JDW Sugar Mills
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Transcript of JDW Sugar Mills
INDUSTRY PROFILE
JDW sugar mills (Jamal Din Wali) company was incorporated in 1990. As a private limited
company under the Companies Ordinance, 1984 and was subsequently converted into a public
limited Company on 24 August 1991. Shares of the Company are listed on the Karachi and
Lahore Stock Exchanges. JDW sugar mills have 3 units and 2 diversifications. The Number of
Employees is 942. The revenue of JDW is 28.50bn and the Net income is 835.87mn.
Unit 1
On 31st May 1990 first unit was
formed. Crushing capacity of this
unit is 2.46 million tons of sugar or
20,500 TCD (tonne sugar cane
crushing per day). This Unit is
located in District Rahim Yar Khan.
The principal activity of the
Company is production and sale of
crystalline sugar with an annual report of 2011.
Unit 2
JDW Unit-II (formerly United Sugar
Mills Limited) was acquired by
JDWSML in November 2005 and
after four years successful
operations this was merged into
JDWSML on October 1, 2008.
Annual Crushing capacity of this
Unit is 1.02 million tons of sugar or
8500 TCD (tonne sugar cane
crushing per day) and is located near Sadiqabad at distance of 45 Kms from JDW Unit-I in
District Rahim Yar Khan.
Unit 3
JDW Unit-III (formerly Ghotki
Sugar Mills (pvt) Limited) was
incorporated on 02 June 2006 as a
Private Limited Company under the
Companies Ordinance, 1984. JDW
Unit-III started crushing in year
2007-2008. The crushing capacity
of this unit is 1.32 million tons of
sugar or 11000 TCD (tonne sugar cane crushing per day) and is located in District Ghotki, Sindh
Province. It was setup in the record time of 11 months between ground breaking and production
and in the first year of production it reached 90,918 Tons with a recovery of 10.55 % which was
the highest in the country.
JDW sugar mills have 2 diversifications also Faruki Pulp Mills Ltd and JK Dairies (Pvt) Ltd.
Management Profile
Board of Directors
Mr. Jahangir Khan Tareen Director/Chief Executive
Syed Ahmed Mahmud Director/Chairman
Mrs. Sameera Mahmud
Mr. Ijaz Ahmed Phulpoto
Mr. Asim Nisar Bajwa
Maj. ® Raheal Masud
Mr. Zafar Iqbal
Chief Operating officer
Rana NasimAhmed
Group Director Finance
Mr. Muhammad Rafique
Auditors
KPMG Taseer Hadi & Co.
Chartered Accountants
Audit Committee
Mr. Asim Nisar Bajwa
Mr. Zafar Iqbal
Mrs. Sameera Mahmud
Banks
Faysal Bank Ltd.
Habib Bank Ltd.
MCB Bank Ltd.
United Bank Ltd.
Standard Chartered Bank (Pakistan) Ltd.
National Bank of Pakistan
Allied Bank Ltd.
The Bank of Punjab
Habib Metropolitan Bank Ltd.
Bank Islami (Pakistan) Ltd.
Silk Bank Ltd.
Location
JDW Sugar Mills Ltd
17-Abid Majeed Road, Lahore Cantt,
Lahore Pakistan
Phone +92 4 236664891-2, +92 42
36602573-4
Fax +92 4 236654490
Web http://www.jdw-group.com/
Email [email protected]
Registrar
Corplink (Pvt.) Ltd.
Wings Arcade, I-K Commercial,
Model Town, Lahore.
Legal Advisor
Cornelius, Lane & Mufti
JDW Sugar Mills Limited
History
JDW Sugar Mills Limited was incorporated in Pakistan on 31 May 1990 as a private limited
company under the Companies Ordinance, 1984 and was subsequently converted into a public
limited Company on 24 August 1991. Shares of the Company are listed on the Karachi and
Lahore Stock Exchanges.
