| Pak Leather Crafts Limited |
|
|
|
|
|
|
|
| Annual
Report 2002 |
|
|
|
| CONTENTS |
|
|
| Corporate
Profile |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Six
years at a glance |
|
| Statement
of Compliance with Best Practice of Corporate Governance |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Statement
of Changes in Equity |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| CORPORATE
PROFILE |
|
|
| BOARD
OF DIRECTORS |
|
| Muhammad
Khurshid Ahmed |
Chairman |
|
| Muhammad
Saleem Ahmed |
|
Chief Executive |
|
| Dr.
Muhammad Shoaib Ahmed |
Director |
|
| Tariq
Mustafa Khan |
|
Director |
|
| Nayyer
Ahmed Jalali |
|
Director |
|
| Hussain
Aqa Naqvi |
|
Director (Nominee of NIT) |
|
| Mumtaz
All Memon |
|
Director (Nominee of ICP) |
|
|
| AUDIT
COMMITTEE |
|
| Dr.
Muhammad Shoaib Ahmed |
Chairman |
|
| Nayyer
Ahmed Jalali |
|
Member |
|
| Tariq
Mustafa Khan |
|
Member |
|
|
| CHIEF
FINANCIAL OFFICER & |
|
| COMPANY
SECRETARY |
|
| Syed
Saquib Hashmi |
|
|
| BANKERS |
|
| Albaraka
Islamic Bank |
|
| Allied
Bank of Pakistan Limited |
|
| Bank
AI-Falah Limited |
|
| Habib
Bank Limited |
|
| Industrial
Development Bank of Pakistan |
|
| United
Bank Limited |
|
|
| EXTERNAL
AUDITORS |
|
| S.M.
Rehan & Co. |
|
| Chartered
Accountants |
|
|
| LEGAL
ADVISOR |
|
| Shakiel
Z. Lari Advocate |
|
|
| REGISTERED
OFFICE |
|
| Plot
16, Sector 7-A, |
|
| Korangi
Industrial Area, |
|
| Karachi |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 15th Annual General Meeting of the members of Pak
Leather Crafts |
|
| Limited
will be held on Monday, the 30th December, 2002 at 10.00 a.m at the
Registered Office |
|
| of
the Company, Plot No. 16, Sector 7-A, Korangi Industrial Area, Karachi to
transact the following |
|
| business: |
|
|
| 1.
To confirm the minutes of the 14th Annual General Meeting held on 31st
December, |
|
| 2001. |
|
|
| 2.
To receive, consider and adopt the audited accounts of the company for the
year |
|
| ended
30th June, 2002 together with the Directors' and Auditors' Reports thereon. |
|
|
| 3.
To appoint Auditors for the year ending June 30, 2003 and to fix their
remuneration. |
|
|
| 4.
To transact any other business with the permission of the chair. |
|
|
|
By Order of the Board |
|
|
|
Syed Saquib Hashmi |
|
| Karachi:
September 30, 2002 |
|
Company Secretary |
|
|
| NOTES: |
|
| 1.
The Share Transfer Books of the Company will remain closed from 23rd
December, 2002 |
|
| to
6th January, 2003 (both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/her |
|
| proxy
to attend the meeting and vote to him/her. No person shall act as a proxy who
is not |
|
| a
member of the Company. Proxies in order to be effective must be received by
the company |
|
| not
less than 48 hours before the meeting. |
|
|
| 3.
CDC account holders will further have to follow the under mentioned
guidelines as laid down |
|
| in
Circular No. 1 dated January 26, 2000 issued by the Securities and Exchange
Commission |
|
| of Pakistan. |
|
|
| i)
In case of individuals, the account holder or sub-account holder and / or the
person, |
|
| whose
securities are in group account and their registration details are uploaded
as |
|
| per
the Regulations, shall authenticate his / her identity showing his / her
original |
|
| National
Identity Card (NIC) or original Passport at the time of attending the
meeting. |
|
|
| The
shareholders registered on CDS are also requested to bring their participants
I.D. |
|
| numbers
and account numbers in CDS. |
|
|
| ii)
In case of a corporate entity, the Board of Directors' resolution / Power of
attorney |
|
| with
specimen signature of the nominee shall be produced (unless it has been
provided |
|
| earlier)
at the time of meeting. |
|
|
| 4.
