strategies,
3and from the perspective of profitability as well as overall corporate
image, the Company was firmly placed in a distinct position in the industry.
(Al- Abbas Sugar Mills Limited, 23rd Annual Report, 2013) CRUSHING CAPACITY of Mirwah Gorchani 7,500
M.Ton sugarcane per day HEAD
4OFFICE 2nd Floor, Pardesi House, Survey No. 2/1, R.Y. 16, Old Queens
Road, Karachi - 74000 Tel: (+92-21) 111-111-224 Fax: (+92-21) 32470090
FACTORIES / LOCATION
41. Mirwah Gorchani, Distt. Mirpurkhas, Sindh 2. Main National Highway,
Dhabeji, Sindh
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3. Oil Installation Area, Kemari, Karachi, Sindh BOARD OF DIRECTORS MR. MUHAMMAD IQBAL USMAN
Chairman
1MR. SHUNAID QURESHI Chief Executive Officer MR. ASIM GHANI Executive
Director MR. ZUHAIR ABBAS Chief Financial Officer COMPANY SECRETARY
MR. ZUHAIR ABBAS
MANAGEMENT TEAM MR. SAYYED RAFAY AKBER RASHDI Chairman Audit Committee MR. TARIQ IQBAL
Secretary of Internal Audit MR. DURAID QURESHI Head of Human Resource and Remuneration MR. TAHIR
HUSSAIN MEMON
1Head of Procurement MR. GHULAM MUHAMMAD SOOMRO General Manager
Plant Mirwah MR. ARIF HUSSAIN General Manager Production Mirwah MR.
GHULAM AKBER General Manager Cane Mirwah MR. UMER BOZDAR General
Manager Mechanical Mirwah MR. AVES COACHINWALA General Manager

Operation Dhabeji
AUDITORS HAROON ZAKARIA & CO. Chartered Accountants ? PRODUCTS AND SERVICES: Products and
Services of Al-Abbas SM Ltd 3-1 Bagasse Services Al-Abbas Sugar Mills Limited Ferro Alloys White Refined
Sugar Ethanol Molasses 3.1. Products: Al-Abbas Sugar Mills Limited yields the following products during its
production and manufacturing of sugar: 3.1.1.
2White Refined Sugar: White refined sugar is the most odorous form of
sugar, produced from sugarcane. At harvest time, farmers cut off the
sugarcane and transport them to a sugar processing plant to be pressed.
The flavor of white refined sugar is relatively neutral, making it a popular
choice for baking and sweetening drinks.
3.1.2.
2Molasses: Molasses is a thick, brown to deep black, honey-like
substance made when cane or beet sugar is processed. Molasses has

somewhat more nutritional value than white or brown sugar. It is used
primarily in alcohol and food items.
3.1.3.
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2Ethanol: Ethanol, also called ethyl alcohol, pure alcohol, grain alcohol, or
drinking alcohol, is a volatile, flammable, colorless liquid. It is
2one of the oldest recreational drugs, best known type of alcohol found in
alcoholic beverages, it is also used in thermometers, as a solvent, and as

a fuel. In common usage, it is often referred to simply as alcohol or spirits.
3.1.4. Bagasse: Bagasse is the fibrous matter that remains after sugarcane
stalks are crushed to extract their juice. It is currently used as a biofuel

and in the manufacture of pulp and paper products and building
materials. 3.1.5. Ferro Alloys: Calcium carbide is produced industrially in
an electric arc furnace from a mixture of lime and coke at approximately
2000 C,
used since
21888. Pure calcium carbide is a colorless solid. Calcium carbide is used
in carbide lamps.
2Ferrosilicon is used as a source of silicon.
2Ferrosilicon is a basis for manufacturing of pre-alloys like magnesium
ferrosilicon (FeSiMg), used for modification of melted malleable iron. 3.2.

Services:
3.2.1 Tank Terminals: The storage tank terminals of Al-Abbas Sugar Mills Limited earned a profit of Rs. 9.716
million during the year 2012. It has extensive terminals located at
2Oil Installation Area, Kemari, Karachi and covered operations of 5,700
square foot
2that comprises of 12 tanks having aggregate storage capacity of 34,920
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M.T and is capable of having storage of all types of chemical and

