| Dewan Salman Fibre Limited |
|
|
|
|
|
|
|
| (Annual
Report 1996-97) |
|
| (A
JOINT VENTURE OF: Mitsubishi Corp. Japan, Dewan Mushtaq Group, Pakistan, Sam
Yang Corp. Korea) |
|
|
| CONTENTS |
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors' Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Summary
of Differences between IAS, UK GAAP and US GAAP |
|
| Pattern
of Share Holding |
|
|
| COMPANY
INFORMATION |
|
| BOARD
OF DIRECTORS |
|
| AKIRA
YAMAMURA |
|
Chairman |
|
| DEWAN
ZlAUR REHMAN FAROOQI |
President / Chief
Executive |
|
| DEWAN
ASlM MUSHFIQ FAROOQUl |
Managing Director |
|
| CHANG
NAM KIM |
|
| DEWAN
GHULAM MUSTAFA KHALID |
|
| DEWAN
MOHAMMED YOUSUF FAROOQUI |
|
| DEWAN
MOHAMMAD AYUB KHALID |
|
| DEWAN
ABDUL REHMAN FAROOQUI |
|
| YOON KIM |
|
(Alternate Director) |
|
| KOICHIRO
YABUTA |
|
(Alternate Director) |
|
| HIROYUKI
AOKI |
|
(Alternate Director) |
|
| HO-SIK KI |
|
(Alternate Director) |
|
|
| AUDITORS |
|
|
| FARUQ
ALl & COMPANY |
|
CHARTERED ACCOUNTANTS |
|
| FEROZE
SHARIF TARIQ & COMPANY |
CHARTERED ACCOUNTANTS |
|
|
|
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| SECRETARY |
|
|
| TARIQ
MOHAMMAD KHAN |
|
|
| LEGAL
ADVISORS |
|
| KHALID
ANWER & COMPANY ADVOCATES |
|
|
| TAX
ADVISORS |
|
| SHARIF
& COMPANY ADVOCATES |
|
|
| FACTORY
OFFICE |
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| PLOT
NO. 1, DEWAN FAROOQUE INDUSTRIAL PARK, |
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| DISTRICT
HARIPUR (N.W.F.P.) |
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|
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| HEAD OFFICE |
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| DEWAN
CENTRE, |
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| S-A,
LALAZAR, |
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| BEACH
HOTEL ROAD, |
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| KARACHI-74000. |
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|
|
|
| REGISTERED
OFFICE |
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| DEWAN
CENTRE, |
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| 17,
STREET-84, |
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| SECTOR
G-6/4, ISLAMABAD-44000. |
|
|
| BANKERS |
|
|
| ABN
AMRO BANK |
|
| AMERICAN
EXPRESS BANK |
|
| BANK
OF AMERICA |
|
| CITIBANK |
|
|
| FAYSAL
BANK LIMITED |
|
| HABIB
BANK LTD. |
|
| MUSLIM
COMMERCIAL BANK LTD. |
|
| SOCIETE
GENERALE, THE FRENCH AND INTERNATIONAL BANK |
|
| STANDARD
CHARTERED BANK |
|
|
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|
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| NOTICE
OF EIGHTH ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Eighth Annual General Meeting of DEWAN SALMAN FIBRE
LIMITED |
|
| will
be held on 26 February 1998 at 3.00 p.m. at Dewan Centre, 17, Street 84,
Sector G-6/4, |
|
| Islamabad,
to transact the following business: |
|
|
| ORDINARY
BUSINESS: |
|
| 1.
Recitation from HOLY QURAN. |
|
| December,
1996 |
|
|
| 3.
To receive, consider and adopt the annual audited accounts for the year ended
30 June |
|
| 1997,
together with the Directors' and Auditors' Report thereon. |
|
|
|
|
| 4.
To approve the declaration of 7.5% Cash Dividend and issuance of Bonus Shares
at the |
|
| rate of 15%. |
|
|
|
|
| 5.
