| BHANERO TEXTILE MILLS LIMITED |
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| Annual
Report 1997 |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
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| CHIEF
EXECUTIVE & DIRECTORS |
|
| Mohammad
Salim |
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| DIRECTORS |
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| Mohammad
Sharif |
|
| Mohammad
Shaheen |
|
| Mohammad
Shakeel |
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| Khurram
Salim |
|
| Furrukh
Salim |
|
| Bilal Sharif |
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|
| S.M.
Siddiqui (Nominee NIT) |
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| COMPANY
SECRETARY |
|
| Asif
Mahmood |
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| ACA,
ACIS, AITM, AICS |
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| FINANCE
MANAGER |
|
| Anwar
Hussain |
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| FCA |
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| BANKERS |
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| Citi
Bank, N.A. |
|
|
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| ABN
Amro Bank Limited. |
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| United
Bank Limited |
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| Standard
Chartered Bank. |
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| Muslim
Commercial Bank Limited. |
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| American
Express Bank Limited. |
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| Bank
AI Habib Limited. |
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| AUDITORS |
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| Mushtaq
& Company |
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| Chartered
Accountants |
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| 407,
Commerce Centre |
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| Hasrat
Mohani Road |
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| Karachi. |
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| REGISTERED
OFFICE |
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| Umer
Chambers |
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| 10/2,
Bilmoria Street |
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| Off.
I. I. Chundrigar Road |
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| Karachi. |
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| Tel:
2635916-7 Fax: 2637826 |
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| email:
umer. khi @ biruni.erum.com.pk |
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| MILLS
AT |
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| Unit
1 is situated at Kotn |
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| District
Dadu, & |
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| Unit
II is situated at |
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| Feroz
Watwan, |
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| Sheikhupura. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| NOTICE
is hereby given that 18th Annual General Meeting of the Shareholders of
Bhanero Textile |
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| Mills
Limited will be held on 19th March, 1998 at 10.00 a.m. at the Registered
Office of the Company, |
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| Umer
Chambers, 10/2 Bilmoria Street, Off. I. I. Chundrigar Road, Karachi to
transact the following |
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| business: |
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|
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| 1.
To confirm the minutes of the last Annual General Meeting held on 30th March,
1997. |
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|
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| 2.
To receive, consider and adopt the Audited Accounts of the Company for the |
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| year
ended 30th September, 1997 together with the Auditors' and Directors' Reports
thereon. |
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| 3.
To approve the dividend as recommended by the Directors, for the year ended
30th September, |
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| 1997. |
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| 4.
To appoint Auditors for the year 1997-98 and fix their remuneration. The
present Auditors M/s |
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| Mushtaq
& Co. Chartered Accountant,. being eligible, offer themselves for
reappointment. |
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| 5.
To transact any other business with the permission of the Chairman. |
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| NOTES: |
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| 1.
The share transfer books of the Company will remain closed from 17th March,
1998 to |
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| 27th
March, 1998 (both days inclusive). |
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| 2.
A member eligible to attend and vote at this Meeting may appoint another
member as |
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| his/her
proxy to attend and vote instead of him/her. Proxies in order to be effective
must |
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| be received by the Company at the Registered
Office not less than 48 hours before the |
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| time
for holding the meeting. |
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| 3.
