| GROWTH MUTUAL FUND LIMITED |
|
|
|
|
|
|
|
|
|
|
| Annual
Report 1997 |
|
|
| CONTENTS |
|
| CORPORATE
INFORMATION |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTOR'S
REPORT |
|
| AUDITOR'S
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
| PROFIT
& LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| NOTES
TO THE ACCOUNTS |
|
| STATEMENT
OF INCOME & EXPENDITURE IN |
|
| RELATION
TO THE INVESTMENT COMPANY |
|
| PATTERN
OF HOLDING OF THE SHARES |
|
|
|
| CORPORATE
INFORMATION |
|
|
| INVESTMENT
ADVISER |
|
| INTERNATIONAL
INVESTMENT & FINANCIAL SERVICES LIMITED |
|
|
| CUSTODIAN |
|
| Allied
Bank of Pakistan Limited |
|
|
| BOARD
OF DIRECTORS |
|
|
| CHIEF
EXECUTIVE |
|
| Rasheed
Waheed |
|
|
| DIRECTORS |
|
| Mr.
S. A. Kermani |
|
| Mr.
Jamshed All |
|
| Mr.
Mustafa Jalil |
|
| Mr.
Irfan Ahmed Qureshi |
|
| Mr.
Nadeem All |
|
| Mr.
M. Akram Ghanchi |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Irfan Ahmed Qureshi |
|
|
|
| AUDITORS |
|
| M/s.
M. Yousuf Adil & Co. |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Bank
of America |
|
| Muslim
Commercial Bank Limited |
|
| Union
Bank Limited |
|
| Schon
Bank Limited |
|
|
| LEGAL
ADVISER |
|
| Hubert
Monteiro |
|
| A/8,
Anthonian Blessing, |
|
| Sunny
Side Road, |
|
| Civil
Lines, Clifton, Karachi. |
|
|
| SHARE
REGISTRARS |
|
| Uni
Associates (Pvt) Ltd. |
|
| 6th
Floor, Lakson Square Building # 3, |
|
| Sarwar
Shaheed Road, Karachi-74200, Pakistan. |
|
| Tel
:5687016, 5687026, 5687056 |
|
| Fax:
(021) 5680414 |
|
|
| REGISTERED
OFFICE: |
|
| 6th
Floor, Lakson Square Building # 3, |
|
| Sarwar
Shaheed Road, Karachi-74200, Pakistan. |
|
| Tel:
5687016, 5687026, 5687056, |
|
| Fax:
(021) 5680414 |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given That the Fifth Annual General Meeting of Growth Mutual |
|
| Fund
Limited, will be held on December 31, 1997 at 12.00 Noon at Raffia Choudri |
|
| Memorial
Centre, Ground Floor, Sidco Avenue Centre, 264 R.A. Lines Sarwar |
|
| Shaheed
Road Karachi to transact the following business :- |
|
|
| 1.
To confirm the minutes of the Annual General Meeting held on December |
|
| 31,1996. |
|
|
| 2.
To receive, consider and adopt the Audited Accounts together with the |
|
| Directors
and audited report for the year ended 'June 30, 1997 |
|
|
| 3.
To appoint Auditors for the year 1997-98 and fix their remuneration. The
present |
|
| Auditors
M/s. M. Yousuf Adil & Co., Chartered Accountants, retire and being |
|
| eligible,
offer themselves for re-appointment. |
|
|
| 4. Any other business with the permission of
the chair. |
|
|
| NOTES |
|
|
| 1.
The Share Transfer Books of the Company Shall remain closed from |
|
| December
23, 1997 To December 31, 1997. (both days inclusive ). No transfer |
|
| will
be accepted for the registration during the period. |
|
|
| 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 the 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 with our Registered Office at 6th Floor, |
|
| Lakson
Square Building No. 3 Sarwar Shaheed Road, Karachi, not less than |
|
| 48
hours before the meeting. |
|
|
| 4.