To appoint Auditors of the Company for the year ending 30 June 1998 and to
fix their |
|
| remuneration. |
|
|
|
| SPECIAL
BUSINESS: |
|
| 6.
To consider and approve alteration in Memorandum of Association. |
|
|
|
|
| 7.
To consider, approve and authorise the President/Chief Executive of the
Company |
|
| to
finalise various contracts required for implementing the Poly-Acrylonitrile
plant to |
|
| produce
Acylic Staple Fibre and Tow. |
|
|
|
|
| 8.
To consider authorisation to the Board of Directors of the Company for making |
|
| necessary
financing arrangements up to the extent of US$ 45 million for financing the |
|
| Poly-Acrylonitrile
plant to produce Acrylic Staple Fibre and Tow, to be raised through |
|
| various
means of financing both in local and foreign currency and to authorise them |
|
| to
negotiate, finalise and sign contracts, deeds and any other documents in this |
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| respect
after taking approval by way of unanimous resolution passed in a meeting |
|
| of
Board of Directors convened in accordance with the Articles of Association of
the |
|
| Company. |
|
|
|
|
|
| 9.
To consider and authorise the Board of Directors to make necessary plans to
expand |
|
| the
Company's Polyester products manufacturing facilities and recommend that the |
|
| Board
of Directors be authorised to negotiate, finalise and sign machinery
contracts |
|
| for
the most economical capacity and to explore, negotiate and finalise efficient |
|
| means
of financing for such expansion plans after taking approval by way of
unanimous |
|
| resolution
passed in a meeting of Board of of Directors convened in accordance with |
|
| the
Articles of Association of the Company. |
|
|
| 10.
To consider and approve short term loans and advances, out of surplus funds
available |
|
| with the Company to Dewan Textile Mills
Limited and / or Dewan Khalid Textile Mills |
|
| Limited and / or Dewan Mushtaq Textile
Mills Limited in compliance with the provisions |
|
| of Section 208 of the Companies Ordinance,
1984. |
|
|
| 11.
To transact any other business with permission of the Chair. |
|
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|
|
|
By Order of the Board |
|
| Date:
04 February 1998 |
|
(TARIQ MOHAMMAD KHAN) |
|
| Place:
Karachi |
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The Shares Transfer Books of the Company will remain closed from 18 February
1998 |
|
| to
28 February 1998 (Both days inclusive). |
|
|
| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint |
|
| a
proxy to attend, speak and vote for him/her (A proxy must be a member of the |
|
| Company). |
|
|
|
| 3.
An instrument of proxy and a power of attorney or other authority (if any)
under which |
|
| it
is signed or a notarilly certified copy of such power of attorney, in order
to be valid |
|
| must
be deposited at the registered office of the Company not less than 48 hours |
|
| before
the time of the meeting. |
|
|
| 4.
Members are requested to notify any changes in their address immediately. |
|
|
| "Statement
under Section 160 of the Companies Ordinance, 1984 is attached with the |
|
| Annual Report circulated to the members of
the Company" |
|
|
|
|
| STATEMENT
UNDER SECTION 160 OF THE COMPANIES |
|
| ORDINANCE,
1984 |
|
| This
statement is annexed to the Notice of the Eighth Annual General Meeting of
Dewan Salman |
|
| Fibre
Limited (hereinafter referred to as DSFL) to be held on 26 February 1998 and
sets out material |
|
| facts
concerning the Special Business to be transacted at the Meeting. |
|
|
| 1.
Establishment of Poly-Acrylonitrile plant to produce Acrylic Staple Fibre and
Tow: |
|
| The
Management is pleased to announce that the company is at an advanced stage |
|
| in
establishing an Acrylic Fibre and Tow Plant of 55,000 tons per annum, with
25,000 tons |
|
| in
the first phase and 30,000 tons in the second phase, at a total capital cost
of approximately |
|
| US$
100 million. The Capital Cost for first phase is estimated at USS 45 million.
The negotiations |
|
| for
the first phase have been completed and the Management Es now fast
approaching |
|
| financial
close, thereby necessary Letters of Credit for setting up of this project
shall be |
|
| opened.
