| GULISTAN SPINNING MILLS LTD. |
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| 10TH
ANNUAL REPORT 1997 |
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| CONTENTS |
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| Board
of Directors |
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| Notice
of Meeting |
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| Directors'
Report |
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| Auditors'
Report |
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| Balance
Sheet |
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| Profit
& Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Share Holding |
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| BOARD
OF DIRECTORS |
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| CHIEF
EXECUTIVE |
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| Mr.
Tanveer Ahmed |
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| DIRECTORS |
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| Mr.
Abdul Shakoor |
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| Mr.
Naseer Ahmed |
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| Mr
Mohammad Abdullah |
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| Mr.
N.R. Siddiqui |
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| Mr.
Mohammad Younus |
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| Mr.
Riaz Ahmed |
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| SECRETARY |
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| Mr.
Zamir Q. Siddiqui |
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| AUDITORS |
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| Messrs
Hameed Chaudhri & Co., |
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| Chartered
Accountants, |
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| Lahore |
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| BANKERS |
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| Messrs:
Habib Bank Limited |
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| REGISTERED
OFFICE |
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| 2nd
floor, Finlay House, |
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| I.I
Chundrigar Road, |
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| Karachi. |
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| MILLS |
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| JUMBER
KHURD |
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| TEHSIL
CHUNNIAN |
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| DISTRICT
KASUR |
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| NOTICE
OF THE ANNUAL GENERAL MEETING |
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| NOTICE
IS HEREBY GIVEN THAT THE ANNUAL GENERAL MEETING OF THE SHAREHOLDERS OF THE |
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| COMPANY
WILL BE HELD ON 30TH MARCH, 1998 AT 11.00 A.M. AT ZULEIKHA BAI V.M, GANY |
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| RANGOONWALA
COMMUNITY CENTRE PLOT NO. IV & V. KDA SCHEME NO.7, BLOCK-IV, DHORAJI |
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| COLONY,
KARACHI. TO TRANSACT THE FOLLOWING BUSINESS: |
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| 1)
To confirm the minutes of the preceding meeting of the share holders of the
Company. |
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| 2)
to receive and consider the Audited Balance Sheet and Profit and Loss
Accounts of the Company for the |
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| year
ended 30.09.97 together with the Directors and Auditors Reports thereon. |
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| 3)
to approve the dividend as recommended by the Directors of the Company. |
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| 4)
to appoint the Auditors of the Company for the year ending 30.9.98 and fix
their remuneration. The present |
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| Auditors
of the company M/s. Hameed Chaudhri and Company, Chartered Accountants, being
eligible |
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| for
appointment offered themselves for reappointment. |
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| 5)
any other matter with the permission of the Chairman. |
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| NOTES: |
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| 1)
The Register of Member Of the Company will remain closed from 28.3.1998 to
31.3.1998 (both days |
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| inclusive).
Dividend if approved will be paid to such members only whose name appear in
the Register |
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| of
Members as at the close of 27th March, 1998. |
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| 2)
Proxies in order to be effective must be received by the Company at the
Registered Office not less than 48 |
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| hours
before the time for holding the meeting. |
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| 3)
Share holders are requested to notify us immediately for any change in their
registered address currently |
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| available
with the company. |
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| DIRECTORS
REPORT TO THE SHARE-HOLDERS |
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| Dear
Share holders, |
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| Assalam-o-Alaikum, |
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| We
welcome you to the 10th Annual General Meeting of the Company to review the
results of your Company for |
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| the
year ended 30.9.1997. |
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| OPERATING
RESULTS: |
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| The
results of the Company in comparison to the preceding year are satisfactory.
The overall sales of Rs. 507 Mls. |
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| show
an increase of 52 million over the sale of the preceding year and the profit
before tax shows an increase of |
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| Rs.
