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|
RAVI RAYON |
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|
L I M I T E D |
|
|
| Annual
Report and Accounts for the year ended June 30, 1996 |
|
|
| CONTENTS |
|
| Board
of Directors |
|
2 |
|
|
|
|
| Notice
of Meeting |
|
3 |
|
|
|
|
| Chief
Executive's Report |
|
4 |
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|
|
|
| Pattern
of Holding of Shares |
6 |
|
|
|
|
| Auditors'
Report |
|
7 |
|
|
|
|
| Balance Sheet |
|
|
8 |
|
|
|
|
| Profit
& Loss Account |
|
10 |
|
|
|
|
| Statement
of Changes |
|
11 |
|
| in
Financial Position |
|
| (Cash
Flow Statement) |
|
|
|
| Notes
to the Accounts |
|
12 |
|
|
|
|
|
| BOARD
OF DIRECTORS |
|
|
| CHAIRMAN |
|
|
|
| MR.
SAADAT HUSAIN KHAN |
|
|
|
| CHIEF
EXECUTIVE |
|
| MR.
IFTIKHAR MAHMOOD RANDHAWA |
|
|
| DIRECTORS |
|
| SYED
MUKHTAR HAlDER SHAH |
|
| MR.
SHAHID GHAFFAR |
|
| MR.
ZAHID AHMAD |
|
| DR:
MASOOD FAIZULLAH |
|
| DR.
ZAFARULLAH SHEIKH |
|
| MR.
NAVEED AHMAD |
|
| HAFIZ
NOOR MUHAMMAD KASURI |
|
|
| SECRETARY |
|
| MR.
LIAQAT ALl KHAN |
|
|
|
| BANKERS |
|
| UNITED
BANK LIMITED |
|
| INDUSTRIAL
DEVELOPMENT BANK OF PAKISTAN |
|
|
|
| AUDITORS |
|
| FORD,
RHODES, ROBSON, MORROW |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE & WORKS |
|
| KALA
SHAH KAKU |
|
| District
Sheikhupura |
|
|
|
| NOTICE
OF MEETING |
|
| Notice
is hereby given that the 35th Annual General Meeting of the Shareholders of
the Company |
|
| will
be held at Faletti's Hotel, Lahore, on Monday, December 30, 1996 at 3.00 p.m.
under the |
|
| Chairmanship
of the Chief Executive to transact the following business. |
|
|
|
| 1.
To confirm the minutes of the last Annual General Meeting held on 18-02-1996. |
|
|
|
|
| 2.
To receive and adopt the accounts of the Company for the year ended June 30,
1996 |
|
| together
with the Auditors' and Directors' report thereon. |
|
|
|
|
| 3.
To appoint Auditors for the year 1996-97 and to fix their remuneration. |
|
|
|
| M/s.
Ford, Rhodes, Robson, Morrow, Chartered Accountants, the retiring Auditors, |
|
| being
eligible offer themselves for re-election. |
|
|
|
|
| 4.
To transact any other business of the Company that may be placed before the
meeting |
|
| with
the permission of the Chairman. |
|
|
|
|
| The
Share Transfer Books of the Company will remain closed from 29th December to
30th |
|
| December
1996 (Both days inclusive). |
|
|
|
| by
Order of the Board |
|
| LIAQAT
ALl KHAN |
|
| Secretary |
|
|
|
| Corporate
Affairs |
|
|
|
|
|
|
|
| Lahore: |
|
|
| Dated
: 30 - 11 - 1996 |
|
|
|
| NOTES |
|
| 1.
A member entitled to attend and vote at this meeting may appoint another
member as |
|
| his/her proxy to attend the meeting and
vote instead of him/her. Proxies in order to be |
|
| effective must be received by the Company
not less than 48 hours before the meeting. |
|
|
| 2.
