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Rupali Polyester
Limited |
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|
(Annual Report 1996) |
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| CONTENTS |
|
Page # |
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|
| Financial
Highlights |
|
3 |
|
|
|
|
| Directors'
Report to the Shareholders |
|
4 |
|
|
|
|
| Notice
of Meeting |
|
9 |
|
|
|
|
| Auditors'
Report to the Members |
|
11 |
|
|
|
|
| Balance
Sheet |
|
12 |
|
|
|
|
| Profit
& Loss Account |
|
14 |
|
|
|
|
| Cash
Flow Statement |
|
15 |
|
|
|
|
| Notes
to the Accounts |
|
17 |
|
|
|
|
| Pattern
of Shareholding |
|
30 |
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|
|
|
|
| PROFILE |
|
| Rupali
Polyester Limited, a Public Limited |
|
| Company,
owns and operates composite |
|
| facilities
for manufacture of polyester fiber |
|
| and
filament yarn. It has one of the best |
|
| organized
facilities for production of |
|
| polyester
staple fiber polymerization and |
|
| polyester
yarn. Since its inception m 1980, the |
|
| Company
has grown over the period through |
|
| expansion
and diversification of its |
|
| operations.
The Company has capacity to |
|
| produce
12,000 M. Tons of polyester fiber and |
|
| 6,300
M. Tons of yarn per annum. |
|
|
| The
Company is extremely conscious of |
|
| maintaining
the quality of its products. For |
|
| the
same reason, it is maintaining a full- |
|
| fledged
Research & Development Center with |
|
| the
principal objectives of monitoring |
|
| consistency
and also introducing innovative |
|
| improvements
in its products. The end |
|
| products
are, therefore, the results of |
|
| strenuous
and expensive quality tests so that |
|
| the
image of the Company developed in the |
|
| minds
of the customers about its products is |
|
| maintained
at all costs. This attitude enables |
|
| the
Company to successfully produce the |
|
| finest
quality of fiber excellently processed |
|
| under
local conditions. |
|
|
| The
ambition of the Company is not only to |
|
| supply
the high quality products in the |
|
| market
but also to take cognizance of |
|
| customer
satisfaction by providing after- |
|
| sales
service to resolve their problems at their |
|
| doorsteps. |
|
|
| The
Company is proud of its goodwill in the |
|
| Corporate
Sector. It is quoted on all the three |
|
| Stock
Exchanges of the country and its shares |
|
| are
traded at substantial premium. By the |
|
| grace
of God, it had often been included |
|
| amongst
the top 25 companies selected by the |
|
| Karachi
Stock Exchange. |
|
|
| FINANCIAL
HIGHLIGHTS |
|
|
|
1992 |
1993 |
1994 |
1995 |
1996 |
|
|
| Sales
(Net) |
|
1,605.94 |
1,812.64 |
1,738.50 |
2,669.62 |
2,803.93 |
|
| Profit
before Tax |
|
284.96 |
343.53 |
235.81 |
552.74 |
235.37 |
|
| Profit
after Tax |
|
178.96 |
212.60 |
147.72 |
354.39 |
148.19 |
|
| Income Tax |
|
106.00 |
130.93 |
88.10 |
198.35 |
87.18 |
|
| Sales
Tax & Excise Duty |
|
162.49 |
196.23 |
243.64 |
380.14 |
412.73 |
|
| Gross
assets employed |
|
1,880.76 |
1,718.82 |
1,889.90 |
2,318.42 |
2,758.75 |
|
| (excluding
capital work in progress) |
|
| Shareholders
equity |
|
884.41 |
1,097.01 |
1,066.98 |
1,319.16 |
1,365.14 |
|
| Long
term loan |
|
121.965 |
63.275 |
33.745 |
4.216 |
0.000 |
|
| Debt/Equity
ratio |
|
12:88 |
6:94 |
3:97 |
0:100 |
0:100 |
|
| Earning
per share before tax (Rs.) |
9.62 |
11.60 |
7.96 |
16.22 |
6.91 |
|
| Dividend/Bonus
(percentage) |
|
140 |
60 |
15 |
30 |
30 |
|
|
|
(Bonus) |
|
|
--------- |
--------- |
--------- |
--------- |
--------- |
|
| Production
volume (M. Tons) |
|
