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TREET CORPORATION LIMITED.                
Annual Reports 2002  
 
   
BOARD OF DIRECTORS  
  Sycd Wajid Ali Chairman  
  Syed Shahid Ali Chief Executive Officer  
  Dr, Mrs. Niloufer Mahdi  
  Syeda Feriel Rifaat Ali  
  Mr. Basil H. Syed (Nominee International Genera] Insurance Company of Pakistan Limited)  
  Mr. Asit'Jameel (Nominee National Investment Trust Limited)  
  Syed Sheharyar Ali  
  Mr. Muhammad Shafique Anjum  
BOARD AUDIT COMMITTEE  
  Mr. Basil H. Syed Chairman  
  Mr. AsifJameel Member  
  Syed Sheharyar Ali Member  
COMPANY SECRETARY  
& CHIEF FINANCIAL OFFICER  
  AnwarKhalil Sheikh  
EXTERNAL A UDITORS  
  TaseerHadiKhalid&Co.  
  Chartered Accountants  
  Lahore.  
INCOME TAX CONSULTANTS  
  Gardezi & Co.  
  Chartered Accountants  
  Lahore.  
LEGAL ADVISORS  
  Salim & Baig, Advocates - Lahore.  
BANKERS  
    Standard Chartered Bank Limited Bank Al-Habib Limited  
  Askari Commercial Bank Limited Habib Bank Limited  
  Mashreq Bank psc. National Bank of Pakistan  
  United Bank Limited Habib Bank A.G. Zurich  
  PICIC Commercial Bank Limited  
REGISTERED OFFICE  
& SHARE DEPARTMENT  
  72-B, Kot Lakhpat Industrial Area, Lahore.  
  Phones: 042-5830881, 5156567 & 5122296  
  Fax: 042-5836770 E-mail: treet@nexlinx.net.pk & treet@tele.net.pk  
   
FACTORIES  
   
Hali Road, P.O. Box No. 308, Hyderabad.  
Phones :0221-880846,883058 & 883174  
Fax : 0221-880172  
E-mail : treet@hyd.netasia.com.pk  
72-B, Kot Lakhpat Industrial Area, Lahore.  
Phones : 042-5830881.5865907,5865947,5865951 : 042-5156567.5156568, 5156572, 5156577 Fax : 042-5836770  
E-mail : treet@nexlinx.net.pk & treet@tele.net.pk  
 
NATIONAL SALES OFFICE    
56, Shahrah-e-Quaid-e-Azam, Lahore.    
Phones : 042-6303680,6303501,6303502    
Fax : 042-6303681      
E-mail : treet @brain.net.pk    
     
KARACHI OFFICE      
17-Abdullah Haroon Road, Karachi. Phone : 021-5681576  
Fax : 021-5681575       
 E-mail : treet@cyber.net.pk    
     
Company's History  
The Ali family of Pakistan commenced its business activities in South East Asia about a century    
ago under the dynamic leadership of Late Sir Syed Muratib Ali, a nationally respected an honored    
pioneer. His unremitting efforts and devotion to the highest standard of integrity and honest dealings    
contributed in no small measure to the success of his ventures in the highly competitive environment    
of pre-independence days in subcontinent. It is a legacy that has been maintained to the present.  
   
From 1947 onward, the family diversified from the main business of agriculture & trading into the    
fledgling industries of soaps, vegetable oil and razor blades in 1954 & 1956. The enterprises were    
consolidated in to a Public Limited Company, quoted on Pakistan Stock Exchange in 1959. Later,    
in 1977, the razor blade and soap operations were managed under the rubric of new company, the    
Treet Corporation, also a Public Limited Company, Quoted on the Stock Exchanges.  
   
In 1984, Treet set up a second factory, the machinery and technology was imported from American    
Safety Razor Company Staunton USA to manufacture super quality, double edge stainless steel    
blades & bounded shaving system. In 1997 Treet obtained ISO-9002 Certification from BSI, UK.  
   
The Manufacturing Operations of blades are located in Hyderabad and Lahore and that of Soaps in    
Gujranwala and the marketing of all brands produced through these locations are managed from    
marketing and sales offices situated in Lahore.  
   
Treet's distribution network covers more than 350 cities in Pakistan, 35,000 retailers directly and    
indirectly. Through the extensive distribution network Treet enjoys 75% Share of the Pakistan    
domestic market'in double edge blades category and 60% share of exports of total razor blades    
from Pakistan.  
   
Treet Corporation Limited, the leading manufacturer of top quality shaving products for the past    
45 years, received ISO-9002 certification in 1997 from BSI, U.K., one of the initial    
recipients of certificate in pakistan.  
   
Treet practices and closely monitors quality through Total Quality Management. Quality products    
for the satisfaction of its customer is the main objective of the company. Hence ISO-9002 is an    
assurance that Treet meets the world quality standards and its products can compete in the world    
market on quality.  
   
NOTICE OF ANNUAL GENERAL MEETING  
   
Notice is hereby given that the Twenty Fifth Annual General Meeting of Treet Corporation Limited will be held at    
Ambassador Hotel, 07-Davis Road, Lahore on Tuesday October 22, 2002 at 10.00 A.M. to transact the following Ordinary    
and Special Business:  
   
A.     ORDINARY BUSINESS  
   
1    To confirm the minutes of previous Extraordinary General Meeting of the shareholders held on June 13, 2002.  
   
2    To receive, consider and adopt the statement of audited accounts for the year ended June 30, 2002 alongwith    
the reports of Auditor and Directors thereon.  
   
3    To approve and declare a dividend @ 133% (Rs. 13.30 per share) as recommended by the Board of Directors.  
   
4    To appoint Auditors of the Company for the year ending June 30, 2003 and to fix their remuneration. The retiring    
Auditors M/S. Taseer Hadi Khalid & Co., Chartered Accountants offer themselves for re-appointment.  
   
B.    SPECIAL BUSINESS  
   
5    To consider and pass the following ordinary resolution as recommended by the Board:  
   
"RESOLVED that consent be and is hereby given for the payment, as remuneration to Syed Shahid Ali    
Chief Executive Officer/Managing Director, of the sum not exceeding Rs. 3,600,000=/ per annum    
effective from July 01, 2002 and for the provision to him of housing, transport, medical and leave fare    
facilities and other benefits or relating to his office in accordance with the Company's rules from time    
to time enforced."  
   
6    To transact any other business with the permission of the Chair.  
   
By order of the Board  
   
Lahore: September 20, 2002  
   
(ANWAR KHALIL SHEIKH)    
Company Secretary  
   
STATEMENT U/S 160 (1) (b) OF THE COMPANIES ORDINANCE 1984.    
Item No. 5 of the Agenda - Remuneration of Chief Executive Officer  
   
The remuneration of Syed Shahid Ali holding the position of Chief Executive Officer/Managing Director and drawing    
Rs.l,380,000/=per annum from July 1, 2000 is being revised with effect from July I, 2002 as recommended by the Board    
of Directors  
   
Syed Shahid Ali is interested in this business to the extent of his remuneration.    
Notes:  
   
1      The share transfer Books of the Company will remain closed from October 16, 2002 to October 22,    
2002 (both days inclusive).  
   
2      Any member of the Company entitled to attend and vote may appoint another member as his/her proxy    
to attend and vote instead of him/her. Proxies must be received at the Registered Office of the Company    
not less than 48 hours before the time of holding the Meeting.  
   
3      The shareholders having shares deposited with the Central Depository Company (CDC) are requested    
to bring their original National Identity Card or passport and CDC account number for verification.  
   
4      Members are requested to promptly notify the Company of any change in their addresses.  
   
DIRECTORS' REPORT TO THE SHAREHOLDERS  
   
The directors of your company take pleasure in presenting their Annual Report together with your    
company's Annual Audited Financial Statements for the year ended June 30, 2002.  
   
ECONOMIC CONDITIONS  
   
Pakistan economy came under immense pressures following the September 11, 2001 terrorist attacks    
on United States of America and its aftermath and global concern for war against terrorism, which    
led to attacks on Afghanistan. This inexorable situation acted as a whirlpool of economic difficulties,    
by not only disrupting the trading activities, but also increasing the cost of international trade owing    
to escalation in freight and war risk insurance charges. This disruption has caused an obvious decline    
in exports and imports. Furthermore, the overall investment is also on the wane.  
   