Shareholders are requested to immediately notify the changes in address, if
any, |
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| DIRECTORS'
REPORT TO THE SHARE HOLDERS |
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| Your
directors present before you the audited annual accounts for the year ended
30th |
|
| September,
1997 together with auditors report thereon, for your consideration and
approval. |
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| FINANCIAL
RESULTS & YEAR UNDER REVIEW |
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| The
year under review was a better year in terms of profits. Your company has
earned a net |
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| profit
before taxation at Rs. 44,114,545/= against Rs. 30,063,882/= in the
corresponding year. |
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| The
financial results are summarised as under: |
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|
Rupees |
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|
(in thousands) |
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| .Profit
for the year before taxation |
|
44,115 |
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| Provision
for taxation |
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|
11,377 |
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----------- |
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| Profit
after taxation |
|
32,738 |
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| Unappropriated
profit brought forward |
|
442 |
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|
----------- |
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| Profit
available for appropriation |
|
33,180 |
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| Appropriations: |
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| Proposed
cash dividend |
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|
15,000 |
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| Transfer
to general reserve |
|
18,000 |
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|
----------- |
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|
33,000 |
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----------- |
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| Unappropriated
profit carried forward |
|
180 |
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|
========= |
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| The
gross sales of the company has increased by Rs. 168,176 Million which is
about 17.90% |
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| of
the last year's sales but due to the increase in the other cost factors, the
profit before tax |
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| has not been increased in the same
proportion, however, due to effective management con- |
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| trols,
the gross profit of your company stood at Rs. 199,055,136/= which is 18.25%
of net |
|
| sales
with an improvement of 2.98% as compared to the last year. |
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|
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| The
financial charges of the company has drastically increased by Rs. 32,103
Million, |
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| the
main reasons were imposition of sales tax on raw cotton and early purchase of
raw cot- |
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| ton,
which enhance the bank borrowings during the year. |
|
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| WAPDA
has further increased the rate of electricity, however, your company has made |
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| arrangements
with Bhanero Energy Limited for power supply to the company at reduced rates, |
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| which
has started supplying power to your company. |
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| PROFIT
DISTRIBUTION |
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| Your
directors are pleased to recommend a payment of 50% final cash dividend that
is Rs. 5 |
|
| per
share for the year under review. |
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| FUTURE
OUTLOOK |
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| The
cotton crop of season 1997-98 has affected due to early rain falls and the
quality of raw |
