| Polypropylene Products Ltd. |
|
|
|
|
|
|
|
|
|
| Annual
Report 2002 |
|
|
|
| Contents |
|
|
| Company
Information |
|
|
| Directors'
Report |
|
|
| Auditor'
Report to the Members |
|
|
| Balance Sheet |
|
|
|
| Profit
and Loss Account |
|
|
| Cash
Flow Statement |
|
|
| Statement
of Changes in Equity |
|
|
| Notes
to Accounts |
|
|
| Pattern
of Shareholdings |
|
|
| Notice
of Annual General Meeting |
|
| Review
Report to the Members on Statement of Compliance |
|
| with
best Practices of code of Corporate Governance |
|
|
|
| Company
Information |
|
|
| Board of |
|
Mr. Razzak H. Mohammed |
|
Chairman |
|
| Directors |
|
Mr. Salim H. Mohammed |
|
|
Mr. Shabbir S. Mohammed |
|
|
Mr. Ather Husain Medina |
|
|
Mr. Iqbal Parekh |
|
|
Mr. Fatehali R. Mohamed |
|
|
Mr. A. Q. Malik |
|
|
Mr. Mohammed Zafar Iqbal |
|
Chief Executive |
|
|
| Audit |
|
Mr. Shabbir S. Mohammed |
|
| Committee |
|
Mr. A. Q. Malik |
|
|
Mr. Mohammed Zafar Iqbal |
|
|
| Company
Secretary |
Mr. Akber Ali Nanji |
|
|
| Bankers |
|
Bank AL Habib Limited |
|
|
Faysal Bank Limited |
|
|
Habib Bank AG Zurich |
|
|
Metropolitan Bank Limited |
|
|
| Auditors |
|
Ford, Rhodes, Robson,
Morrow |
|
|
Chartered Accountants |
|
|
| Factory |
|
Korangi, Karachi. |
|
|
| Registered |
|
7th Floor, Trade Centre, |
|
| Office |
|
I.I. Chundrigar Road, |
|
|
Karachi. |
|
|
|
| Directors'
Report to the Shareholders for the year ended June 30, 2002 |
|
|
| The
Board of Directors of your Company is pleased to submit herewith the
twenty-ninth annual report together with the |
|
| audited
accounts and the Auditors' Report for the year ended June 30, 2002. |
|
|
| Financial
Results |
|
Rupees |
|
| Profit
after taxation |
|
3,875,564 |
|
| Increase
due to adoption of International Accounting Standard 39 |
4,531,731 |
|
| Unappropriated
profit brought forward |
|
1,435,942 |
|
|
---------- |
|
| Profit
available for appropriation |
|
9,843,237 |
|
| Appropriations: |
|
| Proposed
- Cash Dividend @ 15% (Re. 0.75 per share) |
|
3,000,000 |
|
| Transfer
to general 'reserve |
|
3,000,000 |
|
|
---------- |
|
| Unappropriated
profit carried forward |
|
3,843,237 |
|
|
========== |
|
| By
the Grace of Allah the Company has shown an after tax net profit of Rs. 3.87
million for the year ended June 30, 2002 |
|
| and
the Board of Directors have recommended cash dividend of 15 %. |
|
|
| As
mentioned in note 2.3 & 2.4 of notes to the financial statements, due to
adoption of IAS 39 unappropriated profit |
|
| brought
forward was restated by Rs. 4,531,731 increasing total from Rs. 1,435,942 to
Rs. 5,967,673. |
|
|
| Review
of operations |
|
| The
production was further reduced by 18% from 8.7 million metres last year to
7.1 million metres in the year under review, |
|
| which
constitutes only 35% of plant capacity. The production was further reduced
due to excessive supply of PP bags, |
|
| which
created an unhealthy competition and forced the manufacturers to keep prices
below cost. The net sales also |
|
| decreased
by about 30% from Rs. 80.6 million to Rs. 56.1 million due to decrease in
production and low opening inventory |
|
| at
the beginning of the year. |
|
|
| The
Company incurred operating loss of Rs. 4.2 million during the year ended June
30, 2002, but substantial reduction in |
|
| financial
charges and increase in income from investments brought the Company into net
profit of Rs. 3.87 million. |
|
|
| Future
Prospects |
|
| The
situation in PP bag business has worsened because of continuing excess supply
over demand and unhealthy |
|
| competition
with the unorganized sector. Manufacturing of PP bags is being continued only
to a limited extent to remain in |
|
| the
business and when there is masonable contribution towards fixed cost. |
|
| The
Company is not making any significant amount of profit from the business of
manufacturing PP bags. Them is a |
|
| reasonable
