| Millat Tractors Limited |
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(Annual Report 1996) |
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| Contents |
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| Notice
of Meeting |
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6 |
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| Directors'
Report to the |
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| Shareholders |
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7 |
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| Chairman's
Review |
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9 |
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| Decade
at a Glance |
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18 |
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| Auditors'
Report to the Members |
21 |
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| Balance
Sheet |
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22 |
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| Profit
and Loss Account |
24 |
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| Statement
of Changes in |
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| Financial
Position |
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25 |
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| Notes
to the Accounts |
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26 |
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| Pattern
of Shareholding |
47 |
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| Accounts
of Subsidiary |
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Board of Directors |
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| Sikandar
Mustafa Khan |
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| Chairman/Chief
Executive |
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| EMPLOYEES
GROUP |
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| Latif
Khalid Hashmi |
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| Sohail
Bashir |
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| Laeeq
Uddin Ansari |
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| S.R.
Bokhari |
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| Rana
Mohammad Siddique |
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| Mian
Mohammad Saleem |
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| Mian
Mohammad Saleem |
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| Company
Secretary |
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| OTHERS |
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| Mian
Mohammad Mansha |
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| (MCB
Nominee) |
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| A.K.M.
Sayeed |
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| (NIT
Nominee) |
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| Omer
Mahmood Rana |
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| Management |
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| Sikandar
Mustafa Khan |
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| Chairman
/ Chief Executive |
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| Latif
Khalid Hashmi |
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| Director
Marketing |
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| Sohail
Bashir Rana |
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| Director
Technical |
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| Laeeq
Uddin Ansari |
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| Director
Finance |
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| Mian
Mohammad Saleem |
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| Gen.
Manager Finance |
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| S.R.
Bokhari |
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| Gen.
Manager SA & CP |
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| Bashir
A. Chaudhry |
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| Gen.
Manager Marketing |
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| Shaukat Ali Sheikh |
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| Gen.
Manager Production Control |
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| Mubashar
Iqbal |
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| Gen.
Manager Admn / Purchase |
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| M.
Aslam Khokhar |
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| Dy.
Gen. Manager HRD |
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| Pir
Asad Iqbal |
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| Dy.
Gen. Manager R & D |
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| Javed
Munir |
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| Dy.
Gen. Manager Finance |
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Notice of Meeting |
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| Notice
is hereby given that 33rd Annual |
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| General
Meeting of Millat Tractors Limited |
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| will
be held at the Company's Registered |
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| Office,
9 KM. Sheikhupura Road, Shahdara, |
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| Lahore,
on Monday, December 30, 1996 |
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| at
4 P.M. to transact the following business: |
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| 1.
To confirm minutes of the 32nd Annual |
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| General
Meeting. |
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| 2.
To receive, consider and adopt the audited |
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| accounts
of the Company for the year |
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| ended
June 30, 1996, together with the |
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| Directors'
and Auditors' Reports thereon. |
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| 3.
To approve payment of cash dividend at |
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rate of Rs. 7.50 per share (75%). |
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| 4.
To appoint auditors and fix their |
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| remuneration
for the year ending June 30, |
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| 1997.
The present joint auditors M/S |
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| Ilyas
Saleem & Co. Chartered |
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| Accountants
and M/S Ford, Rhodes, |
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| Robson,
Morrow, Chartered Accountants, |
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| retire
and being eligible offer themselves |
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| for
re - appointment. |
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| 5.
To transact any other business with the |
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| permission
of the Chair. |
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| NOTES |
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| 1-
The share transfer books of the Company |
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| will
remain closed from December 12, 1996 |
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| to
December 31, 1996 (both days inclusive) |
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| and
no transfer will be accepted during this |
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| period.
The members whose names appear |
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| in
the register of members as at the close |
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| of
business on December 11, 1996 will |
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| qualify
for the payment of cash dividend. |
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| 2-
A member entitled to attend and vote at |
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| this
meeting may appoint another member |
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| as
his/her proxy to attend the meeting and |
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| vote
for him/her. Proxies in order to be |
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| effective
must be received by the Company |
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| not
less than 48 hours before the meeting. |
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| 3-
Shareholders are requested to notify the |
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| change
of address, if any, immediately. |
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By order of the Board |
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| Lahore |
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Mian Muhammad Saleem |
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| Dec.
