| Liberty Mills Limited |
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| Contents |
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| Company Information |
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| Notice
of Annual General Meeting |
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| Report of the Directors |
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| Compliance with
the Code of Corporate Governance .. |
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| Key
Operating and Financial Data |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit & Loss Account |
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| Cash Flow Statement |
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| Notes to the Accounts |
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| Pattern of Share Holding |
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| BOARD
OF DIRECTORS |
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| DIRECTORS |
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| Mr. Salim N. Mukaty |
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| Mr. Yusuf N. Mukaty |
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| Mrs.
Hamida Salim Mukaty |
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| Mr.
Ashraf Salim Mukaty |
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| Mr.
Noor Mohammad Yousuf Mukaty |
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| Mr.
Arif Haji Abdul Sattar Maniya |
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| Mr.
Luqman F. Poonawala |
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| Mr.
Madni Gul Muhammad |
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| Mr.
Asif Younus Bawany |
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| CHIEF
EXECUTIVE |
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| Mr.
Ashraf Salim Mukaty |
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| SECRETARY |
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| Mr.
Muhammad Ashraf Ghazi |
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| AUDITORS : |
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| HYDER
BHIMJ1 & CO. |
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| Chartered Accountants |
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| A.
R. Diwan & Co. |
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| Chartered Accountants |
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| BANKERS: |
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| Habib
Bank Limited |
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| Habib Bank A. G. Zurich |
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| Metropolitan Bank Ltd. |
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| Soneri
Bank Ltd. |
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| Bank Al Habib Ltd. |
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| REGISTERED
OFFICE |
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| AND MILLS: |
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| A/51-A, S.I.T.E., |
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| Karachi-75700. |
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| Tel.
Nos. 2578103 -16 (14 Lines) |
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| Fax:
(021)2570086 - 2561050 |
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| Notice of Meeting |
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| NOTICE
is hereby given that 36th ANNUAL GENERAL MEETING of Shareholders of |
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| Liberty
Mills Limited wiil be held at our Registered Office situated at A/51-A,
S.I.T.E., Karachi on |
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| October
31, 2002 at 10.00 A.M. to transact the following business : |
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| 1. To confirm the minutes of the Extra
Ordinary General Meeting of the Company held on May |
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| 03, 2002. |
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| 2. To receive, consider and adopt the
Audited Accounts of the Company for the year ended 30th |
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| June
30, 2002 together with Director's and Auditor's report thereon. |
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| 3. To approve Cash Dividend @ 17.50 Percent
for the year ended June 30, 2002 as recommended |
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| by
the Board of Directors. |
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| 4. To appoint Auditors for the year ending
30th June 2003 and to fix their remuneration. The retiring |
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| Auditors
M/s. Hyder Bhimji & Company and M/s. A. R. Diwan & Company
Chartered |
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| Accountants
of the Company have offered themselves for re-appointment. |
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| 5. To transact any other ordinary business
which may be placed before the meeting with permission |
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| of the chair. |
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| By Order of the Board |
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| (Muhammad
Ashraf Ghazi) |
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| Company Secretary |
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| KARACHI:
September 26, 2002 |
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| Report of the Directors |
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| On
behalf of the Board of Directors, it is my pleasure to welcome you at the
36th Annual General Meeting |
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| of
the Company and presenting before you, the Audited Accounts of the Company
and auditors report |
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| thereon
for the year ended 30th June, 2002, |
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| OPERATING RESULT: |
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| I
am pleased to inform that the trend of continuous growth of the Company is
constant despite the |
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| year
under review proved to be a challenging one for the country's economy.
Despite all hurdles in global |
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| trade
and the impact of llth September 2001 event, the results of your company show
overall |
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| improvement
over the last year. The turnover for the year has decreased to 1720.1 million
as compared |
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| to
previous year's sale of Rs. 1753.2 million. The very nominal reduction of
sale by 1.79% is mainly |
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| due
to affects of September 11 and the greater impact is mainly due to stronger
rupee in terms of U.S. |
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| Dollar.
As a consquence of appreciation of Pak rupee value, the Company suffered a
shortfall of Rs. |
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| .
60 million approximate against realization of proceeds of exports sales which
otherwise would have |
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| improved
the turnover and gross profit to the same extent. In spite of these serious
odds, we were able |
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| to
increase our net profits. By the grace of Allah, the net profit has
tremendously improved by 27% |
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| due
to the addition of the most modern plants and machineries by amounting Rs.
