| ELITE TEXTILE MILLS LTD |
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
| CONTENTS |
|
| Board of Directors |
|
| Notice of Meeting |
|
| Directors' Report to the
Shareholders |
|
| Chief
Executive's Review |
|
| Auditors' Report to the Members |
|
| Balance
Sheet |
|
| Profit and Loss Accounts |
|
| Statement of Changes in
Financial Position |
|
| Notes
to the Accounts |
|
| Shareholding
Statistics |
|
|
|
|
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Ahsan
M. Saleem |
|
| Amjad
Mahmood |
|
| Khalid
Bashir |
|
| Shams Raft |
|
| Shaukat
Shafi |
|
| Tariq
Shafi (Chief Executive) |
|
| Zahid Bashir |
|
|
| Auditors |
|
| M.
Yousuf Adil & Co., |
|
| Chartered
Accountants |
|
|
| Bankers |
|
| Citibank
N. A. |
|
| Muslim
Commercial Bank Ltd. |
|
| National
Bank of Pakistan |
|
|
| Legal
Advisers |
|
| A.
K. Brohi & Co. |
|
| Ghani
Law Associates |
|
|
| Registered
Office |
|
| A-40,
S.I.T.E., Manghopir Road, Karachi. |
|
|
| Mills |
|
| A-40,
S.I.T.E., Manghopir Road, Karachi. |
|
|
| Head Office |
|
| 3rd
Floor, Finlay House, |
|
| I.
I. Chundrigar Road, Karachi. |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 46th Annual General Meeting of "ELITE TEXTILE
MILLS LTD." will be |
|
| held
on Tuesday the March 31, 1998, at 5.00 p.m. at the Registered Office A/40,
S.I.T.E., Karachi, to |
|
| transact
the following Ordinary Business. |
|
|
| Agenda: |
|
|
| Ordinary
Business: |
|
|
| 1.
To confirm the Minutes of the Extra Ordinary General Meeting held on July 10,
1997. |
|
|
| 2.
To receive and adopt the Directors' and Auditors' Reports & Accounts for
the year ended September |
|
| 30, 1997. |
|
|
| 3.
To appoint Auditors for the year 1997-98 and fix their remuneration. |
|
| The
present Auditors M/s. M. Yosuf Adil & Co., Chartered Accountants, being
eligible, offer themselves |
|
| for
re-appointment. |
|
|
| 4.
To consider any other business which may be placed before the Meeting with
the permission of the |
|
| Chair. |
|
|
| Book Closure |
|
|
| The
Share Transfer Books of the Company will remain closed from March 28, 1998 to
April 04, |
|
| 1998
(both days inclusive) |
|
|
On behalf of the Board |
|
| A/40,
S.I.T.E., Manghopir Road, Karachi. |
|
Shaukat Shafi |
|
| March
09, 1998 |
|
Director |
|
|
| Note:
Participation in the Annual General Meeting: |
|
|
| 1.
A member eligible to attend and vote at this Meeting may appoint another as
his/her proxy to attend |
|
| and
vote instead of him/her. Proxies in order to be effective must be received by
the Company at |
|
| the
Registered Office not later than 48 hours before the time for holding the
Meeting. |
|
|
| 2.
