| LIBERTY MILLS LIMITED |
|
|
|
|
|
|
| 31ST
ANNUAL REPORT 1997 |
|
|
|
|
| Contents |
|
| Board
of Directors |
|
| Notice
of Meeting |
|
| Report
of the Directors |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Share Holding |
|
|
| Board
of Directors |
|
|
|
|
BOARD OF DIRECTORS |
|
|
| DIRECTORS |
|
MR. SALIM N. MUKATY |
|
|
|
MR. ARIF N. MUKATY |
|
|
|
MR. YUSUF N. MUKATY |
|
|
|
MR. ASHRAF SALIM MUKATY |
|
|
|
MR. ABID ARIF MUKATY |
|
|
|
MR. ARIF HAJI ABDUL
SATTAR MANIYA |
|
|
|
MR. HANIF E. JALIA WALA |
|
|
|
MR. GHAYUR A. KHAN |
|
|
|
MR. MADNI GUL MUHAMMAD |
|
|
| CHIEF
EXECUTIVE |
MR. YUSUF N. MUKATY |
|
| SECRETARY |
|
MR. MUHAMMAD ASHRAF GHAZI |
|
|
|
|
| AUDITORS: |
|
HYDER BHIMJI & CO. |
|
|
|
CHARTERED ACCOUNTANTS |
|
|
|
|
|
|
A. R. DIWAN & CO. |
|
|
|
CHARTERED ACCOUNTANTS |
|
|
| BANKERS: |
|
HABIB BANK LIMITED |
|
|
|
HABIB BANK A. G. ZURICH |
|
|
|
METROPOLITAN BANK LTD. |
|
|
|
SONERI BANK LTD. |
|
|
|
BANK AL HABIB LTD. |
|
|
|
|
| REGISTERED
OFFICE: |
10TH FLOOR, ADAMJEE
HOUSE, |
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|
|
I.I. CHUNDRIGAR ROAD, |
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|
|
KARACHI- 74000. |
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|
|
TEL. NOS. 2417205-6-7-8 |
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|
|
TELE FAX: (021) 2412194 |
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|
|
CABLE: MUKA TICO |
|
|
|
TELEX: 20845 MKC PK |
|
|
| MILLS: |
|
A-51-A, S.I.T.E.,
KARACHI. |
|
|
|
TEL. NOS. 2578103 TO
2578116 |
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|
|
TELEX: 21989 LML PK |
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|
|
TELE EAX : (021) 2564600 |
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|
|
|
|
| Notice
of Meeting |
|
|
| NOTICE
is hereby given that 31st Annual General Meeting of Shareholders of LIBERTY
MILLS |
|
| LIMITED
will be held at Institute of Chartered Accountants of Pakistan Auditorium
ICAP Building |
|
| G-31/&
Kehkashan, Clifton, Karachi on Saturday, 27th December, 1997 at 9.00 A.M. to
transact |
|
| the
following business: |
|
|
| 1.
To confirm the minutes of the Annual General Meeting of the Company held on |
|
| 29-12-1996 |
|
|
|
|
|
| 2.
To receive and adopt the Directors' and Auditors Report and Annual Audit
Accounts |
|
| of
the Company for the 5'ear ended 30th June, 1997. |
|
|
|
|
| 3.
To appoint Auditors for the year ending 30th June, 1998 and to fix their
remuneration. |
|
| The
retiring Auditors M/s. Hyder Bhimji & Company and M/s. A.R. Diwan &
Company, |
|
| Chartered
Accountants of the Company have offered themselves for re-appointment. |
|
|
|
|
| 4.
To approve the payment of cash dividend @ 10% as recommended by the Board of |
|
| Directors. |
|
|
|
| 5.
To transact any other ordinary business which may be placed before the
meeting with |
|
| the
permission of the chair. |
|
|
| NOTE: |
|
|
| 1.
The Share Transfer Books of the Company will be closed from 20th December,
1997 |
|
| to
27th December 1997 (both days inclusive). |
|
|
|
|
| 2.