income from investments but the operating losses absorb a large part of it
hence there is no sizeable net profit |
|
| before
taxation. In order to improve bottom line results of the Company various
options are being explored. |
|
|
| Corporate
Governance |
|
| The
management of the Company has initiated implementation of code of corporate
governance added in the listing |
|
| regulations
of Stock Exchanges. |
|
| The
Company maintains proper books of account as required by the Companies
Ordinance, 1984 and effectively |
|
| implements
and monitors sound internal control systems. There are no significant doubts
upon the Company's ability to |
|
| continue
as a going concern. The Financial statements prepared by the management |
|
| --
gives a true and fair view of the state of the Company's affairs |
|
| are
in conformity with the International Accounting Standards, as applicable in
Pakistan |
|
| --
have consistently applied appropriate accounting policies and estimates are
based on reasonable and prudent |
|
| judgement
and, |
|
| --
there has been no material departure from best practices of corporate
governance. |
|
|
| Key
financial and operating data |
|
| These
has been summarised for the following six years |
|
|
|
2002 |
2001 |
2000 |
1999 |
1998 |
1997 |
|
|
-------------------------------------------Rupees
in 000's------------------------------------------------ |
|
| Capital |
|
20,000 |
20,000 |
20,000 |
20,000 |
20,000 |
20,000 |
|
| Reserves |
|
50,926 |
41,436 |
42,024 |
44,413 |
45,216 |
46,901 |
|
| Deferred
liabilities |
|
3,819 |
5,513 |
10,012 |
10,861 |
11,153 |
9,279 |
|
| Current
liabilities |
|
16,173 |
12,103 |
41,238 |
31,760 |
25,428 |
19,558 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Total
Equity & Liability |
|
90,918 |
79,052 |
113,274 |
107,034 |
101,797 |
95,738 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Operating
fixed assets |
|
9,831 |
11,425 |
13,113 |
14,033 |
14,615 |
12,621 |
|
| Long
term investments/deposits |
|
32,425 |
24,330 |
25,274 |
28,003 |
24,645 |
35,180 |
|
| Current assets |
|
48,662 |
43,297 |
74,887 |
64,998 |
62,537 |
47,937 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Total Assets |
|
90,918 |
79,052 |
113,274 |
107,034 |
101,797 |
95,738 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Net Sales |
|
56,104 |
80,556 |
127,170 |
117,113 |
132,812 |
111,927 |
|
| Cost of Sales |
|
(52,244) |
(77,026) |
(122,678) |
(103,654) |
(119,267) |
(106,212) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Gross Profit |
|
3,860 |
3,530 |
4,492 |
13,459 |
13,545 |
5,715 |
|
| Operating
expenses |
|
(8,066) |
(7,810) |
(12,269) |
(12,339) |
(12,905) |
(11,338) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Operating
profit/(loss) |
|
(4,206) |
(4,280) |
(7,777) |
1,120 |
640 |
(5,623) |
|
| Financial
& other charges |
|
(1,781) |
(4,143) |
(2,336) |
(4,380) |
(7,307) |
(3,333) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
(5,987) |
(8,423) |
(10,113) |
(3,260) |
(6,667) |
(8,956) |
|
| Other income |
|
8,872 |
8,264 |
7,480 |
6,504 |
5,592 |
20,792 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Net
profit/(loss) before tax |
|
2,885 |
(159) |
(2,633) |
3,244 |
(1,075) |
11,836 |
|
| Taxation |
|
990 |
(429) |
243 |
(47) |
3 390 |
(200) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Net
profit after tax |
|
3,875 |
(588) |
(2,390) |
3,197 |
2,315 |
11,636 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| Basic
earnings / (loss) per share-Rs. |
0.97 |
(0.15) |
(0.60) |
0.80 |
0.58 |
2.91 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
|
|
| Board
of Directors meeting |
|
|
|
| During
the year under review the Board of Directors held three meetings. Mr. Ather
Hussain Medina, present NIT |
|
| representative
was elected as Director in place of previous NIT Director Ms. Farzana Munaf. |
|
|
| Board
of Directors |
|
Number of Meetings
attended |
|
| Mr.