Share holders are requested to immediately notify the change in address if
any. |
|
|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
|
| Your
Directors are pleased to present the 46th Annual Report alongwith detailed
notes for the year ended |
|
| September
30, 1997. |
|
|
| Your
Company's trading for the year resulted in a Pre-Tax loss of Rs. 47,562,426
after meeting all operational, |
|
| administrative,
depreciation and other expenses. |
|
|
| Break
up of the same can be read under Profit & Loss Account 1997. |
|
|
|
1997 |
|
|
Rupees |
|
|
| Loss
before taxation |
|
47,562,426 |
|
|
| Add:
Provision for Taxation |
|
| Minimum
Tax/Presumptive Tax/Prior Year's |
|
3,278,270 |
|
|
---------- |
|
|
50,840,696 |
|
| Accumulated
loss brought forward |
|
120,721,348 |
|
|
---------- |
|
| Accumulated
loss carried forward |
|
171,562,044 |
|
|
========== |
|
|
| The
present Auditors Messrs M. Yousuf Adil & Co. retire and being eligible
offer themselves for reappointment. |
|
|
| Information
required under section 236(2) of the Companies Ordinance 1984 follows as
"Review" on the |
|
| next pages. |
|
|
| The
management express their appreciation to all categories of employees for
their continued efforts to |
|
| improve
the efficiency all round. |
|
|
| Date:
March 06 , 1998 |
|
Shaukat Shafi |
|
| Karachi |
|
Director |
|
|
|
| DIRECTORS
REVIEW |
|
|
| The
directors of your Company are pleased to present their report and audited |
|
| financial
statement of the Company for the year ended September 30, 1997. |
|
|
| Considering
the business conditions, and financial position together with the |
|
| accumulated
loss position of the Company, the Directors of the Company consider |
|
| that
it is not possible to profitably continue the operations of the Company and |
|
| therefore
they get approval from the share holders of the Company for disposal |
|
| of
the assets of the Company to liquidate liabilities of the Company. |
|
|
| Subsequent
to this the Company has ceased all its production activities from |
|
| September
01, 1997 and has disposed of major portion of plant & machinery |
|
| and
negotiating for sale of Leasehold land with building thereon and other
assets. |
|
|
| Considering
the above fact the Auditors observe that the Company is no |
|
| more
a going concern and the same they mentioned in their report. |
|
|
| The
year under review was also an another difficult year for the textile |
|
| industry.
Your Company is also a part of this set up. The cotton prices which |
|
| constitute
more than 75% of our cost of production increased considerably which |
|
| increased
the cost of our product unfavorably for domestic market and as well |
|
| as
for international market resulting in decrease in gross profit in the current
year |
|
| under
review. |
|
|
| Financial
expenses decreased by 5% Due to increased export sales selling |
|
| expenses
were increased from Rs. 9.4 million to Rs. 11.5 million this year. Earning |
|
| per
share registered a negative earning of Rs. 26.31. |
|
|
| The
Directors of your Company tries their best efforts to dispose of the assets |
|
| of
the Company at their best prices to meet the obligations of the Company. |
|
|
| KARACHI |
|
|
Shaukat Shafi |
|
| March
06, 1998 |
|
Director |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Elite Textile Mills Limited as at
September 30, I997 and |
|
| the
related profit and loss account and statement of changes in financial
position (Cash Flow Statement), |
|
| together
with the notes forming part thereof, for the year ended on that date 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 purposes of our audit and, after due verification thereof, we report
that: |
|
|
| (a)
The Company has ceased all its production activities from September 01, 1997
and has disposed |
|
| of
major portion of plant & machinery and negotiating for sale of leasehold
land with buildings |
|
| thereon
and other assets and has relieved the workers of the Company. Therefore, the
company |
|
| is
no more a going concern. Consequently adjustment required to record assets at
realizable |
|
| value
and classification of liabilities has not been made. |
|
|
| (b)
in our opinion, proper books of account have been kept by the Company as
required by the |
|
| Companies
Ordinance, 1984; |
|
|
| (c)
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
business; |
|
| and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year |
|
| were
in accordance with the objects of the Company; |
|
|
| (d)