The shareholders are requested to communicate the Company of any change in
their |
|
| address. |
|
|
|
|
|
|
| Report
of the Directors |
|
|
| Dear
Shareholders, |
|
|
| On
behalf of the Board of Directors, it is my pleasure and privilege to welcome
you at this 31st Annual |
| General
Meeting of the Company, and to present the Financial and Operating Results,
together with |
|
| the
Audited accounts of your Company for the period ended 301h June, 1997. |
|
|
| OPERATING
RESULTS |
|
|
| The
Summarized results and appropriation of Profit are as under.' |
|
|
| Profit
Before Taxation |
|
11,498,058 |
|
| Less:'
Taxation |
|
|
(10,944,470) |
|
|
|
---------- |
|
|
| Profit
for the year after-Taxation |
|
|
553,588 |
|
|
| Un-appropriated
Profit from previous year |
|
4,068,721 |
|
|
|
---------- |
|
|
|
|
4,622,309 |
|
|
|
|
|
| Transfer
from Revenue Reserve |
|
|
1O,300,000 |
|
|
|
---------- |
|
|
|
|
14,922,309 |
|
|
|
|
|
| Provision
for 10% Cash Dividend |
|
|
(14,894,690) |
|
|
|
|
|
---------- |
|
|
| Un-appropriated
Profit carried for~'ard |
|
27,619 |
|
|
|
========== |
|
|
|
|
| FUTURE |
|
| We
hope to post an increase in our sales and improve our profit in the year
1997-98 and beyond. |
|
| By
doing this we hope to consolidate and strengthen our financial position in
future years. |
|
|
|
| We
would like to assure you that your management is committed to continue its
best efforts to enhance |
| the
company's business for the benefit of the shareholders, lenders, employees
and other stockholders. |
|
| PATTERN
OF SHARE HOLDINGS |
|
| As
per requirement of section 236 of the Companies Ordinance, 1984, a statement
showing the pattern |
|
| of
Shareholding by the Shareholders of the .Company is annexed to this Report. |
|
|
| AUDITORS |
|
| The
retiring Auditor - Messrs Hyder Bhimji & Company and Messrs A.R. Diwan
& Company, being |
|
| eligible,
offer themselves for reappointment. |
|
|
| LABOUR
AND MANAGEMENT RELATIONS |
|
|
| With
the blessings of Allah the Almighty, the Labour Management relations remained
cordial |
|
| throughout
the year. Your Directors feel pleased to place on record their appreciation
for the loyalty |
| and
devotion to duty of the workers, members of the staff and officers of the
Company. |
|
|
|
| Auditor's
Report to the Members |
|
|
| We
have audited the annexed Balance Sheet of Liberty Mills Limited as at 30th
June 1997, |
|
| and
the related Profit and Loss Account and statement of changes in Financial
position, |
|
| (Cash
flow statement), together with the notes forming part thereof, for the period
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 Companies Ordinance, 1984 and are |
|
| in
agreement with the books of-account and are further in accordance with |
|
| the
accounting policies consistently applied; |
|
|
| ii)
the expenditures incurred during the period were for the purpose of the |
|
| company'
s business; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred during |
|
| the
period 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 position, (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 30th June, 1997and of the profit and the changes in financial |
|
| position,
(Cash flow position) for the period then ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr |
|
| ordinance,
1980. |
|
|
|
|
A.R. Diwan & Co. |
Hyder Bhimji & Co. |
|
| Karachi:
Dec 2, 1997 |
|
Chartered Accountants |
