| FAZAL TEXTILE MILLS LIMITED |
|
|
|
|
|
|
| Annual
Report 1997 |
|
|
| CONTENTS |
|
| Corporate
Information |
|
| Notice
of Annual General Meeting |
|
| Directors
Report |
|
| Auditor's
Report |
|
| Balance
Sheet |
|
| Profit and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Account |
|
| Pattern
of Shareholding |
|
|
|
| CORPORATE
INFORMATION |
|
|
| Board
of Directors |
|
| Mr.
A. Razak A. Aziz (Chairman) |
|
| Mr.
M.Yunus A. Aziz |
|
| Mr.
Sohail M. Yunus (Chief Executive) |
|
| Mr.
Muhammad Ali A. Razak |
|
| Mr.
Imran M. Yunus |
|
| Mr.
Shaikh M. Afzal |
|
| Mr.
Ilyas Ismail |
|
|
| Manager
Finance & Company Secretary |
|
| Rafique
Khanani |
|
| ACA.
ACIS |
|
|
| Auditors |
|
| Hyder
Bhimji & Co. |
|
| Chartered
Accountants. |
|
|
| Legal
Advisor |
|
| Mr.
Muhammad Aleem |
|
| (Advocate) |
|
|
| Bankers |
|
| Bank
of America |
|
| Citibank
N.A. |
|
| Habib
Bank Limited |
|
| Metropolitan
Bank Ltd. |
|
|
| Registered
Office and Mills |
|
| LA-2/B
Block # 21 |
|
| Federal
'B' Area, Karachi-75950 |
|
| Phones:
6321311 -- 6322048 |
|
| Fax:
92-21-6313372 |
|
| Email:
fazalexp@cyber.net.pk |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the |
|
| 35th
Annual General Meeting of |
|
| the
Members of Fazal Textile Mills Limited |
|
| will
be held at Registered Office of the |
|
| Company
L-A, 2/B, Block # 21, Federal 'B' |
|
| Area,
Karachi on Wednesday the 25th |
|
| March,
1998 at 11.30 a.m. to transact the |
|
| following
business. |
|
|
| 1.
To confirm the minutes of the 34th |
|
| Annual
General Meeting held on 26th |
|
| March,
1997 |
|
|
| 2.
To receive consider and adopt the |
|
| Audited
Accounts for the year ended |
|
| September
30, 1997 together with |
|
| Directors
and Auditors Report |
|
| thereon. |
|
|
| 3.
To declare the dividend as |
|
| recommended
by the board. |
|
|
| 4.
To appoint Auditors for the year ending |
|
| September
30, 1998 and to fix their |
|
| remuneration. |
|
|
| 5.
To transact any other business with |
|
| the
permission of the Chairman. |
|
|
| NOTES |
|
|
| 1.
The share transfer books of the |
|
| Company
will remain closed from |
|
| 18th
March 1998 to 25th March |
|
| 1998.
(both days inclusive) |
|
|
| 2.
A member entitled to attend and vote |
|
| at
the Annual General Meeting may |
|
| appoint
a proxy to attend and vote |
|
| for
him/her. Proxy forms must be |
|
| deposited
at the Company's Registered |
|
| Office,
located at L-A, 2/B, Block # |
|
| 21,
Federal 'B' Area, Karachi not less |
|
| than
48 hours before the time for |
|
| holding
the Meeting. |
|
|
| 3.
A Corporation which is a Member of |
|
| the
Company may by a resolution of |
|
| its
Board of Directors or Governing |
|
| body
authorise a person to act as its |
|
| representative
at the Meeting. |
|
|
| 4.
