| COLGATE-PALMOLIVE (PAKISTAN)LTD |
|
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|
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|
|
| Annual
Report 1997 |
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| CONTENTS |
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|
| COMPANY
INFORMATION |
|
| NOTICE
OF MEETING |
|
| DIRECTORS'
REPORT |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| YEARWISE
FINANCIAL HIGHLIGHTS |
|
| PATTERN
OF HOLDING OF SHARES |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
| IQBALALI
LAKHANI |
|
Chairman |
|
| TASLEEMUDDIN
AHMED BATLAY |
|
| CARLOS
ALBERTO VELASQUEZ |
|
| EBRAHIM
SIDAT |
|
| A.K.M.
SAYEED |
|
| A.
AZIZ EBRAHIM |
|
| ZULFIQARALI
LAKHANI |
Chief Executive |
|
|
| ADVISOR |
|
|
| SULTANALl
LAKHANI |
|
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| COMPANY
SECRETARY |
|
|
| RAMZANALI
HALANI |
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|
| AUDITORS |
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|
| EBRAHIM
& CO. |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE |
|
|
| Lakson
Square, Building No. 2 |
|
| Sarwar
Shaheed Road |
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| Karachi
- 74200 |
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| Pakistan |
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|
| FACTORIES |
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|
| Detergents,
Soap and Paste Units |
|
| G-6,
S.I.T.E. Kotri |
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| Distt.
Dadu (Sindh) |
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| Pakistan |
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|
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| NOTICE
OF MEETING |
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| NOTICE
IS HEREBY GIVEN that the 19th Annual General Meeting of Colgate-Palmolive
(Pakistan) |
|
| Limited
will be held at Avari Towers Hotel, Fatima Jinnah Road, Karachi on Tuesday,
December 16, 1997 |
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| at
11.30 a.m. to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
|
| 1.
To receive, consider and adopt the audited Balance Sheet and Profit and Loss
Account for the year |
|
| ended
June 30, 1997 and the Directors' and Auditors' Reports thereon. |
|
|
| 2.
To declare a dividend by way of issue of fully paid bonus shares @ 12.5% i.e.
in the proportion of |
|
| ONE
share for every EIGHT existing shares as recommended by the Board of
Directors. |
|
|
| 3.
To appoint auditors and to fix their remuneration. |
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|
| SPECIAL
BUSINESS |
|
|
| 4.
To consider to capitalise a sum of Rs. 13,589,180 by way of issue of
1,358,918 fully paid bonus |
|
| shares
of Rs. 10/- each and if thought fit to pass an ordinary resolution in the
matter. |
|
|
| The
statement' under section 160 of the Companies Ordinance, 1984 and draft of
the ordinary resolution |
|
| to
be passed in respect of the issue of bonus shares are annexed. |
|
|
|
| NOTES: |
|
|
| 1.
The share transfer books of the Company will remain closed from December 04,
1997 to December |
|
| 16,
1997 both days inclusive. Transfers received in order at the registered
office of the Company upto |
|
| December
03, 1997 will be considered in time for entitlement of the bonus shares. |
|
|
| 2.
A member entitled to attend and vote at the general meeting may appoint
another member as his |
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| proxy
to attend, speak and vote instead of him. |
|
|
| 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.
Members are requested to notify the Company promptly of any change in their
addresses. |
|
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| 5.
Form of proxy is enclosed herewith. |
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|
|
| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984 |
|
|
| This
statement is annexed to the Notice of the Ninteenth Annual General Meeting
and sets out the material |
|
| facts
concerning Special Business to be transacted at the meeting. |
|
|
| In
order to declare a dividend by way of issue of fully paid bonus shares, the
Directors recommend |
|
| to
issue bonus shares in the proportion of ONE share for every EIGHT existing
shares held by the |
|
| members.