Members are requested to immediately notify the Company of any change in
their addresses. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors of your company welcome you to the 15th Annual General Meeting and
place before |
|
| you
the Annual Report alongwith Audited Accounts of the company for the year
ended June 30, 2002, |
|
|
| FINANCIAL
RESULTS |
|
| The
financial results of the Company for the year under report are shown below. |
|
|
|
2002 |
2001 |
|
|
Rupees |
Rupees |
|
| Profit
/ (Loss) from operations |
|
(26,669,529) |
15,495,437 |
|
| Taxation |
|
(3,329,784) |
(5,000,000) |
|
|
---------- |
---------- |
|
| Profit
/ (Loss) after tax |
|
(29,999,313) |
10,495,437 |
|
| Unappropriated
Profit/(Loss) B/F |
|
34,432,431 |
26,486,994 |
|
|
---------- |
---------- |
|
|
4,433,118 |
36,982,431 |
|
| Proposed
Dividend @ Nil ( 2001 @ 7.50% ) |
|
-- |
(2,550,000) |
|
|
---------- |
---------- |
|
| Unappropriated
Profit/(Loss) C/F |
|
4,433,118 |
34,432,431 |
|
| Profit
/ (Loss) per share after tax |
|
(8.82) |
3.08 |
|
|
| YEAR
UNDER REVIEW |
|
| During
the year under review the export sales of the company decreased considerably
as compared |
|
| to
last year because of the following reasons |
|
|
| A)
The tragic incident of the 11th September 2001 in USA. |
|
| B)
Afghan war. |
|
| C)
Threat of Indo-Pak war. |
|
| D)
Decline in expected export orders in general. |
|
| E)
Cancellation of several existing export orders. |
|
| F)
Price war with the buyers which is still going on. |
|
| G)
Losses incurred because of extremely low gross margins in exports. |
|
| H)
Appreciation of Pak Rupees against US Dollar and other international
currencies. |
|
| Persistent
high prices of raw material. |
|
|
| Because
of the above negative factors which prevailed in the international leather
market the |
|
| company
sustained operational losses of Rs. 26.669 millions. |
|
|
| DIVIDEND |
|
| In
view of the losses incurred during the year under report the management is
not recommending |
|
| any
dividend for the year. |
|
|
| FUTURE
PROSPECTS |
|
| In
order to increase export sales of the company which is a dire need of the
time, the management |
|
| is
making its best efforts by exploring new markets, visiting abroad to
materialize deals with the |
|
| buyers,
making and sending samples of new articles and attending international
exhibitions. It is |
|
| hoped
that with all the above said measures being taken by the management supported
by suitable |
|
| government
policies, the export sales as well as profitability of the company will
improve gradually. |
|
|
| A
summary of key operating and financial data of last six years has been
disclosed separately in |
|
| this report. |
|
|
| CORPORATE
GOVERNANCE |
|
| Statement
of Directors Responsibilities |
|
| The
Board is committed to follow the code of Corporate Governance to maintain
high quality |
|
| standards
of good corporate governance. The company is complying with the provisions of
the |
|
| code
as set out by the Securities and Exchange Commission of Pakistan. |
|
|
| There
has been no material departure from the practices of code of corporate
governance as |
|
| detailed
in listing regulations. |
|
|
| Presentation
of Financial Statements |
|
| The
financial statements prepared by the management of the company, fairly
present company's |
|
| state
of affairs, the results of its operations, cash flows and changes in equity. |
|
|
| Books
of Accounts |
|
| The
company has maintained proper books of accounts. |
|
|
| Accounting
Policies |
|
| Appropriate
accounting policies have been consistently applied in preparation of
financial statements |
|
| and
accounting estimates are based on reasonable and prudent judgement. |
|
|
| Application
of International Accounting Standards |
|
| International
Accounting Standards, as applicable in Pakistan, have been followed in
preparation |
|
| of
financial statements and any departure therefrom has been adequately
disclosed. |
|
|
| Internal
control System |
|
| The
system of Internal control is sound in design and has been effectively
implemented and |
|
| monitored. |
|
|
| Going
Concern |
|
| There
is no doubt about the Company's ability to operate in foreseeable future. |
|
|
| During
the year, three (3) meetings of the Board of Directors were held. Attendance
by each Director |
|
| was
as follows: |
|
|
| Name
of Directors |
|
No. of Meetings Attended |
|
|
| Mr.
M. Khurshed Ahmed |
|
3 |
|
| Mr.