dangerous goods. The tanks are
2fitted with overfilled alarm and equipped with pigging system.
The company is currently handling the cargo of its various clients and the company itself. 3.2.2.
2Warehouse: The Company has warehouse facility having 45,000 square
feet capacity located at Dhabeji. The proximity of the warehouse from Bin
Qasim and export processing zone gives added advantage to the
customers for quick dispatch of their goods. (Al-Abbas Sugar
Mills Limited, 2012) ? BEST PRACTICES: Following principles form the basis for the best practices
observed at Al-Abbas Sugar Mills Limited: 4.1.
1Quality Products: ? Care about quality of the product and try to compete
nationally and internationally. ? Always try to stay updated with introduction

of new technology and promote culture of change of in the company. ?
Maintain highest degree of technical standards. 4.2. Dealing with
employees:
? Recognizes and rewards all the
1employees for their performance. ? Provide very friendly working
atmosphere for all the employees and treat them as family members. ? All
employees are treated uniformly according to their organizational status.
4.3. Compliance with the law of country: The company always adheres to the
prevailing laws. Utmost care is taken by the company to discharge all the
legal responsibilities. 4.4 Internal control and financial reporting: ? A very
sound and reliable internal control system has been implemented in the
organization, which is well understood by all the employees and parties
dealing with the company. ? Financial planning is a core activity of the
system through which efficient and effective utilization of financial and
human resources is ensured. ? Financial reporting system employed by the
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company is very effective and transparent and is being relied upon by
society at large. 4.5. Dealing with suppliers and service providers: ?

Purchase only from very reliable parties, acquire service of competent
people and ensure to safeguard their interests by taking all necessary