For the purpose of issue of 1,358,918 bonus shares of Rs. 10/- each by way of |
|
| capitalization
of a sum of Rs. 13,589,180 out of the reserve for issue of bonus shares, the
following |
|
| resolution
will be considered to be passed, as an ordinary resolution: |
|
|
| "RESOLVED
THAT: |
|
|
| i) a sum of Rs. 13,589,180 out of the reserve
for issue of bonus shares be capitalised and applied |
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| in
making payment in full of 1,358,918 ordinary shares of Rs. 10/- each and that
the said shares |
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| be
allotted as fully paid up bonus shares to those members of the Company whose
names |
|
| appear
in the Register of members on December 03, 1997 @ 12.5% i.e. in the
proportion of |
|
| ONE
share for every EIGHT existing shares held and that such new shares shall
rank pari |
|
| passu
as regards future dividends and in all other respects with the existing
ordinary shares |
|
| of
the Company; |
|
|
| ii)
in the event of any member holding less than 8 shares or a number of shares
which is not an |
|
| exact
multiple of EIGHT, the fractional entitlement of shares of such members shall
be |
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| consolidated
into whole new shares and the Directors of the Company be and are hereby |
|
| authorised
to arrange sale of the shares constituted thereby in such manner as they may
think |
|
| fit
and to pay the proceeds of the sale to such of the members according to their
entitlement; |
|
|
| iii)
for the purpose of giving effect to the above matters, the Directors be and
are hereby |
|
| authorised
to give such directions as may be necessary and to settle any question or
difficulties |
|
| that
may arise in regard to the distribution of the said new shares as they think
fit." |
|
|
| The
Directors are interested in this business to the extent of their entitlement
of bonus shares as |
|
| shareholders. |
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|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors of the Company present their report together with the Audited
Accounts for the year |
|
| ended
June 30, 1997. |
|
|
|
Rupees in 000's |
|
|
| Profit
after taxation |
|
38,075 |
|
| Unappropriated
profit brought forward |
|
518 |
|
|
--------- |
|
| Profit
available for appropriation |
|
38,593 |
|
| Appropriations |
|
| Reserve
for proposed issue of bonus shares |
|
| in
the ratio of one share for every eight shares |
|
13,590 |
|
|
| Transfer
to General Reserve |
|
24,500 |
|
|
38,090 |
|
|
--------- |
|
| Unappropriated
profit carried forward |
|
503 |
|
|
========= |
|
| OPERATING
RESULTS |
|
| The
Management Team worked vigorously to defend market positions of our various
products thereby |
|
| enabling
the Company to achieve gross sales of Rs. 1.056 billion, as compared to the
previous 18 months sale |
|
| of
Rs. 1.389 billion. On a yearly proportionate basis, the sales revenue
improved by 14 per cent over the |
|
| average
of corresponding previous 12 months. |
|
|
| Despite
oscillating economic conditions, during the current financial year, the
company has earned a net profit |
|
| of
Rs. 38.075 million in comparison to Rs. 30.519 million of the previous 12
months on an averaged out-basis. |
|
|
| Poised
to perform well across key-categories of our business through product
innovations and distribution |
|
| expansion,
our performance would have been much better if our sales had not been
impacted by large scale |
|
| smuggling
of Detergent Powders. A high degree of pressure from competition also forced
the company to |
|
| maintain
and match its media spendings. Through consumer incentive programmes, we were
able to maintain |
|
| market
shares of our various brands even though this has meant a substantial rise in
our marketing costs. |
|
|
| The
benefit of reduction in sales tax and duties announced by the Government
under its financial package |
|
| was
passed on to the consumer through a price reduction - a move designed to
forestall any loss in market |
|
| momentum. |
|
|
| With
the belief that the consumers prefer quality branded products, we moved
forward to test launch two new |
|
| products,
Express Laundry Bar and Javex Bleach which have a potential of rising up to
become our major |
|
| brands
of the future. |
|
|
| Growth
through new product introductions, geographic expansion of distribution
cycles continue to support |
|
| us
in both consolidating and improving our sales results. |
|
|
| Productivity
gains and cut in manufacturing costs continue to receive management focus.