30,073 |
|
31,008 29,720 |
33,068 |
31,043 |
|
|
| Number
of employees |
|
1,182 |
1,300 |
1,347 |
1,380 |
1,375 |
|
|
=================== |
=================== |
=================== |
=================== |
======== |
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|
|
| DIRECTORS'
REPORT TO |
|
| THE
SHAREHOLDERS |
|
|
| The
Directors are pleased to welcome you to the |
|
| sixteenth
annual general meeting and present their |
|
| annual
report and audited accounts of the |
|
| Company
for the year ended 30 June 1996. |
|
|
| Financial
Results |
|
Rs. in '000' |
|
|
| Net
profit before taxation |
|
235,367 |
|
| Provision
for taxation |
|
87,180 |
|
|
--------- |
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| Profit
after taxation |
|
148,187 |
|
| Unappropriated
profit |
|
|
|
| brought
forward |
|
13,983 |
|
|
--------- |
|
| Profit
available for appropriation |
|
162,170 |
|
|
|
|
| Appropriations: |
|
| Proposed
final cash dividend |
|
102,206 |
|
| Transfer
to general reserve |
|
50,000 |
|
|
|
--------- |
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|
152,206 |
|
|
|
|
|
|
|
--------- |
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| Balance
carried forward |
|
9,964 |
|
|
|
========== |
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|
|
| Operations |
|
| 1996
was a difficult year for the polyester fiber and |
|
| filament
industry as a whole. The profitability was |
|
| affected
adversely by high cost of raw materials, |
|
| devaluation
of Pak Rupee and increase in the cost |
|
| of
furnace oil coupled with over supply of fiber |
|
| and
filament in the international market. |
|
|
| The
industry had strongly represented to the |
|
| Government
for imposition of anti-dumping duties |
|
| but
the Government failed to take any concrete |
|
| steps
to discourage dumping. As a result the |
|
| industry
had to face, and is infact still facing, unfair |
|
| competition
from the foreign suppliers. During the |
|
| year
under review, the cost of raw materials, PTA |
|
| and
MEG, increased from US$ 700 per ton to |
|
| US$
1200 per ton and from US$ 400 per ton to |
|
| USS
800 per ton respectively. Further, the cost of |
|
| furnace
oil increased by 58.77% that is from |
|
| Rs.
2,843.50 per ton to Rs. 4,514.71 per ton and the |
|
| exchange
rate deteriorated from Rs. 31.1961 to |
|
| Rs.
35.3106 per USS reflecting a depreciation of |
|
| 13.19%
during the same period. While this report |
|
| is
being prepared the price of furnace oil has been |
|
| raised
to Rs. 5,876.41 per ton and the exchange rate |
|
| deteriorated
still further to Rs. 40.3607. |
|
|
| The
Company achieved sales revenues of |
|
| Rs.
2,803.930 million in 1996, up by 5.03% over |
|
| Rs.
2,669.622 million in 1995. The increase in sales |
|
| revenue
was attributable to an upturn in product |
|
| prices.
The escalation in cost could not be passed |
|
| on
to the customers due to massive dumping |
|
| whereby
the cost of imported fiber and filament |
|
| remained
below the cost of local products. The |
|
| Government's
inability to address this |
|
| phenomenon
has been a matter of gr. eat concern |
|
| to
your Company. |
|
|
| Operating
expenses increased marginally to |
|
| Rs.
116.039 million from Rs. 112.803 million in 1995, |
|
| owing
to inflationary impact on several items. |
|
|
| The
Company earned other income of Rs. 31.194 |
|
| million
mainly on account of exchange gain. As |
|
| against
this, a loss of Rs. 36.333 million was |
|
| incurred
in 1995. |
|
|
| Notwithstanding
unfavorable circumstances the |
|
| Company
realised a net profit before tax of |
|
| Rs.
