| DEWAN KHALID TEXTILE MILLS LIMITED |
|
|
|
|
|
|
| Annual
Report 1997 |
|
|
|
|
|
| Mission
Statement |
|
| The
mission of Dewan Khalid Textile Mills Limited is to be the |
|
| finest
Organisation, and to conduct business responsibly in a |
|
| straight
forward way. |
|
|
|
|
| Our
basic aim is to benefit the customers, employees and |
|
| shareholders
and to fulfil our commitments to the society. Our |
|
| hallmark
is honesty, initiative and teamwork of our people and |
|
| our
ability to respond effectively to change in all aspects of life |
|
| including
technology, culture and environment. |
|
|
|
| We
will create a work environment, which motivates, recognises |
|
| and
rewards achievements at all levels of the Organisation |
|
| because |
|
|
| IN
ALLAH WE TRUST & IN PEOPLE WE BELIEVE. |
|
|
|
| We
will always conduct ourselves with integrity and strive to be |
|
| the best. |
|
|
|
|
|
| CONTENTS |
|
| Company
Information |
|
| Notice
of the Meeting |
|
| Statement
Under Section 160 |
|
| Directors'Report |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Share Holding |
|
|
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| DEWAN
M. ZIA-UR-REHMAN FAROOQUI |
|
| Chairman |
|
|
| DEWAN
GHULAM MUSTAFA KHALID |
|
| Vice
Chairman |
|
|
| DEWAN
ABDUL REHMAN FAROOQUI |
|
| Managing
Director/Chief Executive |
|
|
| DEWAN
MOHAMMAD AYUB KHALID |
|
| Deputy
Managing Director |
|
|
| DEWAN
MOHAMMAD YOUSUF FAROOQUI |
|
|
| DEWAN
ASIM MUSHFIQ FAROOQUI |
|
|
| MR.
S.K. JAHANGIR (NIT) |
|
|
| AUDITORS |
|
| MESSRS.
FARUQ ALI& CO. |
|
| Chartered
Accountants |
|
| Habib
Square, |
|
| M.
A. Jinnah Road, |
|
| Karachi,
Pakistan. |
|
|
| BANKERS |
|
| MUSLIM
COMMERCIAL BANK LIMITED |
|
| HABIB
BANK LIMITED |
|
| ABN
AMRO BANK |
|
|
|
| REGISTERED
OFFICE |
|
| DEWAN
CENTRE |
|
| 3-A, Lalazar, |
|
| Beach
Hotel Road, |
|
| Karachi
- 74000, |
|
| Pakistan. |
|
|
|
| MILLS |
|
| G-11,
S. I. T. E., |
|
| Kotri (Sindh). |
|
|
|
|
|
| NOTICE
OF TWENTIETH ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the Twentieth Annual General Meeting of Dewan Khalid
Textil~ Mills Limited will |
|
| be
held on Wednesday, 25th March 1998 at 4:00 p.m. at Dewan Centre, 3-A Lalazar
Beach Hotel Road, Karachi, |
|
| to
transact the following business: |
|
|
| ORDINARY
BUSINESS: |
|
| 1.
Recitation from HOLY QURAN. |
|
|
| 2.
To read the confirm the minutes of the Nineteenth Annual General Meeting held
on 28 June 1997. |
|
|
| 3.
To receive, consider and adopt the annual audited accounts for the year ended
30 September 1997, |
|
| together
with the Directors' and Auditors' Report thereon. |
|
|
| 4.
To approve the declaration of 15% Cash Dividend. |
|
|
| 5.
To appoint Auditors of the Company for the year ending 30 September 1998 and
to fix their remunera- |
|
| tion. |
|
|
| SPECIAL
BUSINESS: |
|
| 6.
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 the |
|
| Companies
Ordinance, 1984. |
|
|
| 7.
To transact any other business with the permission of the Chairman. |
|
|
| NOTES: |
|
| 1.
The Shares Transfer Books of the Company will remain closed from 21 March
1998 to 31 March 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 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 |
|
| notarially
certified copy of such power of attorney, in order to be valid must be
deposited at the regis- |
|
| tered
office of the company not less than 48 hours before the time of the meeting. |
|
|
| 4.
Members are requested to notify any change in their addresses 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 Twentieth Annual General Meeting of
Dewan Khalid |
|
| Textile
Mills Limited (hereinafter referred to as DKTML) to be held on 25th March,
1998 and sets out |
|
| material
facts concerning the Special Business to be transacted at the Meeting. |
|
|
| 1.