Nevertheless, there have been some positive developments also and the worst economic conditions    
have been neutralized by removal of economic sanctions, foreign aid, rescheduling of loans, grants    
and assistance to set off the budgetary gap as well as support to the balance of payments.  
   
COMPANY OPERATIONS  
   
Despite harsh economic environment, the financial results of your Company for the year 2002    
epitomizes and incessant growth. By the grace of Almighty Allah and the excellent efforts of all our    
colleagues, the sales revenue of your Company has increased by 16.16% over last year. Segment    
wise analysis portray an increase of 23.44% in local razor blade sales and 7.72% in razor blade    
exports, however the sales revenue from soaps has been reduced by 5.64% as compared to last year.    
This decline in soap sales is mainly due to relentless economic drought, coupled with the stiff    
competition given by major competitors. Your Company has also achieved an increase of 9.35% in    
the production of razor blades over last year.  
   
The company posted profit after tax at Rs. 138.577 million which is up by 174.44% against Rs.    
50.494 million in previous year. Net profit as a percentage of sales has also increased to 15.90%    
as compared to 6.73% of last year. The earning per share comes to Rs 33.13 as compared to Rs.    
12.07 of corresponding year. The elements contributing towards the increase in the Company Profits    
are substantial Growth in Sales revenue, reduction in costs due to effective and timely application    
of controls at each activity level and efficiently managed cash flow.  
   
The financial results of your company are as follows:-  
  2002 2001  
  (Rupees in thousands)  
 
Profit before taxation                        197,385                        94,376  
Less: provision for taxation      
- Current                            58,808                          43,262  
- Prior    -                                620  
                           58,808                          43,882  
Profit after taxation                          138,577                          50,494  
Add : Un-appropriated profit brought forward                                   86                               103  
Effect of change in accounting policy                              6,364  -   
                             7,579  -   
                           14,029                               103  
Profit available for appropriation                        152,606                        50,597  
Appropriation:      
Proposed cash dividend                            55,623                          20,911  
Transfer to general reserve                            96,900                          29,600  
                                  83                                 86  
Earnings per share   33.13 12.07  
   
The Directors of your company has recommended a cash dividend ofRs. 13.30 per share i.e. @ 133 %.    
CODE OF CORPORATE GOVERNANCE  
   
While the world has witnessed a major stride forward and a growing interest for good corporate governance,    
the need to have a Code responsive to our objective circumstances was being increasingly felt. Therefore, the    
need to have a frame work of good corporate governance has never been as impelling as it is today. To cater    
these needs the Securities and Exchange Commission of Pakistan (SECP) has issued a Code of Corporate    
Governance and directed to all stock exchanges to insert its clauses in their respective listing regulations. The    
management of your company welcomes this act of SECP for implementation of good governance in corporate    
sector and is pleased to incorporate and implement its requirements in your Company.  
   
Statements in Compliance of Code  
   
In compliance to the Code, the Board of Directors of your Company states that:  
   
•      The financial statements, prepared by the management of your company, present fairly its state    
of affairs, the result of its operations, cash flows and changes in equity.  
   
•     Proper books of account have been maintained by your company.  
   
• Appropriate accounting policies are consistently applied by your Company in the preparation    
of financial statements, and accounting estimates are based on reasonable and prudent judgment.  
   
• International Accounting Standards, as applicable in Pakistan, have been followed in the    
preparation of these financial statements and any departure therefrom, if any, has adequately    
been disclosed.  
   
• The System of Internal Control, being implemented in your Company is sound and has been    
effectively persisted throughout the year.  
   
• Keeping in view of the financial position of your Company, we do not have any significant    
doubt upon its continuance as a going concern.  
   
• There also has not been any material departure from the best practices of corporate governance,    
as detailed in the listing regulations, during the year under review.  
   
Employee Benefit Funds  
   
The audit of the financial statements ofTreet Corporation Limited Employees Provident Fund, Treet Corporation    
Limited Employees Gratuity Fund and Treet Corporation Limited Staff Retirement Benefit Fund for the year    
2002 has not yet been completed, hence, the values of their respective investments cannot be determined with    
certainty.  
   
Audit Committee  
   
In compliance with the Code, the Board of Directors of your Company has established an Audit Committee    
comprising of the following directors as its members.  
   
1. Mr. BasitH.Syed   (Chairman)  
2. Mr. Asif Jameel   (Member)  
3. Syed Sheharyar Ali   (Member)  
   
Internal Audit  
   
In compliance with the Code, the Board of Directors of your Company has also established an Internal Audit    
Function to monitor and review the adequacy and implementation of Internal Control at each level of your    
Company.  
   
Key Operating and Financial Data  
   
Following is the key operating and financial data of your Company for the last six years:-  
   
  2002 2001 2000 1999 1998 1997  
 
Sales                          871,577                        750,293                        634,736                        667,674                        774,267                        689,502  
Gross profit                          282,452                        181,808                        137,221                        168,214                        184,272                        114,553  
Profit before taxation                          197,385                          94,376                          51,641                          78,887                          53,390                          40,432  
Profit after taxation                          138,577                          50,494                          29,590                          50,568                          26,490                          29,540  
Shareholders' equity                          317,254                        220,357                        190,774                        173,312                        143,655                        117,165  
Fixed assets-net                          118,690                        127,876                        143,551                        138,741                        124,038                        104,881  
Total assets                          706,308                        539,545                        471,086                        475,363                        405,066                        371,720  
Total liabilities                          389,054                        319,188                        280,312                        302,051                        261,411                        254,555  
Current assets                          571,422                        397,760                        309,516                        313,499                        252,940                        226,486  
Current liabilities                          380,163                        224,899                        193,552                        216,422                        182,033                        206,434  
Dividend   133% 50% 29% 50% - 15%  
Important Ratios  
Profitability  
Gross profit   32.41 24.23 21.62 25.19 23.8 16.61  
Profit before taxation   22.65 12.58 8.14 11.82 6.9 5.86  
Profit after taxation   15.9 6.73 4.66 7.57 3.42 4.28  
Return to Shareholders  
Return on equity before taxation 62.22 42.83 27.07 45.52 37.17 34.51  
Return on equity after taxation 43.68 22.91 15.51 29.18 18.44 25.21  
Earnings per share   33.13 12.07 7.08 12.09 6.33 7.06  
Liquidity / Leverage  
Current ratio   1.5 1.77 1.6 1.45 1.39 1.1  
Breakup value per share 75.86 52.69 45.62 41.44 34.35 28.01  
Total liabilities to equity (Times) 0.82 0.69 0.68 0.57 0.55 0.46  
   
Meetings of the Board of Directors  
   
During the year, the Board of Directors of your company has met three times and the attendance at each of these    
meetings is as follows:-  
   
Name of Directors   Meetings of the Board During the Year 2002 Held on  
 
  November 29,2001 January 28,2002 April 18,2002  
 
Syed Wajid Ali   Present Present Present  
Syed Shahid Ali   Present Present Leave of Absence  
Dr. Mrs. Niloufer Mahdi Present Leave of Absence Present  
Ms. S. Feriel Rifaat Ali Leave of Absence Leave of Absence Present  
Mr. Basit H. Syed   Present Leave of Absence Present  
Mr. AsifJameel   Present Present Leave of Absence  
Mr. Abdul LatifUqaili Present Present N.A  
(Resigned on April 18,2002)  
Syed Sheharyar Ali   N.A N.A Present  
(Appointed on April 18,2002)  
   
Pattern of Shareholding  
   
The pattern of shareholding of your Company as on June 30,2002 is annexed with this report. This statement    
is in accordance with the ammendments made through the Code.  
   
FUTURE OUTLOOK  
   
Your company has consistently been performing well in recent years, despite of the economic drought which    
continues to affect badly the overall economy in the country. Having journeyed successfully through yet another    
thorny year, it is encouraging to see that your company has achieved a stupendous growth rate and looks forward    
to the future outlook with a greater optimism. Our over all dedication is to focus on the amplification of your    
Company to achieve superior returns for you through a growth in the sales by improving our sales strategy,    
keeping a vigil in further curbing the costs and investing in lucrative ventures.  
   
