| AISHA COTTON MILLS LIMITED |
|
|
|
|
|
|
| Annual
Report 1997 |
|
|
|
| CONTENTS |
|
| Company Profile |
|
| Notice
of Meeting |
|
| Directors' Report |
|
| Auditors' Report |
|
| Pattern of Shareholding |
|
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Statement of Changes in
Financial Position |
|
| Notes to the Accounts |
|
|
|
| COMPANY
PROFILE |
|
|
| BOARD
OF DIRECTORS |
|
Chairman |
|
| Mr.
Aziz A. Dawood |
|
Chief Executive |
|
| Mr.
Uzair A. Dawood |
|
|
| Mr.
S. Saleem lqbal |
|
(Repesenting N.I.T.) |
|
| Mr.
S. M. Siddiqui |
|
|
| Mr.
Amir A. Siddiqui |
|
|
| Mr.
Malik Aman |
|
|
| Mr.
Akbar Khan |
|
|
| SECRETARY |
|
|
| Mr.
S. Saleem Iqbal |
|
|
| AUDITORS |
|
|
|
| M/s.
M. Yousuf Adil & Company |
|
| Chartered
Accountants |
|
| Cavish
Court, Shara-e-Faisal, |
|
| Karachi. |
|
|
| BANKERS |
|
|
|
| Habib
Bank Limited |
|
|
| Habib
Bank A. G. Zurich |
|
| Muslim
Commercial Bank Limited |
|
| Metropolitan
Bank Limited |
|
|
| REGISTERED
OFFICE |
|
|
| 4th
Floor, Haji Adam Chambers, |
|
| New
Challi, Karachi. |
|
|
| MILLS |
|
|
|
| A-57,
SITE, Manghopir Road, |
|
| Karachi. |
|
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the Ninth Annual General Meeting of AISHA COTTON MILLS
LIMITED |
|
| will
be held on Tuesday March 31, 1998 at NIDA MAHAL, C-11, Block - 3, Rashid
Minhas Road, |
|
| Gulshan-e-lqbal,
Karachi, at 9:30 A.M. to transact the following business: |
|
|
| 1.
To confirm the minutes of the last Annual General Meeting of the Company held
on March |
|
| 31,
1997. |
|
|
| 2.
To Receive, consider and adopt the Audited Account for the year ended 30th
September, |
|
| 1997
together with Directors and Auditors Report thereon. |
|
|
| 3.
To appoint auditors for the year 1997-98 and fix their remuneration. The
retiring Auditors |
|
| Messrs.
M. Yousuf Adil & Company, Chartered Accountants being eligible, offer
themselves for |
|
| re-appointment. |
|
|
| 4.
To transact any other business of the company with the permisssion of the
chair. |
|
|
| Karachi:
March 06, 1997 |
|
|
| NOTES:- |
|
|
| 1.
The Share Transfer Book of the Company will remain closed from March 24, 1998
to March |
|
| 31,1998.
(Both days inclusive). The share holders are advised to notify the company of
any |
|
| change
in their addresses. |
|
|
| 2.
A member entitled to attend and vote at the meeting may appoint another
member as a |
|
| Proxy.
