Statement of Ethics & Business Practices

The entire Organization of Sanghar Sugar Mills Limited will be guided by the following principles in its pursuit of excellence in all activities for the attainment of the Company’s Objectives.

The Company

• Fulfills all statutory requirements of the government and follows all applicable laws of the country together with compliance with accepted accounting principles, rules and procedures required.
• Activities and involvement of directors and employees of the Company in no way conflict with the interest of the Company. All acts and decision of the management are motivated by the interest of the Company rather their own.
• Uses all means to protect the environment and ensures health and safety of the employees.
• Meets the expectations of the spectrum of society and government agencies by implementing an effective and fair system of financial reporting and internal controls.
• Deals with all stakeholders in objective and transparent manner so as to meet the expectations of those who rely on the Company.
• Ensure efficient and effective utilization of its resources.

As Directors

• Promote and develop conducive environment through responsive policies and guidelines to facilitate viable and timely decisions.
• Support and adherence to compliance of legal and industry requirements.
• Maintain organizational effectiveness for the achievement of the Company goals.
• Promote a culture that supports enterprise and innovation, with appropriate short-term and long-term performance related rewards that are fair and achievable in motivating management and employees effectively and productively.
• Ensure protection and safeguard the interest and assets of the Company and meet obligations of the Company.

As Executives And Managers

• Ensure cost effectiveness and profitability of operations.
• Provide direction and leadership for the organization and take viable and timely decisions.
• Promote and develop culture of excellence, conservation and continual improvement.
• Develop and cultivate work ethics and harmony among colleagues and associates.
• Encourage initiatives and self realization in employees through meaningful empowerment.
• Provide pleasant work atmosphere and ensure an equitable way of working and rewarding system.
• Institute commitment to environmental, health and safety performance.

As Employees And Workers

• Observe Company policies, regulations and code of best business practices.
• Devote productive time and continued efforts to strengthen the Company.
• Make concerted struggle for excellence and quality.
• Exercise prudence in effective, efficient and economical utilization of resources of the Company.
• Protect and safeguard the interest of the Company and avoid conflict of interest.
• Maintain financial integrity and must avoid making personal gain at the Company’s expense by participating in or assisting activities which compete with the Company.

Policies For Evaluation of Board’s Performance

1. The Board Evaluation is to be adopted as Self-Evaluation of the Board as a whole through open discussion and questions every year in the Board Meeting.

2. The Evaluation System is to address areas of critical importance besides covering the following.
a) Appraising the basic organization of the Board of Directors.
b) Assessing the Board’s overall scope of responsibilities.
c) The efficiency and effectiveness of the operation of the Board and its Committee.
d) Focusing on the goals and results.
e) Evaluate the flow of financial & other management information.
f) Validate the support and information provided by the management.

3. The Board should review and assess the results and such areas which are identified for improvement.

Human Resource Management Policy & Succession Planning

The Company is committed to build the better organizational culture that is shaped by empowered employees who demonstrate a deep belief in the Company’s Vision and Values.

Human Resource Management Policy

H.R. Management Policy is integral part of the Company’s business strategy. The Company fosters leadership, individual accountability and team work. The main Objectives of the Company’s H.R. Management policy are based on the following.
i. Selection of the right person, with the right experience, at the right time, offering right compensation.
ii. Developing Management philosophy and practices to promote and encourage motivation and retention of the best employees.
iii. Encouraging and supporting concept of team-working and team-building techniques.
iv. Recognizing and rewarding employees’ contribution to the Company.
v. Making all reasonable efforts to achieve a high quality of work- life-balance.

Succession Planning

The Company believes in pro-active approach towards Succession Planning. The Company recruits employees, develops their knowledge, skills, abilities and prepares them for advancement and promotion into more challenging roles. Succession Planning ensures that employees are constantly developed to fill each needed role. The Company looks for people who exemplify continuous improvement when it is spotting Successors for future.

Conflict of Interest Management Policy & Insider Trading

Policy Statement

The Company has the policy for actual and perceived conflicts of interest and measures are adopted to avoid any conflict of interest, identify the existence of any conflict of interest and to disclose the existence of conflict of interest. The Board of Directors shall ensure that the Professional Standards and Corporate Values are put in by the Company that promote integrity for the Company, the Directors, Executives, Managers, Employees and Workers in the form of the Code of Conduct and disseminate the Code of Conduct throughout the Company and put on the Company’s Website. The Company Policy provides a guide as to what constitutes a conflict of interest, the processes and procedures that are in place in order to facilitate compliance therewith and the consequences of non-compliance. The Policy is intended to assists Directors and Employees in making the right decisions when confronted with potential conflict of interest issues.