Members are requested to notify any change in their addresses immediately. |
|
|
|
|
| DIRECTOR'S
REPORT |
|
|
| It
is a great pleasure for us to present to our share holders the fifth Annual
Report |
|
| of
Growth Mutual Fund Limited with the audited account for the year ended June |
|
| 3O,
1997. |
|
|
| OPERATIONAL
AND FINANCIAL REVIEW |
|
| The
final year 1997 was difficult year for the financial market. The political |
|
| uncertainty
balance of payment crisis and depreciating of rupee many times hit the |
|
| performance
of the capital market. The GDP rate declined by 3.1 percent with the |
|
| manufacturing
sector showing a negative growth of 1.4 percent. |
|
|
| The
new government took over in February 1997 and announced a numbers of |
|
| economic
package but the stock market continued a bearish tone except for a few |
|
| short
term bullish behavior. The KSE-100 index showed a steep decline during the |
|
| first-
half of the year and was quoted at 1339 as on December 31st, 1996, |
|
|
| The
financial results for the year ended June 30, 1997. are as under. |
|
|
| Profit/(Loss)
before taxation |
|
(3,772,613) |
|
| Provision
for taxes |
|
(74,404) |
|
| Profits/(Loss)
after taxation |
|
(3,847,017) |
|
| Accumulated
loss |
|
|
|
| carried
forward |
|
(58,289,304) |
|
|
|
|
| FUTURE
PROSPECTS |
|
| The
government has adopted a supply side economic strategy, and successfully |
|
| negotiated
$1.56 bin ESAF/program with IMF. The announcement of various policy |
|
| measures
and packages by the government will have long term positive effect on |
|
| the
economy. It is hoped that the economic indicators will improve. |
|
|
| The
stock market being the barometer of the economic health of the country will |
|
| certainly
respond to the changing situation. |
|
|
| DIRECTOR |
|
| Mr.
NEK MOHAMMAD QURESHI chairman of the Board of Director expired in |
|
| March
1997. The board wishes to acknowledge his contribution towards the growth |
|
| of
financial market and we pray Almighty God to give peace to his departed soul |
|
| and
give strength to all of us to bear such an irreparable loss. |
|
|
| Mr.
Akram Ghanchi joined the board as Director of the Company in September, |
|
| 1997.
We welcome the new Director and look forward to his support for progress of |
|
| the
company. |
|
|
| PATTERN
OF SHARE HOLDING |
|
|
| A
statement showing pattern of share holding in the company as at June 30, 1997 |
|
| is
annexed to the to financial statement. |
|
|
| AUDITORS |
|
|
| The
retiring Auditor's M/s. M. Yousuf Adil & Co. Chartered Accountant, being
eligible |
|
| offer
themselves for re-appointment. |
|
|
| ACKNOWLEDGMENT |
|
|
| The
directors would like to take this opportunity to thank the Corporate Law |
|
| Authority
for their continuos support to the company. |
|
|
| The
board also appreciates the devoted work done by staff and officers of the |
|
| company. |
|
|
|
| AUDITOR'S
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of GROWTH MUTUAL FUND LIMITED as at
June 30, |
|
| 1997
and the related profit & loss account and statement of changes in
financial position (cash flow |
|
| statement)
together with the notes thereon for the year then ended. Our examination was
made in |
|
| accordance
with the generally accepted auditing standards and accordingly included such
tests of the |
|
| accounting
records and such other auditing procedures as were considered necessary in
the |
|
| circumstances
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)
in our opinion, proper books of account have been kept by the Company as
required by |
|
| Companies
Ordinance, 1984 and Rule 16 of the Investment Companies and Investment
Adviser's |
|
| Rules
1971; |
|
|
| (b)
in our opinion: |
|
|
| (i)
The balance sheet and profit & loss account together with the notes
thereon, have been |
|
| drawn
up in conformity with the Companies Ordinance, 1984 and in accordance with
the |
|
| provision
of the Investment Companies and Investment Adviser's Rules, 1971 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 investment policy of the Company and Investment
