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ALLWIN ENGINEERING INDUSTRIES LIMITED.
Annual Reports 2002
CONTENTS
Company Information
Notice of Meeting
Chairman's Review
Directors' Report
Corporate Governance
Auditors' Review Report
Auditors' Report to the Members
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Statement of Changes in Equity
Notes to the Financial Statements
Pattern of Shareholding
Categories of Shareholders
Key Performance and Financial Data
COMPANY INFORMATION
BOARD OF DIRECTORS
Chairman		Yusuf H. Shirazi
Chief Executive Officer		Mohammad Atta Karim
Directors		Aamir H. Shirazi
		Iftikhar H. Shirazi
		Jawaid Iqbal Ahmed
		Mohammad Habib-ur-Rahman
		Muhammad Asif (National Investment Trust)
		Shahid Anwar (Investment Corporation of Pakistan)
Company Secretary		Syed Naushad Ali
GROUP EXECUTIVE COMMITTEE
Chairman		Aamir H. Shirazi
Members		Frahim Ali Khan
		Iftikhar H. Shirazi
		Jawaid Iqbal Ahmed
		Saquib H. Shirazi
		Saleem Ahmed
Secretary		Theresa Dias
GROUP PERSONNEL COMMITTEE
		Chairman Yusuf H. Shirazi
		Members Aamir H. Shirazi
		Jawaid Haider Malik
BOARD AUDIT COMMITTEE
Chairman		Mohammad Habib-ur-Rahman
Members		Aamir H. Shirazi
		Iftikhar H. Shirazi
Secretary		Fida Hussain Zahid - Internal Auditor
COMPANY MANAGEMENT
Chief Executive Officer		Mohammad Atta Karim
General Manager Plant		Col. (R) Mir Moatazid
General Manager Human Resources		M.H. Tabassum
General Manager Marketing		Muzaffar Ali Khan
Chief Financial Officer		Syed Naushad Ali
Auditors		Ford, Rhodes, Robson, Morrow,
		Chartered Accountants
Legal Advisors		Mohsin Tayebaly & Co.
		Advocate Incorporation
Tax Advisors		Mahmood Law Associates
Bankers		Al-Baraka Islamic Bank
		Habib Bank Limited
		Muslim Commercial Bank Limited
		National Bank of Pakistan
		Standard Chartered Grindlays Bank Limited
Registered Office (Factory)		15th Mile, National Highway, Landhi, Karachi-75120
		Tel: 5016921-24 Fax: 5011709
		E-mail: aeil@aeilkhi.atlasgrouppk.com
Branch Offices		Lahore Office:
		C/o Atlas Battery Limited,
		Salam Chamber, 21 Link Mcleod Road., Lahore.
		Phones: 7227075-7354245 Fax: 7352724
		E-mail: aeil@aeillhr.atlasgrouppk.com
		Multan Office:
		C/o Atlsa Honda Limited,
		Azmat Wasti Road, Multan.
		Phone: 512181 Fax: 586280
		E-mail: aeil@mul.atlasgrouppk.com
		Faisalabad Office:
		C/o Atlas Battery Limited,
		No. 54, Chanab Market, Madina Town, Faisalabad.
		Phone:713127 Fax: 726628
		Rawalpindi Office:
		C/o Atlas Battery Limited,
		312, R-A-Bazar, Kashmir Road., Rawalpindi
		Phone: 567423 Fax: 567423
		E-mail: aeil@aeilisb.atlasgrouppk.com
NOTICE OF MEETING
Notice is hereby given that the 40th Annual General Meeting of Allwin Engineering Industries Limited will
be held at Corporate Office at 8th Floor Adamjee House, I.I. Chundrigar Road, Karachi on 24th October 2002
at 11:30 a.m. to transact the following business:
ORDINARY BUSINESS
1. To confirm the minutes of the Extra Ordinary General Meeting held on 15th May 2002.
2. To receive, consider and adopt the Audited Accounts of the Company together with the Directors' and
Auditors' Reports thereon for the year ended 30 June 2002.
3. To appoint Auditors for the year 2002-2003 and to fix their remuneration.
4. To transact any other business with the permission of the chair.
SPECIAL BUSINESS
5. To approve the remuneration of the Chief Executive Officer.
A statement under section 160 of the Companies Ordinance, 1984 pertaining to the Special Business referred
to above is annexed to this Notice of Meeting.