50.99 million added |
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| during
the year under review. |
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| |
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| We
have excellent plans for the future and Inshallah will be adding further new
plant and machineries |
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| to
meet the increasing demand of our products in the overseas markets. We are
determined to further |
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| improve
the quality and efficiency of our plants and machineries which will result in
value added products, |
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| thus
increasing our profitability and customer satisfaction. The summarized data
are produced below. |
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2002 |
2001 |
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Rs. in million |
Rs. in million |
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| Sales & Services |
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1,720.09 |
1,753.21 |
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| Gross Profit |
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248.47 |
274.06 |
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| Profit before Taxation |
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97.25 |
76.56 |
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| Profit after Taxation |
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74.51 |
56.41 |
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| Earning
per share (Rupees) |
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4.07 |
3.79 |
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| DIVIDEND: |
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| Your
Directors are pleased to recommend 17.5% cash dividend i.e. Rs. 1.75 per
share for the |
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| |
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| year
ended 30th June 2002. |
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| FUTURE OUTLOOK |
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| Alhamd-o-lillah
after a number of decades, we have been fortunate to see not only political
stability but |
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| a
sense of immense security and have happily noted progress and improvement in
all spheres of life. |
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| We
are confident that if this continues, Inshallah there will be a drastic
change in our country's economic |
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| and
social well beings, bringing all round prosperity and improvement in the
image of our beloved country |
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| and
hopefully eliminate the unemployment to the large extent being the main
reason of so many social |
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| problems
created by the extreme poverty and unemployment. |
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| We
see overall growth in the country's economy. As already proven by the
consistent policy and endless |
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| efforts
of the present government to bring progress and prosperity for our beloved
country. |
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| As
such we have for the first since four decades become very bullish on our
country and are preparing |
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| a
number of feasibilities and analysis for further substantial investment to
upgrade, expand and add |
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| to
our present manufacturing facilities in all spheres of our production range. |
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| We
hope for positive results in the future. We are grateful to Almighty Allah
for all its blessing. |
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| AUDITORS: |
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| The
retiring auditors Messrs Hyder Bhimji & Company, Chartered Accountants
and Messrs A.R. Diwan |
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| &
Company, Chartered Accountants being eligible have offered themselves for
re-appointment. |
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| BOARD
OF DIRECTORS: |
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| Mr.
Arif N. Mukaty resigned in March 2002 and Mr. Asif Bawany was appointed in
his place. The Board |
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| wishes
to place on record his appreciation for contribution of valuable services
rendered by the outgoing |
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| Director
and welcomes the incoming Director. |
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| PATTERN
OF SHAREHOLDING: |
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| A
statement showing the pattern of shareholding in the Company as at 30th June
2002 is included |
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| in the report. |
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| CORPORATE
GOVERNANCE; |
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| We
are pleased to report that your Company has taken necessary steps to comply
with the provision |
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| of
the Code of Corporate Governance as incorporated in the Listing Rules of the
Stock Exchange. |
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| We
give below Statements .on Corporate and Financial Reporting Frame Work. |
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| The financial statements, prepared by the
management of the Company, present fairly its state |
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| of
affairs, the result of its operations, cash flows and changes in equity. |
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| Proper books of account of the Company has
been maintained. |
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| Appropriate
accounting policies have been consistently applied in preparation of
financial |
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| statements
and accounting estimates are based on reasonable and prudent judgment. |
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| International Accounting Standards, as
applicable in Pakistan, has been followed in preparation |
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| of
financial statements and any departure there from has been adequately
disclosed. |
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| The
system of internal control, which was in place, is being continuously
reviewed by internal |
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| audit
and other such procedures. The process of review will continue with the
objective to further |
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| improve. |
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| There are no significant doubts upon the
Company's ability to continue as a going concern. |
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| There has been no material departure from
the best practices of corporate governance, as detailed |
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| in the listing regulations. |
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| The key operating and financial data of the
Company are included in this report. |
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| The
company has paid all taxes, duties and there are no unpaid balances. |
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| The
increase in prices of raw material, fluctuation in exchange rate, slashing of
rate of duty |
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| drawback
and global conditions are major risks and uncertainties that may affect the
profitability |
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| of the Company. |
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| BOARD
OF DIRECTORS. THEIR FUNCTIONS AND QUALIFICATION: |
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| Out of the 11 directors, only five are
executive directors. |
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| Directors of the Company are not serving as
a director of 10 of the listed companies. |
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| Directors are borne on the register of
National Tax Payers. |
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| Directors
of the Company have not been convicted by a court of competent jurisdictional
as |
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| defaulter
in payment of any loan to a banking company, a Development Financial
Institution or |
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| a
Non-banking Financial Institution or he / she being a member of stock
exchange has not been |
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| declared
as a defaulter by such stock exchange. |
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| The
Board of Directors adopted a vision / mission statement and overall corporate
strategy for |
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| the
company and also formulated significant policies, as detailed in the Code of
Corporate |
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| Governance
having regard to the level of materiality. |
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| The
tenure of the directors elected under section 178 is three years. |
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| Company
has well defined policies on all significant financial and operational
matters. |
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| Company
has an effective and sound system of internal controls in place that is
continuously |
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| monitored
and updated with the growing requirements of the business. |
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| All
meetings of the board are presided over by the Chairman. |
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| Board
meetings are held at least once in a quarter. |
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| Notice
of meeting is sent to directors at least seven days before the meeting except
when emergent |
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| meeting is called. |
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| Minutes
of the meeting are circulated to the directors and the officers within 30
days of the meting. |
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| All
significant matters are placed before the BOD for their consideration and
decision. |
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| Non
of the directors, CEO or executive or their spouses have undertaken any sale/
purchase of |
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| the
shares of the company during the year. |
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| During
the year nine board meetings were held. Each director has attended meetings
as |
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| follows. |
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| Name of Director |
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Meetings Attended |
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| Mr. Salim N. Mukaty |
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9 |
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| Mr.