INVESTMENTS  
   
The management of your Company is pleased to inform you that, acting upon the approval given by you in the    
Extraordinary General Meeting held on June 13,2002, for the investment in the equity instruments of Packages    
Limited, an associated company, the management of your company has purchased 298,500 equity shares for    
an amount ofRs. 20.032 million. We are confident that this investment will prove to be a good addition in the    
prosperity of your Company.  
   
CHANGES IN THE BOARD OF DIRECTORS  
   
Mr. Abdul LatifUqaili the nominee of Investment Corporation of Pakistan (ICP) resigned from the Board of    
Directors on April 18,2002. The Board wishes to place on record its appreciation for the valuable services    
rendered by him for the betterment of your Company.  
   
The directors of your company welcome Syed Sheharyar Ali who had been appointed at the meeting of the    
Board of Directors held on April 18,2002 to fill in the casual vacancy arising out of Mr. Abdul LatifUqaili's    
resignation and who was subsequently duly elected for a further term of three years at the Extraordinary General    
Meeting held on June 13,2002. We expect your company to benefit from his induction in the Board.  
   
AUDITORS  
   
The Audit Committee of your company has recommended that, the present auditors, Messrs. Taseer Hadi Khalid    
& Company Chartered Accountants due to retire and being eligible, are offering themselves for reappointment,    
may be appointed as auditors of your Company for another term.  
   
ACKNOWLEDGEMENTS  
   
We place on record our gratitude for our valued customers for their confidence in our products and we pledge    
ourselves to provide them the best quality in continously improving our products. We would also like to thank    
all of our colleagues, management and factory staff who are strongly committed to their work and the success    
of your Company is built around their efforts. We also thank our shareholders for their confidence in our Company    
and assure them that we are committed to do our best to ensure best rewards for their investment in the Company.  
   
Statement of Compliance with Best Practices of Corporate Governance  
   
The Company is in process of implementing all facets of the Code of Corporate Governance issued    
by the Karachi Stock Exchange and the Board feels pleasure in stating that provisions of the Code,    
relevant 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 as applicable to the Company for the year ended June 30, 2002 prepared by    
the Board of Directors ofTreet Corporation Limited, to comply with the Listing Regulation No. 37    
of the Karachi and Lahore 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. A    
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 a 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 system to enable us to express    
an opinion as to whether the Board's statement on internal control covers all controls and 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 reflect the Company's compliance, in all material respects, with    
the best practices contained in the Code of Corporate Governance effective as at June 30, 2002.  
   
AUDITORS' REPORT TO THE MEMBERS  
   
We have audited the annexed balance sheet ofTreet Corporation 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 the 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 and 2.7 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 Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 was deducted by    
the company and deposited in the central Zakat Fund established under section 7 of that Ordinance.  
   
  Note 2002 2001  
    (Rupees in '000)  
     
FIXED CAPITAL EXPENDITURE   3                        118,690                        127,876  
LONG TERM INVESTMENTS   4                          15,552                          13,265  
LONG TERM DEPOSITS   5                              644                              644  
CURRENT ASSETS      
Stores & spares   6                          33,904                          32,291  
Stock and stores-in-transit - at cost                            16,766                            5,468  
Stock in trade   7                          94,951                          74,523  
Trade debtors - unsecured considered good 8                          16,448                          31,600  
Advances, deposits, prepayments and other receivables 9                          98,177                          48,369  
Cash and bank balances   10                        311,176                        205,509  
                       571,422                      397,760  
CURRENT LIABILITIES      
Current portion of liabilities against assets subject to finance lease  -                             3,705  
Finance under mark-up arrangements - secured 11  -                             5,451  
Creditors, accrued expenses and other liabilities 12                        207,108                        142,077  
Provision for taxation   13                        116,225                          51,796  
Unclaimed dividend                              1,207                               959  
Dividend payable                            55,623                          20,911  
                         380,163                        224,899  
NET CURRENT ASSETS                          191,259                        172,861  
NET ASSETS                        326,145                      314,646  
FINANCED BY:      
Share capital   14                          41,822                          41,822  
Reserves   15                        275,349                        178,449  
Unappropriated profit                                   83                                 86  
a SHARE HOLDERS' EQUITY                          317,254                        220,357  
DEFERRED CREDIT   16                            7,208                            6,980  
LONG TERM DEPOSITS                                   60                                 60  
DEFERRED LIABILITIES   17                            1,623                          87,249  
CONTINGENCIES AND COMMITMENTS   18  -   -   
                       326,145                      314,646  
These accounts should be read in conjunction with the annexed notes.  
   
PROFIT AND LOSS ACCOUNT    
FOR THE YEAR ENDED JUNE 30, 2002  
   
  Note 2002 2001  
    (Rupees in '000)  
     
Sales - net   19                        871,577                        750,293  
Cost of goods sold   20                        589,125                        568,485  
Gross profit                        282,452                      181,808  
Operating expenses :      
Administrative expenses   21                          11,796                          10,237  
Selling & distribution expenses   22                          84,088                          72,322  
Provision for diminution in value of investment                              5,292                            4,123  
                         101,176                          86,682  
Operating profit   23                        181,276                          95,126  
Other income                            32,585                          12,355  
                         213,861                        107,481  
Financial expenses   24                            2,537                            5,422  
                         211,324                        102,059  
Workers' profit participation fund                            10,566                            5,103  
Workers' welfare fund                              3,373                            2,580  
                           13,939                            7,683  
Profit before taxation                        197,385                        94,376  
Taxation      
Current                            58,808                          43,262  
Prior    -                                620  
                           58,808                          43,882  
Profit after taxation                          138,577                          50,494  
Unappropriated profit brought forward as previously stated                                   86                               103  
Effect of change in accounting policy   2.3                            6,364  -   
  2.7                            7,579  -   
Profit brought forward - restated                            14,029                               103  
Available for appropriation                        152,606                        50,597  
APPROPRIATION :      
Proposed cash dividend @ 133 % (2001: @ 50 %)                            55,623                          20,911  
Transfer to general reserve                            96,900                          29,600  
                         152,523                          50,511  
Unappropriated profit carried forward                                   83                                 86  
Earnings per share   30 33.13 12.07  
These accounts should be read in conjunction with the annexed note S.  
   
  2002 2001  
  (Rupees in '000)  
CASH FLOW FROM OPERATING ACTIVITIES  
Profit before taxation                        197,385                        94,376  
Adjustments for :      
Financial charges for the year                              2,537                            5,422  
Depreciation                            26,346                          25,743  
Provision for gratuity                              4,974                            8,191  
Provision for staff retirement scheme                              7,320                            9,922  
Profit on bank deposits                          (23,941)                          (6,235)  
Provision for sales tax                            24,443                          29,048  
Gain on sale of fixed assets                               (988)                          (2,927)  
Provision for WPPF and WWF                            13,939                            7,683  
Provision for diminution in value of investment                              5,292                            4,123  
Provision for doubtful debts    -                             4,545  
Provision for doubtful receivables    -                             1,300  
Dividend income                               (574)                               (28)  
                           59,348                          86,787  
Operating profit before working capital changes                        256,733                      181,163  
(Increase) / decrease in operating assets :      
: Stores and spares                            (1,613)                            4,612  
Stock-in-trade                          (20,428)                          (5,627)  
Stock and store-in-transit                          (11,298)                            4,981  
Trade debtors                            15,152                          (9,890)  
WPPF and WWF paid                          (10,723)                          (3,212)  
Advances, deposits, prepayments and other receivables                              8,290                            7,467  
1                         (20,620)                         (1,669)  
Increase / (decrease) in operating liabilities :      
Creditors, accrued expenses and other liabilities                            35,733                          23,250  
Repayment of loan from director    -                         (13,300)  
                           35,733                            9,950  
Cash generated from operations                          271,846                        189,444  
Financial charges paid                            (2,814)                        (12,664)  
Taxes paid                          (45,044)                        (34,115)  
Gratuity paid                          (43,680)                          (3,051)  
Staff retirement benefits paid                            (3,008)                          (6,092)  
Transfer to unfunded staff retirement benefit scheme                          (44,124)  -   
                       (138,670)                        (55,922)  
Net cash from operating activities                         133,176                      133,522  
   
  2002 2001  
  (Rupees in '000)  
CASH FLOWS FROM INVESTING ACTIVITIES  
Capital expenditure incurred                          (17,480)                        (12,129)  
Proceeds from sale of fixed assets                              1,306                            4,990  
Long term deposits    -                                (13)  
Profit on bank deposits received                            17,682                            5,193  
Dividend received                                 574                                 28  
Net cash flow from investing activities                             2,082                         (1,931)  
CASH FLOWS FROM FINANCING ACTIVITIES      
Payment of lease obligation                            (3,705)                          (6,298)  
Deferred income                                 228                            2,264  
Dividend paid                          (20,663)                        (12,044)  
Net cash flow from financing activities                          (24,140)                        (16,078)  
NET INCREASE IN CASH AND CASH EQUIVALENTS                          111,118                        115,513  
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR                        200,058                          84,545  
CASH AND CASH EQUIVALENTS AT THE END OF YEAR                        311,176                      200,058  
CASH AND CASH EQUIVALENTS      
Cash and bank balances                          311,176                        205,509  
Finance under mark-up arrangements    -                           (5,451)  
                       311,176                      200,058  
These accounts should be read in conjunction with the annexed notes.  
   