steps in dealing with them strictly on fair basis. ? The company always tries
to build confidence, reliability and trust by ensuring fulfillment of
commitments with suppliers and service providers. 4.6. Goal of the
company: ? The company always strives to produce high standard products
whether it is for local or international markets. ? Provide reliable
information to all business partners. ? Keep all assets in superfine
condition and safeguard them from all possible risks.
(Al- Abbas Sugar Mills Limited, 2012) (23rd Annual Report, 2013, 2013) ? FINANCIAL ANALYSIS: The
financial analysis for this study is as follows: 5.1. Methodology: The methodology used for the processing
and analysis of the secondary data available in the Balance Sheet analysis of Joint Stock Companies Listed
on the Karachi Stock Exchange for the time period involves descriptive statistical analysis, the correlation
among variables followed by horizontal and vertical analysis. 5.1.1. Data Length and Period under study:
The period under study for the data collection, assessment and time series analysis of Al- Abbas Sugar Mills
Limited comprises of 21 years that is from 1993 to 2013. 5.1.2. Variables: The variables that have been
used to analyze the performance and growth of the company are as follows: Table 5.1 SR Variables from
Income Statement Sales Revenue CA Variables from Balance Sheet Current Assets GP NP Gross Profit Net
Profit CL TA TL Current Liabilities Total Assets Total Liabilities TE Shareholders Equity 5.1.3. Techniques
applied: The data has been appropriately tabulated and classified to analyze using the tools like descriptive
statistics to quantitatively describe the main features of the available data. Data analysis with the help of
line graphs of variables and correlation are also discussed. Horizontal and vertical analysis of the data for
21 years has also been carried out to undergo trend analysis. 5.2. Descriptive Statistics: Measures of
central tendency including the mean and median, and the measures of variability including the standard
deviation, the minimum and maximum values of the variables, kurtosis and skewness have been used to
analyze the quantitative data. Table 5.2 Descriptive Statistics Sales Gross Profit, Net Profit Current Total
Current Total Total Revenue SR GP NP Assets, CA Assets, TA Liabilities, CL Liabilities, TL Equity, TE Std.
Deviation Skewness Kurtosis Range Minimum Maximum N Mean Median Valid Missing 21 0 2402.71
1423.00 2082.637 .992 -.388 6353 0 6353 21 0 332.29 194.00 335.289 1.358 .560 1159 0 1159 21 0
140.52 86.00 143.866 1.357 1.403 550 -11 539 21 0 911.14 673.00 917.482 1.269 .968 3244 47 3291 21
0 2029.00 1463.00 1555.497 .967 -.569 4761 568 5329 21 0 993.62 738.00 954.082 1.252 .934 3402 64
3466 21 0 1306.10 925.00 1113.149 1.101 -.074 3681 267 3948 21 722.86 599.00 502.081 1.167 .791
1875 87 1962 0 The standard deviation represents the extent of variation among the data. There is less
variation in the data of gross profit, net profit before tax, current assets and current liabilities. Because the
data is dispersed over a wide range of values, thus great variations have been observed in the sales
revenue, total assets, total liabilities and total equities. Skewness describes the degree of asymmetry of a
distribution around its mean. If the skewness is positive, it indicates that the distribution has an asymmetric
tail extending toward more positive values. While negative skewness shows a distribution with an
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asymmetric tail extending toward more negative values. The skewness of the 21 years data is substantial
and is far from being symmetrical for all other variables except for the sales revenue and total assets.
Kurtosis denotes the relative peakedness or flatness of a distribution compared with the normal distribution.
Positive kurtosis suggests a relatively peaked distribution while in case of negative kurtosis a relatively flat
distribution is observed. Sales revenue, total assets and total liabilities have negative kurtosis and give a
relatively flatter than a normal distribution. 5.3. Data Analysis: Figure 4. 1 Assets = Liabilities +
Shareholders' Equity TL. 32% TA. 50% TE. 18% Taking the averages of all the data for 21 years and
computing for the accounting equation revels that total assets comprise of the 50 percent of the overall
equation while on average, the total liabilities form 32 percent and total shareholders equity contributing
about 18 percent. Figure 4. 2 Sales Revenue Export Sales 43% (Rs. 1272.91m) Local Sales 57% (Rs.
1667.9m) The two major components of sales revenue are the local sales and the export sales. The
companys major focus had been the local sales of up to 57 percent which amounts to Rs. 1,667.9m while
its exports of 43 percent or Rs. 1,272.91m on average have been observed to be increasing since its
inception. 5.3.1 Sales Revenue, SR: Figure 4. 3 (Million Rupees) Sales Revenue, SR 7000 6000 Sales
Revenue, SR 5000 4000 3000 2000 1000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Years
There has been a gradual increase in sales revenue from both the local and export sales with an evident