in our opinion and to the best of our information and according to the
explanations given |
|
| to
us, except for the effect of any adjustment had the assets been taken at
realizable value |
|
| and
classification of liabilities in view of the matter referred to in para (a)
above, the balance |
|
| sheet
and profit and loss account and the statement of changes in financial
position, (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 September 30, I997 and
of the loss |
|
| and
the changes in financial position for the year then ended; and |
|
|
| (e)
in our opinion, no zakat was deductible at source under the zakat and Ushr
Ordinance, 1980. |
|
|
| Date:
March 06-1998 |
|
M. Yousuf Adil & Co. |
|
| Karachi |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
| SHARE
CAPITAL |
|
|
| Authorised |
|
| 2,000,000
Ordinary shares |
|
| of
Rs. 10/- each |
|
20,000,000 |
20,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
3 |
19,320,000 |
19,320,000 |
|
| Accumulated
loss |
|
(171,562,044) |
(120,721,348) |
|
|
---------- |
---------- |
|
|
(152,242,044) |
(101,401,348) |
|
| SURPLUS
ON REVALUATION OF |
|
| FIXED ASSETS |
|
4 |
138,500,000 |
138,500,000 |
|
|
|
| LONG
TERM LOAN |
|
5 |
-- |
1,796,894 |
|
|
| DEFERRED
LIABILITIES' |
|
| Staff
gratuity |
|
777,737 |
4,444,745 |
|
|
| CURRENT
LIABILITIES |
|
|
| Short
term bank borrowings |
|
6 |
57,942,159 |
75,442,890 |
|
| Short
term loans |
|
7 |
80,417,368 |
158,767,767 |
|
| Current
portion of long term loan |
|
|
1,796,894 |
3,249,000 |
|
| Creditors,
accrued and other |
|
|
|
| liabilities |
|
8 |
92,792,776 |
35,400,843 |
|
| Taxation |
|
4,342,070 |
2,324,731 |
|
|
---------- |
---------- |
|
|
237,291,267 |
275,185,231 |
|
| CONTINGENCIES |
|
9 |
|
|
---------- |
---------- |
|
|
224,326,960 |
318,525,522 |
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 30 form an integral part of these accounts. |
|
|
| The
Chief Executive of the Company is out of Pakistan, therefore Balance Sheet
and Profit and Loss Account |
|
| is
signed by two Directors |
|
|
| OPERATING
ASSETS |
|
10 |
160,435,233 |
243,887,059 |
|
|
|
| LONG
TERM INVESTMENTS |
|
11 |
6,200,000 |
13,200,000 |
|
| LONG
TERM DEPOSITS |
|
968,900 |
978,900 |
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spares and loose tools |
|
12 |
6,949,714 |
10,361,676 |
|
| Stock
in trade |
|
13 |
985,800 |
17,762,266 |
|
| Trade debts |
|
14 |
7,110,236 |
10,826,988 |
|
| Loans
and advances |
|
15 |
4,931,827 |
5,392,611 |
|
| Deposits
and prepayments |
|
16 |
11,459,913 |
12,863,002 |
|
| Other
receivables |
|
17 |
24,025,996 |
2,614,596 |
|
| Cash
and bank balances |
|
18 |
1,259,341 |
638,424 |
|
|
---------- |
---------- |
|
|
56,722,827 |
60,459,563 |
|
|
---------- |
---------- |
|
|
224,326,960 |
318,525,522 |
|
|
========== |
========== |
|
|
|
| PROFIT
& LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER $0, 1997 |
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
| Sales |
|
382,328,443 |
353,120,776 |
|
| Cost
of goods sold |
|
381,378,496 |
348,291,170 |
|
|
---------- |
---------- |
|
| Gross profit |
|
949,947 |
4,829,606 |
|
|
| Trading
profit |
|
21 |
129,706 |
-- |
|
|
|
---------- |
---------- |
|
|
1,079,653 |
4,829,606 |
|
| Operating
expenses |
|
|
Administration |
|
22 |
13,352,067 |
2,582,983 |
|
|
Selling |
|
23 |
11,507,535 |
9,442,427 |
|
|
---------- |
---------- |
|
|
(14,859,602) |
(12,025,410) |
|
|
---------- |
---------- |
|
| Operating
(loss) |
|
(13,779,949) |
(7,195,804) |
|
|
|
|
| Other income |
|
24 |
10,681,895 |
4,355,349 |
|
|
|
---------- |
---------- |
|
|
|
(3,098,054) |
(2,840,455) |
|
|
|
---------- |
---------- |
|
| Financial
charges |
|
25 |
(44,464,372) |
(46,878,701) |
|
| Loss
before taxation |
|
(47,562,426) |
(49,719,156) |
|
| Provision
for taxation |
|
| Minimum/presumptive
tax |
|
| Current |
|
2,125,OOO |
(1,820,000) |
|
| Prior year's |
|
1,153,270 |
524,406 |
|
|
---------- |
---------- |
|
|
(3,278,270) |
(1,295,594) |
|
|
---------- |
---------- |
|
| Loss
after taxation |
|
(50,840,696) |
(51,014,750) |
|
| Accumulated
Loss brought forward |
|
(120,721,348) |
(69,706,598) |
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
(171,562,044) |
(120,721,348) |
|
|
========== |
========== |
|
| The
annexed notes from 1 to 30 form |
|
| an
integral part of these accounts. |
|
|
| The
Chief Executive of the Company is out of Pakistan, therefore Balance Sheet
and Profit and Loss Account |
|
| is
signed by two Directors |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
|
| A.