Keeping this aim |
|
| in
view, the company financed Rs. 44.490 million, partly from its own retained
earnings and the balance |
|
| through
lease finance, capital expenditures to expand our detergent plant capacity,
in addition to the |
|
| installation
of equipment for the bleach plant. Additional land adjacent to the present
factory was acquired for |
|
| the
purpose of the latter. |
|
|
| PROSPECTS |
|
|
| While
the Management intends to use all resources at its disposal - new products,
marketing and promotion |
|
| supported
by effective pricing to achieve consistent levels of business and profit
growths, a disturbing feature |
|
| has
been a noticeable cascading of production activity particularly of detergent
powders to cottage industry |
|
| levels.
Further, the smuggling of countervailing products in large volumes, coupled
with government policy |
|
| to
lower duties on finished imported products exert uncertain impact on our
future performance. Lowered |
|
| custom
duties in Particular, on finished products are designed to combat smuggling,
but the prices of imported |
|
| key
raw materials still remain the same as the duties tariff on them is identical
to finished goods. This does |
|
| not
augur well fora sound growth oriented market situation in the immediate term.
Nonetheless, we will use |
|
| the
leverages of the tremendous appeal of our well-known brands to propel our
sales to higher levels as much |
|
| as
the market can take. |
|
|
| STAFF
RELATIONS |
|
|
| The
training and skill development programmes will continue to deliver superior
return to our shareholders. |
|
| For
the year under report, the Directors place their appreciation for the hard
work and devotion put in by the |
|
| Management
and Staff vigorously to defend the company's market position and work towards
achieving our |
|
| aims. |
|
|
| AUDITORS |
|
|
| M/s.
Ebrahim & Co., Chartered Accountants, the existing Auditors of the
Company being eligible have offered |
|
| themselves
for re-appointment. |
|
|
| PATTERN
OF SHARE-HOLDING |
|
|
| The
Share-Holding pattern in the prescribed form is given in this report. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of COLGATE-PALMOLIVE (PAKISTAN)
LIMITED as at June |
|
| 30,
1997 and the related profit and loss account and statement of changes in
financial position togetherwith |
|
| 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 purpose of our audit, |
|
| and
after due verification thereof, we report that: |
|
|
| a)
in our opinion, proper books of accounts 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 togetherwith the notes thereon
have been |
|
| drawn
up in conformity with the Companies Ordinance, 1984 and are in agreement with
the |
|
| books
of accounts and we 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, the |
|
| balance
sheet, profit and loss account and the statement of changes in financial
position |
|
| togetherwith
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, 1997 and of the profit and 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. |
|
|
|
EBRAHIM & CO. |
|
| Karachi:
October 14, 1997 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1997 |
|
|
1997 |
1996 |
|
|
Notes |
(Rs. in OO0's) |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
3 |
36,284 |
8,567 |
|
| LONG
TERM LOANS |
|
4 |
1,394 |
1,118 |
|
| LONG
TERM DEPOSITS |
|
5 |
4,239 |
1,952 |
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
6 |
6,834 |
5,622 |
|
| Stock
in trade |
|
7 |
58,482 |
29,467 |
|
| Trade
debts |
|
8 |
6,971 |
10,603 |
|
| Loans
and advances |
|
9 |
12,315 |
16,168 |
|
| Trade
deposits and short term prepayments |