increase in 2001. With an increasing trend, it suddenly showed an increase in the year 2010 and then is
seen to remain somewhat constant. The typical daily sales are Rs. 2,402.73m and the centre of the data is
located at 1,423.4. The values in the data are farther away from the mean, on average. 5.3.2. Gross Profit,
GP: Figure 4. 4 (Million Rupees) Gross Profit, GP 1400 1200 Gross Profit, GP 1000 800 600 400 200 0 1 2
3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Years Since 1993, the gross profit has been observed
to be consistent for quite a few years. There has been significant increase in the gross profit in the years
2001 and 2004. It remains constant for some years and then began to increase in 2009. The peaked value
of Rs. 1,159.3m in 2012 indicates a significant increase in the companys gross profit. 5.3.3. Net Profit
before Tax, NP: Figure 4. 5 Net Profit before tax, NP (Million Rupees) 600 Net Profit before tax, NP 500 400
300 200 100 0 -100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Years As is evident from figure
4.5, Al-Abbas Sugar Mills Limited has experienced many fluctuations in its net profit before tax through these
21 years. The most remarkable change can be seen in 2001 with an increase and a sudden decrease in the
following year of 2002. However, it has managed to elevate in the next two years and the rest of the years.
The highest net profit before tax of Rs. 539.3m has been observed in 2012. 5.3.4. Total Assets, TA: Figure
4. 6 (Million Rupees) Total Assets, TA 6000 5000 Total Assets, TA 4000 3000 2000 1000 0 1 2 3 4 5 6 7 8 9
10 11 12 13 14 15 16 17 18 19 20 21 Years Al-Abbas Sugar Mills Limited has been able to maintain its total
assets for quite a long time. Moreover, the total assets have increased significantly in 2008 and 2011. It has
slightly decreased since then. 5.3.5. Total Liabilities, TL: Figure 4. 7 (Million Rupees) Total Liabilities, TL
4500 4000 Total Liabilities, TL 3500 3000 2500 2000 1500 1000 500 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
16 17 18 19 20 21 Years Total liabilities have been observed to show similar trend as total assets. A
significant increase in the total liabilities is obvious in 2008 and 2011. However, it has declined in the
following two years. 17 5.3.6. Total Shareholders' Equity, TE: Figure 4. 8 (Million Rupees) Total
Shareholders' Equity, TE 2500 Total Shareholders' Equity, TE 2000 1500 1000 500 0 1 2 3 4 5 6 7 8 9 10
11 12 13 14 15 16 17 18 19 20 21 Years The total shareholders equity, as is evident from the above figure
has consistently increased since 1993 and had its highest value of Rs. 1,962m in 2013. 5.3.7. SR, GP and
NP: Figure 4. 9 (Million Rupees) SR, GP and NP 7000 6000 5000 4000 GP 3000 NP 2000 SR 1000 0 1 2 3
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 -1000 As is obvious, in its initial years the company did
not make much profit. The gross profit and the net profit both moved together throughout the years. In year
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2000, the gross profit and the net profit before tax experience very close values which may be a result of
lower operating expenses. However, the sales revenue showed an increasing trend over the years with
respect to the net profit before tax and gross profit. 5.4. Correlation: Correlation is a quantitative index, a
standard statistical measurement of the degree of relationship or association between two sets of variables.
In this study the correlation coefficient analysis has been undertaken to find out the relationship among the
variables, which is a measure of linear association. Table 5.3 Correlations Sales Revenue, SR Net Profit,
Total Assets, TA NP Total Liabilities, TL Total Shareholders Equity, TE Pearson Correlation Sales Revenue,
SR Sig. (2-tailed) N Net Profit, Pearson Correlation NP Sig. (2-tailed) N Total Assets, Pearson Correlation
TA Sig. (2-tailed) N Total Liabilities, Pearson Correlation TL Sig. (2-tailed) N Total Pearson Correlation
Shareholders Sig. (2-tailed) Equity, TE N 1 21 .869** .000 21 .947** .000 21 .896** .000 21 .947** .000 21
1 21 .853** .000 21 .791** .000 21 .889** .000 21 1 21 .984** .000 21 .917** .000 21 1 21 .831** .000 21 1
21 **. Correlation is significant at the 0.01 level (2-tailed). There exists a positive correlation among all the
variables. Sales revenue is strongly correlated to total assets and total shareholders equity. That is when
shareholders equity increases; we can expect the sales revenue to increase. Total assets have a strong
correlation with sales revenue and net profit as well. Total shareholders equity has strong correlation with
sales revenue and total assets while having positive correlation with net profit and total liabilities. 5.5.
Financial Statement Analysis: Financial statement analysis generally is based on comparative financial data
for a series of years. Horizontal analysis provides a direct year-to-year comparison of one companys
performance while vertical analysis shows the relationship of each item on a financial statement to a base
amount on that financial statement for the same year. 5.5.1. Horizontal Analysis: In order to get trend,
horizontal analysis has been carried out by calculating absolute change and percentage change by using
