| Nestle Milkpak Ltd. |
|
|
|
|
|
|
|
| (Annual
Report for the year ended June 30, 1996) |
|
|
| CONTENTS |
|
|
| Company
Information |
|
4 |
|
| Notice
of Annual General Meeting |
|
6 |
|
| Directors'
Report to the Shareholders |
|
7 |
|
| Graphs
and Company Activities |
|
19 |
|
| Auditors'
Report to the Members |
|
21 |
|
| Balance
Sheet |
|
22 |
|
| Profit
and Loss Account |
|
|
24 |
|
| Cash
flow Statement |
|
|
25 |
|
| Notes
to the Accounts |
|
26 |
|
| Pattern
of Shareholdings |
|
39 |
|
| Statement
U/S 237 of the Companies Ordinance l984 |
|
42 |
|
| Report
and Accounts of Kabirwala Dairy Limited |
|
43 |
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|
COMPANY INFORMATION |
|
| BOARD OF |
|
| DIRECTORS |
|
| Syed
Yawar Ali (Chairman) |
|
| Mr.
Graham Campbell (Managing Director) |
|
| Syed
Babar Ali |
|
| Mr.
M.W.O. Garrett |
|
| Mr.
J.D. Luthi |
|
| Mr.
Lim Khing Fong |
|
| Mr.
Tariq Hamid |
|
|
|
| COMPANY |
|
| SECRETARY |
|
| Mr.
M. Hanif Rajpur |
|
|
|
|
| AUDITORS |
|
| A.F.
Ferguson & Co. (Chartered Accountants) |
|
|
| LEGAL |
|
| ADVISORS |
|
| Hassan
& Hassan (Advocates) |
|
|
| BANKERS |
|
| ABN
Amro Bank |
|
| Bank
of America |
|
| Banque
Indosuez |
|
| Deutsche
Bank A.G. |
|
| ANZ
Grindlays Bank plc. |
|
| Muslim
Commercial Bank Ltd. |
|
|
|
| REGISTERED |
|
|
| OFFICE |
|
|
| 40-A,
Gulberg-V, Lahore- 11 |
|
| Phone:
5752582, 5754335-39 |
|
| Cable:
"NESTLE MP" Lahore-Pakistan |
|
|
| CORPOPATE |
|
| OFFICE |
|
| 308-Upper
Mall, Lahore PABX: 5757082-95 |
|
| Telex
No. 44616 MPL PK |
|
| Fax:
No. (042) 5711820 |
|
|
|
| FACTORY |
|
| 29th
Kilometer, Lahore- Sheikhupura Road, |
|
| Sheikhupura
- Pakistan |
|
| Phone:
(042) 6369321- 26 & 7228300 |
|
| Telex:
47237 MPL PK. |
|
| Fax:
(042) 6368710 |
|
|
| REGIONAL |
|
| SALES |
|
| OFFICES |
|
|
| KARACHI |
|
| Lackson
Square Building No.1, 5th Floor, Block C, R.A. Lines, |
|
| Sarwar
Shaheed Road, Karachi Cantt-Pakistan. |
|
| Phone:
5689815, 5689217, 5689712, 5689721-22 |
|
| Fax:
(021) 5682775 |
|
|
| MULTAN |
|
| Near
Al-Shifa Polyclinic, Chungi No l, Multan - Pakistan |
|
| Phone:
(061) 515061 |
|
|
| LAHORE |
|
| 40-A/B,
Zafar Ali Road, Gulberg-V, Lahore- 11 - Pakistan |
|
| Phone:
(042) 5752583, 5754335- 39 |
|
|
| ISLAMABAD |
|
| 74-W,
Yaseen Plaza, 1st Floor, Blue Area, Islamabad - Pakistan |
|
| Phone:
(051) 211874- 75, 819686-87 Fax: (051) 821899 |
|
|
| PESHAWAR |
|
| 2nd
Floor, City Tower, Jamrod Road, University Town, Peshawar |
|
| Pakistan
Phone: (0521) 840859, 43901 Fax: (0521)45516 |
|
|
| QUETTA |
|
| Hari
Krishan Road, Quetta - Pakistan |
|
| Phone:
(081) 825265 |
|
|
| HYDERABAD |
|
| 155-D,
Block-C, Latifabad-6, Hyderabad- Pakistan |
|
| Phone:
(0221) 860618 |
|
|
| FAISALABAD |
|
| House
No: 24-Y-103 Madina Town Faisalabad - Pakistan |
|
| Phone:
(0411)-726993 |
|
|
|
NOTICE OF MEETING |
|
| Notice
is hereby given that the 18th Annual General Meeting of Nestle Milkpak Ltd.,
will be held on |
|
| November
24, 1996 at 9.00 a.m. at the Registered Office of the Company at 40-A, Zafar
Alli Road, |
|
| Gulberg-V,
Lahore to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
| 1.
