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01 | Annual Report 2011

Contents

Corporate Informaion...................................................................................................................02

Vision & Mission Statement.................................................................................................................03

Notice of the Annual General Meeting..................................................................................................04

Directors’ Report to the Members...........................................................................................05-07

Statement of Compliance with Code of Corporate Governance..................................................08-09

Review Report to the Members on Statement of Compliance

with Best Practices of Code of Corporate Governance............................................................................10

Auditors’ Report to the Members............................................................................................................................11

Balance Sheet........................................................................................................................................12-13

Profit and Loss Account........................................................................................................................14

Cash Flow Statement...........................................................................................................................................15

Statement of Changes in Equity....................................................................................................16

Notes to the Accounts............................................................................................................17-36

Financial Highlights...........................................................................................................................................37

Pattern of Shareholding......................................................................................................................38-40

Form of Proxy

Annual Report 2011 | 02

Board of Directors

Chief Financial Officer

Company Secretary

Audit Committee

Executive Committee

Financial Institutions

Auditors

Legal Advisors

Registered Office

Production Facilities

Corporate InformationMr. Naveed M. SheikhMr. Waqar Ibn Zahoor BandeyMian Muhammad AliMr. Muhammad AsgharMr. Ahmed Haji MussaMr. Asad AliMs. Samina Gul

Mr. Saifullah Sheikh

Mr. Abdul Mansoor Khan

Mr. Muhammad AsgharMian Muhammad AliMs. Samina Gul

Mr. Naveed M. SheikhMr. Waqar Ibn Zahoor BandeyMs. Samina Gul

National Bank of PakistanMCB Bank LimitedFaysal Bank LimitedKASB Bank LimitedThe Bank of PunjabAl-Baraka Bank (Pakistan) LimitedPak Oman Investment Company Limited

Naveed Zafar Husain Jaffery & Co.Chartered Accountants

Imtiaz Siddiqui & AssociatesAdvocates & Solicitors

Ismail Aiwan-e-Science Building205 Ferozepur RoadLahore-54600UAN # (042) 111-COLONY Fax # (042) 3576-3247

Phalia ProjectKarmanwala, Tehsil PhaliaDistt. Mandi BahauddinPh # (0546) 541-151/54Fax # (0546) 541-162

- Chairman- Director/CEO- Director- Director- Director- Director- Director

- Chairman- Member- Member

- Chairman- Member- Member

Mian Chanu ProjectChak # 84/15L, 15 KMVehari Road Kacha KhooTehsil Mian ChanuDistt. KhanewalPh # (0652) 553-182Fax # (0652) 660-452

2 6 5 6 6 9


Vision StatementTo exploit our company's potential by diversifyinginto the entire range of industrial and consumerproducts that can be derived from Sugar Cane

Mission StatementTo exceed our customers' expectations in qualityand delivery on one hand and maximize profit

for the stakeholders of our company on the otherhand by continuous cost reduction through

identifying and deploying latest technologies inprocess and monitoring control systems


Notice of Annual General Meeting

NOTICE is hereby given that the 5th Annual General Meeting of the members of Colony Sugar MillsLimited will be held on Tuesday, January 31, 2012, at 10:00 a.m. at the Registered Office at Ismail Aiwan-e-Science Building, 205 Ferozepur Road, Lahore to transact the following business:

1. To receive, consider and adopt the Audited Accounts of the Company for the year ended September30, 2011 together with the Directors' and Auditors' Reports thereon.

2. To appoint Auditors for the year 2011-12 and to fix their remuneration.

3. Any other business with the permission of the Chair.

By Order of the Board

Company SecretaryLahoreJanuary 07, 2012

Notes:-

i. The Share Transfer Books of the Company will remain closed from January 25, 2012 to January 31,2012 (both days inclusive).

ii. A member entitled to attend and vote at this meeting may appoint another member as his proxy toattend and vote on his/her behalf. The proxy, in order to be effective, must be received at the registeredoffice of the Company duly signed not less than 48 hours before the meeting.

iii. The CDC Account holders/sub-account holders are requested to bring with them their National IDCards along with the Participant(s) ID Number and their account numbers at the time of attendingthe Annual General Meeting for identification purpose.

iv. In case of Corporate entity, the Board of directors' resolution/power of attorney with specimensignatures of the nominee shall be produced (unless it has been provided earlier) at the time of themeeting. The nominee shall produce his original CNIC at the time of attending the meeting foridentification purpose.

v. Members are requested to notify the change of address immediately, if any.


DIRECTORS’ REPORT TO THE MEMBERSDEAR MEMBERS

We take pleasure to present Company's Annual Report for the Financial Year ended on September 30,2011 along with the Financial Statements and Auditor's Report thereon.

FINANCIAL PERFORMANCE

Turnover for the year under review raised by 15.46% from last year and reached to Rupees 5,483 Million(2010: Rupees 4,749 Million) whilst the cost of sales stood at Rupees 4,822 Million(2010: Rupees 4,095 Million) bringing gross profit to Rupees 661 Million (2010: Rupees 654 Million).During the year under review, sugar demand as well as its selling price remained depressed; however thecomparative rise in turnover is due to improved ethanol demand in the international market. Profit beforetax is Rupees 120 Million (2010: profit Rupees 132 Million). After making provision for taxation, the netprofit for the year is Rupees 65 Million (2010: profit Rupees 118 Million). Earnings per share is Rupees0.66 per share as compared with Rupees 1.19 per share for the last year.

Sugarcane cultivation as well as its availability was slightly enhanced during the year under review, howeverhigh price fixed by the Government for the season and undue competition amongst the sugar mills to meetthe installed capacity resulted in significant increase in sugarcane price. On the other hand sugar sellingprice remained depressed. Financial costs, inflationary pressure of inputs and increase in minimum tax ratefrom 0.5% to 1% of turnover by the Government has increased our cost. The situation will improve asthe company is settling its long terms debts.

OPERATIONAL PERFORMANCE

During the year under review, the sugarcane availability improved due to increase in area under cultivationhence, company crushed 14.42% more sugarcane (2011: 732,910 M. Tons) as compared to last yearcrushing (2010: 640,547 M. Tons) and produced 63,873 M. Tons Sugar as compared to 55,269 M. Tonsof last year.

Distillery plant produced 25,356,131 liters of ENA, ENA Anhydrous and B-Grade as compared with23,646,464 liters during the corresponding period of last year.

FUTURE OUTLOOK

Due to higher prices fetched by the growers in preceding years, there is better sugarcane crop for the season2011-12. However, market price of sugar is steadily declining due to low demand in the local market.Hence, the Government has to allow export of sugar in this year.

DIVIDEND

Keeping in view current depressed economic and financial scenario, directors didn't recommend dividendfor the year ended September 30, 2011.

STATEMENT OF ETHICS AND BUSINESS PRACTICES

Honesty, integrity and strong commitment to high standards of ethical, moral and lawful conducts areamong the most important traditions of Colony Sugar Mills Ltd. This dedication is critical to meet ourcommitment to our shareholders, customers, suppliers and employees.

CORPORATE SOCIAL RESPONSIBILITY

We actively seek opportunities to contribute to the communities in which we do business, and to improvethe environment that sustains us all. Our main CSR focuses are education, health care and communitybuilding.


AUDIT COMMITTEE

The Board of Directors, in compliance with the Code of Corporate Governance, has established an AuditCommittee. This step has ensured the strict compliance of internal controls so as to safeguard the interestsof the company. The committee reviews the final and interim financial statements.

CORPORATE GOVERNANCE COMPLIANCE

The compliance with the best practices of Code of Corporate Governance provides comfort to the Board.Therefore, the management ensures that all requirements of the code of corporate governance are compliedwith. The statement of compliance with the best practices of Code of Corporate Governance is annexed.

STATEMENT ON CORPORATE AND FINANCIAL REPORTING FRAMEWORK

In compliance with the Code of Corporate Governance, we give below statements on Corporate andFinancial Reporting Framework:

The financial statements prepared by the management of the company 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 per statutory requirements.

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

Code of ethics and business practices have been developed, communicated and acknowledged by eachdirector and employee.

The International Accounting Standards, as applicable in Pakistan, have been followed in preparationof financial statements.

The system of internal control is sound in design and has been effectively implemented and monitored.

There are no significant doubts upon the company's ability to continue as a going concern.

There has been no departure from the best practices of corporate governance, as detailed in the listingregulations.

Key operating and financial data since incorporation is annexed in summarize form.

Directors have not recommended dividend in view of depressed economic and financial scenario.

Information about outstanding taxes and other government levies are given in related note(s) to theaccounts.

