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Atlas Battery Limited |
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|
(Annual Report 1996) |
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| Contents |
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| Corporate
Information |
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|
2 |
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| Notice
of Meeting |
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3 |
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| Chairman's
Review |
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4 |
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| Directors'
Report |
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8 |
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| Five
Years at a Glance |
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10 |
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| Graphic
Illustration |
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11 |
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| Atlas
Group Companies |
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12 |
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| Auditors'
Report |
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13 |
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| Balance
Sheet |
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14 |
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| Profit
& Loss Account |
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16 |
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| Statement
of Changes in Financial Position |
17 |
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| Notes
to the Accounts |
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19 |
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| Pattern
of Shareholding |
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|
35 |
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| Form
of Proxy |
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| Company
Information |
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|
| Chairman |
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| Yusuf
H. Shirazi |
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| Directors |
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| Aitzaz
Shahbaz |
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| M.
Habib-ur-Rahman |
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| Iftikhar
H. Shirazi |
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| M. Iwai |
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| Shahid Anwar |
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| Vazeer Ali |
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| Chief
Executive |
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| Vazeer Ali |
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| Secretary |
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| M.
Atta Karim |
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| General
Manager (Tech) |
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| M.
Khalid Jilani |
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| Chairman
Group Personnel Committee |
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| Nasim
S. Mirza |
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| Chairman
Group Audit Committee |
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| Sanaullah
Qureshi |
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| Auditors |
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| Hameed
Chaudhri & Co. |
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| (Chartered
Accountants) |
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| Bankers |
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| National
Bank of Pakistan |
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| Muslim
Commercial Bank Limited |
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| Bank
of Tokyo-Mitsubishi Limited |
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| Registered
Office (Factory) |
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| D/181,
Central Avenue, S.I.T.E, Karachi. |
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| Group
Executive Committee |
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| Chairman |
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| Yusuf
H. Shirazi |
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| Members |
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| Jawaid
Iqbal Ahmed |
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| Frahim
Ali Khan |
|
| Iftikhar
H. Shirazi |
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| Aamir
H. Shirazi |
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| Secretary |
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| Amjad
Hussain |
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|
Notice of Meeting |
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| Notice
is hereby given that the Annual General Meeting of the Shareholders of the |
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| Company
will be held at 09.00 a.m. on Monday December 23, 1996 at 8th Floor, Adamjee |
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| House,
I.I. Chundrigar Road, Karachi to transact the following business: |
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| ORDINARY
BUSINESS |
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| 1.
To confirm Minutes of the Extraordinary General Meeting held on April 23,
1996. |
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| 2.
To consider and adopt the audited accounts of the company for the year ended
June 30, |
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| 1996
together with the Directors' and Auditors' Report thereon. |
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| 3.
To consider and approve the recommendation of Directors for payment of
dividend at the |
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| rate
of 25% (Rs. 2.50 per Share) for the year ended June 30, 1996. |
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| 4.
To appoint Auditors for the year 1996-97 and fix their remuneration. |
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| 5.
To transact any other business with the permission of the Chair. |
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| Notes: |
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| 1.
The Share Transfer Books of the Company will remain closed from December 15,
1996 |
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| to
December 23, 1996 (both days inclusive). Transfers received in order at the
registered |
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| office
of the company by December 14, 1996 will be in time for the purpose of |
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| entitlement
for payment of the dividend to the transferee. |
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| 2.
A member entitled to attend and vote at the General Meeting is entitled to
appoint |
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| another
member as a proxy to attend and vote on his/her behalf Proxies in order to |
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| be
effective must be received at the Registered Office of the Company not less
than 48 |
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| hours
before the time appointed for meeting. |
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|
| 3.
The members are requested to please communicate to the company any change in
their |
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| mailing
address immediately. |
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|
Chairman's Review |
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| It
is my great pleasure to present the 30th |
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| Annual
Report of your Company for the year ended |
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| June
30, 1996 and review its performance. |
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| THE
BATTERY INDUSTRY |
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| The
organized sector of the battery industry in the |
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| country
showed a negligible growth of 1.1°/(~ as |
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| compared
to 11.5% in the preceding year. The |
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| imposition
of higher taxes on locally produced |
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| batteries,
lowering of taxes on import of batteries, |
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| influx
through Afghan transit trade, smuggling and |
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| replating
were the main reasons for the low growth. |
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|
| The
total estimated demand of automotive batteries |
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| in
Pakistan for 1995-96 was about 1.15 million |
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| units
against which the organized sector supplied |
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| 0.87
million units - about 76%. The rest of the |
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| demand
- about 24% was met by smuggling and |
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| replating
which does not come under the ambit of |
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| the
tax net and thus becomes competitive in the |
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| market.
