| Karam Ceramics Limited |
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|
17TH ANNUAL REPORT |
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|
for the year ended 30
June 1996 |
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| Contents |
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| Company
Information |
|
2 |
|
|
| Notice
of Meeting |
|
3 |
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|
| Directors,
Report |
|
4 |
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|
| Auditors
Report |
|
5 |
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| Balance
Sheet |
|
6 - 7 |
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|
| Profit
and Loss Account |
|
8 |
|
|
| Statement
of Changes in Financial Position |
9 |
|
|
| Analysis
of Increase (Decrease) in Working Capital |
10 |
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|
| Notes
to the Accounts |
|
11 - 25 |
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|
| Pattern
of Shareholding |
|
26 |
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| Proxy Form |
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|
27 |
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|
Company Information |
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|
| BOARD
OF DIRECTORS |
|
| Shaban
Ali G. Kassim |
Chief Executive |
|
| Irshad
Ali S. Kassim |
|
| Munawar
Ali S. Kassim |
|
| Mariam
Shaban All |
|
| Shaheen
A. Rehman |
|
| Sakin
Noorallah |
|
| Amirall
H. Gangji |
|
| Sirajuddin
Ahmed |
ICP Nominee |
|
| S.
Faiq Hussain |
PLHC Nominee |
|
|
| COMPANY
SECRETARY |
|
| Ismail
Rajan |
|
|
| AUDITORS |
|
| Taseer
Hadi Khalid & Co. |
|
| Chartered
Accountants |
|
|
| Qavi & Co. |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Soneri
Bank Limited |
|
| Emirates
Bank International Limited |
|
| Askari
Bank Limited |
|
| Bank
of America |
|
| Citi
Bank N. A. |
|
|
| REGISTERED
OFFICE |
|
| BC-6,
Block-5,. Scheme-5, Kehkashan, Clifton, Karachi. |
|
|
| REGISTRAR
AND SHARE TRANSFER OFFICE |
|
| T.H.K.
Associates (Private) Limited |
|
| Ground
Floor, Sultan Trust Building No. 2, Beaumont Road, |
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| Karachi. |
|
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|
Notice of Meeting |
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| Notice
is hereby given that the 17th Annual General Meeting of the Company will be
held at the |
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| Registered
Office of the Company on Thursday 26th December, 1996 at 9.00 a.m. to
transact the |
|
| following
business :- |
|
|
| 1.
To confirm the minutes of the 16th Annual General Meeting held on November
22nd, 1995 |
|
|
| 2.
To consider and adopt the Audited Accounts of the Company for the year ended
June 30, 1996 |
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| along
with the Report of the Directors thereon. |
|
|
| 3.
To approve the payment of cash dividend to the shareholders @ 20% per share
as recommended |
|
| by
the Directors. |
|
|
| 4.
To appoint Auditors for the year 1997 and fix their remuneration. |
|
|
| 5.
To transact any other business with the permission of the Chairman. |
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|
By Order of the Board |
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|
ISMAIL RAJAN |
|
| KARACHI |
|
Company Secretary |
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| DECEMBER
5TH 1996 |
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|
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| NOTES: |
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| 1.
The Share Transfer Books of the company will remain closed from December 19,
1996 to December |
|
| 26,
1996 (Both days inclusive) dividend will be paid to the Members of the
company who are |
|
| registered
in the books of the company at the close of business on 18th December, 1996. |
|
|
| 2.
A member eligible to attend and vote at the meeting may appoint another
member as his/her proxy |
|
| to attend and vote on his/her behalf.
Proxies to be effective must be received by the company |
|
| not less than 48 hours before the time for
holding of the meeting. |
|
|
| 3.