The company operates a gratuity fund scheme for all employees. The net value of investment in theirrespective accounts is given in related note(s) to the accounts.

All material information, as described in clause (xxiii) of the Code is disseminated to the StockExchange and Securities and Exchange Commission of Pakistan in a timely fashion.

The company has complied with requirements as stipulated in clause 35 (xiii) (a) relating to relatedparty transactions.

The directors, CEO, CFO, Company Secretary and their spouses and minor children have made notrading in the company's share during the year. The number of shares, if any, held by them is annexed.


BOARD MEETINGS

During the year under review four (04) meetings of the Board of Directors were held. Participation ofDirectors is as follows: -

Names of Directors Attendance

Mr. Naveed M. Sheikh 2Mr. Waqar Ibn Zahoor Bandey 4Mr. Ahmed Haji Mussa 4Mr. Muhammad Asghar 4Mr. Asad Ali 4Mian Muhammad Ali 4Ms. Samina Gul 4

*The Board granted leave of absence to the directors who could not attend the Meeting.

EXTERNAL AUDITOR

The present auditors M/S Naveed Zafar Husain Jaffery & Co., Chartered Accountants are retiring andbeing eligible, offer themselves for re-appointment.

The external auditors have been given satisfactory rating under the Quality Control Review Program ofthe Institute of Chartered Accountants of Pakistan (ICAP). They have further confirmed that their firmis in compliance with International Federation of Accountants' (IFAC) guidelines on the Code of Ethicsas adopted by the ICAP. The external auditors have not been appointed to provide other services exceptin accordance with the listing regulations and they have confirmed that they have observed IFAC guidelinesin this respect. The audit committee has recommended M/s Naveed Zafar Husain Jaffery & Co., as auditorsof the company for the next financial year.

PATTERN OF SHAREHOLDING

The pattern of shareholding under section 236 (d) and information under clause XIX (i) of the Code ofCorporate Governance as on September 30, 2011 are annexed.

ACKNOWLEDGEMENT

Board is thankful to the valuable Members, Banks and Government departments for their trust, persistentsupport and patronage and would like to place on record its gratitude to all the Growers and Employeesof the company for their contribution, dedication and hard work.

For and on behalf of the Board

Lahore Naveed M. SheikhJanuary 07, 2012 Chairman


The statement is being presented to comply with the Code of Corporate Governance contained in theRegulation # 35 of the listing regulation of Karachi Stock Exchange (Guarantee) Limited for the purposeof establishing a framework of good governance, whereby a listed company is managed in compliance withthe best practices of corporate governance.

The company has applied the principles contained in the Code in the following manner:

1. The company encourages representation of independent non-executive directors and directorsrepresenting minority interest on its Board of Directors. At present, the Board includes five independentnon-executive directors.

2. The directors have confirmed that none of them is serving as a director in more than ten listedcompanies, including this company.

3. All the resident directors of the company are registered as tax payers and non of them has defaultedin payment of any loan to a banking company, DFI, NBFI or, being a member of a stock exchange,has been declared as a defaulter by that stock exchange.

4. The company has prepared a "Statement of Ethics and Business Practices" which has been signed byall the directors and employees of the company.

5. The Board has developed a vision/mission statement. Overall corporate strategy and significant policiesof the company have been developed and maintaining a complete record of particulars of significantpolicies.

6. All the powers of the Board have been duly exercised and decisions on material transactions, includingappointment and determination of remuneration and terms and conditions of the employment of theCEO and other executive directors, have been taken by the Board.

7. The meetings of the Board were presided over by the Chairman and, in his absence, by a directorelected by the Board for this purpose and the Board met at least once in every quarter. Written noticesof the board meetings, along with agenda and working papers, were circulated at least seven daysbefore the meetings. The minutes of the meetings were appropriately recorded and circulated.

8. The Directors are aware of their fiduciary responsibilities and orientations courses were arranged inthe past in-house and will be arranged, in future if so required.

9. The Board has approved the appointment of CFO, Company Secretary and Internal Auditor, includingtheir remuneration and terms and conditions of the employment, as determined by the CEO.

10. The directors' report for the year has been prepared in compliance with the requirements of the codeand fully describes the salient matters required to be disclosed.

11. The financial statements of the company were duly endorsed by CEO and CFO before approval ofthe board.

Statement of Compliance with the Code ofCorporate GovernanceFor The Year Ended September 30, 2011


12. The directors, CEO and executives don't hold any interest in the shares of the company other thanthat disclosed in the pattern of shareholding.

13. The company has complied with the corporate and financial reporting requirements of the code.

14. The Board has formed an audit committee. It comprises of three members, all of them are non-executive Directors including the Chairman of the company.

15. The meetings of the audit committee were held, prior to the approval of interim and final results ofthe company as required by the code. The term of reference of the committee have been formed andadvised to the committee for compliance.

16. The Board has set up an internal audit function and taking appropriate measures to make it effective.

17. The statutory auditors of the company have confirmed that they have been given a satisfactory ratingunder the Quality Control Review program of The Institute of Chartered Accountants of Pakistan,that they or any of the partners of the firm, their spouses and minor children do not hold shares ofthe company and that the firm and all its partners are in compliance with International Federationof Accountants ( IFAC) guidelines on the code of ethics as adopted by The Institute of CharteredAccountants of Pakistan.

18. The statutory auditors or the persons associated with them have not been appointed to provide otherservices except in accordance with the listing regulations and the auditors have confirmed that theyhave observed IFAC guidelines in this regard.

19. All material information, as described in clause (xxiii) of the Code is disseminated to the StockExchange and Securities and Exchange Commission of Pakistan in a timely fashion.

20. The company has complied with requirements as stipulated in clause 35(xiii) (a) relating to relatedparty transactions.

21. We confirm that all other material principles contained in the code have been complied with.

For and on behalf of the Board

LahoreJanuary 06, 2012 Naveed M. Sheikh

Chairman


We have reviewed the Statement of Compliance with the best practices contained in the Code of CorporateGovernance prepared by the Board of Directors of COLONY SUGAR MILLS LIMITED (”the Company”)to comply with the Listing Regulation No. 35 of Karachi Stock Exchange, where the Company is listed.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directorsof the company. Our responsibility is to review, to the extent where such compliance can be objectivelyverified, whether the Statement of Compliance reflects the status of the company's compliance with theprovisions of the Code of Corporate Governance and report if it does not. A review is limited primarilyto inquiries of the company personnel and review of various documents prepared by the company to complywith the Code of Corporat Governance.

As part of our audit of financial statements, we are required to obtain an understanding of the accountingand internal control systems sufficient to plan the audit and develop an effective audit approach. We havenot carried out any special review of the internal control system to enable us to express an opinion as towhether the Board's statement on internal control covers all controls and the effectiveness of such internalcontrols, the Company's corporate governance procedures and risks.

Further, Sub-Regulation (xiii a) of Listing Regulation # 35 of The Karachi Stock Exchange (Guarantee)Limited requires the Company to place before the Board of Directors for their consideration and approval,related party transactions distinguishing between transactions carried out on terms equivalent to those thatprevail in arm's length transactions and transactions which are not executed at arm's length price recordingproper justification for using such alternate pricing mechanism. Further, all such transactions are alsorequired to be separately placed before the audit committee.

We are only required and have ensured compliance of requirement to the extent of approval of related partytransactions by the Board of directors and placement of such transactions before the audit committee. Wehave not carried out any procedures to determine whether the related party transactions were undertakenat arm's length price.

Based on our review, nothing has come to our attention which causes us to believe that the Statement ofCompliance does not appropriately reflect the Company's compliance, in all material respects, with the bestpractices contained in the Code of Corporate Governance, as applicable to the Company for the year endedSeptember 30, 2011.

Lahore: NAVEED ZAFAR HUSAIN JAFFERY & CO.January 07, 2012 Chartered Accountants

Engagement Partner: S. Zafar Ullah Shah

Review Report to the Members on Statement of Compliancewith Best Practices of Code of Corporate Governance


We have audited the annexed balance sheet of COLONY SUGAR MILLS LIMITED (”the Company”)as at September 30, 2011 and the related profit and loss account, cash flow statement and statement ofchanges in equity together with the notes forming part thereof, for the year then ended and we state thatwe have obtained all the information and explanation which, to the best of our knowledge and belief, werenecessary for the purposes of our audit.

It is the responsibility of the Company’s management to establish and maintain a system of internalcontrol, and prepare and present the above said statements in conformity with the approved accountingstandards and the requirements of the Company’s Ordinance, 1984. Our responsibility is to express anopinion on these statements based on our audit.