8, 1996 |
Company Secretary |
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Directors Report to the
Shareholders |
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| Your
directors have the pleasure to lay before |
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| you
their 33rd report together with audited |
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| accounts
of the company for the year ended |
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| June30,
1996. |
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| APPROPRIATIONS |
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| Your
directors recommend the payment of cash |
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| dividend
at the rate of Rs. 7.50 per share (75%) |
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| out
of the profits available for appropriations. |
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| Accordingly,
the following appropriations |
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| have
been made: |
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| ACCOUNTS |
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(Rupees in thousands) |
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| Profit
before taxation |
159,213 |
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| Less:
Taxation |
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62,400 |
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-------- |
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| Profit
after taxation |
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96,813 |
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| Add:
Unappropriated profit |
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| brought
forward |
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476 |
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-------- |
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| Profit
available for |
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| appropriations |
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97,289 |
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| Less:
Appropriations |
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| Transfer
to general reserves |
37,000 |
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| Proposed
dividend @ 75% |
60,070 |
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97,070 |
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| Unappropriated
profit |
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| carried
forward |
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219 |
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| AUDITORS |
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| The
present joint auditors Messrs Ilyas Saleem |
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| &
Company, Chartered Accountants, and |
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| Messrs
Ford, Rhodes, Robson, Morrow, |
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| Chartered
Accountants, retire and being |
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| eligible
offer themselves for re-appointment. |
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| CHAIRMAN'S
REVIEW |
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| The
directors of your company endorse the |
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| contents
of the Chairman's review dealing with |
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| the
company affairs which is included in the |
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| Annual
Report. |
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| PATTERN
OF SHAREHOLDING |
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| The
pattern of shareholding is annexed. |
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Chairman's Review |
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| Dear
Shareholders: |
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| It
is a privilege and immense pleasure for me to |
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| welcome
you to the 33rd Annual General |
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| Meeting
of the Company and present the |
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| audited
accounts and Report of your Board of |
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| Directors
for the year ended June 30, 1996. |
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| By
the grace of Almighty Allah and the |
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| dedicated
efforts of the Company employees, |
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| the
year 1996 has proved to be another year of |
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| achievements.
Your Company gained further |
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| heights
in various areas of its activities as it |
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| recorded
a pre-tax profit of Rs. 159.2 million |
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| on
a sale of over Rs. 3 billion. The Company |
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| generated
major portion of the revenue through |
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| sale
of tractors on cash basis and also |
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| successful
marketing of its multi-application |
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| products
like Gensets, Forklift Trucks & Prime |
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| Movers
valuing Rs. 92.2 million which, of |
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| course,
augurs well for the Company's future. |
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| In
my review of 1992 when the Company was |
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| transferred
to MTL Employees under the |
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| privatisation
policy of the Government, I had |
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| assured
the shareholders that destiny of the |
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| Company
was now in the safe hands of the |
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| employees
management who had accepted the |
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| challenge
with new determination and renewed |
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| dedication
to lift the Company to even greater |
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| heights
of glory in future. I am now pleased to |
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| record
that we feel we have lived upto your |
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| expectations
in further improving the |
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| performance
of the Company. |
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| FINANCIAL
RESULTS |
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| The
prudent employment of financial |
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| resources
and efficiently managing material |
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| and
other inputs, the gross profit ratio |
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| improved
from 8.1% to 11.1% during the year |
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| under
review. Financial charges went upto |
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| Rs.
33.5 million as against Rs. 23.8 million of |
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| last
year due to piling up of inventory in view |
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| of
Government's promise to include local |
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| tractor
manufacturers in the Awami Tractor |
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| Scheme
which did not materialise. The |
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| increase
in operating expenses was due mainly |
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| to
the charge to Employees Pension Fund and |
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| other
provisions made during the year. The |
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| robust
financial health during the year under |
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| review
improved the current ratio to 1.3:1. |
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| Earning
per share |
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| increased
from |
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| Rs.
10.00 per |
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| share
to Rs. 12.00 |
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| and
the break-up |
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| value
of a share |
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| rose
to Rs. 57.00 |
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| from
Rs. 52.00 of |
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| last
year, while all |
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| other
financial |
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| indicators
also |
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| showed
a steep rise. |
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| After
making provision for taxation of Rs. 62.4 |
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| million,
the after-tax profit of Rs. 97.3 million |
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| was
available for appropriation. Your Board of |
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| Directors
thus feels pleasure in recommending |
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| a
cash dividend of Rs. 7.50 per share (75%) for |
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| the
year 1995-96. |
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| SELLING
OPERATIONS |
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| During
the year under review, tractor industry |
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| registered
a drop of 42% through ADBP |
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| funding.