CASH FROM OPERATING ACTIVITIES |
|
|
| Loss
before taxation |
|
(47,562,426) |
(49,719,156) |
|
| Adjustment
for |
|
|
|
| Depreciation |
|
2,549,008 |
11,823,819 |
|
| Gain
on disposal of fixed assets |
|
(9,082,901) |
(51,913) |
|
| Provision
for gratuity |
|
2,007,082 |
1,608,875 |
|
| Payment
of gratuity |
|
(5,674,090) |
(905,288) |
|
| Financial
charges |
|
44,464,372 |
46,878,701 |
|
|
---------- |
---------- |
|
| Operating
(loss) / profit before working capital changes |
|
(13,298,955) |
9,635,038 |
|
|
---------- |
---------- |
|
| Changes
in working capital |
|
| (lncrease)/decrease
in current assets |
|
| Stores,
spares and loose tools |
|
711,962 |
4,440,354 |
|
| Stock
in trade |
|
16,776,466 |
23,699,360 |
|
| Trade debts |
|
3,716,752 |
5,095,464 |
|
| Loans
and advances |
|
1,176,521 |
540,799 |
|
| Deposits
and prepayments |
|
1,403,089 |
(8,457,531) |
|
| Other
receivables |
|
(20,097,145) |
(1,428,632) |
|
| Increase/(decrease)
in current liabilities |
|
|
|
| Creditors,
accrued and other liabilities |
|
63,967,510 |
I2,990,287 |
|
|
---------- |
---------- |
|
|
67,655,155 |
36,880,101 |
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
54,356,200 |
46,515,139 |
|
|
| Financial
charges paid |
|
(52,339,950) |
(39,545,353) |
|
| Tax paid |
|
(3,290,923) |
(1,400,720) |
|
|
---------- |
---------- |
|
| NET
CASH (USED IN) / FROM OPERATING ACTIVITIES |
|
(1,274,673) |
5,569,066 |
|
|
---------- |
---------- |
|
| B.
CASH FROM INVESTING ACTIVITIES |
|
|
| Proceeds
from disposal of fixed assets |
|
96,790,000 |
1,460,000 |
|
| Fixed
capital expenditures |
|
(2,804,280) |
(25,107,737) |
|
| Long
term investments |
|
7,000,000 |
-- |
|
| Long
term deposits |
|
10,000 |
-- |
|
|
---------- |
---------- |
|
| NET CASH FROM / (USED
IN) INVESTING ACTIVITIES |
|
100,995,720 |
(23,647,737) |
|
|
|
========== |
========== |
|
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
| C.
CASH FROM FINANCING ACTIVITIES |
|
|
| Redemption
of redeemable capital |
|
-- |
(2,237,500) |
|
| Repayment
of long term loans |
|
(3,249,000) |
(2,838,000) |
|
| Decrease
in short term borrowings |
|
(17,500,731) |
(64,737,545) |
|
| (Decrease)
/ Increase in short term loans |
|
(78,350,399) |
88,087,626 |
|
|
---------- |
---------- |
|
| NET
CASH (USED IN) / FROM FINANCING ACTIVITIES |
|
(99,100,130) |
18,274,581 |
|
|
|
---------- |
---------- |
|
| Net
Increase in cash and cash equivalents (A+B+C) |
|
610,917 |
195,910 |
|
| Cash
and cash equivalents at the |
|
|
|
| beginnin9
of the year |
|
638,424 |
442,514 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents |
|
| at
end of the year |
|
1,249,341 |
638,424 |
|
|
========== |
========== |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
| 1.
