| MITCHELL'S FRUIT FARMS LIMITED |
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| Annual
Report 1997 |
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| CONTENTS |
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| Company
Information |
|
|
| Directors'
Report |
|
|
| Pattern
of Shareholding |
|
| Notice
of Annual General Meeting |
|
| Five
Years at a Glance |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
|
| Notes
to the Accounts |
|
|
|
|
|
| Company
Information |
|
|
| Board of |
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|
|
| Directors |
|
|
|
| S.M.
Mohsin |
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| Chairman
& Chief Executive |
|
|
| Mehdi
Mohsin |
|
|
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| Executive
Director |
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| Syed
Babar Ali |
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|
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| Syed
Faisal Imam |
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| Sitwat
Mohsin |
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|
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| Begum
Kishwar Abid Hussain |
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| Razi-ur-Rehman
Khan - NIT Nominee |
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| Company |
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| Secretary |
|
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| Amir
Sattar |
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| Auditors |
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|
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| A.F.
Ferguson & Company |
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| Chartered
Accountants |
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| Legal |
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| Advisors |
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|
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| Sajjad
Law Associates, Lahore |
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| S.
Imran Bokhari, Lahore |
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| Bankers |
|
|
|
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| American
Express Bank Limited |
|
|
| Emirates,
Bank International |
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| Muslim
Commercial Bank Limited |
|
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| National
Bank of Pakistan |
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| Share |
|
|
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| Softlink
(Private) Limited |
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|
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| Registrar |
|
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| Wings
Arcade, |
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| 1-K
(Commercial) Model Town, |
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| Lahore. |
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| Phones
: (042) 5831980-82 |
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| Fax : (042) 5837061 |
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| Registered
Office, |
|
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| Renala
Khurd, |
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| Factory
and Farms |
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| District
Okara. |
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| Phones
: (04443) 2416, 3017 & 3018 |
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| Fax : (04443) 621416 |
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| E.Mail
: rnk@mitchells.com.pk |
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| Head |
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|
| Office |
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| 3-B,
LDA Complex, |
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| Mian
Mohammad Shafi Road, |
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| Lahore. |
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| Phones |
: (042) 6314171,
6314185-86 & 6305401 |
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| Fax |
: (042) 6369904 &
6312824 |
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| E.Mail |
: ho@mitchells.com.pk |
|
| Website |
: www. mitchells.com.pk |
|
|
| Regional
Sales Office |
|
| (South) |
|
|
| Mehran
VIP II, Ground Floor, |
|
| Plot
18 / 3, Dr. Dawood Pota Road, |
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| Karachi. |
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| Phones
: (021) 519675 & 512112 |
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| E.Mail
: rsos@mitchells.com.pk |
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| Regional
Sales Office |
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| (North) |
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| Block
No. l-A, Sector G - 7 / 4 |
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| Street
No. 40, |
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| Islamabad. |
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| Phones
: (051) 201961-62 & 812669 |
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| E.Mail
: rson@mitchells.com.pk |
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| Regional
Sales Office |
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| (Central) |
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| 153-A,Judicial
Colony, |
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| EO.