Shareholders are requested to promptly notify the Company of any changes in
their |
|
| addresses. |
|
|
|
| CHIEF
EXECUTIVE'S REVIEW FOR SHAREHOLDERS |
|
| I
welcome you on behalf of the Board of Directors and present the 35th Annual
Report together |
|
| with
audited accounts for the year ended 30th June, 1996. The year under review
has been very |
|
| difficult
for the Company, during which it sustained a loss of Rs. 141.170 million. One
of the primary |
|
| reasons
for the loss was the unprecedented rise in the price of basic inputs namely
Molasses price |
|
| of
which increased from Rs. 1300 per ton during the previous year to well over
Rs. 3000 per ton |
|
| during
the year under review. Even at such a high price availability of Molasses was
limited so |
|
| much
so that the Company's own production of alcohol had to be suspended and the
same had to |
|
| be
procured from outside. Such phenomenal rise in the cost of production could
not be passed on |
|
| to
the customers due to inherent weakness of Company's principal product namely
Acetate Yarn. |
|
| The
competing products are newly developed fibbers and yarn which are based upon
highly |
|
| sophisticated
modern technologies and are much superior as compared to Acetate Yarn. These |
|
| are
also abundantly available at cheaper prices in the local market. In addition
to the increasing |
|
| trend
in the prices of basic raw material i.e. Molasses and Cotton Linters,
increase in tariff of Sui |
|
| Gas,
Electricity, Salaries and wages and cost of imported inputs i.e. Chemicals,
Dyes and Spares |
|
| and
continuous devaluation of Pak Rupee also had significant adverse impact. |
|
|
| Due
to stiff competition and market's instability the Company has not been in a
position to increase |
|
| its
selling prices corresponding to the increase in cost of production. The
economic viability of the |
|
| Company
is mainly dependent upon the sale of it's acetate yarn at a fair price. Any
factor adversely |
|
| effecting
sales of acetate yarn jeoparadizes all the operational parameters of the
Company. |
|
| Despite
market competition, some price increase was passed on to the customers but it
eventually |
|
| resulted
in substantial decline of sales in the domestic market by another 287 tons.
However, |
|
| Export
Market considerably improved, but the prices realized from exports are
internationally |
|
| competitive
and do not fully cover the high cost of production. Export Sales only help in
higher |
|
| capacity
utilization of the unit thereby economising on the overall cost of
production. Export |
|
| potential
was successfully exploited during the year and volume of exports increased by
18% while |
|
| price
realisation also improved by over 40%. |
|
|
| On
account of continuous adverse operating performance, financial position of
the Company has |
|
| been
seriously effected. The Company is now virtually operating with negative
working capital due |
|
| to
which it hardly has the financial capacity to maintain reasonable stocks of
basic raw materials |
|
| available
of which are seasonal. As a result of fragile liquidity position it remains
in a weak |
|
| bargaining
position with its suppliers and often faces problems in maintaining of the
continuous |
|
| supplies
of basic raw materials which eventually effects the production activities.
Despite |
|
| forementioned
difficulties management of your Company continued its strenuous efforts and
was |
|
| able
to increase the Company's net sales from Rs. 524.46 million in 1994-95 to Rs.
589.605 during |
|
| 1995-96.
However, as explained earlier high cost of molasses and energy neuterlized
the benefits |
|
| derived
from increase in Sales. |
|
|
| OPERATING
RESULTS |
|
| Net
sales of the Company during the year under review were Rs. 589.605 million as
compared to |
|
| last
year sales of Rs. 524.459 million. The Company produced 2712 M. Tons of
Acetate Yarn as |
|
| against
2575 M. Tons during the preceding year. Sales of Acetate Yarn were 2922 M.
Tons as |
|
| against
last year sales of 3053 M. Tons while there was decline of 287 M. Tons in the
domestic |
|
| market,
the export increased by 156 M. Tons, from 860 M. Tons of last year to 1016 M.
Tons. |
|
| Similarly
sales of Fresh Yeast also registered significant improvement over the last
year. The |
|
| Company
was able to sell 838 M. Tons of Fresh Yeast during 1995-96 as against 822 M.
Tons |
|
| during
last year. |
|
|
| FUTURE
PROSPECTS |
|
| On
account of gradual decline in domestic market of acetate yarn over the years,
Company |
|
| continues
to pass through extremely difficult economic conditions. Strenuous efforts
continued |
|
| throughout
the year for maintaining the share of the local market of acetate yarn which
is under |
|
| ever
increasing threat from other man-made fibbers such as Polyester, Viscose,
Acrylic and free |
|
| import
of all Deniers of Acetate Yarn. However export market for acetate yarn in
overseas countries |
|
| has
considerably improved. |
|
|
| Fortunately
the prices of Molasses and Cotton Linters are now showing a downward trend
and it is |
|
| expected
that supply position will also improve. Even though the local Sales of
Acetate Yarn have |
|
| decreased
due to impact of recent increase in Sales Tax and occasional market closure
due to |
|
| strikes
at various stations it is expected that the acceptance of this increase shall
soon be |
|
| absorbed
by the market and local sales of acetate yarn will firmup. |
|
|
| Another
significant factor which will adversely effect the sales is the increase in
rates of sales tax on |
|
| Acetate
Yarn from 10% to 18% and withdrawal of exemption of sales tax on certain
production |
|
| processes.
