| GUL AHMED TEXTILE MILLS LIMITED |
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
|
| CONTENTS |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| IQBAL
ALlMOHAMMED - Chief Executive |
|
| RAZI-UR-RAHMAN
KHAN - (NIT) |
|
| BASHIR
H. ALlMOHAMMED |
|
| A.
LATIF VALIMOHAMMED |
|
| GHULAM
HAJI ALlMOHAMMED |
|
| JAVAID IQBAL |
|
| ZAIN BASHIR |
|
|
| COMPANY
SECRETARY |
|
| MOHAMMED
HUSSAIN, FCA |
|
|
| BANKERS |
|
| ABN
AMRO BANK NV |
|
| AMERICAN
EXPRESS BANK LIMITED |
|
| BANK
AL-HABIB LIMITED |
|
| BANK
OF AMERICA NT & SA |
|
| CITIBANK,
N.A. |
|
| DEUTSCHE
BANK AG |
|
| HABIB
BANK AG ZURICH |
|
| HABIB
BANK LIMITED |
|
| SOCIETE
GENERALE THE FIB |
|
| STANDARD
CHARTERED BANK |
|
|
| AUDITORS |
|
| HYDER
BHIMJI & CO. |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE |
|
| PLOT NO. 82, |
|
| MAIN
NATIONAL HIGHWAY, |
|
| LANDHI,
KARACHI-75120 |
|
|
| SHARES
DEPARTMENT |
|
| PLOT
NO. HT/3A, |
|
| LANDHI
INDUSTRIAL AREA, |
|
| KARACHI-75120 |
|
|
| MILLS |
|
| PLOT
NO. HT/4, |
|
| LANDHI
INDUSTRIAL AREA, |
|
| KARACHI-75120 |
|
|
|
| NOTICE
OF MEETING |
|
| NOTICE
is hereby given that the 45th Annual General Meeting of the Shareholders of
Gul Ahmed Textile Mills |
|
| Limited
will be held at Avari Towers, 242, Fatima Jinnah Road, Karachi, on Monday
March 30, 1998 at 10:00 A.M. |
|
| to
transact the following business: |
|
|
| 1.
To receive and adopt the Directors' Report and Audited Accounts for the year
ended |
|
| September
30, 1997 and Auditors' Report thereon. |
|
|
| 2.
To approve the payment of cash dividend @ 12.5% as recommended by the Board. |
|
|
| 3.
To appoint Auditors and fix their remuneration. |
|
|
| 4.
To transact any other ordinary business as may be placed before the meeting
with the permission |
|
| of
the Chairman. |
|
|
| NOTES: |
|
| 1.
Share Transfer Books of the Company will remain closed from March 21,1998 to
March 30, 1998 |
|
| (both
days inclusive). |
|
| 2.
A member entitled to vote at the meeting may appoint a proxy. Proxies in
order to be effective, must |
|
| be
received at the Registered Office of the Company duly stamped and signed not
later than 48 |
|
| hours
before the meeting. |
|
| 3.
A proxy must be a member of the Company. |
|
| 4.
Shareholders are requested to immediately notify the change of address, if
any. |
|
|
|
| DIRECTORS'
REPORT |
|
| Your
Directors are pleased to present the 45th Annual Report and the audited
accounts for the year ended |
|
| September
30, 1997. |
|
|
| OPERATING
RESULTS |
|
|
Rs. 000s |
|
| Operating
results of the Company are noted below: |
|
|
| Net
profit after providing depreciation |
|
| of
Rs. 119.783 million amounts to |
|
81,423 |
|
| Less:
Provision for taxation the year |
|
15,900 |
|
|
| Profit
for the year after tax |
|
65,523 |
|
| Less:
Provision for taxation for prior years |
29,221 |
|
| Add:
Unappropriated profit brought forward |
|
2,185 |
|
|
---------- |
|
| Amount
available for appropriation |
|
38,487 |
|
|
========== |
|
| Appropriations |
|
| Proposed
dividend |
|
35,782 |
|
| Amount
carried forward |
|
2,705 |
|
|
---------- |
|
|
38,487 |
|
|
========== |
|
|
|
|
| Sales
have increased by 23.76% and profit before tax has increased from Rs. 70.873
million to |
|
| Rs.