We conducted our audit in accordance with the auditing standards as applicable in Pakistan. Thesestandards require that we plan and perform the audit to obtain reasonable assurance about whether theabove said statements are free of any material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the above said statements. An audit also includesassessing the accounting policies and significant estimates made by management, as well as, evaluatingthe overall presentation of the above said statements. We believe that our audit provides a reasonablebasis for our opinion and, after due verification, we report that:

(a) in our opinion, proper books of account have been kept by the Company as required by the CompaniesOrdinance, 1984;

(b) in our opinion:

(i) the balance sheet and profit and loss account together with the notes thereon have been drawnup in conformity with the Companies Ordinance, 1984, and are in agreement with the booksof account and are further in accordance with accounting policies consistently applied; and

(ii) the expenditure incurred during the year was for the purpose of the Company’s business; and

(iii) the business conducted, investment made and the expenditure incurred during the year were inaccordance with the objects of the Company;

(c) in our opinion and to the best of our information and according to the explanations given to us, thebalance sheet, profit and loss account, cash flow statement and statement of changes in equity togetherwith the notes forming part thereof conform with approved accounting standards as applicable inPakistan, and, give the information required by the Companies Ordinance, 1984, in the manner sorequired and respectively give a true and fair view of the state of the Company’s affairs as at September30, 2011 and of the profit, total comprehensive income, its cash flows and changes in equity for theyear then ended; and

(d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII)of 1980).

Lahore: NAVEED ZAFAR HUSAIN JAFFERY & CO.January 07, 2012 Chartered Accountants

Engagement Partner: S. Zafar Ullah Shah

Auditors’ Report to the Members


Balance SheetAs at September 30, 2011

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES

Authorized Capital100,000,000 (2010: 100,000,000) ordinary shares

of Rupees 10 each 1,000,000 1,000,000

Issued, subscribed and paid up capital 5 990,200 990,200Unappropriated profit 534,743 469,032

1,524,943 1,459,232

NON-CURRENT LIABILITIES

Long term finances 6 1,097,528 1,211,835Staff retirement benefits 7 12,943 8,060Deferred taxation 8 5,000 5,348

1,115,471 1,225,243

CURRENT LIABILITIES

Trade and other payables 9 527,388 597,814Accrued finance cost 10 121,221 119,493Short term borrowings - secured 11 1,625,102 1,102,060Current portion of long term finances 137,500 228,194Provision for taxation 12 35,269 2,788

2,446,480 2,050,349

Contingencies and commitments 13 - -

5,086,894 4,734,824

The annexed notes from 1 to 34 form an integral part of these financial statements.

Note 2011 2010(Rupees in thousand)

Chief Executive Officer


Balance SheetAs at September 30, 2011

PROPERTY AND ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 14 3,515,925 3,343,051

CURRENT ASSETS

Stores, spares and loose tools 15 135,899 151,219Stocks in trade 16 896,981 827,489Trade debts 17 324,547 143,247Advances, deposits, prepayments and other receivables 18 196,583 232,242Cash and bank balances 19 16,959 37,576

1,570,969 1,391,773

5,086,894 4,734,824


Director


Profit and Loss AccountFor the year ended September 30, 2011

Sales - net 20 5,483,297 4,749,066Cost of sales 21 4,822,065 4,095,161

Gross profit 661,232 653,905

Administrative expenses 22 102,724 81,414Distribution and marketing expenses 23 30,240 25,480

132,964 106,894

Operating profit 528,268 547,011Other operating income 24 5,336 3,526

533,604 550,537

Finance cost 25 406,960 411,409Worker's profit participation fund 6,332 6,956

413,292 418,365

Profit before taxation 120,312 132,172Provision for taxation 26 54,601 14,121

Profit for the year 65,711 118,051

OTHER COMPREHENSIVE INCOME

Other comprehensive income-net of tax - -

Total comprehensive income 65,711 118,051

Earnings per share - basic & diluted 27 0.66 1.19



Chief Executive Officer Director


Cash Flow StatementFor the year ended September 30, 2011

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 120,312 132,172Adjustments for non-cash and other items:

Finance cost 406,960 411,409Depreciation of Property, plant and equipment 161,828 147,243Provision for employees' retirement benefits - gratuity 6,906 6,179Provision for contribution to workers' profit participation fund 6,332 6,956

582,026 571,787

Cash generated from operating activities before working capital changes 702,338 703,959

Adjustments for Working Capital Changes(Increase)/decrease in current assets:

Stores, spares and loose tools 15,320 (3,423)Stocks-in-trade (69,492) 237,053Trade debts (181,635) (143,247)Advances, deposits, prepayments and other receivables 35,659 (7,807)

Increase in current liabilities;Trade and other payables (70,408) (98,269)

Net working capital changes (270,556) (15,693)

Finance cost paid (405,232) (391,572)Employees' retirement benefits - gratuity paid (2,023) (907)Workers' profit participation fund paid (6,956) (18,624)Income tax paid (22,120) (22,716)

(436,331) (433,819)

Net cash (used in) / generated from operating activities (4,549) 254,447

CASH FLOWS FROM INVESTING ACTIVITIES

Fixed capital expenditure (655,593) (41,315)Capital work in progress 321,484 (104,861)

Net cash used in investing activities (334,109) (146,176)

CASH FLOWS FROM FINANCING ACTIVITIESShort term borrowings 523,042 66,893Long term finances (205,001) (163,250)

Net cash generated from / (used in) financing activities 318,041 (96,357)

NET (DECREASE) / INCREASE IN CASH ANDCASH EQUIVALENTS (20,617) 11,914

CASH AND CASH EQUIVALENTS AT THEBEGINNING OF THE YEAR 37,576 25,662

CASH AND CASH EQUIVALENTS AT THEEND OF THE YEAR 16,959 37,576





Statement of Changes in EquityFor the year ended September 30, 2011

Balance as on September 30, 2009 990,200 350,981 1,341,181

Total comprehensive income -))))) 118,051 118,051


Total comprehensive income -))))) 65,711 65,711



ParticularsShare

CapitalUnappropriated

profitTotalequity

(Rupees in thousand)



Notes to the Financial StatementsFor the year ended September 30, 2011

1. LEGAL STATUS AND NATURE OF BUSINESS

1.1 Colony Sugar Mills Limited ("the Company") was incorporated in Pakistan on May 09, 2007under the Companies Ordinance, 1984. The shares of the Company are quoted on Karachi StockExchange (Guarantee) Limited. The Company's registered office is situated in Lahore and itsmanufacturing facilities are located at Tehsil Phalia, District Mandi Bahauddin and Tehsil MianChannu, District Khanewal. The Company is engaged in manufacturing and sale of white refinedsugar and ethanol and by products.

1.2 Seasonality of operation

The Company is inter-alia, engaged in manufacturing of sugar for which the season begins in Novemberand ends in April. Therefore, majority of expenses are incurred and production activities are undertakenin first half of the company's financial year.

2 STATEMENT OF COMPLIANCE

These financial statements have been prepared in accordance with the requirements of the CompaniesOrdinance, 1984 (the Ordinance) and the directives issued by the Securities and Exchange Commissionof Pakistan (SECP) and approved accounting standards as applicable in Pakistan. Approved accountingstandards comprise of such International Accounting Standards (IASs) / International FinancialReporting Standards (IFRSs) as notified under the provisions of the Ordinance. Wherever, therequirements of the Ordinance or the directives issued by the SECP differ with the requirements ofthese standards, the requirements of the Ordinance or the requirements of the said directives takeprecedence.

2.1 Adoption of new and revised standards and interpretations

Standards, amendments and interpretations to existing standards that are not yet effective andhave not been early adopted by the Company.

IFRS 7 Financial instruments: Disclosures (Amendments) January 1, 2011 & July 1, 2011IAS 1 Presentation of financial statements (Amendments) January 1, 2011 & July 1, 2012IAS 12 Income taxes (Amendments) January 1,2012IAS 19 Employee benefits ( Amendments) January 1,2013IAS 24 Related party disclosures (Revised) January 1,2011IAS 27 Separate Financial statements (Revised) January 1,2013IAS 28 Investments in Associated & Joint Venture (Revised) January 1,2013IAS 34 Interim Financial Reporting (Amendments) January 1,2011IFRIC 13 Customer Loyalty Programmes (Amendments) January 1,2011IFRIC 14 The limit on a defined benefit asset, minimum funding

requirements and their interaction (Amendments) January 1,2011

The management anticipates that adoption of above standards, amendments and interpretationsin future periods will have no material impact on the Company's financial statements except foradditional disclosures.

