| KARAM CERAMICS LIMITED |
|
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
|
|
| Contents |
|
| Company
Information |
|
| Business Items |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Financial
Highlights |
|
| Auditors
Report |
|
| Balance
Sheet |
|
| Profit and Loss Account |
|
| Statement of Changes in
Financial Position |
|
| Analysis of
Increase (Decrease) in Working Capital |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
|
| Company
Information |
|
|
| BOARD
OF DIRECTORS |
|
|
| Shaban
Ali G. Kassim |
|
Chairman |
|
| Irshad
Ali S. Kassim |
|
Chief Executive |
|
| Munawar
Ali S. Kassim |
|
| Mariam
Shaban Ali |
|
| Shaheen
A. Rehman |
|
| Sakin
Noorallah |
|
| Amirali
H. Gangji |
|
| Sirajuddin
Ahmed |
|
ICP Nominee |
|
| S.
Faiq Hussain |
|
PLHC Nominee |
|
|
| COMPANY
SECRETARY |
|
| Ismail Rajan |
|
|
| AUDITORS |
|
| Taseer
Hadi Khalid & Co. |
|
| Chartered
Accountants |
|
|
| Qavi & Co |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Soneri
Bank Limited |
|
| Emirates
Bank Limited |
|
| Askari
Bank Limited |
|
| Bank
of America |
|
| Citi
Bank N. A. |
|
|
| REGISTERED
OFFICE |
|
| BC-6,
Block-5, Scheme-5, Kehkashan, Clifton, Karachi. |
|
|
| REGISTRAR
AND SHARE TRANSFER OFFICE: |
|
| T.H.K.
Associates (Private) Limited |
|
| Ground
Floor, Sultan Trust Building No. 2, Beaumont Road, |
|
| Karachi. |
|
|
|
| Business
Items |
|
|
| 1.
SANITARYWARE |
|
|
|
|
| *
Simpact - set |
|
| W.C Cistern |
|
|
| Wash Basin |
|
|
| Pedestal |
|
|
| Bidet |
|
|
|
|
|
| *
Royal - set |
|
| W. C Cistern |
|
|
| Wash Baisn |
|
|
| Pedestal |
|
|
|
| *
Mayfair - set |
|
| W.C. Cistern |
|
|
| Wash Basin |
|
|
| Pedestal |
|
|
| Bidet |
|
|
|
|
|
| *
Venus - set |
|
| W. C Cistern |
|
|
| Wash Basin |
|
|
| Pedestal |
|
|
|
|
|
| *
Angelo - set |
|
| W.C Cistern |
|
|
| Wash Baisn |
|
|
| Pedestal |
|
|
|
| *
Orissa Asian W.C. |
|
| Sanitare
Asian W.C. |
|
| Orient W. C. |
|
|
|
| *
Kitchen Sink |
|
| * Urinal |
|
| *
Accessories |
|
| Soap/Paper/Tooth
Brush Holder |
|
| Mirror Plate |
|
|
| Towel Rails |
|
|
| Hooks |
|
|
|
| *
Ceramic Traps |
|
| S. Trap |
|
|
| P. Trap |
|
|
|
| 2.
Ceramic Glazed Tiles |
|
|
| *
Coloured & Decorative / Effects |
|
| Glazed
Wall Tiles |
|
| 15cm x 15cm |
|
| 20cm x 30cm |
|
|
|
| Notice
of Meeting |
|
|
| Notice
is hereby given that the 18th Annual General Meeting of the Company will be
held at the |
|
| Registered
Office of the Company on Saturday 20th December, 1997 at 10.30 a.m. to
transact |
|
| the
following business:- |
|
|
| 01.
To confirm the minutes of the 17th Annual General Meeting held on December
26th 1996. |
|
|
|
|
| 02.
To consider and adopt the Audited Accounts of the Company for the year ended
June 30, |
|
| 1997
along with the Report of the Directors thereon. |
|
|
| 03.
