Agricultural Industry of Pakistan

AGRICULTURAL
INDUSTRY OF
PAKISTAN
Submitted By:
Muhammad Shahrukh
Nimra Malik
Hafiz Uzair
Sakran Khan
Submitted To:
Miss. Rabia Javed
2/18/2015
(F13BB022)
(F13BB026)
(F13BB032)
(F13BB044)
Table of Contents
Executive Summary ................................................................................................. 1

Agricultural Industry of Pakistan .......................................................................... 2
Contribution of Agriculture in the Economic Development of Pakistan ........... 3
Sugar Industry.......................................................................................................... 4
Al-Moiz Industry ...................................................................................................... 5
Operations & Strengths and Weaknesses of the Company ................................. 6
Performance of Al-Moiz Industries .................................................................. 7
Cost & Profit Overview .................................................................................... 8
Revenue & Expenses Overview ........................................................................ 9
Competition & Challenges Faced By the Company ........................................... 9
Fixed and Variable Costs .................................................................................. 10
Cost Curves .................................................................................................... 10
Recommendations ................................................................................................. 13
References .............................................................................................................. 14
Agricultural Industry of Pakistan
Executive Summary
Agriculture Sector is a key sector of the economy and accounts for 21 percent of
GDP. The supportive policies of the government resulted in a growth of 3.1
percent against 2.4 percent last year. Major Crops registered an accelerating
growth of 3.2 percent compared to a negative growth of 0.2 percent last year. The
major crops including Cotton, Sugarcane and Rice witnessed growth in production
of 18.6 percent, 4.9 percent and 27.7 percent respectively.
Pakistan is the 15th largest producer of sugar in the world, 5th largest in terms of
area under sugar cultivation and 60th in yield. The sugar industry plays an
important role in the economy of the country. It is the second largest industry after
textiles. The Sugar industry employs over 75000 people, including management
experts, technologists, engineers, and financial experts, skilled, semiskilled and
unskilled workers. It contributes around 4 billion rupees only under the head of
excise duty and other levies to the Government are also paramount significance.
Al-Moiz Sugar Mills Limited incorporated in 2004 as a limited company and
certificate of commencement of business was granted in 2005. This is the only
Pakistani company with state of the art technology and is one of the very few mills
in Pakistan that is providing Wapda with electricity. This firm is a role model for
the whole sector in Pakistan as well as Asia and can manufacture sugar from
processing 8000 tons per day sugar cane as well as 6000 tons per day sugar beet.
Almoiz Industries Limited is a major contributor to the government of Pakistan
and national exchequer revenues in the shape of Income tax, sales tax, customs and
excise duties. Almioz Industries Limited has the capacity to produce 27MW
electricity and the same is used for manufacturing of sugar and is also sold to local
electric supply company.
Agricultural Industry of
Pakistan
Introduction:
The history of Pakistan bears testimony to the fact that agriculture is the largest contributing sector and
backbone of economy. Agriculture has played a dominant role as a driving force for our countrys
growth and development since country's creation. As we know that Industrialization is the period of
social and economic change that transforms a country from an agrarian society to an industrial one. As
the time proceeded Pakistan turned into more diversified country as industrialization took place.
Though the share of agriculture has reduced considerably since its birth but the development of
industries had not removed the agricultural presence in Pakistan.
Ranking:
Pakistan has significant world rankings in many of the important agricultural products (see Table below).
The country produces very good quality of basmati rice which earn very high value in the world market.
The country earned more than US$ 2billion dollars from export of rice alone in 2007-08. Similarly in
cotton production, we are almost self-sufficient and are able to fulfill the demand of a large (almost US$
10 billion dollar) domestic textile industry. However, in the case of mangoes country is in the process of
negotiating market access with USA that will further enhance the ranking of this category.
Pakistan Agriculture Products Production/Exports - World's Ranking
Rice
Cotton
Milk
Kino
Dates
Mangoes
Apricots
Sugarcane
Chickpeas
Production
12th
4th
5th
12th
4th
4th
4th
5th
3rd
Export Quantum
4th
N-A
Nill
5th
2nd
6th
45th
6th
7th
Export
Value
N-A
N-A
Nill
12th
5th
7th
72nd
27th
12th
Contribution of Agriculture in
the Economic Development of
Pakistan
Agriculture is an important sector, providing food to the fast-growing population of the country.
According the 1998 census, the total population of Pakistan is 130 million. With a population growth
rate of 2.6 percent there is a net addition of 3.4 million people each year. In 1947 the population of
Pakistan was 32.5 million; in 50 years it has increased fourfold. During this period the production of
wheat, the major food crop, has increased only 2.9 fold. During 1970/71 the amount of wheat imported
was 0.3 million tons; it has increased to 4.1 million tons in 1997. Tremendous efforts have been carried
out to narrow the gap between population growth and food production.
This industrialized work on agriculture has benefited Pakistans economy in the following ways:
1)
2)
3)
4)
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
INCREASING GDP OF THE ECONOMY

