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PREMIER TOBACCO INDUSTRIES LIMITED
		(Report and Accounts January 1995-June 1996)
	CONTENTS
Company Information				2
Notice of Meeting				3
Directors' Report				4
Pattern of Shareholding				6
Auditors' Report to the Members				7
Balance Sheet				8
Profit and Loss Account				10
Cash Flow Statement				11
Notes to the Accounts				12
Statement & Report Under Section 237				25
Subsidiary Company's Accounts				26
Premier Tobacco Company (Pvt) Limited				27
Ten Years Financial Highlights				28
Form of Proxy
	COMPANY INFORMATION
BOARD OF DIRECTORS
IQBALALI LAKHANI			Chairman
AMIN MOHAMMED LAKHANI			Chief Executive
S. A. SAMAD			(Upto September 30, 1996)
E.A. NOMANI
JON BACKHOUSE			(Upto September 30, 1996)
PETER GEORGE GREGORY
CHRISTOPHER DENNIS TOMKINSON
HASANALI H. MERCHANT
TASLEEMUDDIN AHMED BATLAY
AZIZ EBRAHIM
RAMZANALI HALANI
M.K. NAWAZ
ADVISOR
SULTANALl LAKHANI
COMPANY SECRETARY
RAMZANALI HALANI
AUDITORS
A.F. FERGUSON & CO.
CHARTERED ACCOUNTANTS
REGISTERED OFFICE
LAKSON SQUARE, BUILDING No. 2
SARWAR SHAHEED ROAD
KARACHI-74200
	NOTICE OF MEETING
NOTICE IS HEREBY given that the 41st Annual General Meeting of Premier Tobacco Industries
Limited will be held at Avari Renaissance Towers Hotel, Fatima Jinnah Road, Karachi at 3.00 p.m.
on Thursday December 19, 1996 to transact the following business:
To receive, consider and adopt the audited Balance Sheet and Profit & Loss Account for
the period of 18 months ended June 30, 1996 together with the Directors' and Auditors' Reports
thereon.
To declare a final dividend @ 40% i.e. Rs. 4/- per share for the period of 18 months ended
June 30, 1996 as recommended by the Board of Directors in addition to the 10% interim
dividend already paid.
3. To appoint Auditors and fix their remuneration.
NOTES:
1. The share transfer books of the Company will remain closed from December 05, 1996 to
December 19, 1996 (both days inclusive). Transfers received in order at the registered office
of the Company upto December 04, 1996 will be considered in time.
2. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint
another member as his proxy to attend, speak and vote instead of him. A proxy must be
a member of the Company.
3. Forms of proxy to be valid must be received at the Company's registered office not later
than 48 hours before the time of the meeting.
4. A proxy form is enclosed herewith.
	DIRECTORS' REPORT
Keeping in view the amendment made under section 2(26) of the Income Tax Ordinance, 1979 through
the Finance Act 1995 the Directors of your Company have changed the accounting/financial year from
January-December to July-June. As a result, the Company's current financial year commencing January
1, 1995 has been extended to June 30, 1996. The Directors take pleasure in presenting the audited
financial statements and report for eighteen months period ended June 30, 1996.
FINANCIAL/OPERATING RESULTS
Due to the change in accounting/financial year of the Company as above, the figures for 18 months
have been compared with the figures of the preceding full year of 1994.
					(Rupees '000)
					18 months	Year ended
					ended
					30-Jun-96	31-Dec-94
Profit before taxation					163,458	90,934
Taxation					59,703	33,452
					---------	---------
Profit before taxation					103,755	57,482
Unappropriated profit brought forward					263	387
					---------	---------
					104,018	57,869
APPROPRIATIONS
Interim cash dividend @ Re.1.00
(1994: Re.1.00) per share					8,316	8,316
Proposed final cash dividend @ Rs. 4.00
(1994: Rs. 2.50) per ordinary share of Rs.10/- each					33,264	20,79O
Transfer to general reserve					52,000	28,500
					---------	---------
					93,580	57,606
					---------	---------
Unappropriated profit carried forward					10,438	263
					=========	=========
Sales turnover increased to Rs. 8,897 million for the 18 month period under review, reflecting a strong
growth in demand for the Red & White and K2 brands, matched by higher production and improved
productivity. Profit after taxation is recorded at Rs. 103.7 million (for 18 months) compared to Rs.
57.5 million (for 12 months). On an average monthly basis the increase recorded is 20.2%. Net earnings
per share for the 18 month period improved to Rs. 12.48.
Your Company's contribution to the national exchequer in the shape of excise duties and sales tax
rose to Rs. 6,260 million (18 months) from Rs. 2,825 million (12 months) of the previous year. On
an average monthly basis the increase is 47.7%. The component of excise duty and sales tax paid
during the 18 month period was equivalent to 70.4% of our domestic turnover for cigarettes.