Management of Conflict of Interest

The primary goal of Policy of Sanghar Sugar Mills Limited is to manage conflicts of interest to ensure that decisions are made and are seen to be made on proper grounds, for legitimate reasons and without bias. To do this, the Company has set the following procedures to manage and monitor the conflict of interest:-
i. To identify the areas of risks.
ii. To develop strategies and responses for risky areas.
iii. To educated all employees about the conflict of interest policy.
iv. To communicate with stakeholders to provide the platform for proper disclosure.
v. To enforce the policy of the Company.

Insider Trading

All the Directors of the Company are reminded of the Insider Trading Letter No.1696 dated February 08,2013 alongwith SRO No. 1431(1)/2012 dated December 05,2012 issued by the Securities and Exchange Commission of Pakistan to avoid dealing in shares of the Company while they are in possession of the Insider Information. Every Director is required to provide to the Board complete details regarding any material transaction which may bring conflict of interest with the Company for prior approval of the Board. The Interested Directors do not participate in the discussion neither they vote on such matters. The Transactions with Related Parties in case of supply of sugarcane to the Company are made during the Crushing Period on the Basis of Price Fixed by the Government of Sindh as announced at the start of the each Crushing Season and notified for each year and for Other Transactions that should be made at Arms-Length Basis and complete details thereof should be provided to the Board for their approval. Further, all the Transactions with the Related Parties are fully disclosed in the Financial Statement of the Company.

Policy for Whistleblowing

Following are the synopsis of policy for Whistleblowing.

Introduction

The Whistleblowing Policy gives legal protection to employee(s) or person(s) against being dismissed or penalized by their employers as a result of alone or jointly, provides to the Regulatory Authorities and to the Sanghar Sugar Mills Limited (the Company) with information regarding a contravention or indented contravention of the Laws and policies administered by the Regulatory Authorities and the Company.

It is fundamental to any employment contract that an employee will be loyal to his or her employer and will not disclose confidential information outside the organization. However, from time to time, a member of staff might discover information which he or she believes shows wrongdoing or malpractice within the organization. On such occasions, it must be made possible for the information to be disclosed without fear of reprisal.

Policy Statement

Sanghar Sugar Mills Limited (the Company) is committed to the highest standards of honesty, openness and accountability. It aims to ensure that it operates in a responsible manner, taking into account standards set out. It recognizes that individual members of staff have an important role in helping to achieve this aim.

It is often members of the Company who are first to know if someone in the Company, or connected with it, appears to be acting illegally or improperly. They may feel apprehensive or anxious about raising their concerns, and their loyalty to the Company or to a colleague may prevent them from doing so. They might also be concerned that they will not be taken seriously or about any action against themselves that a disclosure might provoke. However, the Company encourages individuals who have knowledge, or reasonable suspicion, of wrongdoing to come forward. The Company takes all wrongdoing seriously and believes that any evidence suggesting such behavior should be investigated thoroughly.

The purpose of this procedure is to assist and enable all person(s) and or employee(s) of the Company to raise concerns or to disclose information which they believe, in good faith, may indicate malpractice.

Scope of the Policy and Procedure

The policy and procedures are concerned with alleged malpractice, impropriety or wrongdoing in the Company, which it is in the Company’s or Shareholder’s interest to disclose. The purpose of this policy is to establish appropriate handling of the receipt, retention, and treatment of Whistleblowing matters that may involve; (however it is not an exhaustive list):

o Breach of Company’s Polices / Manuals (Accounting policies, Department Manuals, Money Laundering, Department Standard Operating Procedures or other policies / manuals);

o Breach of Internal Controls, management override of controls or other auditing matters;

o Noncompliance of various regulations and rules applicable on the Company (Companies Act, Income Tax Ordinance, Listing regulations, Rule Book of Pakistan Stock Exchange, Securities Act, Code of Corporate Governance and etc. and their related rules, notifications, directives or circulars etc.);