This is causing a great deal of loss not only |
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| to
the battery industry, but also to the Government; |
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| loss
of revenue on account of excise duty, custom |
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| duty,
sales tax and income tax. This is a chronic |
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| situation
which if continued will have an adverse |
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| impact
on the organized sector and loss of revenue |
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| to
the Government unless appropriate measures |
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| are
taken at the Government level. |
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| OPERATIONAL
RESULTS |
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| The
Company was able to face the unfavourable |
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| operating
environment as stated above and |
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| succeeded,
however, in showing an overall improved |
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| and
satisfactory performance during the year under |
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| report.
Sales revenue increased to Rs 339.6 million, |
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| up
by 31.6% over the corresponding year, on |
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| account
of volume growth, price increase and |
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| better
sales mix. Against the battery industry growth |
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| of
1.1% the company achieved a volume growth of |
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| 11.7%
which is creditable. |
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| The
gross profit for the year was Rs 76.8 million, up |
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| by
23.7%, over 1994-95. However, the overall |
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| cost
push due to general inflation, unprecedented |
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| increase
in the prices of major imported raw |
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| materials,
continuous depreciation in the value of |
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| Pak
Rupee and increase in import levies reduced |
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| the
gross profit margin for the year under review to |
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| 22.6%
of sales as compared to 24.1% in the |
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| preceding
year. How ever it was 24.0% for the six |
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| months
ended June 30, 1995. The fierce market |
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| competition,
under-invoiced imports, replating and |
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| smuggling
did not allow us to fully pass on the total |
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| cost
increases to the customers and the Company |
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| had
to absorb a part of it. Thus the volume increase |
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| could
not contribute fully to the bottom line and |
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| some
incremental advantage was lost. |
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| Administration,
selling and distribution expenses |
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| for
the period were Rs 41.5 million compared to |
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| Rs.
32.1 million for the year ended June 30, 1995 |
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| up
by 29.2%, as against a revenue increase of |
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| 31.6%.
It was Rs. 15.9 million for the six months |
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| ended
June30, 1995~ The expense as a ratio to |
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| sales
was contained at 12.2% as against 12.5% in |
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| the
preceding year. A prudent financial management |
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| policy
resulted in lower financial cost which was |
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| recorded
at Rs 7.2 million for the year as compared |
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| to
Rs. 8.4 million for the preceding period. It was |
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| Rs
4.5 million for the six months ended June 30, |
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| 1995. |
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| The
net result of the operation yielded an increase |
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| of
29.5% in profit before tax to Rs 27.2 million |
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| compared
to Rs 21.0 million in the previous year. |
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| It
was Rs 8.6 million in the six months ended June |
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| 30,
1995. The company achieved a ROE of 32.9% |
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| and
EPS of Rs 8.0 after tax against 31.1% and Rs |
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| 5.8
of the previous year. |
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| Your
Company was set up in 1968 with an equity |
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| of
Rs 3.0 million which has grown to Rs 55.7 |
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| million
including the reserves and the un- |
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| appropriated
profits of Rs 32.7 million. During this |
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| period
the Company has issued bonus shares of |
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| Rs.
10.0 million and right shares of Rs 10.0 million. |
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| The
equity of Rs. 55.7 million is after cash dividend |
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| of
Rs. 23.5 million upto June, 1996. The current |
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| value
of the share is quoted at Rs. 60.0 inspite of the |
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| depressed
stock market. |
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| The
Atlas Group's equity, of which your Company |
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| is
a constituent member, stands at Rs. 1,751.625m |
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| on
June 30, 1996, the bonus issues are at Rs. |
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| 170.317m
and right issues at Rs. 126.895m. The |
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| cash
dividends paid are at Rs. 177.835m. The |
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| Group
believes in optimizing profits and ensuring a |
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| fair
return to the share holders. In 1995 the number |
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| of
dividend paying companies reduced to 216 out |
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| of
764 companies quoted on the Stock Exchanges |
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| or
28% against 50% - 270 companies out of 542 |
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| quoted
in 1991, vide table in the Annual Report on |
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| Page
7. Last year in the Atlas Group five out of |
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| seven
Group companies quoted on the stock |
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| exchanges
were among the dividend paying |
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| companies.