Proxies in order to be effective must be received at the office of the
company not less |
|
| than
48 hours before the time of holding the Meeting. |
|
|
|
|
| DIRECTORS'
REPORT |
|
|
| Dear
Shareholders, |
|
|
| I
Welcome you on behalf of the Directors to the Ninth Annual General Meeting
and present Annual |
|
| Report
alongwith the Audited Accounts of the Company for the year ended 30th Sep,
1997. |
|
|
| FINANCIAL
RESULTS: |
|
|
| During
the year under review the company has incurred a net loss of Rs. 39.30
million compared to |
|
| a
net loss of Rs. 68.81 million in the year 95-96. |
|
|
| The
Financial result are summarized below: |
|
|
|
(Rupees in Million) |
|
|
|
1997 |
1996 |
|
|
| Net
Sales |
|
271.585 |
192.243 |
|
| Gross
Profit |
|
8.669 |
2.355 |
|
| Operating
Loss |
|
0.315 |
3.205 |
|
| Net
Loss Before Taxation |
39.297 |
68.807 |
|
|
|
|
|
| Turnover
for the review period touched Rs. 271.585 million which is 41.27% higher than
last year. It |
|
| also
include the export which was increased by 100%. This .increase is
attributable to higher sales, |
|
| price
increase and continous improvements in cost control measures and containing
expenses within |
|
| the
going inflation rate. |
|
|
| The
company has extended its market from local to international and exported yarn
of Rs. 67 million |
|
| (1996-Ni11). |
|
|
| The
management of your company has also put their effort to increase the quantity
and also quality of |
|
| production,
and as a result, has succeeded to increase its production quantity by 21% as
compared to |
|
| last
year. |
|
|
| The
result of the year under review is encouraging and the Gross Profit has
increased against last year |
|
| as
the financial expense is reduced by 20% and will also be less in the coming
years. |
|
|
| The
bankers have not yet renewed the Running Finance Limit for the fifth
consecutive year. Cotton |
|
| purchases
were made from the market on day to day basis resulting higher cost of raw
material. |
|
|
| Due
to shortage .of fund and high prices of Raw Cotton in the market, your
company management |
|
| had
decided to close down the production activity for period of 45 days, during
the year under review. |
|
|
| FUTURE
PROSPECTS: |
|
|
| The
management of the company is focusing its concentration to improve export
sales of the company |
|
|
| which
resulted increase of sale. They are also improving the production facilities
by adding new |
|
| machinery
and technology which will definitely benefit your company. |
|
|
| The
Cotton crises had its effects on the cotton prices. The Yarn Market has
improved allowing the |
|
| company
to re-start the mills. The company is trying to get its share from the
improved yarn market |
|
| and
succeeded to some extent. |
|
|
| The
KESC has increased its Additional Surcharge from Rs. 1.18 to Rs. 1.65 per
unit which has |
|
| seriously
effected the conversion cost. But during the year your management has
successfully curtailed |
|
| the
power cost upto Rs. 4.7 million by utilizing self generation inspite of
improved production quantity |
|
| by
21% as compared to last year. We also expect to reduce the power & fuel
cost in the coming year. |
|
|
| The
management of your company succeeded in getting rescheduling and
restructuring of the loan |
|
| with
Habib Bank Ltd. In this exercise the new management of Habib Bank Limited are
found more |
|
| competent,
co-operative and fact realizing. They realized the problem faced by us and
help a lot in |
|
| this
regard. We hope a good relation and understanding will be developed between
the HBL and |
|
| management
of your company. This will help in getting out from the financial crises. |
|
|
| CAPITALIZATION
OF EXCHANGE FREE RISK: |
|
|
| Regarding
the remarks in para 'C' of the auditors report. We have capitalized exchange
risk fee |
|
| being
allowable capital expenditure, in the respective assets accounts, as
consistent Accounting Policy |
|
| Note#2.4. |
|
|
| AUDITORS: |
|
|
| The
present Auditors M/s. M. Yousuf Adil & Co., Chartered Accountants being
eligible have offered |
|
| themselves