Chartered Accountants |
|
|
|
|
|
|
|
|
| Balance
Sheet as at 30th June, 1997 |
|
|
|
|
30.6.97 |
30.6.96 |
|
|
NOTES |
RUPEES |
RUPEES |
|
|
|
|
| CAPITAL
AND RESERVES |
|
|
|
| CAPITAL |
|
|
|
| Authorised : |
|
|
|
| 20,000,000
Ordinary Shares |
|
|
| of
Rs. 10/- each. |
|
200,000,000 |
200,000,000 |
|
|
|
|
========== |
========== |
|
| ISSUED,
SUBSCRIBED AND PAID- UP |
|
148,946,900 |
148,946,900 |
|
| RESERVE
AND SURPLUS |
|
|
|
| Revenue
Reserve |
|
4 |
14,000,000 |
24,300,000 |
|
| Un-appropriated
Profit |
|
|
27,619 |
4,068,721 |
|
|
|
|
---------- |
---------- |
|
|
|
|
162,974,519 |
177,315,621 |
|
| REDEEMABLE
CAPITAL |
|
5 |
21,310,834 |
30,731,132 |
|
| LONG
TERM LOANS |
|
6 |
30,501,690 |
39, 044,690 |
|
| LONG
TERM LIABILlTIES |
|
7 |
- |
789,422 |
|
| DEFERRED
LIABILITIES |
|
8 |
39,941,574 |
42,347,355 |
|
| CURRENT
LIABILlTIES |
|
|
---------- |
---------- |
|
| Current
Portion of Redeemable Capital |
|
9,420,298 |
8,682,302 |
|
| Current
Portion of Long Term Loans |
|
9 |
8,857,025 |
11,520,750 |
|
| Short
Term Running Finance utilised under |
|
| mark-tip
Arrangement |
|
10 |
205,028,541 |
262,371,854 |
|
|
|
|
| Creditors,
Accrued and Other Liabilities |
11 |
77,202,346 |
71,720,749 |
|
| Proposed
Dividend |
|
|
14,894,690 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
315,402,900 |
354,295,655 |
|
|
|
|
| CONTINGENCIES
& COMMITMENTS |
|
12 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
Total |
570,131,517 |
644,523,875 |
|
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed Notes form an integral part of these accounts. |
|
|
| FIXED
TANGIBLE ASSETS |
|
|
|
| Operating
Assets |
|
13 |
343,321,256 |
362,021,486 |
|
| CAPITAL
WORK-IN-PROGRESS |
|
14 |
9,627,275 |
13,978,504 |
|
|
|
|
---------- |
---------- |
|
|
|
|
352,948,531 |
375,999,990 |
|
| LONG
TERM DEPOSITS |
|
|
2,405,195 |
2,405,195 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
& Spares |
|
|
15 |
4,725,170 |
4,218,704 |
|
| Stock-in-Trade |
|
|
16 |
33,827,027 |
109,552,339 |
|
| Trade Debts |
|
|
17 |
134,363,393 |
101,593,083 |
|
| Advances,
Deposits, Prepayments and |
|
|
|
| other
Receivable |
|
|
18 |
39,919,026 |
46,652,869 |
|
|
|
|
|
| Cash
& Bank Balances |
|
|
19 |
1,943,175 |
4,101,695 |
|
|
|
|
---------- |
---------- |
|
|
|
|
214,777,791 |
266,118, 690 |
|
|
|
|
---------- |
---------- |
|
|
Total |
570,131,517 |
644,523,875 |
|
|
|
========== |
========== |
|
|
|
|
|
|
| Profit
and Loss Account |
|
| For
the Year Ended 30th June, 1997 |
|
|
|
|
|
1.7.96 to |
1.1.95 to |
|
|
|
|
30.6.97 |
30.6.96 |
|
|
NOTES |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
20 |
483,778,909 |
727,069,618 |
|
| Income
from Process Services |
|
|
|
| rendered
to Outside Parties |
|
|
452,303,626 |
628,153,808 |
|
|
|
|
---------- |
---------- |
|
|
|
|
936,082,535 |
########### |
|
| Cost
of Sales and Services |
|
21 |
833,153,634 |
########### |
|
|
|
|
---------- |
---------- |
|
| Gross Profit |
|
|
102,928,901 |
136,668,075 |
|
|
|
|
---------- |
---------- |
|
| Administrative
Expenses |
|
22 |
16,844,588 |
20,805,772 |
|
| Selling
& Distribution Expenses |
|
23 |
24,219,414 |
35,136,486 |
|
|
|
|
---------- |
---------- |
|
|
|
|
41,064,002 |
55,942,258 |
|
|
|
|
---------- |
---------- |
|
| Operating
Profit |
|
|
61,864,899 |
80,725,817 |
|
|
|
|
---------- |
---------- |
|
| Financial
Charges |
|
24 |
50,428,959 |
72,155.33 |
|
| Other