Thokar Niaz Baig, |
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| Lahore. |
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| Phones
: (042) 5220333, 5411433 & 5419350 |
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| E.Mail
: rsoc@mitchells.com.pk |
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| Directors'
Report to the Members |
|
|
| The
Directors have pleasure in presenting their annual report |
|
| together
with the Company's audited accounts for the year ended |
|
| September
30,1997. |
|
|
| Business
Year Review |
|
|
| In
welcoming our shareholders to the 65th annual general meeting ~ |
|
| of
the company, I am pleased to be able to advise that the year |
|
| under
review once again closed with record figures for both sales |
|
| and
profit. The net sales figure for the year is Rs 402,987,599 as compared to Rs
309,020,694 |
|
| representing
an increase of 30'~,. The net profit before tax has, at the same time,
registered a growth |
|
| of
more than 100%; going up from Rs 21,085,708 in 1996 to Rs 42,639,589 in the
year ended September |
|
| 30,1997. |
|
|
| While
the result speaks for itself, the noteworthy feature of the year has been
that this record sale |
|
| and
profit has been garnered from a generally sluggish market. The task was not
made any easier |
|
| b~
the regular inflow of large quantities of foreign-manufactured goods; both
confectionery and |
|
| groceries
carrying world-famous brand names. Competition from domestic manufacturers
also |
|
| grew
simultaneously. |
|
|
| In
view of these developments, the continuing all round expansion of our
business can only be |
|
| attributed
to the good value we offer to our consumers. Both in terms of quality and
price, Mitchell's |
|
| products
remain a strong favourite with the discerning consumer and we plan to
re-inforce this |
|
| sound
position we enjoy in the market. |
|
|
| The
significantly higher turnover reflects also an encouraging increase in volume
for sugar |
|
| confectionery
and for some of the product-groups in our groceries range. While preserves,
sauces |
|
| and
canned goods are showing an upward trend, the market for fruit drinks
suffered a decline. |
|
| This
is due largely to a relatively short summer season and an increasingly
crowded market |
|
| accompanied
by the arrival of several new soft drinks sold at intensely competitive
prices. |
|
|
| We
have broadened our product range with the addition of a new chocolate-coated
product and |
|
| "Diet
Golden Mist Marmalade". "Discoveree", an almond, honey and
caramel bar enrobed in pure |
|
| chocolate,
has received an encouraging consumer response. We are optimistic about the
prospects |
|
| for
our "Diet" substitute of Golden Mist Marmalade already established
as a breakfast favourite in |
|
| the
country. |
|
|
| Within
the country much can be done to promote the development of our industry. The
law and |
|
| order
situation has caused anxiety; a few of our major distributors having suffered
losses through |
|
| burglary
and armed robberies. The transport system - particularly the condition of the
roads - has |
|
| left
much to be desired. Strong technical support from universities and public
sector research agencies |
|
| -
which is a source of vitality and progress for the food industry in more
advanced countries - is a |
|
| crying
need in the present state of our economy. We look forward to the day when our
technical |
|
| institutions
can play their proper role in Pakistan. |
|
|
| Appropriations |
|
|
|
| Profit
after tax for the year |
|
29,421,670 |
|
| Unappropriated
profit brought forward |
|
25,359,670 |
|
|
|
|
---------- |
|
| Profit
available for appropriation |
|
54,781,340 |
|
| Proposed
Cash Dividend @ 30 % |
|
10,500,000 |
|
|
|
|
---------- |
|
| Unappropriated
profit carried forward |
|
Rupees |
44,281,340 |
|
| Auditors |
|
========= |
|
|
| The
present auditors Messers A.F. Ferguson & Company, Chartered Accountants,
retire and, being |
|
| eligible,
offer themselves for re-appointment. |
|
|
| Earnings
per Share |
|
|
| Earnings
per share (EPS) of Rs 10 each works out to Rs 8.41. This EPS has been
calculated on the |
|
| basis
of 3.5 million shares outstanding at the year end. |
|
|
| Management
and Staff Relations |
|
|
| The
notable success of the last year is owed in large measure to the unstinted
support and willing |
|
| cooperation
of all the employees of the company working at every level. I would like to
record my |
|
| sincere
appreciation of their valued contribution. |
|
|
| Future |
|
|
| During
the current year we will be adding substantially to our production capacity
in order to meet |
|
| the
unfulfilled demand for our products. While new equipment from reputable
foreign |
|
| manufacturers
is being installed, we actively look for and support competent local sources
for |
|
| supply
of both machines and spare parts. I am happy to report that, in recent years
several new |
|
| Pakistani
manufacturers have supplied us with equipment which compares favourably with
their |
|
| foreign
counterparts. This is a heartening development and bodes well for the future
of the food- |
|
| processing
industry in our country. |
|
|
| Globalisation,
and the accelerating competition from imported products, remains a constant |
|
| challenge;
we have taken steps to protect our position as a leading manufacturer of
processed-food |
|
| products
by conforming to high standards of quality combined with a persistent effort
to contain |
|
| costs.