M. Saleem Ahmed |
|
3 |
|
| Mr.
M. Shoaib Ahmed |
|
2 |
|
| Mr.
Tariq Mustafa Khan |
|
3 |
|
| Mrs.
Rubina Jalali |
|
0 |
|
| Mr.
H. A. Naqvi (Nominee of NIT) |
2 |
|
| Mr.
Mumtaz Ali Memon (Nominee of ICP) |
3 |
|
|
| Leave
of absence was granted to Directors who could not attend some of the Board
Meetings. |
|
|
| Audit
Committee |
|
| An
audit committee was established to assist the board of directors to discharge
its responsibilities |
|
| for
Corporate Governance, reporting requirements and internal controls. The
Committee comprises |
|
| of
three directors including the chairman of the committee. |
|
|
| APPOINTMENT
OF AUDITORS |
|
| Messrs
S. M. Rehan & Co. Chartered Accountants have retired and being eligible,
have offered |
|
| themselves
for re-appointment. |
|
|
| WORKER
MANAGEMENT RELATIONSHIP |
|
| Your
management would like to place on record valued contribution of all members
of the staff |
|
| and
workers towards achieving management's goals. The worker management
relationship remained |
|
| cordial
throughout the year, which resulted in the smooth operation of your company. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding is annexed with this report. |
|
|
|
On behalf of the Board |
|
|
|
|
|
Muhammad Saleem Ahmed |
|
| Karachi:
September 28, 2002 |
|
Chief Executive |
|
|
|
| Six
YEARS AT A GLANCE |
|
|
|
|
|
(Rs in '000) |
|
| PARTICULARS |
2002 |
2001 |
2000 |
1999 |
1998 |
1997 |
|
| Sales |
|
344,466 |
567,527 |
313,563 |
309,130 |
269,124 |
407,444 |
|
| Gross Profit |
|
29,130 |
75,262 |
49,621 |
42,816 |
33,459 |
62,451 |
|
| Net
Profit / (loss) before tax |
(26,669) |
15,495 |
11,177 |
10,423 |
(6,621) |
15,404 |
|
| Cash
dividend |
-- |
2,550 |
4,250 |
2,550 |
|
4,250 |
|
| Gross
Profit ( % ) |
8.46 |
13.26 |
15.82 |
13.85 |
12.43 |
15.33. |
|
| Net
Profit/(loss) ( % ) |
(7.74) |
2.87 |
3.56 |
3.37 |
(2.46) |
3.78 |
|
| Earning
per share ( after tax ) |
(8.68) |
3.08 |
2.44 |
2.28 |
(2.63) |
3.54 |
|
| Current ratio |
|
1.05 |
1.13 |
1.19 |
1.14 |
1.07 |
1.04 |
|
|
|
| STATEMENT
OF COMPLIANCE WITH BEST PRACTICES |
|
| OF
CORPORATE GOVERNANCE |
|
|
| The
Company is in process of implementing all facets of the Code of the Corporate
Governance |
|
| issued
by the Karachi Stock Exchange and the Board feels pleasure in stating that
provisions of |
|
| the
code, relevent for the year ended June 30, 2002 have been duly complied with. |
|
|
| REVIEW
REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE |
|
| WITH
BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE |
|
|
| We
have reviewed the Statement of Compliance with the best practices contained
in the Code of |
|
| Corporate
Governance prepared by the Board of Directors of Pak Leather Crafts Limited
to comply |
|
| with
the Listing Regulation No. 37 of the Karachi, Lahore and Islamabad Stock
Exchange where |
|
| the
company is listed. |
|
|
| The
responsibility for compliance with the Code of Corporate Governance is that
of the Board of |
|
| Directors
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 the provisions of the Code of Corporate Governance and report if it does
not. Our |
|
| review
is limited primarily to inquiries of the company personnel and review of
various documents |
|
| prepared
by the company to comply with the Code. |
|
|
| As
part of our audit of financial statements we are required to obtain an
understanding of the |
|
| accounting
and internal control systems sufficient to plan the audit and develop an
effective audit |
|
| approach.