Combined effect of these budgetory measures will increase the sales tax
liability on |
|
| Acetate
Yarn by more than 200%. |
|
|
| The
management of the Company is making all out efforts to get the Company out of
present state |
|
| of
affairs and to improve its performance by operating this unit at optimum
level as long as |
|
| possible
even under the adverse conditions in view of the national importance of the
Company |
|
| towards
self reliance. |
|
|
| It
is also hoped that the proposed Voluntary Separation Scheme if introduced in
due course of |
|
| time,
will provide some relief in terms of reducing monthly salaries and wages
bills of the |
|
| Company,
I wish to assure you that management of your Company will leave no stone
unturned for |
|
| steering
the Company out of the present difficult situation. |
|
|
| ACKNOWLEDGEMENT |
|
| We
are grateful to Federal Chemical and Ceramics Corporation Limited and
Ministry of Industries |
|
| and
Production for providing necessary guidances and extending every support in
running the |
|
| affairs
of the Company. There valuable guidance not only gave us moral support to
tackle day to |
|
| day
problems but also enabled us to a great extent in dealing with various
operational difficulties. |
|
| The
Labour Management Relations remained very cordial during the year. We wish to
place on |
|
| record
appreciations for the work done by the executives, staff and workers. Without
the keen |
|
| sense
of involvement and complete devotion to duties displayed by all employees,
surviving the |
|
| current
crises would not have been possible. |
|
|
| AUDITORS |
|
| The
present auditors M/s. Ford, Rhodes, Robson, Morrow, retire and being eligible
offer |
|
| themselves
for re-appointment as auditors for the year 1996-97. |
|
|
|
| PATTERN
OF SHARE HOLDERS |
|
| The
pattern of share holding is annexed. |
|
|
|
|
|
| For
and on behalf of the Board of Directors |
|
|
| IFTIKHAR
MAHMOOD RANDHAWA |
|
| Chief Executive |
|
|
|
| PATTERN
OF SHARE HOLDING AS ON JUNE 30, 1996 |
|
|
| NO. OF |
SHAREHOLDING |
|
TOTAL |
|
| SHARE HOLDERS |
FROM' |
TO |
SHARES HELD |
|
|
| 1,996 |
1 |
100 |
115,111 |
|
| 1,245 |
101 |
500 |
345,938 |
|
| 393 |
501 |
1000 |
333,740 |
|
| 70 |
1001 |
5000 |
171,998 |
|
| 40 |
5001 |
10000 |
361,200 |
|
| 1 |
10001 |
15000 |
14,750 |
|
| 8 |
15001 |
20000 |
141,690 |
|
| 4 |
25001 |
30000 |
114,900 |
|
| 1 |
35001 |
40000 |
39,050 |
|
| 1 |
70001 |
75000 |
73,800 |
|
| 1 |
130001 |
135000 |
135,000 |
|
| 1 |
200001 |
205000 |
201,890 |
|
| 1 |
230001 |
235000 |
231,239 |
|
| 1 |
425001 |
430000 |
427,150 |
|
| 1 |
945001 |
950000 |
948,710 |
|
| 1 |
1925001 |
1930000 |
1,924,500 |
|
| 1 |
3775001 |
3780000 |
3,776,894 |
|
| -------------- |
|
-------------- |
|
| 3,766 |
|
9,357,560 |
|
| -------------- |
|
-------------- |
|
|
|
|
| CATEGORIES
OF SHAREHOLDERS |
|
|
|
|
|
|
NO. OF |
|
|
| PARTICULARS |
|
SHARE HOLDERS |
SHARES HELD |
PERCENTAGE |
|
|
| Individuals |
|
3,734 |
2,642,326 |
28.24% |
|
| Investment
Companies |
5 |
250,099 |
2.67% |
|
| Insurance
Companies |
8 |
214,100 |
2.29% |
|
| Joint
Stock Companies |
0 |
0 |
0.00% |
|
| Financial
Institutions |
16 |
2,465,740 |
26.35% |
|
| Foreign
Sponsors |
0 |
0 |
0.00% |
|
| * Corporations |
1 |
3,776,894 |
40.36% |
|
| Corporate
Law Authority |
1 |
1 |
0.00% |
|
| ** Others |
|
1 |
8,400 |
0.09% |
|
|
------------- |
------------- |
------------- |
|
|
3,766 |
9,357,560 |
100.00% |
|
|
------------- |
------------- |
------------- |
|
|
| *
Federal Chemical & Ceramics Corporation Ltd. |
|
| **
Administrator, Abandoned Properties, |
|
| Government of Pakistan, Rawalpindi. |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed Balance Sheet of Ravi Rayon Limited as at June 30,
1996 and the |
|
| related
Profit and Loss Account and Statement of Sources and Application of Funds,
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: |
|
|
| The
financial statements have been prepared on a going concern basis. This basis
may not be |
|
| appropriate
because the accumulated losses exceed the equity by RS. (thousand) 270,212.