81.423 million. |
|
|
| Net
earning per share before the issue of right shares works out to Rs. 2.69.
After issue of right shares, earning |
|
| per
share works out to Rs. 2.29. |
|
|
| DIVIDEND |
|
| Your
Directors are pleased to recommend cash dividend @ 12.5% that is Rs. 1.25 per
share. |
|
|
| FUTURE
PROSPECTS |
|
| The
current balancing, modernisation and replacement programme is in progress and
about 50% work has |
|
| been
completed. The Company is confident that the programme would be completed
during the current fiscal |
|
| year. |
|
|
| The
benefits of this programme in the shape of manufacturing efficiency and
increase in sales have already |
|
| started
showing and will further improve as the programme is fully implemented. |
|
|
| Depreciation
during the fiscal year under report, in the value of major West European
currencies has eroded |
|
| the
margins to some extent. Recent turmoil in currency values of East Asian
countries have further dampened |
|
| the
prospects of improvement in export selling prices. |
|
|
| It
is however expected that the balancing, modernisation and replacement
programme under implementation, |
|
| will
help in absorbing to the some extent the adverse effects of currency
fluctuations. |
|
|
| BOARD
OF DIRECTORS |
|
| During
the course of the year Hajiani Zubeda Haji Alimohammed and Mrs. Zeenat H.
Anwar resigned from the |
|
| Board
and were replaced by Mr. Javaid Iqbal and Mr. Zain Bashir. |
|
|
| The
Board while welcoming Mr. Javaid Iqbal and Mr. Zain Bashir wishes to place on
record its thanks to Hajiani |
|
| Zubeda
Haji Alimohammed and Mrs. Zeenat H. Artwar for their valuable contribution
over the years. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| A
statement showing the pattern of shareholding in the Company as at September
30, 1997 is included in this |
|
| report. |
|
|
| AUDITORS |
|
| The
present auditors Hyder Bhimji & Co., Chartered Accountants, retire and
offer themselves for re-appointment. |
|
|
| EMPLOYEES'
RELATIONS |
|
| The
Board is pleased to report that the workers and staff management relations
remained cordial and wishes |
|
| to
express its deep appreciation for the commitment and hard work put in by the
employees at all levels. |
|
|
|
| AUDITORS'
REPORT |
|
| TO
THE MEMBERS |
|
| We
have audited the annexed Balance Sheet of GUL AHMED TEXTILE MILLS LIMITED as
at September 30, |
|
| 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
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 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 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; |
|
|
| (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 |
|
| September
30, 1997 and of the profit and changes in cash position 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. |
|
|
HYDER BHIMJI & CO. |
|
| Karachi:
February 24, 1998 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT SEPTEMBER 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Note |
Rs. 000s |
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorised
capital |
|
500,000 |
300,000 |
|
| (50,000,000
ordinary shares of Rs.10 each) |
|
========== |
========== |
|
| (1996:30,000,000
ordinary shares ) |
|
|
| Issued,
subscribed and paid-up capital |
|
286,260 |
212,044 |
|
| Reserves |
|
426,086 |
383,677 |
|
| Reserve
for bonus shares |
|
- |
31,807 |
|
| Unappropriated