To appoint Auditors for the year 1998 and fix their remuneration. |
|
|
| 04.
To transact any other business with the permission of the Chairman. |
|
|
| NOTES: |
|
|
| 01.
The Share Transfer Books of the company will remain closed from December
13,1997 to |
|
| December
20, 1997 (Both days inclusive) |
|
| 02.
A member eligible to attend and vote at the meeting may appoint another
member as his/ |
|
| her
proxy to attend and vote on his/her behalf. Proxies to be effective must be
received by |
|
| the
company not less than 48 hours before the time for holding of the meeting. |
|
| 03.
Members are requested to communicate to the Company or the Registrar to the
Company |
|
| of
any change in their address. |
|
|
|
| Directors'
Report |
|
|
| The
Directors of your company have pleasure in submitting the report along with
audited accounts |
|
| for
the year ended 30th June 1997. |
|
|
| OPERATING
PERFORMANCE |
|
| During
the year the over all business environment remained sluggish due to cut back
in |
|
| Government
development budget, and frequent currency devaluation. These factors have |
|
| especially
effected industries whose major portion of product cost consist of imported
raw |
|
| materials.
The competition with imported product which were cheaper because of lower
import |
|
| duties
made it impossible to achieve corresponding increase in selling price to off
set the effect |
|
| of
devaluation. |
|
|
| As
compared to corresponding period there has been decrease of RS. 12.838
million in the sale. |
|
| The
main reason4'or this reduction that imported wall tiles of different sizes
are available in the |
|
| market
at cheaper price which has considerable reduced market for smaller tiles.
Further the |
|
| other
factors which has effected the operating results are increase in imported raw
material |
|
| cost
owing to rupee devaluation with no corresponding increase in selling price
and substantial |
|
| increase
in price of other inputs especially Gas and electricity. |
|
|
| However
your management has been able to show better results by keeping check on |
|
| administrative,
selling expenses and by reducing financial charges. |
|
|
| The
Results are Summarized as under:- |
|
|
|
|
Rupees |
|
| PROFIT
BEFORE TAXATION |
|
14,008,594 |
|
| PROVISION
FOR TAXATION - NET |
|
7,821,160 |
|
|
|
|
---------- |
|
| PROFIT
AFTER TAXATION |
|
6,187,434 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
24,064,315 |
|
|
|
|
---------- |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
30,251,749 |
|
|
========== |
|
|
|
|
|
| FUTURE
PROSPECTS |
|
| The
management has decided to modernise their wall tiles plant which will become
more cost |
|
| effective
the estimated cost of this expansion will be approximately Rs. 60 million and
will increase |
|
| the
total production capacity to 1,200,000 Sq. Mtr., further the management has
started |
|
| production
of different bigger size of wall tiles in line with market trend which will
enable the |
|
| company
to compete with the local and imported tiles. The management has taken many
other |
|
| cost
saving measures wherever it was possible. The Government has given number of
incentives |
|
| to
the business community which include fixation of import trade price, fixation
of custom |
|
| duties
@ 10% on plant and machinery imported for BMR or expansion withdrawal of
regulatory |
|
| duty
of 10% reduction in sales tax from 18% to 12.5% withdrawal of 1% Central
Excise duty from |