Further |
|
| the
Company is dependent on the financial assistance from the Government of
Pakistan to meet its |
|
| shortfall
in day to day running of the Company's operations. These factors indicate
that the |
|
| Company
may be unable to continue manufacturing and trading. |
|
|
| Except
for the effect of the matters set out in the above paragraph, 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 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 Sources and Application of |
|
| Funds, 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 loss |
|
| and the changes in sources and application
of funds for the year then ended; and |
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance |
|
| 1980. |
|
|
|
|
|
| FORD,
RHODES, ROBSON, MORROW |
|
| Chartered
Accountants |
|
|
|
|
| Lahore · |
|
| Date
· 27-11-1996. |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1996 |
|
|
Notes |
1996 |
1995 |
|
|
(Rupees in thousands) |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
Share Capital |
|
|
Authorised |
|
|
15,000,000 ordinary
shares or Rs. 10 each |
150,000 |
150,000 |
|
|
|
=========================== |
|
| Issued,
subscribed and paid up |
4 |
93,576 |
93,576 |
|
|
| ACCUMULATED
LOSS |
|
(363,788) |
(219,670) |
|
|
|
|
--------------------------- |
|
|
|
(270,212) |
(126,094) |
|
|
|
|
|
| LONG
TERM LOANS |
|
5 |
144,674 |
-- |
|
| APPLICATION
MONEY FOR PARTICIPATION |
|
| Term
certificates |
|
6 |
23,368 |
23,368 |
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| To
finance lease |
|
7 |
495 |
430 |
|
|
|
|
| DEFERRED
LIABILITIES |
|
8 |
12,000 |
12,000 |
|
|
| CURRENT
LIABILITIES |
|
| Long
Term Loans :- |
|
|
|
Current maturity |
5 |
-- |
-- |
|
|
Overdue |
|
5 |
13,950 |
99,256 |
|
|
|
|
--------------------------- |
|
|
13,950 |
99,256 |
|
|
| Current
maturity and overdue of liabilities against |
|
| assets
subject to finance lease |
7 |
309 |
250 |
|
| Short
term loans and running finances |
9 |
48,533 |
44,158 |
|
| Creditors,
accruals and other liabilities |
10 |
427,693 |
340,415 |
|
| Provisions
for Sales-tax |
|
2,329 |
5,776 |
|
|
--------------------------- |
|
|
492,814 |
489,855 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
29 |
-- |
-- |
|
|
|
|
--------------------------- |
|
|
|
403,139 |
399,559 |
|
|
|
============================ |
|
| Auditors'
Report of even date is attached hereto. |
|
|
| FORD,
RHODES, ROBSON, MORROW |
|
| Chartered
Accountants |
|
|
| Lahore : |
|
| Date
: 27-11-1996 |
|
|
|
|
|
|
|
Notes |
1996 |
1995 |
|
|
|
(Rupees in thousands) |
|
|
|
| FIXED
ASSETS - TANGIBLE |
|
| Operating
assets |
|
11 |
109,903 |
115,653 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
12 |
465 |
465 |
|
| LONG
TERM LOANS AND ADVANCES |
13 |
63,793 |
48,515 |
|
| LONG
TERM DEPOSITS |
|
14 |
10,293 |
17,816 |
|
| CURRENT
ASSETS |
|
|
| Stores,
spares and loose tools |
15 |
45,330 |
47,486 |
|
| Stock-in-trade |
|
16 |
94,555 |
102,867 |
|
| Trade debtors |
|
17 |
31,861 |
44,453 |
|
| Loans
and advances |
|
18 |
20,911 |
14,456 |
|
| Deposits
and prepayments |
|
19 |
13,153 |
4,323 |
|
| Income
tax refundable |
|
|
5,359 |
307 |
|
| Cash
and bank balances' |
|
20 |
7,516 |
3,218 |
|
|
|
|
--------------------------- |
|
|
|
|
218,685 |
217,110 |
|
|
|
|
|
|
|
--------------------------- |
|
|
|
403,139 |
399,559 |
|
|
|
=========================== |
|