BY ORDER OF THE BOARD
Karachi: 18 September 2002		SECRETARY
NOTES:
1. The Share Transfer Books of the Company will remain closed from 18 October to 24 October 2002 (both
days inclusive)
2. A member entitled to attend and vote at the meeting may appoint another member as his/her proxy to
attend and vote on his/her behalf. The instrument appointing a proxy must be received at the Company's
Registered Office not less than 48 hours before the time of holding of the meeting.
3. Any individual Beneficial Owner of the Central Depository Company, entitle to vote at this meeting must
bring his/her National Identity Card with him/her to prove his/her identity and in case of proxy, must
enclose an attested copy of his/her National Identity Card. Representative of corporate members should
bring the usual documents required for such purpose.
STATEMENT UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984.
Approval is being sought for fixing the remuneration of the Chief Executive Officer working with the Company.
The Chief Executive Officer is interested only in the remuneration payable to him.
CHAIRMAN'S REVIEW
It is a pleasure to present to you the 40th Annual Audited Report and review on the performance of
the Company for the year ended June 30, 2002.
The Economy
The fiscal year 2001-02 has been a challenging one for the world economy in general and Pakistan
economy in particular. The events of September 11 and December 13 and the continuation of severe
drought condition adversely affected the pace of economic recovery in Pakistan. The country had to
deploy troops in self-defense on both borders, resulting in an over-run in defense spending. This has seriously
undermined Pakistan's efforts towards further fiscal consolidation. Pakistan economy showed mixed trend achieving a
3.6% GDP growth, while witnessing a decline in
revenues, exports and production of wheat, rice and cotton crops. The 3.6 percent growth was possible
due to 1.4% growth in agriculture, 4.4% in the manufacturing and 5.1% in the service sector. Major
crops registered a negative growth of 0.5 percent, while minor crops grew slightly by 1.0%. Major crops
witnessed decline - wheat 2.9%, rice 19.2% and cotton 1.1%. The sugarcane production, however,
increased by 10.2%. The manufacturing sector registered a growth of 4% in large-scale manufacturing.
Exports, on the other hand, received a setback causing a decline of 2.7% in the first nine month.
As a result, the textile sector declined by 0.9% over the last year.
The inflation was 2.6%, lowest in three decades. The decline in interest rates, removal of economic sanctions,
trade concessions, and Paris club debt rescheduling enabled the stock market to post the highest year on
year growth in the world. The current account balance at the end of outgoing year was surplus to the extent of $ 2.7 billion as
against of $ 0.331 billion of the previous year. Foreign exchange reserves crossed the Unprecedented level
of $ 7.0 billion. With the help of external debt re- profiling, foreign debt has declined from $ 38 billion
to $ 36 billion. As a result, there has been a reduction in the foreign debt to GDP ratio from 62% to 50%.
The Industry
The performance of the engineering sector, which for some time now suffers from lack of vision and
clarity for its future growth, generally remained subdued. It has been particularly the case with the
basic vending industry finding no feet of its own. The production of tractors decreased from 31,635 in
the previous year to 23,801, lower 24.8% which affected your company's growth also. Production of
the cars at 40,601 units registered increase of 2.6%
over 39,573 units in the previous year. The production of motorcycle was recorded at 120,627 units against
108,850 units of last year up 10.8%. Following are the relevant production figures relating to the
automobile industry, as a whole, for the year under  review:
Particulars	2002	2001	lncr/(Decr)	% age
Cars	40,601	39,573	1,028	2.60
Motorcycle	120,627	108,850	11,777	10.80
Tractors	23,801	31,635	(7,834)	(24.80)
Buses/Trucks &LCVs	11,275	9,662	1,613	16.70
Total	196,304	189,720	6,584	3.50
In the replacement market besides spurious manufacturers, who are not in tax net, your company
faced with the continuing problem of smuggling, under-invoicing and un-fair competition in the form
of unchecked illegal means and cheap sub-standards imitations leaves an uneven playing field. The menace
has yet to be routed out; the several steps taken by the government have not yielded the desired results
so far and continue to hinder the development of parts industry in the organized sector.
