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| DEWAN
SALMAN FIBRE LIMITED |
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| Annual
Report 1995-96 |
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A |
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Joint Venture |
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Of |
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MITSUBISHI CORPORATION |
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DEWAN MUSHTAQ GROUP |
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JAPAN |
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PAKISTAN |
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SAM YANG CORPORATION |
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KOREA |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
|
| AKIRA
YAMAMURA |
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| Chairman |
|
|
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| DEWAN
ZIAUR REHMAN FAROOQUI |
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| President
/ Chief Executive |
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| DEWAN
ASIM MUSHFIQ FAROOQUI |
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| Managing
Director |
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| CHANG
NAM KIM |
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| DEWAN
GHULAM MUSTAFA KHALID |
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| DEWAN
MOHAMMAD AYUB KHALID |
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| DEWAN
MOHAMMAD YOUSUF FAROOQUI |
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| DEWAN
ABDUL REHMAN FAROOQUI |
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| YOON KIM |
|
(Alternate Director) |
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| KOICHIRO
YABUTA |
|
(Alternate Director) |
|
| HIROSHI
KANAMORI |
|
(Alternate Director) |
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| SHINSUKE
FUJITA |
|
(Alternate Director) |
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| HO-SIK
KI |
|
(Alternate Director) |
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| SECRETARY |
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| TARIQ
MOHAMMAD KHAN |
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| AUDITORS |
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| FARUQ
ALl & COMPANY |
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| CHARTERED
ACCOUNTANTS |
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| FEROZE
SHARIF TARIQ & COMPANY |
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| CHARTERED
ACCOUNTANTS |
|
|
| LEGAL
ADVISORS |
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| KHALID
ANWER & COMPANY |
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| ADVOCATES |
|
|
| TAX
ADVISORS |
|
| SHARIF
& COMPANY |
|
| ADVOCATES |
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| AUTHORISED
CAPITAL |
|
| RS.
3,600 MILLION |
|
|
| FACTORY
OFFICE |
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| PLOT
NO. 1, DEWAN FAROOQUE |
INDUSTRIAL PARK, |
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| DISTRICT
HARIPUR (N.W.F.P.) |
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|
| HEAD
OFFICE |
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| DEWAN
CENTRE, |
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| 3-A,
LALAZAR, |
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| BEACH
HOTEL ROAD, |
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| KARACHI-74000. |
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|
| REGISTERED
OFFICE |
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| DEWAN
CENTRE, |
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| 17,
STREET-84, |
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| SECTOR
G-6/4, ISLAMABAD-44000. |
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|
| BANKERS |
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| ABN
AMRİ BANK |
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| AMERICAN
EXPRESS BANK |
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| BANK
OF AMERICA |
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| CITIBANK |
|
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| HABIB
BANK LTD. |
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| MUSLIM
COMMERCIAL BANK LTD. |
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| SOCIETE
GENERALE, THE FRENCH AND |
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| INTERNATIONAL
BANK |
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| STANDARD
CHARTERED BANK |
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| NOTICE
OF SEVENTH ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Seventh Annual General Meeting of DEWAN SALMAN FIBRE
LIMITED |
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| will
be held on 22 December 1996 at 1.00 p.m. at Dewan Centre, 17, Street 84,
Sector G-6/4, |
|
| Islamabad,
to transact the following business: |
|
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| ORDINARY
BUSINESS: |
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| 1.
Recitation from HOLY QURAN, |
|
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| 2.
To read and confirm the minutes of the SIXTH ANNUAL GENERAL MEETING held on
31 |
|
| January,
1996. |
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|
| 3.
To receive, consider and adopt the annual audited accounts for the year ended
30 June |
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| 1996,
together with the Directors' and Auditors' Report thereon, |
|
|
| 4.
To elect 8 Directors of the Company for a pried of three years. The number of
Directors |
|
| to
be elected is fixed by the Board of Directors in accordance with the
provisions of Section |
|
| 178
(I) of the Companies Ordinance, 1984. The following retiring directors are
eligible for |
|
| re-election: |
|
|
| 1. |
Mr. Akira Yamamura |
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| 2. |
Dewan Ziaur Rehman
Farooqui |
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| 3. |
Mr. Chang Nam Kim |
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| 4. |
Dewan Ghulam Mustafa
Khalid |
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| 5. |
Dewan Mohammad Ayub
Kholid |
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| 6. |
Dewan Mohammad Yousuf
Farooqui |
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| 7. |
Dewan Abdul Rehman
Farooqui |
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| 8. |
Dewan Asim Mushfiq
Farooqui |
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|
|
| 5.