To confirm the minutes of the 17th Annual General Meeting held on March 31,
1996. |
|
|
|
| 2.
To receive, consider and approve the Audited Accounts of the Company for the
year ended |
|
| June 30, 1996, together with the Directors'
Report thereon. |
|
|
|
| 3.
To appoint Auditors of the Company and fix their remuneration. |
|
|
|
| 4.
To declare dividend. (The Directors have recommended that an interim dividend
of 40% i.e. |
|
| Rs.
4/- per share paid during the year to be treated as final dividend.) |
|
|
|
|
| SPECIAL
BUSINESS |
|
|
|
| 5.
To consider and pass with or without modification the following Resolution as
a |
|
| Special
resolution. |
|
|
| "RESOLVED
that amalgamation of wholly owned subsidiary company, i.e. |
|
| Kabirwala
Dairy Limited and the holding Company i.e. Nestle Milkpak Ltd., |
|
| be
and is hereby approved." |
|
|
| 6.
To transact any other business with the permission of the chair. |
|
|
| NOTES: |
|
| 1.
Share Transfer Books of the Company will remain closed from November 19, 1996
to |
|
| November 25,1996 (both days inclusive) for
the purpose of Annual General Meeting. |
|
|
| 2.
A member entitled to attend and vote at the General Meeting is entitled to
appoint another |
|
| member as proxy to attend and vote instead
of him/her. |
|
|
| 3.
The Instrument appointing a proxy must be received at the Registered Office
of the Company |
|
| not
later than forty eight (48) hours before the Meeting. |
|
|
| 4.
Shareholders are requested to notify the change of address, if any,
immediately. |
|
|
| STATEMENT
UNDER SECTION 160 (b) OF THE COMPANIES ORDINANCE 1984 |
|
|
| The
members' approval is being sought for the amalgamation of subsidiary company
and holding |
|
| company
in line with the management policy for improving operational efficiency as
both companies |
|
| are
being run under one management and engaged in same business. |
|
|
|
|
DIRECTORS' REPORT TO |
|
|
THE SHAREHOLDERS |
|
|
|
|
| The
Directors are pleased to submit their annual report along with the audited
financial statements of the |
|
| company
for the year ended June 30, 1996 |
|
|
| Inspite
of a difficult business climate and high inflation which considerably
impacted consumer purchasing |
|
| power,
your company performed well and in line with our expectations. This was
mainly a result of the high |
|
| quality
of our products and a noticeable contribution coming from new products
launched during the year. |
|
|
| The
total sales reached Rs. 2.86 bio as compared to Rs. 1.2 bio for the half year
which ended June 30, 1995 |
|
| thus
registering 30% growth. The company earned after tax profit of Rs. 184.78 mio
as against after tax |
|
| profit
of Rs. 37.92 mio made in the half year upto June 30, 1995. Strong operational
controls, intensified |
|
| selling
efforts and our high quality products continued to enjoy consumer confidence,
all combined, |
|
| helped
us to achieve good operating results for the year. |
|
|
| Fresh
milk continued to attract our major attention and in order to improve its
quality, maximum emphasis |
|
| was
placed on self collection, chilling milk in the field and reducing the
transportation time from milk |
|
| chilling
centers to the factories. These efforts will continue in future as well. |
|
|
| APPROPRIATIONS |
|
Rupees |
|
|
('000) |
|
|
|
|
|
| Net
profit for the year |
|
184,780 |
|
| Un-appropriated
profit brought forward |
140,592 |
|
|
|
--------- |
|
|
|
325,372 |
|
|
| Appropriations |
|
| Dividend
of Rs.4/- per share |
|
120,704 |
|
| Transfer
to general reserves |
|
200,000 |
|
|
|
--------- |
|
|
320,704 |
|
|
|
--------- |
|
| Un-
appropriated profit carried forward |
4,668 |
|
|
|