profit |
|
2,705 |
2,185 |
|
|
----------- |
----------- |
|
|
715,051 |
629,713 |
|
| REDEEMABLE
CAPITAL |
|
5 |
90,881 |
115,213 |
|
| DEBENTURES
AND LONG TERM LOANS |
|
| -
For operations |
|
6 |
487,767 |
244,431 |
|
| - For hedging |
|
7 |
272,774 |
- |
|
|
|
----------- |
----------- |
|
|
|
760,541 |
244,431 |
|
| DEFERRED
LIABILITIES |
|
|
|
| Taxation |
|
46,470 |
46,470 |
|
| Gratuity |
|
8 |
12,937 |
11,331 |
|
|
|
----------- |
----------- |
|
|
|
59,407 |
57,801 |
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
|
|
|
| Shod
term running finance |
|
9 |
1,271,285 |
888,907 |
|
| Current
maturity of redeemable capital, |
|
|
| debentures
and long term loans |
10 |
149,658 |
117,463 |
|
| Creditors
and accrued liabilities |
11 |
268,976 |
193,135 |
|
| Other
liabilities |
|
12 |
1,078 |
574 |
|
| Provision
for taxation |
|
|
36,263 |
9,186 |
|
| Proposed
dividend |
|
|
35,782 |
15,903 |
|
|
|
----------- |
----------- |
|
|
|
1,763,042 |
1,225,168 |
|
|
|
|
|
|
| CONTINGENT LIABILITIES AND
COMMITMENTS |
13 |
|
|
---------- |
---------- |
|
|
3,388,922 |
2,272,326 |
|
|
|
========== |
========== |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
|
| Operating
assets |
|
14 |
1,125,225 |
1,031,954 |
|
| Capital
work-in-progress |
|
15 |
142,782 |
59,139 |
|
|
|
---------- |
---------- |
|
|
|
1,268,007 |
1,091,093 |
|
|
|
|
| LONG
TERM INVESTMENT |
|
16 |
50 |
50 |
|
| LONG
TERM DEPOSITS |
|
17 |
312,504 |
2,296 |
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
18 |
75,080 |
58,426 |
|
| Stock-in-trade |
|
19 |
1,160,498 |
720,526 |
|
| Trade debts |
|
20 |
436,721 |
261,361 |
|
| Advances,
prepayments and other receivables
21 |
128,397 |
136,818 |
|
|
| Cash
and bank balances |
|
22 |
7,665 |
1,756 |
|
|
|
---------- |
---------- |
|
|
1,808,361 |
1,178,887 |
|
|
---------- |
---------- |
|
|
3,388,922 |
2,272,326 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Note |
Rs. 000s |
|
|
| Sales |
|
23 |
3,091,856 |
2,498,345 |
|
| Cost of sales |
|
24 |
2,548,596 |
2,048,185 |
|
|
|
---------- |
---------- |
|
| GROSS PROFIT |
|
|
543,260 |
450,160 |
|
|
|
|
| Administrative
expenses |
|
25 |
107,687 |
86,352 |
|
| Selling
expenses |
|
26 |
55,325 |
46,457 |
|
|
|
---------- |
---------- |
|
|
|
163,012 |
132,809 |
|
|
|
|
| OPERATING
PROFIT |
|
|
380,248 |
317,351 |
|
| Other income |
|
27 |
3,820 |
3,192 |
|
|
|
---------- |
---------- |
|
|
|
384,068 |
320,543 |
|
|
|
|
| Financial
charges |
|
28 |
297,747 |
245,690 |
|
| Workers'
profit participation fund |
|
4,316 |
374.30 |
|
| Workers'
welfare fund |
|
|
582 |
237 |
|
|
|
---------- |
---------- |
|
|
|
302,645 |
249,670 |
|
|
|
---------- |
---------- |
|
| Net
profit for the year before taxation |
|
81,423 |
70,873 |
|
| Provision
for taxation for the year |
29 |
15,900 |
10,341 |
|
|
|
---------- |
---------- |
|
| Net
profit for the year after taxation |
|
65,523 |
60,532 |
|
| Provision
for taxation - prior years |
|
(29,221) |
(9,210) |
|
| Unappropriated
profit brought forward |
|
2,185 |
4,766 |
|
|
|
---------- |
---------- |
|
| Net
profit available for appropriation |
|
38,487 |
56,088 |
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
|
|
|
|
|
| Proposed
dividend |
|
|
35,782 |
15,903 |
|
| General
reserve |
|
|
- |
38,000 |
|
|
|
---------- |
---------- |
|
|
|
35,782 |
53,903 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