Members are requested to notify the |
|
| Company
of any change in their |
|
| addresses
immediately. |
|
|
By order of the Board |
|
| Karachi
: February 28, 1998 |
RAFIQ KHANANI |
|
|
Company Secretary |
|
|
|
| DIRECTORS
REPORT TO THE MEMBERS |
|
|
| we
are pleased to welcome the |
|
| Members
at the 35th Annual |
|
| General
meeting and have pleasure |
|
| in
presenting the Annual Report |
|
| together
with the Company's audited accounts |
|
| for
the. year ended September 30, 1997. |
|
|
| FINANCIAL
AND OPERATIONAL |
|
| RESULTS. |
|
| The
year under review in terms of Finan- |
|
| cial
results Alhamdo Lillah was outstand- |
|
| ing
and your Company's profit was doubled |
|
| as
compared to the corresponding year. |
|
|
| The
Financial results are summarised as |
|
| under: |
|
|
Rs. '000' |
|
|
|
|
| Profit
before taxation |
|
72,169 |
|
| Provision
for taxation |
|
9,329 |
|
|
---------- |
|
| Profit
after taxation |
|
62,840 |
|
|
|
|
| Unappropriated
profit |
|
|
|
| brought
forward |
|
6,221 |
|
|
---------- |
|
| Profit
available for appropriation |
69,061 |
|
|
|
|
|
|
|
| Appropriation: |
|
|
|
| Proposed
Cash dividend |
|
|
|
| @ 10% |
|
5,625 |
|
|
|
|
| Transfer from share premium |
|
5,625 |
|
| account |
|
|
|
| Proposed
Bonus shares |
|
|
|
| @ 10% |
|
5,625 |
|
|
|
|
|
|
|
| Transfer
to general reserve |
|
60,000 |
|
|
--------- |
|
|
65,625 |
|
|
|
|
| Unappropriated
profit |
|
|
|
| carried
forward |
|
3,436 |
|
|
========= |
|
|
| The
year under review witnessed impor- |
|
| tant
political and economic changes and |
|
| these
have invariably had an impact on |
|
| the
course of economy. The business cli- |
|
| mate
during the year remained to be dif- |
|
| ficult
and uncertain due to political changes. |
|
| The
successive governments have intro- |
|
| duced
successive economic revival pack- |
|
| ages
to boost the exports and production |
|
| of
manufacturing sector. It is expected |
|
| that
supply side reforms announced by |
|
| the
new government will help in the re- |
|
| vival
of the production sector of the |
|
| economy. |
|
|
| It
is an established fact that our textile |
|
| sector
is facing twin problems of liquidity |
|
| and
viability. The traditional edge in the |
|
| raw
cotton prices is narrowing down and |
|
| the
industry has still not developed |
|
| competitives
on international prices of |
|
| raw
materials further energy cost and the |
|
| credit
cost has increased considerably. |
|
| Inspite
of all these odds, by the grace of |
|
| Almighty
Allah your company has again |
|
| performed
very well and earned a hand- |
|
| some
after tax profit of Rs. 62.840 Million |
|
| against
Rs. 29.299 Million in the corre- |
|
| sponding
year. Our members would recall |
|
| that
in our last annual report we have |
|
| reported
that we have started production |
|
| of
blended yarn and our total spinning |
|
| capacity
is evenly utilized for production |
|
| of
both Cotton yarn and blended yarn. In |
|
| addition
to that we have also entered in |
|
| fancy
yarn market and got positive re- |
|
| sponse. |
|
|
| The
effect of the above change in produc- |
|
| tion
plan is clearly reflected in our local |
|
| sales
for the year under review, which is |
|
| doubled
as compare to last year. Conse- |
|
| quently
the export of cotton yarn is re- |
|
| duced
in terms of quantity by 25%. How- |
|
| ever,
export of knitted fabric has shown |
|
| a
remarkable improvement during the year |
|
| and
due to this factor our export sales has |
|
| not
fallen as compared to the increase in |
|
| local
sales. |
|
|
| DIVIDEND |
|
| Inspite
of the tight liquidity position and |
|
| difficult
business conditions the directors |
|
| of
the Company has continued the |
|
| payout
to the members of its due share |
|
| and
have recommended 20% dividend. |
|
| This
comprises Cash dividend @ 10% |
|
| and
a Bonus issue in proportion to ten |
|
| shares
for every one hundred shares reg- |
|
| istered
i.e. @ 10%. |
|
|
| FUTURE
PROSPECTS |
|
| The cotton crop for the
year 1997-98 is |
|
| again failed due to
heavy rain in October/ |
|
| November 1997. The
crises of cotton con- |
|
| tinued
unabated, as the crop is in short |
|
| of
target, inspire of this the government |
|
| has allowed free import and
export of |
|
| cotton. We are trying
our best to fetch best |
|
| possible prices of our
products in local as |
|
| well
as in international markets. The impact |
|
| of
recent events in Southeast Asia has |
|
| adverse effects on
exports of our Country |
|
| and on your Company as
well. |
|
|
| We anticipate that
inspite of increase in |
|
| cost of production and
competitive sales |
|
| prices your Company will
be able to per- |
|
| form reasonably well
during the current |
|
| year and will make all
possible efforts to |
|
| continue
its tradition in exporting more |
|
| and more. |
|
|
| AUDITORS |
|
| The present auditors M/s.
