| DEWAN TEXTILE MILLS LIMITED |
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| Annual
Report 1997 |
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| Mission
Statement |
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|
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| The
mission of Dewan Textile Mills Limited is to be the finest |
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| Organisation,
and to conduct business responsibly in a straight |
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| forward
way. |
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| Our
basic aim is to benefit the customers, employees and |
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| shareholders
and to fulfil our commitments to the society. Our |
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| hallmark
is honesty, initiative and teamwork of our people and |
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| our
ability to respond effectively to change in all aspects of life |
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| including
technology, culture and environment. |
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| We
will create a work environment, which motivates, recognises |
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| and
rewards achievements at all levels of the Organisation |
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| because |
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| IN
ALLAH WE TRUST & IN PEOPLE WE BELIEVE. |
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| We
will always conduct ourselves with integrity and strive to be |
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| the best. |
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| CONTENTS |
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| Company
Information |
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| Notice
of the Meeting |
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| Statement
Under Section 160 |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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| Balance
Sheet |
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| Profit
& Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Share Holding |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
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| DEWAN
GHULAM MUSTAFA KHALID |
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| Chairman |
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| DEWAN
M. ZIA-UR-REHMAN FAROOQUI |
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| Managing
Director/Chief Executive |
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| DEWAN
MOHAMMAD AYUB KHALID |
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| Resident
Director |
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| DEWAN
MOHAMMAD YOUSUF FAROOQUI |
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| DEWAN
MOHAMMAD HAMZA FAROOQUI |
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|
| DEWAN
ABDUL REHMAN FAROOQUI |
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|
| MR.
IQBAL NAEEM PASHA |
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| AUDITORS |
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| MESSRS.
FEROZE SHARIF TARIQ & CO. |
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| Chartered
Accountants |
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| BANKERS |
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| MUSLIM
COMMERCIAL BANK LIMITED |
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| CITI
BANK N. A. KARACHI |
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| HABIB
BANK LIMITED |
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| STANDARD
CHARTERED BANK |
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| BANK
OF AMERICA |
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| AMERICAN
EXPRESS BANK |
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| SOCIETE
GENERALE, |
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| THE
FRENCH & INTERNATIONAL BANK |
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| ABN
AMRO BANK |
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| REGISTERED
OFFICE |
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| DEWAN
CENTRE |
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| 3-A,
Lalazar, |
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| Beach
Hotel Road, |
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| Karachi
- 74000, |
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| Pakistan. |
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|
| MILLS |
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| H/20
& H/26, S.I.T.E., |
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| Kotri,
District Dadu, |
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| Sindh,
Pakistan. |
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| NOTICE
OF TWENTY EIGHTH ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Twenty Eighth Annual General Meeting of Dewan
Textile Mills |
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| Limited
will be held on Wednesday, 25th March, 1998 at 2:00 p.m. at Dewan Centre,
3-A, Lalazar, |
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| Beach
Hotel Road, Karachi, to transact the following business: |
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| ORDINARY
BUSINESS: |
|
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| 1.
Recitation from HOLY QURAN. |
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| 2.
To read and confirm the minutes of the Twenty Seventh Annual General Meeting
held on 28th |
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| June
1997. |
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| 3.
To receive, consider and adopt the annual audited accounts for the year ended
30 September |
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| 1997,
together with the Directors' and Auditor's Report therein. |
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| 4.
To approve the declaration of 15% Cash Dividend. |
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| 5.
To appoint Auditors of the Company for the year ending 30 September 1998 and
to fix their |
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| remuneration. |
|
|
| (i)
Dewan Ghulam Mustafa Khalid |
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| (ii)
Dewan M. Zia-ur-Rehman Farooqui |
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| (iii)
Dewan Mohammad Ayub Khalid |
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| (iv)
Dewan Mohammad Yousuf Farooqui |
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| (v)
Dewan Mohammad Hamza Farooqui |
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| (vi)
Dewan Abdul Rehman Farooqui |
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| (vii)
Mr. Iqbal Naeem Pasha |
|
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| 6.
To appoint Auditors of the Company for the year ending 30 September 1998 and
to fix their |
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| remuneration. |
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| SPECIAL
BUSINESS |
|
|
| 7.