2,705 |
2,185 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
|
|
1997 |
1996 |
|
|
'Rs. 000s |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
before tax |
|
81,423 |
70,873 |
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
119,783 |
112,810 |
|
| Staff
gratuity |
|
2,810 |
2,636 |
|
| Financial
charges |
|
298,261 |
245,690 |
|
| Profit
on sale of operating assets |
|
(1,705) |
(1,492) |
|
| Interest
income |
|
(514) |
- |
|
|
---------- |
---------- |
|
|
500,058 |
430,517 |
|
| Changes
in working capital: |
|
| (Increase)/Decrease
in current assets |
|
| Stores
and spares |
|
(16,654) |
4,836 |
|
| Stock-in-trade |
|
(439,972) |
152,804 |
|
| Trade debts |
|
(175,360) |
(2,607) |
|
| Advances,
prepayments and other receivables |
|
12,192 |
(48,678) |
|
|
---------- |
---------- |
|
|
(619,794) |
106,355 |
|
| Increase
in current liabilities |
|
| Creditors,
accrued and other liabilities |
|
63,614 |
10,310 |
|
|
---------- |
---------- |
|
|
(556,180) |
116,665 |
|
|
---------- |
---------- |
|
| Cash
(used in)/generated from operations |
|
(56,122) |
547,182 |
|
| Payments for: |
|
| Staff
gratuity |
|
(1,204) |
(600) |
|
| Financial
charges |
|
(285,530) |
(270,409) |
|
| Income tax |
|
(21,301) |
(19,342) |
|
|
---------- |
---------- |
|
| Net
cash (used in)/generated from operating activities |
(364,157) |
256,831 |
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Capital
expenditure |
|
(298,628) |
(147,972) |
|
| Sale
proceeds of operating assets |
|
3,636 |
3,775 |
|
| Long
term loans, deposits & deferred cost |
|
(310,208) |
36 |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(605,200) |
(144,161) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Proceeds
from issue of right shares with premium |
84,818 |
1,691 |
|
| Long
term borrowings |
|
641,437 |
50,000 |
|
| Long
term borrowings-repayment |
|
(96,049) |
(185,002) |
|
| Redemption
of redeemable capital |
|
(21,415) |
(20,913) |
|
| Increase
in shod terms borrowings |
|
382,378 |
50,707 |
|
| Dividends
paid |
|
(15,903) |
(14,767) |
|
|
---------- |
---------- |
|
| Net
cash generated from/(used in) financing activities |
975,268 |
(118,284) |
|
| Net
increase/(decrease)in cash and cash equivalents |
5,909 |
(5,614) |
|
| Cash
and cash equivalents at October 1 |
|
1,756 |
7,370 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at September 30 |
|
7,665 |
1,756 |
|
|
========== |
========== |
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| Gul
Ahmed Textile Mills Limited is a public limited company incorporated in
Pakistan and is listed on the |
|
| Karachi
and Lahore Stock Exchanges. It is engaged in the manufacture and sale of
textile products. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| Accounts
of the Company have been prepared on historical cost convention. |
|
|
| 2.2
Foreign currency translation |
|
| Assets
and liabilities in foreign currencies are translated in Pak Rupees at the
rates ruling on the |
|
| balance
sheet date or as fixed under contractual arrangements. |
|
|
| Exchange
differences on loans and deposits created to hedge these loans are adjusted
to assets |
|
| acquired
under the loans. Other exchange differences are charged to current year's
income. |
|
|
| 2.3
Retirement gratuity |
|
| The
Company provides for the liability of gratuity payable to its employees under