It is expected that the first phase will commence commercial operations in
the |
|
| first
quarter of the year 1999. The drafts of Commercial and Technical Contracts
have |
|
| been
negotiated and agreed in principal. The construction work of the project
shall start |
|
| very
soon. Shipments of plant and machinery will commence from the month of May
1998. |
|
| The
work on second phase of 30,000 tons capacity with capital cost of
approximately |
|
| USS
55 million shall commence in 1999 and expected to be completed by the year
2001. |
|
|
| Currently,
the domestic demand of Acrylic Fibre and Tow is estimated at about 30,000 |
|
| to
35,000 tons per annum which is being met through costly imports. With the
local |
|
| production
of Acrylic Fibre and Tow, the cotton spinning, worsted spinning, weaving, |
|
| knitting,
carpet, blanket and quilt manufacturing industry of Country will further
benefit |
|
| from
widening of the raw material availability, diversification and increase of
exportable |
|
| value-added
textile products. Similar expansion and diversification have been witnessed |
|
| since
the commencement of local production of Polyester Fibre. |
|
|
| None
of the Directors of DSFL have any vested or non-vested interest, whether
directly |
|
| or
indirectly, in the proposed new business except that they are the Directors
and |
|
| Shareholders
of DSFL. However, Mitsubishi Corporation, one of the major share holders of |
|
| the
Company, are one of the largest player in Acrylonitrile business (the basic
raw material |
|
| used
in the production of Acrylic Fibre and Tow) may offer its services for supply
of raw |
|
| material
and marketing of finished product of new business but the decision in this
respect |
|
| shall
be taken by the Board of Directors of the Company at arms length basis on
most |
|
| competitive
terms and conditions. Mr. Akira Yamamura is the nominee director of
Mitsubishi |
|
| Corporation. |
|
|
| In
this respect, approval is sought from the shareholders for the following: |
|
| a)
Alteration in Memorandum of Association |
|
| b)
Execution of Contracts |
|
| c)
Financing of the Project |
|
|
| a)
Alteration in Memorandum of Association: |
|
| In
order to enable the Company to proceed with implementation of its plan to set |
|
| up
the Poly-Acrylonitrile plant to produce Acrylic Staple Fibre and Tow in
combination |
|
| with
Polyester Products more conveniently and advantageously, it is proposed to |
|
| insert
new sub-clauses in the Object Clause of Memorandum of Association under |
|
| the
provisions of Section 21 (1)(d) of the Companies Ordinance, 1984. |
|
|
| For
the said purpose it is intended to pass following resolution, with or without |
|
| modification,
as a "Special Resolution". |
|
|
| "Resolved
that the following new sub-clauses be added as 53 & 54 after existing |
|
| sub-clause
52 in the Object Clause of the Memorandum of Association". |
|
|
| "(53)
to buy, sell, manufacture, produce, import, export, manipulate, refine,
process, |
|
| supply
and deal in, all kinds of Poly-Acrylonitrile products including Acrylic
Staple |
|
| Fibre
and Tow in Pakistan or in any part of the world and either as principal or |
|
| otherwise
and either alone or in conjunction with others, and whether by or through |
|
| agents,
sub-contractors, or otherwise, all substances, machinery, apparatus,
equipment |
|
| and
things capable of being used in the business of Poly-Acrylonitrile
products". |
|
|
| "(54)
to own, purchase, acquire, build, erect, install, establish, hire on lease,
operate, |
|
| use,
manage, repair, maintain and dispose of factories, machinery, plants,
laboratories, |
|
| equipment,
apparatus and other facilities for the manufacturing, storage, sale and |
|
| distribution
of Poly-Acrylonitrile products including Acrylic Staple Fibre and Tow,
etc". |
|
|
| "Further
resolved that after insertion of new clauses the existing sub-clauses of
Object |
|
| Clause
be re-numbered accordingly". |
|
|
| b)
Execution of contracts |
|
| In