To consider and approve short term loans and advances out of surplus funds
available with the |
|
| Company
to Dewan Sugar Mills Limited in compliance with the provisions of Section 208
of |
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| the
Companies Ordinance, 1984. |
|
|
| 8.
To transact any other business with permission of the Chairman. |
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| NOTES: |
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| 1.
The Shares Transfer Books of the Company will remain closed from 21 March
1998 to 31 March |
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| 1998
(both day inclusive). |
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| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint a proxy to attend, |
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| speak
and vote for him / her (A proxy must be member of the company). |
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| 3.
An instrument of proxy and a power of attorney or other authority (if any)
under which it is signed |
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| or
a notarially certified copy of such power of attorney, in order to be valid
must be deposited at the |
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| registered
office of the Company not less than 48 hours before the time of the meeting |
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| 4.
Members are requested to notify any changes in their address immediately. |
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|
| "Statement
under Section 160 of the Companies Ordinance, 1984 is attached with the
Annual Report cir- |
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| culated
to the members of the company". |
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| STATEMENT
UNDER SECTION 160 |
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| OF
THE COMPANIES ORDINANCE, 1984 |
|
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| This
statement is annexed to the Notice of Twenty Eighth Annual General Meeting of
Dewan Textile |
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| Mills
Limited to be held on 25th March 1998 and sets out material fact concerning
the Special |
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| Business
to be transacted at the Meeting. |
|
|
| 1.
Investment in Associated Companies |
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| The
Board of Directors considers to advance temporary short term financing to the
associated com- |
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| panies
out of surplus funds available with the Company. Details of such financing
are given |
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| below: |
|
|
| (i)
Name of borrower Company and |
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Dewan Sugar Mills Limited |
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| associated undertaking
together with |
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Rupees Fifty Million only |
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| the
amount of loans and advances. |
|
|
| (ii)
Rate of interest to be charged on each |
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- 1% above the rate on
which the lending |
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| loan
and advance together with the |
|
Company has obtained its
own borrowing |
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| particulars
of collateral security to be |
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- No Security is
considered necessary as all the |
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| obtained
from borrower. |
|
companies are under
common management |
|
|
control. |
|
|
| (iii)
Period for which these loans and |
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- Twelve Months |
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| advances
will be made |
|
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| (iv)
The terms of repayment or any other |
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- The loans and advances
are adjustable within |
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| terms
of loans and advances. ' |
|
a period of twelve months
or as and when |
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|
required by the lending
Company. |
|
|
| (v)
Purpose of loans and advances |
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- The purpose of loans
and advances is to pro- |
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|
vide any immediate
requirement of working |
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|
capital of the borrowing
Companies. |
|
|
| (vi)
Benefits likely to accrue to the |
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- Tim investing Company
and its shareholders |
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| Company
and its shareholders from |
|
will be benefited in a
manner that their invest- |
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| loans
and advances |
|
merit will fetch a return
of one percent over |
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|
and above the mark-up
rate at which the |
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|
investing Company has
borrowed. Further, |
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|
the surplus funds will
not remain idle and will |
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|
be invested in the most
efficient manner |
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|