Total tractor sale in the country was |
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| 25,813
units inclusive of 9,520 units sold |
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| under
the Awami Tractor Scheme. The local |
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| industry
thus contributed 16,293 units out of |
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| which
we recorded a sale of 9,628 units to |
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| maintain
our market share of 60%. |
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| In
terms of units, however, our sale dropped by |
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| 690
from 10,318 units mainly due to restricted |
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| ADBP
loaning and influx of imported CBU |
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| tractors
under the A.T.S. Our Tractor prices |
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| also
increased because of the October, 1995 |
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| devaluation
and imposition of 10% regulatory |
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| duty
which took considerable time for the |
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| market
to stabilize. |
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| AWAMI
TRACTOR SCHEME |
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| The
Awami Tractor Scheme was launched by |
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| the
Government in 1994 allowing import of |
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| completely
built up tractors without any duty |
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| and
sales tax. Under this scheme 20,000 trac- |
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| tors
were imported for which letters of credit |
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| were
established by ADBP thereby relieving |
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| the
importers of the working capital require- |
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| ments
and financial risk. Taking into account |
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| the
concessions provided to the importers of |
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| CBU
tractors, the country had to pay a higher |
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| price
for each imported tractor which allowed |
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| a
subsidy of almost Rs. 2 billion, and Rs. 2.8 |
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| billion
spent in valuable foreign exchange. |
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| These
funds could have been more prudently |
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| invested
to the betterment of the local tractor |
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| industry
which is presently under crisis. |
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| TECHNICAL
OPERATIONS |
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| Technical
Department's activities continued to |
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| focus
on providing quality products and |
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| services to the
customers with overall produc- |
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| tivity improvement.
However, uncertainty in |
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| the market due to the
induction of ATS |
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| and devaluation, led
to erratic production |
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| which is making the
entire tractor industry |
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| inefficient and
manufacturing more expensive. |
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| Pakistan Steel Mills proved
to be an |
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| unreliable source of
raw materials in terms |
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| of
quality, supply & pricing. Despite all these |
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| constraints
we managed to produce 9,591 units against |
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| 10,199
units produced during the last year. |
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| DIVERSIFICATION |
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| It
was through well co-ordinated efforts that |
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| goals
of progressive manufacturing of |
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| Diesel
Generating Sets, Forklift Trucks and |
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| other
multi-application products have been |
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| achieved.
We added special features in the |
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| already
developed Generating Set to meet the |
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| specific
requirements of Pakistan Telec- |
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| ommunication
Company Limited. This |
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| breakthrough
enabled the Company to com- |
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| pete
with the imported Genders and resulted in |
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| securing
orders from individual customers and |
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| a
bulk order from client like Pakistan |
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| Telecommunication
Company Limited. |
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| The
self propelled Combine Harvester |
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| indigenously
developed and manufactured |
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| after several years
of tests and trials was |
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| successfully
commissioned for commercial |
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| sale. The feasibility
of its operations was |
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| practically
demonstrated & hailed by the |
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| Minister
for Food and Agriculture alongwith |
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| progressive
farmers who witnessed its field |
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| test
for wheat harvesting. Your Company feels |
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| that
it is a major achievement towards |
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| indigenization
of a highly sophisticated |
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| engineering
product which will go a long |
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| way
towards achieving self-sufficiency in |
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| food
and saving valuable foreign exchange by |
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| providing
a competitive priced product. |
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| EMPLOYEES'
WELFARE SCHEMES |
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| Maintenance
of conducive, cordial and |
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| constructive
relations with the workforce was |
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| the
major factor towards achieving appreciable |
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| all
round performance exhibited through high |
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| standards
of professionalism and responsibility |
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| at
all levels. Responding to staff's loyalty |
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| and
dedication, the Company has introduced |
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| Employees'
Children Scholarship Scheme, |
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| Benevolent
Fund Scheme and Pension Fund. |
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| While
Scholarship Scheme helps promote |
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| education,
Benevolent Fund Scheme aims at |
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| providing
financial assistance to the needy |
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| employees.
The introduction and implementa- |
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| tion
of the Pension Scheme during the current |
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| financial
year is in line with the already |
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| established
welfare schemes which are part of |
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| Management's
resolve to bring a tangible |
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| change
in their financial and social set-up. |
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| It
is fervently hoped that these |
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| welfare
schemes will prove to be a |
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| driving
force in motivating the |
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| employees
to be more productive, |
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| dedicated
& loyal to their institution. |
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| STEPS
FOR FUTURE |
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|
1996 |
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| We
are well aware of the vicious circle |
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| threatening
the tractor industry. The Company |
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| is,
therefore, enhancing its diversification |
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| capabilities
to maintain its role as market |
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| leaders
through customer satisfaction and |
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| quality
products. We have already reaped a |
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| good
harvest through our diversification plans |
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| as
the Company managed to sell Gen. Sets, |
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| Prime
Movers & Forklift Trucks valuing |
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| Rs.