Arif N. Mukaty (Resigned 29-03-2002) |
0 |
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| Mr. Yousuf N Mukaty |
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6 |
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| Mrs.
Hamida Salim Mukaty |
0 |
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| Mr.
Ashraf Salim Mukaty |
9 |
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| Mr.
Noor Muhammad Y. Mukaty |
3 |
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| Mr.
Arif H.A Sattar Maniya |
9 |
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| Mr.
Luqman F. Poonawala |
9 |
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| Mr;
Madni Gul Muhammad |
8 |
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| Mr.
Asif Younus Bawany (Appointed 29-03-2002) |
4 |
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| Leave
of absence was granted to Directors who could not attend some of Board
meetings. |
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| QUALIFICATION
REQUIREMENT FOR CHIEF FINANCIAL OFFICER (CFO) COMPANY SECRETARY (CS) |
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| The
CFO/CS meets the eligibility criteria as provided in the code and attends
board meetings as per |
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| the code's requirements. |
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| FINANCIAL
REPORTING: |
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| Printed
(un-audited) quarterly and half yearly accounts of the company are circulated
in time along with |
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| director's
review on the affairs of the company. |
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| The
CEO and CFO duly sign financial statements presented to the Board for
approval. |
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| AUDIT COMMITTEE: |
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| An
audit committee in accordance with the requirements of the code has been
formed and following |
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| are its members: |
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| |
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| Mr. Salim N. Mukaty |
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Chairman |
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| Mr. Madni Gul Muhammad |
Director |
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| Mr. Asif Bawany |
|
Director |
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| INTERNAL
AUDIT FUNCTION: |
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| .
The Company has Internal Audit Function in place which is headed by a
Chartered Accountant. |
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| EARNING PER SHARE: |
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| With
the efforts of your Directors and the Management, the earning per share has
also increased to |
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| Rs.
4.07 per share as against Rs. 3.79 per share in the preceding year. |
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| ACKNOWLEDGMENT: |
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| In
the end your Directors express recognition for the efforts put in by the
workers, staff and executives |
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| of
the Company. We also acknowledge the cooperation extended by our banks and
financial institutions. |
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| At
the same time, we also thanks for the well wishes of our valued shareholders. |
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| Thanks to all of You. |
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| For
and on behalf of the Board of Directors |
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| ASHRAF
SALIM MUKATY |
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| Chief Executive |
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| Karachi:
September 26, 2002 |
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| STATEMENT OF COMPLIANCE
WITH THE CODE OF |
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| CORPORATE
GOVERNANCE |
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| The
Company is in the process of implementing the requirements of the Code of
Corporate Governance |
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| |
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| issued
by the Securities and Exchange Commission of Pakistan and adopted by the
Stock Exchanges. |
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| The
provisions of the code, relevant for the year ended June 30, 2002 have been
duly complied with |
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| by the company. |
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| SALIM N. MUNKAY |
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| Chairman |
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| Karachi:
the 26 September 2002 |
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| REVIEW REPORT TO THE
MEMBERS ON STATEMENT OF |
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| COMPLIANCE
WITH BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE |
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| |
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| We
have reviewed the Statement of Compliance with the best practices contained
in the Code of |
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| Corporate
Governance prepared by the Board of Directors of Liberty Mills Limited to
comply with the |
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| Listing
Regulation No. 37 of the Karachi Stock Exchange, where the Company is listed. |
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| |
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| The
responsibility for compliance with the Code of Corporate Governance is that
of the Board of Directors |
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| of
the Company. Our responsibility is to review to the extent where such
compliance can be objectively |
|
| verified,
whether the Statement of Compliance reflects the status of the Company's
compliance with |
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| the
provisions of the Code of Corporate Governance and report if it does not. A
review is limited primarily |
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| to
inquires of the Company personnel and review of various documents prepared by
the Company to |
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| comply with the Code. |
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| |
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| As.