STATEMENT OF CHANGES IN EQUITY    
FOR THE YEAR ENDED JUNE 30, 2002  
   
  Note SHARE CAPITAL CAPITAL  GENERAL  UNAPP P ROPRIATED  TOTAL  
      RESERVE RESERVE   ROFIT    
    (Rupees in '000)  
     
Balance as on June 30,2000                            41,822                            8,949                        139,900                                 103                        190,774  
Profit after tax    -   -   -                             50,494                          50,494  
Dividend    -   -   -                           (20,911)                        (20,911)  
Transferred during the year    -   -                           29,600                          (29,600)  -   
Balance as on June 30,2001                                   42                            8,949                        169,500                                   86                        220,357  
Balance as on July 01,2001 (as previously stated)                          41,822                            8,949                        169,500                                   86                        220,357  
Effect of change in accounting policy 2.3  -   -   -                               6,364                            6,364  
  2.7  -   -   -                               7,579                            7,579  
Balance as on July 01,2001 - restated                            41,822                            8,949                        169,500                            14,029                        234,300  
Profit after tax    -   -   -                           138,577                        138,577  
Dividend    -   -   -                           (55,623)                        (55,623)  
Transferred during the year    -   -                           96,900                          (96,900)  -   
Balance as on June 30,2002                          41,822                           8,949                      266,400                                  83                      317,254  
   
These accounts should be read in conjunction with the annexed notes.  
   
NOTES TO THE ACCOUNTS    
FOR THE YEAR ENDED JUNE 30, 2002  
   
1.    STATUS AND NATURE OF THE BUSINESS  
   
The Company was incorporated in Pakistan on January 22, 1977 as a Public Limited Company. Its    
shares are listed on Karachi and Lahore Stock Exchanges. The principal activity of the Company is    
manufacturing and sale of razors and razor blades. The Company is also engaged in the business of    
soaps. These soaps are manufactured by Khatoon Soap Industries (Private) Limited for the Company.    
The Company has entered into a contract with Khatoon Soap Industries (Private) Limited for manufacturing    
of soaps.  
   
2.    SIGNIFICANT ACCOUNTING POLICIES  
   
2.1    Statement of compliance  
   
These accounts have been prepared in accordance with accounting standards issued by the    
International Accounting Standard Committee (IASC), interpretations issued by the Standing    
Interpretations Committee of the IASC as applicable in Pakistan and the requirements of the    
Companies Ordinance, 1984.  
   
2.2    Accounting convention  
   
These accounts have been prepared under the historical cost convention, except for long term    
investments, which have been included at fair value.  
   
2.3    Employee Retirement Benefits  
   
a)     Defined Contribution Scheme  
   
A recognized contributory provident fund scheme is in operation covering all permanent    
employees. Equal contributions are made monthly both by the Company and employees    
in accordance with the rules of the scheme at 10% of basic pay.  
   
b)    Defined Benefit Schemes  
   
The Company operates an approved funded gratuity scheme and un-funded staff retirement benefit    
scheme (SRBS) for all employees with qualifying service periods of six months and ten years respectively.    
Consequential to the adoption of IAS 19 (revised 2000) "Employee Benefits", Company has changed    
its accounting policy and provisions are now made annually to cover the obligation on the basis of    
actuarial valuation and are charged to income currently. The most recent valuation was carried out as    
on June 30,2002 using the projected unit credit method.  
   
The principal actuarial assumptions used in the valuation of these schemes as on June 30, 2002 are as    
follows:  
   
  Funded I Jn-Funded  
  Gratuity SRBS  
Contribution rates   As per As per  
  Rules Rules  
     
Expected rate of salary increase in future years   10% 10%  
Discount rate   11% 11%  
Expected rate of return on fund assets during the year   11% 11%  
Actual return on plan assets during the year (Rupees in thousand) 2,251 -  
The amount recognized in the profit and loss account are as follows:  
  Funded Un-Funded  
  Gratuity SRBS  
  (Rupees in '000)  
Current service cost                              2,788                            2,550  
Interest cost                              4,468                            4,435  
Expected return on assets                           (2,282)  -   
Non-vested past service cost charge    -                                335  
Liability/(Asset) Charged due to application of IAS-19                               (876)                          (5,488)  
Net amount chargeable to profit & loss account                             4,098                           1,832  
Gross amount chargeable to profit and loss account      
(by grossing up the transitional liability/(assets)                             4,974                           7,320  
   
Movements in the net liability recognized in the balance sheet are as follows:  
  Funded Un-Funded  
  Gratuity SRBS  
  (Rupees in '000)  
Opening liability/(asset)                            41,499                          44,128  
Amount recognized during the year under IAS-19                              4,097                            1,832  
Contributions made by the Company during the year                          (43,680)                        (47,135)  
Closing liability/(asset)                              1,916                          (1,175)  
The amounts recognized in the balance sheet are as follows:  
  Funded Un-Funded  
  Gratuity SRBS  
  (Rupees in '000)  
Present Value of defined benefit obligation                            46,242                          45,722  
Less:      
• Fair value of plan assets                          (43,749)                        (44,128)  
• Non-vested past service cost to be      
recognized in later period?    -                           (1,338)  
• Liability from application of IAS-19      
to be recognized in later periods    -   -   
• Actuarial losses / (gains) to be      
recognized in later periods                               (577)                          (1,431)  
Balance Sheet liability                             1,916                         (1,175)  
   
Under the transitional provisions of IAS-19, the transitional assets relating to gratuity ofRs.876 thousand and    
Staff Retirement Benefit Scheme ofRs. 5,488 thousand are being recognized immediately under IAS 8 "Net    
profit or loss for the period, fundamental errors and changes in accounting policies". Consequently, the change    
in accounting policy has been accounted for retrospectively. However, the corresponding figures for the year    
ended June 30, 2001 have not been restated as it is not practical to do so. Opening reserves as on July 01, 2001    
have been increased by Rs.6,364 thousand, which is the cumulative effect of the adjustment, relating to periods    
prior to July 01, 2001. Had there been no change in accounting policy, profit for the year before taxation and    
reserves as at June 30, 2002 would have been higher by Rs. 4,019 thousand.  
   
Actuarial gain/loses are amortized over the expected average remaining working life time of employees.  
   
2.4      Taxation  
   
a)     Current  
   
The charge for cin-reni taxation is based on taxable income at the current rates of taxation    
after taking into account applicable tax credits and tax rebates.  
   
b)     Deferred  
   
Provision for deferred taxation is made on all significant timing differences, which are    
likely lo reverse in the foreseeable future using the liability method. However, deferred    
tax debits arc not accounted tor. At year end deferred tax debit balance not recognised    
in the accounts amounted to Rs. 4,422 thousand (2001: Rs. 18,373 thousand).  
   
2.5      Fixed assets and depreciation    
Owned  
   
•     These arc carried at cost less accumulated depreciation. On disposal or scrapping, the    
cost of the assets and the corresponding depreciation is adjusted from both the accounts    
and the resultant gain or loss is dealt with through the profit and loss account.  
   
•     Full year's depreciation is charged on all fixed assets capitalized during the year while    
no depreciation is charged in the year fixed assets are disposed or scrapped.  
   
•     Depreciation on fixed assets other than freehold land is charged on straight-line basis,    
whereby the cost of assets is written off over their useful life without taking into account    
any residual value. The rates of depreciation arc specified in note 3.1.  
   