Charges |
|
25 |
1,159,361 |
1,273,443 |
|
|
|
|
---------- |
---------- |
|
|
|
|
51,588,320 |
73,428,773 |
|
|
|
|
---------- |
---------- |
|
|
|
|
10,276,579 |
7,297,044 |
|
| Other Income |
|
26 |
1,221,479 |
2,794,861 |
|
|
|
|
---------- |
---------- |
|
| Profit
before Taxation |
|
|
11,498,058 |
10.091.905 |
|
| Provision
for Taxation |
|
27 |
(10,944,470) |
(6,100,000) |
|
|
|
|
---------- |
---------- |
|
| Profit
after Taxation |
|
|
553,588 |
3,991,905 |
|
| Un-appropriated
Profit brought forward |
|
4,068,721 |
76,816 |
|
|
|
---------- |
---------- |
|
|
|
4,622,309 |
4,068,721 |
|
| Transfer
from Revenue Reserve |
|
1O,300,000 |
- |
|
|
|
---------- |
---------- |
|
|
|
14,922,309 |
4,068,721 |
|
| Provision
for 10% Cash Dividend |
|
(14,894,690) |
- |
|
|
|
|
---------- |
---------- |
|
| Un-appropriated
Profit carried forward |
|
27,619 |
4,068,721 |
|
|
|
========== |
========== |
|
|
| Note:
The annexed Notes form an integral part of these accounts. |
|
|
|
|
| Statement
of Changes in Financial Position |
|
| (Cash
Flow Statement) For the Year Ended 30th June, 1997 |
|
|
|
|
|
1.7.96 to |
1.1.95 to |
|
|
|
|
30.6.97 |
30.6.96 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
GENERATED FROM OPERATION ACTIVITIES |
|
|
|
|
|
|
| PROFIT
BEFORE TAXATION |
|
|
|
11,498,058 |
1O,091,905 |
|
| Adjustment
for Non-cash charges and other items |
|
|
|
|
|
|
|
| Depreciation |
|
|
37,715,114 |
58,865,713 |
|
| Depreciation
written back |
|
(1,451,091) |
- |
|
| Provision
for staff Retirement benefits (Net) |
|
2,094,219 |
1,794,972 |
|
| Financial
charges provided |
|
50,428,959 |
72,155,330 |
|
| (
Profit )/Loss on sale fixed assets |
|
1,566,982 |
(250,413) |
|
| Working
Capital changes - (Note. 31) |
|
53,200,493 |
(11,441,893) |
|
|
|
---------- |
---------- |
|
|
|
|
155,052,734 |
131,215,614 |
|
|
|
========== |
========== |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
| Cash
generated operation |
|
|
|
155,052,734 |
131,215,614 |
|
| Financial
charges paid |
|
|
|
(52,400,868) |
(75,432,563 |
|
| Tax paid |
|
|
|
(11,437,748) |
(10,853,863) |
|
| Long
term security deposit paid |
|
|
- |
(180,000 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash in flow/(out flow) from operating activities |
91,214,118 |
44, 749,188 |
|
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
| Fixed
capital expenditure |
|
|
(41,583,408) |
(56,041,282 |
|
| Proceed
of disposal of fixed assets |
|
|
22,532,135 |
3,062,650 |
|
|
|
---------- |
---------- |
|
|
|
|
(19,051,273) |
(52,978,632 |
|
|
|
|
|
|
1.7.96 to |
1.1.95 to |
|
|
|
|
30.6.97 |
30.6.96 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Repayment
of long term Borrowing |
|
|
(8,245, 750 |
32,103,812 |
|
| Repayment
of Redeemable capital |
|
|
(8,682,302 |
- |
|
| Long
term liability |
|
|
|
(50,000 |
- |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash out flow from Financial activities |
|
(16,978,052) |
32,103,812 |
|
|
|
|
|
---------- |
---------- |
|
| Net
increase/(decrease) in Cash & Cash equivalents |
55,184,793 |
40,333,256 |
|
| Cash
& cash equivalent at the beginning of the year |
(258,270,159 |
(217,936,903) |
|
|
|
|
|
---------- |
---------- |
|
| Cash
& cash equivalent at the end of the year (Note. 32) |
(203,085,366) |
(258,270,159) |
|
|
|
========== |
========== |
|
|
|
|
|
|
| Notes
to the Accounts |
|
| For
the Year Ended 30th June, 1997 |
|
|
| 1.