10 |
4,214 |
3,710 |
|
| Other
receivables |
|
11 |
583 |
2,408 |
|
| Cash
and bank balances |
|
12 |
1,425 |
1,092 |
|
|
|
--------- |
--------- |
|
|
|
25,288 |
3,534 |
|
| Less:
CURRENT LIABILITIES |
|
|
|
|
| Current
portion of long term liabilities |
|
13 |
282 |
913 |
|
| Short
term running finances |
|
14 |
50,029 |
22,949 |
|
| Creditors,
accrued and other liabilities |
|
15 |
18,357 |
56,502 |
|
| Dividends |
|
16 |
36 |
41 |
|
| Taxation |
|
17 |
7,354 |
9,355 |
|
|
--------- |
--------- |
|
| NET
CURRENT ASSETS |
|
10,522 |
24,224 |
|
|
--------- |
--------- |
|
|
14,766 |
44,846 |
|
|
|
--------- |
--------- |
|
|
56,683 |
56,483 |
|
|
|
========= |
========= |
|
|
| FINANCED
BY: |
|
| Share
capital |
|
18 |
43,178 |
26,595 |
|
| Capital
reserves |
|
19 |
13,456 |
13,456 |
|
| Reserve
for issue of bonus shares |
|
|
13,590 |
16,583 |
|
| Revenue
reserves |
|
20 |
22,967 |
64,018 |
|
|
|
--------- |
--------- |
|
| Shareholders
Equity |
|
|
27,655 |
55,116 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
|
| TO
FINANCE LEASES |
|
21 |
26,944 |
-- |
|
| DEFERRED
LIABILITY |
|
22 |
634 |
-- |
|
| LONG
TERM DEPOSITS |
|
23 |
1,450 |
1,367 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
24 |
|
|
|
---------- |
---------- |
|
|
56,683 |
56,483 |
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
Year ended |
Eighteen |
|
|
June 30, |
months ended |
|
|
1997 |
June 30, 1996 |
|
|
Notes |
(Rs. in 000's) |
|
|
| Sales |
|
33,881 |
37,245 |
|
| Cost
of goods sold |
|
17,835 |
38,902 |
|
|
---------- |
---------- |
|
| Gross
profit |
|
16,046 |
63,879 |
|
| Administrative
and selling expenses |
|
27 |
5,423 |
29,724 |
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
10,623 |
34,155 |
|
| Other
income -- |
|
28 |
4,656 |
9,903 |
|
|
|
---------- |
---------- |
|
|
15,279 |
44,058 |
|
|
| Financial
charges |
|
29 |
17,821 |
32,292 |
|
| Workers'
profit participation fund |
|
3,150 |
3,865 |
|
| Workers'
welfare fund |
|
1,240 |
1,461 |
|
|
---------- |
---------- |
|
|
22,211 |
37,618 |
|
|
---------- |
---------- |
|
| Net
profit for the year |
|
58,604 |
6,440 |
|
| Taxation |
|
30 |
20,529 |
26,197 |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
38,075 |
45,779 |
|
|
|
|
| Unappropriated
profit brought forward |
|
518 |
480 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
38,593 |
46,259 |
|
|
|
|
| Appropriation |
|
|
|
| Reserve
for proposed issue of |
|
|
|
|
|
|
| bonus
shares - 12.5% (1996: 18%) |
|
13,590 |
16,583 |
|
|
|
|
| Tax
thereon |
|
|
1,658 |
|
|
13,590 |
18,241 |
|
| Transfer
to general reserve |
|
24,500 |
27,500 |
|
|
---------- |
---------- |
|
|
38,090 |
45,741 |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
503 |
518 |
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
Year ended |
Eighteen |
|
|
June 30, |
months ended |
|
|
1997 |
June 30, 1996 |
|
|
(Rs. in 000's) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Net
profit for the year |
|
58,604 |
6,440 |
|
| Adjustments
for items not involving movement of funds |
|
|
| Depreciation |
|
12,352 |
12,801 |
|
|
| Profit
on sale of fixed assets |
|
(77) |
(548) |
|
|
--------- |
--------- |
|
|
5,343 |
18,693 |
|
| Decrease/(Increase)
in current assets |
|
| Stores
and spares |
|
(1,212) |
(642) |
|
| Stock
in trade |
|
36,521 |
(108,595) |
|
| Trade
debts |
|
3,632 |
(20,200 |
|
| Advances,
deposits and prepayments |
|
3,349 |
2,042 |
|
| Other
receivables |
|
1,825 |
(502) |
|
|
--------- |
--------- |
|
|
44,115 |
'(127,897 |
|
| (Decrease)/Increase
in current liabilities |
|
|
| Creditors,
accrued and other liabilities |
|
(38,145) |
63,832 |
|
|
--------- |