|
| all
types of loan. The financial impact of all these benefits will be available
during 1997-98 and |
|
| will
certainly help in improving the profitability of the company. |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Irshadali S. Kassim has been appointed as Chief Executive of the company in
place of Mr. |
|
| Shabanati
G. Itassim and Mr. Shabanali G. Kassim has been appointed as Chairman of the |
|
| company
by the Board of Directors. |
|
|
| EMPLOYEES
RELATION |
|
| The
management would like to place on record the positive attitude of the labour
union during |
|
| the
year under review and we look forward to resolving all issues mutually and
with the active |
|
| cooperation
of the labour union. |
|
|
| AUDITIOR |
|
| Our
present auditors M/s. Taseer Hadi Khalid & Co. Chartered Accountants and
M/s. Qavi |
|
| &
Co. Chartered Accountants retire and offer themselves for reappointment. |
|
|
| APPRECIATION |
|
| The
Directors take this opportunity to thank the members, the customers,
employees etc. For |
|
| their
cooperation and contributions towards the progress of the company. We would
also like to |
|
| thank
the financial institution and banks namely Soneri Bank Limited for the
confidence reposed |
|
| on
the Company. |
|
|
|
| Financial
Highlights |
|
|
|
|
12 Months |
12 Months to |
|
|
|
|
|
June 30, 1997 |
June 30, 1996 |
|
|
|
|
| Net Sales |
|
Rs. in Million |
265.00 |
278.00 |
|
|
|
|
|
|
|
| Profit/(Loss)
before Tax |
|
Rs. in Million |
14.00 |
20.00 |
|
| Income Tax |
|
Rs. in Million |
7.81 |
9.74 |
|
|
|
|
|
|
|
| Profit/(Loss)
after Tax |
|
Rs. in Million |
6.19 |
10.26 |
|
|
|
|
|
|
|
| Earnings
per Share |
|
Rs. / Share |
|
0.57 |
0.94 |
|
|
|
|
|
|
|
| Cash
Dividend per Share |
|
Rs. / Share |
|
- |
2.00 |
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Karam Ceramics Limited as at 30
June 1997 |
|
| and
the related profit and loss account and statement of changes in financial
position, 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 neces- |
|
| sary
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, 1984 and are in agreement with |
|
| the
books of account and are further in accordance with accounting policies
consis- |
|
| tently
applied, |
|
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the company'
busi- |
|
| ness, 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 statement of changes
in finan- |
|
| cial
position, 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 30 June 1997 and of
the profit |
|
| and
the changes in financial 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. |
|
|
|
|
|
Qavi & Co. |
|
Taseer Hadi Khalid &
co. |
|
|
Chartered Accountants |
Chartered Accountants |
|
| Karachi:
Nov 26, 1997 |
|
|
|
|
| Balance
Sheet |
|
| As
at 30 June, 1997 |
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised |
|
|
|
|
| 15,000,000
ordinary shares of Rs. 10/- each |
|
150,000,000 |
150,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
3 |
109,117,800 |
109,117,800 |
|
| Unappropriated
profit |
|
|
|
30,251,749 |
24,064,315 |
|
|
|
|
---------- |
---------- |
|
|
|
|
139,369,549 |
133,182,115 |
|
| REDEEMABLE
CAPITAL - Secured |
|
4 |
- |
- |
|
| LONG
TERM AND DEFERRED LIABILITIES |
|
5 |
103,457,447 |
102,461,474 |
|
| DEFERRED
INCOME |
|
6 |
6,458,064 |
- |
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term finances under mark-up |
|
|
---------- |
---------- |
|
| arrangements
- Secured |
|
7 |
10,000,000 |
22,500,000 |