6.110 million. |
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| Following
are the results alongwith the recommendation of your Directors for
appropriation. |
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| Profit
for the year before Tax |
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Rs. |
23,390,495 |
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| Provision
for taxation |
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|
Rs. |
17,929,844 |
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| Profit
after taxation |
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|
Rs. |
5,460,651 |
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| Unappropriated
Profit brought forward |
Rs. |
52,277,156 |
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| Available
surplus |
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|
Rs. |
57,737,807 |
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| Transfer
to General Reserve |
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Rs. |
- |
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| Dividend
as proposed (10% Cash) |
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Rs. |
10,000,000 |
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| It
is clarified for your knowledge that your Company was advised by the Legal
Advisors that the imposition of |
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| excise
duty on the balances of loans is challengeable in the Court of Law. The
Company accordingly acted on this |
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| counsel
and preferred constitution petition in the High Court of Sindh. The Hon'ble
Court had been pleased to |
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| restrain
the recoveries and to the best of our knowledge all the pending matters on
this question of law are clubbed |
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| together
for hearing and disposal through single judgement. The amount of impugned
excise duty on loans/ |
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| advances,
has however, been shown as contingent liability in the accounts presented to
you. It is explained that |
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| this
duty on loans now stand with drawn by the Govt. effective July 97. |
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| DIVIDEND |
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| We
hope you would approve the recommendations of your Directors for a cash
dividend of 10%. The Directors |
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| made
this recommendation after taking into account the commitment of your Company
to its creditors and also |
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| the
fact that the forecast of results for the current year is not bright due to
failure of cotton crop and currency crisis |
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| in
the far Eastern Countries. |
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| FUTURE
OUTLOOK: |
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| In
our preceding report to you we conveyed the hope that cotton crop would be
better than in the past years. |
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| Unfortunately
the recent rains have damaged the crop and now the production of crop has
been reduced to 8.5 |
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| millions
bales against the expectations of a bumper crop of about 11 million bales.
The yield from the damaged |
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| cotton
would be lesser then the yield percentage of the year under review. This
would again create the problem |
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| of
demand and supply and may result in increase in cotton Prices during the
year. Your Company is purchasing |
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| as
much cotton of good quality as is possible to ensure the smooth production
during this year. |
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| In
addition the crises in the currencies in Far Eastern Markets has created
problem for the exporting industries |
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| in
Pakistan. In these circumstances apparently the future of Textile Industry is
not bright for the next year unless |
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| the
concerned Govt. authorities take timely action to find out a solution so that
our competitiveness in |
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| international
Market is not adversely affected. |
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| PLANT
& MACHINERY |
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| In
view of the fact that the Machinery of your production unit is operating
round the clock for about 350 days in |
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| a
year, your Directors are taking all possible measures for the replacement of
unserviceable parts. Investments |
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| as
and when required to improve and modernize the existing spinning capacity are
being made. This is one of |