Further, the following new standards have been issued by the International Accounting StandardsBoard (IASB), which are yet to be notified by the Securities and Exchange Commission ofPakistan, for the purpose of their applicability in Pakistan:

Effective date ( annual periodsbeginning on or after)


IFRS 1 First-time adoption of International Financial Reporting Standards July 1,2001IFRS 9 Financial instruments January 1, 2013IFRS 10 Consolidated financial statements January 1, 2013IFRS 11 Joint arrangements January 1, 2013IFRS 12 Disclosure of interests in other entities January 1, 2013IFRS 13 Fair value measurement January 1, 2013

3 BASIS OF PREPARATION

These financial statements have been prepared under the "historical cost convention" using, exceptfor cash flow statement, accrual basis of accounting.

3.1 Critical accounting estimates and judgments

The preparation of financial statements in conformity with International Accounting Standards/International Financial Reporting Standards requires management to make judgments, estimatesand assumptions that affect the application of policies and reported amounts of assets andliabilities, income and expenses. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable under the circumstances,the results of which form the basis of making judgments about carrying values of assets andliabilities that are not readily apparent from other sources. Actual results may differ from theseestimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimates are revised.

Significant areas requiring the use of management estimates in these financial statements relateto the useful life of depreciable assets, taxation, provision for doubtful receivables and slowmoving inventory. However, assumptions and judgments made by management in the applicationof accounting policies that have significant effect on the financial statements are not expectedto result in material adjustment to the carrying amounts of assets and liabilities in the next year.

3.2 Functional and presentation currency

The financial statements are presented in Pak Rupees, which is the Company's functional andpresentation currency.

4 SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of these financial statements are setout hereunder. These policies have been consistently applied to year presented, unless otherwise stated.

4.1 Employees' retirement benefits

The Company operates an un-funded gratuity scheme for all employees with qualifying serviceperiod of two years. Provisions are made annually to cover the obligations under the schemeon the basis of an actuarial valuation. The most recent valuation was carried out as at 30thSeptember 2010 using the "Projected unit credit method".

The amount recognised in balance sheet represents the present value of the defined benefitobligation as on 30th September, 2011 as adjusted for unrecognised actuarial gains and losses.

4.2 Taxation

CurrentProvision for taxation is based on taxable income for the year determined in accordance with

Effective date ( annual periodsbeginning on or after)


the prevailing law for taxation of income. The charge for current tax is calculated using prevailingtax rates or tax rates expected to apply the profit for the year if enacted. The charge for thecurrent tax also includes tax credits and tax rebates available, if any.

DeferredDeferred tax liability is accounted for using the balance sheet liability method in respect of alltaxable temporary differences at the balance sheet date arising from difference between thecarrying amount of the assets and liabilities in the financial statements and corresponding taxbases used in the computation of taxable profit. Deferred tax assets are generally recognized forall deductible temporary differences, unused tax losses and tax credits to that extent it is probablethat taxable profit will be available in future against which the deductible temporary differences,unused tax losses and tax credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differencesreverse based on tax rates that have been enacted or substantively enacted by balance sheet date.Deferred tax is charged or credited in the income statement, except in the case of items creditedor charged to equity in which case it is included in equity.

4.3 Property, plant and equipment

Property, plant and equipment except freehold land are stated at cost less accumulated depreciationand impairment loss, if any. Freehold land is stated at cost.

Depreciation is charged by applying the reducing balance method over its estimated useful lifeat the rates specified in note 14.

Depreciation is charged on additions during the year from the month in which assets becomeavailable for use while no depreciation is charged from the month of deletion/disposal.

The assets residual value and useful lives are reviewed to ensure that the methods and periodof depreciation charged during the year are consistent with the expected pattern of economicbenefits from the assets. Appropriate adjustments are made if the impact of depreciation issignificant.

Normal repairs are charged to income as and when incurred. Major overhauling, renovations,rehabilitation, renewals and improvements are capitalized and assets so replaced, if any, areretired.

Gains and losses on disposal of fixed assets are taken to profit and loss account.

4.4 Capital work in progress

Capital work in progress is stated at cost less any identified impairment loss. All expenditureconnected with specific assets incurred during installation and construction period are carriedunder capital work in progress. These are transferred to specific assets as and when these assetsare available for use.

4.5 Stores, spares and loose tools

These are valued at lower of cost and net realizable value. Cost is calculated using moving averagemethod except for items in transit which are valued at cost comprising invoice value plus othercharges paid thereon till the balance sheet date. Provision is made against obsolete items andslow moving stores and spares based on management's estimate.

4.6 Stocks-in-trade

Stock of raw materials, work-in-process and finished goods, except for those in transit are valuedprincipally at the lower of weighted average cost and net realizable value. Cost of work-in-process


and finished goods comprises cost of direct materials, labour and appropriate manufacturingoverheads. Cost of own produced molasses, a by product, is determined on the basis of monthlyaverage cost of molasses purchased from third parties.

Stock of raw material and finished goods purchased for sale/process are valued at weightedaverage cost. Materials in transit are stated at cost comprising invoice values plus other chargespaid thereon.

Net realizable value signifies the estimated selling price in the ordinary course of business lesscosts necessary to be incurred in order to make a sale. Provision is made in the financial statementsfor obsolete and slow moving stock in trade based on management's estimate.

4.7 Financial Instruments

All the financial assets and financial liabilities are recognized at the time when the Companybecomes a party to the contractual provisions of the instruments and are remeasured at fair value.Any gain/loss on de-recognition and on remeasurement of such financial instruments other thaninvestments available for sale, is included in the profit/loss for the period in which it arises.

a) Trade debts and other receivablesTrade debts and other receivables are carried at original invoice amount less an estimate madefor doubtful debt balances based on review of all outstanding amounts at the year end. Baddebts are written off when identified.

b) Cash and cash equivalentsCash and cash equivalents comprise of cash in hand and at banks on current, saving and depositaccounts and other short term highly liqiud instruments that are readily convertible into knownamount of cash and which are subject to insignificant risk of changes in values.

c) BorrowingsLoans and borrowings are recorded at the proceeds received. Financial cost is accounted for onthe accrual basis and is reported under accrued finance cost to the extent of unpaid. Borrowingcosts 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 intendeduse or sale, are added to the cost of those assets, until such time as the assets are substantiallyready for their intended use or sale. All other borrowing costs are charged to income in theperiod in which these are incurred.

d) Trade and other payablesLiabilities for trade and other amounts payable are carried at cost which is the fair value of theconsideration to be paid in the future for goods and services.

e) ProvisionsProvisions are recognized when the Company has a legal and constructive obligation as a resultof past events and it is probable that an outflow of resources will be required to settle theseobligations and a reliable estimate of the amounts can be made.

4.8 Impairment

a) Financial assetsA financial asset is considered to be impaired if objective evidence indicate that one or moreevents had a negative effect on the estimated future cash flow of that asset.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as adifference between its carrying amount and the present value of estimated future cash flowsdiscounted at the original effective interest rate. An impairment loss in respect of available forsale financial asset is calculated by reference to its current fair value.


Individually significant financial assets are tested for impairment on an individual basis. Theremaining financial assets are assessed collectively in groups that share similar credit riskscharacteristics.

b) Non-Financial assetsThe carrying amounts of the Company's assets are reviewed at each balance sheet date todetermine whether there is any indication of impairment. If such indication exists, the recoverableamount of such asset is estimated. An impairment loss is recognized wherever the carryingamount of the asset exceeds its recoverable amount. Impairment losses are recognized in profitand loss account. A previously recognized impairment loss is reversed only if there has been achange in the estimates used to determine the asset's recoverable amount since the last impairmentloss was recognized. If that is the case, the carrying amount of the asset is increased to itsrecoverable amount. That increased amount cannot exceed the carrying amount that would havebeen determined, net of depreciation, had no impairment loss been recognized for the assets inprior years. Such reversal is recognized in profit and loss account.

4.9 Off Setting of financial assets and financial liabilities

Financial assets and financial liabilities are offset and the net amount is reported in the balancesheet, when there is a legally enforceable right to set off the recognized amounts and the Companyintends to either settle on net basis or to realize the asset and settle the liability simultaneously.Corresponding income on assets and charge on liability is also offset.

4.10 Revenue recognition

Revenue from sales is recognized on dispatch of goods to customers.

Return on deposits is accrued on a time proportion basis by reference to the principal outstandingand the applicable rate of return.

4.11 Related party transactions

Transactions between the Company and a related party are measured at arm’s length ratesdetermined in accordance with the Comparable Uncontrolled Price Method.

4.12 Foreign currency translations

Transactions in foreign currency are accounted for in Pak rupees at the rates of exchange prevailingat the date of transaction. Monetary assets and liabilities in foreign currencies are translated atrates of exchange prevailing at the balance sheet date and in case of forward exchange contractsat the committed rates. Gains or losses on exchange are charged to income.