for re-appointment. |
|
|
| PATTERN
OF SHARE HOLDING: |
|
|
| As
required by section 256 of the Companies Ordinance, 1984, pattern of
shareholding is attached to |
|
| this
report. |
|
|
| The
Directors are pleased to place on record deep and sincere appreciation of the
workers, the staff |
|
| members
for devoted services rendered by them and also for there loyalty with
Company. |
|
|
| Karachi: 27 February 1998 |
Chief Executive |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of AISHA COTTON MILLS LIMITED as at
September 30, |
|
| 1997
and the related profit and loss account and statement of changes in financial
position (cash flow |
|
| statement)
together with the notes forming part thereof, for the year ended on that date
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, except for the effect of the matter referred to in Note 9.2, the
balance sheet, |
|
| profit
and loss account and the statement of changes in financial position (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 September 30, 1997 |
|
| and
of the loss and the changes in financial position for the year then ended;
and |
|
|
| (d)
in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| Without
further qualifying our opinion, we state that the Company during the year has
incurred loss |
|
| of
Rs. 40.655 million and has accumulated losses amounting to Rs. 340.998
million as at September |
|
| 30,
1997 which has eroded the capital and as at balance sheet date, the Company's
current |
|
| liabilities
exceed its current assets by Rs. 139.006 million. The management is confident
that operating |
|
| result
will improve in future as a result of their efforts and financial and
operational supports from |
|
| the
directors and associated undertakings will continue. No adjustments, if any,
have been made in |
|
| the
accounts, that may be necessary should the company be unable to continue as a
going concern. |
|
|
| Karachi: |
|
M. YOUSUF ADIL & CO. |
|
| Date : |
27 February 1998 |
|
CHARTERED ACCOUNTANTS |
|
|
|
|
| PATTERN
OF SHAREHOLDING · |
|
| SEPTEMBER
30, 1997 |
|
|
|
|
| NUMBER OF |
SHAREHOLDING |
TOTAL NUMBER |
|
| SHAREHOLDERS |
FROM |
TO |
OF SHARES HELD |
|
|
| 9412 |
100 |
500 |
4,685,700 |
|
| 2 |
501 |
1,000 |
6,503 |
|
| 2 |
1,001 |
1,500 |
3,000 |
|
| 1 |
1,501 |
2,000 |
2,000 |
|
| 8 |
1,501 |
2,000 |
2,000 |
|
| 8 |
2,001 |
750,000 |
3,032,548 |
|
| 1 |
750,001 |
1,212,000 |
1,212,000 |
|
| 2 |
1,212,001 |
1,500,000 |
2,999,249 |
|
| ---------- |
|
---------- |
|
| 9,436 |
|
11,943,000 |
|
| ========== |
|
========== |
|
|
| Categories
of Shareholders |
Number |
Shares Held |
Percentage |
|
|
| Individuals |
|
9,435 |
10,731,000 |
8,985 |
|
| Financial
Institution |
1 |
1,212,000 |
1,015 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
9,436 |
11,943,000 |
100.00 |
|
|
========== |
========== |
========== |
|
|
|
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30,1997 |
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
| SHARE
CAPITAL |
|
|
|
|
|
|
| Authorised |
|
|
|
| 12,000,000
Ordinary shares |
|
|
|
| of
Rs.10/= each |
|
|
120,000,000 |
120,000,000 |
|
|
|
=========== |
=========== |
|
|
| Issued,
subscribed and paid up |
|
|
|
| 11,943,000
Ordinary shares of |
|
|
|
| Rs.10/=
each fully paid in cash |
|
|
119,430,000 |
119,430,000 |
|
|
|
| Accumulated
loss |
|
|
(340,997,511) |
(300,342,338) |
|
|
----------- |
----------- |
|
|
|
|
(221,567,511) |
(180,912,338) |
|
| SURPLUS
ON REVALUATION |
|
| OF
FIXED ASSETS |
|
3 |
208,989,956 |
208,989,956 |
|
|
| DEBENTURES
AND LONG |
|
| 'TERM
LOANS |
|
4 |
299,608,791 |
289,695,948 |
|
|
| DEFERRED
LIABILITY |
|
| Staff
gratuity |
|
|
947,425 |
708,345 |
|
| CURRENT
LIABILITIES |
|
| Short
term bank borrowings |
|
5 |
77,111,513 |
77,511,595 |
|
| Current
portion of long term liabilities |
6 |
42,309,062 |
32,041,054 |
|
| Creditors,
accrued and other liabilities |
7 |
50,138,019 |
26,002,891 |
|
| Taxation |
|
|
|
6,002,622 |
4,644,622 |
|
|
|
|
----------- |
----------- |
|
|
|
|
175,561,216 |
140,200,162 |
|
| CONTINGENCIES |
|
|
8 |
-- |
-- |
|
|