United Sugar Mills Limited
USML was incorporated in Pakistan on February 5, 1970. United Sugar Mills Limited was
acquired by JDWSML in November 2005 and after four years successful operations this was
merged into JDWSML on October 1, 2008.
Gohtki Sugar Mills (Pvt) Limited
Ghotki Sugar Mills (pvt) Limited) was incorporated on 02 June 2006 as a Private Limited
Company. After that GSM was merged into JDWSML.
JDW is involved in various businesses including:
Faruki Pulp mills Ltd
Dairy
Power Generation
Faruki Pulp Mills Ltd
Faruki Pulp Mills Limited was incorporated as a public limited company on October 20, 1991.
The Company is engaged in the manufacturing of wood pulp from Eucalyptus for consumption
in local and foreign paper industry. This project was started in early 1990 but due to various
reasons could not be completed on time. This will be first of its kind project in Pakistan based on
100% supply of all raw materials locally. Due to its technical and professional viability, JDW
Group has chosen this business for strategic investment with an objective of diversification. This
is an agro based industry using local raw materials. The company has commenced its
commercial production on October 1, 2011.
JK Dairies (Pvt) Ltd
This Company was incorporated in Pakistan on 26 February 2007 as a Private Limited Company
under the Companies Ordinance, 1984. It is the first modern Dairy Farm in the private sector. At
present the herd consists of 1500 Friesian, Jersey & AFS imported cows. It is principally
engaged in production and supply of milk.
Company Profile
JDW sugar mills (Jamal Din Wali) company was incorporated in 1990. As a private limited
company under the Companies Ordinance, 1984 and was subsequently converted into a public
limited Company on 24 August 1991. The number of employees is approximately 942 people in
all units.
Before bringing life to a vision we have to see it first. And for that we need people who
specialize in seeing the impossible. Here at JDW, we are proud of the visionary men we have
who take up the responsibility of creating opportunities for the future, not only for our company
but for the whole community we operate in. We believe life is about the betterment of the human
condition; it’s about social awareness, and random acts of kindness that weave the soul of
humanity. Together, we all participate in weaving the social fabric; we should all therefore be
patching the fabric when it develops holes.
The mission of JDW is to be the market leader and a world-class organization by meeting and
proactively anticipating customer needs, to maximize the wealth of stakeholders by optimizing
the long term returns and growth of the business, to be amongst the most efficient and lowest
cost producers in the industry, to ensure a safe, harmonious and challenging working
environment for the employees.
HEAD OFFICE
Its head office is situated in 17-Abid Majeed Road, Lahore Cantt, Lahore Pakistan
Market Share:
JDW is one of the largest groups in the sugar sector and contributes approximately 9-10% of
country sugar production. The current price of per share is 112.06.
Organizational Structure:
The JDW is simple structure that each employee can easily understand it very easily and is has
centralized structure and on department level is has decentralized structure.
Departments of JDW Mills limited:
JDW Sugar Mills Limited has following departments
Finance
Administration
Cane
Chemical/Production
Electrical
Management Information System
Store
Mechanical
Policies:
The company has the proper policies and rules to fulfill the vision, mission, objectives and
strategies requirement.
LEASING
Definition:
Leasing is a financial instrument in which the ownership of the leased asset remains with the
leasing company while the lessee obtains the right to use the asset by paying lease rentals for the
life time of the leasing contract. At the maturity of the leasing contract the ownership of the
leased asset is transferred to the lessee at a symbolic cost. In short leasing provides you with
alternative business funding.
Leasing Process:
General Benefits Can Be Obtained Through Leasing:
100% financing
Quick approval process
Budgeting is made easy with fixed payments throughout the lease term.
Finance the equipment you need today, without having to wait for the total cash amount
to be budgeted.
As a lease is considered a direct expense to your business, there may be advantageous tax
benefits.
Help plan equipment acquisitions.
Allows you to upgrade as your needs change.