4.13 Business segment

A business segment is a group of assets and operations engaged in providing or services that aresubject to risks and returns that are different from those of other business segments. Businesssegments are the primary reporting format and the Company is organized into two segments:

- Sugar division - manufacture and sale of sugar- Ethanol division - manufacture and sale of ethanol

A geographical segment is engaged in providing products or services within a particular economicenvironment that are subject to risks and returns that are different from those of segmentsoperating in other economic environments. The Company mainly operates in one economicenvironment, hence there are no geographical segments.


4.14 Contingencies

The Company has disclosed contingent liabilities for the pending litigation and claims againstthe company based on its judgment and the advice of the legal advisors for the estimated financialoutcome. The actual outcome of these litigations and claims can have an effect on the carryingamounts of the liabilities recognized at the balance sheet date. However, based on the bestjudgment of the Company and its legal advisors, the likely outcome of these litigations andclaims is remote and there is no need to recognize any liability at the balance sheet date.

4.15 Segment assets and liabilities

The assets of a segment include all operating assets used by a segment and consist principallyof operating cash, receivables, inventories and property, plant and equipment, net off allowancesand provisions.

Segment liabilities include all operating liabilities consisting principally of deferred liabilities,other payables and accrued liabilities.

The carrying amount of identifiable assets and liabilities are directly attributed to respectivesegments. The carrying amount of jointly used assets and liabilities of sugar and allied segmentis classified as unallocated assets and liabilities.

4.16 Allocation of segment expenses

All identifiable expenses are directly attributed to the respective segments. The jointly incurredexpenses of sugar and allied segments are allocated on the basis of segment revenues.

4.17 Dividends and other appropriations

Dividend distribution to the Company's shareholders is recognized in the company's financialstatements in the period in which the dividends are declared and other appropriations arerecognized in the period in which these are approved by the Board of Directors.

2011 2010(Rupees in thousand)

5 ISSUED, SUBSCRIBED AND PAID UP CAPITAL

64,020,000 (2010: 64,020,000) Ordinary shares of Rupees 10each fully paid in cash 640,200 640,200

35,000,000 (2010: 35,000,000) Ordinary shares of Rupees 10each issued as fully paid for consideration other than cash 350,000 350,000

990,200 990,200

5.1 26,506,961 (2010: 26,506,961) ordinary shares of the Company are held by Colony MillsLimited.

6 LONG TERM FINANCES - Secured

Long term finance from commercial banks - SecuredThe Bank of Punjab 6.1 383,333 479,167Faysal Bank Limited 6.2 137,500 187,500KASB Bank Limited - DF I & II 6.3 223,749 276,666Pak Oman Investment Limited 6.4 93,750 100,000

838,332 1,043,333Loan from related parties:

Musharika-I 6.5 87,626 87,626Musharika-II 6.6 309,070 309,070

396,696 396,696

1,235,028 1,440,029

Less: Current portion shown under current liabilities- Long term finances - secured (137,500) (228,194)

1,097,528 1,211,835

6.1 This represents term finance facility obtained from the Bank of Punjab, as of 30 September 2011only eight semi annual installments remained outstanding. It carries mark up at the rate ofaverage 3 month KIBOR plus 195 bps (2010: 3 month KIBOR plus 195 bps) per annum, with11% floor and no cap. It is secured by way of 1st exclusive charge over present and future currentand fixed assets of the Company with 25% margin and personal guarantee of a sponsor director.

6.2 This represents term finance facility of Rs. 250 Million obtained from Faysal Bank Limited, asof 30 September 2011 only 5.5 semi annual installments remained outstanding. It carries markup at the rate of 6 month average KIBOR plus 300 bps (2010: 6 month average KIBOR plus300 bps) per annum. It is secured by way of 1st pari passu charge on all present and future fixedassets of the Company and personal guarantee of a sponsor director.

6.3 This represents demand finance facility (DF-I) of Rs. 80 million obtained from KASB BankLimited, as of 30 September 2011 only eighteen monthly installments remained outstanding.It carries mark up at the rate of 6 month KIBOR plus 2.5% (2010: 6 month KIBOR plus 2.5%)per annum. It is secured by way of ranking charge over fixed assets of the Company and personalguarantee of a sponsor director.

This represents demand finance facility (DF-II) of Rs. 210 million obtained from KASB BankLimited, as of 30 September 2011 only fourteen quarterly installements remained outstanding.It carries mark up at the rate of 6 month KIBOR plus 2.5% (2010: 6 month plus 2.5%) perannum. It is secured by way of ranking charge over fixed assets of the Company and personalguarantee of a sponsor director.

6.4 This represents term finance facility of Rs. 100 Million obtained from PAK Oman InvestmentCompany Limited, as of 30 September 2011 only fifteen quarterly installments remainedoutstanding. It carries mark up at the rate of 3 months average KIBOR plus 3.25% (2010: 3month average KIBOR plus 3.25%) per annum. It is secured by way of personal guarantee andproperty located at Mouza Theter, Lahore of a sponsor director.

6.5 This represents long term musharika based loan extended by Colony Mills Limited (CML) ofRs. 1.13 billion in consideration of the sale, transfer and vesting of assets less current liabilitiesof CML's sugar division, Mian Channu, as of 30 September 2011 outstanding due on 31 March



2014, or it may be repaid earlier or swapped with arrangements made by the company, and issubject to profit rates charged to the CML by its creditors matching with its related borrowings.The current profit rate would accordingly be 3 month KIBOR plus 3% (2010: 3 month KIBORplus 3%) per annum. The company, shall not, without prior written consent of CML sell, transfer,grant encumber, lease or otherwise dispose of all or any substantial part of Musharika Assets.

6.6 This represents long term musharika based loan extended by Colony Industries (Private) Limited(CIL) of Rs. 1 billion, as of 30 September 2011 only three half yearly installments remainedoutstanding, which may be repaid earlier or swapped with arrangements made by the company,and is subject to profit rates charged to the CIL by its creditors matching with its relatedborrowings. The current profit rate would accordingly be 3 month KIBOR plus 3% (2010: 3month KIBOR plus 3%) per annum.

7 STAFF RETIREMENT BENEFITS - Gratuity

Staff Gratuity- Actuarial Valuation 7.1 12,943 8,060

12,943 8,060

7.1 Reconciliation of payable to defined benefit plan:

The amounts recognized in the balance sheetare as follows:Present value of defined benefitobligation (PVDBO) 7.2 15,175 11,106Add: Unrecognized net actuarial gains 210 210Less: Unrecognised Transitional Liability 7.5 (2,442) (3,256)

12,943 8,060

7.2 Movement in net liability recognized is as follows:

Opening balance of PVDBO as at October 01 11,106 6,857Add:

Service cost recognized during the year 4,704 4,508Interest cost for the year 1,388 857

17,198 12,222Less:

Benefits paid during the year (2,023) (906)Actuarial (Gain) on PVDBO - (210)

(2,023) (1,116)

Closing balance of PVDBO as at September 30 15,175 11,106

7.3 The principal assumption used in theactuarial valuation are as follows:

Discount rate 12.5% 12.5%Expected rate of salary increase 11.5% 11.5%Expected average remaining working life of employees 11 Years 11 Years



7.4 Charge to Profit & Loss Account for theyear is as follows:

Current service cost 4,704 4,508Interest cost 1,388 857Liability charged due to amortisation of

transitional liability 7.5 814 814

6,906 6,179

7.5 Amortisation of Transitional Liability is madeup as follows:

Transitional Liability under IAS-19 3,256 6,857Liability reflected as per Previous Accounting Policy - 2,787

Addition in Liability under IAS-19 3,256 4,070Less: Amortisation for the period 7.4 (814) (814)

2,442 3,256

As per provisions of IAS-19, the additional liability resulting from the application of IAS-19i.e. 4.070 million can be recognised immediately or amortised over the maximum period of 5years. The Company has adopted to amortise this additional liability over the period of 5 years.