Your company was one of them. Your |
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| company
paid a dividend of 30% (15 % cash and |
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| 15
% bonus)in 1993, 20% cash in 1994 and 15%, |
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| cash
in 1995 for a six months period. |
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| DEVALUATION
AND HIGH TAX INCIDENCE |
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| Our
economic planners continue to rely upon |
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| devaluation
as the only measure to boost exports, |
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| reduce
trade imbalance and minimize inflation. |
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| Devaluation
or adjustments in the value of the |
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| Rupee
have become a regular feature. Immediately |
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| after
setting-up of the Company, it saw cessation of |
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| East
Pakistan (now Bangladesh) followed by a |
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| massive
devaluation of 151%. From July 1995, till |
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| this
date, the value of the Rupee with respect to the |
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| Dollar
has decreased by 29%. Such formulae have |
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| failed
in 35 countries out of the 46 countries |
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| according
to a world bank report. The little success |
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| achieved
has only been in smaller economies. |
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| Invariably
among others inflation increased, interest |
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| rates
soared and industrial growth declined. Whether, |
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| this
policy has borne the desired results in Pakistan |
|
| is
obvious. Devaluation has generally followed, |
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| whereas
investment, production and export have |
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| not
kept pace. Ours is basically an import based |
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| economy.
Devaluation has always led to increasing |
|
| existing
foreign debt burden, increasing consequently |
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| debt
servicing, leading to increasing balance of |
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| payments
problems. In our import based economy |
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| the
solution lies in hi-tech value-added industrial |
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| development,
leading to increased investment |
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| broadening
of technological base, increased |
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| productivity,
employment and savings. A stable |
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| Government
policy especially for investment, |
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| industry
and taxation is fundamental to sustained |
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| growth
of the economy ensuring productivity of |
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| men,
machines and materials: Nothing else! |
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| The
imposition of regulatory duty of 10% on all |
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| imports,
increase in the tariff of utilities and other |
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| inflationary
measures have pushed up our |
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| production
cost. Further, the Federal Budget, |
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| 1996-97,
enhanced the rate of Sales Tax from |
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| 15%
to 18% making the product more expensive, |
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| further
squeezing the organized market, industry |
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| margins,
not to speak of the Government's revenues: |
|
|
| (The
wrong does wrong; the right, right) |
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|
| ATLAS
PHILOSOPHY AND FUTURE OUTLOOK |
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| Be
it as it may, Atlas believes in steady consistent |
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| growth.
We have traveled a long way to achieve |
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| what
we are today. Steady growth based on sound |
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| management
practices has been the hallmark of the |
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| Atlas
Group. It firmly believes in that "everything |
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| that
is greater in life is the product of slow |
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| growth;
the greater and higher, the nobler |
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| the
work; the slower the growth, the surer |
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| is
its lasting success. Mushrooms attain |
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| their
full power in a night; Oaks require |
|
| decades"
Unless something radical is done, |
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| recession
is expected to persist in the organized |
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| sector
of battery market. Fierce competition will |
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| continue
in a stunted market where growth is |
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| adversely
affected as a result of smuggling, |
|
| replating
and imports. The rupee depreciation, |
|
| increase
in imported raw material prices and |
|
| high
inflation will create greater pressure on profit |
|
| margins
and working capital. However, your |
|
| Company
is fully geared to meet the future |
|
| business
challenges and endeavour to improve |
|
| its
market share though dedicated and strategic |
|
| marketing.
Our emphasis on quality management, |
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| technical
pro-efficiency, quality of product and |
|
| services
is expected to produce better results. |
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|
| Your
management is also faced with a capacity |
|
| constraint.
Steps have been undertaken for |
|
| expansion
and modernization of the existing |
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| production
facilities. |
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|
| ACKNOWLEDGMENT |
|
| On
behalf of the Board, I wish to place on record |
|
| the
appreciation for the CEO and his team for |
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| their
hard work and commitment to high |
|
| performance.
I thank Japan Storage Battery |
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| Company
Ltd., our joint venture partners, for |
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| their
continued help and support. May I also |
|
| thank
members of the Board of Directors and the |
|
| Group
Executive Committee for providing the |
|
| necessary
guidance and the banks, financial |
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| institutions,
dealers, customers and shareholders |
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| for
the trust and confidence reposed in us. |
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|
Listed Companies
Distribution |
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|
Dividend, Bonus &
Issue of Right Shares |
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|
Dec. 31, |
Dec. 31, |
Dec. 31, |
Dec. 31, |
Dec. 31, |
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|
| PARTICULARS |
|
1991 |
1992 |
1993 |
1994 |
1995 |
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|
|
|
Rs in Million |
Rs in Million |
Rs in Million |
Rs in Million |
Rs in Million |
|
|
|
|
|
| Paid
Up Capital |
|
37,024,343 |
58,198,532 |
69,476,146 |
104,137,242 |
134,372,315 |
|
|
| No.