To approve the declaration of 10 % Cash Dividend |
|
|
| 6.
To appoint Auditors of the Company for the year ending 30 June 1997 and to
fix their |
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| remuneration. |
|
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| SPECIAL
BUSINESS: |
|
| 7.
To consider and approve short term loans and advances out of surplus funds
available |
|
| with
the Company to Dewan Textile Mills Limited and/or Dewan Khalid Textile Mills |
|
| Limited
and/or Dewan Mushtaq Textile Mills Limited in compliance with the provisions |
|
| of
Section 208 of the Companies Ordinance, 1984, |
|
|
| 8.
To transact any other business with the permission of the Chairman. |
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|
| By
Order of the Board |
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| (TARIQ
MOHAMMAD KHAN) |
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| Company
Secretary |
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| NOTES: |
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| 1.
The Shares Transfer Books of the Company will remain closed from 18 December
1996 |
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| to 31 December 1996 (Both days inclusive). |
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|
| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint |
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| a proxy to attend, speak and vote for
him/her (A proxy must be a member of the |
|
| Company). |
|
|
| 3.
An instrument of proxy and a power of attorney or other authority (if any)
under which |
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| it is signed or a notarilly certified copy
of such power of attorney, in order to be valid |
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| must be deposited at the registered office
of the Company not less than 48 hours |
|
| before the time of the meeting. |
|
|
| 4.
Members are requested to notify any changes in their address immediately. |
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| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984 |
|
| This
statement is annexed to the Notice of the Seventh Annual General Meeting of
Dewan |
|
| Salman
Fibre Limited to be held on 22 December 1996 and sets out material facts
concerning |
|
| the
Special Business to be transacted at the Meeting. |
|
|
| 1.
The Board of Directors considers to advance temporary short term financing to
the |
|
| associated
companies out of surplus funds available with the company, In this regard |
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| following
resolution is proposed to be passed, with or without modification, as a
'SPECIAL |
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| RESOLUTION.' |
|
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| "RESOLVED
THAT THE PRESIDENT/CHIEF EXECUTIVE OF THE COMPANY BE AND IS HEREBY |
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| AUTHORISED
TO MAKE TEMPORARY SHORT TERM LOANS/ADVANCES TO THE FOLLOWING |
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| ASSOCIATED
COMPANIES UP TO MAXIMUM LIMIT OF RS. 50 MILLION AT THE MARK UP RATE |
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| OF
1% ABOVE THE RATE ON WHICH THE COMPANY HAS MADE THE BORROWING. |
|
|
| -
DEWAN TEXTILE MILLS LIMITED |
|
|
| -
DEWAN KHALID TEXTILE MILLS LIMITED |
|
|
| -
DEWAN MUSHTAQ TEXTILE MILLS LIMITED |
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| THESE
TEMPORARY LOANS/ADVANCES SHALL BE ADJUSTED AS AND'WHEN REQUIRED BY THE |
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| COMPANY
AND SHALL NOT EXCEED 12 MONTHS PERIOD. |
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| DIRECTORS'
REPORT |
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| Your
Directors take pleasure in presenting to you the Seventh Annual Report of the
Company together |
|
| with
the audited accounts for the-year ended on 30 June 1996. |
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|
| Alhamdolillah,
the results for the year under review are satisfactory considering the global
crisis of the |
| Polyester
Industry. The company has earned a consolidated Net Profit of Rs. 163.6
million. The highlights |
| of
the accounts are as follows: |