order to purchase the plant and machinery, approval of the shareholders is
sought |
|
| to
consider and authorise the President / Chief Executive of the Company to |
|
| negotiate,
finalise, seal and sign various contracts such as Contract for Supply of |
|
| Plant
and Machinery, Technical Know-How and Supervision, Civil Works and other |
|
| contracts
related to setting up of Poly-Acrylonitrile plant to produce Acrylic Staple |
|
| Fibre
and Tow and pass the following special resolution with, or without
modification: |
|
|
| "Resolved
that the president / Chief Executive of the Company be and is hereby |
|
| authorised
to negotiate with the machinery suppliers and other contractors and to |
|
| execute
various contracts such as Contract for Supply of Plant and Machinery, |
|
| Technical
Know-How and Supervision, Civil Works and other contracts, on behalf |
|
| of
the Company, as deemed appropriate by him for the establishment of Poly- |
|
| Acrylanitrile
plant to produce Acrylic Staple Fibre and Tow". |
|
|
| c)
Financing of the project |
|
| The
Company will need substantial foreign and local currency funds amounting to |
|
| approximately
USS 45 Million, in order to meet the cost of plant and machinery, |
|
| erection
of machinery, construction of building, etc. for the first phase of the Poly- |
|
| Acrylonitrile
plant to produce Acrylic Staple Fibre and Tow. the Management has |
|
| been
considering various financing options in order to minimise the burden on the |
|
| Company
and to make the project economical and competitive. Among various |
|
| financing
options being considered by the management of the Company include |
|
| Suppliers
Credit, Lease Financing, Medium Term Financing, Term Finance Certificates, |
|
| Bonds,
etc. The foreign currency financing may be available at an interest rate |
|
| ranging
between 3 to 5 percent over and above prevailing LIBOR (London Inter Bank |
|
| Offering
Rate). Whereas the local currency funds may be available at a mark-up |
|
| rate
ranging between 17% to 20% per annum. The financing for the project would |
|
| be
secured by creating charge on the assets of the Company. |
|
|
| For
the said purpose it is intended to pass following resolution, with or without |
|
| modification,
as a "Special Resolution". |
|
|
| "Resolved
that for the purpose of financing the establishment of the Poly-Acrylonitrile |
|
| plant
to produce Acrylic Staple Fibre and Tow, the Board of Directors of the
Company |
|
| be
and is hereby authorised to obtain foreign and local currency financing on
such |
|
| terms
and conditions as the Board of Directors of the Company may approve by |
|
| way
of unanimous resolution in accordance with the provisions of Articles of
Association |
|
| of
the Company. including the proportion of local and foreign currency loans in
the |
|
| total
borrowing". |
|
|
| "Further
resolved that the Board of Directors of the Company be and is hereby |
|
| authorised
to negotiate, finalise and sign contracts, deeds and any other documents |
|
| in
this behalf". |
|
|
|
| 2.
Expansion in Polyester Products Manufacturing Facilities: |
|
| The
demand for polyester staple fibre (PSF) is showing rapid growth due to
various reasons |
|
| such
as shortage of cotton, increased export of blended yarn and fabrics and easy |
|
| availability
of PSF due to sufficient local production and competitive prices of PSF as |
|
| compared
to cotton. The consumption of PSF increased from 158,000 tons in 1995 to
310,000 |
|
| tons
in 1997 and expected to reach 350,000 tons by the end of 1998. It is
estimated that |
|
| the
entire existing capacity to produce PSF will be consumed by the mid of year
1999 |
|
| and
there may be room for expansion in the existing capacities in order to
fulfill the local |
|
| demand
of PSF. |
|
|
| In
order to attain the lead position and after closely monitoring the prevailing
situation |
|
| of
local as well as international Polyester industry, the Management of the
Company has |
|
| decided
to further expand its existing facilities to manufacture polyester products.