part of our audit of financial statements we are required to obtain an
understanding of the |
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| accounting
and internal control systems sufficient to plan the audit and develop an
effective audit |
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| approach.
We have not carried out any special review of the internal control system to
enable us to |
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| express
an opinion as to whether the Baord's statement on internal control covers all
controls and the |
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| effectiveness
of such internal controls. |
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| |
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| Based
on our review nothing has come to our attention, which causes us to believe
that the Statement |
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| of
compliance does not appropriately reflect the Company's compliance, in all
material respects, with |
|
| the
best practices contained in the Code of Corporate Governance. |
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| |
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| HYDER BHIMJI & CO. |
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| Chartered Accountants |
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| |
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| Karachi:
September 26, 2002 |
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| |
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| A.R. DIWAN & CO. |
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| Chartered Accountants |
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| |
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| KEY
OPERATING AND FINANCIAL DATA |
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| |
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| |
2002 |
2001 |
2000 |
1999 |
1998 |
1997 |
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| |
| Sales |
1,720 |
1,753 |
1,455 |
1,438 |
1,090 |
936 |
|
| Gross Profit |
248 |
274 |
198 |
134 |
112 |
103 |
|
| Operating Profit |
135 |
134 |
100 |
59 |
51 |
62 |
|
| Profit before Tax |
97 |
77 |
68 |
28 |
13 |
12 |
|
| Tax |
24 |
20 |
33 |
19 |
3 |
11 |
|
| Profit after Tax |
73 |
57 |
35 |
9 |
10 |
1 |
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| |
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|
| Total Assets |
1,480 |
1,181 |
1,006 |
797 |
645 |
570 |
|
| Current Liabilities |
567 |
549 |
525 |
456 |
400 |
316 |
|
| |
913 |
632 |
481 |
341 |
245 |
254 |
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| |
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| Represented by: |
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| Share Capital |
179 |
149 |
149 |
149 |
149 |
149 |
|
| Reserves |
112 |
101 |
44 |
24 |
24 |
14 |
|
| Equity |
291 |
250 |
193 |
173 |
173 |
163 |
|
| Long Term Loans |
560 |
327 |
233 |
132 |
30 |
51 |
|
| Deferred Liability |
62 |
55 |
55 |
36 |
42 |
40 |
|
| |
913 |
632 |
481 |
341 |
245 |
254 |
|
| Cash Dividend (% age) |
17.50% |
NIL |
10% |
6% |
NIL |
10% |
|
| Bonus (% age) |
- |
20% |
- |
- |
- |
- |
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| |
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| We
have audited the annexed Balance Sheet of M/S. LIBERTY MILLS LIMITED, as at
June 30, 2002, |
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| |
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| and
the related profit and Loss Account, cash flow statement and statement of
changes in equity, together |
|
| with
the Notes forming part thereof, for the year then ended and we state that we
have obtained all |
|
| the
information and explanations which, to the best of our knowledge and belief,
were necessary for |
|
| the
purposes of our audit. |
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| |
|
| It
is the responsibility of the company's management to establish and maintain a
system of Internal |
|
| Control,
and prepare and present the above said statements in conformity with the
approved accounting |
|
| standards
and the requirements of the Companies Ordinance, 1984. Our responsibility is
to express |
|
| an
opinion on these statements based on our audit. |
|
| |
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
|
| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the |
|
| above
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 includes |
|
| assessing
the accounting policies and significant estimates made by management, as well
as, evaluating |
|
| the
overall presentation of the above said statements. We believe that our audit
provides a reasonable |
|
| basis
for our opinion and, after due verification, we report that - |
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| |
|
| (a) in our opinion, proper books of accounts
have been kept by the Company as required by the |
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| |
|
| Companies
Ordinance, 1984. |
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| |
|
| (b) in our opinion: |
|
| |
|
| i) the Balance Sheet and profit and loss
Account together with the notes thereon have been |
|
| drawn
up in conformity with the Companies Ordinance, 1984 and are in agreement
with |
|
| the
books of accounts and are further in accordance with the accounting policies
consistently |