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| cotton
is not up to the mark, which shall reduce the yield of yarn about 5%. The
prices of |
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| cotton
yarn in international market are not favourable due to currency crisis in far
east. The |
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| other
countries of the region are also devaluing their currency, which may further
effect the |
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| international
market of yarn. The conditions of international market are not in favour of
textile |
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| industries
in Pakistan however, the timely devaluation of Pak Rupee may help in revival
of the |
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| textile
industry. |
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| AUDITORS |
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| The
present auditors M/s Mushtaq & Company, Chartered Accountants being
eligible, |
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| have
offered themselves for reappointment. |
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| PATTERN
OF SHAREHOLDING |
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| Statement
showing pattern of holding of. shares as at September 30, 1997 is annexed to
this |
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| report. |
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| THANKS
AND GRATITUDE |
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| I,
on behalf of the Board, places on record the appreciation for the loyalty and
devotion to |
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| the
work by the staff and the workers of the company. I further extended thanks
to bankers |
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| and
customers for their continued support and trust in the company. |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed Balance Sheet of BHANERO TEXTILE MILLS LIMITED as at
Septem- |
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| ber
30, 1997 and the related Profit & Loss account and the Statement of
Changes in Financial Posi- |
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| tion
together with the notes forming part thereof, for the year then ended and we
state that we have |
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| 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 · |
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|
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| a)
In our opinion, proper books of accounts have been kept by the Company as
required by Com- |
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| panies
Ordinance, 1984. |
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|
|
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| b)
In our opinion; |
|
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| i)
The Balance Sheet and Profit and Loss account together with the notes thereon
have |
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| been
drawn up in conformity with the Companies Ordinance, 1984 and are in
agreement |
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| with
the books of account and are further in accordance with the accounting
policies |
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| consistently
applied. |
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|
|
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| ii)
The expenditure incurred during the year was for the purposes of the
Company's busi- |
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| ness, and |
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|
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| iii)
The business conducted, investments made and the expenditure incurred during
the year |
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| were
in accordance with the objects of the Company. |
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|
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| c)
In our opinion and to the best of our information and according to the
explanations given to us, |
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| the
Balance Sheet, Profit & Loss Account and the Statement of changes in
financial position, |
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| 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 |