Members are requested to communicate to the Company or the Registrar to the
Company of any |
|
| change
in their address. |
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|
|
|
Directors' Report |
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| The
Directors of your company have pleasure in submitting the report along with
the audited |
|
| accounts
for the year ended 30th June, 1996. |
|
|
| OPERATING
PERFORMANCE |
|
| By
the grace of Almighty Allah your company's net sales amounted to Rs.278.286
million for the year as |
|
| compared
to Rs.240.031 million in the immediate preceding year, and the pre-tax profit
amounted to |
|
| Rs.20.008
million as against Rs.19.032 million in the year ending June 1995. The
increase in sales in due |
|
| to
introduction of varieties and different sizes of tiles and sanitaryware and
increase' of prices. However, |
|
| inflationary
pressures continued to push the production cost up. |
|
|
| FINANCIAL
RESULTS AND APPROPRIATIONS |
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| Net
profit after tax for the year together with unappropriated profit brought
forward from previous years makes |
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| available
to directors for appropriation a total sum of Rs.45.888 million. Details of
the appropriation |
|
| recommended
by the directors are as under: |
|
|
|
Rupees |
|
|
| PROFIT
AFTER TAXATION |
|
10,264,043 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
35,623,832 |
|
|
-------- |
|
| AVAILABLE
FOR APPROPRIATION |
|
45,887,875 |
|
| APPROPRIATIONS: |
|
| PROPOSED |
|
| GASH
DIVIDEND @ 20% (1995 @ 20%) |
|
| ON
10,911,780 SHARES OF RS.10/- EACH |
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| AT
RS.-2/- PER SHARE |
|
21,823,560 |
|
|
-------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
24,064,315 |
|
|
======== |
|
| FUTURE
PROSPECTS |
|
|
|
| The
management is planning to go for an expansion of the tiles plant to increase
the production which has |
|
| good scope. |
|
|
| EMPLOYEES
RELATION |
|
| Relation
with labour remained cordial during the year. |
|
|
| AUDITORS |
|
| Our
present auditors M/S. TASEER HADI KHALID & CO., Chartered Accountants and
M/s. QAVI & CO., |
|
| Chartered
Accountants retire and offer themselves for reappointment. |
|
|
| APPRECIATION |
|
| The
directors take this opportunit9 to Thanks the members, the customers,
employees etc. For their co-operation |
|
| and
contribution towards the progress of the company and the financial
institution and banks for their guidance |
|
| from
time to time. |
|
|
On behalf of the |
|
|
Board of Directors |
|
|
|
SHABAN ALI G. KASSIM |
|
| November
3, 1996 |
|
Chief Executive |
|
|
|
|
Auditors Report to the
Members |
|
| We
have audited the annexed balance sheet of Karam Ceramics Limited as at 30
June 1996 |
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| and
the related profit and loss account and statement of changes in financial
position, together with |
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| 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 account together with the notes thereon
have been |
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| drawn
up in conformity with the Companies Ordinance, 1984 and are in agreement with |
|
| the
books of account and are further in accordance with accounting policies
consistently |
|
| applied; |
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the company's
business; |
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| and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year |
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| 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 and the statement of changes in financial |
|
| position, together with the notes forming
part thereof, 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 30 June 1996 and of the profit and the changes |