----------- |
----------- |
|
|
|
|
463,539,877 |
458,682,073 |
|
|
=========== |
=========== |
|
| The
annexed notes from 1 to 27 form an integral part of these accounts. |
|
|
| OPERATING
ASSETS |
|
9 |
426,449,501 |
437,277,054 |
|
|
| LONG
TERM DEPOSITS AND |
|
| DEFERRED
COSTS |
|
10 |
534,830 |
1,013,489 |
|
|
| CURRENT
ASSETS |
|
| Stores,
spares and loose tools |
|
11 |
4,149,990 |
2,158,695 |
|
| Stock
in trade |
|
12 |
11,176,700 |
8,413,628 |
|
| Trade
debtors |
|
13 |
11,266,217 |
3,527,905 |
|
| Loans
and advances |
|
14 |
4,300,028 |
2,000,594 |
|
| Deposits
and prepayments |
|
15 |
1,699,395 |
531,229 |
|
| Other
receivables |
|
16 |
1,924,001 |
881,575 |
|
| Cash
and bank balances |
|
17 |
2,039,215 |
2,877,904 |
|
|
|
|
----------- |
----------- |
|
|
|
|
36,555,546 |
20,391,530 |
|
|
----------- |
----------- |
|
|
|
463,539,877 |
458,682,073 |
|
|
|
=========== |
=========== |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997. |
|
|
|
|
|
|
1997 |
1996 |
|
|
|
Note |
Rupees |
Rupees |
|
|
| Sales |
|
18 |
271,585,085 |
192,243,794 |
|
| Cost
of goods sold |
|
19 |
(262,915,910) |
(189,888,774) |
|
|
----------- |
----------- |
|
| Gross
profit |
|
|
8,669,175 |
2,355,020 |
|
|
| OPERATING
EXPENSES |
|
| Administration |
|
20 |
6,064,038 |
5,537,824 |
|
| Selling |
|
21 |
2,920,224 |
22,345 |
|
|
|
|
|
----------- |
----------- |
|
|
|
|
(8,984,262) |
(5,560,169) |
|
|
|
|
----------- |
----------- |
|
|
|
|
(315,087) |
(3,205,149) |
|
| OTHER
CHARGES |
|
| Financial |
|
22 |
37,437,609 |
65,107,815 |
|
| Amortization
of deferred costs |
|
|
494,539 |
494,539 |
|
| Provision
for doubtful recoveries |
|
1,049,938 |
-- |
|
|
----------- |
----------- |
|
|
|
|
(38,982,086) |
(65,602,354) |
|
|
|
|
----------- |
----------- |
|
| Loss
before taxation |
|
|
(39,297,173) |
(68,807,503) |
|
| Taxation
- minimum tax based on turnover |
|
| Current |
|
|
|
|
(1,358,000) |
(985,655) |
|
| Prior
year's |
|
|
|
-- |
(157,702) |
|
|
----------- |
----------- |
|
|
|
|
(1,358,000) |
(1,143,357) |
|
|
|
|
----------- |
----------- |
|
| Loss
after taxation |
|
|
(40,655,173) |
(69,950,860) |
|
| Accumulated
loss brought forward |
|
(300,342,338) |
(230,391,478) |
|
|
|
|
----------- |
----------- |
|
| Accumulated
loss carried forward |
|
(340,997,511) |
(300,342,338) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 27 form an integral part of these accounts. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997. |
|
|
|
|
|
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
|
| A.
CASH FROM OPERATING ACTIVITIES |
|
|
| Loss
before taxation |
|
|
(39,297,173) |
(68,807,503) |
|
| Adjustment
for |
|
|
|
|
| Depreciation |
|
|
14,635,029 |
14,102,529 |
|
| Amortisation
of deferred cost |
|
494,539 |
494,539 |
|
| Provision
for gratuity |
|
615,839 |
586,372 |
|
| Payment
of gratuity |
|
|
(376,759) |
(235,054) |
|
| Financial
charges |
|
|
37,437,609 |
65,107,815 |
|
| Provision
for doubtful recoveries |
|
1,049,938 |
-- |
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
14,559,022 |
11,248,698 |
|
|
---------- |
---------- |
|
| Changes
in working capital |
|
| (Increases)/decrease
in current assets |
|
| Stores,
spares and loose tools |
|
(1,991,295) |
174,904 |
|
| Stock
in trade |
|
|
(2,763,072) |
(99,610) |
|
| Trade
debtors |
|
|
(8,788,250) |
6,255,847 |
|
| Loans
and advances |
|
|
(291,351) |
(229,211) |
|
| Deposits
and prepayments |
|
(1,168,166) |
(100,505) |
|
| Other
receivables |
|
|
(1,042,426) |
63,998,344 |
|
|
| Increase/(Decrease)
in current liabilities |
|
| Creditors,
accrued and other liabilities |
|
21,140,384 |
4,348,811 |
|
|
---------- |
---------- |
|
|
|
|
5,095,824 |
74,348,580 |
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
19,654,846 |
85,597,278 |
|
| Financial
charges paid |
|
(34,442,864) |
(40,829,930) |
|
| Taxes
paid |
|
|
(2,008,083) |
(145,442) |
|
|
---------- |
---------- |
|
| Net
cash (used in) / from operating activities |
(16,796,101) |
44,621,906 |
|
|
========== |
========== |
|
|
|
|
|
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
| B.