whereby the investing
Company, not only get- |
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|
ting good return but the
funds will also remain |
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|
at the disposal of the
investing Company as |
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|
such loans and advances
are repayable on |
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|
demand. |
|
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| None
of the Directors or their spouse has any vested or non-vested interest
whether directly, or indirectly in |
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| the
proposed business. |
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| In
this regard following resolution is proposed to be passed, with or without
modification, as a |
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| 'SPECIAL
RESOLUTION.' |
|
|
| "Resolved
that the Board of Directors of the Company be and is hereby authorised to
make temporary short |
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| term
loans / advances to Dewan Sugar Mills Limited up to maximum limit of Rs. 50
million each at the |
|
| mark
up rate of 1% above the rate on which the Company has obtained the borrowing. |
|
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| These
temporary loans / advances shall be adjusted as and when required by the
Company and shall not |
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| exceed
12 months period." |
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|
| DIRECTORS'
REPORT |
|
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| Your
Directors take pleasure in presenting to you the 28th Annual Report of the
Company together |
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| with
the audited accounts for the year ended on September 30, 1997. |
|
|
| Alhamdolillah, the results for the year under review are satisfactory despite
many adverse factors |
|
| such
as increase in cotton prices as compared with last year, instability in yarn
prices and immense |
|
| increase
in power charges. |
|
|
| By
the grace of Almighty Allah, your Company has earned a Net Profit of Rs.36.4
million as com- |
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| pared
with Net Profit of Rs. 131.4 million of last year. Current year's Profit
includes Cash Dividend |
|
| Income
of Rs. 38.6 million from Dewan Salman Fibre Ltd. This dividend income has
once again pro- |
|
| vided
a sign of relief to your Company's cash flow. The highlights of the Accounts
are as follows: |
|
|
|
1997 |
1996 |
|
|
(Rupees) |
|
|
| Gross
Sales |
|
1,727,606,822 |
1,678,087,086 |
|
| Fuel,
Power and Water |
|
149,965,548 |
119,102,199 |
|
| Gross
Profit |
|
231,161,377 |
198,093,251 |
|
| Cash
Dividend income from DSFL |
|
38,640,000 |
134,400,000 |
|
| Taxation |
|
16,600,000 |
26,334,672 |
|
| Net
Profit After Tax |
|
36,449,499 |
131,424,574 |
|
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| We
humbly gratefully bow our heads before Almighty Allah, the Most Gracious and
Merciful, who |
|
| has
rewarded and blessed Your Company with His countless bounties in difficult
times. |
|
|
| IF
YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN) |
|
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| Your
Directors are pleased to propose appropriation of profit in the following
manner: |
|
|
| Profit
for the year 1996-97 |
|
Rs. |
36,449,499 |
|
| Un
appropriated Profit brought forward |
|
Rs. |
142,197,208 |
|
|
|
----------- |
|
| Profit
available for appropriation |
|
Rs. |
178,646,707 |
|
|
|
============ |
|
| Appropriation |
|
|
|
| Cash
dividend |
|
Rs. |
10,395,000 |
|
| Un-appropriated
profit carried forward |
|
Rs. |
168,251,707 |
|
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|
----------- |
|
|
Total |
Rs. |
178,646,707 |
|
|
============ |
|
|
|
| The
Board of Directors took decision for appropriation of the profit keeping in
view the expectations |
|
| of
the shareholders from Dewan Mushtaq Group, cash position of the Company,
future profitabili- |
|
| ty
and present scenario of Textile Industry.. |
|
|
| The
Board also decided to apprise its valued shareholders current status and
future of local Textile |
|
| industry
and other prevalent situation in detail through this report. |
|
|
| SALIENT
FEATURES OF THE ACCOUNTS: |
|
|
| 1.
Total gross sales of your Company amounted to Rs. 1.72 billion as compared to
Rs. 1.67 bil- |
|
| lion
last year. Minimal increase in sales is mainly attributed to devaluation of
Pak Rupee |
|
| against
US Dollar. |
|
|
| 2.
Earning Per Share of your Company works out to Rs. 5.26 as compared with last
year's EPS |
|
| which
was Rs. 18.96. |
|
|
| 3.
During the reviewing year, Textile Industry continued to remain under grave
crisis. Cotton |
|
| crop
once again failed miserably and cotton prices remained at high level. Average
price of |
|
| cotton
remained around Rs. 2,200/- per maund, excluding 12.5% sales tax. The sales
of your |
|
| Company
increased marginally, primarily due to devaluation impact. The yarn prices |
|
| remained
under pressure whereas other costs like power charges increased
significantly. |
|
|
| 4.
The Board would like to apprise the shareholders that our plants are based on
old technolo- |
|
| gy
and with the passage of time, they are less efficient than the new technology
plant and |
|
| machinery.
Since the plant and machinery are almost fully depreciated, therefore, your |
|
| Company
has been able to maintain profitability and paid dividend every year
regularly. |
|
|
| 5.