Hyder Bhimji |
|
| & Co., Chartered
Accountants retiring at |
|
| the
annual general meeting and being |
|
| eligible,
have offered themselves for reap- |
|
| pointment
until conclusion of the next |
|
| annual
general meeting. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| Statement
showing pattern of holding of |
|
| shares
as at September 30, 1997 is an- |
|
| nexed
to this report. |
|
|
| THANKS
AND APPRECIATION |
|
| We
would like to place on record our deep |
|
| appreciation
for the efforts of the execu- |
|
| tives,
officers and other staff members |
|
| and
workers for their hardwork, co-opera- |
|
| tion
and sincerity to the Company in |
|
| achieving
the best results for the company |
|
| and
we do hope to get the same co-opera- |
|
| tion
in the years to come. |
|
|
On behalf of the Board |
|
|
SOHAIL M. YUNUS |
|
|
Chief Executive |
|
| Karachi:
February 28, 1998 |
|
|
| FIVE
YEARS PERFORMANCE AT A GLANCE WITH RATIOS |
|
|
(Rupees in
"000"). |
|
|
| Years |
|
1996-97 |
1995-96 |
1994-95 |
1993-94 |
1992-93 |
|
| Export
sales and rebate |
|
1,077,129 |
1,472,849 |
1,240,615 |
1,057,249 |
855,742 |
|
| Local
sales |
|
739,040 |
345,760 |
419,501 |
221,950 |
188,781 |
|
| Gross
sales |
|
1,816,169 |
1,818,609 |
1,660,116 |
1,279,199 |
1,044,523 |
|
| Net
sales |
|
1,721,393 |
1,775,704 |
1,623,251 |
1,255,438 |
1,018,198 |
|
| Gross
profit |
|
228,241 |
225,670 |
152,469 |
245,527 |
173,105 |
|
| Gross
profit ratio |
|
13.26% |
12.71% |
9.39% |
19.56% |
17.00% |
|
| Profit
before taxation |
|
72, 169 |
43,596 |
16,616 |
74.63 |
16,552 |
|
| Profit
before taxation ratio |
|
4.19% |
2.46% |
1.02% |
5.94% |
1.63% |
|
| Profit
after taxation |
|
62,840 |
29,299 |
4,162 |
64,135 |
5,056 |
|
| Profit
after taxation ratio |
|
3.65% |
1.65% |
0.26% |
5.11% |
0.50% |
|
| Cost
of fixed assets |
|
811,502 |
805,415 |
817,129 |
806,805 |
742,485 |
|
| Book-value
of fixed assets |
|
407,525 |
444,716 |
497,408 |
540,262 |
543,540 |
|
| Total
assets employed |
|
978,428 |
873,769 |
732,869 |
807,526 |
664,568 |
|
| Shareholders
equity |
|
274,727 |
217,512 |
113,756 |
109,594 |
45,459 |
|
| Break-up
value per share |
|
48.84 |
38.67 |
101.12 |
146.13 |
60.61 |
|
| Earning
per share before tax |
|
12.83 |
7.75 |
14.77 |
99.51 |
22.07 |
|
| Earning
per share after tax |
|
11.17 |
5.21 |
3.70 |
85.51 |
6.74 |
|
| Production
capacity (20/s} Lbs. |
|
43,876,544 |
41,927,575 |
43,917,305 |
47,484,252 |
44,357,046 |
|
| Production
(20/s} Lbs. |
|
43,593,931 |
40,341,175 |
42,714,091 |
44,231,906 |
42,529,146 |
|
| Capacity
utilization |
|
99.36% |
96.22% |
97.26% |
93.15% |
95.88% |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed |
|
| balance
sheet of Fazal Textile |
|
| Mills
Limited as at September |
|
| 30,
1997 and related profit and loss ac- |
|
| count
and Statement of changes in finan- |
|
| cial
position (cash flow statement), to- |
|
| gether
with the notes forming part thereof, |
|
| for
the year then ended and we state that |
|
| we
have obtained all the information and |
|
| explanations
which to the best of our |
|
| knowledge
and belief were necessary for |
|
| the
purposes of our audit and alter due |
|
| verification
thereof, we report that: |
|
|
| (a)
in our opinion, proper books of ac- |
|
| count
have been kept by the Com- |
|
| pany
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 Com- |
|
| panies
Ordinance, 1984 and are |
|
| in
agreement with the books of |
|
| account
and are further in accor- |
|
| dance
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, invest- |
|
| ments
made and expenditure |
|
| incurred
during the year were in |
|
| accordance
with the objects of |
|
| the
Company. |
|
|
| c)
in our opinion and to the best of our |
|
| information
and according to the |
|
| explanations
given to us, the balance |
|
| sheet,
profit and loss account and |
|
| the
statement of changes in financial |
|