92.2 million against Rs. 27.5 million of last |
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| year
which is up by 235%. Our ambitious |
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| Combine
Harvester project, which was under- |
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| taken
in 1994 using indigenous technology and |
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| based
on tractor components already manufac- |
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| tured
locally, has gained momentum and we |
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| have
manufactured a few units which are |
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| available
to farmers at far lower prices than |
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| imported.
In addition, the Company's thrust |
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| would
be on improving its tractor sale on cash |
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| basis
to reduce dependence on ADBP funding |
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| and
thus ensure a secured future. |
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| GRATITUDES |
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| Summing
up my review I would like to |
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| place
on record my appreciation for the |
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| untiring
efforts of MTL employees at all |
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| levels
which helped achieve our targets |
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| and
materialise our ambitious plans. I also |
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| acknowledge
the assistance and co-operation |
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| extended
by our dealers and vendors which |
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| was
instrumental in achieving appreciable |
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| results.
I am also indebted to our principals |
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| Massey
Ferguson and Perkins Engines for their |
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| assistance
and guidance. M/s. Beijing Forklift |
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| Truck
Company of China also deserve our |
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| gratitude
for promoting our diversification |
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| plans.
My thanks are due to the farming |
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| community
and all other institutions who |
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| reposed
confidence in our products & con- |
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| firmed
brand loyalty. My sincere thanks to the |
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| Company's
shareholders as well for whom we |
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| always
strive to protect their interest. May |
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| Allah
bless all those who are in any way |
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| related
to the Company. |
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|
Decade at a Glance |
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| INCOME |
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| Net
sales and income |
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| Profit
before tax |
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| Profit
after tax & extraordinary items |
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| Transfer
from reserve |
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| Less:
cash dividend |
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| Retained
in business |
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| FINANCIAL
POSITION |
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| Current
assets |
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| Less:
Current liabilities |
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| Net
working capital |
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| Fixed
assets - Net |
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|
|
| Investments |
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| Other
assets |
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| Less:
Long term debts |
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| Other
liabilities |
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| Shareholders'
equity |
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| REPRESENTED
BY: |
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| Share
capital |
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| Capital
reserve |
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| Revenue
reserve |
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|
| Unappropriated
profit |
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| NET
CAPITAL EMPLOYED |
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| STATISTICS |
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| Break-up
value of a share of Rs. 10/- each |
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| Dividend
(Rupees per share) |
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| Dividend
(Percentage) |
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| Bonus
issue / Right issue of shares |
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| Total
number of tractors sold |
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| RATIOS |
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| Current
assets to current liabilities |
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| Profit
before tax to sale and |
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| income
(Percentage) |
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| Return
on capital employed (Percentage) |
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| Return
on equity (Percentage) |
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| Debt
to equity |
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|
(Rupees in thousands) |
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|
| 1996 |
1995 |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
1988 |
1987 |
|
|
| 3330334 |
3003924 |
2481006 |
2347175 |
1494771 |
1529830 |
2017422 |
2153151 |
1608629 |
1384354 |
|
| 159213 |
126207 |
113912 |
94185 |
19293 |
55363 |
93131 |
112036 |
66461 |
54662 |
|
| 96813 |
81007 |
67898 |
53235 |
11203 |
33400 |
56143 |
62722 |
41257 |
31012 |
|
| - |
- |
- |
- |
15500 |
- |
- |
- |
- |
- |
|
|
| 60070 |
48056 |
44052 |
36042 |
13349 |
- |
20858 |
20858 |
14748 |
14748 |
|
| -------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
-------- |
|
| 36743 |
32951 |
23846 |
17193 |
13354 |
33400 |
35285 |
41864 |
26509 |
16264 |
|
| ======== |
======== |
======== |
======== |
======== |
======== |
======== |
======== |
======== |
======== |
|
|
| 855916 |
1130866 |
679918 |
788055 |
943146 |
826610 |
791129 |
584176 |
540600 |
435754 |
|
| 671291 |
972699 |
549444 |
665945 |
792574 |
632484 |
567243 |
346714 |
428208 |
371923 |
|
| 184625 |
158167 |
130474 |
122110 |
150572 |
194126 |
223886 |
237462 |
112392 |
63831 |
|
| 224124 |
230010 |
249282 |
259351 |
259698 |
232217 |
178983 |
141740 |
135605 |
138822 |
|
| 69116 |
65616 |
63616 |
63616 |
4000 |
4000 |