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|
(Rs. in '000') |
|
|
|
|
Unit I |
Unit II |
Consol- |
|
|
|
|
|
idated |
|
| Gross
Sales |
|
|
3,575,993 |
3,066,327 |
6,642,320 |
|
| Excise
Duty |
|
|
160,209 |
145,539 |
305,748 |
|
| Depreciation |
|
|
198,496 |
316,298 |
514,794 |
|
| Gross
Profit |
|
|
388,048 |
278,086 |
666,134 |
|
| Net
Profit before Tax |
|
|
135,082 |
60,021 |
195,103 |
|
| Turn
Over Tax |
|
|
17,020 |
14,447 |
31,467 |
|
|
| The
above profits are from the first full year's operations of both Units of the
Company. It was the most |
| turbulent
year for Polyester industry around the world. We humbly and gratefully bow
our heads before |
|
| Almighty
Allah. the most Gracious and Merciful, who has enabled your Company with His
incalculable |
|
| blessings
and innumerable bounties to succeed in the most difficult crisis without much
harm. |
|
|
| IF
YE GIVE THANKS, I Will YOU GIVE YOU MORE (AL-QLIRAN) |
|
|
| Appropriation: |
|
| Your
Directors are pleased to propose appropriation of profit in the following
manner:- |
|
|
|
|
(Rs. in '000') |
|
| Profit
for the year 1995-96 |
|
163,636 |
|
| Unappropriated
profit brought forward |
|
484,020 |
|
|
|
|
--------- |
|
| Profit
available for appropriation |
|
647,656 |
|
|
|
|
========= |
|
|
| Appropriation |
|
| Cash
dividend |
|
|
121,272 |
|
| General
Reserves |
|
|
400,000 |
|
| Unappropriated
Profit carried forward |
|
126,384 |
|
|
|
|
--------- |
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| Total |
|
|
647,656 |
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|
|
========= |
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| The
Board would like to apprise its shareholders that as per the International
Accounting Standards |
|
| (IAS)
and in accordance with the provisions of the Companies Ordinance, 1984, it is
allowed for o |
|
| company
to incorporate exchange differences, arising in respect of foreign currency
loans/bonds |
|
| issued
for acquisition of its assets and against which there is no practical means
of hedging, in the cost |
| of
relevant assets up to the date of settlement/redemption of such loans/bonds.
Based on this, your |
|
| Board
decided to capitalize exchange loss occurred amounting to Rs. 153.4 million
upto 30 June 1996. |
|
|
| The
Board of Directors took decision for appropriation of the profit, keeping in
view the track record of |
| Dewan
Mushtaq Group under whose management, Alhamdolillah and with the blessings of
Almighty |
|
| Allah,
no group company has ever skipped dividend. |
|
|
| The
Board also decided to apprise the valued Shareholders that how your Company
suffered because |
|
| of
volatile international market situation, victimisation of policy makers and
other circumstances in |
|
| detail
through this report. |
|
|
| Salient
features of the accounts: |
|
| 1.
The total combined sales of the Company amounted to Rs. 6.4 billion as
compared to Rs, 4.3 billion |
|
| last
year, The increase in Sales is due to the start of commercial operation of
Unit II, |
|
|
| 2.
The earning per share of the Company works out to Rs.1.35 per share which
shows significant |
|
| decrease
over prior years due to decreased margins. |
|
|
| 3.
The year under review was marked by volatile movements in the polyester
sector. The raw material |
|
| price
hike continued up to the end of first quarter of 1996 and broke all previous
records due to |
|
| complete
imbalance between demand and supply position. |
|
|
| 4.
Alhamdolillah, despite mitigating factors, your Company has been able to meet
all its financial |
|
| obligations
on time and from its own resources. Todate, seven instalments of long term
foreign |
|
| currency
loan have been paid on schedule. Further, three instalments of lease
financing obtained |
|
| from
AI Tawfeek Company for Investment Funds have been remitted as per Repayment
Schedule, |
|
| In
addition, interest amount on Euro Convertible Bonds are being remitted to the
bondholders on |
|
| due
dates. |
|
|
| Plant
Operation: |
|
| The
Board feels pleasure to report that, Alhamdolilloh, its Unit II, having
production capacity of 56,000 |
| tons
per annum of Polyester Staple Fibre (PSF) has successfully completed its
first full year of operations |
| and
produced 44,324 tons of PSF. The product was well accepted by the buyers.