STATUS AND ACTIVITIES |
|
|
| 1.1
The company is limited by shares incorporated in Pakistan
on August 21, 1951 and quoted |
|
| on
the Karachi and Islamabad stock exchanges. The principal business of the
Company was |
|
| manufacture
and sale of yarn. The Mills is located at Sindh Industrial Trading Estate,
Karachi. |
|
|
| 1.2
A special resolution
has been passed in the general meeting of members on July 10, 1997 |
|
| authorizing
the Board of Directors to dispose off the whole of the undertaking of current
assets |
|
| of
the Company. |
|
|
| 1.3 The Company has ceased its major production activities from May
14, 1997 and all activities |
|
| from
September 01, 1997 and has disposed off major portion of plant &
machinery and relieved |
|
| the
workers of the Company. The Company is negotiating for sale of land with
buildings thereon |
|
| and
other remaining assets. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
|
| These
accounts have been prepared under 'historical cost convention, except lease
hold land |
|
| that
has been included at revaluation. |
|
|
| 2.2
Staff retirement benefits |
|
|
| The
company operates an unfunded gratuity scheme covering all its employees.
Provision is |
|
| made
annually to cover the liability under the scheme. |
|
|
| 2.3 Taxation |
|
|
|
| Current |
|
|
| Provision
for current taxation is based on taxable income at current tax rates after
taking into |
|
| account
tax rebates and tax credits available, if any. |
|
|
| Deferred |
|
|
| The
Company accounts for deferred taxation on material timing differences using
the liability |
|
| method.
However, deferred tax is not provided, if it can be established that these
differences |
|
| will
not reverse in the foreseeable future. |
|
|
| 2.4
Operating fixed assets |
|
|
| Operating
assets except leasehold and are stated at cost less accumulated depreciation.
Lease |
|
| hold
Land is stated at valuation. |
|
|
| Depreciation
is charged to income applying the reducing balance method at the rates
specified |
|
| in
fixed assets note. |
|
|
| Depreciation
on additions for the year is charged on the basis of whole year while no
depreciation |
|
| is
charged on deletion during the year. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Major renewals |
|
| and
improvements are capitalised. |
|
|
| Gains
and losses on disposal of fixed assets are included in current income. |
|
|
| 2.5
Investments |
|
|
| Long
term investment in shares of joint stock companies are stated at cost.
Permanent diminution |
|
| in
value is charged to current income. |
|
|
| 2.6
Stores, spares and loose tools |
|
|
| These
are valued at moving average cost. |
|
|
| 2.7
Stock in trade |
|
|
| These
are valued at lower of average cost and net realisable value applying the
following basis: |
|
|
| Raw material |
|
Weighted average cost |
|
| Finished
good |
Average manufacturing
cost |
|
| Work
in process |
Average manufacturing
cost |
|
| Waste |
|
Net realisable value |
|
|
| Average
cost signifies in relation to work in progress and finished goods average
manufacturing |
|
| cost
including a portion of related direct overheads. Net realizable value
signifies the selling |
|
| prices
prevailing in the market less selling expenses incidental to sales. |
|
|
| 2.8
Trade debtors |
|
|
| Known
bad debts are written off and provision is made for debts considered
doubtful. |
|
|
| 2.9
Rates of exchange |
|
|
| Assets
and liabilities in foreign currencies are converted into Rupees at the rates
of exchange |
|
| ruling
on the balance sheet date. Exchange differences are included in current
income. |
|
|
| 2.10
Revenue recognition |
|
|
| Sales
are recorded on despatch of goods. |
|
|
| 3.
ISSUED, SUBSCRIBED |
|
| AND
PAID UP CAPITAL |
|
|
| 1997 |
1996 |
|
1997 |
1996 |
|
| No. of Share |
|
|
Rupees |
Rupees |
|
|
| 920,000 |
920,000 |
Ordinary shares of
Rs.10/= |
|
|
each fully paid in cash |
|
9,200,000 |
9,200,000 |
|
|
| 1,012,000 |
1,012,000 |
Ordinary shares of
Rs.10/= |
|
| ---------- |
---------- |
each issued as fully paid |
|
---------- |
---------- |