CASH FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
(3,807,477) |
(15,892,746) |
|
| Long
term deposits |
|
|
(15,880) |
13,000 |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(3,823,357) |
(15,879,746) |
|
|
========== |
========== |
|
| C.
CASH FROM FINANCING ACTIVITIES |
|
|
| Long
term loans obtained |
|
20,180,851 |
-- |
|
| Repayment
of long term loan |
|
-- |
(31,752,825) |
|
| Decrease
in short term borrowings |
|
(400,081) |
(1,546,679) |
|
|
---------- |
---------- |
|
| Net
cash from / (used in) financing activities |
19,780,770 |
(33,299,504) |
|
|
========== |
========== |
|
| Net
decrease in cash and cash |
|
| equivalents
(A+B+C) |
|
|
(838,688) |
(4,557,344) |
|
|
| Cash
and cash equivalents at |
|
| the
beginning of the year |
|
2,877,904 |
7,435,248 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalent at |
|
| the
end of the year |
|
|
2,039,215 |
2,877,904 |
|
|
========== |
========== |
|
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| NOTES
TO THE ACCOUNTS |
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| FOR
THE YEAR ENDED SEPTEMBER 30, 1997. |
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| 1.
STATUS AND ACTIVITIES: |
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| The
Company is limited by shares incorporated in Pakistan on July 14, 1988 under
the |
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| Companies
Ordinance, 1984.The shares of the Company are listed in Stock Exchanges at |
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| Karachi
and Lahore. The principal business of the Company is manufacture and sale of
yarn. |
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| The
Mills is located at Sindh Industrial Trading Estate, Karachi in the province
of Sindh. |
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| 2.
ACCOUNTING POLICIES: |
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| 2.1
Accounting Convention: |
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| These
accounts have been prepared under 'historical cost convention' modified by |
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| certain
exchange differences referred to in note 2.4 and revaluation of certain
assets. |
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| 2.2
Staff Retirement Benefits: |
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| The
Company operates an unfunded gratuity scheme cover all its employees.
Provision |
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| is
made annually to cover the liability under the scheme. |
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| 2.3
Taxation |
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| Current |
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| Provision
for current taxation is based on taxable income at the current tax rates |
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| after
taking into account tax rebates and tax credit available, if any. |
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| Deferred |
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| The
company accounts for deferred taxation on material timing differences using
the |
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| liability
method. However, deferred tax is not provided, if it can be established that |
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| these
differences will not reverse in the foreseeable future. |
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| 2.4
Operating Assets: |
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| These
are stated at cost and certain assets are stated at revalued amount less |
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| accumulated
depreciation, except freehold land which is stated at revalued amount. |
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| Depreciation
is charged to income applying the reducing balance method at the rates
specified |
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| in
operating assets note except depreciation on plant and machinery which is
charged on the |
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| basis
of production of units whereby the rate of depreciation is computed with
reference to |
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| the
proportion which the actual production during the year bears to the units
estimated to be |
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| produced
during the economic serviceable life of such assets, subject to a minimum
annual |
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| charge
based on 55% of the installed capacity to cover the wear and tear and
obsolescence. |
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| Depreciation
on additions during the year is charged on the' basis of whole year |
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| while
no depreciation is charged on deletion during the year. However, depreciation |
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| on
capitalization of whole or part of the undertaking is charged proportionately |
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| for
the period of use. |
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