| Lakson Tobacco Company Limited |
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| (ANNUAL
REPORT 1997) |
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| CONTENTS |
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|
| Company
Information |
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| Notice
of Meeting |
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| Directors'
Report |
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| Auditors'
Report to the Members |
|
| Balance
Sheet |
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|
| Profit
& Loss Account |
|
|
| Statement
of Sources & Application of Funds (Cash Flow Statement) |
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| Notes
to the Accounts |
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| Pattern
of Holding of Shares |
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| Subsidiary
Company's Accounts |
|
| Premier
Tobacco Company (Pvt) Limited |
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| Financial
Highlights |
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| Company
Information |
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| BOARD
OF DIRECTORS |
|
|
| IQBAL
ALI LAKHANI |
(Chairman & Chief
Executive) |
|
| AMIN
MOHAMMED LAKHANI |
|
| CHRISTOPHER
DENNIS TOMKINSON |
|
| PETER
GEORGE GREGORY |
|
| E.A. NOMANI |
|
| HASAN
ALI H. MERCHANT |
|
| TASLEEMUDDIN
AHMED BATLAY |
|
| AZIZ
EBRAHIM |
|
| A.K.M.
SAYEED |
|
| RAMZANALI
HALANI |
|
| M.K. NAWAZ |
|
|
| ADVISOR |
|
| SULTANALI
LAKHANI |
|
|
|
| COMPANY
SECRETARY |
|
| RAMZANALI
HALANI |
|
|
|
| AUDITORS |
|
| EBRAHIM
& CO. |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE |
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| LAKSON
SQUARE, BUILDING NO. 2 |
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| SARWAR
SHAHEED ROAD |
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| KARACHI-74200 |
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| FACTORIES |
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| 1.
E/15, S.I.T.E., KOTRI |
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| DISTT.
DADU, (SlNDH) |
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| 2.
PLOT NO. 20, SECTOR NO. 17 |
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| KORANGI
INDUSTRIAL AREA, |
KARACHI |
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| 3.
QUADIRABAD |
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| DISTT
SAHIWAL |
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| 4.
VILLAGE MANDRA |
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| TEH:
GUJAR KHAN |
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| DISTT.
RAWALPINDI |
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| Notice
of Meeting |
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| NOTICE
IS HEREBY GIVEN that the 28th Annual General Meeting of Lakson Tobacco
Company Limited will be held |
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| at
Avari Renaissance Towers Hotel, Fatima Jinnah Road, Karachi on Monday,
December 15, 1997 at 3.00 p.m. to |
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| transact
the following business: |
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| ORDINARY
BUSINESS |
|
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| 1.
To receive, consider and adopt the audited Balance Sheet and Profit and Loss
Account for the year ended June |
|
| 30,
1997 together with the Directors' and Auditors' Reports thereon. |
|
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| 2.
To declare dividend as recommended by the Board of Directors. |
|
|
| 3.
To consider to appoint auditors and fix their remuneration. The Company has
received a notice under section |
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| 253
(1) of the Companies Ordinance, 1984 from a member of the Company by which he
has notified his intention |
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| to
appoint M/s. Ebrahim & Co. and A. F. Ferguson & Co., Chartered
Accountants, as joint auditors of the Company |
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| for
the year ending June 30, 1998 in place of the retiring auditors M/s. Ebrahim
& Co. |
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| SPECIAL
BUSINESS |
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| 4.
To consider to capitalise a sum of Rs. 32,724,310/- by way of issue of
3,272,431 fully paid bonus shares of |
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| Rs.10/-
each and if thought fit to pass the following resolution as an Ordinary
Resolution: |
|
|
| "RESOLVED
THAT: |
|
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| i)
a sum of Rs. 32,724,310/- out of the reserve for issue of bonus shares be
capitalised and applied in making |
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| payment
in full of 3,272,431 ordinary shares of Rs. 10/- each and that the said
shares be allotted as fully paid |
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| up
bonus shares to those members of the Company whose names appear in the
register of members on |
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| December
15, 1997 @ 20% i.e. in the proportion of ONE share for every FIVE existing
shares and that such |
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| new
shares shall rank pari passu in all respects with the existing ordinary
shares of the Company except that |
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| they
shall not be eligible for dividend declared for the year ended June 30, 1997; |
|
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| ii)
in the event of any member holding less than five shares or a number of
shares which is not an exact multiple |
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| of
FIVE, the fractional entitlements of shares of such members shall be
consolidated into whole new shares |
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| and
the Directors of the Company be and are hereby authorised to arrange sale of
the shares constituted |
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| thereby
in such manner as they may think fit and to pay the proceeds of the sale to
such of the members |
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| according
to their entitlement; |
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| iii)
for the purpose of giving effect to the above, the Directors be and are
hereby authorised to take all necessary |
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| steps
in the matter and to settle any question or difficulties that may arise in
regard to the distribution of the |
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| said
new shares as they think fit." |
|
|
| 5.