Razzak H. Mohammed |
|
3 |
|
| Mr.
Salim H. Mohammed |
|
3 |
|
| Mr.
Shabbir S. Mohammed |
|
3 |
|
| Mr.
Iqbal Parekh |
|
2 |
|
| Mr.
Fatahali R. Mohamed |
|
1 |
|
| Mr.
A. Q. Malik |
|
3 |
|
| Mr.
Mohammed Zafar Iqbal (Chief Executive) |
|
3 |
|
| Ms.
Farzana Munaf (N.I.T. Director) |
|
| Mr.
Ather Husain Medina (N.I.T. Director) |
|
|
| Pattern
of shareholding |
|
| The
pattern of shareholding as at June 30, 2002 is shown on Page 22. |
|
|
| Auditors: |
|
| The
present Auditors of the Company, Ford, Rhodes, Robson, Morrow, Chartered
Accountants, retire and being eligible, offer |
|
| themselves
for re-appointment for the year 2002-2003. |
|
|
| Your
Directors would like to thank the workers and staff of the Company for
working with enthusiasm, loyalty and devotion to duty. |
|
|
|
On behalf of the Board |
|
|
|
|
|
RAZZAK H. MOHAMMED |
|
| Karachi:
August 17, 2002 |
|
Chairman |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of POLYPROPYLENE PRODUCTS 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 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 account 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, except for the changes as stated in notes |
|
| 2.3
with which we concur; |
|
|
| (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
profit, its cash |
|
| flows
and changes in equity for the year then ended; and |
|
|
| (d)
in our opinion no Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 |
|
| (XVIII
of 1980). |
|
|
|
Ford, Rhodes, Robson, Morrow |
|
| Karachi:
August 17, 2002 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2002 |
|
|
|
|
2002 |
2001 |
|
|
Note |
Rupees |
Rupees |
|
| Non
current assets |
|
| Operating
fixed assets |
|
3 |
9,831,263 |
11,425,223 |
|
| Long-term
investments |
|
4 |
31,701,941 |
23,660,627 |
|
| Long-term
loans and deposits |
|
5 |
722,630 |
669,030 |
|
| Current assets |
|
|
|
| Stores
and spares |
|
6 |
1,304,981 |
1,508,887 |
|
| Stock-in-trade |
|
7 |
1,475,059 |
4,263,563 |
|
| Trade debtors |
|
8 |
12,093,715 |
7,291,303 |
|
| Advance
income-tax |
|
|
2,377,580 |
2,374,952 |
|
| Dividends/profit
accrued on investments |
|
|
9,207,500 |
6,548,000 |
|
| Advances,
deposits and prepayments |
|
9 |
739,550 |
1,244,278 |
|
| Short-term
investment |
|
10 |
20,000,000 |
20,000,000 |
|
| Cash
and bank balances |
|
11 |
1,463,926 |
66,451 |
|
|
|
---------- |
---------- |
|
|
48,662,311 |
43,297,434 |
|
|
---------- |
---------- |
|
| Total assets |
|
90,918,145 |
79,052,314 |
|
|
========== |
========== |
|
| Share
capital and reserves |
|
|
|
| Share capital: |
|
| Authorised: |
|
| 6,000,000
(2000: 6,000,000) ordinary shares of Rs. 5 each |
|
30,000,000 |
30,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
12 |
20,000,000 |
20,000,000 |
|
| Reserves |
|
13 |
50,925,924 |
41,435,942 |
|
|
|
---------- |
---------- |
|
| Shareholders'
equity |
|
|
70,925,924 |
61,435,942 |
|
| Deferred
liability |
|
14 |
3,819,361 |