--------- |
|
|
| Dividend
at the rate of Rs.4/- per share (40%) was paid out of the profit for the year
under review. |
|
|
| EXPORTS |
|
| In
addition to exports of our company's products to Afghanistan and Bangladesh
the Company started |
|
| exporting,
by land, to Central Asian Republics. Total exports for the year under review
amounted to |
|
| US$
2.5 mio, this figure includes exports of US$ 1.0 mio to Uzbekistan. |
|
|
| APPOINTMENT
OF AUDITORS |
|
| The
present auditors M/s. A.F. Ferguson & Co. Chartered Accountants retired
and being eligible, offer |
|
| themselves
for re-election. |
|
|
| PERSONNEL |
|
| Development
and maintenance of a cordial relationship with the staff is of high priority
to the management. |
|
| The
Directors are pleased to accord their appreciation for the contribution made
by the staff for achieving |
|
| the
excellent results during the year. |
|
|
| FUTURE
OUTLOOK |
|
| Inspite
of difficult economic conditions, the company will invest over Rs. 2.00 bio
in new expansion projects |
|
| over
the next three years. This shows Nestle Group's commitment to develop new
business in the country. |
|
|
| AUDITORS'
REPORT |
|
| TO
THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Nestle Milkpak Limited as at June
30, 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 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 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; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year were |
|
| in
accordance with the objects of the company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the |
|
| balance sheet, profit and loss account and
the cash flow statement, 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 June 30, |
|
| 1996 and of the profit and the cash flow
for the year then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was deducted by |
|
| the
company and deposited in the Central Zakat Fund established under section 7
of that Ordinance. |
|
|
|
|
|
BALANCE SHEET |
|
|
AS AT JUNE 30, 1996 |
|
June 30, 1996 |
June 30, 1995 |
|
|
|
|
Rupees ('000) |
Rupees ('000) |
|
|
|
|
Notes |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
| Share
Capital |
|
|
|
| Authorised
Capital |
|
| 50,000,000
ordinary shares of Rs 10 each |
|
500,000 |
500,000 |
|
|
|
========= |
========= |
|
| Issued,
subscribed and paid up capital |
2 |
301,759 |
301,759 |
|
|
|
|
|
|
| Reserves |
|
3 |
600,407 |
400,407 |
|
| Accumulated
profit |
|
|
4,668 |
140,592 |
|
|
|
--------- |
--------- |
|
|
|
|
906,834 |
842,758 |
|
|
|
|
|
|
|
| NON-PARTICIPATORY
REDEEMABLE |
|
|
|
|
|
| CAPITAL
- SECURED |
|
4 |
80,996 |
99,615 |
|
|
|
|
|
|
| LONG
TERM LOANS- SECURED |
|
5 |
- |
25,833 |
|
|
|
|
|
|
| LIABILITY
FOR F1NANCE LEASE |
|
6 |
- |
937 |
|
|
|
|
25,818 |
|
| CURRENT
LIABILITIES |
|
|
|
25,419 |
|
|
|
|
|
| Current
maturity of |
|
|
|
|
| Non-participatory
redeemable capital - secured |
4 |
25,818 |
2,370 |
|
| Long
term loans |
|
5 |
25,833 |
25,419 |
|
| Liabilities
for finance lease |
|
6 |
937 |
2,370 |
|
| Finances
under mark up arrangements |
|
7 |
410,298 |
7,816 |
|
| Creditors,
accrued and other liabilities |
8 |
364,134 |
247,981 |
|
| Provision
for taxation |
|
|
78,144 |
59,855 |
|
|
|
|
--------- |
--------- |
|
|
|
|
905,164 |
369,259 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
9 |
|
|
|
|
|
--------- |
--------- |
|
|
|
|
1,892,994 |
1,338,402 |
|
|
|
|
========= |
========= |
|
|
BALANCE SHEET |
|
|
AS AT JUNE 30, 1996 |
|
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
| Operating
fixed assets |
|
10 |
806,557 |
456,144 |
|
| Capital
work in progress |
|
11 |
122,306 |
136,507 |
|
| Assets
subject to finance lease |