--------- |
|
| Net
cash from operating activities before tax |
|
11,313 |
20,164 |
|
| Tax paid |
|
(21,896) |
(28,010) |
|
|
--------- |
--------- |
|
| Net
cash from operating activities |
|
54,953 |
(7,846) |
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Addition
to fixed assets and capital |
|
| work
in progress |
|
(40,245) |
(18,035) |
|
| Long
term loans and advances |
|
(276) |
(778) |
|
|
|
| Long
term deposits |
|
(2,287) |
(591) |
|
|
| Proceeds
from sate of fixed assets |
|
253 |
699 |
|
|
--------- |
--------- |
|
| Net
cash from investing activities |
|
(42,555) |
(18,705) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Finance
obtained on sale and leaseback |
|
27,450 |
-- |
|
| Redemption
of redeemable capital |
|
(913) |
(6,241) |
|
| Repayment
of liabilities against finance lease |
|
(224) |
|
|
| Repayment
of long term loans |
|
|
(436) |
|
|
|
|
|
|
|
| Short
term running finances |
|
(38,456) |
(134) |
|
|
| Dividend
paid |
|
(5) |
|
|
| Long
term deposits |
|
83 |
25 |
|
|
--------- |
--------- |
|
| Net
cash from financing activities |
|
(12,065) |
(6,786) |
|
|
--------- |
--------- |
|
| Net
increase/(decrease) in cash and cash equivalents |
|
333 |
(33,337) |
|
| Cash
and cash equivalents at the beginning of the year |
1,092 |
34,429 |
|
|
--------- |
--------- |
|
| Cash
and cash equivalents at the end of the year |
|
1,425 |
1,092 |
|
|
========= |
========= |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
| 1.
NATURE AND STATUS OF BUSINESS |
|
|
| The
Company was incorporated in Pakistan on December 5, 1977 as a public limited
Company and its |
|
| shares
are quoted on the stock exchanges in Pakistan. The Company is mainly engaged
in manufacture |
|
| and
sales of detergents, personal and other products. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting year |
|
|
| Consequent
to the amendments announced in the Finance Act, 1995 regarding fixation of
the |
|
| fiscal
year as the income year, the company changed the accounting year to July -
June. As a |
|
| result
the profit and loss account was prepared for the eighteen months period from
January 01, |
|
| 1995
to June 30, 1996 figures of which have been used in these accounts for
comparison. |
|
|
| 2.2
Cost convention |
|
|
| These
accounts have been prepared under the historical cost convention without any
adjustments |
|
| for
the effect of inflation or current values. |
|
|
| 2.3
Staff retirement benefits |
|
|
| The
Company contributes to a provident fund scheme established since July 1,
1981. |
|
|
| 2.4
Taxation |
|
|
| Provision
for current taxation is the higher of the amount computed on taxable income
at the |
|
| current
tax rates after taking into account tax credits/rebates, if any, and the
minimum tax |
|
| computed
at the prescribed rate on sales. |
|
|
| The
Company accounts for deferred tax liability, if any, on account of
accelerated depreciation |
|
| allowed
under the Income Tax Rules and after taking the effect of provision for
doubtful debts and |
|
| other
major timing differences. |
|
|
| 2.5
Tangible fixed assets |
|
|
| These
are stated at cost less accumulated depreciation except leasehold land and
capital work |
|
| in
progress which are stated at cost. |
|
|
| Depreciation
is charged using the reducing balance method by applying rates specified in
relevant |
|
| note
on written down value. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred while cost of
major |
|
| replacements
and improvements, if any, are capitalised. |
|
|
| Gains
and losses on disposal of fixed assets are included in current income. |
|
|
| 2.6
Accounting for leases |
|
|