FOREIGN EXCHANGE EARNER
SUSTAINING THE POPULATION
SOURCE OF EMPLOYMENT
INCREASING THE TAX REVENUE OF THE GOVERNMENT
SUPPORT OF INDUSTRIES
RAW MATERIAL FOR INDUSTRIAL SECTOR
MARKETABLE SURPLUS
INFRASTRUCTURE DEVELOPMENT
DECREASE IN PRICES
EXTENSION OF MARKET
POLITICAL STABILITY
INCREASE IN PER CAPITA INCOME
DIRECT FOREIGN INVESTMENT
Sugar Industry
The sugar industry is currently playing a vital role in the national economy of our country. Sugarcane
accounts 3.4 % in agriculture value and 0.7 % in GDP and is considered a high value cash crop of
Pakistan. During July-March 2013-2014, alone sugar export earned foreign exchange of about US$ 236.8
million.
The graph and table of production and yield of Sugarcane according to the Economic survey of Pakistan
(2013-2014) are shown below:
Al-Moiz Industry
Introduction:
Al-Moiz Sugar Mills Limited incorporated in 2004 as a limited company and certificate of
commencement of business was granted in 2005. The Head Office of the company is located at
Gulberg III Lahore whereas the factory unit is located on Chashma Road in the D.I.KHAN
District Khyber Pakhtunkhwa. The company is recognized in the local and international market
as a fine quality producer of white refined Sugar, Molasses and also holds a substantial share in
the market. The company is also engaged in the export of white refined sugar to Afghanistan and
molasses to Euro countries and is contributing to the national economy in the form of foreign
exchange. The company has strong corporate clients including Engro and Pepsi. This is the only
Pakistani company with state of the art technology and is one of the very few mills in Pakistan
that is providing Wapda with electricity.
The sugar mills basic plant & machinery was acquired and installed by The Heavy Mechanical
Complex Taxila (A State Engineering Company). Other equipment such as turbines and
gearboxes etc. were imported from Germany and United Kingdom. Currently the plant is
working at the crushing capacity of 1oooo MTCD and company is keen to increase it to 12000
MTCD. The sugar mill has a state of the art technology which is the latest technology in
Pakistan. The mill produces sugar by using both sugar cane and sugar beet as a raw material. The
company is committed to invest in IT with an eventual target of implementing ERP system.
Vision of Al-Moiz industries:

The vision of Al-Moiz is to be the worlds leading innovative and sustainable-centric producer of
high quality sweeteners, bio-energy and allied products and services.
(i) Their motto is:
"
Operations & Strengths and

Weaknesses of the Company
Products:
In relation to sugar production, Al-Moiz industries deals with the following products:
Ultra White Refined Sugar

White Refined Sugar (Fine Grain)
Pressed Beet Pulp
Molasses
( ICUMSA* Below 100)

(ICUMSA Below 60)
Basic Operations:
Sugarcane juice extraction using Diffusers

Sugar Crystallization at Pan Evaporation Stations
Decontamination using Refine Centrifugal machines
Quality assurance monitoring by Distribution Control Systems (DCS) & controlled from the
Central Control Room (CCR)
Strengths:
Attractive salary packages for employees on the site

Top management. The CEO of the company is a Stanford Graduate and is a man of great vision
Friendly and cooperative working environment
Financial resources
Agricultural assistance to the local farmers
State of the art technology
Corporate Social Responsibility
Weaknesses:
Lack of skilled persons available in the region where the mill is located
Shortage of residence available for employees on the site
The site is prone to being affected by the flood and has been affected by the recent floods
Number of accidental reports are increasing
Turnover rate is high
Weak organizational policies
* ICUMSA stands for (International Commission for Uniform Methods of Sugar Analysis) which deals in specifying
standards for different refined sugar types.
Performance of Al-Moiz Industries