the law. |
|
|
| 2.4 Taxation |
|
| Provision
for current taxation is based on taxable income at the current rates of
taxation after |
|
| considering
tax credits and rebates, if any. Deferred taxation is accounted for on all
material timing |
|
| differences
using the liability method. |
|
|
| 2.5
Fixed assets |
|
| Fixed
assets are stated at cost less accumulated depreciation except leasehold land
and capital |
|
| work-in-progress
which are stated at cost. Depreciation is charged on reducing balance method
at |
|
| rates
specified in the note on operating assets. Full year's depreciation is
charged on additions |
|
| except
major additions or extentions to production facilities which are depreciated
on pro-rata basis |
|
| for
the period of use during the year and no depreciation is charged on assets in
the year of its |
|
| disposal. |
|
|
| 2.6
Investments |
|
| Investments
in shares are stated at cost. No adjustment for market value as on the
balance sheet |
|
| date
is made in the accounts. |
|
|
| 2.7
Stores and spares |
|
| Stores,
chemicals and spares are valued at average cost and goods-in-transit are
stated at actuals. |
|
|
| 2.8
Stock-in-trade |
|
| Raw
materials are valued at average cost. Finished goods are valued at lower of
average cost and |
|
| net
realisable value. Stock-in-process is valued at average cost of raw materials
plus a proportion |
|
| of
the production overheads. Waste products are valued at contract rates. |
|
|
| 2.9
Trade debts |
|
| Debts
considered irrecoverable are written off and provision is made for debts
considered doubtful. |
|
|
| 2.10
Revenue recognition |
|
| Sales
are recorded on despatch of goods to buyers. Income on investment is recorded
when |
|
| received. |
|
|
|
1997 |
1996 |
|
|
Rs. 000s |
|
| 3.
ISSUED, SUBSCRIBED AND PAID-UP CAPITAL |
|
|
| 17,484,722
ordinary shares of Rs. 10 each |
|
| fully
paid issued for cash |
|
174,847 |
132,438 |
|
| (1996:13,243,837
shares) |
|
| 11,141,249
ordinary shares of Rs.10 each |
|
| fully
paid issued as bonus shares |
|
111,413 |
79,606 |
|
| (1996:7,960,586
shares) |
|
---------- |
---------- |
|
|
286,260 |
212,044 |
|
|
========== |
========== |
|
| 4. RESERVES |
|
|
| Revenue
reserve |
|
| General
reserve |
|
295,000 |
257,000 |
|
| Add:
Transfer from profit and loss account |
|
- |
38,000 |
|
|
---------- |
---------- |
|
|
295,000 |
295,000 |
|
| Capital
reserve |
|
|
|
| Share premium |
|
88,677 |
119,419 |
|
| Add:
Premium on right shares issued during the year |
42,409 |
1,065 |
|
|
---------- |
---------- |
|
|
131,086 |
120,484 |
|
| Less:
Reserve for bonus shares |
|
- |
31,807 |
|
|
---------- |
---------- |
|
|
131,086 |
88,677 |
|
|
---------- |
---------- |
|
|
426,086 |
383,677 |
|
|
========== |
========== |
|
| 5.
REDEEMABLE CAPITAL - SECURED |
|
| 5.1
Habib Bank Limited - Long term finance |
|
10,655 |
14,540 |
|
| 5.2
National Investment Trust Limited -TFCs |
|
104,557 |
122,087 |
|
|
---------- |
---------- |
|
|
115,212 |
136,627 |
|
| Less:
Current maturity shown under current liabilities |
24,331 |
21,414 |
|
|
---------- |
---------- |
|
|
90,881 |
115,213 |
|
|
========== |
========== |
|
|
|
|
|
Amount |
Rate of |
Total |
|
Amount of Installment |
|
|
(Rs. 000s) |
Mark-up |
Mark-up |
Re-payment Period |
(Rs. 000s) |
|
|
Paisa/Rs. 1000 |
|
|
|
Per Day |
(Rs. 000s) |
|
|