Investments in Associated Companies |
|
| The
Board of Directors considers to advance temporary short term financing to the
associated |
|
| company
out of surplus funds available with the company. Details of such financing
are given |
|
| below: |
|
|
| (i)
Name of borrower company and asso- |
|
Dewan Sugar Mills Limited |
|
| ciated
undertaking together with the |
|
Rupees Fifty Million only |
|
| amount
of loans and advance. |
|
|
| (ii)
Rate of interest to be charged on each |
|
1% above the rate on
which the lending |
|
| loan
and advance together with the |
|
Company has obtained its
own borrowing |
|
| particulars
of collateral security to be |
|
No Security is considered
necessary as all the |
|
| obtained
from borrower. |
|
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 other |
|
The loans and advances
are adjustable within |
|
| terms
of loans and advances. |
|
a period of twelve months
or as and when |
|
|
required by the lending
Company. |
|
|
| (v)
Purpose of loans and advances |
|
The purpose of loans and
advances is to pro- |
|
|
vide any immediate
requirement of working |
|
|
capital of the borrowing
Companies. |
|
|
| (vi)
Benefits likely to accrue to the |
|
The investing Company and
its shareholders |
|
| Company
and its shareholders from |
|
will be benefited in a
manner that their invest- |
|
| loans
and advances |
|
ment 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 get- |
|
|
ting good return but the
funds will also remain |
|
|
at the disposal of the
investing Company as |
|
|
such loans and advances
are repayable on |
|
|
demand. |
|
|
| None
of the Directors or their spouse has any vested or non-vested interest
whether directly, or indirectly in |
|
| the
proposed business. |
|
|
| 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 tem- |
|
| porary
short term loans/advances to Dewan Sugar Mills Limited upto maximum limit of
Rs. 50 |
|
| Million
at the mark up rate of 1% above the rate on which the Company has obtained
the bor- |
|
| rowing. |
|
|
|
| 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 20th Annual Report of the
Company together |
|
| 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.13.4
million as com- |
|
| pared
with Net Profit of Rs. 44.8 million of last year. Current year's Profit
includes Cash Dividend |
|
| Income
of Rs. 11.9 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) |
(Rupees) |
|
|
|
|
|
| Gross Sales |
|
304,462,700 |
540,866,290 |
|
|
| Fuel,
Power and Water |
|
65,608,311 |
46,798,966 |
|
|
| Gross Profit |
|
40,153,263 |
47,761,295 |
|
|
| Cash
Dividend income from DSFL |
|
11,959,998 |
41,599,995 |
|
|
| Taxation |
|
4,077,000 |
8,000,000 |
|
|
| Net
Profit After Tax |
|
13,453,099 |
44,822,387 |
|
|
|
| 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) |
|
| Your
Directors are pleased to propose appropriation of profit in the following
manner: |
|
|
| Profit
for the year 1996-97 |
|
Rs. |
13,453,099 |
|
|
| Un
appropriated Profit brought forward |
|
Rs. |
52,061,462 |
|
|
|
|
----------- |
|
|
| Profit
available for appropriation |
|
Rs. |
65,514,561 |
|
|
| Appropriation |
|
|
=========== |
|
|
| Cash
dividend |
|
Rs. |
4,374,000 |
|
|
| Un-appropriated
profit carried forward |
|
Rs. |
61,140,561 |
|
|
|
|
----------- |
|
|
| Total |
|
Rs. |
65,514,561 |
|
|
|
|
=========== |
|
|
|
|
| DIRECTORS'
REPORT |
|
|
| 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 profitability |
|
| 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 ACCO UNTS: |
|
| 1.
Total gross sales of your Company amounted to Rs. 304.46 million as compared
to Rs. 540.86 |
|
| million
last year. |
|
|
| 2.
Earning Per Share of your Company works out to Rs. 4.61 as compared with last
year's EPS |
|
| which
was Rs. 15.37. |
|
|
| 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 yarn
prices |
|
| remained
under pressure whereas other cost like power charges increased significantly.
The |
|
| sales
of your company has been decreased considerably due to the fact that your
Company |
|
| manufactured
some seasonal products towards the year end which were scheduled to be lift- |
|
| ed
by the customers in the month of September, but the same could not be lifted
on schedule |
|
| due
to reasons beyond control of the Management. However, the majority of stocks
of yarn |
|
| reported
in the Balance Sheet have been lifted after completion of the financial year
and the |
|
| sale
proceeds have also been realised. |
|
|
| 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 8.8-9.0 |
|
| 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 informal sec- |
|
| tor
to the tune of 0.5 million bales the output of 8.8 million bales puts the
Textile industry in an |
|
| accommodative
position. The fact that adequate quantity of cotton will be available for the
domes- |
|
| tic
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 government |
|
| functionaries,