Market Review
Inspite of the availability of cheap products, under- invoiced and smuggled parts, becoming an order of
the day, enlightened customer base preferred the Allwin quality. Years of sustained efforts in
manufacturing and providing quality products has withstood the test of times through its products, the
company is striving to deliver value as desired by the customer.
The recent action in replacement market sector with the dedicated team efforts executed a well conceived
marketing strategy that reaped rich benefits for the company.
Expansion in the dealers network, focusing the unattended areas, dealers and mechanics incentive
programs, price rationalization, review of discounts, offering cash discounts to the dealers and other
promotional activities generated a positive response which resulted in a better sales particularly the last
quarter of 2001-02, which set the momentum for the year ahead.
Following a well planned customer oriented policy, one of the areas focused with special attention was
mechanics gatherings and relationing with the countrywide auto-technicians. Mechanics' gatherings
were held in Karachi in the different hubs of workshops communicating with them regarding the
products and its features. Similar meetings are planned in the other parts of the country following policy of
providing technical assistance and knowledge to our end-users. This interaction provides an opportunity
to both customer and the company to interact through a feedback process to ensure customer satisfaction.
The warranty facilities have also been made more efficient as the new procedures for claims settlement
has been laid down to reduce the claim settlement time.
Exports
The year saw greater acceptability of the products in international market. Exports to Saudi Arabia,
Bangladesh and Sri Lanka have become our regular market with an increase of 6% during the year under
review. Further prospects are bright with the extra efforts planned this year to increase the export volume.
Company Operations
The sales revenue for the year was Rs. 382.25 million as compared to Rs. 405.84 million in the corresponding
year, down 5.8%. In OEM segment sales were 88.9% of the previous year, mainly due to low demand from
Tractor industry. Due to lower volume and cost push which could not be passed on to customer, the
gross profit for the period declined to Rs. 46.91 million, down 13.8% against Rs. 54.44 million in the
corresponding period.
In order to contain expenditure level strict austerity measures have been imposed. Management is pushing
ahead with the right sizing of manpower. Rationalization of products specially Cast Iron Parts
is being examined with a view to reduce losses. As a result of managements efforts for reorganization
and restructuring activities, operating expenses were recorded at Rs. 27.45 million against Rs. 28.45 million
of the previous year, down 3.5%. Financial expenses were up Rs. 0.72 million, mainly due to adjustment
of interest amount payable on royalty and technical fee in the corresponding period.
Due to lower gross profit, the net profit before tax was recorded at Rs. 3.51 million against Rs. 8.09
million of the previous year. Your company paid Rs. 67.99 million to the
Government revenues in the form of Custom duty, Sales tax, Income tax, etc being 17.8% of the sales
volume during the year.
Human Resource
Mr. S V H Naqvi, your company's Chief Executive Officer, retired on attaining the age of retirement.
The Board of Directors acknowledges and places on record valuable service rendered by him to the
company.
Mr. Mohammad Atta Karim, who has been the Company Secretary and Director Finance of the
company, has been elevated as Chief Executive Officer of the company. He has the necessary exposure to
general and financial management. I am confident that the company will prosper under his leadership.
The vacancy of the Company Secretary has been filled by promoting Syed Naushad Ali, Manager
Finance. He is a home grown executive and has been with the company for the last 22 years.
Mr. Muzaffar Ali Khan has joined the company as General Manager Marketing in place of Mr. Shameem
Ahmed who retired. Mr. Muzaffar has 25 years experience in marketing and sales management.
Relations between the management and workers of your company remained cordial and a source of
strength for the company throughout the year, cutting costs and improving efficiency and productivity.
Future Outlook
The development of local automobile industry is key to industrialization. Back in 1993, the auto industry
was protected through ban on import of reconditioned cars, which helped local engineering industry grow.
However, in current budget, the government has reduced the custom duty on CBU ranging from 25%
to 50% on different categories of cars and motorcycles, a setback to progressive manufacturing of vehicles
and ultimately the vending industry of which your company is a constituent member.