|
| Short
term running finance |
|
8 |
10,935,729 |
- |
|
|
|
|
| Current/overdue
portion of redeemable |
|
| capital,
long-term and deferred liabilities |
9 |
45,488,622 |
10,721,981 |
|
|
|
|
| Creditors,
accrued expenses and other |
|
| liabilities |
|
10 |
69,284.55 |
60,373,319 |
|
| Provision
for taxation |
|
|
11,500,000 |
8,554,320 |
|
| Unclaimed
dividend |
|
|
3,670,485 |
80,945 |
|
| Proposed
dividend |
|
|
- |
21,823,560 |
|
|
|
|
---------- |
---------- |
|
|
|
|
150,879,381 |
124,054,125 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
11 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
400,164,441 |
359,697,714 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
assets - At cost |
|
|
| less
accumulated depreciation |
|
12 |
247,817,394 |
253,487,391 |
|
|
|
|
|
| LONG
TERM PREPAYMENTS |
|
13 |
7,860,614 |
1,575,000 |
|
| CURRENT
ASSETS |
|
|
---------- |
---------- |
|
| Stores,
spares and loose tools |
|
14 |
134,862 |
1,074,541 |
|
|
|
|
|
| Stock
in trade |
|
15 |
68,932,448 |
48,578,227 |
|
| Trade
debts - Unsecured considered good |
|
27,703,478 |
18,530,520 |
|
| Loans,
advances, deposits |
|
|
|
| prepayments
and other receivables |
|
16 |
14,207,493 |
7,985,920 |
|
|
|
|
|
| Cash
and bank balances |
|
17 |
33,508,152 |
28,466,115 |
|
|
|
|
---------- |
---------- |
|
|
|
|
144,486,433 |
104,635,323 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
400,164,441 |
359,697,714 |
|
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
|
| Profit
and Loss Account |
|
| As
at 30 June, 1997 |
|
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| SALES- Net |
|
18 |
265,447,999 |
278,286,462 |
|
| COST
OF SALES |
|
19 |
218,958,815 |
219,754,718 |
|
|
|
|
---------- |
---------- |
|
| GROSS PROFIT |
|
|
46,489,184 |
58,531,744 |
|
| OTHER
IN COME |
|
20 |
3,871,852 |
1,233,509 |
|
|
|
|
---------- |
---------- |
|
|
|
|
50,361,036 |
59,765,253 |
|
|
|
|
---------- |
---------- |
|
| ADMINISTRATIVE,
SELLING AND GENERAL |
|
21 |
22,811,835 |
21,879,986 |
|
| FINANCIAL
CHARGES |
|
22 |
12,803,302 |
16,824,528 |
|
| WORKERS'
PROFIT PARTICIPATION FUND |
|
|
737,305 |
1,053,037 |
|
|
|
|
---------- |
---------- |
|
|
|
|
36,352,442 |
39,757,551 |
|
|
|
|
---------- |
---------- |
|
| PROFIT
BEFORE TAXATION |
|
|
14,008,594 |
20,007,702 |
|
|
|
|
| PROVISION
FOR TAXATION |
|
|
|
---------- |
---------- |
|
| Current year |
|
|
10,700,000 |
6,250,972 |
|
| Prior year |
|
|
(2,878,840) |
3,492,687 |
|
|
|
|
---------- |
---------- |
|
|
|
7,821,160 |
9,743,659 |
|
|
|
---------- |
---------- |
|
| PROFIT
AFTER TAXATION |
|
6,187,434 |
10,264,043 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
24,064,315 |
35,623,832 |
|
|
|
---------- |
---------- |
|
|
|
30,251,749 |
45,887,875 |
|
| APPROPRIATIONS |
|
|
|
| Proposed
dividend Nil ( 1996: 20%) |
|
- |
21,823,560 |
|
| UNAPPROPRIATED
PROFIT |
|
|
|
---------- |
---------- |
|
| CARRIED
FORWARD |
|
|
30,251,749 |
24,064,315 |
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
|
| Statement
of Changes in Financial Position |
|
| For
the year ended 30 June 1997 |
|
|
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
| Profit
before taxation |
|
|
|
14,008,793 |
20,007,702 |
|
| Adjustments
for: |
|
|
---------- |
---------- |
|
| Depreciation |
|
|
29,079,436 |
28,964,631 |
|
| Provision
for staff gratuity |
|
2,233,022 |
1,973,074 |
|
| Charge
for Workers' Profit Participation Fund |
|
737,305 |
1,053,037 |
|
| Interest