To consider to increase the Authorised Capital of the Company from Rs. 200
million to Rs. 300 million and if thought |
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| fit
to pass the following resolution as an Ordinary Resolution: |
|
|
|
|
| "RESOLVED
THAT the Authorised Capital of the Company be and is hereby increased from
Rs. 200 million to |
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| Rs.
300 million by creation of 10 million ordinary shares of Rs. 10/- each and
that consequential notes be made |
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| under
clause V of the Memorandum of Association and Article 3 of the Articles of
Association." |
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| The
statement under section 160 of the Companies Ordinance, 1984 in the above
matters is annexed. |
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By Order of the Board |
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|
RAMZANALI HALANI |
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| Karachi:
November 17, 1997 |
|
Director/Company
Secretary |
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|
| NOTES: |
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| 1.
The share transfer books of the Company will remain closed from December 05,
1997 to December 15, 1997, both |
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| days
inclusive. Transfers received in order by the Company upto December 04, 1997
will be considered in time |
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| to
be eligible for payment of the dividend and issue of bonus shares to the
transferees. |
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|
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| 2.
A member entitled to attend and vote at the general meeting may appoint
another member as his proxy to attend, |
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| speak
and vote instead of him. |
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|
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| 3.
Forms of proxy to be valid must be received at the Company's Registered
Office not later than 48 hours before the |
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| time
of the meeting. |
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| 4.
Members are requested to notify the Company promptly of any change in their
addresses. |
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| 5.
A form of proxy is enclosed herewith. |
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| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984 |
|
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| 1.
The Directors have recommended the issue of 3,272,431 bonus shares by
capitalisation of a part of the Free |
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| Reserves
of the Company. Upon issuance of the bonus shares as above, the paid-up
capital of the Company shall |
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| stand
increased to Rs. 196,345,860/-. The Directors are interested in this business
to the extent of their entitlement |
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| of
bonus shares as shareholders. |
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|
| 2.
At present the Authorised Capital of the Company is Rs. 200 million. Upon
issuance of the bonus shares as above, |
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| the
paid-up capital of the Company shall stand increased to Rs. 196,345,860/-.
The Directors have therefore |
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| recommended
to increase the Authorised Capital to Rs. 300 million to facilitate increase
in the paid-up capital as |
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| and
when required to do so. |
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| Directors'
Report |
|
| The
Directors of your Company take pleasure in presenting their report and
audited accounts for the year ended June |
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| 3O, 1997. |
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| |
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1997* |
1996 |
|
|
|
(Rupees 000's) |
|
|
| Profit
before taxation |
|
|
129,792 |
66,419 |
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| Taxation |
|
|
40,034 |
18,299 |
|
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|
|
---------- |
---------- |
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| Profit
after taxation |