|
| The
attached notes form an integral part of these accounts. |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1996 |
|
|
Notes |
1996 |
1995 |
|
|
|
|
(Rupees in thousands) |
|
|
|
| NET SALES |
|
21 |
589,605 |
524,459 |
|
| COST OF SALES |
|
22 |
682,599 |
577,706 |
|
|
|
|
--------------------------- |
|
| GROSS LOSS |
|
(92,994) |
(53,247) |
|
|
|
--------------------------- |
|
| OPERATING
EXPENSES |
|
|
| Administrative,
selling and general |
23 |
46,513 |
41,060 |
|
| Financial |
|
24 |
6,312 |
36,855 |
|
|
|
|
--------------------------- |
|
|
|
|
52,825 |
77,915 |
|
|
|
|
--------------------------- |
|
| OPERATING
LOSS |
|
|
(145,819) |
(131,162) |
|
| OTHER
INCOME/CHARGES |
|
25 |
4,649 |
4,064 |
|
|
|
|
--------------------------- |
|
| LOSS
BEFORE TAXATION |
|
|
(141,170) |
(127,098) |
|
|
|
|
|
|
| TAXATION , |
|
26 |
(2,948) |
(2,622) |
|
|
--------------------------- |
|
| LOSS
AFTER TAXATION |
|
|
(144,118) |
(129,720) |
|
|
|
|
|
|
| ACCUMULATED
LOSS BROUGHT FORWARD |
|
(219,670) |
(89,950) |
|
|
|
|
--------------------------- |
|
| ACCUMULATED
LOSS CARRIED FORWARD |
|
(363,788) |
(219,670) |
|
|
|
|
=========================== |
|
|
| The
attached notes form an integral part of these accounts. |
|
|
| STATEMENT
OF SOURCES AND APPLICATION OF FUNDS |
|
| (CASH FLOW) |
|
| FOR
THE YEAR ENDED JUNE 30, 1996 |
|
1996 |
1995 |
|
|
|
(Rupees in thousands) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Net
(Loss) after taxation |
|
|
(144,118) |
(129,720) |
|
|
|
|
|
|
| Adjustment
for items not involving movement of funds:- |
|
|
| Depreciation |
|
|
12,204 |
12,900 |
|
| Profit
on sale of Fixed Assets |
|
(713) |
(180) |
|
| Book
value of Fixed Assets written off |
|
311 |
359 |
|
|
|
--------------------------- |
|
|
11,802 |
13,079 |
|
|
|
--------------------------- |
|
|
|
(132,316) |
(116,641) |
|
|
|
|
| (Increase)/Decrease
in Current Assets |
|
| Stores,
Spares & Loose Tools |
|
2,156 |
(183) |
|
| Stock
in -trade |
|
8,312 |
45,224 |
|
| Trade Debtors |
|
12,592 |
(2,928) |
|
| Loans
and Advances |
|
(6,455) |
1,255 |
|
| Deposits
and Prepayments |
|
(8,830) |
1,123 |
|
| Income
Tax Refundable |
|
(5,052) |
343 |
|
|
--------------------------- |
|
| Increase/(Decrease)
in Current Liabilities |
2,723 |
44,834 |
|
|
|
|
|
| Short
Term Loans |
|
4,375 |
(11,341) |
|
| Creditors,
Accruals and other Liabilities |
|
87,278 |
107,146 |
|
| Provision
for Taxes |
|
(3,447) |
1,653 |
|
|
|
--------------------------- |
|
|
|
88,206 |
97,458 |
|
|
|
|
|
|
|
--------------------------- |
|
| NET
CASH FROM OPERATING ACTIVITIES |
|
(41,387) |
25,651 |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Purchase
of Fixed Assets |
|
(7,162) |
(10,950) |
|
| Capital
work in progress |
|
- |
- |
|
| Sale
proceeds from disposal of Fixed Assets |
1,111 |
285 |
|
| Long
Term Loans and Advances |
|
(15,278) |
(20,986) |
|
| Long
Term Deposits |
|
7,523 |
(2,207) |
|
|
|
--------------------------- |
|
|
|
(13,806) |
(33,858) |
|
|
|
|
|
|
|
--------------------------- |
|
| NET
CASH FROM INVESTING ACTIVITIES |
|
(55,193) |
(8,207) |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Long
term loans |
|
144,674 |
- |
|
| Long
term loans - overdue |
|
(85,306) |
- |
|
| Proceeds
from obligation under Finance Lease |
379 |
495 |
|
| Repayment
of obligation under Finance Lease |
(256) |
(236) |
|
|
|