Monthly, Quarterly, Semi-annual and Annual payments are available.
Lease Proposal of JDW Sugar Mills
Statement
A company named JDW Sugar Mills LTD approached us for a 5 year lease facility against
caterpillar generator for unit 1. After evaluating the data of our customer, we came to know that
our customer’s credit history is good and our customer has the potential to repay credit. Our
customer is A rated. So, after discussing the terms and conditions with our customer, we have
developed the following lease proposal to be presented to our management.
LEASE STRUCTURE
Name of Organization: JDW Sugar Mills Limited
Nature of Organization: Sugar Mill
Status of Organization: Public Limited Company
Register Office: JDW Sugar Mills Ltd, 17-Abid Majeed Road, Lahore Cantt,
Lahore.
Phone +92 4 236664891-2, +92 42 36602573-4
Fax +92 4 236654490
Web http://www.jdw-group.com/
Email [email protected]
Site Offices: Mauza Sharin, Jamal Din Wali, Distt. Rahim Yar Khan. (Unit 1)
Machi Goth, Sadiqabad. (Unit 2)
Mauza Laluwali, Near Village Islamabad, Distt. Ghotki. (Unit 3)
Date of Incorporation: 31 May 1990
NTN of Company: 0711003-7
Terms and condition of Lease
Type of Lease: Direct Lease
Description of Asset: Sugar cane crushing Machinery (4 sets 1 set = 2,500,000)
Lease Amount: 10,000,000 (10 Million)
Security Deposit [35%]: 3,500,000
Residual Value [35%]: 3,500,000
Net lease: 6,500,000
IRR: 12.74% [9.24% 1 month KIBOR (average asks Side) + 350 basis
points
Lease Rental Monthly: ($171,718.03)
Lease Term: 4 Year
Payment Term: Monthly in Advance
Processing fee @ 1%: Rs-100,000
Documentation charges: Rs-6,500
Security: a. personal guarantees of directors.
b. 47 postdated Cheques
KIBOR difference will be recovered before disbursement.
KIBOR published on 4th January 2013 was 9.74%
REFERENCES
CIB Report: CIB report is clear from overdue. No overdue payments have been occur
previously means they have good credit history. So a good credit history has been seen so the co
is (A rated).
Creditors: Financial Institutions
Suppliers: The statement which is as stated by the supplier that JDW Pay their credit payments
on time and we never have a feeling to chances of default.
Directors Information:
Mr. Jahangir Khan Tareen Director/Chief Executive
Syed Ahmed Mahmud Director/Chairman
RanaNasim Ahmed Chief Operating Officer
Mr. Muhammad Rafique Group Director Finance
Mrs. Sameera Mahmud
Mr. Ijaz Ahmed Phulpoto
Mr. AsimNisarBajwa
Maj. ® RahealMasud
Mr. ZafarIqbal
FINANCIAL INFORMATION
Following information is extracted from the financial statements of prospect audited by.
External Auditors
KPMG Taseer Hadi & Co.,
Chartered Accountants
PEST ANALYSIS
Political Factors:
Since the independence in 1947, Pakistan has continuously faced political instability. The
political instability has led to uncertain environment in the country, which is a threat for
any business including JDW Mills Limited.
Government regulations regarding hygiene, health and food regulations, food standards,
etc.
The rules and regulations are changed quite frequently due to changes in the government
that affects the business flow for any company.
Economic Factors:
Economic conditions are not very sound. The rising political instability has led to
economic instability as well.
Inflation remains the biggest threat to the economy. The surge in global petrol prices and
thus local petrol prices hurt the buying power of consumers that reduced the demand for
products. Due to inflation the cost of doing business has also gone higher. If Pakistan
keeps on getting better grants and loan waivers or if any other economy boosting factors
such as controlled inflation rate and economic growth take place, it will benefit the entire
industry of Pakistan.