Fixed Base method. o Absolute Change: Fixed Base Method = Current Year Value Base Year Value o
Percentage Change: Fixed Base Method = (Current Year Value / Base Year Value) X 100 As is evident from
the calculated results of horizontal analysis shown in Annexure D, 1993 is taken as the base year and the
rest are the comparison years for comparative balance sheet and income statement analyses. Items on the
balance sheet for the proceeding years have been compared with the items of balance sheet for the year
1993. An increasing trend has been observed in the total and current assets of Al-Abbas Sugar Mills Limited.
There has been a sudden increase in the total and current assets in 2001 and then in 2011 with respect to
the initial total and current assets held by the company in 1993. With a gradual increase in the companys
total and current liabilities since its inception, a drastic increase was obvious in the 2001 leading to an
increasing trend in its liabilities and then another sudden increase in 2011 again. Similarly, the total
shareholders equity increased in 2001 but bears the largest contribution in 2013. Similarly, items on the
income statement for the proceeding years have been compared with those for the year 1993. Net Sales
showed highest absolute and percentage changes in the year 2010 while the highest changes in absolute
values and percentage of gross profit and net profit have been observed in the year 2012. 5.5.2. Vertical
Analysis: The vertical analysis compares each separate figure to one specific figure in the financial
statement, which is reported as a percentage. o Vertical Analysis of Balance Sheets: Computing all balance
sheet items as a percentage of Total Assets ( Balance Sheet Items / Total Assets X 100 ) o Vertical Analysis
of Income Statements: Computing each income statement item as a percentage of Sales (Income Statement
Items / Sales X 100 ) The calculated results of the vertical analysis of balance sheet and income statement
are shown in Annexure E. For comparative balance sheet, current assets and current liabilities showed
highest percentages in the years 2011 and 2012. While for computing the comparative income statement,
1994 has been taken as the base year. Gross profit and net profit before tax show deviation with highest
percentages with respect to sales in the year 2004. 5.6. SWOT Analysis: The major strengths, weaknesses,
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opportunities and threats to Al-Abbas Sugar Mills Limited are shown in the figure below: SWOT Analysis 1
STRENGTHS: Generates revenue for the industry Employment Provides essential products to other
industries Good R&D capabilities WEAKNESSES: Poor management and planning Unable to meet
domestic needs Lack of technology and modernization Lack of education OPPORTUNITIES: THREATS:
Exporting to other countries Increase in fuel prices Large area of cultivable land Recent floods available
Smuggling International exposure and systematic branding efforts Artificial shortages, cartelling and
hoarding Pest attacks 5.7. Comparison with industrial sector: The calculation and analysis of the company
in isolation holds less importance and meaning. Thus, in order to get the true essence of the companys
efforts and contribution towards the industry, a comparison of 15 years of data (from 1999 to 2013) of
Al-Abbas Sugar Mills Limited with the overall sugar sector is presented here in detail. Assuming the sales
revenue, total assets, liabilities and total shareholders equity remains same as the last year; thus, the data
for the year 2013 has been taken as the estimated values of previous year, 2012. 5.7.1 Sales Revenue,
SR: Figure 5.7.1 160000 140000 120000 100000 80000 60000 40000 20000 0 1 2 3 4 (Million Rupees)
Sales Revenue, SR 5 6 7 8 9 10 11 12 13 14 15 SUGAR SECTOR AABS Sales revenue for Al-Abbas Sugar
Mills Limited remained consistent with the overall sugar sector in 1999 and 2000. The industry began to
grow since then with slight shifts and reached the highest value of Rs.144, 796.87m of overall sales revenue
in 2011. 5.7.2. Gross Profit, GP: Figure 5.7.2 (Million Rupees) 18000 16000 14000 12000 10000 8000
6000 4000 2000 0 Gross Profit, GP 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 SUGAR SECTOR AABS The gross
profit of Al-Abbas Sugar Mills Limited remains somewhat consistent throughout comparatively to the sugar
sector on the whole. However, the overall sugar sector represents major shifts with Rs.6, 391.5m in 2006
while Rs.17, 133m in the year 2011. 5.7.3. Net Profit before Tax, NP: Figure 5.7.3 (Million Rupees) 6000 Net
Profit, NP 5000 4000 3000 2000 1000 0 -1000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 -2000 SUGAR
SECTOR AABS Similarly, Al-Abbas Sugar Mills Limited had smooth net profit before taxes for the last fifteen
years. But the sugar sector at large has experienced many fluctuations in net profit before taxes. This may
be the result of various extraneous factors such as climatic changes, floods, political and procedural
impacts. 24 5.7.4. Total Assets, TA: Figure 5.7.4 140000 120000 100000 80000 60000 40000 20000 0 1 2