•     Assets, which have been fully depreciated, are retained in the books at a nominal value    
of Rupee 1.  
   
•     Normal repairs and maintenance arc charged to expense as and when incurred. Major    
renewals and improvements arc capitalized and the assets so replaced, if any, are retired.  
   
Leased  
   
Assets subject to finance lease are stated at the lower of present value of minimum lease    
payments under (he lease agreement and (lie fair value of the assets at the inception of the lease.    
The related obligations, under the lease are accounted for as liabilities. Depreciation is charged    
on straight-line basis at the rates given in note 3.1 to the accounts. The finance charge is    
calculated at the rates implicit in the leases.  
   
2.6    Capital work-in-progress  
   
Capital work-in-progress represents expenditure on fixed assets in the course of construction    
and installation. Transfers arc made to relevant fixed assets category as and when assets are    
available for use. Capital work in progress is stated at cost.  
   
2.7    Long term investments  
   
In compliance with Securities and Exchange Commission of Pakistan circular No. 1 dated    
January 10, 2002, the Company adopted International Accounting Standard 39, "Financial    
Instruments: Recognition and Measurement" with effect from July 01, 2001. The adoption of    
this IAS has resulted in the Company classifying its investments as available for sale. These    
are initially recognized at cost and derecognized by the Company on the date it commits to sell    
them off. At each balance sheet date , these are stated at fair value. Fair value is determined    
on the basis of year end bid prices obtained from stock exchange quotations. This change has    
been accounted for by adjusting the opening balance of retained earnings by an amount of    
Rs.7,579 thousand comparatives have not been restated. Had there been no change in policy,    
investments would have been lower by Rs.4,256 thousand with corresponding effect on profit    
and loss account.  
   
2.8    Stores and spares  
   
These are valued at lower of moving average cost and net realisable value. Write down in stores    
and spares are made for slow moving and obsolete items.  
   
2.9    Stock-in-trade  
   
Stock of raw materials, packing materials, work-in-process and finished goods are valued at    
the lower of moving average cost and net realisable value. Cost in relation to work-in-process    
and finished goods includes prime cost and appropriate proportion of production overheads.    
Net realisable value signifies the estimated selling price in the ordinary course of the business    
less estimated costs to complete and to make the sale.  
   
2.10   Stock and stores-in-transit  
   
These are valued at invoice value plus other directly attributable charges incurred thereon.  
   
2.11   Trade debtors  
   
Known bad debts, if any, are written off and provisions are made against debts considered    
doubtful.  
   
2.12   Foreign currencies  
   
Assets and liabilities in foreign currencies are translated into Pak. Rupees at rates of exchange    
which approximate those prevailing at the balance sheet date. Foreign Currency transactions    
are translated at the rates prevailing at the date of transaction. Exchange differences, if any, are    
taken to profit and loss account currently.  
   
3.2 Disposal of fixed assets  
   
  (Rupees in '000)  
Particulars Cost Accumulated WDV Sales Profit/ Mode of Sold To  
  Depreciation as on Proceeds (Loss) Sale  
  June 30,2002  
Vehicles  
Motorcycles                               480                               430                                 50                               439                               389 Staff Motorcycle Scheme Various Employees  
Toyota Corolla                               375                               375  -                                123                               123 Executive Car Scheme Mr. Muhammad Shafique Anjul  
Suzuki Khyber                               300                               300  -                                132                               132 —..do—— Mr. Ghulam Sarwar Qureshi  
Suzuki Khyber                               346                               346  -                                  82                                 82 .——do-- Ch. Riaz Ahmad  
Suzuki Khyber                               363                               363  -                                  95                                 95 ——do-- Mr. M. Asim Khan  
Suzuki Khyber                               346                               346  -                                  81                                 81 .—do— Mr. Fakhar us Sami  
Suzuki Cultus                               445                               177                               268                               354                                 86 --.do-- Mr. Shahid Mehmood  
     
2002                           2,655                           2,337                              318                           1,306                              988  
     
2001                           4,986                           2,923                           2,063                           4,990                           2,927  
   
  2002 2001  
  (Rupees in' 000)  
Capital work in progress  
 
Plant,machinery and equipment  
under installation   12,555 9,667  
   
3.1 Operating Assets - at cost less accumulated depreciation  
   
 
    COST   Rate   DEPRECIATION   Net Book
  As on July Additions/ As on June % As on July For the (Disposal)/ As on June Value as on
  01 2001 (deletions) 30, 2002   01, 2001 year adjustment 30, 2002 June 30,2002
OWNED:  
Freehold land                              6,969  -                             6,969    -   -   -   -                             6,969
Building on freehold land                          49,959                            1,295                          51,254  5 to 10                           33,663                            2,832  -                           36,495                        514,759
Plant and machinery                          302,684                          16,511                        319,195                                 10                        230,762                          16,785                            3,425                        250,972                        268,223
Furniture and equipment                          22,874                            5,657                          28,531  10 to 25                           16,675                            2,755  -                           19,430                            9,101
Vehicles                            24,520                            3,176                          25,041                                 20                          15,942                            3,974                          (1,958)                          17,958                            7,083
                             (2,655)  
                         407,006                          26,639                        430,990                          297,042                          26,346                            1,467                        324,855                        106,135
                             (2,655)  
LEASED:    
Plant and machinery                            11,418                        (11,418)  -                                  10                            3,425  -                           (3,425)  -   - 
Equipment    -   -   -                                  10  -   -   -   -   - 
Vehicles                                 631  -   -                                  20                               379  -                              (379)  -   - 
                                (631)  
                           12,049                        (12,049)  -                               3,804  -                           (3,804)  -   - 
2002                        419,055                        26,639                      430,990                        300,846                        26,346                         (2,337)                      342,855                      106,135
                          (14,704)              
   
2001                        402,943                        33,798                      419,055                        278,026                        25,743                         (2,923)                      300,846                      118,209
                          (17,686)              
   
3.1.1 Depreciation charged for the period has been allocated as follows:-  
   
  Note 2002 2001  
    (Rupees in '000)  
     
Cost of goods sold   20.1 23,166 24,229  
Administrative expenses   21 1,268 394  
Selling and distribution expenses   22 1,912 1,120  
  26,346 25,743  
   
  2002 2001  
  (Rupees in '000)  
5. LONG TERM DEPOSITS  
Utilities   644 644  
6. STORES AND SPARES  
Stores   6,321 4,171  
Spares   27,583 28,120  
  33,904 32,291  
7. STOCK IN TRADE  
Blades:  
Raw materials and chemicals   46,169 20,656  
Packing materials   7,113 6,400  
Work-in-process   15,090 11,325  
Finished goods   7,609 9,147  
  75,981 47,528  
Soaps:  
Raw materials and chemicals   9,139 8,809  
Packing materials   2,746 1,946  
Work-in-process   2,823 3,337  
Finished goods   4,262 12,903  
  18,970 26,995  
  94,951 74,523  
8. TRADE DEBTORS - UNSECURED  
Considered good   16,448 31,600  
Considered doubtful   - 4,545  
  16,448 36,145  
Less : Provision for doubtful debts   4,545  
  16,448 31,600  
   
4. LONG TERM INVESTMENTS  
Companies   No.of ordinary shares Cost Market Value Percentage of  
  of Rs.10/- each   Holding  
  June30.2002  June 30, 2001  June 30 ,2002  June 30, 2001 June 30, 2002  June  30, 2001 June 30,2002 June  30,2001  
 
Zulfeqar Industries Limited 718,340 718,340 5,418 5,418 4,326 2,685 17.95 17.95  
Provision for loss on investment -420,000 -420,000 -4,200 -4,200  
  298,340 298,340 1,218 1,218 4,326 2,685  
Wazir Ali Industries Limited 1,178,100 1,178,100 15,902 15,902 10,721 17,671 15.48 15.48  
Provision for diminution in value of investment - - - -4,123 - -  
  1,178,100 1,178,100 15,902 11,779 10,721 17,671  
International General Insurance Company of  
Pakistan Limited   6,972 6,063 268 268 505 488  
Bonus Shares   909 . - - - 0.07 0,07  
  6,972 6,972 268 268 505 488  
    17.388 13,265 15.552 20.844    
   
4.1         The Company pledged 420,000 shares of Zulfeqar Industries Limited, an associated Company with Dadabhoy Leasing Company Limited for modaraba finance facility  
   
granted to Zulfeqar Industries Limited. Zulfeqar Industries Limited repaid the financing facility on July ! 7,1996. however, the above shares have not yet been released    
by Dadabhoy Leasing Company Limited. The Company has tiled a legal suit for the recovery of these shares. Management is of the view that the outcome of the case    
will be in favour of the Company. However, being prudent, a provision ofRs.4.20 million has been made for any possible losses on this investment.The fair value of    
these shares is taken as nil.  
   