235.367 million in 1996 as against Rs. 552.738 |
|
| million
in 1995. After making provision for tax, net |
|
| profit
for the year ended 30 June 1996 amounted |
|
| to
Rs. 148.187 million as compared to Rs. 354.388 |
|
| million
in the previous year. |
|
|
| Board
of Directors |
|
| During
the year under review, the composition of |
|
| the
Board remained unchanged. |
|
|
|
| Future
Outlook |
|
| The
future outlook for polyester fiber and filament |
|
| yarn
is not very encouraging. Apart from the cost |
|
| escalations
the other increased production from |
|
| new
units and the resultant over capacity may |
|
| upset
the balance of supply And demand. As |
|
| already
stated earlier, the real danger to the local |
|
| industry
is from 'dumping', which gives rise to |
|
| absolutely
unfair competition because of certain |
|
| relaxations
in duties/taxes allowed by the |
|
| Government
on imported fiber and filament while |
|
| the
local manufacturers are liable to excessive tax |
|
| burdens.
There has been further devaluation and |
|
| large
increase in cost of furnace oil and other |
|
| petroleum
products with 2% additional respection |
|
| charges
on imports which will cause unabated rise |
|
| in
the cost of production. It is imperative that the |
|
| Government
should take anti-dumping measures |
|
| including
removal of taxation anomalies and |
|
| discriminatory
treatment so as to provide prompt |
|
| and
adequate redress for the local industry, |
|
| recognizing
its role as a large contributor to |
|
| national
exchequer, and to eradicate unjustified |
|
| competition
in an anomalous atmosphere. |
|
|
| Another
serious anomaly that exists between the |
|
| imported
fiber and local product is that the local |
|
| fiber
is subjected to 5% excise duty whereas |
|
| imported
fiber does not have to pay such duty in |
|
| one
or the other form. Despite appreciation and |
|
| acceptance
of this anomaly by the Government, it |
|
| has
not provided any relief to the local |
|
| manufacturers. |
|
|
| The
prices of PTA and MEG seemingly are |
|
| showing
now a downward trend, which if persists, |
|
| shall
provide some relief to polyester industry. |
|
| However,
we are gearing up to meet the new |
|
| challenges
by focusing on the quality of our |
|
| products. |
|
|
| Dividend |
|
| Your
Directors are pleased to propose a dividend |
|
| @
30% i.e. Rs. 3/- per share of Rs. 10/- each for the |
|
| year
ended 30 June 1996. |
|
|
| Auditors |
|
| M/s.
Qavi & Co. Chartered Accountants retire and |
|
| being
eligible offer themselves for re-appointment. |
|
|
| Pattern
of Shareholding |
|
| A
statement showing the pattern of shareholding |
|
| in
the Company as at 30 June -1996 as required |
|
| under
Section 236 of the Companies Ordinance |
|
| 1984
appears on page 30. |
|
|
| Labor
Management Relations |
|
| The relations between the management and |
|
| employees
of the Company remained cordial |
|
| during
the year and we wish to place on record |
|
| our
appreciation of the dedication and hard work |
|
| of
the staff and workers of the Company. |
|
|
| A
Note of Gratitude |
|
| The
Directors also wish to place on record their |
|
| appreciation
for the cooperation extended by the |
|
| Ministry
of Finance, Industries, Commerce and |
|
| Communication.
We also owe our thanks for the |
|
| cooperation
afforded by the Departments of |
|
| Customs,
Central Excise and Government of the |
|
| Punjab.
We appreciate the patronage and |
|
| confidence
placed in the Company by the |
|
| Development
Financial Institutions and |
|
| Commercial
Banks. We are also thankful to our |
|
| valued
customers and expect more pleasant |
|
| business
relationship with them. To our |
|
| shareholders
we are grateful for their stake and |
|
| faith
in the Company. Rupali Polyester Limited |
|
| greatly
values their trust. |
|
|
|
|
On behalf of the Board |
|
|
|
| Karachi |
|
Jafferali M. Feerasta |
|
| 31
October 1996 |
|
Chairman |
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|
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|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the 16th Annual General Meeting of the Company will be
held at Pearl |
|
| Continental
Hotel, Karachi on Saturday, 21 December 1996 at 9:00 a.m. to transact the
following |
|
| business: |
|
|
| Ordinary
Business: |
|
|
| 1.
To confirm the minutes of the last Annual General Meeting held on 17 December
1995. |
|
|
| 2.