In order |
|
| to
make the project feasible and viable, the Management is striving hard to make
a best |
|
| deal
for procurement of Plant & Machinery and its financing at most
competitive terms |
|
| and
costs. The management is exercising various options of project configurations
and |
|
| capacity
and will decide the most appropriate configuration and size of the plant,
ranging |
|
| from
300-450 tons per day of polymerisation capacity. |
|
|
| None
of the Directors of DSFL have any vested or non-vested interest, whether
directly |
|
| or
indirectly, in the proposed new business except that they are the Directors
& Shareholders |
|
| of
DSFL. However, Mitsubishi Corporation, one of the major share holders of the
company, |
|
| having
a long term agreement for supply of raw material used in the production of |
|
| Polyester
Products may offer its services for supply of raw material and marketing of |
|
| finished
product of new business as well as they may have interest in supply of Plant
and |
|
| Machinery
but the decision in this respect shall be taken by the Board of Directors of
the |
|
| Company
at arms length basis on most competitive terms and conditions. The Sam Yang |
|
| Corporation,
also one of the major share holders of the company may also have interest |
|
| in
supply of Plant, Machinery, Stores, Spares, Catalysts and Finish Agent for
the new |
|
| business
but the decision in this respect shall be taken by the Board of Directors of |
|
| the
Company at arms length basis on most competitive terms and conditions. |
|
| Mr.
Akira Yamamura and Mr. Chang Nam Kim are the nominee directors of Mitsubishi |
|
| Corporation
and Sam Yang Corporation respectively. |
|
|
| For
the said purpose it is intended to pass following resolution, with or without
modification, |
|
| as
a "Special Resolution". |
|
|
| "Resolved
that the Board of Directors of the Company be and is hereby authorised to
make |
|
| necessary
plans to expand the Company's Polyester Products Manufacturing
Facilities". |
|
|
| "Further
resolved that the Board of Directors be and is hereby authorised to
negotiate, |
|
| finalise
and sign machinery contract(s) for most economical configuration and capacity |
|
| and
in the manner as the Board of Directors may approve by way of unanimous
resolution |
|
| in
accordance with the provisions of Articles of Association of the Company for
expansion |
|
| of
Company's Polyester Products Manufacturing Facilities". |
|
|
| "Further
resolved that for the purpose of financing the expansion of Company's
Polyester |
|
| Products
Manufacturing Facilities, the Board of Directors of the company be and is
hereby |
|
| authorised
to explore, negotiate and finalise financing on such terms and conditions as |
|
| the
Board of Directors of the Company may approve by way of unanimous resolution
in |
|
| accordance
with the provisions of Articles of Association of the Company, including the |
|
| proportion
of local and foreign currency loans in the total borrowing". |
|
|
| "Further
resolved that the Board of Directors of the company be and is hereby
authorised |
|
| to
negotiate, finalise and sign contracts, deeds and any other documents in this
behalf". |
|
|
| 3.
Investments in Associated Companies |
|
| The
Board of Directors considers to advance temporary short term financing to the |
|
| associated
companies out of surplus funds available with the Company. Details of such |
|
| financing
are given below:- |
|
|
| (i) |
Name of Borrower Company
and |
-- Dewan Textile Mills
Limited |
|
|
associated undertaking
together |
Rupees Fifty Million only |
|
|
with the amount of loan
and |
|
-- Dewan Khalid Textile
Mills Limited |
|
|
advance. |
|
|
Rupees Fifty Million only |
|
|
|
|
-- Dewan Mushtaq Textile
Mills Limited |
|
|
|
|
Rupees Fifty Million only |
|
| (ii) |
Rate of interest to be
charged |
-- 1% above the rate on
which the Lending |
|
|
on each loan and advance |
|
Company has obtained its
own borrowing. |
|
|
together with the
particulars of |
|
|
|
|
collateral security to be
obtained |
-- No security is
considered necessary as |
|
|
from borrower. |
|
|
all the companies are
under common |
|
|
|
|
management control. |
|
| (iii) |
Period for which these
loans and |
-- Twelve Months |
|
|
advances will be made |
|
| (iv) |
The terms of repayment or
any |
-- The loans and Advances
are adjustable |
|
|
other terms of loans and
advances. |
within a period of twelve
months or as |
|
|
|
|
and when required by the
Lending |
|
|
|
|
Company, whichever is
earlier. |
|
| v) |
Purpose of loans and
advances |
-- The purpose of loans
and advances is |
|
|
|
|
to meet any immediate
requirement of |
|
|
|
|
working capital of the
Borrowing |
|
|
|
|
Company. |
|
| (vi) |
Benefits likely to accrue
to the |
-- The Investing Company
and its |
|
|
Company and its
shareholders |
shareholderswill be
benefited in a manner |
|
|
from loans and advances. |
|
that their investment
will fetch a return |
|
|
|
|
of one percent over and
above the |
|
|
|
|
mark up rate at which the
Investing |
|
|
|
|
Company has borrowed.