of Listed Companies |
|
542 |
628 |
653 |
724 |
764 |
|
|
| Announcements |
|
|
| Cash
Dividend |
|
|
| No.
of Companies |
|
139 |
157 |
138 |
156 |
139 |
|
|
| %
of Total Listed Companies |
26.00% |
25.00% |
21.00% |
22.00% |
18.00% |
|
|
| Bonus
Shares Issued |
|
|
|
|
| No
of Companies |
|
36 |
55 |
70 |
57 |
37 |
|
|
| %
of Total Listed Companies |
7.00% |
9.00% |
11.00% |
8.00% |
5.00% |
|
|
| Cash
+ Bonus Issued |
|
|
| No.
of Companies |
|
42 |
42 |
58 |
42 |
23 |
|
|
| %
of Total Listed Companies |
8.00% |
7.00% |
9.00% |
6.00% |
3.00% |
|
|
|
|
|
|
|
| Cash
+ Right Issued |
|
|
| No.
of Total Companies |
|
26 |
10 |
10 |
15 |
6 |
|
| %
of Total Listed Companies |
5.00% |
2.00% |
2.00% |
2.00% |
1.00% |
|
|
|
| Bonus
+ Right Issued |
|
|
| No.
of Companies |
|
18 |
10 |
14 |
18 |
9 |
|
| %
of Total Listed Companies |
3.00% |
2.00% |
2.00% |
2.00% |
1.00% |
|
|
|
| Cash
+ Bonus + Right Issued |
|
| No.
of Companies |
|
9 |
4 |
3 |
4 |
2 |
|
| %
of Total Listed Companies |
2.00% |
1.00% |
0.00% |
1.00% |
0.00% |
|
|
|
|
|
| Right
Shares Offered |
|
|
| No.
of Companies |
|
36 |
15 |
16 |
45 |
17 |
|
| %
of Total Listed Companies |
7.00% |
2.00% |
2.00% |
6.00% |
2.00% |
|
|
|
|
|
| Total
Companies Announced |
|
|
| Cash
and Bonus |
|
270 |
278 |
293 |
292 |
216 |
|
| %
of Total Listed Companies |
50.00% |
44.00% |
45.00% |
40.00% |
28.00% |
|
|
|
| Total
Companies Offered Right |
|
| Issue
of Right Shares |
|
89 |
39 |
43 |
82 |
34 |
|
| %
of Total Listed Companies |
16.00% |
6.00% |
7.00% |
11.00% |
4.00% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors' Report |
|
|
|
|
|
| Your
Directors have pleasure to present their report together with the Audited
Accounts |
|
| and
Auditors Report thereon for the year ended June 30, 1996. |
|
|
| Financial
results are as follows: |
|
Rs. in 000 |
|
|
|
|
1996 |
1995 |
|
|
12 Months |
6 Months |
|
|
| Profit
before taxation |
|
27,223 |
8,569 |
|
| Provision
for taxation |
|
| Current |
|
9,726 |
3,000 |
|
| Deferred |
|
(833) |
35O |
|
|
|
--------- |
--------- |
|
|
8,893 |
3,350 |
|
|
|
--------- |
--------- |
|
| Profit
after tax |
|
18,330 |
5,219 |
|
| Unappropriated
profit brought forward |
|
154 |
385 |
|
|
|
--------- |
--------- |
|
|
18,484 |
5,6O4 |
|
| Appropriations: |
|
|
|
| Cash Dividend |
|
5,750 |
3,450 |
|
| General Reserve |
|
12,000 |
2,000 |
|
|
--------- |
--------- |
|
|
|
17,750 |
5,45O |
|
|
|
--------- |
--------- |
|
| Unappropriated
profit carried to Balance Sheet |
734 |
154 |
|
|
|
========= |
========= |
|
|
| DIVIDEND |
|
| The
Directors are pleased to recommend a Dividend of 25 %(Rs. 2.50 per Share) on
the paid up capital of Rs. |
|
| 23,000,000/-
as on June 30, 1996. |
|
|
|
| CHAIRMAN'S
REVIEW |
|
| The
Directors endorse the contents of the Chairman's Review, included in this
report highlighting the |
|
| activities
of the company for the year under review. |
|
|
|
| DIRECTORS |
|
|
| In
accordance with the Companies Ordinance, 1984 the following Directors were
unanimously elected at an |
|
| Extra
Ordinary General Meeting held on April 23, 1996 for a period of 3 years; |
|
|
| Mr.