|
| in financial 'position for the year then
ended; and |
|
|
| (d)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was |
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| deducted
by the company and deposited in the Central Zakat Fund, established under
Section |
|
| 7
of that Ordinance. |
|
|
| QAVI & CO. |
|
TASEER HADI KHALID &
CO. |
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| CHARTERED
ACCOUNTANTS |
|
CHARTERED ACCOUNTANTS |
|
|
| KARACHI:
NOVEMBER 3, 1996 |
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|
|
|
|
Balance Sheet |
|
|
As at 30th June 1996 |
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|
|
|
1996 |
1995 |
|
|
NOTE |
Rupees |
Rupees |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Share
Capital |
|
| Authorised |
|
| 15,000,000
Ordinary Shares of Rupees 10/- each |
|
150,000,000 |
150,000,000 |
|
|
| Issued,
subscribed and paid-up |
|
3 |
109,117,800 |
109,117,800 |
|
| Unappropriated
profit |
|
|
24,064,315 |
35,623,832 |
|
|
|
-------- |
-------- |
|
|
|
133,182,115 |
144,741,632 |
|
| REDEEMABLE
CAPITAL -- Secured |
|
4 |
- |
7,488,212 |
|
| LONG
TERM AND DEFERRED LIABILITIES |
|
5 |
102,461,474 |
30,965,514 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
| Short
term finances under mark-up |
|
|
|
| arrangements
- Secured |
|
6 |
22,500,000 |
45,000,000 |
|
|
| Current/overdue
portion of redeemable capital, |
|
| long-term
and deferred liabilities |
|
7 |
10,721,981 |
25,855,335 |
|
|
| Creditors,
accrued expenses and other liabilities |
8 |
60,373,319 |
46,793,145 |
|
| Provision
for taxation |
|
8,554,320 |
7,667,189 |
|
| Unclaimed
dividend |
|
80,945 |
61,262 |
|
| Proposed
dividend |
|
21,823,560 |
21,823,560 |
|
|
-------- |
-------- |
|
|
124,054,125 |
147,200,491 |
|
| COMMITMENTS
AND CONTINGENCIES |
|
9 |
|
|
-------- |
-------- |
|
|
359,697,714 |
330,395,849 |
|
|
|
======== |
======== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
| Operating
Assets - At cost less |
|
| accumulated
depreciation |
|
10 |
253,487,391 |
223,967,250 |
|
|
|
|
| LONG
TERM PREPAYMENTS |
|
11 |
1,575,000 |
2,115,000 |
|
|
| CURRENT
ASSETS |
|
|
| Stores,
spares and loose tools |
|
12 |
1,074,541 |
98,010 |
|
| Stock
in trade |
|
13 |
48,578,227 |
61,773,680 |
|
| Trade
debts- Unsecured considered good |
|
18,530,520 |
13,608,036 |
|
| Loans,
advances, deposits, prepayments |
|
|
| and
other receivables |
|
14 |
7,985,920 |
12,979,071 |
|
|
| Cash
and bank balances |
|
15 |
28,466,115 |
15,854,802 |
|
|
-------- |
-------- |
|
|
|
104,635,323 |
104,313,599 |
|
|
-------- |
-------- |
|
|
359,697,714 |
330,395,849 |
|
|
======== |
======== |
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
Profit and Loss Account |
|
|
|
For the year ended 30th
June 1996 |
|
|
|
NOTE |
1996 |
1995 |
|
|
|
Rupees |
Rupees |
|
|
| SALES - Net |
|
16 |
278,286,462 |
240,030,812 |
|
| COST
OF SALES |
|
17 |
219,754,718 |
184,353,174 |
|
|
|
-------- |
-------- |
|
| GROSS
PROFIT |
|
|
58,531,744 |
55,677,638 |
|
| OTHER
INCOME |
|
18 |
1,233,509 |
598,314 |
|
|
|
-------- |
-------- |
|
|
59,765,253 |
56,275,952 |
|
|
| ADMINISTRATIVE, SELLING AND |
- |
|
| GENERAL
EXPENSES |
|
19 |
21,879,986 |
19,631,508 |
|
|
|
|
| FINANCIAL
CHARGES |
|
20 |
16,824,528 |
16,610,800 |
|
| WORKERS'
PROFIT PARTICIPATION FUND |
|
1,053,037 |
1,001,682 |
|
|
-------- |
-------- |
|
|
39,757,551 |
37,243,990 |
|
|
-------- |
-------- |
|
| PROFIT
BEFORE TAXATION |
|
20,007,702 |
19,031,962 |
|
| PROVISION
FOR TAXATION |
|
| Current
year |
|
6,250,972 |
2,800,000 |
|
| Prior year |
|
3,492,687 |
67,055 |
|
|
-------- |
-------- |
|
|
9,743,659 |
2,867,055 |
|
|
-------- |
-------- |
|
| PROFIT
AFTER TAXATION |
|
10,264,043 |
16,164,907 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
35,623,832 |
41,282,485 |
|
|
-------- |
-------- |
|
|