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| the
basic reasons that the production and the sale of yarn particularly in
foreign markets is satisfactory since the |
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| inception. |
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| PATTERN
OF SHAREHOLDING: |
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| Statement
showing pattern of shareholding as on 30.9.97 is annexed to this report. |
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| APPOINTMENT
OF AUDITORS. |
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| M/s.
Hameed Chaudhri and Company, Chartered Accountants, the Auditors of the
Company retire and |
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| re-offered
themselves as the Auditors of the Company for the year ending 30.9.98 |
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| VOTE
OF THANKS. |
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| The
board place on record its thanks to all the Members of staff for their
untiring services and for assistance |
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| extended
by our bankers and others. |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed Balance Sheet of GULISTAN SPINNING MILLS LIMITED as
at 30 September, 1997 |
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| and
the related Profit and Loss Account and Cash Flow Statement, together with
the notes forming part thereof, |
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| for
the year then ended and we state that we have obtained all the information
and explanations which to the best |
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| of
our knowledge and belief were necessary for the purposes of our audit and,
after due verification thereof, we |
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| report
that: |
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| (a)
in our opinion, proper books of account have been kept by the Company as
required by the |
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| Companies
Ordinance, 1984; |
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| (b)
in our opinion: |
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| (i)
the Balance Sheet and Profit and Loss Account together with the notes thereon
have been drawn |
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| up
in conformity with the Companies Ordinance, 1984 and are in agreement with
the books of |
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| account
and are further in accordance with accounting policies consistently, applied; |
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| (ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
|
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| (iii)
the business conducted, investments made and the expenditure incurred during
the year were |
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| in
accordance with the objects of the Company; |
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| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the |
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| Balance
Sheet, Profit and Loss Account and the Cash Flow Statement, together with the
notes forming |
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| part
thereof, give the information required by the Companies Ordinance, 1984 in
the manner so |
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| required
and, except for the fact that provision for Central Excise Duty on short term
finances, long |
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| term
finances and loans aggregating Rs. 11.206 million has not been made in these
accounts (note 8.3) |
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| and
the extent to which this may affect the annexed accounts, respectively give a
true and fair view |
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| of
the state of the Company's affairs as at 30 September, 1997 and of the profit
and cash flows for the |
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| year
then ended; and |
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| (d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was deducted |
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| by
the Company and deposited subsequent to the balance sheet date in the Central
Zakat Fund |
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| established
under Section 7 of that Ordinance. |
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| BALANCE
SHEET AS AT SEPTEMBER 30, 1997 |
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1997 |
1996 |
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Note |
Rupees |
Rupees |
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| SHARE
CAPITAL AND RESERVES |
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| Authorised
Capital: |
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| 10,000,000
ordinary shares of Rs. 10/-each. |
|
100,000,000 |
100,000,000 |
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|
========== |
========== |
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| Issued,
Subscribed and Paid-up Capital |
3 |
100,000,000 |
100,000,000 |