We have not carried out any special review of the internal control system to
enable us |
|
| to
express an opinion as to whether the Board's statement on internal control
covers or controls |
|
| and
the effectiveness of such internal controls. |
|
|
| Based
on our review, nothing has come to our attention, which causes us to believe
that the |
|
| Statement
of Compliance does not appropriately reflects the company's compliance, in
all material |
|
| respects,
with the best practices contained in the code of Corporate Governance
effective as at |
|
| 30 June 2002. |
|
|
|
S.M. Rehan & Co. |
|
| Karachi:
September 28, 2002 |
|
Chartered Accountants |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of PAK LEATHER CRAFTS LIMITED as at
June 30, |
|
| 2002
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. |
|
|
| 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: |
|
|
| a)
In our opinion, proper books of accounts have been kept by the company as
required by the |
|
| Companies
Ordinance, 1984; |
|
|
| 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 account and are further in accordance with accounting policies
consistently |
|
| applied; |
|
|
| ii)
the expenditure incurred during the year was for the purpose of the company's
business; |
|
| and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred
during the year |
|
| were
in accordance with the objects of the company; |
|
|
| c)
In our opinion and to the best of our information and according to the
explanations given to |
|
| us,
the balance sheet, profit and loss account, cash flow statement and statement
of changes |
|
| in
equity together with the notes forming part thereof conform with approved
accounting |
|
| standards
as applicable in Pakistan, and, give the information required by the
Companies |
|
| Ordinance,
1984 in the manner so required and respectively give a true and fair view of
the |
|
| state
of the Company's affairs as at June 30, 2002 and of the loss, its cash flow
and changes |
|
| in
equity for the year then ended; and |
|
|
| d)
In our opinion Zakat deductible at source under the Zakat and Ushr Ordinance
1980 (XVIII of |
|
| 1980),
was deducted by the company and deposited in the Central Zakat Fund
established |
|
| under
Section 7 of that Ordinance. |
|
|
| Dated:
September 28, 2002 |
|
S.M. Rehan & Co. |
|
| Karachi |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2002 |
|
|
|
NOTE |
2002 |
2001 |
|
|
|
(Rupees) |
(Rupees) |
|
| CAPITAL
& RESERVES |
|
| Authorised
share capital |
|
| 5,000,000
Ordinary Shares |
|
| of
Rs. 10/- each |
|
50,000,000 |
50,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
|
3 |
34,000,000 |
34,000,000 |
|
| Unappropriated
profit |
|
4,433,118 |
34,432,431 |
|
|
---------- |
---------- |
|
|
38,433,118 |
68,432,431 |
|
| LIABILITIES
AGAINST ASSETS |
|
| SUBJECT
TO FINANCE LEASE |
|
4 |
1,277,262 |
979,105 |
|
| RETIREMENT
BENEFITS |
|
5 |
1,930,731 |
2,026,049 |
|
|
| CURRENT
LIABILITIES |
|
| Short
term finances |
|
6 |
221,900,000 |
169,100,000 |
|
| Current
maturity of long term liabilities |
|
4 |
1,552,021 |
884,804 |
|
| Creditors,
accrued expenses & other liabilities |
7 |
108,743,632 |
185,951,659 |
|
| Workers'
profit participation fund |
|
8 |
-- |
815,548 |
|
| Provision
for taxation |
|
|
3,300,000 |
5,000,000 |
|
| Proposed
dividend |
|
|
-- |
2,550,000 |
|
|
|
---------- |
---------- |
|
|
|
335,495,653 |
364,302,011 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
9 |
|
|
---------- |
---------- |
|
|
377,136,764 |
435,739,596 |
|
|
========== |
========== |
|
| FIXED
CAPITAL EXPENDITURE |
|
| Operating
assets ( at cost less |
|
| accumulated
depreciation) |
|
10 |
23,752,772 |
23,994,847 |
|
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