BOARD OF DIRECTORS
The Board welcomes the newly elected Directors M/s. Christopher Dennis Tomkinson and Peter George
Gregory, nominees of Rothmans of Pall Mall (International) Ltd, and M/s. Ramzanali Halani and M.K.
Nawaz. The Board also appreciates the valuable services rendered by the outgoing Directors M/s.
S. A. Samad and Jon Backhouse during their tenure on the Board.
DIRECTORS' REPORT (CONTINUED)
LEAF TOBACCO
The 1995 tobacco crop was surplus to the industry's requirement. Considerable improvement was
visible in the quality of the leaf crop and your Company was able to procure its requirements at
competitive prices. The Company also had to absorb extra inventory to meet the requirement of pro-
rata allocation of the surplus crop, which has raised tobacco stock levels.
FUTURE OUTLOOK
Margins in the cigarette industry will continue to be under pressure due to direct and indirect monetary
impacts introduced in the Federal Budget 1996-1997. Sales tax on cigarettes has been revised upwards,
from 15%to 18%, which is an increase of 20 percent. Raw material prices are expected to remain
high due to the continued devaluation of the Pak Rupee, which may seriously erode profitability.
Pretax profits to turnover decreased from 2.30% to 1.84%, which is inadequate to run a cash intensive
industry. Your Company will continue in its endeavour to further increase sales volume through sales
promotion efforts coupled with improved quality, wider distribution and improved productivity.
Due to the monetary impact of the Federal Budget 1996-1997, the Company had no choice but to
increase prices of the Company's various brands soon after the budget announcement. Your Company
is undertaking an appropriate restructuring to improve productivity by curtailing costs and expenses
to attain improved margins. The Directors look forward with the hope of continuation of levels of
profitability achieved.
MERGER
Under the instructions of the Honourable High Court of Sindh an Extraordinary General Meeting of
the members was held to consider the proposed merger of the Company with Lakson Tobacco Company
Limited. The proposed Scheme of Amalgamation was approved by members througha99.94percent
favourable vote. Further actions are being pursued at the Honourable High Court of Sindh.
INDUSTRIAL RELATIONS
The Directors wish to place on record their appreciation of the loyal and efficient services rendered
by the employees towards promoting the Company's objectives. The development of management
and staff has a high priority in the Company and the Company continues to benefit from the efforts
and dedication of all employees.
A Total Quality Management (TQM) programme has been implemented over the period of this report
with encouraging results.
PATTERN OF SHAREHOLDING
A pattern of shareholding in the prescribed form is included in this report at page number 6.
AUDITORS
The Auditors M/s. A.F. Ferguson & Company, Chartered Accountants, retire and offer themselves for
re-appointment.
	PATTERN OF SHAREHOLDING
	HELD BY THE SHAREHOLDERS AS AT JUNE 30, 1996
No. of		Shareholding			Total Shares
Shareholders		from	to		held
871		1	1O0	shares	19,488
439		101	5OO	shares	108,311
111		501	1,000	shares	80,468
107		1,001	5,000	shares	215,302
11		5,001	10,000	shares	77 318
8		10,001	15,000	shares	94 066
7		15,001	20,000	shares	121 384
9		20,001	25 000	shares	208 859
3		25 001	30 000	shares	86 116
2		30 001	35 000	shares	66 547
2		45 001	50 000	shares	94 339
1		6O 001	65 000	shares	61 007
1		125 001	130 000	shares	125,810
1		155 001	160 000	shares	158,574
1		330 001	335 000	shares	331,620
1		610,001	615,000	shares	613,327
2		1,920,001	1,925,000	shares	3,844,805
1		2,005,001	2,010,000	shares	2,008,659
---------					---------
1,578					8,316,000
==========					==========
Categories of Shareholders			Number	Shares held	Percentage
Individuals			1,551	1,438,848	17.30
Investment Companies			2	619	0.01
Insurance Companies			5	64,584	0.78
Joint Stock Companies			11	2,773,433	33.35
Financial Institutions			4	169,390	2.03
Charitable Institution			1	20,773	0.25
Government Organisations			2	3,548	0.04
Foreign Companies			2	3,844,805	46.24
			---------	---------	---------
			1,578	8,316,000	100.00
			==========	==========	==========
	AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed Balance Sheet of Premier Tobacco Industries 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 period January 1, 1995 to June 30, 1996 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 period was for the purpose of the Company's
business; and
(iii) the business conducted, investments made and the expenditure incurred during
the period 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 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 cash flows for the period 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
					June 30,	December 31,
				Note	1996	1994
					(Rupees '000)
SHARE CAPITAL AND RESERVES
Authorised capital
10,000,000 ordinary shares of Rs. 10/- each					100,000	100,000
					==========	==========
Issued, subscribed and paid up capital				3	83,160	83,160
Revenue reserve - general				4	144,315	92,315
Unappropriated profit					10,438	263
					---------	---------
					237,913	175,738
SURPLUS ON REVALUATION OF FIXED ASSETS				5	38,854	38,854
LIABILITIES AGAINST ASSETS SUBJECT TO
FINANCE LEASE				6	16,181	7,443
DEFERRED LIABILITIES - Taxation					10,188	9,348
CURRENT LIABILITIES
Short-term finances utilised under
mark-up arrangements				7	116,203	57,641
Current portion of liabilities
against assets subject to finance lease				6	6,210	2,153
Creditors, accrued and other liabilities				8	280,633	273,042
Taxation					14,616	26,950
Proposed dividend					33,264	20,79O
					---------	---------
					450,926	38O,576
					---------	---------
CONTINGENCIES AND COMMITMENTS				9	754,062	611,959
					==========	==========
The annexed notes form an integral part of these accounts.