Alhamdolillah, your company has been able to meet all its financial
obligations on time and |
|
| from
its own resources. |
|
|
| FUTURE
PROSPECTS |
|
|
| The
outlook of local Textile Industry appears encouraging for the year 1998. An
improvement in raw |
|
| material
position, supported with cheap export-refinance facility and depreciated
Rupee value, is |
|
| expected
to attain a good performance during the year. The 1998 cotton crop is
expected to be |
|
| 8.8N9.0
million bales (3-5% lower than 1997). The crop size is little lower this
time, it still compares |
|
| well
with total requirement of the local Textile Industry which stood at 8.5
million bales in 1997, |
|
| down
from 8.9 million bales in 1996. As per the estimates, after accounting the
usage by the infor- |
|
| mal
sector to the tune of 0.5 million bales the output of 8.8 million bales puts
the Textile industry in |
|
| an
accommodation position. The fact that adequate quantity of cotton will be
available for the |
|
| domestic
industry during the current season is also reflected in the spot prices of
cotton at Karachi |
|
| Cotton
Exchange which are on average reduced by 5% as compared with last year. |
|
|
| The
Management has decided to implement a major Balancing, Modernising and
Replacement |
|
| (BMR)
program in order to remain competitive in its field of operation. Some of the
capital expen- |
|
| diture
incurred in this relation has been reflected in the current accounts and
further investment is |
|
| underway.
The Board feels that it has now become inevitable to undertake BMR so as to
maintain |
|
| promising
future prospects of your Company. |
|
|
| NOTE
OF THANKS: |
|
| The
Board puts on record its gratitude to its valued shareholders, federal and
provincial govern- |
|
| ment
functionaries, banks, development financial institutions and customers whose
co-operation, |
|
| constant
support and patronage have enabled of your Company to achieve the desired
results. |
|
|
| The
Board also expresses its thanks for the valuable teamwork, loyalty and
laudable efforts ren- |
|
| dered
by the executives, staff members and workers of your Company, during the year
under |
|
| review,
and wish to place on record its appreciation for the same. |
|
|
| AUDITORS: |
|
| The
Auditors of your Company, Messrs Feroze, Sharif, Tariq & Company,
Chartered accountants, |
|
| retire
and offer their services for re-appointment for the ensuing year on the same
remuneration. |
|
|
| CONCLUSION: |
|
| In
conclusion, we bow, beg and pray to Almighty Allah, Rehman-o-Rahim, in the
name of our |
|
| beloved
prophet, Muhammad, peace be upon him, for continued showering of His
Blessings, |
|
| Guidance,
Strength, Health and Prosperity to us, our Company, Country and Nation; and
also pray |
|
| to
Almighty Allah to bestow peace, harmony, brotherhood and unity in true
Islamic spirit to whole |
|
| of
Muslim Ummah, Ameen, Summa-Ameen. |
|
|
| LO-MY
LORD IS INDEED HEARER OF PRAYER (HOLY QURAN) |
|
|
| For
and on behalf of the Board of Directors |
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Dewan Textile Mills Limited, as at
30 September, 1997 |
|
| 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 accounting policies
consistently |
|
| applied; |
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the Company's
busi- |
|
| ness; 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 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 30 September 1997 and of the profit and the 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 trader
Section |
|
| 7
of that Ordinance. |
|
|
|
| BALANCE
SHEET |
|
| AS
ON 30 SEPTEMBER 1997 |
|
|
|
1996 |
1997 |
|
| CAPITAL AND LIABILITIES |
Notes |
|
(Rupees) |
|
| SHARE
HOLDER'S EQUITY |
|
| Share
Capital |
|
| Authorised |
|
| 30,000,000
Ordinary shares of Rs. 10/- each |
|
300,000,000 |
300,000,000 |
|
| Issued,
Subscribed and Paid up |
|
========== |
========== |
|
| Share
capital |
|
3 |
69,300,000 |
69,300,000 |
|
| Reserves
and surplus |
|
4 |
501,251,707 |
475,197,208 |
|
|
|
---------- |
---------- |
|
|
|
570,551,707 |
544,497,208 |
|
| DEFERRED