banks, development financial institutions and customers whose co-operation,
con- |
|
| stant
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 rendered |
|
| 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 Faruq All & 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) |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Dewan Khalid 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 infor- |
|
| mation
and explanations which to the best of our knowledge and belief were necessary
for the purpos- |
|
| es
c~f 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 m~d 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 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 under
Section |
|
| 7
of that Ordinance. |
|
|
| Karachi. |
|
Faruq Ali & Company |
|
| Date:
March 02, 1998 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| AS
ON 30 SEPTEMBER, 1997 |
|
|
| CAPITAL
AND LIABILITIES |
|
1997 |
1996 |
|
|
|
Notes |
(Rupees) |
(Rupees) |
|
| SHAREHOLDER'S
EQUITY |
|
| Share Capital |
|
| Au.thorised |
|
| 15,000,000
Ordinary shares of Rs. 10/- each |
|
150,000,000 |
150,000,000 |
|
| Issued,
Subscribed & Paid up |
|
========== |
========== |
|
| Share capital |
|
3 |
29,160,000 |
29,160,000 |
|
| Reserves
and surplus |
|
4 |
196,140,561 |
187,061,462 |
|
|
---------- |
---------- |
|
|
225,300,561 |
216,221,462 |
|
|
| DEFERRED
LIABILITIES FOR: |
|
| Assets
subject to finance lease |
|
5 |
13,926,199 |
-- |
|
| Staff gratuity |
|
12,849,675 |
10,393,392 |
|
|
| CURRENT
LIABILITIES |
|
| Current
portion of lease liability |
|
3,501,336 |
-- |
|
| Short
term running finances - Secured |
|
6 |
246,889,784 |
202,169,258 |
|
| Creditors,
accrued expenses & other liabilities |
|
7 |
73,053,808 |
37,163,058 |
|
| Dividends |
|
8 |
7,572,869 |
6,054,157 |
|
| Provision
for taxation |
|
6,017,696 |
34,375,000 |
|
|
---------- |
---------- |
|
|
337,035,493 |
279,761,473 |
|
|
---------- |
---------- |
|
|
|
589,111,928 |
506,376,327 |
|
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
| Operating
fixed assets - at cost |
|
| less
accumulated depreciation |
|
9 |
77,959,943 |
60,688,078 |
|
|
|
|
|
|
|
| LONG
TERM INVESTMENT |
|
10 |
65,000,000 |
65,000,000 |
|
| LONG
TERM DEPOSITS |
|
11 |
66,775 |
66,775 |
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
12 |
10,014,383 |
10,364,181 |
|
| Stock-in-trade |
|
13 |
416,186,783 |
220,484,248 |
|
| Trade
debts - (Unsecured, considered good) |
|
|
501,767 |
96,178,775 |
|
| Advances,
deposits, prepayments |
|
|
|
|
| and
other receivables |
|
14 |
14,362,294 |
46,338,967 |
|
| Cash
and bank balances |
|
15 |
5,019,983 |
7,255,303 |
|
|
---------- |
---------- |
|
|
446,085,210 |
380,621,474 |
|
|
---------- |
---------- |
|
|
589,111,928 |
506,376,327 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER, 1997 |
|
|
|
|
1996 |
1997 |
|
|
(Rupees) |
(Rupees) |
|
|
|
| Sales |
|
16 |
301,420,105 |
538,335,984 |
|
| Less:
Excise / Export Duty |
|
|
73,959 |
8,299,906 |
|
|
|
---------- |
---------- |
|
|
|
301,346,146 |
530,036,078 |
|
| Cost of sales |
|
17 |
261,192,883 |
482,274,783 |
|
|
|
---------- |
---------- |
|
| Gross profit |
|
|
40,153,263 |
47,761,295 |
|
| Operating
expenses |
|
|
|
| Administrative
& general expenses |
|
18 |
4,933,445 |
4,653,626 |
|
| Selling
& distribution expenses |
|
19 |
2,820,076 |
3,738,654 |
|
|
|
---------- |
---------- |
|
|
7,753,521 |
8,392,280 |
|
|
---------- |
---------- |
|
| Operating
profit |
|
32,399,742 |
39,369,015 |
|
|
| Other
charges |
|
| Financial
charges |
|
20 |
26,758,281 |
24,466,090 |
|
| Donation |
|
21 |
890,397 |
2,656,233 |
|
|
| Workers'
profit participation fund |
|
237,553 |
612,335 |
|
| Workers'
welfare fund |
|
250,388 |
411,965 |
|
|
---------- |
---------- |
|
|
28,136,619 |
28,146,623 |
|
|
---------- |
---------- |
|
|
4,263,123 |
11,222,392 |
|
| Other income |
|
22 |
13,266,976 |
41,599,995 |
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
17,530,099 |
52,822,387 |
|
| Taxation
- current year |
|
4,077,000 |
8,000,000 |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
13,453,099 |
44,822,387 |
|
|
| Unappropriated
profit brought forward |
|
52,061,462 |
13,071,075 |
|
|
---------- |
---------- |
|
|
65,514,561 |
57,893,462 |
|
|
| Appropriation |
|
| Proposed
cash dividend · @ 15% (1996: 20%) |
|
4,374,000 |
5,832,000 |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
61,140,561 |
52,061,462 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER 1997 |
|
|
1997 |
1996 |
|
|
(Rupees) |
(Rupees) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
17,530,099 |
52,822,387 |
|
| Adjustment
for non-cash and other items |
|
| Depreciation |
|
9,449,065 |
7,315,621 |
|
| Financial
charges accured |
|
26,758,281 |
24,466,090 |
|
| Provision
for gratuity |
|
5,053,892 |
6,718,782 |
|
| Gain
on sale of fixed assets |
|
(1,306,978) |
-- |
|
|
---------- |
---------- |
|
|
57,484,359 |
91,322,880 |
|
| Changes
in operating assets and liabilities |