|
12 |
5,349 |
6,457 |
|
|
|
--------- |
--------- |
|
|
|
|
934,212 |
599,108 |
|
|
|
--------- |
--------- |
|
| LONG
TERM INVESTMENT |
|
13 |
7,274 |
7,274 |
|
| LONG
TERM DEPOSITS |
|
|
411 |
507 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
| Stores
and spares |
|
14 |
71,546 |
55,877 |
|
| Stock
in trade |
|
15 |
336,647 |
151,844 |
|
| Trade debts |
|
16 |
374,653 |
178,564 |
|
| Advances,
deposits, Prepayments and |
|
|
|
|
| other
receivables |
|
17 |
58,676 |
46,730 |
|
| Cash
and bank balances |
|
18 |
109,575 |
298,498 |
|
|
|
--------- |
--------- |
|
|
|
951,097 |
731,513 |
|
|
|
|
|
|
--------- |
--------- |
|
|
1,892,994 |
1,338,402 |
|
|
========= |
========= |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
PROFIT & LOSS ACCOUNT |
|
|
FOR THE YEAR ENDED |
|
|
JUNE 30, 1996 |
|
|
|
| Sales |
|
19 |
2,862,916 |
1,186,509 |
|
| Cost
of goods sold |
|
20 |
2,110,615 |
910,361 |
|
|
|
--------- |
--------- |
|
| Trading
profit |
|
|
752,301 |
276,148 |
|
| Administration
and selling expense |
|
21 |
425,921 |
191,084 |
|
|
|
|
--------- |
--------- |
|
| Operating
profit |
|
|
326,380 |
85,064 |
|
| Other
income |
|
22 |
17,007 |
8,466 |
|
|
|
|
--------- |
--------- |
|
|
|
343,387 |
93,530 |
|
|
|
|
|
|
| Financial
charges |
|
23 |
35,487 |
11,246 |
|
| Other
charges |
|
24 |
19,934 |
6,246 |
|
|
--------- |
--------- |
|
|
|
55,421 |
17,492 |
|
|
|
--------- |
--------- |
|
| Profit
before taxation |
|
287,966 |
76,038 |
|
| Provision
for taxation |
|
103,186 |
38,119 |
|
|
--------- |
--------- |
|
| Profit
after taxation |
|
184,780 |
37,919 |
|
| Accumulated
profit brought forward |
|
140,592 |
102,673 |
|
|
|
--------- |
--------- |
|
| Profit
available for appropriation |
|
325,372 |
140,592 |
|
|
|
|
|
| Appropriations |
|
|
|
| Dividend
Rs 4 (1995: Rs Nil) per shares |
|
120,704 |
- |
|
| Transfer
to general reserve |
|
200,000 |
- |
|
|
|
320,704 |
- |
|
|
--------- |
--------- |
|
| Accumulated
profit carried forward |
|
4,668 |
140,592 |
|
|
========= |
========= |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
CASH FLOW STATEMENT |
|
|
FOR THE YEAR ENDED |
|
|
|
|
JUNE 30, 1996 |
|
|
|
|
|
|
| Cash
flow from operating activities |
|
|
|
|
|
|
| Cash
generated from operations |
|
28 |
112,337 |
84,770 |
|
| Financial
charges paid |
|
(23,197) |
(11,239) |
|
| Net
decrease in long term deposits |
|
96 |
- |
|
| Taxes paid |
|
(84,897) |
(10,917) |
|
|
|
--------- |
--------- |
|
| Net
cash inflow from operating activities |
|
4,339 |
62,614 |
|
|
|
|
|
| Cash
flow from investing activities |
|
|
|
|
| Fixed
capital expenditure |
|
(436,649) |
(155,698) |
|
| Sale
proceeds of fixed assets |
|
7,239 |
627 |
|
|
--------- |
--------- |
|
| Net
cash (outflow) from investing activities |
|
(429,410) |
(155,071) |
|
| Cash
flow from financing activities |
|
|
|
| Issue
of shares |
|
- |
40,000 |
|
| Share
premium |
|
- |
260,000 |
|
| Payment
of finance lease liabilities |
|
(2,370) |
(1,164) |
|
| Repayment
of redeemable capital |
|
(18,619) |
(6,855) |
|
| Repayment
of long term loans and debentures |
|
(25,419) |
(12,694) |
|
| Dividends
paid |
|
(119,926) |
- |
|
|
|
--------- |
--------- |
|
| Net
cash out flow (in flow) from financing activities |
(166,334) |
279,287 |
|
|
|
--------- |
--------- |
|
| Net
(decrease)/increase in cash and cash equivalents |
(591,405) |
186,830 |
|
|
|
|
|
| Cash
and cash equivalents at the beginning of the year |
290,682 |
103,852 |
|
|
|
--------- |
--------- |
|
| Cash
and cash equivalents at the end of the year |
29 |
(300,723) |
290,682 |
|
|
|
========= |
========= |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
| 1.