We are sanguine that as and when we can attain access to the huge
neighbouring market in |
|
| India,
we should find ourselves well positioned to establish a foothold there. |
|
|
|
| Pattern
of Shareholding as at September 30, 1997 |
|
|
|
|
| Number of |
|
Shareholding |
Total |
|
|
| shareholders |
From |
To |
Shares held |
|
|
| 153 |
|
1 |
100 |
14,850 |
|
| 375 |
|
101 |
500 |
163,350 |
|
| 35 |
|
501 |
1000 |
33,850 |
|
| 26 |
|
1001 |
5000 |
63,980 |
|
| 7 |
|
5001 |
10000 |
48,300 |
|
| 4 |
|
10001 |
15000 |
49,070 |
|
| 1 |
|
20001 |
25000 |
23,300 |
|
| 4 |
|
30001 |
35000 |
125,580 |
|
| 2 |
|
35001 |
40000 |
77,320 |
|
| 2 |
|
55001 |
60000 |
112,300 |
|
| 2 |
|
75001 |
80000 |
152,360 |
|
| 1 |
|
110001 |
115000 |
111,690 |
|
| 1 |
|
445001 |
450000 |
448,860 |
|
| 1 |
|
535001 |
540000 |
538,440 |
|
| 1 |
|
755001 |
760000 |
756,750 |
|
| 1 |
|
775001 |
780000 |
780,000 |
|
| --------- |
--------- |
--------- |
--------- |
--------- |
|
| 616 |
|
3,500,000 |
|
| ========= |
========= |
========= |
========= |
========= |
|
|
|
| Categories
of Shareholders |
Number |
Shares |
Percentage |
|
|
held |
|
| Individuals |
|
607 |
2,550,360 |
72.87 |
|
| Trust |
|
1 |
780,000 |
22.29 |
|
| Insurance
companies |
|
3 |
118,190 |
3.38 |
|
| Investment
companies |
1 |
30,950 |
0.88 |
|
| Joint-stock
companies |
3 |
20,000 |
0.57 |
|
| Modaraba
Management |
|
1 |
500 |
0.01 |
|
|
|
--------- |
--------- |
--------- |
|
| Total |
|
616 |
3,500,000 |
100.00 |
|
|
========= |
========= |
========= |
|
|
|
|
|
|
|
| Notice
of Annual General Meeting |
|
|
|
| Notice
is hereby given that the 65th Annual General Meeting of the Company will be
held on |
|
| Monday,
30th March 1998 at 11:30 a.m. at the Registered Office of the Company at
Renala Khurd, |
|
| District
Okara to transact the following business: |
|
|
| Ordinary
Business: |
|
|
| 1.
To confirm the minutes of the Annual General Meeting held on March 29, 1997. |
|
|
| 2.
To receive, consider and adopt the Annual Audited Accounts for the year ended
September |
|
| 30,
1997 together with the Directors' and Auditors' reports. |
|
|
| 3.
To approve cash dividend @ 30% as recommended by the Directors in their
meeting held on |
|
| January
23, 1998. |
|
|
| 4.
To appoint auditors for the year ending September 30, 1998 and to fix their
remuneration. |
|
| The
retiring auditors namely Messrs A.F. Ferguson & Co., Chartered
Accountants, being |
|
| eligible,
offer themselves for reappointment. |
|
|
| 5.
To transact any other business which may be placed before the meeting with
the permission |
|
| of
the chair. |
|
|
| Notes: |
|
|
| 1.
The share transfer book of the Company will remain closed from March 24,19~8
to March |
|
| 31,1998
(both days inclusive). |
|
|
| 2.
A member eligible to attend and vote at this meeting may appoint another
member as his/ |
|
| her
proxy to attend and vote instead of him/her. Proxies, in order to be
effective, must be |
|
| received
by the Company at the Registered office not later than 48 hours before the
time the |
|
| meeting
is scheduled for. |
|
|
| 3.
Shareholders are requested to immediately notify the change in their address,
if any. |
|
|
| Five
Years at a Glance |
|
|
|
|
|
Rupees in thousands |
|
|
|
1993 |
1994 |
1995 |
1996 |
1997 |
|
|
|
|
| Net sales |
|
|
165,995 |
168,759 |
223,312 |
309,021 |
402,988 |
|
| Cost
of sales |
|
124,240 |
129,076 |
175,436 |
242,841 |
304,770 |
|
| Gross
profit |
|
41,755 |
39,683 |
47,876 |
66,180 |
98,218 |
|
| Gross
profit to sales (%) |
25.15 |
23.51 |
21.44 |
21.42 |
24.37 |
|
| Profit
before tax |
|
9,566 |
8,084 |
13,464 |
21,086 |
42,640 |
|
| Taxation |
|
|
3,217 |
726 |
3,163 |
8,869 |
13,218 |
|
| Profit
after tax |
|
6,349 |
7,358 |
10,301 |
12,217 |
29,422 |
|
| Earnings
per share |
- Rupees |
1.81 |
2.10 |
2.94 |
3.49 |
8.41 |
|
| Dividend
per share |
- Rupees |
1.00 |
1.50 |
2.00 |
2.25 |
3.00 |
|
| Capital
expenditure |
|
8,391 |
9,519 |
3,327 |
10,001 |
7,347 |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Mitchell's Fruit Farms Limited as
at September 30, |
|
| 1997
and the related profit and loss account and the 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 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 the 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 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 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 the cash flow 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. |