Unit II has the |
|
| distinction
to produce for the first time in Pakistan various deniers, lusters, lengths
and cross sections |
| which
your Company successfully introduced and provided domestic substitution of
such specialised |
|
| products,
The performance of Unit I also remained satisfactory, The production of
40,274 tons against |
|
| installed
capacity of 52,500 tons is due to commercial reasons which are explained
herein. |
|
|
| Year
Under Review: |
|
| The
year under review was one of the most turbulent year in the history of
Polyester Industry in the world, |
| This
was an experience and test of nerves for the management to cope up with the
most difficult of |
|
| times
with patience. |
|
|
| As
reported in our last year's review, your plant faced major difficulty in
procuring the raw materials, |
| particularly
Pure Terephthalic Acid (PTA). Under the long term agreement with Mitsubishi
Corporation, |
|
| Japan,
they were supposed to supply PTA for the increased demand of your Company
from Sam Nom |
|
| Petrochemicals
Co., Ltd., South Korea whose second plant commenced production in November |
|
| 1995
instead of announced schedule of June 1995 due to severe global shortage of
its feedstock |
|
| Paraxylene.
This led to considerable difficulty in obtaining PTA, due to which part of
the requirement |
|
| was
procured from the spot market and your Company had to also reduce its
operational level. The |
|
| situation
was further exacerbated by tremendous upsurge in the price of both main raw
materials i.e. |
|
| PTA
and MEG, These factors have resulted in a squeeze on the profit margins of
your Company, |
|
|
| While
raw material price touched its peak, it badly affected consumption of
polyester fibre around the |
|
| world.
At the same time, massive new capacities started coming into operation which
further |
|
| aggravated
the situation. This started the spate of dumping from large global
manufacturers under |
|
| the
lead of U.S. manufacturers whose domestic prices of PTA were much lower than
the Asian market |
|
| and
who took advantage of the circumstances of rising raw material cost and short
supply and exerted |
|
| tremendous
pressure on Asian market and significantly on Pakistani Polyester Industry.
It was then the |
|
| turn
of Far Eastern manufacturers who got desperate because of this situation and
desperation added |
|
| with
new capacities started commencing production. Pakistani market became dumping
ground |
|
| and
it was free for all situation. Under these circumstances, a leading Saudi
company started their first |
| polyester
plant and this new entrant also could not find any market in Pakistan for
dumping their output. |
| Because
of this dumping, the local Polyester Industry was unable to even sell their
production |
|
| comfortably.
This situation is amply reflected by the huge stocks that your Company was
carrying as |
|
| of
the close of balance sheet year. |
|
|
| DIRECTORS'
REPORT |
|
| As
the polyester market tumbled globally, the polyester companies started to dry
their pipeline stocks |
|
| of
raw materials which resulted in sudden panic decline in PTA prices followed
by Paraxylene, It turned |
|
| out
as a chaos for polyester and intermediate industry around the world, The new
capacities of PTA |
|
| and
Paraxylene manufacturing further contributed to this situation, However,
during the third quarter |
|
| of
this calendar year, market touched the bottom and stabilised a bit but sudden
technical problems |
|
| in
different PTA plants who were operating at optimal capacity without giving
appropriate maintenance |
|
| time
again created temporary shortfall during the fourth quarter. Since the huge
capacity of |
|
| Paraxylene,
PTA and Polyester is in various stages of implementation around the globe,
therefore, |
|
| future
scenario appears to be in favour of consumers, |
|
|
| Future
Plans: |
|
| The
Board of Directors is seriously considering new Investment opportunities and
diversification of |
|
| business
and would very soon announce the plan regarding its future business expansion
and strategy. |
|
|
| Persistent
discriminatory policies against the Company: |
|
| The
frequent changes in policies of the government through budget, series of mini
budgets and sudden |
|
| shocks
of devaluation have resulted in additional sufferings to your Company. |
|
|
| As
you are well aware, the primary reason for setting up the plant in NWFP was
the availability of area- |
| specific
incentives which, given the large capital outlay and the incremental
operating costs arising |
|
| from
the location, justified the project's feasibility. The overseas and Pakistani
sponsors of the Company |
| sought
comfort in the assurances that these incentives were provided legal cover