8 DEFERRED TAXATION

The liability for deferred taxation comprises of temporarydifferences relating to:

Accelerated tax depreciation 221,281 83,921Unused tax credits and losses (213,864) (75,693)Provision for gratuity (2,417) (2,880)

5,000 5,348

9 TRADE AND OTHER PAYABLES

Creditors 369,992 330,118Bills payable - 161,420Advances from customers 70,081 -Accrued liabilities 40,128 17,454Income tax deducted at source 2,104 404Sales tax payable 6,011 80,499Letter of credits 31,434 -Refundable securities 235 121Worker's profit participation fund 9.1 6,332 6,956Other payables 1,071 842

527,388 597,814

9.1 Worker's profit participation fund (WPPF)

Balance as on October 01 6,956 18,624Allocation for the year 6,332 6,956

13,288 25,580

Amount paid during the year (6,956) (18,624)

Balance as on September 30 6,332 6,956




10 ACCRUED FINANCE COST

Accrued finance cost on:- Long term finances 63,116 68,609- Short term borrowings 58,105 50,884

121,221 119,493

11 SHORT TERM BORROWINGS - SECURED

From commercial banks: 1,625,102 1,102,060

These represent cash finance, running finance, export refinance, murabaha obtained from variousbanking companies and are subject to mark up ranging from 9 % to 17.30 % per annum (2010: 7.5% to 16.77 %). These are secured against pledge/hypothecation of stock-in-trade, charge on currentassets, demand promisory note, Company's performance guarantee and personal guarantee of a sponsordirector.

The aggregated amount of unavailed credit limits as at September 30, 2011 is Rupees 374.899 million(2010: Rupees 573 million).

12 PROVISION FOR TAXATION

Opening Balance 2,788 23,312Add: Provision for Taxation 54,601 30,971

57,389 54,283

Less: Adjusted against Advance Tax 18.2 (22,120) (51,495)

35,269 2,788

13 CONTINGENCIES AND COMMITMENTS

13.1 Commitments

Nill (2010: Nill)

13.2 Contingencies

Guarantees given to sui northern gas pipelines limited and director excise and taxation by bankson behalf of the company outstanding as at September 30, 2011 were for Rupees 46.6 million( 2010: Rupees 47.3 million).

14 PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 14.1 3,515,925 3,022,160Capital work - in - progress 14.3 - 320,891

3,515,925 3,343,051


At October 01, 2009Cost 310,514 1,461,336 1,594,394 26,468 33,229 3,425,941Accumulated depreciation - 133,970 149,301 3,711 10,871 297,853

Net book value 310,514 1,327,366 1,445,093 22,757 22,358 3,128,088

Year ended September 30,2010Opening net book value 310,514 1,327,366 1,445,093 22,757 22,358 3,128,088Additions - 790 30,281 3,532 6,712 41,315Disposals:

Cost - - - - - -Accumulated depreciation - - - - - -

- - - - - -

Depreciation charge - 66,406 72,920 2,536 5,381 147,243

Closing net book value 310,514 1,261,750 1,402,454 23,753 23,689 3,022,160

At September 30, 2010Cost 310,514 1,462,126 1,624,675 30,000 39,941 3,467,256Accumulated depreciation - 200,376 222,221 6,247 16,252 445,096

Net book value 310,514 1,261,750 1,402,454 23,753 23,689 3,022,160

Year ended September 30,2011Opening net book value 310,514 1,261,750 1,402,454 23,753 23,689 3,022,160Additions 6,340 645,215 3,908 130 655,593Disposals:

Cost - - - - - -Accumulated depreciation - - - - - -

Depreciation charge - 63,246 91,310 2,530 4,742 161,828

Closing net book value 310,514 1,204,844 1,956,359 25,131 19,077 3,515,925

At September 30, 2011Cost 310,514 1,468,466 2,269,891 33,907 40,072 4,122,850Accumulated depreciation - 263,622 313,532 8,776 20,995 606,925

Net book value 310,514 1,204,844 1,956,359 25,131 19,077 3,515,925

Annual rate of depreciation (%) - 5 5 10 20

14.1 Operating Fixed Assets


Freeholdland

Building onFreehold land

Plant andmachinery

Furniture,fixture andequipment

Vehicles Totaloperating

assetsParticulars


14.2 The depreciation charge for the year has been allocated as follows:

Cost of sales 154,556 139,327Administration and general expenses 7,272 7,916

161,828 147,243

14.3 Capital work-in-progress

Civil work - 21,310Plant and machinery - 299,581

- 320,891



14.3.1 Capital work in progress includes borrowing cost amounting to Rs. 45.802 Million, whichwere capitalized during the year (2010: Rs. 35.951 Million). The borrowing costs are capitilizedat the rate of 17 % (2010: 15.5 %) per annum.

15 STORE, SPARES AND LOOSE TOOLS

Stores 80,520 96,516Spares 47,530 47,862Loose tools 7,849 6,841

135,899 151,219

15.1 The Company does not hold any stores for specific capitalization.

15.2 There are no stores, spares and loose tools in transit as at September 30, 2011 Rupees Nil (2010:Nil).

16 STOCKS IN TRADE

Raw materials - molasses 90,318 46,739Work in process

-Sugar 4,081 4,849-Molasses 11,331 -

15,412 4,849Finished goods

-Sugar 666,245 427,500-Ethanol 125,006 348,401

791,251 775,901

896,981 827,489

16.1 Stocks amounting to Rupees 998.367 million (2010: Rupees 704.447 million) are pledged withlenders as security against short term borrowings as referred to in note 11.

17 TRADE DEBTS comprise of the followings:

UnsecuredLocal- Considered good 167,247 46,985

SecuredForeign 157,300 96,262

324,547 143,247

18 ADVANCES, DEPOSITS, PREPAYMENTSAND OTHER RECEIVABLES

Advances - considered good 18.1 166,747 227,105Advance income tax 18.2 - -Security deposits 12,986 4,349Letter of credits/ guarantee margin 6,853 -Other receivables 9,997 788

196,583 232,242


18.1 It includes advances given to sugarcane growers of Rupees 13.650 million (2010: 47.228 million)which are recoverable from growers against supply of sugarcane for crushing season 2011-2012and to suppliers and contractors of Rupees 33.541 million (2010: 49.023 million). It alsoincludes Rs.100 million paid for purchase of property after obtaining courts' consent decreewhich is presently under execution with the same court. The property shall be disposed off afterit is taken over.

18.2 Advance Income Tax is made up as follows:

Opening Balance - 28,779Add: Deducted during the year 22,120 22,716

22,120 51,495

Less: Transfer to Provision for Taxation 12 (22,120) (51,495)

19 CASH AND BANK BALANCES

Cash in hand - 96Cash with banks:in current accounts 19.1 16,950 37,461in saving accounts 9 19

16,959 37,480

16,959 37,576

19.1 It includes foreign currency accounts with balances of US Dollars 869.38 equivalent to Pak Rupees70,787 (2010: US Dollars 869.38)



Gross SalesLocal 3,972,642 58,152 4,030,794 4,177,867 49,440 4,227,307Export - 1,696,372 1,696,372 - 778,479 778,479Inter-segment 307,383 - - 302,211 - -

4,280,025 1,754,524 5,727,166 4,480,078 827,919 5,005,786

Less: Sales tax and special excise duty 192,953 8,752 201,705 204,790 9,156 213,946Commission to selling agents 2,481 39,683 42,164 2,239 40,535 42,774

195,434 48,435 243,869 207,029 49,691 256,720

Net Sales 4,084,591 1,706,089 5,483,297 4,273,049 778,228 4,749,066

20.1 Inter-segment sales have been eliminated from the total figures.

20.2 The comprative figures of gross sales, sales tax and special excise duty have been re-arrangedfor the purpose of better presentation. However there is no change in the net sales figure.

Sugar Ethanol Total(Rupees in thousand)

2011Sugar Ethanol Total


201020 SALES-net


21 COST OF SALES

Raw Material consumed 21.1 3,652,090 643,263 4,295,353 3,115,428 544,055 3,659,483Inter-segment transfers - 307,383 - - 302,211 -

3,652,090 950,646 4,295,353 3,115,428 846,266 3,659,483

Salaries, wages and other benefits 21.2 99,939 15,129 115,068 92,227 29,266 121,493Fuel and power 14,418 156,909 171,327 12,286 68,797 81,083Chemicals consumed 6,252 22,760 29,012 7,757 14,194 21,951Packing material consumed 22,771 - 22,771 17,259 - 17,259Oil and Lubricants 12,524 1,470 13,994 11,064 723 11,787Stores and spares consumed 16,138 10,454 26,592 39,009 2,367 41,376Repair and maintenance 2,385 2,982 5,367 10,311 3,224 13,535Insurance 6,721 2,072 8,793 12,113 3,913 16,026Vehicle, running and maintenance 3,335 1,199 4,534 2,999 495 3,494Miscellaneous 611 - 611 525 - 525Depreciation 108,776 45,780 154,556 100,406 38,921 139,327

3,945,960 1,209,401 4,847,978 3,421,384 1,008,166 4,127,339Work In ProcessOpening Stock 4,849 - 4,849 2,820 305 3,125Closing Stock (4,081) (11,331) (15,412) (4,849) - (4,849)

768 (11,331) (10,563) (2,029) 305 (1,724)

Cost of goods produced 3,946,728 1,198,070 4,837,415 3,419,355 1,008,471 4,125,615

Finished GoodsOpening Stock 427,500 348,401 775,901 718,187 27,261 745,448Closing stock (666,245) (125,006) (791,251) (427,500) (348,401) (775,901)

(238,745) 223,395 (15,350) 290,687 (321,140) (30,453)

3,707,983 1,421,465 4,822,065 3,710,042 687,331 4,095,161




2010

21.1 Raw material consumed




2010

Opening stock - 46,739 46,739 - 315,969 315,969Purchases (Included procurementand other costs) 3,652,090 686,842 4,338,932 3,115,428 274,825 3,390,253Less: Closing stock - (90,318) (90,318) - (46,739) (46,739)

3,652,090 643,263 4,295,353 3,115,428 544,055 3,659,483

21.1.1 Inter-segment purchases have been eliminated from the total figures.

21.2 These include Rupees 4.834 million (2010: Rupees 4.325 million) in respect of employees'retirement benefits - gratuity.