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| Capital
Reserve |
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4 |
25,000,000 |
25,000,000 |
|
| Unappropriated
profit |
|
|
47,737,807 |
52,277,156 |
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|
---------- |
---------- |
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|
|
|
172,737,807 |
177,277,156 |
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| LONG
TERM LOANS AND FINANCES |
|
5 |
41,507,190 |
41,352,795 |
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| LIABILITIES
AGAINST ASSETS SUBJECT |
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| TO
FINANCE LEASE |
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6 |
2,703,415 |
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| CUSTOM
DUTY PAYABLE |
|
|
452,212 |
452,212 |
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| DEFERRED
LIABILITY |
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| Provision
for Gratuity |
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|
3,966,453 |
2,283,198 |
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| CURRENT
LIABILITIES |
|
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|
| Current
portion of long term liabilities |
7 |
12,072,559 |
7,475,306 |
|
| Short
term finances |
|
8 |
116,540,330 |
97,030,797 |
|
| Creditors,
accruals and other liabilities |
9 |
25,319,942 |
26,583,589 |
|
| Provision
for taxation |
|
10 |
3,013,611 |
- |
|
| Unclaimed
dividend |
|
|
946,141 |
- |
|
| Proposed
dividend |
|
|
10,000,000 |
7,500,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
167,892,583 |
138,589,692 |
|
|
|
|
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|
| CONTINGENCIES
AND COMMITMENTS |
|
11 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
389,259,660 |
359,955,053 |
|
|
|
|
========== |
========== |
|
|
|
|
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| The
annexed notes form an integral part of these accounts. |
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|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
fixed assets |
|
12 |
177,921,901 |
184,381,700 |
|
|
|
|
|
| Capital
work-m-progress |
|
13 |
4,008,022 |
4,500,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
181,929,923 |
188,881,700 |
|
|
|
|
|
| LONG
TERM INVESTMENTS |
|
14 |
9,171,595 |
9,281,065 |
|
|
|
|
|
| LONG
TERM DEPOSITS AND |
|
|
|
| DEFERRED
COSTS |
|
15 |
3,065,160 |
4,428,237 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
spares and loose tools |
|
16 |
6,584,027 |
7,364,466 |
|
| Stock-in-trade |
|
17 |
19,955,451 |
19,008,459 |
|
| Trade
debtors |
|
18 |
59,777,882 |
19,712,506 |
|
| Advances,
deposits, prepayments |
|
|
| and
other receivables |
|
19 |
74,029,037 |
62,754,399 |
|
| Short
term investments |
|
20 |
2,217,981 |
6,751,850 |
|
| Cash
and bank balances |
|
21 |
32,528,604 |
41,772,371 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
195,092,982 |
157,364,051 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
389,259,660 |
359,955,053 |
|
|
|
|
========== |
========== |
|
| PROFIT
AND LOSS ACCOUNT |
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| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
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|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
| SALES-NET |
|
22 |
507,156,940 |
455,528,742 |
|
|
|
|
|
|
| COST
OF SALES |
|
23 |
414,761,709 |
371,931,925 |
|
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
92,395,231 |
83,596,817 |
|
|
|
|
|
|
| ADMINISTRATIVE
AND SELLING EXPENSES |
24 |
27,313,693 |
24,151,443 |
|
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
65,081,538 |
59,445,374 |
|
|
|
|
|
|
| OTHER
INCOME |
|
25 |
877,471 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
65,959,009 |
59,445,374 |
|
|
|
|
|
|
| OTHER
CHARGES |
|
|
|
|
| Financial
- net |
|
26 |
38,945,020 |
37,035,096 |
|
| Miscellaneous |
|
27 |
2,386,239 |
2,016,992 |
|
| Workers'
Profit Participation Fund |
|
1,237,255 |
928,756 |
|
|
|
|
---------- |
---------- |
|
|
|
42,568,514 |
39,980,844 |
|
|
|
|
|
|
|
|
---------- |
---------- |
|
| PROFIT
BEFORE PRIOR YEARS ITEM AND TAXATION |
|
23,390,495 |
19,464,530 |
|
| ADDITIONAL
SURCHARGE ON ELECTRICITY-Prior year |
28 |
- |
2,184,414 |
|
|
|
|
|
|
---------- |
---------- |
|
| PROFIT
BEFORE TAXATION |
|
|
23,390,495 |
17,280,116 |
|
|
|
|
| PROVISION
FOR TAXATION |
|
|
|
| -Current |
|
|
|
10 |
4,682,674 |
- |
|
| -
Prior years |
|
|
10.2 |
13,247,170 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
17,929,844 |
- |
|
|
|
|
---------- |
---------- |
|
| PROFIT
AFTER TAXATION |
|
|
5,460,651 |
17,280,116 |
|
|
|
|
|
|
| UNAPPROPRIATED
PROFIT - Brought forward |
|
52,277,156 |
42,497,040 |
|
|
|
|
---------- |
---------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
57,737,807 |
59,777,156 |
|
|
|
|
|
|
| APPROPRIATION: |
|
|
|
| Proposed
dividend @ 10% (1996: @ 7.5%) |
|
10,000,000 |
7,500,000 |
|
|
|
---------- |
---------- |
|
| UNAPPROPRIATED
PROFIT-Carried to Balance Sheet |
|
47,737,807 |
52,277,156 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30,1997 |
|
|
|
|
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| (Note "A") |
|
|
|
12,021,510 |
65,744,492 |
|
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
| Tangible