o Non-compliance of Code of Conduct;

o Fraud that is the use of deception with the intention of gaining an undue advantage, avoiding an obligation or causing loss to another party;

o False representations of a matter of fact whether by words or by conduct to clients or other stakeholders or any other fraudulent activities;

o Misappropriation of assets;

o Misuse of confidential information or deliberate falsification of records;

o Gross misconduct, gross incompetence, gross inefficiency or inadequate performance;

o Willful omission to perform duty;

o Illicit and corrupt practices;

o Acts of omissions which are deemed to be against the interest of the Company, laws, regulations or public policies;

o Deliberate damage to or misuse of Company’s property, plant & equipment and resources;

o Taking or giving bribes or any illegal gratification or any other questionable activity;

o Serious breach of confidence, including insider dealing in securities;

o Financial malpractice or impropriety or fraud;

o Dangers to health and safety or the environment;

o Criminal activity;

o Improper conduct or unethical behavior including any offence;

o Miscarriage of justice; and

o Attempts to conceal any of the above and others.

It can be difficult to decide whether a particular action falls within the procedures and it may be that, when concerns are investigated, it appears appropriate to address them through other more specific procedures. As part of its day to day conduct of business the Company takes decisions under established and reasonable procedures. It is not intended that this procedure will allow such decisions to be questioned unless on grounds of malpractice, impropriety or wrongdoing.

Information Technology Governance Policy & Steering Committee

Information Technology Governance Policy

To have properly documented and implemented I.T. Governance policy to ensure integrated framework for evolving and maintaining existing information Technology and acquiring new technology to achieve the Company’s strategic focus.
I.   To define I.T. Governance, Scope, its roles and responsibilities.
II.  To promote accountabilities, due diligence, efficient and economic delivery of the Company’s I.T. Services.
III. To provide structured decision making process around I.T. investment decisions.
IV. To safeguard the Financial Data of the Company.
V.  To lay down solid foundation for Management decision making.
VI. To develop and upgrade different modules to provide reliable, efficient and timely information.

Steering Committee

There will I.T. Steering Committee consisting of following three executives in order to implement the I.T. Governance Policy, report thereon and recommend suggestions for improvement in their in to the Board of Directors to secure the interest of the Company.
Mr. Ghulam Hyder Chairman
Syed Rehan Ahmad Hashmi Member
Manager I.T. Member

Policy on Level of Materiality

Purpose

The purpose of this Policy is to define the level of materiality for transactions which are financially significant for the consideration of the Board of Directors of Sanghar Sugar Mills Limited (the Company) keeping in view the provisions of the repealed Companies Ordinance, 1984 and now the Companies Act, 2017 and the Code of Corporate Governance, relating thereto:

Scope

This Policy shall be applicable to all transactions which are financially material and any other transaction(s) which the Board may consider to be material whether defined or not.

Policy

Following transactions should be considered material and be referred to the Board for its consideration, decision and approval by the Directors of the Company in their meeting, namely:-

1) to incur capital expenditure on any single item or dispose of a fixed asset in accordance with the following limits:

(i) in case of capital expenditure to be incurred on any single item, an amount exceeding one million rupees: and

(ii) in case of disposal of fixed assets, an amount of book value exceeding one hundred thousand rupees:

2) to undertake obligations under leasing contracts exceeding one million rupees;

3) to approve bonuses to employees

4) having regard to such amount as may be determined to be material by the Board:

(i) to write off bad debts, advances and receivables;

(ii) to write off inventories and other assets of the Company;

(iii) to determine the terms of and the circumstances in which a law suit may be compromised and a claim or a right in favour of the Company may be released, extinguished or relinquished

5) to make calls on shareholders in respect of moneys unpaid on their shares;

6) to issue shares

7) to issue debentures, participation term certificate or any instrument in the nature of redeemable capital;

8) to borrow moneys otherwise than on debentures;

9) to invest the funds of the Company;

10) to make loans;

11) to authorize a director or the firm of which he is a partner or any partner of such firm or a private company of which he is a member or director to enter any contract with the Company for making sale, purchase or supply of goods or rendering services with the Company;

12) to approve annual or half-yearly or other periodical accounts as are required to be circulated to the members;

13) to declare interim dividend;

14) all transactions or contract of sale and purchase with associated company/companies and related party/parties; and

15) any other transaction which, in the opinion of the Board, is material and needs consideration and approval of the Board.