  Note 2002 2001  
    (Rupees in '000)  
10. CASH AND BANK BALANCES  
Cash at bank :  
Current accounts   10.1 276,061 172,745  
Collection accounts   35,115 32,764  
  311,176 205,509  
   
10.1   Major amount of this balance is invested in three different    
banks on which mark up is being received together with    
current account facilities.  
   
11.   FINANCE UNDER MARK-UP ARRANGEMENTS -    
SECURED  
   
  Limit  
  (Rs in Millions)  
Cash Finance  
Bank Al Mashreq psc.   20  -                                  16  
Export Refinance Loan      
Standard Chartered Bank Limited    -                             5,435  
   -                             5,451  
   
11.1   At the terminal date, the Company has following available    
unutilized limits:  
   
  Limit  
  (Rs in Millions)  
Cash Finance  
Standard Chartered Bank Limited                                   37  
Askari Commercial Bank Limited                                   35  
United Bank Limited (Interchangeable      
with Export Refinance)                                   50  
Bank Al Mashreq psc.                                   20  
   
These financial facilities are secured against joint pari-passu hypothecation charge over the current    
assets of the company.  
   
  Note 2002 2001  
    (Rupees in '000)  
9. ADVANCES, DEPOSITS, PREPAYMENTS AND  
OTHER RECEIVABLES  
Unsecured - considered good :  
Advances:  
To employees                              1,330                            1,506  
To suppliers                              6,173                            5,553  
For custom duty                                 214                               451  
For taxation                            77,479                          26,815  
                         85,196                        34,325  
Deposits:      
Letter of Credit-margin deposits                                 222                                 61  
Prepayments                                298                           1,513  
Due from Associated Companies      
Abbassi Textile Limited                                 458                               458  
Loads (Pvt.) Limited    -                                154  
Wazir Ali Industries Limited    -                                  13  
Zulfeqar Industries Limited   9.1                               104                            5,047  
                                562                            5,672  
Interest Accrued                              7,301                            1,042  
Sales Tax Refund                              4,302                            7,175  
Staff Retirement Scheme   2.3                            1,175                                    -  
Miscellaneous                                 879                               339  
                           99,935                          50,127  
Less : Provision for doubtful recievables                            (1,758)                          (1,758)  
                         98,177                        48,369  
   
9.1    This amount represents the balance of an interest free current account with the associated undertaking-    
Zulfeqar Industries Limited.  
   
9.2    Maximum aggregate amount due from associated companies at the end of any month during the    
year was Rs. 1,379 thousand (2001:Rs. 4,932 thousand).  
   
  Note 2002 2001  
    (Rupees in '000)  
12.3 Workers' Profit Participation Fund  
Balance as at July 01,                              5,103                            3,212  
Allocation for the year                            10,566                            5,103  
                         15,669                           8,315  
Less : Paid during the year                              5,103                            3,212  
Balance as at June 30                          10,566                           5,103  
   
13.   TAXATION  
   
The income tax assessments of the Company have been finalized up to and including assessment year    
2001-2002. However, appeals have been filed against the assessment years 1999-2000, 2000-2001    
and 2001-2002.  
   
The Company is in appeal before the Commissioner of Income Tax against the assessment order under    
section 62 of the Income Tax ordinance, 1979 for the years 1999-2000, 2000-2001 and 2001-2002    
against the add backs amounting in all to Rs. 54.701 million.The company expects favourable outcome    
in respect ofaddbacks totalling Rs. 8.7 million. The final outcome of the rest cannot be reasonably    
ascertained.  
   
  2002 2001  
  (Rupees in '000)  
14. SHARE CAPITAL  
Authorised  
5,000,000 ordinary shares ofRs. 10 each                          50,000                        50,000  
Issued, subscribed and paid-up capital      
Shares issued as fully paid-up in cash      
2,594,075 ordinary shares ofRs. 10 each                          25,940                        25,940  
Shares issued for consideration other than cash      
1,095,000 ordinary shares ofRs. 10 each                          10,950                        10,950  
Shares issued as fully paid bonus shares      
493,150 ordinary shares ofRs. 10 each                              4,932                            4,932  
                         41,822                        41,822  
   
  Note 2002 2001  
    (Rupees in '000)  
12. CREDITORS, ACCRUED EXPENSES AND    
OTHER LIABILITIES  
Creditors :  
Associated companies   12.1                            2,391                               646  
Others                            15,082                            8,630  
                         17,473                           9,276  
Accrued expenses :      
Mark-Up on :      
Finance under markup arrangements                                   84                                 53  
Loan from director    -                                308  
                                  84                               361  
Others:      
Sales tax payable                            49,630                          32,973  
Excise duty on soap                              1,216                            2,117  
Accrued expenses                            75,253                          47,160  
                         126,099                          82,250  
                       126,183                        82,611  
Other Liabilities :      
Advances from customers                            21,617                          25,258  
Due to associated companies   12.1  -                             1,637  
Workers' welfare fund   12.2                            3,373                            5,620  
Workers' profit participation fund   12.3                          10,566                            5,103  
Employee deposits                              4,560                            4,038  
Payable to gratuity fund   2.3                            1,916  -   
Others                            21,420                            8,534  
                           63,452                          50,190  
                       207,108                      142,077  
   
12.1   Maximum aggregate amount due to associated companies at the end of any month during the year    
was Rs.3,390 thousand (2001: Rs.5,060 thousand).  
   
12.2 Workers' Welfare Fund  
  2002 2001  
  (Rupees in '000)  
Balance as at July 01                              5,620                            3,040  
Allocation for the year                              3,373                            2,580  
                             8,993                            5,620  
Less : Paid during the year                              5,620  -   
Balance as at June 30                             3,373                           5,620  
   
18    CONTINGENCIES AND COMMITMENTS  
   
18.1   Messrs. Unilever Pie and Lever Brothers Pakistan Limited were intervening in the company's    
lawful right of manufacture and sale of Bodyguard soap. In order to protect the Company's    
right of manufacturing and selling Bodyguard soap, legal proceedings were initiated against    
Messrs. Unilever Pie and Lever Brothers Pakistan Limited to restrain them from interfering    
in the Company's business. Messrs. Unilever Pie. and Lever Brothers Pakistan Limited filed    
a counter suit against the Company for using similar wrappers to those of the above mentioned    
companies and claimed Rs. 52.5 million from Treet Corporation Limited for infringement of    
their rights.The proceedings of the above mentioned suits are in progress. However, the    
management is of the view that the outcome of the above mentioned case will be favourable.  
   
18.2   There were no significant capital commitments as on June 30, 2002.  
   
  Note 2002 2001  
  (Rupees in '000)  
19. SALES - Net  
Blades   19.1                        756,942                        628,175  
Soaps   19.2                        114,635                        122,118  
                       871,577                      750,293  
19.1 Blades      
Local sales                          794,561                        671,839  
Export sales                          121,168                        108,468  
                         915,729                        780,307  
Less: Sales tax                          112,772                          92,116  
                         802,957                        688,191  
Add: Export rebate                              5,556                            9,176  
                         808,513                        697,367  
Less : Trade discount                            51,571                          69,192  
                       756,942                      628,175  
19.2 Soaps      
Local sales                          158,673                        146,761  
Export sales                                 303                               948  
                         158,976                        147,709  
Less : Sales tax                            22,418                          19,587  
                         136,558                        128,122  
Less : Trade discount                            21,923                            6,004  
                       114,635                      122,118  
   
  Note 2002 2001  
  (Rupees in '000)  
15. RESERVES  
Capital reserve   15.1                            8,949                            8,949  
General reserve   15.2                        266,400                        169,500  
                       275,349                      178,449  
15.1 Capital Reserve      
Excess of net worth over purchase consideration of      
unrelated assets of Wazir Ali Industries Limited                                 629                               629  
Share premium                              8,320                            8,320  
                            8,949                           8,949  
15.2 General Reserve      
Balance as at July 01                          169,500                        139,900  
Transferred from profit and loss account                            96,900                          29,600  
Balance as at June 30                          266,400                        169,500  
                            7,208                           6,980  
   
16.   DEFERRED CREDIT-UNIDO PROJECT AID  
   
This amount represents grant received from UN1DO for financing of the project to phase out the use    
ofCFC-113 at Hyderabad and Lahore Factories, by replacing the existing spraying unit.  
   