|
|
89,758 |
48,120 |
|
| Un-appropriated
profit brought forward |
|
8,064 |
36 |
|
|
| Un-appropriated
profit of Premier Tobacco |
|
| Industries
Ltd. as at January 1, 1997 |
|
52,569 |
-- |
|
|
|
|
---------- |
---------- |
|
|
|
|
150,391 |
48,156 |
|
| Amount
transferred from capital reserve |
|
4,322 |
-- |
|
|
|
|
---------- |
---------- |
|
|
|
|
154,713 |
48,156 |
|
| Appropriations: |
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| Interim
dividend @ Rs. 1.70 (1996: nil) per ordinary |
|
|
| share
of Rs. 10/- each |
|
27,816 |
-- |
|
| Proposed
cash dividend @ Rs. 2.50 |
|
| (1996:
Rs. 2.00) per ordinary share of Rs. 10/- each |
|
40,905 |
16,092 |
|
|
| Transfer
to reserve for proposed issue of |
|
| bonus shares in the ratio
of one share for |
|
|
|
| every
five shares |
|
|
32,724 |
-- |
|
| Transfer
to general reserve |
|
53,000 |
24,000 |
|
|
|
|
154,445 |
40,092 |
|
|
|
|
---------- |
---------- |
|
| Un-appropriated
profit carried forward |
|
268 |
8,064 |
|
|
|
========== |
========== |
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| *
(consolidated figures of LTC & PTI) |
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|
| AMALGAMATION |
|
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| As
many of you already know, the scheme of arrangement for amalgamation of
Premier Tobacco Industries Limited |
|
| (PTI)
with Lakson Tobacco Company Limited (LTC) which was earlier approved by the
respective Board of Directors |
|
| and
Shareholders of both the companies was sanctioned as prayed by the High Court
of Sindh vide its order dated |
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| December
16, 1996. The Directors wish to place on record their appreciation for the
high standard of service and |
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| professional
input provided by all of your Company's employees in the process of
amalgamation of PTI with LTC, |
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| which
was achieved smoothly. |
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| As
a result of amalgamation, there will be considerable cost savings through
streamlined distribution, elimination of |
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| duplicated
services and operations, and a reduction in overhead expenses. The
amalgamation is leading to the much |
|
| needed
ability to re-invest in manufacturing, marketing and geographic expansion of
distribution. There will also be |
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| an
increase in sales revenue and production at lower cost and increased
efficiency by virtue of unified operations. |
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| The
consequential improvement in operations should ultimately insure benefit to
consumers. |
|
|
| The
figures for the audited accounts of Lakson Tobacco Company Limited for the
year ended June 30, 1997 include |
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| the
unappropriated profit and all assets and liabilities of PTI which were merged
with LTC as at January 1, 1997. |
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| The
comparative 1996 figures given in these accounts are in respect of LTC only. |
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|
| OPERATING
RESULTS |
|
|
| Sales
turnover increased to Rs. 6,698 million for the financial period under
review, with profit after taxation recorded |
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| at
Rs. 89.7 million. |
|
|
| Combined
sales revenue, including those of the first half of the year of PTI, was Rs.
10.2 billion as compared to |
|
| annual
sales of LTC and PTI of Rs. 9.2 billion during the same period last year, an
increase of 10.5%. Combined |
|
| net
profit of the merged companies increased 10.4% as compared to last year. |
|
|
| Your
Company's combined contribution, including that of the first half of the year
of PTI, to the national exchequer |
|
| in
the shape of excise duties and sales tax rose to Rs. 6,674 million as
compared to the total amount of Rs. 6,259 |
|
| million
paid by LTG and PTI (combined) in the previous year. The component of excise
duty and sales tax paid during |
|
| the
period was equivalent to 65.2% of domestic turnover for cigarettes. |
|
|
| LEAF
TOBACCO |
|
|
| The
1996 tobacco crop was adequate to meet the industry's requirements and
considerable improvement was visible |
|
| both
in quantity and quality, particularly of the Company supervised production.
Your Company was able to procure |