Policy for Safety of Records of the Company

The main purpose of the Company’s Policy will be the following.

i. To ensure that the Company’s records are created, managed, retained, and disposed off in an effective and efficient manner;
ii. To keep Books of Accounts upto the period as required and to comply with the provisions of Section 230 of the repealed Companies Ordinance, 1984 and now the Companies Act, 2017.
iii. To keep records upto the period as required under Income Tax Laws, Sales Tax Laws, General Clauses Act Labour Laws and other Laws applicable to the Company.
iv. To facilitate the efficient management of the Company’s records through the development of Coordinated Records Management Program;
v. To ensure preservation of the Company’s records of permanent value to support both protection of privacy and freedom of information service throughout the Company to promote collegiality and knowledge sharing;
vi. Information will be held only as long as required and disposed off in accordance with the record retention policy and retention schedules
vii. Records and information are owned by the Company, not by the individual or team.

Policy & Procedures for Stakeholder’s Engagement

1. Policy Note

Sanghar Sugar maintains sound collaboration relationships with its stakeholders.

2. Procedures

Procedure for stakeholder’s engagement includes communication, good harmony, compliance with laws and regulations and sugarcane growers focused approach which is the key factors for establishment of collaboration relationship with stakeholders.

3. Engagement Frequency

Policy for Corporate Social Responsibility

The following are the Synopsis of policy for Corporate Social Responsibility.

The objective is to promote the development of a framework for Corporate Social Responsibility (CSR) initiatives by the Sanghar Sugar Mills Limited (the Company).

Strategy of Corporate Social Responsibility

The Company is socially responsible and committed to conduct its business ethically and with responsibility. The Company is conscious of the role to play as responsible corporate citizen in fulfilling the various needs of the society concerning health, safety, environment, employee relationship and social welfare of the society. The Company considers itself accountable to its stakeholders and has identified dimensions of performing the social responsibilities which are contribution to economy, environment and society. The management peruses the strategy by following strategic guidelines to be a good corporate citizen:
1. Encouraging employment of work force living in the rural areas in order to yield significant gain and uplift their living standard.

2. Continuously striving to improve greenery, protecting the environment, maintain a clean environment around the factory and better housekeeping.

3. Making arrangement for civic, health, safety of people, education and accommodation facilities to employees and people.

4. Support social causes and human rights.

5. Conducting business in a socially responsible and ethical manner and in compliance with the Law.

6. Behave responsibly and with sensitivity to local communities in the area in which we operate.

7. Engaging, learning from, respecting and supporting the communities and cultures within which we work.

Sustainability & Corporate Social Responsibility

The Company acknowledges its social and ethical responsibility to carry out its business in order to keep it safe and protect it for the generation to come. Sustainability Policy is considered to be essential for continuing of the business. The Company considers itself accountable to its stakeholders and informs them about the initiative and measures taken to ensure sustainability and has identified the following dimensions of performing social responsibilities which contributing to economy, environment, health, education and society.
1. To support the sugarcane growers of the area and provide better quality seeds and fertilizers to achieve improvement in quality of sugarcane and enhance its quantity and productivity in order to have regular, constant and better supply in future the major basic raw material for sugar mills.

2. To alleviate illiteracy in the rural areas of the Country, the Company has launched education program and is providing education facilities at the premises adjacent to the Mills’ Employees’ Colony by the qualified staff on concessional basis to the children of the factory employees and persons living nearby in rural areas.

3. To contributing to the National growth by sharing its revenue with the nation in the form of taxes, rates and duties.

4. To improve foreign reserves of the Country by earning foreign currency through exports of sugar as and when allowed.

5. To follow consciously the needs of the Society concerning health, safety and environment for achieving the objective.

6. To make efforts to minimize the accidental risks, have necessary medical facilities and continuously shrine to improve greenery and maintain clean and safe environment, better housekeeping, safeguarding the health of employees.

7. To make efforts on improving the social conditions of the Communities and employees related to the Company by establishing fair working conditions, ensuring occupational safety, setting social standard, establishing minimum wages, zero tolerance on child labour and forced labour etc.

8. To encourage employment of workforce living in the rural areas in order to yield significant gain and uplift their living standard.