45,887,875 |
57,447,392 |
|
| APPROPRIATION: |
|
| Proposed
dividend 20% (1995: 20%) |
|
21,823,560 |
21,823,560 |
|
|
-------- |
-------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
24,064,315 |
35,623,832 |
|
|
======== |
======== |
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
Statement of Changes in
Financial Position |
|
|
For the year ended 30
June 1996 |
|
|
|
1996 |
1995 |
|
|
Rupees |
Rupees |
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
20,007,702 |
19,031,962 |
|
|
-------- |
-------- |
|
| Adjustments
for: |
|
|
| Depreciation |
|
28,964,631 |
25,626,404 |
|
| Provision
for staff gratuity |
|
1,973,074 |
3,054,339 |
|
| Charge
for Workers' profit participation fund |
|
1,053,037 |
1,001,682 |
|
| Interest
and markup expense |
|
15,864,991 |
16,205,077 |
|
| Profit
on sale of fixed assets |
|
(336,201) |
- |
|
| Return
on deposits |
|
(887,610) |
(554,177) |
|
| Movement
in long term prepayments |
|
540,000 |
180,000 |
|
|
-------- |
-------- |
|
|
47,171,922 |
45,513,325 |
|
|
-------- |
-------- |
|
|
67,179,624 |
64,545,287 |
|
|
| (Increase)
/ Decrease in operating assets |
|
| Stores
and spares |
|
(976,531) |
4,051 |
|
| Stock
in trade |
|
13,1.95,453 |
10,782,658 |
|
| Trade
debtors |
|
-4,922,484 |
6,777,105 |
|
| Loans,
advances, deposits, prepayments and |
|
|
|
| other
receivables |
|
(601,963) |
1,791,038 |
|
|
| Increase
/ (Decrease) in operating liabilities |
|
| Short
term finance under mark-up arrangements |
|
(22,500,000) |
(12,000,000) |
|
| Creditors,
accrued expenses and other liabilities |
|
13,528,819 |
(1,763,476) |
|
|
-------- |
-------- |
|
| Cash
generated from operations |
|
64,902,918 |
70,136,663 |
|
|
| Interest
and markup paid |
|
(15,842,049) |
(16,595,350) |
|
| Income
tax paid |
|
(3,315,716) |
(1,371,268) |
|
| Gratuity
paid |
|
(1,094,566) |
(363,024) |
|
| WPPF paid |
|
(1,024,624) |
(1,072,531) |
|
| Rent paid |
|
-- |
(900,000) |
|
|
-------- |
-------- |
|
| Net
cash flows from operating activities |
|
43,625,963 |
49,834,490 |
|
|
-------- |
-------- |
|
|
|
| Net
cash flows from operating activities |
|
43,625,963 |
49,834,490 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Capital
expenditure incurred |
|
(58,911,571) |
(38,934,281) |
|
|
| Return
on investment |
|
941,912 |
253,665 |
|
|
| Sales
proceeds of fixed assets |
|
| disposed
during the year |
|
763,000 |
-- |
|
|
-------- |
-------- |
|
| Net
cash flows from investing activities |
|
(57,206,659) |
(38,680,616) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Long
term finance under mark-up arrangements |
|
62,560,355 |
13,000,000 |
|
|
| Repayment
of redeemable capital, debentures and |
|
| long
term finance |
|
(14,564,469) |
(12,817,385) |
|
|
| Dividend
paid |
|
(21,803,877) |
(13,578,463) |
|
|
-------- |
-------- |
|
| Net
cash flows from financing activities |
|
26,192,009 |
(13,395,848) |
|
|
-------- |
-------- |
|
| Net
Increase /(decrease) in cash and bank balances |
|
12,611,313 |
(2,241,974) |
|
|
| Cash
and bank balances at beginning of the year |
|
15,854,802 |
18,096,776 |
|
|
-------- |
-------- |
|
| Cash
and bank balances at end of the year |
|
28,466,115 |
15,854,802 |
|
|
======== |
======== |
|
|
|
Notes to the Accounts |
|
|
For the year ended 30th
June, 1996 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| The
Company was incorporated in Pakistan on 8 April 1979 as a public limited
company under |
|
| the
Companies Act, 1913 (now Companies Ordinance, 1984). The shares of the
company are |
|
| quoted
on Karachi and Lahore Stock Exchanges. The principle activity of the company
is the |
|
| manufacture
and sale of sanitaryware, tiles and allied accessories. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention as modified
by |
|
| capitalisation
of certain exchange differences. |
|
|
| 2.2
Staff retirement benefits |
|
| The