Note

22 ADMINISTRATIVE EXPENSES

Salaries, wages and other benefits 22.1 63,831 46,527Fee and subscription 1,993 1,318Vehicle running 7,769 6,858Legal and professional 1,772 845Rent, rates and taxes 1,391 1,408Travelling and conveyance 6,891 5,574Postage, telephone and telegrams 2,695 2,014Utilities expenses 3,254 2,635Entertainment 1,322 1,113Insurance 1,050 1,358Repair and maintenance 1,396 1,059Printing and stationery 637 384Charity and donations 73 180Newspapers and periodicals 11 18Advertisement and publicity 17 63Auditors' remuneration 22.2 375 375Other expenses 975 1,769Depreciation 7,272 7,916

102,724 81,414

22.1 These include Rupees 2.072 million (2010:Rupees 1.854 million) in respect of employees'retirement benefits - gratuity.

22.2 Auditors' remuneration

Statutory audit 250 250Half yearly review 100 100Out of pocket expenses 25 25

375 375

23 DISTRIBUTION AND MARKETING EXPENSES

Salaries and other benefits 1,953 1,824Stock handling charges 25,719 18,539Insurance 1,417 3,997Other expenses 1,151 1,120

30,240 25,480

24 OTHER OPERATING INCOMEMiscellaneous 5,336 3,526

5,336 3,526

25 FINANCE COST

Financial charges on:- Long term finances 218,050 171,665- Short term borrowings 186,309 236,845Bank charges, commission and excise duty 2,601 2,899

406,960 411,409



26 PROVISION FOR TAXATION

Provision for taxation for:- Current year 54,949 29,148- Prior year - 1,823

54,949 30,971- Deferred tax (348) (16,850)

54,601 14,121

Income tax return for the tax year 2011 has been filed under universal self assessment scheme isdeemed to have been accepted.

No numeric tax rate reconciliation is given in these financial statements as provisions made duringthe current and preceding years respectively represent final tax deducted at source on realisation offoreign exchange proceeds under section 154 and minimum tax payable under section 113 of theIncome Tax Ordinance, 2001.

27 EARNINGS PER SHARE

27.1 Basic earnings per share

Profit for the year Rupees 65,711 118,051

Weighted average number of ordinary shares Numbers 99,020 99,020

Earning per share - Basic Rupees 0.66 1.19

27.2 Diluted earning per share

There is no dilution effect on the basic earning per share as the Company has no such commitments.



28 REMUNERATION OF CHIEF EXECUTIVE OFFICER , DIRECTORS AND EXECUTIVES

Managerial remuneration 1,404 2,728 7,010 11,142 1,283 2,273 6,648 10,204Rent and utilities - - 3,422 3,422 - - 2,385 2,385Medical 108 272 701 1,081 144 227 697 1,068

1,512 3,000 11,133 15,645 1,427 2,500 9,730 13,657

Number of Persons 1 1 11 13 1 1 10 12

ChiefExecutive Directors Executive Total Chief

Executive Directors Executive Total

2011 2010

(Rupees in thousand) (Rupees in thousand)

28.1 In addition to the above, some of the executives are provided with free use of company maintainedcars.

29 RELATED PARTY TRANSACTIONS

Colony Mills Limited

Long term musharika finance 87,626 87,626Profit charged on long term musharika finance 14,368 24,270

Colony Industries (Private) Limited

Long term musharika finance 309,070 309,070Profit charged on long term musharika finance 50,678 51,796

30 BUSINESS SEGMENT INFORMATION

RevenueLocal and export 20 3,777,208 1,706,089 5,483,297 3,970,838 778,228 4,749,066Inter-segment 20 307,383 - - 302,211 - -

4,084,591 1,706,089 5,483,297 4,273,049 778,228 4,749,066

Segment expensesCost of sales - Intersegment 21 - 307,383 - - 302,211 -

- External 21 3,707,983 1,114,082 4,822,065 3,710,041 385,120 4,095,161

3,707,983 1,421,465 4,822,065 3,710,041 687,331 4,095,161

Gross profit 376,608 284,624 661,232 563,008 90,897 653,905Administrative expenses 22 (93,672) (9,052) (102,724) (74,014) (7,400) (81,414)Distribution and marketing

expenses 23 (7,373) (22,867) (30,240) (8,473) (17,007) (25,480)

Operating profit 275,563 252,705 528,268 480,521 66,490 547,011

30.1 The comprative figures of Administrative, distribution and marketing expenses have been re-arranged for the purpose of better presentation. However there is no change in the net figures.

30.2 Inter-segment sales and purchases

Inter-segment sales and purchases have been eliminated from total figures.






2010

30.3 Basis of inter-segment pricing

All inter-segment transfers are made at cost.

Segment assets 3,871,050 1,215,843 5,086,893 3,856,238 878,586 4,734,824

Segment liabilities 2,606,989 949,962 3,556,951 2,580,486 695,106 3,275,592

Capital expenditures 65,787 589,806 655,593 8,784 106,481 115,265Depreciation on property,plant and equipment 113,972 47,856 161,828 106,084 41,158 147,242




2010

31 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES

31.1 Financial risk factors

The Company's activities expose it to a variety of financial risks: market risk, (including currencyrisk, other price risk and interest rate risk), credit risk and liquidity risk. The Company's overall

Note


risk management programme focuses on the unpredictability of financial markets and seeks tominimise potential adverse effects on the financial performance.

Risk Management is carried out by the Board of Directors (the Board). The Board providesprinciples for overall risk management, as well as policies covering specific areas such as currencyrisk, other price risk credit risk and liquidity risk.

(a) Market risk

(i) Currency riskCurrency risk is the risk that the fair value or future cash flows of a financial instrumentwill fluctuate because of the changes in foreign exchange rates. Currency risk arises mainlyfrom future commercial transactions or receivables and payables that exist due to transactionsin foreign currencies.

The Company is exposed to currency risk arising from various currency exposures, primarilywith respect to the United States Dollar (USD). The company's foreign exchange riskexposure is restricted to the amounts receivable/payable from/to foreign entities. However,there is no exposure to currency risk at the year end.

(ii) Other price riskOther price risk represents the risk that the fair value of future cash flows of a financialinstrument will fluctuate because of changes in market prices (other than those arising frominterest rate risk or currency risk), whether those changes are caused by factors specific tothe individual financial instruments or its issuer, or factors affecting all similar financialinstruments traded in the market. The Company is not exposed to commodity price risk.

(iii) Interest rate riskThis represents the risk that the fair value or future cash flows of a financial instrument willfluctuate because of changes in market interest rates.

The Company has no significant long-term interest bearing assets. The Company's interestrate risk arises from long term financing, musharika finance and short term borrowings.Borrowings obtained at variable rates expose the Company to cash flow interest rate risk.Borrowings obtained at fixed rate expose the Company to fair value interest rate risk.

At the balance sheet date the interest rate profile of the Company's interest bearing financialinstruments was:

Floating rate instrumentsBank balances-saving accounts 9 19

Financial liabilitiesLong term financing 1,235,028 1,440,029Short term borrowings 1,625,102 1,102,060

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed rate financial assets and liabilities at fair valuethrough profit or loss. Therefore, a change in interest rate at the balance sheet date wouldnot affect profit or loss of the Company.

(b) Credit riskCredit risk represents the risk that one party to a financial instrument will cause a financial loss forthe other party by failing to discharge an obligation. The carrying amount of financial assets


represents the maximum credit exposure. The maximum exposure to credit risk at the reportingdate was as follows:

Trade debts 324,547 143,247Advances, deposits and other receivables 61,350 85,014Bank balances 16,959 37,480

(c) Liquidity riskLiquidity risk is the risk that an entity will encounter difficulty in meeting obligations associatedwith financial liabilities.