and markup expense |
|
12,443,392 |
15,864,991 |
|
| Profit
on sale of fixed assets |
|
(61,702) |
(336,201) |
|
| Return
on deposits |
|
{1,114,541) |
(887,610) |
|
| Gain
on sale and lease back of fixed assets |
|
(1,449,770) |
- |
|
| Movement
in long term prepayments |
|
360,000 |
540,000 |
|
|
|
---------- |
---------- |
|
|
|
42,227,142 |
47,171,922 |
|
|
|
---------- |
---------- |
|
|
|
56,235,736 |
67,179,624 |
|
|
|
|
| (Increase)/Decrease
in operating assets |
|
|
| Stores
and spares |
|
|
|
939,679 |
(976,531) |
|
| Stock
in trade |
|
|
|
(20,354,221) |
13,195,453 |
|
| Trade
debtors |
|
|
|
(9,172,958) |
(4,922,484) |
|
| Loans,
advances, deposits, prepayments and other |
|
|
|
| receivables |
|
|
|
(1,608,836) |
(601,963) |
|
|
|
|
| Increase/(Decrease)
in operating liabilities |
|
|
| Short
term finance under mark-up arrangements |
|
(12,500,000) |
(22,500,000) |
|
| Short
term running finance |
|
10,935,729 |
- |
|
| Creditors,
accrued expenses and other liabilities |
|
9,226,958 |
13,528,819 |
|
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
33,702,087 |
64,902,918 |
|
|
|
|
| Interest
and markup paid |
|
|
|
(12,380,239) |
(15,842,049) |
|
| Income
tax paid |
|
|
|
(9,016,013) |
(3,315,716) |
|
| Gratuity
paid |
|
|
|
(909,574) |
(1,094,566) |
|
| WPPF paid |
|
|
|
(1,116,190) |
(1,024,624) |
|
|
|
---------- |
---------- |
|
| Net
cash flows from operating activities |
|
10,280,071 |
43,625,963 |
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Net
cash flows from operating activities |
|
10,280,071 |
43,625,963 |
|
|
|
|
---------- |
---------- |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Capital
expenditure incurred |
|
(15,510,903) |
(58,911,571) |
|
| Return
on investment |
|
|
642,337 |
941,912 |
|
| Sale
Proceeds of fixed assets disposed during the year |
71,000 |
763,000 |
|
|
|
---------- |
---------- |
|
| Net
cash flows from investing activities |
|
(14,797,566) |
(57,206,659) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
| Long
term finance under mark-up arrangements |
|
48,320,042 |
62,560,355 |
|
| Repayment
of redeemable capital, debentures |
|
|
| and
long term finance |
|
|
(15,328,056} |
(14,564,469) |
|
| Long
term deposits and prepayments |
|
|
(6,645,614) |
- |
|
| Dividend
paid |
|
|
|
(18,234,020) |
(21,803,877) |
|
| Suppliers
Credit |
|
|
|
1,447,180 |
- |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash flows from financing activities |
|
9,559,532 |
26,192,009 |
|
|
|
|
|
---------- |
---------- |
|
| Net
Increase/(Decrease) in cash and bank balances |
|
5,042,037 |
12,611,313 |
|
| Cash
and bank balances at beginning of the year |
|
28,466,115 |
15,854,802 |
|
|
|
---------- |
---------- |
|
| Cash
and bank balances at end of the year |
|
33,508,152 |
28,466,115 |
|
|
|
========== |
========== |
|
|
|
|
| Notes
to the Accounts |
|
| For
the year ended 30 June, 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| The
Company was incorporated in Pakistan on 08 April 1979 as a public limited
company |
|
| under
the Companies Act 1913, (now Companies Ordinance, 1984), The shares of the |
|
| company
are quoted on Karachi and Lahore Stock Exchanges. The principle activity of |
|
| the
company is the manufacture and sale of sanitary ware, tiles and allied
accessories. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention as modified
by |
|
| capitalization
of certain exchange differences. |
|
|
|
|
| 2.2
Staff retirement benefits |
|
|
|
|