company operates an unfunded gratuity scheme covering all non-management
employees |
|
| and
provisions are made annually to cover obligations under the scheme. |
|
|
| 2.4
Tangible fixed assets and depreciation |
|
| (a)
Operating assets are stated at cost (including exchange fluctuations-and
related |
|
| borrowing
cost) less accumulated depreciation, except freehold land which is stated |
|
| at
cost. Depreciation on operating assets is charged to income applying the
reducing |
|
| balance
method at the rates given in Note 10. |
|
|
| (b)
A full year's depreciation is charged on assets capitalised during the year,
while no |
|
| depreciation
is charged in the year assets are disposed off or scrapped. |
|
|
| (c)
Gains/losses on disposal of assets are included in income currently. |
|
|
| (d)
Normal repairs and maintenance are charged to income as and when incurred. |
|
|
| 2.4
Stores, spares and loose tools |
|
| These
have been valued at cost determined on first-in-first-out basis. |
|
|
| 2.5
Stock-in-trade |
|
| These
have been valued at lower of 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 business |
|
| less
estimated costs of completion and costs necessarily to be incurred in order
to make |
|
| the sale. |
|
|
| Stock
in transit is valued at invoice value. |
|
|
| 2.6
Trade debts |
|
| Known bad debts are written off, while
provisions are made for debts considered doubtful. |
|
|
| 2.7
Foreign currency transactions |
|
| Foreign
currency transactions are converted into rupees at the rate of exchange
prevailing |
|
| on
the date of the transaction. The assets and liabilities in foreign currency,
if any, are |
|
| translated
into rupees at the rate of exchange prevailing on the date of the balance
sheet. |
|
| The
exchange gains or losses are included in income currently. |
|
|
| 2.8
Taxation |
|
| The
charge for taxation, is based on taxable income at the current rates of
taxation, after |
|
| taking
into consideration available tax credits, rebates and tax losses, etc. The
company |
|
| accounts
for deferred taxation using the liability method on all major timing
differences |
|
| except
where these are not expected to reverse in the foreseeable future. However,
deferred |
|
| tax
debits are not incorporated in the accounts. |
|
|
| 2.9
Revenue recognition |
|
| Sales
are recorded on despatch of goods to customers. |
|
|
|
1996 |
1995 |
|
|
Rupees |
Rupees |
|
|
| 3.
ISSUED, SUBSCRIBED AND PAID-UP CAPITAL |
|
|
| 9,630,890 |
Ordinary shares of Rs.
10/- each |
|
|
fully paid in cash |
|
96,308,900 |
96,308,900 |
|
|
| 1,280,890 |
Ordinary shares of Rs.
10/- each |
|
|
issued as fully paid
bonus shares |
12,808,900 |
12,808,900 |
|
|
--------- |
--------- |
|
| 10,911,780 |
|
Rupees |
|
109,117,800 |
109,117,800 |
|
|
========= |
========= |
|
| 4.
REDEEMABLE CAPITAL -- Secured |
|
|
| Participation
term certificates |
4.10 |
-- |
2,500,000 |
|
| (participatory) |
|
|
| Term
finance certificates |
|
|
(non-participatory) |
4.20 |
-- |
4,988,212 |
|
|
--------- |
--------- |
|
|
Rupees |
-- |
7,488,212 |
|
|
========= |
========= |
|
|
|
| 4.1
Participation term certificates |
|
| (participatory) |
|
|
| Opening
balance |
|
5,000,000 |
7,500,000 |
|
| Less
:Paid during the year |
|
2,500,000 |
2,500,000 |
|
|
--------- |
--------- |
|
|
2,500,000 |
5,000,000 |
|
|
|
| Less
:Current portion |
|
| --
shown under current liabilities |
|
2,500,000 |
2,500,000 |
|
|
--------- |
--------- |
|
|
Rupees |
-- |
2,500,000 |
|
|
========= |
========= |
|
|
| 4.1.1.
Investment Corporation of Pakistan in association with other commercial banks
of |
|
| Pakistan named hereunder (collectively
called "SYNDICATE") have invested a sum |
|
| of Rs.20 million on profit and loss sharing
basis against issue of Participation Term |
|
| Certificates as follows: |
|
|
| SYNDICATE
MEMBERS |
|
AMOUNT INVESTED IN PARTICIPATION |
|
|