Yusuf H. Shirazi |
|
| Mr.
Aitzaz Shahbaz |
|
| Mr.
Mitsuo Iwai |
|
| Mr.
M. Habib-ur-Rahman |
|
| Mr.
Shahid Anwar |
|
| Mr.
Iftikhar H. Shirazi |
|
| Mr.
Vazeer Ali |
|
|
| The
Board wishes to place on record its deep appreciation of the services
rendered and guidance given by |
|
| retiring
Directors, Mr. Taufiq Ahmed Khan of ICP and Mr. H.U Butt. The Board extends a
warm welcome to |
|
| Mr.
Shahid Anwar of ICP and Mr. M. Habib-ur-Rahman. |
|
|
| CHIEF
EXECUTIVE OFFICER |
|
| Mr.
Vazeer Ali has been reappointed with effect from May 21,1996 as Chief
Executive Officer of the Company |
|
| under
Section 199 of the Companies Ordinance, 1984. |
|
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding as at June 30, 1996 is annexed to this report. |
|
|
| AUDITORS |
|
| The
present auditors, Messrs. Hameed Chaudhri & Co., Chartered Accountants
retired and being eligible |
|
| offer
themselves for reappointment. |
|
|
| Five
Years at a Glance |
|
|
(Rs. in million) |
|
|
1992 |
1993 |
1994 |
1995 |
1995-96 |
|
| STATISTICS |
|
6 Months |
|
| Sales |
|
175.14 |
206.35 |
260.41 |
121.97 |
339.58 |
|
| Gross Profit |
|
50.63 |
64.75 |
66.84 |
29.31 |
76.79 |
|
| Profit
before tax |
|
18.43 |
23.11 |
23.89 |
8.57 |
27.22 |
|
| Profit
after tax |
|
16.67 |
7.65 |
15.84 |
5.22 |
18.33 |
|
| Paid
up share capital |
|
20.00 |
20.00 |
23.00 |
23.00 |
23.00 |
|
| Reserves
and unappropriated profit |
5.50 |
10.14 |
18.38 |
20.15 |
32.73 |
|
| Shareholders'
equity |
|
25.50 |
30.14 |
4,138 |
43.15 |
55.73 |
|
| Long
term debt |
|
17.83 |
14.51 |
14.33 |
14.05 |
12.58 |
|
|
|
|
|
| RATIOS |
|
|
|
| G.P.
to Sales % |
|
28.91 |
31.38 |
25.67 |
24.03 |
22.61 |
|
| N.P.
before tax to Sales % |
1,052 |
11.20 |
917 |
7.03 |
801 |
|
| Return
on equity before tax % |
72.27 |
7,668 |
57.73 |
1,988 |
48.84 |
|
| Current
ratio |
|
1.08:1 |
1.16:1 |
1.27:1 |
1.24:1 |
1.17:1 |
|
| Breakup
value per share Rs. |
12.75 |
1,507 |
17.99 |
18.76 |
2,423 |
|
| Earning
per share before tax Rs. |
9.21 |
1,155 |
10.38 |
373 |
11.83 |
|
|
|
|
|
|
|
|
|
|
|
Atlas Group Companies |
|
|
|
|
Year of Establishment |
|
|
Acquisition * |
|
|
|
| Shirazi
Investments (Pvt) Ltd. |
1962 |
|
| Atlas
Honda Ltd. |
|
1963 |
|
| Atlas
Battery Ltd. |
|
1966 |
|
| Shirazi
Trading Co.(Pvt) Ltd. |
1973 |
|
| Atlas
Warehousing (Pvt) Ltd. |
1979 |
|
| Atlas
Office Equipment (Pvt) Ltd. |
1979* |
|
| Muslim
Insurance Co. Ltd. |
|
1980* |
|
| Allwin
Engineering Industries Ltd. |
1981* |
|
| Atlas
Lease Ltd. |
|
1989 |
|
| Atlas
Investment Bank Ltd. |
1990 |
|
| Honda
Atlas Cars (Pakistan) Ltd. |
1993 |
|
| Honda
Atlas Services (Pvt) Ltd. |
1994 |
|
| Atlas
Information Technology (Pvt) Ltd. |
1996 |
|
|
|
|
Auditors' Report to the
Members |
|
|
| We
have audited the annexed balance sheet of ATLAS BATTERY LIMITED as |
|
| at
June 30,1996 and the related profit and loss account and statement of changes
in |
|
| financial
position, 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
and, after due verification thereof, 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 ac |