| positions
(cash flow statement), to- |
|
| gether
with the notes forming part |
|
| thereof,
give the information required |
|
| by
the Companies Ordinance, 1984 |
|
| in
the manner so required and re- |
|
| spectively
and given a true and fair |
|
| view
of the state of the Company's |
|
| affairs
as at September 30, 1997 and |
|
| of
the profit and the cash flows 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 un- |
|
| der
Section 7 of that Ordinance. |
|
|
HYDER BHIMJI & CO. |
|
| Karachi:
February 28, 1998 |
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET |
|
| AS
AT SEPTEMBER 30, 1997 |
|
|
Rupees '000' |
|
|
Note |
1997 |
1996 |
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorised: |
|
| 15,000,000
{1996: 15,000,000) |
|
| Ordinary
shares of Rs. 10/- each |
|
150,000 |
150,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paidup |
|
3 |
56,250 |
56,250 |
|
|
| RESERVES
AND SURPLUS |
|
| General
reserve |
|
4 |
215,041 |
155,041 |
|
| Unappropriated
profit |
|
3,436 |
6,221 |
|
|
---------- |
---------- |
|
|
218,477 |
161,262 |
|
|
---------- |
---------- |
|
| Shareholders
equity |
|
274,727 |
217,512 |
|
| DEFERRED
LIABILITIES |
|
| Staff
retirement gratuity |
|
12,904 |
10,145 |
|
|
| CURRENT
LIABILITIES |
|
| Finances
under mark-up arrangements |
|
5 |
532,459 |
493,902 |
|
| Creditors,
accruals and others |
|
6 |
84,441 |
72,057 |
|
| Advance
against sales |
|
7 |
45 |
15,630 |
|
| Provision
for taxation |
|
8 |
68,227 |
58,898 |
|
| Proposed
dividend |
|
5,625 |
5,625 |
|
|
---------- |
---------- |
|
|
690,797 |
646,112 |
|
| CONTINGENCIES |
|
9 |
-- |
-- |
|
|
---------- |
---------- |
|
|
978,428 |
873,769 |
|
|
========== |
========== |
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
assets |
|
10 |
407,525 |
444,716 |
|
|
| LONG
TERM DEPOSITS |
|
1,007 |
1,013 |
|
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
11 |
15,781 |
10,670 |
|
| Stock
in trade |
|
12 |
163,944 |
102,942 |
|
| Trade
debts - Unsecured considered good |
|
|
298,935 |
196,857 |
|
| Loans,
advances, deposits |
|
13 |
82,062 |
77,152 |
|
| Cash
and bank balances |
|
14 |
9,174 |
40,419 |
|
|
---------- |
---------- |
|
|
569,896 |
428,040 |
|
|
---------- |
---------- |
|
|
978,428 |
873,769 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
|
Rupees '000' |
|
|
Note |
1997 |
1996 |
|
|
| Sales |
|
15 |
1,721,393 |
1,775,704 |
|
| Cost
of sales |
|
16 |
1,493,152 |
1,550,034 |
|
|
---------- |
---------- |
|
| Gross
profit |
|
228,241 |
225,670 |
|
|
| Administrative,
selling and |
|
| general
expenses |
|
17 |
54,780 |
79,414 |
|
| Financial
expenses |
|
18 |
98,485 |
103,371 |
|
|
---------- |
---------- |
|
|
153,265 |
182,785 |
|
|
---------- |
---------- |
|
| Operating
profit |
|
74,976 |
42,885 |
|
|
19 |
991 |
3,006 |
|
|
---------- |
---------- |
|
|
75,967 |
45,891 |
|
| Workers
profit participation fund |
|
3,798 |
2,295 |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
72,169 |
43,596 |
|
|
|
|
| Provision
for taxation -- Current |
|
9,329 |
13,801 |
|
| Tax
on bonus shares issued |
|
-- |
496 |
|
|
---------- |
---------- |
|
|
9,329 |
14,297 |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
62,840 |
29,299 |
|
|
| Excess
reserve for issue of bonus |
|
| shares
of prior year written back |
|
-- |
666 |
|
| Unappropriated
profit brought forward |
|
6,221 |
6,881 |
|
|
---------- |
---------- |
|
|
6,221 |
7,547 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
69,061 |
36,846 |
|
|
|
|
| Appropriation: |
|
|
|
| Proposed
dividend @ 10% |
|
5,625 |
5,625 |
|
| Transfer
to general reserve |
|
60,000 |
25,000 |
|
|
---------- |
---------- |
|
|
65,625 |
30,625 |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
3,436 |
6,221 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
|
Rupees '000' |
|
|
|
Note |
1997 |
1996 |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from operation |
|