under the |
|
| 'Protection of Economic Reforms Act, 1992'. |
|
|
| The
Company was still contesting with the Government regarding 12.5% Sales Tax
which was levied on |
|
| imported
raw materials in 1992, only six months after its commercial operations,
whereas imported raw |
|
| materials
of Polyester Industry was exempt from Sales Tax since 1981 |
|
|
| The
Sales Tax was later increased to 15% In 1994, thereby removing the very
reason for placing the plant |
| In
the under developed area of NWFP. |
|
|
| Therefore,
it came as a great shock when in the Budget 1995-96, the Federal Government
once again |
|
| exclusively
aiming at your Company, reduced the Sales Tax on finished product from 15% to
10% and |
|
| imposed
Excise Duty of 6% on locally produced PSF, while retaining Sales Tax on
import of its raw |
|
| materials
at 15%. The imposition of Excise Duty on the sale of finished goods caused a
direct erosion |
|
| of
your Company's profitability, as it created an additional cost equal to 5% of
total revenues. This step |
| of
the Government was again taken at the behest of our competitors who
instigated the Government |
|
| functionaries
against your Company under the slogan of 'level playing field' and suggested
the |
|
| innovative
idea as to how to renege from the sovereign commitments. |
|
|
| This
has not only washed out our incentive totally but it had also placed your
Company in much adverse |
|
| situation
as compared to other PSF manufacturers situated outside the exempt areas who
were able |
|
| to
claim refund of Sales Tax paid at input stage as input tax exceeded the
output tax. Similarly, your |
|
| Company
had to pay higher Excise Duty due to its higher base price as Excise Duty is
calculated on |
|
| the
basis of price per Kg. net of Sales Tax on finished goods, This fiscal
measure resulted in a loss of |
| revenue
of Rs. 89.4 million to your Company in addition to complete erosion of Sales
Tax incentive. This |
| Is
how the champions of 'fair play' and 'level playing field' managed to make
the same playing field |
|
| unlevelled
for your Company, |
|
|
| The
Budget of 1996-97 delivered the final blow to your Company when the Sales Tax
was imposed on |
|
| the
Textile Industry. Prior to 1996-97 budget, your Company was issuing Invoices
to its customers against |
| "exempt
supply" i.e. customers could claim Sales Tax adjustment on the basis of
such invoices, |
|
| However,
the right was never exercised as the Textile Industry was exempt from the
payment of Sales |
|
| Tax,
In 1996-97 budget, sales tax has been levied on the sale of domestically
produced textile products |
|
| Including
yarn, This has created a requirement for the customers of your Company to
request for a sales |
|
| tax
paid invoice for their purchases. |
|
|
| At
the same time Clause (iv) of Sub Section (2) of Section 7 of the Sales Tax
Act, 1990 has been amended |
| in
such a manner that a purchaser can no longer claim Sales Tax adjustment
against an Invoice issued |
|
| as
"exempt supply". Therefore, your Company was at a tremendous
disadvantage as its invoices |
|
| could
not be used by its customers to adjust their Sales Tax payments, Due to this
glaring case of pre- |
|
| emptory
discrimination, your Company was compelled to relinquish its right to Sales
Tax exemption |
|
| against
all norms of natural justice, equity, fair play and established doctrine of
promissory estoppel. |
|
| It
is evident from the aforementioned facts that your Company has been
methodically persecuted |
|
| and
placed into a tremendous disadvantage compared to other PSF players in the
industry. Its area- |
|
| specific
incentives have been systematically removed and it has been forced to pay
Sales Tax in order |
|
| to
be able to sell its output, In the first instance, it may seem that your
Company is now at par with other |
| manufacturers,
However, the things are divergent as your Company has to bear high additional
costs |
|
| like
transportation of row materials to factory which is about 1500 km from the
port, freight cost of |
|
| finished
product to customers which are located at a distance of 400 km and
incremental salaries by |
|
| way
of hardship allowance to highly trained technical staff. However, your
Company is zealously |
|
| pursuing
its case with the government and judicial courts in order to obtain its
vested right with regard |
| to
the area-specific incentive. |
|
|
| The
Company is still continuing its efforts to convince the government to
implement the Arbitration |
|
| Award
given in its favour. Your Company has been sending distress signals to the
Federal Government |
|
| on
account of erosion of the level of exemption through the Government
Notifications. |
|
|
| Need
of Anti-Dumping Legislation: |