	AS AT JUNE 30, 1996
FIXED ASSETS - TANGIBLE
Operating assets				10	107,117	86,717
Capital work-in-progress				11	29,309	4,019
					---------	---------
					136,426	90,736
LONG-TERM INVESTMENT				12	1	1
LONG-TERM DEPOSITS AND PREPAYMENTS				13	7,343	5,072
CURRENT ASSETS
Stores and spares				14	10,080	9,622
Stock-in-trade				15	368,089	484,659
Trade debts				16	13,370	2,015
Loans and advances				17	2,595	3,184
Trade deposits and short-term prepayments				18	9,438	2,894
Short-term investments				19	72,500	-
Other receivables				20	9,249	4,996
Cash and bank balances				21	124,971	8,780
					---------	---------
					610,292	516,150
					---------	---------
					754,062	611,959
					==========	==========
	PROFIT AND LOSS ACCOUNT
	FOR THE YEAR PERIOD JANUARY 1, 1995 TO JUNE 30, 1996
					18 months	Year ended
					ended June	December
				Note	30, 1996	31, 1994
					(Rupees '000)
Sales				22	8,897,293	3,957,004
Cost of goods sold				23	8,387,761	3,730,525
					---------	---------
Gross profit					509,532	226,479
Administration and marketing expenses				24	332,756	117,765
					---------	---------
Operating profit					176,776	108,714
Other income				25	23,605	7,559
					---------	---------
					200,381	116,273
Financial charges				26	23,829	17,808
Other charges				27	13,094	7,531
					---------	---------
					36,923	25,339
					---------	---------
Profit before taxation					163,458	90,934
Taxation				28	59,703	33,452
					---------	---------
Profit after taxation					103,755	57,482
Unappropriated profit brought forward					263	387
					---------	---------
Profit available for appropriation					104,018	57,869
Appropriations:
Interim dividend @ Rs. 1.0
(1994: Rs. 1.0) per share					8,316	8,316
Proposed final dividend @ Rs 4.0
(1994: Rs. 2.5) per share					33,264	20,79O
Transfer to general reserve					52,000	28,500
					---------	---------
					93,580	57,606
					---------	---------
Unappropriated profit carried forward					10,438	263
					==========	==========
The annexed notes form an integral part of these accounts.
	CASH FLOW STATEMENT
	FOR THE PERIOD JANUARY 1, 1995 TO JUNE 30, 1996
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from operations				33	223,820	171,983
Mark-up paid on short-term finances					(19,485)	(12,618)
Interest on security deposits paid					(61)	(44)
Payment of finance charge on liabilities against
assets subject to finance lease					(3,132)	(1,432)
Taxes paid					(71,197)	(29,665)
Long-term loans and advances					--	5
Long-term deposits and prepayments					(2,271)	(2,427
					---------	---------
Net cash inflow from operating activities					127,674	125,802
Cash flow from investing activities
Fixed capital expenditure					(55,236)	(14,625)
Sale proceeds of fixed assets					18,724	3,863
Income received on short-term deposits					1,347	231
					---------	---------
Net cash outflow from investing activities					(35,165)	(10,531
Cash flow from financing activities
Repayment of liabilities against assets
subject to finance lease					(5,857)	-1,593
Dividends paid					(29,023)	(20,798
					---------	---------
Net cash outflow from financing activities					(34,880)	(22,391)
					---------	---------
Net increase in cash and cash equivalents					57,629	92,880
Cash and cash equivalents at beginning of
the period/year					(48,861)	(141,741)
Cash and cash equivalents at end of					---------	---------
the period/year				34	8,768	(48,861)
					==========	==========
The annexed notes form an integral part of these accounts
	NOTES TO THE ACCOUNTS
	FOR THE PERIOD JANUARY 1, 1995 TO JUNE 30, 1996
1. THE COMPANY AND ITS OPERATIONS