5,513,505 |
|
| Current
liabilities |
|
|
|
| Short-term
running finance |
|
15 |
7,500,000 |
3,841,232 |
|
| Creditors,
accrued and other liabilities |
|
16 |
1,980,919 |
3,168,352 |
|
| Provision
for taxation |
|
3,071,000 |
4,471,000 |
|
| Unclaimed
dividend |
|
620,941 |
622,283 |
|
| Proposed
dividend |
|
3,000,000 |
-- |
|
|
---------- |
---------- |
|
|
16,172,860 |
12,102,867 |
|
| Contingencies
and commitments |
|
17 |
|
|
---------- |
---------- |
|
| Total
shareholders' equity and liability |
|
90,918,145 |
79,052,314 |
|
|
========== |
========== |
|
| The
accounting policies and explanatory notes form an integral part of these
financial statements. |
|
|
|
Mohammed Zafar Iqbal |
|
|
Salim H. Mohammed |
|
|
Chief Executive |
|
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2002 |
|
|
|
|
|
|
2002 |
2001 |
|
|
|
Note |
Rupees |
Rupees |
|
| Turnover |
|
| Cost of sales |
|
18 |
56,104,025 |
80,555,997 |
|
|
19 |
(52,243,754) |
(77,026,389) |
|
|
---------- |
---------- |
|
| Gross Profit |
|
3,860,271 |
3,529,608 |
|
| Operating
expenses: |
|
| Administrative
expenses |
|
20 |
(4,620,384) |
(4,296,093) |
|
| Selling
expenses |
|
21 |
(3,445,682) |
(3,513,857) |
|
|
|
|
---------- |
---------- |
|
| Operating
loss |
|
(8,066,066) |
(7,809,950) |
|
|
|
---------- |
---------- |
|
| Other
charges |
|
(4,205,795) |
(4,280,342) |
|
| Financial
charges |
|
22 |
(1,056,093) |
(3,213,357) |
|
| Provision
for diminution in value of investments |
|
-- |
(929,436) |
|
| Loss
on restructuring of ICI shares |
|
(573,104) |
-- |
|
| Workers'
profit participation fund |
|
(151,874) |
-- |
|
|
---------- |
---------- |
|
|
(1,781,071) |
(4,142,793) |
|
|
---------- |
---------- |
|
| Other income |
|
(5,986,866) |
(8,423,135) |
|
|
23 |
8,872,468 |
8,264,039 |
|
| Profit/(Loss)
before taxation |
|
|
---------- |
---------- |
|
| Taxation |
|
|
2,885,602 |
(159,096) |
|
| Profit/(Loss)
after taxation |
|
24 |
989,962 |
(428,519) |
|
|
|
|
---------- |
---------- |
|
|
|
3,875,564 |
(587,615) |
|
| Unappropriated
profit brought forward |
|
25 |
5,967,673 |
2,023,557 |
|
| Available
for appropriation |
|
---------- |
---------- |
|
|
9,843,237 |
1,435,942 |
|
| Appropriation: |
|
|
|
| Transfer
to general reserve |
|
3,000,000 |
-- |
|
| Proposed
dividend @ Re. 0.75 per share |
|
3,000,000 |
-- |
|
|
|
|
---------- |
---------- |
|
|
6,000,000 |
-- |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
3,843,237 |
1,435,942 |
|
|
========== |
========== |
|
| Basic
earnings per share |
|
26 |
0.97 |
(0.15 |
|
|
|
|
| The
accounting policies and explanatory notes form an integral part 0f these
financial statements |
|
|
|
Mohammed Zafar Iqbal |
|
|
Salim H. Mohammed |
|
|
Chief Executive |
|
|
Director |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2002 |
|
|
|
2002 |
2001 |
|
|
Rupees |
Rupees |
|
| Cash
flows from operating activities |
|
| Profit
/ (loss) before taxation |