|
| Whenever
new industrial capacity came on line in Pakistan. it has been followed up by
a spate of |
|
| dumping
of PSF from manufacturers to discourage future formation of capacity in order
to safeguard |
|
| their
interests in our market, The price of PSF in the international markets has
been consistently higher |
| than
the CNF prices being offered in Pakistan by such foreign suppliers, The
disparity in prices clearly |
| reflect
that international manufacturers are dumping their output in Pakistan at a
significant discount |
|
| to
global prices. |
|
|
| The
unchecked and reckless spate of dumping of PSF is resulting in the ruination
of PSF manufacturing |
|
| companies
in the country. The damage is being caused due to lack of availability of an
anti-dumping |
|
| legislation
to arrest the activities of rogue exporters and apathy on the part of the
Government to |
|
| understand
the situation. So for, the industry has successfully tackled these issues but
due to lack of |
|
| protective
legislation available to safeguard the local industry, the dumping of PSF in
the time of |
|
| recession
all around the world in the PSF Industry has delivered a damaging blow to the
local PSF |
|
| Industry. |
|
|
| The
Government should immediately formulate anti-dumping laws, as is a normal
practice in various |
|
| countries,
to stop this monster of dumping from devouring the entire PSF Industry and to
protect |
|
| domestic
PSF manufacturers from being completely wiped out by global players. However,
in the |
|
| interim,
additional protective duty should be imposed on imported PSF while the
anti-dumping |
|
| legislation
is being developed. |
|
|
| Preferential
Treatment to Gadoon Industries is supporting Foreign Suppliers: |
|
| The
regulations covering Gadoon Amazai Industrial Estate allow the spinners to
import raw materials |
|
| including
PSF with a 2,5% concession from all import levies. This industrial estate was
established at a time |
| when
there was a shortage of domestic PSF capacity and imports were used to bridge
the gap |
|
| between
the total demand and supply of PSF. Pakistan has now reached self-sufficiency
in the |
|
| production
of PSF. However, the manufacturers in this industrial estate are not using
domestic PSF as |
|
| it
is very expensive compared to the imported PSF due to the concession
available to them. The |
|
| spinners
in this industrial estate import over 15,000 tons per annum of PSF. In view
of the increased |
|
| capacity
coming on stream soon, there will be tremendous over-supply of PSF and,
therefore, it is |
|
| suggested
that the Government while retaining the benefits of Gadoon Amazoi Industrial
Estate, |
|
| should
allow the spinners to procure PSF from the local market on similar terms so
as to bring local PSF |
| at
par with imported PSF, as the current measures tantamount to serving and
protecting the overseas |
|
| PSF
producers and their exports into our country. |
|
|
| Future
Prospects:- |
|
| It
is expected that Polyester Industry will see comparatively greater stability
as compared to complete |
|
| chaos
last year. Uncertainty in raw materials supply and cost will stabilise to
some extent. However, the |
| economy
as well as the Polyester Industry has yet to come out from the clouds of
uncertainty. We have |
|
| already
seen over 12% devaluation of Pak Rupee against US Dollar during current
fiscal year and there |
|
| are
continuous rumours of further devaluation. Ever-rising inflation, constant
increase in fuel, power |
|
| charges
and borrowing cost and increase in excise duty on telecommunication services
are adversely |
|
| affecting
the margins. |
|
|
| Only
the strong companies will be able to stand up to the challenge whilst weak
companies having |
|
| inferior
and deficient technology will suffer more. Your Company will have to make
extraordinary |
|
| efforts
to encounter diverse difficulties which are of commercial nature as well as
unethical movements |
|
| of
competitors and undue pressures from the Textile lobby, Apart from this,
another challenge would |
|
| arise
from the over-supply situation when the new PSF capacities will commence
operations. However, |
|
| in
spite of these odds, we are still confident that we will be able to face the
challenges courageously, |
| as
we have unwavering faith and belief in Almighty Allah's blessings, support
and guidance. |
|
| Alhamdolillah,
your Company having sound potential will, Inshallah, emerge successful in
this evolving |
|
| scenario. |
|
|
| New
Textile Package: |
|
| The
caretaker Government has announced on 23 November 1996 a new Textile Package
in which |
|
| certain
steps have been token regarding Textile and Polyester Industry in order to
put them back on |
|
| track.