Further, the |
|
|
|
|
surplus funds will not
remain idle and will |
|
|
|
|
be invested in the most
efficient manner |
|
|
|
|
whereby the Investing
Company not |
|
|
|
|
only getting good returns
but the funds |
|
|
|
|
will also remain at the
disposal of the |
|
|
|
|
Investing Company as such
loans and |
|
|
|
|
advances are repayable on
demand. |
|
|
| In
this regard following resolution is proposed to be passed, with or without
modification |
|
| as
a "SPECIAL RESOLUTION". |
|
| "resolved
that the Board of Directors of the Company be and is hereby authorised to
make |
|
| temporary
short term loans/advances to the following associated companies 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. |
|
| m
Dewan Textile Mills Limited |
|
| --
Dewan Khalid Textile Mills Limited |
|
| --
Dewan Mushtaq Textile Mills Limited |
|
| These
temporary loans / advances shall be adjusted as and when required by the |
|
| Company
and shall not exceed 12 months period". |
|
|
|
|
| DIRECTORS'
REPORT |
|
| Your
Directors take pleasure in presenting to you the Eighth Annual Report of the
Company together |
|
| with
the audited accounts for the year ended on 30 June 1997. |
|
|
| Alhamdolillah,
the results for the year under review are satisfactory considering the global
crisis of the |
|
| Synthetic
industry. The company has earned a consolidated Net Profit of Rs.350.262
million. The |
|
| highlights
of the Accounts are as follows: |
|
|
|
|
|
(Rs. in '000') |
|
|
|
Unit I |
Unit II |
Consolidated |
|
| Gross Sales |
|
3,472,619 |
3,844,643 |
7,317,262 |
|
| Excise Duty |
|
65,374 |
76,588 |
141,962 |
|
| Sales
Tax - net |
134,013 |
145,696 |
279,707 |
|
| Depreciation |
178,798 |
323,627 |
502,425 |
|
| Gross
Profit |
545,862 |
278,004 |
823,866 |
|
| Net Profit |
|
279,642 |
70,620 |
350,262 |
|
|
| We
humbly and gratefully bow our heads before Almighty Allah, the most Gracious
and Merciful, who |
|
| has
rewarded and blessed Your Company with His innumerable bounties in the
difficult times. |
|
|
| IF
YE GIVE THANKS, I WILL GIVE YOU MORE (AL-QURAN) |
|
|
| Appropriations: |
|
| Your
Directors are pleased to propose appropriation of profit in the following
manner:-- |
|
|
|
|
|
(Rs. in '000') |
|
|
|
|
| -- Profit for the year 1996-97 |
|
|
350,262 |
|
| -- Unappropriated profit
brought forward |
|
126,384 |
|
|
|
|
|
---------- |
|
| Profit
available for appropriation |
|
|
476,646 |
|
|
========== |
|
| Appropriations |
|
|
|
| -- Cash dividend @ 7.5% |
|
|
90,954 |
|
| -- Reserve for
Proposed Issue of Bonus Shares @ 15% |
|
181,908 |
|
| -- Unappropriated Profit
carried forward |
|
203,784 |
|
|
|
|
|
---------- |
|
| Total |
|
|
|
476,646 |
|
|
|
|
========== |
|
| 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,
burden of debt |
|
| servicing
and future plans i.e. upcoming Acrylic and Polyester projects. |
|
|
| The
Board also decided to apprise the valued shareholders current status and
future of local |
|
| as
well as international polyester industry, pressure from textile lobby and
other prevalent |
|
| situation
of synthetic industry in detail through this report. |
|
|
| Salient
features of the Accounts: |
|
|
| 1.