Companies |
|
| and
Investment Adviser's Rules, 1971. |
|
|
| (iv)
the company has not contravened the provision of Rules 8 of the Investment
Companies and |
|
| Investment
Adviser's Rules, 1971; and |
|
|
| (c)
in Our opinion and to the best of our information and according to the
explanations given to us the |
|
| balance
sheet and profit & loss account and statement of changes in finical
position (cash flow |
|
| statement)
together with the notes thereon, given the information required by the
Companies |
|
| Ordinance,
1984 Investment Companies and Investment Adviser's Rules, 1971 in the manner
so |
|
| required
and respectively give a true and fair view of the state of the company's
affairs as at June |
|
| 30,
1997 and the loss and changes in financial position for the year then ended;
and |
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| Karachi |
|
M. YOUSUF ADIL & CO. |
|
| Dated:
December 08, 1997 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Notes |
Rupees |
Rupees |
|
|
| SHARE
CAPITAL |
|
|
| Authorised |
|
| 20,000,000
Ordinary shares |
|
| of
Rs. 10/- each |
|
200,000,000 |
200,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
|
| 10,000,000
ordinary shares |
|
| of
Rs. 10/- each fully paid in cash |
|
100,000,000 |
100,000,000 |
|
| Accumulated
loss |
|
(58,289,304) |
(54,442,287) |
|
|
---------- |
---------- |
|
|
41,710,696 |
45,557,713 |
|
|
| DEFERRED
LIABILITY |
|
3 |
1,111,427 |
2,222,854 |
|
|
| CURRENT
LIABILITIES |
|
|
| Currents
portion of deferred liability |
|
1,111,427 |
1,111,427 |
|
| Due
to Investment Adviser |
|
4 |
999,558 |
911,154 |
|
|
| Accrued
expenses and |
|
| other
liabilities |
|
20,000 |
32,738 |
|
| Taxation |
|
5 |
327,846 |
333,913 |
|
|
|
---------- |
---------- |
|
|
2,458,831 |
2,389,232 |
|
|
---------- |
---------- |
|
|
45,280,954 |
50,169,799 |
|
|
========== |
========== |
|
| The
annexed notes from 1 to 11 form |
|
| an
integral part of these accounts. |
|
|
| DEFERRED
EXPENDITURE |
|
6 |
1,241,076 |
2,352,503 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Marketable
securities |
|
7 |
17,256,654 |
36,598,823 |
|
| Accounts
receivable |
|
| considered
good |
|
26,185,591 |
5,003,681 |
|
|
| Dividend,
interest and other |
|
| receivable
considered good |
|
-- |
564,108 |
|
|
| Advance
tax |
|
23,311 |
18,136 |
|
| Cash
with banks |
|
8 |
574,322 |
5,632,548 |
|
|
|
---------- |
---------- |
|
|
44,039,878 |
47,817,296 |
|
|
---------- |
---------- |
|
|
45,280,954 |
50,169,799 |
|
|
========== |
========== |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
| Income |
|
| Loss
on dealing in securities |
|
9 |
(17,005,736) |
(3,647,775) |
|
| Return
on deposits and certificates |
|
51,751 |
178,998 |
|
| Dividends |
|
1,057,932 |
2,801,908 |
|
|
---------- |
---------- |
|
|
(15,896,053) |
(666,869) |
|
| Operating
Expenses |
|
|
| Remuneration
to Investment Adviser |
|
834,214 |
911,154 |
|
| Amortisation
of deferred expenditure |
|
1,111,427 |
1,111,427 |
|
| Custodian
charges |
|
300,000 |
300,000 |
|
| Financial
charges |
|
333,428 |
445,407 |
|
| Audit
fee |
|
20,000 |
20,000 |
|
| Others |
|
13,533 |
4,500 |
|
|
---------- |
---------- |
|
|
(2,612,602) |
(2,792,488) |
|
|
|
|
|
(18,508,655) |
(3,459,357) |
|
| Reversal/(Provision)
for diminution in value |
|
|
|
| of
Marketable Securities |
|
14,736,042 |
(4,889,490) |
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
(3,772,613) |
(8,348,847) |
|
|
|
|
| Taxation |
|
70,000 |
190,000 |
|
| Current |
|
4,404 |
726,234 |
|
| Prior
year's |
|
---------- |
---------- |
|
|
(74,404) |
'(916,234) |
|
|
---------- |
---------- |
|
| Loss
after taxation |
|
(3,847,017) |
(9,265,081) |
|
| Accumulated
loss brought forward |
|
(54,442,287) |
(45,177,206) |
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
(58,289,304) |
(54,442,287) |
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 11 form |
|
| an
integral part of these accounts |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
|
| A.