fixed assets acquired including leased |
|
|
| assets
of Rs, 3,540,157 (1996 Nil) |
|
(12,914,873) |
(8,451,324) |
|
| Sale
proceeds of long term investments |
|
134,100 |
- |
|
| Insurance
claim of vehicle |
|
385,000 |
- |
|
| Short
term investments - Net |
|
4,533,869 |
(93,200) |
|
| Short
term loan received |
|
- |
10,156,306 |
|
| Interest
received |
|
7,076,724 |
4,777,525 |
|
| Dividend
received |
|
779,250 |
- |
|
|
|
---------- |
---------- |
|
| NET
CASH INFLOW/OUT FLOW, FROM INVESTING ACTIVITIES |
(5,930) |
6,389,307 |
|
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Repayment
of: |
|
|
|
| Finance
under mark-up arrangements |
|
(387,662 |
(365,722) |
|
| Lease
Finances |
|
|
|
(3,153,329 |
(1,756,471) |
|
| Lease
finances obtained |
|
|
3,540,157 |
- |
|
| Short
term finances-net |
|
|
19,509,533 |
(1,474,904) |
|
| Dividend
Paid |
|
|
|
(6,553,859) |
- |
|
| Custom
Debentures |
|
|
|
1,533,768 |
(2,250,496) |
|
| Financial
Charges paid |
|
|
|
(35,747,955) |
(35,988,698) |
|
|
|
---------- |
---------- |
|
|
|
|
|
| NET
CASH (OUT FLOW) FROM FINANCING ACTIVITIES |
|
(21,259,347) |
(41,836,291) |
|
|
|
---------- |
---------- |
|
| NET
(DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS |
(9,243,767) |
30,297,508 |
|
|
|
|
| CASH
AND CASH EQUIVALENT AT THE BEGINNING OF THE YEAR |
41,772,371 |
11,474,863 |
|
|
|
---------- |
---------- |
|
| CASH
AND CASH EQUIVALENTS AT END OF THE YEAR |
|
32,528,604 |
41,772,371 |
|
|
|
========== |
========== |
|
|
| The
annexed note 'A' form an integral part of this statement |
|
|
| NOTE "A" |
|
|
|
|
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
| Profit/(loss)
for the year before taxation |
|
23,390,495 |
17,280,116 |
|
|
|
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
19,555,241 |
20,288,275 |
|
| Provision
for gratuity - net |
|
1,683,255 |
(55,483) |
|
| Deferred
cost amortised |
|
1,317,333 |
917,334 |
|
| Gain
on sale of long term investments |
|
(24,630) |
- |
|
| Gain
on disposal of vehicle |
|
(73,591) |
- |
|
| Financial
charges |
|
41,598,809 |
41,733,117 |
|
| Interest
on deposits and advances |
|
(6,837,325) |
(8,071,932) |
|
| Dividend
Income |
|
(779,250) |
- |
|
|
|
|
| CASH
INFLOW FROM OPERATING ACTIVITIES |
|
---------- |
---------- |
|
| -
Before working capital changes |
|
79,830,337 |
72,091,427 |
|
|
|
|
| (Increase)
decrease in current assets: |
|
|
| Stores,
Spares and loose tools. |
|
780,439 |
177,108 |
|
| Stock
- in - trade |
|
(946,992) |
12,018,008 |
|
| Trade
Debtors |
|
(40,065,376) |
(7,066,662) |
|
| Advances,
deposits, prepayments and other |
|
|
|
| receivables
(excluding income, taxes and accrued interest) |
(21,134,112) |
1,048,058 |
|
|
|
|
|
| Decrease
in creditors, accruals and |
|
|
|
| other
liabilities(excluding accrued financial charges) |
(1,192,372) |
(8,747,172) |
|
|
|
---------- |
---------- |
|
|
|
(62,558,413) |
(2,570,660) |
|
|
|
|
| CASH
INFLOW FROM OPERATING ACTIVITIES |
|
|
| -before
taxation |
|
17,271,924 |
69,520,767 |
|
|
|
|
| Income
tax paid |
|
(5,296,158) |
(4,623,935) |
|
|
|
---------- |
---------- |
|
|
|
|
|
| CASH
INFLOW FROM OPERATING ACTIVITIES |
|
|
| -
after taxation |
|
11,975,766 |
64,896,832 |
|
|
|
|
| Long
term deposits |
|
45,744 |
3,448,750 |
|
| Custom
duty paid |
|
- |
(2,601,090) |
|
|
|
---------- |
---------- |
|
|
|
45,744 |
847,660 |
|
|
|
---------- |
---------- |
|
| Net
cash inflow from operating activities |
|
12,021,510 |
65,744,492 |
|
|
|
========== |
========== |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS: |
|
| The
company was incorporated in Pakistan on 25th February, 1987 as a Public
Company and it is principally |
|
| engaged
in manufacture and sale of yarn. The shares of the Company are listed on
Lahore and Karachi Stock |
|
| Exchanges. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under historical cost convention modified by
exchange rate |
|
| adjustments
as stated in notes 2.3 & 2.5. |
|
|
| 2.2
Staff retirement benefits |
|
| The
Company operates an unfunded gratuity scheme for its eligible employees.
Provision is made |
|
| annually
to cover obligation under the scheme. |
|
|
| 2.3
Foreign currency translation |
|
| Assets
and liabilities in foreign currencies are converted into Pak Rupees at
exchange rates ruling |
|
| on
the balance sheet date except where exchange rates have been booked which are
translated at the |
|
| contracted
rates. Exchange fluctuations and exchange risk coverage fee on principal
loans are |
|
| transferred
to cost of assets acquired out of the proceeds of such loans. All other
exchange gams/ |
|
| losses
are taken to profit and loss account. |
|
|
| 2.4
Taxation |
|
| Current |
|
| Provision
for taxation is made at current rates of taxation. |
|
|
| Deferred |
|
| The
Company does not accounts for deferred taxation due to reason stated in note
10.3 |
|
|
| 2.5
Tangible fixed assets and depreciation thereon |
|
| Operating
fixed assets are stated at cost less accumulated depreciation except freehold
land and capital |
|
| work
in progress which are stated at cost. Cost of plant and machinery includes
historical cost, |
|
| exchange
rate fluctuations and exchange risk coverage fee on foreign currency loans
utilised for |
|
| acquisition
thereof. |
|