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| State
of the Company's affairs as at September 30, 1997 and of the profit and the
changes in |
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| the
financial position for the year then ended; and |
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|
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| d)
In our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was |
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| deducted
by the Company and deposited in the central Zakat fund established under
Section 7 |
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| of
the Ordinance. |
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| YEAR
WISE STATISTICAL SUMMARY |
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| ASSETS
EMPLOYED |
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|
RS. IN THOUSANDS |
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|
1997 |
1996 |
1995 |
1994 |
1993 |
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| FIXED
ASSETS |
|
300,748 |
294,322 |
293,424 |
293,261 |
304,729 |
|
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|
|
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| INVESTMENTS
AND LONG |
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| TERM
LOANS & DEPOSITS |
12,338 |
15,074 |
3,327 |
2,165 |
1,565 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
273,219 |
279,534 |
169,256 |
161,671 |
143,517 |
|
|
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
|
| TOTAL ASSETS EMPLOYED |
586,305 |
588,930 |
466,007 |
457,097 |
449,811 |
|
|
|
|
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| FINANCED
BY |
|
|
|
|
| SHAREHOLDER'S
EQUITY |
188,179 |
170,442 |
153,154 |
144,249 |
117,586 |
|
|
|
| REDEEMABLE
CAPITAL |
27,744 |
41,727 |
53,722 |
64,014 |
72,845 |
|
|
|
|
| LONG
TERM LIABILITIES |
48,012 |
70,133 |
58,339 |
77,217 |
70,792 |
|
|
|
|
| DEFERRED
LIABILITIES |
12,235 |
10,366 |
10,542 |
8,510 |
8,419 |
|
|
|
|
| CURRENT
LIABILITIES |
310,135 |
296,262 |
190,190 |
163,107 |
180,169 |
|
|
|
----------- |
----------- |
----------- |
----------- |
----------- |
|
|
|
586,305 |
588,930 |
466,007 |
457,097 |
449,811 |
|
| TOTAL FUND INVESTED |
|
|
|
|
|
|
| PROFIT
& LOSS |
|
|
|
|
|
|
|
|
| TURNOVER
(NET) |
|
1,090,709 |
919,530 |
829,811 |
665,140 |
548,490 |
|
|
|
|
|
|
|
| GROSS
PROFIT |
|
199,055 |
140,416 |
99,840 |
154,238 |
126,876 |
|
|
|
|
| OPERATING
PROFIT |
|
147,962 |
99,736 |
61,742 |
96,709 |
87,090 |
|
|
|
|
| FINANCIAL
CHARGES |
|
102,362 |
68,654 |
46,936 |
67,213 |
57,722 |
|
|
|
|
|
|
|
| PROFIT BEFORE TAXATION |
44,114 |
30,063 |
22,028 |
51,396 |
27,905 |
|
|
|
|
|
|
|
| PROFIT AFTER TAXATION |
32,737 |
24,787 |
14,155 |
34,163 |
27,905 |
|
|
|
|
| CASH
DIVIDEND |
|
15,000 |
7,500 |
5,250 |
7,500 |
3,000 |
|
|
|
|
| TRANSFER
TO RESERVES |
18,000 |
26,000 |
0 |
27,000 |
25,000 |
|
|
|
|
| PROFIT
C/F |
|
179 |
442 |
9,154 |
249 |
586 |
|
|
|
|
|
|
|
1997 |
1996 |
1995 |
|
|
|
% |
% |
% |
|
|
|
|
| GROSS
PROFIT |
|
|
18.25 |
15.27 |
12.03 |
|
| OPERATING
PROFIT |
|
|
13.57 |
10.85 |
7.44 |
|
| PROFIT
BEFORE TAX |
|
|
4.04 |
3.27 |
2.65 |
|
| NET
PROFIT AFTER TAX |
|
3.00 |
2.70 |
1.71 |
|
| NET
PROFIT TO SHARE HOLDER EQUITY |
17.40 |
14.54 |
9.24 |
|
| NET
PROFIT TO TOTAL ASSETS |
|
5.58 |
4.21 |
3.03 |
|
| INCREASE
IN SALES |
|
18.82 |
10.81 |
24.75 |
|
| MATERIAL
TO NET SALES |
|
60.72 |
62.42 |
71.95 |
|
| ADMINISTRATIVE
EXPENSES TO NET SALES |
2.03 |
1.36 |
1.26 |
|
| SELLING
EXPENSES TO NET SALES |
|
2.65 |
3.06 |
3.33 |
|
| FINANCIAL
CHARGES TO NET SALES |
9.38 |
7.47 |
5.66 |
|
| INCOME
TAX TO GROSS SALES |
|
0.83 |
0.70 |
0.83 |
|
|
|
|
| SHORT
TERM SOLVENCY & OVERALL VALUATION |
|
|
|
|
|
|
1997 |
1996 |
1995 |
|
|
|
|
|
|
| WORKING
CAPITAL RATIO |
|
0.96:1 |
1.03:1 |
1:1 |
|
| EQUITY
RATIO |
|
32.09 |
28.94 |
32.87 |
|
| DEBT
RATIO |
|
67.91 |
71.06 |
67.13 |
|
| BREAKUP
VALUE PER SHARE |
|
62.73 |
56.81 |
51.05 |
|
| DIVIDED
PER SHARE |
|
5 |
2.5 |
1.75 |
|
|
|
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1997 |
|
|
|
|
|
|
|
|
NOTE |
1997 |
1996 |
|
|
|
RUPEES |
RUPEES |
|
| CAPITAL
AND LIABILITIES |
|
|
|
|
| CAPITAL
AND RESERVES |
|
|
|
|
| Authorised
Capital |
|
3 |
30,000,000 |
30,000,000 |
|
|
========= |
========= |
|
| Issued,
Subscribed and |
|
| paid-up-capital |
|
4 |
30,000,000 |
30,000,000 |
|
|
| REVENUE
RESERVES |
|
|
|