CASH USED IN OPERATING ACTIVITIES |
|
|
| Loss
before taxation |
|
(3,772,613) |
(8,348,847) |
|
|
| Adjustment
for items not involving |
|
| movement
of funds (Reversal) |
|
| /
Provision for diminution in |
|
(14,736,042) |
4,889,490 |
|
| marketable
securities |
|
|
| Amortisation
of deferred expenditures |
|
1,111,427 |
1,111,427 |
|
|
---------- |
---------- |
|
|
(13,624,615) |
6,000,917 |
|
|
---------- |
---------- |
|
| Operating
10SS before working |
|
| capital
changes |
|
(17,397,228) |
(2,347,930) |
|
|
| Changes
in working capital |
|
| (Increase)/decrease
in current assets |
|
|
| Investment
in marketable securities |
|
34,078,211 |
(4,685,879) |
|
| Accounts
receivable |
|
(21,181,910) |
3,153,569 |
|
| Dividend
/ interest receivable |
|
564,108 |
1,393,092 |
|
| Advance
tax |
|
(5,175) |
(18,136) |
|
| (Decrease)/Increase
in current liabilities |
|
|
|
| Due
to Investment Adviser |
|
88,404 |
(461,068) |
|
| Accrued
expenses and other liabilities |
|
(12,738) |
12,738 |
|
|
---------- |
---------- |
|
|
13,530,900 |
(605,684) |
|
| Tax paid |
|
(80,471) |
(687,321) |
|
|
---------- |
---------- |
|
|
13,450,429 |
(1,293,005) |
|
|
---------- |
---------- |
|
| Net
cash used in operating activities |
|
(3,946,799) |
(3,640,935) |
|
|
| B.
CASH USED IN FINANCING |
|
| ACTIVITIES |
|
|
| Deferred
expenditure |
|
(1,111,427) |
(1,111,427) |
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
(1,111,427) |
(1,111,427) |
|
|
| Net
decrease in cash and cash |
|
| equivalents
(A+B) |
|
(5,058,226) |
(4,752,362) |
|
|
| Cash
and cash equivalents at the |
|
| beginning
of the year |
|
5,632,548 |
10,384,910 |
|
|
| Cash
and cash equivalent at the |
|
---------- |
---------- |
|
| end
of the year |
|
574,322 |
5,632,548 |
|
|
========== |
========== |
|
|
|
| NOTES
TO THE ACCOUNTS -JUNE 30, 1997 |
|
| 1.
STATUS AND ACTIVITIES |
|
|
| 1.1
The Company was incorporated on May 24, 1992 as a Public Company |
|
| Limited
by shares under the Companies Ordinance, 1984 and has been |
|
| registered
as an Investment Company under the Investment Companies |
|
| and
Investment Adviser's Rules, 1971. It is listed on the Karachi Stock |
|
| Exchange.