|
| its
requirements at competitive prices. Increased inventory levels resulted from
absorbing a portion of the surplus |
|
| crop
under advice of the Pakistan Tobacco Board. |
|
|
| CERTIFICATION
OF ISO 9002 |
|
|
| In
December 1996, Lakson's Leaf Division and Central Analytical Services
Division became the first divisions of a |
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| tobacco
company in Pakistan to acquire ISO 9002 Certification. A better understanding
of the Company operations |
|
| by
its staff as well as customers, coupled with a higher degree of quality and
reliability have led to a growing tobacco |
|
| export
business and increased domestic sales, which reflects a recognition of Lakson
as a Company that invests |
|
| on quality. |
|
|
| FUTURE
OUTLOOK |
|
|
| Weather
conditions in the N.W.F.P. and the Punjab were not favourable prior to
harvesting the 1997 tobacco crop. |
|
| As
a result, the quality of the crop deteriorated and all varieties of tobacco
fell short of the industry's requirements. |
|
| Your
Company, however, managed to buy the required quantity, although at
substantially increased prices, so as to |
|
| meet
market demand for the Company's products. This may impact the profitability
of your Company during the coming |
|
| year. |
|
|
| The
expansion of the green leaf threshing plant (GLT) at Mardan is expected to be
completed by the middle of 1998. |
|
| The
investment is poised to significantly increase the redrying capacity of the
Company for tobacco leaf. The project |
|
| will
have a very positive impact on the quality of processed tobaccos, while also
improving productivity and operating |
|
| efficiencies. |
|
|
| INDUSTRIAL
RELATIONS |
|
|
| The
Directors wish to place on record their appreciation of the loyal and
efficient services rendered by the employees |
|
| towards
promoting the Company's objectives. The continued training and development of
management and staff has |
|
| a
high priority with management and the Company continues to benefit from the
efforts and dedication of all employees. |
|
| The
key to our future lies in the ability of our employees to assemble our
synergies to make our operations more |
|
| effective
so as to improve the Company's competitiveness in a highly competitive
industry. |
|
|
| SOCIAL
SERVICE |
|
|
| As
part of social service to the community, your Company has been crusading
against blindness for many years by |
|
| holding
free eye camps in different parts of the country. This year a six day free
eye camp was held with the support |
|
| of
leading eye doctors at the Leaf Division of the Company at Mardan. The
Company expects to continue its support |
|
| for
this worthy cause during the coming year. |
|
|
| PATTERN
OF SHAREHOLDING |
|
|
| A
pattern of shareholding in the prescribed form appears at page number 31. |
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|
| AUDITORS |
|
|
| The
Auditors M/s. Ebrahim and Co., Chartered Accountants, retire and offer
themselves for re-appointment. A member |
|
| of
the Company has proposed that M/s. Ebrahim & Co. the retiring auditors
and M/s. A. F. Ferguson & Co., the ex- |
|
| auditors
of PTI be appointed as joint auditors for LTC for the year 1997-98. |
|
|
|
|
On behalf of Board of
Directors |
|
|
|
|
|
IQBALALI LAKHANI |
|
| Karachi:
October 16, 1997 |
|
Chairman |
|
|
|
|
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of LAKSON TOBACCO COMPANY LIMITED as
at June 30, 1997 |
|
| and
the related profit and loss account and statement of sources and application
of funds, 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 accounts 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 |
|
| accounts
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 statement of sources and application of funds
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 June |
|
| 30,
1997 and of the profit and the changes in sources and application of funds
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. |
|
|
|
|
|
EBRAHIM & CO. |
|
| Karachi:
October 16, 1997 |
|
Chartered Accountants |
|
|
|
|
|
|
|
| Balance
Sheet as at June 30, 1997 |
|
|
|
|
1997 |
1996 |
|
| |
|
NOTES |
(Rupees '000) |
|
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
assets |
|
|
3 |
355,915 |
175,020 |
|
| Capital
work-in-progress |
|
|
4 |
154,986 |
9,655 |
|
|
|
---------- |
---------- |
|
|
|
510,901 |
184,675 |
|
|
|
|
|
|
| LONG
TERM INVESTMENT |
|
|
5 |
1 |
-- |
|
| LONG
TERM LOANS, DEPOSITS AND PREPAYMENTS |
6 |
30,129 |
10,367 |
|