9. To treat all employees fairly and compensates them according to the industry practice. Provides the benefits such as perquisites, annual leaves, pick and drop, facility of mess, safe and healthy working conditions etc along-with group insurance, making payments to Employees Old Age Benefits Institution, Worker’s Welfare Fund, Worker’s Profit Participation Funds.

10. To maintain the principles of integrity and trust with respect to privacy of the employees of the Company.

11. To carry out activities at the time of natural calamity or engage in Disaster Management System.

12. To promote sustainability in collaboration with the industry associations.

13. To contribute to any fund setup by the Government, which may be recognized as CSR activity.

14. Monitor and review our CSR policies and procedures on a regular basis to ensure suitability and effectiveness.

15. Use continuous assessment to ensure our CSR activities meet identified performance objectives.

Policy for Directors’ Remuneration & Meeting Fee

Following are the policy for Directors’ Remuneration and Meeting Fee of Sanghar Sugar Mills Limited (the Company)

Meeting Fee of Directors

Non-Executive Directors do not have service agreements, but are engaged on the basis of a letter of appointment. All Directors are subject to re-election after three years at the Extra Ordinary General Meeting. It is the policy of the Board of Directors that Non-Executive Directors are not eligible to participate in any of the Company’s bonus, share option, long-term incentive or Gratuity schemes.

Objective Approach of the Company Fees (cash and shares) is to attract and retain Non-Executive Directors of the highest caliber with broad commercial experience relevant to the Company. The fees paid to NonExecutive Directors are determined by the Board of Directors, with recommendations provided. Fee levels may be reviewed annually, with any adjustments effective from start of the financial year and are reviewed by taking into account external advice on best practice and competitive levels. Time commitment and responsibility are also taken into account when reviewing fees. Chairman and Non-Executive Director fees may be delivered in cash. The fees paid to the Chairman and Non-Executive Directors in respect of the year under review (and for the following year) are disclosed in the Annual Report. Aggregate fees are limited by the Company’s Articles of Association. Travel and expenses for Non-Executive Directors (including the Chairman) are incurred in the normal course of business, for example in relation to attendance at Board and Committee meetings. The costs associated with these are all met by the Company.

Any non-executive director may waive the meeting fee from the Company, upon submission of waiver consent in writing.

The remuneration to be paid to any director except the Chief Executive and the working directors for attending the meetings of the directors or a committee of directors shall not exceed the scale approved from time to time by the Board of Directors, as the case may be.

The remuneration of a director for performing extra services, including the holding of the office of the chairman, from time to time shall be determined by the Board of Directors.

Members representing management or others in any committee and the Executive Directors / Executives will not be entitle for the Meeting Fee.

Executive Directors Remuneration

Basic Salary:

Provides market competitive fixed remuneration that rewards to relevant skills, responsibilities and contribution. Salaries are positioned within a market competitive range for companies of a similar size and complexity. The Board / Committee does not slavishly follow data but uses it as a reference point in considering, in its judgment, the appropriate level having regard to other relevant factors including corporate and individual performance and any changes in an individual’s role and responsibilities. Basic salary is paid monthly through cheque.

Benefits & Allowances:

To provide appropriate supporting monetary benefits. Provides appropriate insurance cover benefits. The Company may periodically change the benefits available for the office at which an Executive Director works in which case the Director would normally be eligible to receive the amended benefits on similar terms to all relevant staff.

Increment:

It’s a sole discretion of the Board of Directors to decide the Increment percentage for annual basis of Executive Directors.

Gratuity:

Provides basic retirement benefits which reflects local market practice and for the permanent employee of the Company as per policy.

Production Bonuses:

Supports delivery of short term operational, financial and strategic goals. Production Bonuses levels and the appropriateness of measures are reviewed annually to ensure they continue to support the strategy. Production bonuses will be paid as per the policy of the Company and subject to the limit approved by the Board of Directors for the Executive Directors.

Others:

The remuneration of a director for performing extra services, including the holding of the office of the chairman, from time to time shall be determined by the Board of Directors. Interested Directors & their relatives will not be eligible to participate and vote in the proceeding of the Board Meetings in which their remuneration & benefits will be discussed. All taxes and or with-holding taxes will applicable on the Remuneration and fee paid by the Company. These are subject to deduction of tax as per the applicable laws.