To receive, consider and adopt audited accounts together with the Directors'
and Auditors' report |
|
| thereon
for the year ended 30 June 1996. |
|
|
| 3.
To approve the payment of final dividend @ 30% i.e. Rs. 3.00 per share for
the year ended 30 June |
|
| 1996
as recommended by the Board of Directors. |
|
|
| 4.
To appoint Auditors of the Company and fix their remuneration. |
|
|
| 5.
To transact such other ordinary business as may be placed before the meeting
with the permission |
|
| of
the Chair. |
|
|
| Special
Business: |
|
| To
consider and, if deemed fit, pass with or without modification following
resolution as Special |
|
| Resolution
as required under the provision of Section 208 of the Companies Ordinance
1984: |
|
|
| "RESOLVED
THAT the Company, Rupali Polyester Limited, be and is hereby authorized to
make, |
|
| from
time to time, investment as loan/advance upto Rs. 300,000,000.00 (Rupees
three hundred |
|
| million
only) in Rupafab Limited which is an associated company, for a period of five
(5) years |
|
| and
would be recoverable as bullet maturity after five (5) years. The
loan/advance will be secured |
|
| against
charge over fixed assets of Rupafab Limited. |
|
|
| FURTHER
RESOLVED THAT Mr. Badruddin J. Feerasta, Chief Executive and Mr. Nooruddin B. |
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| Feerasta
(st.), Executive Director of the Company be and are hereby singly and/or
jointly authorized |
|
| to
make such investments as and when necessary and mark-up on loan/advance @ 17%
per annum |
|
| be
charged on the amounts so outstanding from Rupafab Limited." |
|
|
| Statement
under Section 160 of the Companies Ordinance 1984 pertaining to the Special
Business is |
|
| being
sent to the shareholders with the notice. |
|
|
| Notes: |
|
| Share
Transfer Books of the Company will remain closed from 12 December 1996 to 21
December |
|
| 1996
(both days inclusive) for determining entitlement of the final dividend. The
members whose |
|
| names
appear in the Register of Members as at the close of business on 11 December
1996 will be |
|
| entitled
for payment of final dividend. |
|
|
| A
member entitled to attend and vote at the meeting may appoint another member
as his or her |
|
| proxy
to attend and vote. Proxies in order to be effective must be received at the
Registered Office |
|
| of
the Company not less than 48 hours before the time of holding the meeting.
Proxy form is |
|
| enclosed
herewith. |
|
|
| Shareholders
are requested to notify the Company of any change in their addresses
immediately. |
|
|
| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE 1984 |
|
| This
Statement is annexed to the notice of the 16th Annual General Meeting of the
Company to be held |
|
| on
21 December 1996 and sets out the material facts concerning the Special
Business to be transacted |
|
| at
the Meeting. |
|
|
| Rupafab
Limited is a vertically integrated textile dyeing/ printing/ finishing
project which has been |
|
| set
up at Raiwind Road, Lahore for producing high quality fabrics for local and
export market. The |
|
| project
is exempted from payment of income tax for a period of three years. The
Authorized Capital of |
|
| Rupafab
Limited is Rs. 500,000,000 (Rupees five hundred million only). Sponsors have
already invested |
|
| Rs.
376,972,000 (Rupees three hundred seventy six million nine hundred seventy
two thousand only) |
|
| as
equity. The project is financed by the International Finance Corporation
(IFC) which has already |
|
| invested
USS 11,000,000 (US Dollars eleven million only) in the form of loan. IFC has
also approved |
|
| the
investment of USS 1,200,000 (US Dollars one million two hundred thousand
only) as equity. |
|
|
| Based
on the long term viability of the project, Rupali Polyester Limited proposes
to make a loan/ |
|
| advance
upto Rs. 300,000,000 (Rupees three hundred million only) out of its surplus
funds to Rupafab |
|
| Limited
for a period of five (5) years and charge mark-up @ 17% per annum. The
loan/advance will |
|
| be
secured against charge of the Company over fixed assets of Rupafab Limited.
Thus, the funds will |
|
| remain
fully secured and the rate of return is also higher as compared to other
investment avenues, |
|
| resulting
in additional revenue earning. The funds will be repaid as bullet maturity
after five (5) |
|
| years. |
|
|
| The
following Directors of Rupali Polyester Limited are also the Directors of
Rupafab Limited: |
|
|
| 1.