The total combined gross sales of the Company amounted to Rs. 7.3 billion as
compared |
|
| to
Rs. 6.6 billion last year. The increase in sales is attributed to higher
volume of sales quantity. |
|
|
|
|
| 2.
The earning per share of the Company works out to Rs. 2.89 which shows
considerable |
|
| improvement
over last years EPS which was Rs. 1.61. |
|
|
|
|
| 3.
During the year exchange differences amounted to Rs. 201.07 million arising
in respect of |
|
| US$
denominated Convertible Bonds issued for the acquisition of assets have been
incorporated |
|
| in
the cost of relevant assets. |
|
|
|
|
| 4.
The reviewing year was a bit stable as compared to volatile movements last
year. The |
|
| financial
results of the year are attributed to the sound management policy, improving |
|
| efficiencies,
customer oriented marketing, effective cost controls, prudent raw material |
|
| procurement
policy, constructive efforts of dedicated manpower with participatory
management, |
|
| and
above all due to the immense blessings of Almighty Allah, Rehman-o-Rahim.
Although |
|
| the
prices of PTA showed downward trend but on the other hand prices of MEG
touched |
|
| new
heights. The selling price remained under pressure due to excess domestic
capacity |
|
| and
severe international competition in absence of adequate protection against
dumping |
|
| by
Far Eastern manufacturers. |
|
|
|
|
| 5.
The Company was paying minimum tax liability @ 0.5% of turnover under Section
80 (D) of |
|
| the
Income Tax Ordinance, 1979 under protest and filed a writ petition with
Peshawar High |
|
| Court
against this provision of the Income Tax Ordinance, 1979. The decision on
this petition |
|
| is
still pending with the Honourable Court. Howe9er, the Honourable Supreme
Court of |
|
| Pakistan
vide order No. C.A. No. 307/95(80-D) dated 4th June 1997 has decided on
identical |
|
| petitions
that those companies which are enjoying certain exemptions from levy of
Income |
|
| Tax
are also excluded from the ambit of Section 80(D) of the Income Tax
Ordinance, 1979. |
|
| Accordingly,
no provision for turn over tax has been made in these accounts for the year |
|
| ended
30 June 1997 whereas refund applications have been filed with the tax
authorities |
|
| for
payments of turn over tax made in respect of prior years. |
|
|
| 6.
Alhamdolillah, your Company has been able to meet all its financial
obligations on time |
|
| and
from its own resources. To date nine instalments out of fourteen of long term
foreign |
|
| currency
loan obtained in 1990 from Mitsubishi Corporation, Tokyo have been paid on |
|
| schedule.
Further, five instalments out of twelve of lease financing obtained in 1994
from |
|
| AI
Tawfeek Company for Investment Funds, Jeddah have also been remitted as per
repayment |
|
| schedule.
In addition, interests on Euro Convertible Bonds are being remitted to the
bondholders |
|
| on
due dates. |
|
|
| Systematic
withdrawal of area-specific incentive: |
|
| As
reported to you in last year's Annual Report, your Company has been
continuously contesting |
|
| in
the Courts of Law against withdrawal of the promised area-specific incentives
by way of |
|
| tempering
with tariff and fiscal regime which has resulted in adversely affecting the
margins. |
|
|
| Future
Plans |
|
| After
considering various new investment opportunities and diversification of
business, the Board |
|
| of
Directors is pleased to announce the plans regarding its future business
expansion and strategy |
|
| as follows: |
|
|
| Acrylic
Fibre Project: |