COMPANY AND ITS BUSINESS |
|
|
|
|
| The
Company was incorporate in Pakistan in 1965 as Private Limited Company and
was |
|
| converted
into Public Limited Company on 12th September 1969. Its share are quoted in
the |
|
| Karachi
Stock Exchange. The principal activity of the Company is manufacturing and
process- |
|
| ing
of all kinds of Fabrics. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.01
Accounting Convention |
|
| The
Account of the Company have been prepared under the historical cost
convention |
|
| modification
thereto if any are specifically stated. |
|
|
| 2.02
Taxation |
|
|
| The
charge for current taxation is based on taxable income at the current rates
of taxation |
|
| after
considering admissible tax credit and rebates, if any |
|
|
| The
Company accounts for deferred taxation on all material timing differences by
using |
|
| liability
method. |
|
|
| 2.03
Gratuity |
|
|
| The
Company operates an un-funded gratuity scheme for all its employees who are
eligible |
|
| to
the benefit. |
|
|
| 2.04
Foreign Currency Transaction |
|
|
| Transactions
in foreign currencies are translated at the rates prevailing on the Balance |
|
| Sheet date. |
|
|
| 2.05
Fixed Tangible Assets |
|
|
| These
are stated at cost less accumulated depreciation except leasehold land and
capital |
|
| work-in-process
which are stated at cost. |
|
|
| Depreciation
in charged to income applying the reducing balance method at normal tax |
|
| rates,
whereby the cost of assets is written off over its estimated useful life.
Maintenance |
|
| and
normal repairs are charged to income as incurred. Major renewals and
improvement |
|
| are
capitalised and assets so replaced, if any, are retired. Addition to fixed
assets are |
|
| depreciated
for the whole year irrespective of date of purchase while no depreciation |
|
| is
provided on Assets disposed off during the year. Profit or Loss on disposal
of fixed |
|
| assets
is included in income currently. |
|
|
| 2.06
Stores and Spares |
|
|
| These
are valued at cost on First-in-First our method. |
|
|
| 2.07
Stock-in-Trade |
|
|
| These
are valued as under: |
|
|
| (a)
Raw Material at cost on FIFO basis. |
|
|
| (b)
Work-in-process at average cost of raw material. |
|
|
| (c)
Finished Stock at the lower of cost on FIFO basis and net realisable value. |
|
| (d)
Stock in Bonded Warehouse at actual. |
|
| (e) Trading Stock at actuals. |
|
|
| 2.08
Trade Debts |
|
|
| Debts
consider irrecoverable, are written off and provision is made for debts
considered |
|
| doubtful,
if any. |
|
|
| 2.09
Revenue Recognition |
|
|
| Sales
are recorded on despatch of goods to the Customers. Income from process
services |
|
| is
recorded when earned. |
|
|
| 3.
ISSUED, SUBSCRIBED AND PAID-UP-CAPITAL |
|
|
|
|
30.6.97 |
30.6.96 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| 12,732,092 |
Ordinary Shares of |
|
127,320,920 |
127,320,920 |
|
|
Rs. 10/- each fully |
|
|
|
|
paid issued for cash |
|
|
|
| 2,162,598 |
Ordinary Shares of |
|
21,625,980 |
21,625,980 |
|
|
Rs. 10/-each fully |
|
|
|
|
paid issued as |
|
|
|
|
Bonus Shares. |
|
|
|
| ---------- |
|
|
---------- |
---------- |
|
| 14,894,690 |
|
|
148,946,900 |
148,946,900 |
|
| ========== |
|
|
========== |
========== |
|
|
| 4.
REVENUE RESERVE |
|
|
|
|
| Balance
as at start |
|
24,300,000 |
24,300,000 |
|
| Transfer
to Profit and Loss Account |
|
(10,300,000) |
- |
|
|
|
---------- |
---------- |
|
|
|
14,000,000 |
24,300,000 |
|
|
|
========== |
========== |
|
| 5.
REDEEMABLE CAPITAL |
|
|
|
| Long
Term Running Finance: |
|
|
|
| From
Islamic Development Bank |
|
30, 731,132 |
39,413,434 |
|
| (Islamic
Dinar 845651) |
|
|
|
| Less:
Current Maturity |
|
(9,420,298) |
(8,682,302) |
|
|
|
---------- |
---------- |
|
|
|
21,310,834 |
30,731,132 |
|
|
|
========== |
========== |
|
|
| FINANCE
FROM ISLAMIC DEVELOPMENT BANK |
|
|
| The
above Finance (under the credit line of installment sale) is financed by
Islamic Development |
|
| Bank
on the Guarantee of PICIC and is payable in Islamic Dinar. |
|
|
| Security: |
|
|
| The
Guarantee given by PICIC to Islamic Development Bank is secured by 1st charge
on all |
|
| the
assets including the assets for which the above financing was obtained and
2nd charge on |
|
| such
assets over which Habib Bank has 1st charge. |
|