It is a closed end mutual fund. |
|
|
| 1.2
"International Investment and Financial Services Limited" are the
approved |
|
| "Investment
Adviser" of the Company and Allied Bank of Pakistan Limited |
|
| are
the approved Custodian |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under 'historical cost convention'. |
|
|
| 2.2
Taxation |
|
| Provision
for current taxation is based on taxable income at the current |
|
| tax
rates after taking into account tax credits available, if any. The |
|
| company
accounts for deferred taxation arising on all major timing |
|
| difference,
using the liability method but does not account for deferred |
|
| tax
debits. |
|
|
| 2.3
Deferred expenditure |
|
| The
expenditure incurred on the incorporation and issue of shares to the |
|
| public
is deferred and are amortised over a maximum period of five years |
|
| from
the year of incurrence. |
|
|
| 2.4
Marketable securities |
|
| Investment
is valued at lower of average cost and market value on an |
|
| aggregate
portfolio basis. Market value is taken from Karachi Stock |
|
| Exchange
quotation sheets on last working day of the income year. |
|
|
| 2.5
Revenue recognition |
|
| Sale
and purchase of securities and resultant gain/loss are recognised on |
|
| the
date of contract. |
|
| Dividend
income is recognised when the right to receive dividend is |
|
| established
and is shown net off zakat deduction. |
|
|
| Return
on bank deposits is recognised on accrual basis. |
|
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
|
| 3.
Deferred liability |
|
|
| International
Investment and |
|
| Financial
Services Limited |
|
| Investment
Adviser |
|
|
| Preliminary
and share issue |
|
| expense
incurred |
|
5,557,135 |
5,557,135 |
|
|
| Less:
Repaid to the Investment Adviser |
|
| Upto
previous year |
|
22,228,541 |
1,111,427 |
|
| During
the year |
|
1,111,427 |
1,111,427 |
|
|
----------- |
----------- |
|
|
(3,334,281) |
(2,222,854) |
|
|
----------- |
----------- |
|
|
2,222,854 |
3,334,281 |
|
| Payable
within one year shown |
|
| under
current liabilities |
|
(1,111,427) |
(1,111,427) |
|
|
----------- |
----------- |
|
|
1,111,427 |
2,222,854 |
|
|
========== |
========== |
|
| Markup
is being paid @ 10% per annum. |
|
|
| 4.
Due to Investment Adviser |
|
|
| International
Investment and |
|
| Financial
Services Limited |
|
|
| Remuneration |
|
| 2%
of of net assets (4.1) |
|
834,214 |
911,154 |
|
| Interest
on deferred liability |
|
165,344 |
-- |
|
|
---------- |
---------- |
|
|
999,558 |
911,154 |
|
|
========== |
========== |
|
| 4.1
The remuneration of the Investment Advisor is payable at the rate of 2% of
the |
|
| net
assets of the company for the first five years of the investment company's |
|
| existence
and thereafter at the rate of 1% of the net assets of the company in |
|
| terms
of clause 1 l(a) of the Investment Companies and Investment Adviser's |
|
| Rules,
1971. The remuneration for the year has been determined as under. |
|
|
|
|
| Assets |
|
|
| Deferred
expenditures |
|
1,241,076 |
2,352,503 |
|
| Marketable
securities |
|
17,256,654 |
36,598,823 |
|
| Accounts
receivable |
|
26,185,591 |
5,003,681 |
|
| Dividend/interest
receivable |
|
-- |
564,108 |
|
| Advance
tax |
|
23,311 |
18,136 |
|
| Cash
with banks |
|
574,322 |
5,632,548 |
|
|
---------- |
---------- |
|
|
45,280,954 |
50,169,799 |
|
| Liabilities |
|
|
|
|
|
|
| Deferred
liability |
|
1,111,427 |
2,222,854 |
|
| Current
portion of deferred liability |
|
1,111,427 |
1,111,427 |
|
| Due
to investment adviser |
|
999,558 |
911,154 |
|
| Accrued
and other liabilities |
|
20,000 |
32,738 |
|
| Taxation |
|
327,846 |
333,913 |
|
|
---------- |
---------- |
|
|
(3,570,258) |
(4,612,086) |
|
|
---------- |
---------- |
|
| Net
Assets |
|
41,710,696 |
45,557,713 |
|
|
---------- |
---------- |
|
| Remuneration
@ 2% of net assets |
|
834,214 |
911,154 |
|
|
=========== |
=========== |
|
| 5.
Provision for taxation |
|
|
| Tax
assessments of the Company have been finalized upto assessment year |
|
| 1996-97.
The Company has challenged the order of the assessing office for the |
|
| assessment
year 1994-95 to 1996-97 on certain matters. However provision |