Rate of inflation determines the rate of remuneration of employees and directly affects
the price of the sugar's products. Again, the proportion between the inflation rate and
wages prices is direct.
Unemployment rate is going up and up which has increase the level of poverty thus
further reducing the buying power of the people.
Social Factors:
Eating habits of the people in your chosen business environment may, and certainly will,
affect your marketing decisions.
Peoples are becoming health curious, they want to avoid sugar’s product.
Technological Factors:
Companies have technology with which they can have a competitive advantage in the
Pakistani market. Companies are investing in their infrastructure to not only expand but
also to upgrade their existing structure.
A good technical infrastructure would lead to better production, procurement and
distribution logistics, resulting in reduced wastage and lower costs.
Sound technology may be a decisive factor for food technology innovation, better
presentation, more effective business marketing, etc.
SWOT-ANALYSIS
STRENGTH:
JDW is the market leader.
There is no union labor in the organization.
JDW have wide set up of farms.
JDW has experienced qualified and competent employees in each department.
They are using latest technology. Latest techniques. Latest fertilizers to increase the
capacity of production
Most of population lives in rural areas that are why labor is cheap.
Cultivatable land is available for the production.
Large domestic market is available.
WEAKNESS:
JDW is using man power on large scale so expenses are high.
Salary package of lower staff is low as compared to other sugar mills.
JDW have no proper transportation system for their employees..
JDW sugar Mills limited does not have proper recycling system which results in high
water.
OPPOURTUNITIES:
JDW Sugar mills limited can increase per yield production by using further new
technologies and fertilizers.
The land of vicinity is very fruitful for sugar mills.
JDW can shift towards beet production as it is cheaper.
JDW can earn foreign exchange by exporting surplus sugar.
THREATS:
The production of sugar cane decreases the productivity of land.
Competition will increase
The advertising campaign may be needed in future.
No provision of proper transport to the field staff.
As sugar cane crop requires a lot of water, increase in production may create shortage of
water for other crops.
Requirement of the regularity bodies
Long-term Debt/Equity ratio is within the prescribed limit of 60/40.
Current ratio is within the prescribed limit.
Borrower’s total facilities are within the limit of 10 times of capital & reserves free of losses.
The prescribed exposure limit is within 20% of equity.
Lease Justification
Profitability of the prospect is improving.
Existing relationship with one of its group company with satisfactory repayment behavior.
Profitability of the prospect is good enough.
Their sales are increasing because of new technology.
Although current ratio is less than one but this company is cleared from the CIB report and their
suppliers and creditors as well.
They are taking more Assets and raw material on credit so that is the reason that their Current
ratio is less.
JDW group has a good name in the market so that is the reason we facilitate them.
Their debt to equity ratio is also good
Ratios
Debt to Equity
A company's debt to equity ratio or its gearing ratio is a measure of the level of borrowings a
company has used in proportion to stockholders' equity to finance it's assets. It's often used as an
indicator of the amount of risk inherent in the shares of a particular corporation.
Debt to Equity = Total Liabilities / Stockholders' Equity
2011 2010
=6,106,431+8,320,707/4,816,905
= 2.99 times
= 4,396,216+4,365,876/3,417,492
= 2.56 times
The company has more debt as compared to previous year. This could be due to the
reason that JDW sugar mills issue Rs.500 million loans.
Debt to Assets
2011 2010
= 6,106,431+8,320,707/19,244,044
= 74%
=4,396,216+4,365,876 / 12,179,586
= 72%
The ratio has increase from 72% to 74% because of increase in non-current liabilities whereas
fixed assets did not increased. The company has not invested loans to enhance its assets
Current ratio
An indication of a company's ability to meet debt obligations; the higher the ratio, the
more liquid the company is. Current ratio is equal to current assets divided by current liabilities.
Current ratio = Current Assets/ Current Liabilities
2011 2010
= 6,505,191/8,320,707
= 0.78:1
=3,322,546/4,365,876
= 0.76:1