|
| General
reserves |
|
5 |
158,000,000 |
140,000,000 |
|
| Un-appropriated
profit |
|
|
179,653 |
442,011 |
|
|
---------- |
---------- |
|
|
|
|
188,179,653 |
170,442,011 |
|
|
| Redeemable
capital |
|
6 |
27,744,775 |
41,727,625 |
|
|
| LONG
TERM LIABILITIES |
|
|
| Long
term loans and debentures |
|
7 |
31,346,973 |
43,369,609 |
|
| Obligation
under finance lease |
|
8 |
5,811,546 |
15,602,661 |
|
| Customs
duty payable |
|
|
1,252,787 |
1,252,787 |
|
| Excise
duty payable |
|
|
9,600,875 |
11,209,528 |
|
|
----------- |
----------- |
|
|
48,012,181 |
71,434,585 |
|
| DEFERRED
LIABILITIES: |
|
|
|
| Staff
retirement gratuity |
|
9 |
6,217,527 |
4,349,538 |
|
| Deferred
taxation |
|
|
6,017,056 |
6,017,056! |
|
|
----------- |
----------- |
|
|
12,234,583 |
10,366,594 |
|
| CURRENT
LIABILITIES: |
|
|
|
| Short
term running finance |
|
10 |
65,777,647 |
77,436,863 |
|
| Current
maturity of long term liabilities |
|
26,314,932 |
24,428,796 |
|
| Creditors,
accured and other |
|
| liabilities |
|
11 |
86,189,506 |
63,593,434 |
|
| Provision
for taxation |
|
|
16,852,070 |
22,000,551 |
|
| Proposed
dividend |
|
|
15,000,000 |
7,500,000 |
|
|
----------- |
----------- |
|
|
310,134,155 |
294,959,644 |
|
| CONTINGENT
LIABILITIES |
|
12 |
-- |
-- |
|
|
|
----------- |
----------- |
|
|
586,305,347 |
588,930,459 |
|
|
========= |
========= |
|
| The
annexed notes form an integral part of these accounts. |
|
| Karachi
23rd February, 1998. |
|
|
| PROPERTY
AND ASSETS |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
|
|
|
|
|
| Operating
assets |
|
13 |
299,870,920 |
293,266,707 |
|
| Capital
work in progress |
|
14 |
877,430 |
1,055,617 |
|
|
---------- |
---------- |
|
|
|
300,748,350 |
294,322,324 |
|
| LONG
TERM LOANS |
|
15 |
224,669 |
2,966,811 |
|
|
|
|
|
| LONG
TERM INVESTMENTS |
|
16 |
11,374,609 |
11,374,609 |
|
|
| LONG
TERM DEPOSITS |
|
|
738,676 |
731,875 |
|
|
|
|
| CURRENT
ASSETS |
|
|
| Stores,
spares & loose tools |
|
17 |
3,741,367 |
4,039,133 |
|
|
|
|
|
|
|
|
| Stock
in trade |
|
18 |
50,070,742 |
39,795,422 |
|
| Trade debts |
|
|
19 |
102,144,463 |
90 325 385 |
|
| Loans
and Advances |
|
20 |
89,578,386 |
113,975,743 |
|
| Deposits,
prepayments and |
|
|
|
|
|
|
|
| other
receivables |
|
21 |
3,035,015 |
27,096,614 |
|
|
|
|
| Cash
and bank balances |
|
22 |
4,649,070 |
4,302,543 |
|
|
|
|
----------- |
----------- |
|
|
273,219,043 |
279,534,840 |
|
|
|
|
----------- |
----------- |
|
|
586,305,347 |
588,930,459 |
|
|
========= |
========= |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
|
|
|
NOTE |
1997 |
1996 |
|
|
|
RUPEES |
RUPEES |
|
|
| Sales (Net) |
|
|
23 |
1,090,709,300 |
919,530,354 |
|
| Cost
of Sales |
|
|
891,654,164 |
779,113,782 |
|
|
------------ |
------------ |
|
| Gross
Profit |
|
199,055,136 |
140,416,572 |
|
|
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative |
|
25 |
22,163,181 |
15,049,144 |
|
| Selling
and distribution |
|
26 |
28,929,458 |
24,026,349 |
|
|
|
|
|
------------ |
------------ |
|
|
|
51,092,639 |
39,075,493 |
|
|
------------ |
------------ |
|
| Operating
profit |
|
|
147,962,497 |
101,341,079 |
|
| Other
income |
|
|
27 |
836,209 |
564,255 |
|
|
------------ |
------------ |
|
|
148,798,706 |
101,905,334 |
|
|
|
|
| Financial
charges |
|
28 |
102,362,345 |
70,259,142 |
|
| Workers'
profit participation fund |
|
2,321,818 |
1,582,310 |
|
|
|
|
|
------------ |
------------ |
|
|
|
104,684,163 |
71,841,452 |
|
|
------------ |
------------ |
|
| Profit
before taxation |
|
|
44,114,543 |
30,063,882 |
|
| Taxation |
|
|
29 |
|
| -
Prior Year |
|
2,353,122 |
(1,342,918) |
|
| -
Current Year |
|
9,023,779 |
6,619,753 |
|
|
------------ |
------------ |
|
|
11,376,901 |
5,276,835 |
|
|
|
|
| Profit
after taxation |
|
|
32,737,642 |
24,787,047 |
|
| Unappropriated
profit brought forward |
|
442,011 |
9,154,964 |
|
|
|
------------ |
------------ |
|
|
33,179,653 |
33,942,011 |
|
| Profit
available for appropriation |
|
|
|
|
| APPROPRIATIONS |
|
|
|
| Proposed
dividend |
|
|
150,000,001 |
7,500,000 |
|
| General
Reserve |
|
|
18,000,000 |
26,000,000 |
|
|
------------ |
------------ |
|
|
33,000,000 |
33,500,000 |
|
|
|
|
------------ |
------------ |
|
| Un-appropriated
profit carried forward |
|
179,653 |
442,011 |
|
|
========== |
========== |
|
| The
annexed notes 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 |
|
|
| Profit
before taxation |
|
44,114,543 |
30,063,882 |