3 4 (Million Rupees) Total Assets, TA 5 6 7 8 9 10 11 12 13 14 15 SUGAR SECTOR AABS Although there
has been a gradual increase in the companys total assets, but they have been observed to show consistent
values as compared to the sector. As is evident from the figure 5.7.4, total assets in the sugar sector have
shown gradual increase over these years. The highest total assets of the sugar sector have been about
Rs.132, 282m in 2012. 5.7.5. Total Liabilities, TL: Figure 5.7.5 (Million Rupees) 500000 450000 400000
350000 300000 250000 200000 150000 100000 50000 0 Total Liabilities, TL 1 2 3 4 5 6 7 8 9 10 11 12 13
14 15 SUGAR SECTOR AABS The companys total liabilities showed variations but total liabilities of the
sector on the whole represented an increasing trend in the last fifteen years. The total liabilities reached the
highest value of Rs.457, 133m in 2010. 5.7.6. Total Shareholders' Equity, TE: Figure 5.7.6 (Million Rupees)
40000 Total Shareholders' Equity, TE 35000 30000 25000 20000 15000 10000 5000 0 1 2 3 4 5 6 7 8 9 10
11 12 13 14 15 SUGAR SECTOR AABS Total shareholders equity has been observed to be gradually
increasing for the company and the sugar sector for the fifteen years period as well. But the rate of increase
in total shareholders equity was greater than that of the company itself. 5.7.7. SR, GP and NP: Figure 5.7.7
(Million Rupees) 160000 140000 120000 100000 80000 60000 40000 20000 0 SR, GP and NP -20000 1 2
3 4 5 6 7 8 9 10 11 12 13 14 15 SR GP NP Sales revenue has been observed to be gradually increasing for
the last fifteen years. Similarly, gross profit and net profit before tax for the sugar sector move together but
the degree of increase in sales revenue is greater. This may be due to the increasing indirect and operating
expenses over the years. Although the gross profit remained consistent however, the net profit before tax for
25-Jun-14 6:26 PM
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the sugar sector showed negative values in the years 2001, 2002, 2003 and 2007. Limitations: Care has
been taken while gathering, analyzing and interpreting the data. However, following were the limitations while
conducting the study. ? While computing the horizontal and vertical analysis of income statement, 1994 was
taken as the base year to get viable results. ? For comparative analysis of Al-Abbas Sugar Mills Limited with
the overall sugar sector, data of overall sugar sector for only fourteen years, from 1999 to 2012, was
available. ? The data for the year 2013 was assumed to be similar to the previous year that is 2012. ?
Conclusion: Al-Abbas Sugar Mills Limited aims at enhancing its sugar manufacturing and production facilities.
Descriptive statistical analysis technique has been used to disintegrate the secondary data for a specified
time frame of 21 years from 1993 through 2013. A detailed company analysis of Al-Abbas Sugar Mills
Limited on various aspects has been observed to analyze the companys growth potential. In time series
analysis of 21 years, less variation in the data of gross profit, net profit before tax, current assets and
current liabilities has been observed. In years 2008 and 2011, major shifts in Sales Revenue (SR), Total
Assets (TA) and Total Liabilities (TL) are evident. While Net Profit Before Tax (NP) and Gross Profit (GP)
have been observed to remain consistent for quite a long time. On the basis of a comparative analysis,
Al-Abbas Sugar Mills Limited has been observed to show sales revenue, gross profit, net profit, total assets
and liabilities and total shareholders equity of the sugar sector to be increasing at a greater rate than the
company itself. Recommendations: Based upon the analysis of the company and corporate activities,
following are the recommendations drawn for the Al-Abbas Sugar Mills Limited: Upgrade to latest
technology. Improve storage and warehousing facilities. Enhance hygiene of the workers and the product.
Educate the workers and employees. Provide a productive and efficient working environment. Improve
transportation for timely delivery of the raw material and the final product.
1Ensure and safeguard the interests of all stakeholders.
REFERENCES Al-Abbas Sugar Mills Limited. (2012). Retrieved May 4, 2014, from Al-Abbas Sugar Mills
Limited: http://www.aasml.com/ Al-Abbas Sugar Mills Limited. (2012). Retrieved May 31, 2014, from
Al-Abbas Sugar Mills Limited: http://www.aasml.com/ Al-Abbas Sugar Mills Limited, 23rd Annual Report,
2013. M.Ammar Arif Nakhuda, A. S. (2010). Sugar Industry of Pakistan. Karachi. Malu, R. S. (2007).
COMPANY ANALYSIS IN SUGAR SECTOR. Pune, India. Memon, Z. A. Internship report bawany sugar mills
ltd. Pakistan Sugar Mills Association, Islamabad. (2011). Retrieved May 5, 2014, from
http://www.psmacentre.com/aboutus.php?id=4&type=membersList&status=1 Saeed, K. (2013). Overview of
Sugar Industry in Pakistan. The Lahore Chamber of Commerce and Industry, Research and Development
Department. Lahore: The Lahore Chamber of Commerce and Industry. Shaukat, M. I. (n.d.). A
comprehensive study about Sugarcane in Pakistan. ANNEXURE A
1Mr. Shunaid Qureshi Chief Executive Officer Mr. Shunaid Qureshi
Presently holding the office of Chairman Pakistan Ethanol Manufacturers