The donor countries together with WTO continue their pressure for free trade and reduction in tariff
rates affecting local competitiveness, quality and prices despite Govt's assurance to protect the local
industry including against any unfair competition from under-invoice and smuggling which will be a
great challenge to the local parts manufacturers. Your management is quite aware of the challenges
and taking action to minimize the effect of these influences. The management will exercise further
control on rejections and wastages and general expenses and ensure effective utilization of resource
and quality of product. I am confident that the management will handle the challenges successfully.
Acknowledgement
I thank the Group President Mr. Aamir H. Shirazi, members of the Group Executive Committee and
Board of Directors for providing necessary guidance. May I also thank the CEO, Mr. Mohammad Atta Karim,
his team and all members of the staff and workers of the company for their dedicated efforts and valuable
contribution. I also thank the CBA for their positive role and valuable contribution.
Thanks are also due to our shareholders, valuable customers, Banks and dealers for their trust and
confidence reposed in us. Yusuf H. Shirazi
DIRECTORS' REPORT
The Directors of your company take pleasure in presenting their report together with the Audited Accounts
and Auditor's Report thereon for the year ended 30 June 2002.
FINANCIAL RESULTS
The financial results of your company for the year ended 30 June 2002 under review are summarized as
follows:
				(Rupees in 000's)
				2002	2001
Profit before taxation				3,505	8,092
Provision for taxation				(2,018)	(2,064)
Profit after taxation					6,028
Appropriation
Interim Cash Dividend 5%				2,467
Dividend waived by sponsors				(1,410)	-
				1,057	-
				430	6,028
Balance brought forward				(48,921)	(54,949)
Balance carried forward				(48,491)	(48,921)
Earnings per Share
Earnings per share after taxation comes to Rs. 0.30 per share (2001: Rs. 1.22 per share).
Operating and Financial Data
Operating and Financial data and key ratios of the company for last six years are annexed.
Employees Provident Fund
The company has maintained recognized provident fund for their employees.
Value of Investment Rs. 91.975 Million
Based on Audited Accounts as at 30 June 2001.
Chairman's Review
The review included in the Annual Audited Report deals inter alia, with the performance of the company
for the year ended 30 June 2002 and future prospects. The Directors endorse the contents of the review.
Board of Directors
The Board comprises of one executive and seven non-executive directors. All the directors keenly take interest
in the proper stewardship of the company's affairs. The non-executive directors are independent of management.
The Board has approved the remuneration of the CEO Rs. 1.80 million and other benefit like free transportation,
telephone facility, medical expenses etc. as per company's policy for the year 2002-2003.
Directors, CEO, CFO/Company Secretary and their spouse and minor children have made no transactions of
company's shares during the year.
During the year four Board meetings were held and attended as follows:
Mr. Yusuf H. Shirazi		3
Mr. Aamir H. Shirazi		4
Mr. Jawaid Iqbal Ahmed		4
Mr. M. Habib-ur-Rahman		3
Mr. Shahid Anwar		4
Mr. Iftikhar H. Shirazi		2
Mr. Muhammad Asif		1	Appointed 15.05.2002
Mr. Mohammad Atta Karim		3	Appointed 26.12.2001
Mr. Al-Malik Khoja		1	Appointed 16.01.2002
			Resigned 15.05.2002
Mr. S.V.H. Naqvi		1	Resigned 26.12.2001
Ms. Farzana Munaf		1	Resigned 16.01.2002
Corporate Governance
Compliance for Corporate Governance is annexed.
Pattern of Share Holding
The pattern of shareholding of the company is annexed.
Auditors
The present Auditors M/s. Ford, Rhodes, Robson, Morrow, Chartered Accountants retire and being eligible,
offer themselves for re-appointment.
The Board Audit Committee has recommended appointment of M/s. Ford, Rhodes, Robson, Morrow, Chartered
Accountants, as auditors of the Company for the ensuing year.
For and on behalf of the
XBOARD OF DIRECTORS
Mohammad Atta Karim
Chief Executive Officer
Karachi: 18 September 2002
CORPORATE GOVERNANCE
Statements of Directors' responsibilities
The Board regularly reviews the company's strategic direction. Annual plans and performance targets for
business are set by the Chief Executive and are reviewed in total by the Board in the light of the company's
overall objectives. The Board is committed to maintain the high standards of good corporate governance.