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
7 |
73,031 |
54,545 |
|
| Stock
in trade |
|
8 |
717,453 |
278,754 |
|
| Trade
debtors |
|
9 |
23,809 |
28,404 |
|
| Loans
and advances |
|
10 |
90,247 |
45,428 |
|
| Deposits,
prepayments and other receivables |
11 |
71,231 |
39,266 |
|
| Cash
and bank balances |
|
12 |
19,858 |
4,325 |
|
|
|
|
|
|
|
995,629 |
450,722 |
|
|
| Less:
CURRENT LIABILITIES |
|
| Current
portion of long term liabilities |
|
13 |
54,305 |
12,903 |
|
| Short
term redeemable capital |
|
|
-- |
75,000 |
|
| Short
term running finances |
|
14 |
172,376 |
93,812 |
|
| Creditors,
accrued and other liabilities |
|
15 |
445,278 |
168,439 |
|
| Provision
for taxation |
|
|
61,000 |
21,000 |
|
| Dividends |
|
16 |
70,459 |
16,592 |
|
|
|
|
803,418 |
387,746 |
|
| NET
CURRENT ASSETS |
|
|
192,211 |
62,976 |
|
|
|
|
---------- |
---------- |
|
|
|
733,242 |
258,018 |
|
|
|
========== |
========== |
|
| Financed
by: |
|
|
|
| SHARE
CAPITAL |
|
|
17 |
163,621 |
80,461 |
|
| RESERVES |
|
|
|
18 |
336,717 |
111,000 |
|
| UNAPPROPRIATED
PROFIT |
|
|
268 |
8,064 |
|
|
|
|
---------- |
---------- |
|
| SHAREHOLDERS
EQUITY |
|
|
500,606 |
199,525 |
|
|
|
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
|
19 |
51,092 |
12,238 |
|
| LIABILITIES AGAINST ASSETS
SUBJECT TO |
|
|
| FINANCE
LEASES |
|
20 |
159,078 |
36,163 |
|
| DEFERRED
LIABILITY |
|
21 |
22,466 |
10,092 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
22 |
-- |
-- |
|
|
|
|
---------- |
---------- |
|
|
|
733,242 |
258,018 |
|
|
|
========== |
========== |
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
| Profit
& Loss Account |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
NOTES |
(Rupees '000) |
|
|
|
|
| Sales |
|
|
6,697,980 |
2,727,448 |
|
| Cost
of sales |
|
23 |
6,059,147 |
2,405,598 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
638,833 |
321,850 |
|
| Establishment
expenses |
|
24 |
108,305 |
65,156 |
|
| Selling
and distribution expenses |
|
25 |
361,653 |
150,285 |
|
|
|
|
469,958 |
215,441 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
168,875 |
106,409 |
|
| Other
income |
|
26 |
17,919 |
2,767 |
|
|
|
|
---------- |
---------- |
|
|
|
|
186,794 |
109,176 |
|
|
|
|
|
|
|
| Financial
charges |
|
27 |
47,463 |
37,805 |
|
| Other
charges |
|
28 |
9,539 |
4,952 |
|
|
|
|
57,002 |
42,757 |
|
|
|
|
---------- |
---------- |
|
| Profit
for the year before taxation |
|
|
129,792 |
66,419 |
|
| Taxation |
|
29 |
40,034 |
18,299 |
|
|
---------- |
---------- |
|
| Net
profit after taxation |
|
|
89,758 |
48,120 |
|
| Unappropriated
profit brought forward |
|
|
8,064 |
36 |
|
|
|
|
|
|
| Unappropriated
profit of Premier Tobacco Industries |
|
|
|
| Limited
as at January 01, 1997 |
|
52,569 |
-- |
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
|
150,391 |
48,156 |
|
| Transfer
from capital reserve |
|
|
4,322 |
-- |
|
|
|
---------- |
---------- |
|
| Balance
available for appropriation |
|
|
154,713 |
48,156 |
|
|
| Appropriations: |
|
| Proposed
dividend |
|
| - Interim at 17% (1996: Nil) |
|
27,816 |
-- |
|
| - Final at 25% (1996: at 20%) |
|
40,905 |
160 |
|
|
|
68,721 |
16,092 |
|
| Reserve
for proposed issue of bonus shares at |
|
|
| 20% (1996: Nil) |
|
|
32,724 |
-- |
|
| Transfer
to general reserve |
|
53,000 |
24,000 |
|
|
154,445 |
40,092 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
268 |
8,064 |
|
|
|
========== |
========== |
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
| Statement
of Sources and Application of Funds (Cash Flow Statement) |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
(Rupees '000) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Net
profit for the year |
|
|
129,792 |
66,419 |
|
| Adjustments
for items not involving movement of funds |
|
| Depreciation |
|
|
31,609 |
19,047 |
|
| Profit
on sale of fixed assets |
|
|
(3,226) |
(719) |
|
|
---------- |
---------- |
|
|
|
|
158,175 |
84,747 |
|
|
| (Increase)/Decrease
in current assets |
|
| Stores
and spares |
|
|
(8,207) |
(6,527) |
|
| Stock
in trade |
|
|
324,267 |
(30,361) |
|
| Trade
debtors |
|
|
14,401 |
(313) |
|
| Loans
and advances |
|
|
4,150 |
(3,535) |
|
| Deposits,
prepayments and other receivables |
|
1,346 |
(15,671) |
|
|
|
|
|
335,957 |
(56,407) |
|
| Increase/(Decrease)
in current liabilities |
|
| Creditors,
accrued and other liabilities |
|
(106,806) |
53,823 |
|
|
---------- |
---------- |
|
| Net
cash from operating activities before tax |
|
387,326 |
82,163 |
|
| Taxes paid |
|
|
|
(41,171) |
(25,043) |
|
|
|
|