Association (P.E.M.A.). He continued as Chairman of Pakistan Sugar Mills
Association (All Pakistan Basis) for the term 2007-2008 (Sindh Zone). He
endured his services as Chairman of F.P.P.C.I Standing Committee on
"WAPDA Affairs", for the term ending Dec. 2010.
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14 of 16
Mr. Asim Ghani Executive Director
1Mr. Asim has very extensive experience in procurement and handling of
molasses. Besides, this he acts as Executive Director in managing the

daily affairs of Dhabeji unit of the Al-Abbas Sugar Mills
1Limited. Mr. Duraid Quresh Director Mr. Duraid Qureshi is the Chief
Executive Officer (CEO) of HUM Network Limited, (satellite Channel). From

2001-2003 he was the CEO of Eye Entertainment. Prior to this he was the
Chief Operating Officer of Al-Abbas Sugar Mills Limited responsible for all
operating work at the mill. Mr.
1Ali Jehangir Siddiqui Director Mr. Ali Jahangir Siddiqui is the Managing
Partner of JS Private Equity, Pakistan's largest private equity firm.
Executive Director JS, Investments Ltd. 2002-2003.
1Director with Crosby, a private equity firm, based in Hong Kong.
Associate with Tech pacific Capital.
1Mr. Siddiqui holds a B.A. in Economics from Cornell University.
1Mr. Suleman Lalani Director Mr. Suleman Lalani joined Jahangir Siddiqui
& Co. Limited (JSCL) on March 1, 2012 as Chief Executive Officer.
1Executive Director Finance & Operations and Company Secretary of JS
Investments Limited.
Started his career with JSCL in 1992.
1Promoted to the position of Chief Operating Officer of JS Investment
25-Jun-14 6:26 PM
15 of 16
Bank Limited
in 2000.
1Joined The First MicroFinance Bank Limited as its CFO and Company
Secretary
in 2002.
1Fellow member of the Institute of Chartered Accountants of Pakistan and
has 20 years of experience in the financial services sector.
ANNEXURE B PHOTOCOPY THEN SCAN Source: Balance Sheet Analysis of Joint Stock Companies
Listed on KSE, Volume-II, 1993-99, SBP. 31 ANNEXURE - C Variables used in the study: Sales Revenue,
SR = Local Sales + Export Sales Gross Profit, GP = Sales Cost of Sales Net Profit before Tax, NP =
Operating Profit Financial Expenses Total Assets, TA = (Liquid Assets Cash + Inventories + Other Current
Assets) + Fixed Assets after deducting accumulated depreciation Total Liabilities, TL = (Preferred Shares +
Debentures + Other Fixed Liabilities) + Current Liabilities Total Shareholders' Equity, TE = Ordinary Share
Capital + Surplus Complete data sheet of Al-Abbas Sugar Mills Limited for the period of 21 years from 1993
to 2013 is given here. Insert Last page Balance Sheet and income stat items for report ANNEXURE - D
Horizontal Analysis of Balance Sheet 1993-02 Horizontal Analysis of Balance Sheet 2003-13 Al - Abbas
Sugar Mills Ltd. Comparative Income Statement Horizontal Analysis, Items are in "Million Rupees"
(September 30, 1993 - 2013) Net Sales, SR Gross Profit, GP Net Income/Profit, NP SR Absolute Change
Percentage Change GP Absolute Change Percentage Change NP Absolute Change Percentage Change
1993 0 - - 0 - - 0 - - 1994 325.1 0.00 100.00 91.8 0.00 100.00 28.6 0.00 100.00 1995 766.2 441.10 235.68
118.9 27.10 129.52 44.7 16.10 156.29 1996 578.6 253.50 177.98 111 19.20 120.92 49.8 21.20 174.13
1997 720.8 395.70 221.72 98.2 6.40 106.97 41.1 12.50 143.71 1998 1013.7 688.60 311.81 128.3 36.50
139.76 37.2 8.60 130.07 1999 1173 847.90 360.81 165 73.20 179.74 88.2 59.60 308.39 2000 963 637.90
296.22 111.4 19.60 121.35 71.4 42.80 249.65 2001 2019.9 1694.80 621.32 260.4 168.60 283.66 118.2
89.60 413.29 2002 1401.6 1076.50 431.13 67.6 -24.20 73.64 -10.8 -39.40 -37.76 2003 1327.4 1002.30
408.31 193.4 101.60 210.68 86 57.40 300.70 2004 1423.4 1098.30 437.83 333.4 241.60 363.18 211.3
182.70 738.81 2005 1845.7 1520.60 567.73 194 102.20 211.33 70.5 41.90 246.50 2006 2514.3 2189.20
773.39 198.1 106.30 215.80 31.6 3.00 110.49 2007 2842.3 2517.20 874.28 251.5 159.70 273.97 173.3
144.70 605.94 2008 2931.1 2606.00 901.60 212 120.20 230.94 104.3 75.70 364.69 2009 4166.9 3841.80
1281.73 785.6 693.80 855.77 337.1 308.50 1178.67 2010 6352.9 6027.80 1954.14 756.6 664.80 824.18
276.1 247.50 965.38 2011 6220.5 5895.40 1913.41 940.1 848.30 1024.07 324.5 295.90 1134.62 2012
5964.2 5639.10 1834.57 1159.3 1067.50 1262.85 539.3 510.70 1885.66 2013 5906.7 5581.60 1816.89
802.2 710.40 873.86 331 302.40 1157.34 * 1994 is taken as the Base Year ANNEXURE - E Vertical
Analysis of Balance Sheet 1993-02 Vertical Analysis of Balance Sheet 2003-13 Al - Abbas Sugar Mills Ltd.
Comparative Income Statement Vertical Analysis, Items are expressed as Percentage of Sales"
(September 30, 1993 - 2013) Net Sales, SR Gross Profit, GP Net Income/Profit, NP SR Percentage Change
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GP Percentage Change NP Percentage Change 1993 0 - 0 - 0 - 1994 325.1 100.00 91.8 28.24 28.6 8.80
1995 766.2 100.00 118.9 15.52 44.7 5.83 1996 578.6 100.00 111 19.18 49.8 8.61 1997 720.8 100.00
98.2 13.62 41.1 5.70 1998 1013.7 100.00 128.3 12.66 37.2 3.67 1999 1173 100.00 165 14.07 88.2 7.52
2000 963 100.00 111.4 11.57 71.4 7.41 2001 2019.9 100.00 260.4 12.89 118.2 5.85 2002 1401.6 100.00
67.6 4.82 -10.8 -0.77 2003 1327.4 100.00 193.4 14.57 86 6.48 2004 1423.4 100.00 333.4 23.42 211.3
14.84 2005 1845.7 100.00 194 10.51 70.5 3.82 2006 2514.3 100.00 198.1 7.88 31.6 1.26 2007 2842.3
100.00 251.5 8.85 173.3 6.10 2008 2931.1 100.00 212 7.23 104.3 3.56 2009 4166.9 100.00 785.6 18.85
337.1 8.09 2010 6352.9 100.00 756.6 11.91 276.1 4.35 2011 6220.5 100.00 940.1 15.11 324.5 5.22 2012
5964.2 100.00 1159.3 19.44 539.3 9.04 2013 5906.7 100.00 802.2 13.58 331 5.60 * 1994 is taken as the
Base Year Chapter 3: Chapter 4: Chapter 5: 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 18 19 20 21 22 23
25 26 27 28 29 30 32 33 34 35 36 37 38 39 40 41 42 43 44 45
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3Al-Abbas Sugar Mills Limited is a progressive company that was