However, the policy is aimed primarily at providing boost to the Textile
Industry and stops short |
| from
addressing the issues faced by the Polyester Industry. |
|
|
| The
Government has announced removal of Regulatory Duty of 10% levied on imports
of PTA and MEG |
|
| while
at the same time, protective duty on imported PSF has been reduced from 15%
to 5% besides |
|
| Excise
Duty of 5% levied on local sales of PSF has also been removed, a notification
for which is |
|
| expected
to be issued very soon. There is no net effect on the existing protection
level of Polyester |
|
| Industry
as the impact of removal of Regulatory Duty on raw materials and Excise Duty
on finished |
|
| product
as been nullified by reduction of Regulatory Duty on imported PSF. |
|
|
| The
Polyester Industry boast of second highest investment in the county after
power projects. The major |
|
| ailment
of Textile Industry is consecutive cotton crop failures, the Polyester
Industry has supported |
|
| Textile
Industry by providing an alternate source of cheap raw material i.e. PSF. The
local price of PSF |
| has
always been pegged below that of imported PSF; and at no time, Polyester
Industry tried to take |
|
| advantage
of higher prices in the international market; even during the last year due
to upsurge in |
|
| global
PSF market, local PSF manufacturers maintained their prices at 15-20% lower
level- a fact which |
|
| Textile
Industry cannot deny. |
|
|
| The
misinformation has been generally spread that profits made by the domestic
Polyester Industry |
|
| have
been at the expense of Textile manufacturers. However, this is completely
untrue and it is |
|
| incorrect
to assume that the profits of one sector have come from those of another. The
fact remains |
|
| that
during the successive cotton crop failures of 1992-95, it was the presence of
this large domestic |
|
| capacity
of PSF that averted a complete disaster for the Textile Industry by
consistently making PSF |
|
| available
at a discount compared with imported PSF. Usage of PSF by the Textile
Industry also |
|
| generated
valuable foreign exchange by increasing exports. In fact, the domestic
Polyester Industry |
|
| has
made very significant contributions to the country and most of the benefits
that have accrued from |
|
| the
growth in PSF usage have to the Textile industry. |
|
|
| It
is imperative that the protective duty differential between imported PSF and
its main raw materials |
|
| should
be maintained at minimum 15% to recognise unique Pakistani cost (lack of
infrastructure, high |
|
| interest
rates, fuel and energy cost, etc.), the capital-intensive nature of this
industry and adding up of |
| new
capacities. Soon, the new capacities of Ibrahim Fibre. ICI Expansion and full
capacity of Dhan |
|
| Fibres
shall also come on stream, thus increasing the local production of PSF
available for 1997 to |
|
| 389,500
tons against the expected demand of 220,000 tons. |
|
|
| Note
of Thanks: |
|
| The
Board puts on record its gratitude to its valued shareholders, federal and
provincial government |
|
| functionaries,
banks, development financial institutions and customers of Salsabil, whose
cooperation, |
|
| unwavering
support and patronage have enabled the Company to achieve the desired
results. |
|
|
| The
Board also express its thanks for the valuable services, loyalty and laudable
efforts rendered by |
|
| the
executives, staff members and workers of the Company, during the year under
review, and wishes |
|
| to
place on record its appreciation for the same. |
|
|
| Auditors: |
|
| The
Auditors of your Company M/s. Faruq Ali and Company, Chartered Accountants,
and Messers |
|
| Feroze
Sharif Tariq and Company, Chartered Accountants, retire and offer their
services for re- |
|
| appointment
for the ensuing year on the same remuneration. |
|
|
| Conclusion: |
|
| In
conclusion, we bow, beg and pray to Almighty Allah, Rahman-e-Rahim, in the
name of our beloved |
|
| prophet,
Muhammed, peace be upon him, for continued showering of His Blessings,
Guidance, |
|
| Strength,
Health and Prosperity on us, our Company, Country and Nation; and also pray
to Almighty |
|
| Allah
to bestow peace, harmony, brotherhood and unity in true Islamic spirit to the
whole of Muslim |
|
| Ummah,
Ameen, Summa-Ameen. |
|
|
| LO-MY
LORD IS INDEED HEARER OF PRAYER (HOLY QURAN) |
|
|
| For
and on behalf of the Board of Directors |
|
| DEWAN
ZIAUR REHMAN FAROOQUI |
|
| President
/ Chief Executive |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed Balance Sheet of Dewan Salmon Fibre Limited, as at
30 June, |
|
| 1996
and the related Profit and Loss Account and Cash Flow Statement 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 purpose 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 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 change as stated |
|
| in
note 2.7 with which we concur; |
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the Company's |
|
| business; and |
|