(Year 2008 -2013)
With the growth rate of above 400% and the revenue ranging between 10 50 million US Dollars, AlMoiz industries is one of Pakistans fastest growing companies and have a huge impact on the countrys
economy.
Sugar Production:
The production of sugar during 2008 -2013 is shown in figure 1:
Sugar Production (2008-2013)

120000
100000
80000
60000
40000
20000
0
2008
2009
2010
2011
Sugar Production(M.Tons)
Figure 1
2012
2013
Cost & Profit Overview:

Below figures represents the 6 year (2008-2013) overview of cost of sales and gross profit of the
company
Cost of Sales (Rs. '000)

8000000
7000000
6000000
5000000
4000000
3000000
2000000
1000000
0
2008
2009
2010
2011
2012
2013
Cost of Sales (Rs.'000)
Figure 2
Profit including Tax (Rs.'000 )

900000
850000
800000
750000
700000
650000
2008
2009
2010
2011
Profit including Tax (Rs. '000)
Figure 3
2012
2013
Revenue & Expenses Overview:
6 Year Analysis
3.75E+09
5E+09
3.7E+09
4.9E+09
3.65E+09
4.8E+09
3.6E+09
4.7E+09
3.55E+09
4.6E+09
3.5E+09
4.5E+09
3.45E+09
4.4E+09
3.4E+09
4.3E+09
3.35E+09
4.2E+09
3.3E+09
4.1E+09
2008
2009
2010
Expense (Rs. In billions)
2011
2012
2013
Net Revenue (Rs. In Billions)
Figure 4
Competition & Challenges Faced By the Company

Al-Moiz sugar mill has many competitors with Chashma sugar mill and Layyah sugar mill being
its two immediate competitors. The competitors also offer the same range of products with white
refined sugar being the core product and several other by product including molasses however
there isnt any sugar mill that generates its own electricity as Almoiz sugar mill.
The challenges or threats can be summarized as follows:
Seasonal Variation in sugar cane

Political Instability
Natural Calamities
The region in which the mill is located is very risky in terms of stability
Competitors in the same region can attract the skilled resource of the company by offering them a
better package
External Factor
Weight
Weighted Score
Opportunities
Entering International Markets
10
Fixed and Variable Costs

Fixed Costs:
The following costs which are incurred irrespective of output at Al-Moiz Industries are:
1. Plant & Machinery
2. Buildings
3. Interest
Variable Costs:
1.
2.
3.
4.
5.
6.
7.
Labor
Repairs
Fuel
Insurances
Packaging
Salaries of certain executives
Material
Cost Curves
The cost curves for the past 5 years are shown below:
FOR YEAR 2013

AFC
AVC
ATC
1600
1400
1200
1000
800
600
400
200
0
0
10
12
11
FOR YEAR 2012

AFC
AVC
ATC
1600
1400
1200
1000
800
600
400
200
0
0
10
12
FOR YEAR 2011

AFC
AVC
ATC
1400
1200
1000
800
600
400
200
0
0
10
12
12
FOR YEAR 2010

AFC
AVC
ATC
1400
1200
1000
800
600
400
200
0
0
10
12
10
12
FOR YEAR 2009

AFC
AVC
ATC
1400
1200
1000
800
600
400
200
0
0
13
Recommendations
Since Almoiz has already built a strong corporate clientele with clients, they should shift their
focus towards the domestic consumer now they should launch their own brand however they
should place it at international modern stores like metro habib and hyperstar where an aware and
a conscious consumer comes to purchase sugar and is willing to pay the price being charged.
Sugar should be positioned on the basis of quality, safe to consume, lesser calorie content, less
processed than generic sugar and as something healthy which people can consume with the belief
that it is safe and healthy to use sugar.
14
References
Moeen Tariq (Assistant Manager HR)

Wasif Mahmood (Chief Financial Officer)
Websites:
http://www.almoiz.com
http://www.finance.gov.pk
http://www.allworldxchange.com
http://www.pakissan.com
http://www.ukessays.com
End of Report

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AGRICULTURAL

Executive Summary ................................................................................................. 1