incorporated in May, 1991. The shares of the Company were listed on

3after its incorporation the company stood on sound financial and

same location. 4 While the unit

3in 2000, alloys in 2005 and power generation in 2010.

2the companys belief in calculated expansion and diversification by

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three sugar mills in Pakistan

3various types of alloys product to meet the whole country s demand.

3environment and well aware of its Corporate Social Responsibility. In

order to achieve this objective, a waste water treatment plant was

3making significant contribution towards the economy of the sugar plant.

The Management of the Company bears a special interest in improving the

The company does so by investing

good quality education at nominal cost, financial support on a continuous

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4Vision: Al-Abbas Sugar Mills Limited is committed to earn reputation of

a reliable manufacturer and supplier of good quality white sugar,

international markets by concentrating on quality of core products. ? To

3production planning combined with creative marketing and management

3and from the perspective of profitability as well as overall corporate

Road, Karachi - 74000 Tel: (+92-21) 111-111-224 Fax: (+92-21) 32470090

41. Mirwah Gorchani, Distt. Mirpurkhas, Sindh 2. Main National Highway,

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MR. ZUHAIR ABBAS

1Head of Procurement MR. GHULAM MUHAMMAD SOOMRO General Manager

Manager Mechanical Mirwah MR. AVES COACHINWALA General Manager

2Molasses: Molasses is a thick, brown to deep black, honey-like

substance made when cane or beet sugar is processed. Molasses has

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drinking alcohol, is a volatile, flammable, colorless liquid. It is

alcoholic beverages, it is also used in thermometers, as a solvent, and as

stalks are crushed to extract their juice. It is currently used as a biofuel

21888. Pure calcium carbide is a colorless solid. Calcium carbide is used

2Ferrosilicon is used as a source of silicon.

2Ferrosilicon is a basis for manufacturing of pre-alloys like magnesium

ferrosilicon (FeSiMg), used for modification of melted malleable iron. 3.2.

2Oil Installation Area, Kemari, Karachi and covered operations of 5,700

2that comprises of 12 tanks having aggregate storage capacity of 34,920

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M.T and is capable of having storage of all types of chemical and

2fitted with overfilled alarm and equipped with pigging system.

2Warehouse: The Company has warehouse facility having 45,000 square

nationally and internationally. ? Always try to stay updated with introduction

? Recognizes and rewards all the

1employees for their performance. ? Provide very friendly working

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company is very effective and transparent and is being relied upon by

society at large. 4.5. Dealing with suppliers and service providers: ?

people and ensure to safeguard their interests by taking all necessary

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1Ensure and safeguard the interests of all stakeholders.