The Company manages liquidity risk by maintaining sufficient cash and the availability of fundsthrough an adequate amount of committed credit facilities. At 30th September 2011 the companyhad Rs. 374.899 million available borrowing limits from financial institutions and Rs. 16.9 millioncash and bank balances. As, the Company is in a positive working capital position at the year end,management believes the liquidity risk is minimal. Following are the contractual maturities offinancial liabilities including interest payments. The amounts disclosed in the table are undiscountedcash flows.


Loans and Advances2011 2010



The contractual cash flows relating to the above financial liabilities have been determined on thebasis of interest rates/mark up rates effective as at 30th September. The rates of interest /markuphave been disclosed in Note-6 and Note-11 to these financial statements.

31.2 Fair values of financial assets and liabilities

The carrying values of all financial assets and liabilities reflected in financial statements approximatetheir fair values. Fair value is determined on the basis of objective evidence at each reportingdate.

31.3 Financial instruments by categories

As at September 30

Assets as per balance sheetTrade debts 324,547 143,247Advances, deposits and other receivables 61,350 85,014Cash and bank balances 16,959 37,576

Current maturities of financial liabilities as at 30th September, 2011

Long term finances 1,235,028 1,298,144 200,616 1,097,528 -Short term borrowings 1,625,102 1,683,207 1,683,207 - -Trade and other payables 425,898 425,898 425,898 - -

3,286,028 3,407,249 2,309,721 1,097,528 -

Current maturities of financial liabilities as at 30th September, 2010

Long term finances 1,440,029 2,016,040 257,859 1,758,181 -Short term borrowings 1,102,060 1,233,426 1,233,426 - -Trade and other payables 597,814 597,814 597,814 - -

3,139,903 3,847,280 2,089,099 1,758,181 -

CarryingAmount

ContractualValues

Less thanOne Year

One toFive Years

More thanFive Years

CarryingAmount

ContractualValues

Less thanOne Year

One toFive Years

More thanFive Years

Liabilities as per balance sheetLong term financing 1,235,028 1,440,029Deferred liabilities- Employees' benefits 12,943 8,060Short term borrowings 1,625,102 1,102,060Trade and other payables 425,898 597,814Accrued mark up 121,221 119,493

31.4 Capital risk management

The Company's objectives when managing capital are to safeguard the Company's ability tocontinue as a going concern in order to provide returns for shareholders and benefits for otherstakeholders and to maintain in optimal capital structure to reduce the cost of capital. In orderto maintain or adjust the capital structure, the Company may adjust the amount of dividendspaid to shareholders, return capital to shareholders through repurchase of shares, issue newshares or sell assets to reduce debt. Consistent with others in industry and the requirements ofthe lenders, the Company monitors the capital structure on the basis of gearing ratio. This ratiois calculated as borrowing divided by total capital employed. Borrowings represent long-termfinancing, Musharika financing and short-term borrowings obtained by the Company as referredin Note-6 and Note-11 respectively. Total capital employed includes 'total equity' as shown inthe balance sheet plus 'borrowings'. The gearing ratio as at year ended 30th Septermber 2011and 30th September 2010 is as follows:

Borrowings 2,860,130 2,542,089Total equity 1,524,943 1,459,232Total capital employed 4,385,073 4,001,321Gearing ratio 65% 64%


2011 2010



Financial liabilities at amortised cost2011 2010


32. CAPACITY AND PRODUCTION

Sugar

Plant capacity on the basis of operating days M. Tons 1,426,500 1,288,500(Phalia 877,500 M.Tons (2010:780,000 M.Tons) andMianchanu 549,000 M.Tons (2010:508,500M.Tons)Actual Crushing M. Tons 732,910 640,547Actual Production M. Tons 63,873 55,269

Ethanol

Rated capacity on the basis of operatingworking days (E.N.A. & B-Grade) Liters 26,750,000 24,375,000Actual production (E.N.A., E.N.A.Anhydrous & B-Grade) Liters 25,356,131 23,646,464

The low production was due to limited availability of raw material.

33. DATE OF AUTHORIZATION OF ISSUE

These financial statements were authorized for issue on January 07, 2012 by the Board of Directorsof the Company.

34. GENERAL

34.1 Figures have been rounded off to the nearest thousand.

34.2 Previous year's figures have been rearranged, wherever necessary for the purpose of comparison.However, no significant re-arrangement has been made in these financial statements.


Financial Highlights

Share Capital 990,200 990,200 990,200 990,200 200

Unappropriated Profit 534,743 469,032 350,981 41,876 -

Non current Liabilities 1,115,471 1,225,243 1,510,347 2,153,643 1,657,224

Current Liabilities 2,446,480 2,050,349 1,983,804 2,231,573 36,793

Non Current Assets 3,515,925 3,343,051 3,344,118 3,262,442 2,213,254

Current Assets 1,570,969 1,391,773 1,491,214 2,154,850 116,963

Turnover 5,483,297 4,749,066 4,009,320 2,106,567 -

Gross Profit 661,232 653,905 1,086,249 671,070 -

Operating Profit 528,268 547,011 945,159 508,675 -

Profit before Taxation 120,312 132,172 353,575 52,409 -

Profit after Taxation 65,711 118,051 309,105 41,876 -

Production Data

Cane crushed (M.Tons) 732,910 640,547 688,030 1,122,467 -

Sugar Produced (M.Tons) 63,873 55,269 64,736 96,694 -

Ethanol produced (Liters) 25,356,131 23,646,464 13,522,468 37,361,663 -

2011 2010 2009 2008 2007(Rupees in Thousand)


3785792303247414107853324224112111111111111111211211111111

1,682

Pattern of ShareholdingAs at September 30, 2011

1101501

10015001

1000115001200012500130001350014000145001500016000165001700017500195001

100001105001120001140001150001180001255001335001345001415001870001915001940001

10600011155001129500118500012150001227000130100013335001562500161800016495001662000185650019215001

26505001

100500

10005000

1000015000200002500030000350004000045000500005500065000700007500080000

100000105000110000125000145000155000185000260000340000350000420000875000920000945000

10650001160000130000018550002155000227500030150003340000563000061850006500000662500085700009220000

26510000

15,867 151,561 173,254 694,475 574,887 164,448 178,540 155,874 219,341 160,219 113,690 132,809

97,500 211,212 127,587 133,153 295,762

75,056 100,000 205,214 107,740 120,600 144,248 151,000 181,491 257,912 335,682 350,000 419,450 871,763 919,950 940,340

1,060,470 1,158,991 1,300,000 3,707,704 2,152,581 2,274,090 6,020,826 3,338,026 5,626,833 6,184,678 6,500,000 6,623,100 8,565,498 9,219,617

26,506,961

99,020,000

Number ofShareholders From To

Shareholdings Total Shares held


INDIVIDUAL

FINANCIAL INSTITUTIONS

INSURANCE COMPANIES

JOINT STOCK COMPANIES

MUTAL FUND

OTHERS

TOTAL

Categorial Pattern of ShareholdingAs at September 30, 2011

1,622

7

11

36

1

5

1,682

57,142,216

2,756,702

958,289

37,821,529

335,682

5,582

99,020,000

57.71

2.78

0.97

38.20

0.34

0.01

100.00

Categories ofShareholders

Number ofShares Held Percentage

Number ofShareholders


Pattern of Shareholding (Additional Information)Under Code of Corporate Governance as at September 30, 2011

Directors, CEO, and their spouse and minor children:

Mr. Naveed M. SheikhMr. Waqar Ibn Zahoor BandeyMs. Samina GulMr. Muhammad AsgharMr. Mohammad AliMr. Ahmed Haji MussaMr. Asad AliMrs. Aasiya N. SheikhMs. Izza Naveed SheikhMr. Ibrahim Naveed Sheikh

Executives

Associated Compaines, Undertakings & related parties


NITICP

Public Sector Companies & Corporation

Banks, DFIs, NBFI & Insurance Companies, Modarabasand Mutual funds

Others

Public

Total:

Shareholding 10% and More


65,861 10,252

1,000 1,000 1,000 1,000 1,000

3,810,413 3,010,413 3,010,413

--

26,506,961

335,682 --

1,023

4,050,673

11,320,150

46,893,159

99,020,000

26,506,961

0.07 0.01 0.00 0.00 0.00 0.00 0.00 3.85 3.04 3.04

--

26.77

0.34 --

0.00

4.09

11.43

47.36

100.00

26.77

Shareholding Percentage

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