11 |
4,622,848 |
4,291,008 |
|
| Stock
in trade |
|
12 |
322,952,137 |
336,352,458 |
|
| Trade debts |
|
13 |
3,813,006 |
6,187,521 |
|
| Advances,
deposits and prepayments |
|
14 |
6,683,806 |
12,354,453 |
|
| Other
receivables |
|
15 |
14,589,987 |
35,680,658 |
|
| Cash
and bank balances |
|
16 |
722,208 |
16,878,651 |
|
|
353,383,992 |
411,744,749 |
|
|
---------- |
---------- |
|
|
377,136,764 |
435,739,596 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
MUHAMMAD SALEEM AHMED |
|
MUHAMMAD KHURSHID AHMED |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2002 |
|
|
|
|
NOTE |
2002 |
2001 |
|
|
|
(Rupees) |
(Rupees) |
|
| Sales |
|
17 |
344,466,262 |
567,526,655 |
|
| Cost of sales |
|
18 |
315,336,743 |
492,265,153 |
|
|
|
---------- |
---------- |
|
| Gross profit |
|
29,129,519 |
75,261,502 |
|
|
|
|
| Operating
Expenses |
|
| Administrative |
|
19 |
19,740,458 |
11,847,805 |
|
| Selling |
|
20 |
21,593,259 |
32,488,462 |
|
|
|
---------- |
---------- |
|
|
31,333,717 |
44,336,267 |
|
|
|
|
| Operating
profit/(Loss) |
|
(2,204,198) |
30,925,235 |
|
| Financial
charges |
|
21 |
26,130,943 |
15,302,357 |
|
|
|
---------- |
---------- |
|
|
|
(28,335,141 ) |
15,622,878 |
|
| Other income |
|
22 |
1,665,612 |
688,107 |
|
|
|
---------- |
---------- |
|
| Profit/(Loss)
for the year |
|
|
(26,669,529) |
16,310,985 |
|
| Other
charges |
|
23 |
-- |
815,548 |
|
|
|
---------- |
---------- |
|
| Profit/(Loss)
before taxation |
|
(26,669,529) |
15,495,437 |
|
| Provision
for taxation - current year |
|
3,300,000 |
5,000,000 |
|
| - prior year |
|
29,784 |
-- |
|
|
---------- |
---------- |
|
|
3,329,784 |
5,000,000 |
|
|
---------- |
---------- |
|
| Net
Profit/(Loss) after taxation |
|
(29,999,313) |
10,495,437 |
|
| Unappropriated
profit/(Loss) b/f |
|
34,432,431 |
26,486,994 |
|
|
---------- |
---------- |
|
|
4,433,118 |
36,982,431 |
|
|
---------- |
---------- |
|
| Proposed
dividend Nil (2001: @ 7.5%) |
|
-- |
2,550,000 |
|
|
---------- |
---------- |
|
| Unappropriated
profit/(Loss) c/f |
|
4,433,118 |
34,432,431 |
|
|
========== |
========== |
|
| Earnings
/ (loss) per share |
|
(8.82) |
3.08 |
|
| The
annexed notes form an integral part of these accounts |
|
|
|
MUHAMMAD SALEEM AHMED |
|
MUHAMMAD KHURSHID AHMED |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2002 |
|
|
|
2002 |
2001 |
|
|
(Rupees) |
(Rupees) |
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES. |
|
| Net
profit/(Loss) before taxation |
|
(26,669,529) |
15,495,437 |
|
|
|
|
| ADJUSTMENT
FOR NON CASH CHARGES |
|
|
|
| AND
OTHER ITEMS |
|
|
|
| Depreciation |
|
5,472,221 |
10,564,209 |
|
| Gain
on sale of fixed assets |
|
(1,467,629) |
(469,000) |
|
| Provision
for gratuity |
|
287,284 |
328,673 |
|
| Gratuity paid |
|
(382,602) |
(311,584) |
|
|
-------- |
-------- |
|
|
3,909,274 |
10,112,298 |
|
|
-------- |
-------- |
|
|
(22,760,255) |
25,607,734 |
|
| (INCREASE)/DECREASE
IN CURRENT ASSETS |
|
|
|
| Store
and spares |
|
(331,840) |
1,424,779 |
|
| Stock
in trade |
|
13,400,321 |
(150,524,646) |
|
| Trade
debtors |
|
2,374,515 |
(222,088) |
|
| Advance,
deposits and prepayments |
|
3,493,248 |
(1,790,580) |
|
| Other
receivables |
|
21,090,671 |
(12,732,042) |
|
|
-------- |
-------- |
|
|
40,026,915 |
163,844,577) |
|
| INCREASE/(DECREASE)
IN CURRENT LIABILITIES |
|
| Shore
term finances |
|
52,800,000 |
44,100,000 |
|
| Creditors,
accrued expenses and other liabilities |
|
(77,233,907) |
104,752,352 |
|
| Other
creditors |
|
(815,548) |
208,148 |
|
|
-------- |
-------- |
|
|
(25,249,455) |
149,060,500 |
|
| Net
cash flow from operating activities |
|
(7,982,795) |
10,823,657 |
|
|
| B.
CASH FLOW FROM INVESTING ACTIVITIES |
|
| Capital
expenditure |
|
( |