LIABILITIES FOR |
|
|
|
|
| Assets
subject to finance lease |
|
5 |
46,234,778 |
16,218,097 |
|
| Staff
gratuity |
|
|
24,810,772 |
22,522,947 |
|
| Taxation |
|
|
26,252,244 |
26,252,244 |
|
|
|
---------- |
---------- |
|
|
|
97,297,794 |
64,993,288 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
portion of lease liabilities |
|
|
10,832,941 |
2,288,208 |
|
| Short-term
running finances - Secured |
|
6 |
189,584,532 |
195,976,186 |
|
| Creditors,
accrued expenses and other liabilities |
7 |
72,551,695 |
85,597,811 |
|
| Dividends |
|
8 |
20,320,340 |
13,934,453 |
|
| Provision
for taxation |
|
|
95,087,659 |
100,747,652 |
|
|
|
---------- |
---------- |
|
|
|
388,377,167 |
398,544,310 |
|
| Contingencies |
|
9 |
---------- |
---------- |
|
|
1,056,226,668 |
1,008,034,806 |
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
| Operating
fixed assets - at cost |
|
| less
accumulated depreciation |
|
10 |
234,521,404 |
161,564,361 |
|
|
|
|
|
| LONG
TERM INVESTMENT |
|
11 |
210,000,000 |
210,000,000 |
|
| LONG
TERM DEPOSITS |
|
12 |
238,129 |
218,129 |
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
13 |
38,675,906 |
53,483,685 |
|
| Stock
- in - trade |
|
14 |
358,944,503 |
246,606,872 |
|
| Trade
debts |
|
15 |
79,207,250 |
204,533,779 |
|
| Advances,
deposits, prepayments and |
|
|
|
|
| other
receivables |
|
16 |
132,457,593 |
131,183,514 |
|
| Cash
and bank balances |
|
17 |
2,181,883 |
444,466 |
|
|
|
---------- |
---------- |
|
|
61l,467,135 |
636,252,316 |
|
|
---------- |
---------- |
|
|
1,056,226,668 |
1,008,034,806 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts |
|
|
|
| Note:
Chief Executive of the company is out of Pakistan, therefore the Balance
Sheet and Profit and Loss |
|
| Account
signed by two Directors. |
|
|
|
| Profit
& Loss Account |
|
| For
the year ended 30 September 1997 |
|
|
|
|
1997 |
1996 |
|
|
Notes |
(Rupees) |
|
|
| Sales |
|
18 |
1,692,542,460 |
1,646,800,733 |
|
| Less:
Excise / Export Duty |
|
19 |
2,042,010 |
10,554,442 |
|
|
|
---------- |
---------- |
|
|
|
1,690,500,450 |
1,636,246,291 |
|
| Cost
of sales |
|
20 |
1,459,339,073 |
1,438,153,040 |
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
231,161,377 |
198,093,251 |
|
| Operating
expenses |
|
|
|
|
| Administrative
& general |
|
21 |
17,043,518 |
13,141,636 |
|
| Selling
and distribution |
|
22 |
83,542,043 |
81,705,822 |
|
|
|
---------- |
---------- |
|
|
|
100,585,561 |
94,847,458 |
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
130,575,816 |
103,245,793 |
|
| Other
charges |
|
|
|
|
| Financial
charges |
|
23 |
112,540,992 |
77,038,480 |
|
| Donation |
|
24 |
2,624,832 |
860,503 |
|
| Workers'
profit participation fund |
|
|
770,500 |
1,267,341 |
|
| Workers'
welfare fund |
|
|
395,412 |
720,223 |
|
|
|
---------- |
---------- |
|
|
|
116,331,736 |
79,886,547 |
|
|
|
---------- |
---------- |
|
|
|
14,244,080 |
23,359,246 |
|
| Other
Income |
|
25 |
38,805,419 |
134,400,000 |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
53,049,499 |
157,759,246 |
|
|
| Taxation |
|
| Current
Year |
|
16,600,000 |
22,310,000 |
|
| Deferred |
|
-- |
40,246,721 |
|
|
---------- |
---------- |
|
|
16,600,000 |
26,334,672 |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
36,449,499 |
131,424,574 |
|
|
| Unappropriated
profit brought forward |
|
142,197,208 |
24,632,634 |
|
|
---------- |
---------- |
|
|
178,646,707 |
156,057,208 |
|
| Appropriation |
|
| Proposed
cash dividend @ 15% (1996:20 %) |
|
10,395,000 |
13,860,000 |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
168,251,707 |
142,197,208 |
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| Note:
Chief Executive of the company is out of Pakistan,
therefore the Balance Sheet and Profit and Loss Account |
| signed
by two Directors. |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER 1997 |
|
|
1997 |
1996 |
|
|
(Rupees) |
|
| CASH FLOW FROM OPERATING
ACTIVITIES |
|
|
| Profit
before taxation |
|
53,049,499 |
157,759,246 |
|
| Adjustment
for non-cash and other items |
|
|
|
| Depreciation |
|
27,803,315 |
19,111,158 |
|
| Financial charges accrued |
|