  2002 2001  
  (Rupees in '000)  
16.1 Balance as on July 01                              6,980                            4,716  
Additions during the year                                 228                            2,264  
Balance as at June 30                              7,208                            6,980  
17. DEFERRED LIABILITIES      
Gratuity    -                           41,498  
Staff retirement scheme    -                           44,128  
Deferred taxation                              1,623                            1,623  
                             1,623                          87,249  
   
  Note 2002 2001  
  (Rupees in '000)  
20.1.1 Raw material. Chemicals and Packing  
material consumed  
Opening Stock                            27,056                          27,344  
Purchases                          273,590                        233,903  
                         300,646                        261,247  
Closing Stock                          (53,282)                        (27,056)  
                       247,364                      234,191  
   
20.1.2 Salaries, wages and other benefits include Rs. 9,103 thousands (2001: Rs. 16,700 thousands) in respect    
of defined benefit schemes.  
   
20.1.3 Amount represents additional tax calculated as per section 34 of the Sales Tax Act, 1990.  
   
  Note 2002 2001  
  (Rupees in '000)  
20.2 Cost of goods sold - Soap Operations  
Raw material consumed   20.2.1                          67,764                          71,257  
Stores and spares consumed                                   55                               197  
Salaries, wages and other benefits                                 552                               380  
Fuel and power                              7,964                            8,132  
Excise duty                            13,815                          13,890  
Printing and stationery                                     3                                   3  
Product development                                     4                                 12  
Insurance                                   55                                 60  
Travelling and conveyance                                 110                                 36  
Manufacturing charges                              6,136                            6,401  
Other expenses                                 454                               475  
                           96,912                        100,843  
Opening stock of work in process                              3,307                            4,027  
Closing stock of work in process                            (2,823)                          (3,337)  
Cost of goods manufactured                            97,426                        101,533  
Opening stock of finished goods                            12,903                            9,160  
Closing stock of finished goods                            (4,262)                        (12,903)  
                       106,067                        97,790  
   
  Note 2002 2001  
  (Rupees in '000)  
20. COST OF GOODS SOLD  
Blades   20.1                        483,058                        470,695  
Soaps   20.2                        106,067                          97,790  
                       589,125                      568,485  
20.1 Cost of goods sold - Blade Operations      
Raw and packing material consumed   20.1.1                        247,364                        234,191  
Stores and spares consumed                            34,638                          35,527  
Salaries, wages and other benefits   20.1.2                        105,508                        108,448  
Fuel and power                            27,488                          26,447  
Repairs and maintenance - Vehicle                                 253                                 93  
Repairs and maintenance - Others                              4,406                            3,983  
Rent, rates and taxes                              1,337                            1,354  
Insurance                              1,911                            1,665  
Product research and development                                 463                               404  
Travelling and conveyance                              4,591                            3,856  
Printing and stationery                                 914                               541  
Postage and telephone                              1,443                            1,705  
Legal and professional charges                                 118                               566  
Entertainment                                 501                               496  
Subscriptions                                 180                               264  
Depreciation   3.1.1                          23,166                          24,229  
Expenses for computerization                                 158                                 51  
Pakistan Standard Institution fees                              5,796                               555  
Provision for sales tax   20.1.3                          24,443                          29,048  
Other expenses                                 607                               647  
                         485,285                        474,070  
Opening stock of work-in-process                            11,325                          12,313  
Closing stock of work-in-process                          (15,090)                        (11,325)  
Cost of goods manufactured                          481,520                        475,058  
Opening stock of finished goods                              9,147                            4,784  
Closing stock of finished goods                            (7,609)                          (9,147)  
                       483,058                      470,695  
   
  Note 2002 2001  
  (Rupees in '000)  
22. SELLING AND DISTRIBUTION EXPENSES  
Salaries and other benefits   22.1                          21,344                          16,246  
Advertising                            34,566                          25,820  
Electricity and gas                                 506                               558  
Repairs and maintenance - Vehicles                                 260                               345  
Repairs and maintenance - Others                                 134                               203  
Freight octroi and handling                            11,659                          11,036  
Rent, rates and taxes                                 702                               563  
Insurance                                 790                               702  
Travelling and conveyance                              7,329                            6,464  
Entertainment                                 124                               128  
Postage and telephone                              2,052                            2,073  
Product development                                   33                               194  
Printing and stationery                                 443                               478  
Legal and professional charges                                 220                               119  
Meetings and conferences                                 506                               649  
Subscription                                 175                               186  
Depreciation   3.1                            1,912                            1,120  
Computer expenses                                 345                               338  
Provision for doubtful debts    -                             4,545  
Others expenses                                 988                               555  
                         84,088                        72,322  
   
22.1   Salaries and other benefits include Rs. 2,554 thousand (2001: Rs. 1,460 thousand) in respect of defined    
benefit schemes.  
   
22.2   No segregation of selling and distribution expenses has been made for blade and soap operations.  
   
  2002 2001  
  (Rupees in '000 )  
23. OTHER INCOME  
Profit on bank deposits                            23,941                            6,235  
Profit on sale of fixed assets                                 988                            2,927  
Sale of scrap & empties                              2,044                            2,338  
Recovery against provision for doubtful debts                             4,545  -   
Dividend income from International General Insurance Company      
of Pakistan Limited                                   35                                 28  
Dividend income from Zulfeqar Industries Limited                                 539  -   
Rent income                                 150                               150  
Insurance claim                                 343                               677  
                         32,585                        12,355  
   
  Note 2002 2001  
    (Rupees in '000)  
20.2.1 Raw material consumed  
Opening Stock                            10,755                          11,268  
Purchases                            68,894                          70,744  
                           79,649                          82,012  
Closing Stock                          (11,885)                        (10,755)  
                         67,764                        71,257  
21. ADMINISTRATIVE EXPENSES      
Salaries and other benefits   21.1                            6,352                            4,841  
Electricity and gas                                 246                               482  
Repairs and maintenance - Vehicles                                   49                                 71  
Repairs and maintenance - Others                                   81                               120  
Rent, rates and taxes                                   36                               264  
Insurance                                   48                                 62  
Advertising                                 164                               109  
Travelling and conveyance                                 554                               563  
Entertainment                                   85                               109  
Postage and telephone                                 461                               410  
Printing and stationery                                 620                               498  
Legal and professional charges   21.2                            1,097                               498  
Donations   21.3                                 13                                 16  
Computer expenses                                 414                               367  
Directors' fee                                   20                                   4  
Subscription                                 288                               125  
Depreciation   3.1                            1,268                               394  
Provision for doubtful receivables    -                             1,300  
Others    -                                    4  
                         11,796                        10,237  
   
21.1   Saleries and other benefits include Rs. 637 thousand [2001: Rs.(50) thousand] in respect of  
   
defined benefit schemes.  
   
21.2   Legal and professional charges include the following in respect of auditors' remuneration and expenses.  
   
  2002 2001  
  (Rupees in '000)  
Audit fee   80 80  
Out of pocket expenses   30 13  
  110 93  
   
21.3   The directors and their spouses did not have any interest in the donee fund.  
   
21.4   No segregation of administrative expenses has been made for blade and soap operations.  
   
    (Units in millions)  
    ACTUAL PRODUCTION  
  Rated 2002 2001  
26. PLANT CAPACITY AND PRODUCTION  
Hyderabad                               300                               379                               318  
Lahore                               400                               323                               324  
                                 702                              642  
   
The major reason for increase in the production is mainly the reduction in smuggled blades.  
   
 
  2002 2001  
27. TRANSACTIONS WITH RELATED PARTIES   (Rupees in '000)  
Purchases and services received  
                           26,285                        23,070  
27.1   Nature of relationship - Equity holding and common directorship.  
   