Mr. Jafferali M. Feerasta |
|
| 2.
Mr. Badruddin J. Feerasta |
|
| 3.
Mr. Amiruddin J. Feerasta |
|
| 4.
Mr. Nooruddin B. Feerasta (Sr.) |
|
|
| The
Memorandum and Articles of Association of both the above Companies are kept
at their registered |
|
| office
at 7th Floor, Gul Tower, I.I. Chundrigar Road, Karachi and can be inspected
from |
|
| 9:30
to 11:30 a.m on all working days upto 21 December 1996. |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed Balance Sheet of RUPALI POLYESTER 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 explana- |
|
| tions
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 the 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 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 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. |
|
|
| 31
October 1996 |
|
Qavi & Co. |
|
| Karachi |
|
Chartered Accountants |
|
|
|
|
|
|
|
|
BALANCE SHEET AS AT JUNE
30, 1996 |
|
|
|
|
Amount in Rs. '000' |
|
|
Note |
1996 |
1995 |
|
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
| Authorised
Capital |
|
|
|
|
| 35,000,000
Ordinary Shares of Rs. 10 each |
|
|
350,000 |
350,000 |
|
|
|
========= |
========= |
|
|
|
|
|
| Issued,
Subscribed & Paid-up Capital |
|
3 |
340,685 |
340,685 |
|
|
|
|
|
| Reserves |
|
4 |
1,014,490 |
964,490 |
|
|
|
|
|
| Unappropriated
Profit |
|
|
9,964 |
13,983 |
|
|
|
--------- |
--------- |
|
|
|
1,365,139 |
1,319,158 |
|
|
|
|
|
| REDEEMABLE
CAPITAL |
|
5 |
- |
4,216 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
|
|
| Provision
for staff gratuity |
|
|
14,874 |
10,465 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
Maturity of Redeemable Capital & |
|
|
|
|
| Long-Term
Loans |
|
6 |
4,216 |
29,529 |
|
|
|
|
|
| Short
Term Running Finance |
|
|
|
|
| Utilised
Under Mark-up Arrangements |
|
7 |
407,760 |
116,786 |
|
|
|
|
|
| Advances,
Deposits, Rententions & Other Payables |
8 |
96,497 |
108,160 |
|
|
|
|
| Creditors
& Accrued Expenses |
|
9 |
697,279 |
444,975 |
|
| Provision
For Taxation |
|
91,336 |
202,731 |
|
| Proposed
Dividend |
|
102,206 |
102,206 |
|
|
--------- |
--------- |
|
|
1,399,294 |
1,004,387 |
|
|
|
|
| CONTINGENCIES
& COMMITMENTS |
|
10 |
- |
- |
|
|
|
--------- |
--------- |
|
|
|
2,779,307 |
2,338,226 |
|
|
|
========= |
========= |
|
| The
annexed notes from an integral part of these accounts |
|
|
|
|
|
|
|
|
|
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
|
| Operating
Fixed Assets |
|
11 |
600,485 |
668,603 |
|
| Capital
Work in Progress |
|
12 |
20,555 |
19,930 |
|
|
|
|
--------- |
--------- |
|
|
|
|
621,040 |
688,533 |
|
|
|
|
|
| LONG
TERM LOANS |
|
13 |
1,244 |
1,735 |
|
|
|
|
|
| LONG
TERM DEPOSITS & |
|
|
|
|
| PREPAYMENTS |
|
14 |
5,073 |
3,458 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
| Stores,
Spares & Loose Tools |
|
15 |
93,703 |
119,412 |
|
|
|
|
|
| Stock
in Trade |
|
16 |
703,493 |
521,971 |
|
|
|
|
|
| Trade
Debts |
|
17 |
397,532 |
216,665 |
|
|
|
|
| Loans,
Advances, Deposits, Prepayments & |
|
|
|
|
| Other
Receivables |
|
18 |
841,578 |
694,332 |
|
|
|
|
|
| Cash
and Bank Balances |
|
19 |
115,644 |
92,120 |
|
|
--------- |
--------- |
|
|
|
2,151,950 |
1,644,500 |
|