|
2,885,602 |
(159,096) |
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
1,212,787 |
1,496,605 |
|
| Profit
on sale of fixed assets |
|
(623,827) |
(471,906) |
|
| Provision
for gratuity |
|
56,818 |
186,592 |
|
| Loss
on restructuring of ICI shares |
|
573,104 |
-- |
|
| Provision
for diminution in value of investments |
|
-- |
929,436 |
|
| Income
from investments |
|
(8,228,538) |
(7,569,318) |
|
| Financial
charges |
|
1,056,093 |
3,213,357 |
|
|
---------- |
---------- |
|
| Operating
loss before working capital changes |
|
(3,067,961 |
(2,374,330 |
|
| (Increase)/decrease'
in current assets: |
|
|
|
| Stores
and spares |
|
203,906 |
48,123 |
|
| Stock-in-trade |
|
2,788,504 |
25,040,617 |
|
| Trade debtors |
|
(4,802,412) |
5,092,142 |
|
| Advances,
deposits and prepayments |
|
504,728 |
3,208,936 |
|
|
---------- |
---------- |
|
|
(1,305,274) |
33,389,818 |
|
| (Decrease)/increase
in current liabilities: |
|
| Short-term
running finance |
|
3,658,768 |
(20,694,127) |
|
| Creditors,
accrued and other liabilities excluding |
|
|
|
| mark-up
accrued on short-term running finance |
|
(1,091,939) |
(7,635,264) |
|
|
---------- |
---------- |
|
|
2,566,829 |
(28,329,391) |
|
|
---------- |
---------- |
|
|
1,261,555 |
5,060,427 |
|
|
---------- |
---------- |
|
|
(1,806,406) |
2,686,097 |
|
| Movement
in long-term loans and deposits |
|
(53,600) |
15,270 |
|
|
---------- |
---------- |
|
|
(1,860,006) |
2,701,367 |
|
| Cash
(used) / generated from operations: |
|
| Gratuity paid |
|
(1,750,962) |
(4,685,247) |
|
| Income
tax paid |
|
(412,666) |
(403,546) |
|
| Financial
charges. paid |
|
(1,151,587) |
(3,703,085) |
|
|
---------- |
---------- |
|
| Net
cash outflow from operating activities |
|
(5,175,221) |
(6,090,511) |
|
|
| Cash
flows from investing activities |
|
| Proceeds
from sale of fixed assets |
|
1,005,000 |
662,612 |
|
| Income
from investments |
|
5,569,038 |
5,188,068 |
|
|
---------- |
---------- |
|
| Net
cash inflow from investing activities |
|
6,574,038 |
5,850,680 |
|
|
| Cash
flows from financing activities |
|
| Dividend paid |
|
(1,342) |
(15,935) |
|
|
---------- |
---------- |
|
| Net
cash outflow from financing activities |
|
(1,342) |
(15,935) |
|
|
---------- |
---------- |
|
| Net
increase / (decrease) in cash and cash equivalents |
|
1,397,475 |
(255,766) |
|
| Cash
and cash equivalents at the beginning of the year |
|
66,451 |
322,217 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
|
1,463,926 |
66,451 |
|
|
========== |
========== |
|
|
|
|
|
Mohammed Zafar Iqbal |
|
Salim H. Mohammed |
|
|
Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2002 |
|
|
|
Issued, |
|
Net unrealised |
|
|
|
subscribed |
|
gain on |
|
|
|
and paid-up |
General |
investment |
Unappropriated |
|
|
|
capital |
reserves |
securities |
profit |
Total |
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
|
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