27.2   The company has purchased the goods and services from its related parties on commercial    
terms and conditions.  
   
 
  2002 2001  
24. FINANCIAL EXPENSES   (Rupees in '000)  
Mark-up on :  
Finance under mark-up arrangements  
Loan from director                                   91                               149  
Export re-finance    -                             1,106  
Finance leases                                 186                               701  
Workers' profit participation fund                                 205                            1,134  
                             1,351                               190  
Other charges - Bank charges                              1,833                            3,280  
                                704                            2,142  
                              2,537                           5,422  
25.   REMUNERATION OF CHIEF EXECUTIVE,        
DIRECTORS AND EXECUTIVES  
   
  Chief Executive Executive  
  2002 2001 2002 2001  
  (Rupees in '000 )  
Remuneration                            1,260                               900                            9,205                            3,983  
Provident Fund                                 90                                 90                               508                               352  
Bonus                               313                                 67                            1,659                               928  
Entertainment                                 33                                 51  -   -   
Utilities                               120                               120                            1,576                               709  
Medical                                 52                                 68                            1,016                               562  
Leave Passage                                 50                                 50                               766                               506  
                            1,918                           1,346                        14,730                           7,040  
     
No. of persons 1 1 29 21  
   
The Company provides free residential telephones and transport facilities to the chief executive, director    
and executives.  
   
Aggregate amount charged in these accounts for fee to 6 non-executive directors was Rs. 20 thousand    
(200 l:Rs. 4 thousand)  
   
28.1.1 Effective interest rates and related risk  
  Fixed or 2002 2001  
  Variable  
Financial Assets  
Cash and bank balances   Fixed 7.00 to 11.00% 7.00%  
Financial Liabilities  
Finance under mark-up arrangements   Fixed - 8.00%  
Creditors, accrued expenses and other liabilities Fixed 12.50% 12.50%  
Liability against assets subject to finance lease Fixed - 20.12%  
  23.00%  
   
28.2   Concentration of credit risk  
   
The credit risk represents the accounting loss that would be recognized at the reporting date if counter    
parties failed to perform as contracted. The Company does not have significant exposure to any    
individual customer. Out of total financial assets ofRs. 359,704 thousand (2001: Rs. 263,884 thousand)    
the financial assets, which are subject to credit risk amount toRs.24,513 thousand (2001: Rs.44,331    
thousand). The Company believes that it is not exposed to any major credit risk, however, any such    
possibility is mitigated by the application of credit limits to its customers and also obtaining collaterals.  
   
28.3   Foreign exchange risk  
   
Foreign exchange risk arises mainly where receivables and payables exist due to transactions with    
foreign undertakings. The company believes that it is not exposed to any major foreign exchange risk    
at the terminal date.The only foreign currency exposure outstanding at the balance sheet date are foreign    
debtors amounting to equivalent Pak Rs. 11.754 million.  
   
28.4   Fair value of financial instruments  
   
All financial instruments are reflected at their fair value.  
   
  2002 2001  
29. NUMBER OF EMPLOYEES  
Total number of employees at the end of the year   708 698  
   
28. FINANCIAL ASSETS AND LIABILITIES  
   
28.1 Interest rate risk exposure i—  
  2002 2001
  (Rupees in 'OOOs) (Rupees in OOOs)
  Interest bearing   Non interest Total Interest bearing   Non interest Total
  Maturity Maturity bearing   Maturity Maturity bearing  
  within one t nore than one   within one m ore than one  
  year year and less   year y ear and less  
    than five   than five  
    years   years  
Financial assets:  
Long term investments    -   -                           15,552                          15,552  .   -                           13,265                          13,265
Long term deposits    -   -                                644                               644  -   -                                644                               644
Trade debtors    -   -                           16,448                          16,448  -   -                           31,600                          31,600
Advances, deposits, prepayments and other receivable  -   -                           15,884                          15,884  -   -                           12,866                          12,866
Cash and bank balances                          265,023  -                           46,153                        311,176                        163,128  -                           42,381                        205,509
                         265,023                            94,681                        359,704                        163,128                          100,756                        263,884
Financial Liabilities:    
Finance under mark-up arrangements    -   -   .   -                             5,451  -   -                             5,451
Creditors, accrued expenses and other liabilities                          14,023  -                         115,880                        129,903                          11,084  -                           66,855                          77,939
Unclaimed dividend    -   -                             1,207                            1,207  -   -                                959                               959
Proposed dividend    -   -                           55,623                          55,623  -   -                           20,911                          20,911
Long term deposits    -   -                                  60                                 60  -   -                                  60                                 60
Liability against assets subject to finance lease  -   -   •   -                             3,705  -   -                             3,705
                         14,023  -                       172,770                      186,793                        20,240  -                         88,785                      109,025
   
Pattern of Shareholding as at June 30, 2002  
   
Number of   Shareholding Total Shares  
Shareholders From To Held  
2,132 1 100 39,752  
338 101 500 81,051  
78 501 1,000 54,962  
80 1,001 5,000 190,268  
9 5,001 10,000 66,235  
5 10,001 15,000 56,648  
3 15,001 20,000 56,649  
1 20,001 25,000 23,050  
1 25,001 30,000 25,053  
2 30,001 35,000 66,970  
3 35,001 40,000 113,252  
1 40,001 45,000 42,300  
2 60,001 65,000 126,514  
1 70,001 75,000 74,500  
1 95,001 100,000 95,962  
1 110,001 115,000 114,156  
1 130,001 135,000 133,000  
1 145,001 150,000 150,000  
1 195,001 200,000 197,400  
1 220,001 225,000 222,590  
1 435,001 440,000 436,896  
1 540,001 545,000 544,206  
1 545,001 550,000 550,000  
1 720,001 725,000 720,811  
2,666   4,182,225  
   
Categories   No. of Share Held Percentage  
of Shareholders   Shareholders   %  
   
Associated Companies and & Undertakings  
Intemationi General Insurance Company of Pakistan Limited                                   1                        544,206 13.01  
NIT & ICP      
Investment Corporation of Pakistan                                     1                            3,959 0.09  
National Bank of Pakistan Trustee Dept (NIT)                                   1                        720,811 17.24  
CEO, Directors, Spous & Minor Children      
Syed Wajid Ali                            222,590 5.32  
Syed Shahid Ali                            436,896 10.45  
Dr. Mrs. Niloufer Mahdi                              11,625 0.28  
Syeda Ferial Rifaat Ali                              25,053 0.6  
Syed Sheharyar Ali                            347,400 8.31  
Mr. Muhamamd Shafique Anjum                                2,505 0.06  
Mrs. Khadija Wajid Ali (w/o Syed Wajid Ali)                            32,848 0.79  
Executives    -   -  -  
INVESTMENT COMPANIES                                     4                          37,690 0.9  
JOINT STOCK COMPANIES                                   26                        338,303 8.09  
BANKS, DEVELOPMENT FINANACE INSTITUTION,                                   8                        255,607 6.11  
NON-BANKING FINANCE INSTITUTIONS, INSURANCE    
COMPANIES, MODARABA & MUTUAL FUNDS    
FOREIGN COMPANIES                                     1                        550,000 13.15  
PUBLIC SECTOR & CORPORATIONS    -   -  -  
OTHERS                                     1                                   1 0  
INDIVIDUALS                              2,623                        652,731 15.6  
                            2,666                   4,182,225 100  
   
SHAREHOLDERS HOLDING 10% SHARES  
   
Sr. No. Name of Shareholder Shares  
1 International General Insurance Company of Pakistan Limited                          544,206  
2 Syed Shahid Ali                          436,896  
3 M/s Escanaba Ltd. (Hong Kong)                          550,000  
4 National Bank of Pakistan Limited Trustee Dept.                          720,811  
   
  2002 2001  
30. EARNINGS PER SHARE  
Profit for the year after taxation (Rupees in 'OOOs)                          138,557                          50,494  
Weighted average number of ordinary shares in issue      
during the year (Number in 'OOOs)                              4,182                            4,182  
Earnings per share (Rupees)                                   33                                 12  
   
31.   DATE OF AUTHORIZATION FOR ISSUE  
   
These financial statements were authorized for issue on September 20, 2002 by the board of directors    
of the company.  
   
32.   FIGURES  
   
- have been rounded off to nearest thousand rupees.  
   
- of previous year have been re-arranged and re-classified wherever necessary for the purposes of    
comparison.  
   
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