Significant accounting policies |
|
| 1.1
Accounting convention |
|
|
| The
accounts have been prepared under the historical cost convention, modified by
capitalisation of certain |
|
| exchange
gains or losses referred to in note 1.8. |
|
|
| 1.2
Taxation |
|
| Provision
for current taxation is based on taxable income at the current rates of
taxation after taking into |
|
| account
available tax rebates and credits. |
|
|
|
| The
company accounts for deferred tax using the liability method on all
significant timing differences if these |
|
| are
likely to reverse in the foreseeable future and will not be replaced.
Provision for deferred tax for the year |
|
| is
not considered necessary as the timing differences are not likely to reverse
in the foreseeable future. |
|
|
|
| 1.3
Fixed Capital Expenditure |
|
|
|
|
| 1.3.1 Operating fixed assets |
|
| These
assets are stated at cost less accumulated depreciation, except for freehold
land which is stated at cost. |
|
| Cost
in relation to certain operating assets comprises historical cost and
exchange differences relating to |
|
| foreign
currency loans utilised for the acquisition of such assets. |
|
|
| Depreciation
is charged to income on the straight line method whereby cost of an asset is
written off over its |
|
| estimated
useful life. Significant additions or extensions to production facilities are
depreciated on a pro-rata |
|
| basis
for the period of use in the year of addition. |
|
|
| Maintenance
and repairs are charged to income as and when incurred. Major renewals and
improvements |
|
| are
capitalised and the assets so replaced, if any, are retired. Gains and losses
on deletion of assets are |
|
| included
in income. |
|
|
| 1.3.2. Capital Work-in-Progress |
|
| Capital
work-in-progress is stated at cost. |
|
|
|
| 1.3.3. Assets subject to
finance lease |
|
| These
assets are stated at the lower of present value of minimum lease payments and
the fair value of the |
|
| assets.
The related obligations of the lease are accounted for as liabilities. |
|
|
|
| Assets
acquired under finance lease are amortised over the useful life of the assets
on the straight line method. |
|
|
| 1.4
Long term investments |
|
| These
are stated at cost. |
|
|
|
|
| 1.5
Stores and spares |
|
| These
are valued principally at average cost. |
|
|
|
|
|
|
NOTES TO THE ACCOUNTS |
|
|
|
| 1.6
Stock in trade |
|
| Stock
in trade is stated at the lower of cost and net realisable value. Cost in
relation to local raw and |
|
| packing
materials is determined principally using the average method and in relation
to major imported |
|
| raw
material is determined using the first in first out (FIFO) method. Cost in
relation to work-in-process |
|
| and
finished goods includes an appropriate portion of production overheads. |
|
|
|
| Net
realisable value is the estimated selling price in the ordinary course of
business less cost necessary |
|
| to
be incurred in order to make a sale. |
|
|
|
| 1.7
Staff retirement benefits |
|
| The
company operates: |
|
| (a)
An approved funded pension scheme for its management staff. Monthly
contributions are made to |
|
| this
fund on the basis of actuarial recommendations at the rate of 12.5 percent of
basic salaries. |
|
| The
actuarial valuation of the scheme is carried out once in every two years with
the most recent |
|
| valuation
being carried out as at December 31, 1994. The fair value of the fund's
assets and |
|
| liabilities
for past services at the latest valuation date were Rs 6.514 million and Rs
9.178 million |
|
| respectively.
The future contribution rate of this fund includes allowance for amortizing
the deficit |
|
| over
the future working lifetime of employees. Attained Age Method, based on the
following |
|
| significant
assumptions, is used for valuation of this fund: |
|
|
|
|
| --
Expected rate of increase in salary level 15 percent per annum for first
three years |
|
| and
10 percent per annum thereafter. |
|
| --
Expected rate of return of 12 percent per annum; and |
|
|
|
| (b)
An approved contributory provident fund for all employees. |
|
|
|
|
| 1.8
Exchange differences on foreign currencies |
|
| Assets
and liabilities in foreign currencies are translated at the rates of exchange
prevailing at balance |
|
| sheet
date or at the contracted rates. Exchange gains and losses are charged to
income except those |
|
| referred
in note 1.3.1. |
|
|
| 1.9
Financial charges |
|
| Financial
expenses of long term loans are capitalised upto the date of commissioning of
the respective |
|
| plant
and machinery, acquired out of the proceeds of such loans. All other
financial expenses are charged |
|
| to income. |
|