|
|
| A.E
Ferguson & Company |
|
| Chartered
Accountants |
|
|
| Lahore,
January 23,1998 |
|
|
|
| Balance
Sheet as at September 30, 1997 |
|
|
|
1997 |
1996 |
|
|
|
|
Note |
Rupees |
Rupees |
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorized
capital |
|
| 5,0(J0,000
(1996: 5,000,000) ordinary |
|
| shares
of Rs 10 each |
|
|
50,000,000 |
50,000,000 |
|
|
| Issued,
subscribed and paid up capital |
3 |
35,000,000 |
35,000,000 |
|
| Capital
reserves |
|
4 |
9,335,878 |
9,335,878 |
|
| Revenue
reserves |
|
5 |
300,000 |
300,000 |
|
| Unappropriated
profit |
|
|
44,281,340 |
25,359,670 |
|
|
|
|
---------- |
---------- |
|
|
|
|
88,917,218 |
69,995,548 |
|
|
| SURPLUS
ON REVALUATION OF |
|
| FIXED
ASSETS |
|
6 |
40,665 |
40,665 |
|
|
|
| REDEEMABLE
CAPITAL |
|
7 |
-- |
1,820,840 |
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| TO
FINANCE LEASE |
|
8 |
166,906 |
661,124 |
|
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
9 |
11,796,378 |
10,805,704 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
portion of redeemable capital |
7 |
1,820,840 |
1,611,314 |
|
| Current
portion of finance lease |
8 |
736,890 |
903,870 |
|
| Short
term running finances |
|
10 |
1,586,053 |
10,578,629 |
|
| Creditors,
accrued and other liabilities |
11 |
28,040,661 |
31,178,610 |
|
| Provision
for taxation |
|
|
8,314,067 |
2,190,640 |
|
| Proposed
dividend |
|
|
10,500,000 |
7,875,000 |
|
|
|
|
--------- |
--------- |
|
|
|
|
50,998,511 |
54,338,063 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
12 |
|
|
|
|
|
--------- |
--------- |
|
|
|
|
151,919,678 |
137,661,944 |
|
|
========== |
========== |
|
| FIXED
CAPITAL EXPENDITURE |
|
| Operating
fixed assets |
|
13 |
48,539,162 |
47,819,975 |
|
| Assets
subject to finance lease |
|
14 |
1,440,896 |
1,801,120 |
|
| Capital
work in progress |
|
15 |
2,258,155 |
1,958,818 |
|
|
|
52,238,213 |
51,579,913 |
|
| LIVESTOCK |
|
744,000 |
701,040 |
|
| LONG
TERM DEPOSITS |
|
150,723 |
340,273 |
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
16 |
4,279,380 |
4,018,126 |
|
| Stock
in trade |
|
17 |
75,026,511 |
63,455,300 |
|
| Trade
debts |
|
|
|
|
18 |
3,586,338 |
4,901,964 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
19 |
6,049,453 |
4,433,053 |
|
| Cash
and bank balances |
|
20 |
9,845,060 |
8,232,275 |
|
|
---------- |
---------- |
|
|
98,786,742 |
85,040,718 |
|
|
---------- |
---------- |
|
|
|
151,919,678 |
137,661,944 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| Profit
and Loss Account for the year ended September 30, 1997 |
|
|
|
|
|
|
1997 |
1996 |
|
|
|
Note |
Rupees |
Rupees |
|
|
| Sales |
|
21 |
402,987,599 |
309,020,694 |
|
| Cost
of sales |
|
22 |
304,769,683 |
242,841,153 |
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
98,217,916 |
66,179,541 |
|
| Selling
and distribution expenses |
23 |
32,993,855 |
25,390,584 |
|
| Administrative
expenses |
|
24 |
16,223,628 |
13,203,362 |
|
|
|
|
---------- |
---------- |
|
|
|
|
49,217,483 |
38,593,946 |
|
|
| Operating
profit |
|
|
49,000,433 |
27,585,595 |
|
| Other
income |
|
25 |
1,798,765 |
982,790 |
|
|
---------- |
---------- |
|
|
|
|
50,799,198 |
28,568,385 |
|
| Financial
charges |
|
26 |
4,906,609 |
5,813,677 |
|
| Other
charges |
|
27 |
3,253,000 |
1,669,000 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
8,159,609 |
7,482,677 |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
42,639,589 |
21,085,708 |
|
| Provision
for taxation |
|
28 |
13,217,919 |
8,869,137 |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
29,421,670 |
12,216,571 |
|
| Unappropriated
profit brought forward |
|
25,359,670 |
21,018,099 |
|
|
|
|
---------- |
---------- |
|
| Available
for appropriation |
|
|
54,781,340 |
33,234,670 |
|
|
| Appropriations |
|
| Proposed
final dividend Rs 3.00 |
|
| (1996:
Rs 2.25) per share |
|
|
10,500,000 |
7,875,000 |
|
|
---------- |
---------- |
|
|
|
|
44,281,340 |
25,359,670 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| Cash
Flow Statement for the year ended September 30, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
|
Note |
Rupees |
Rupees |
|
| Cash
flow from operating activities |
|
|
| Cash
generated from operations |
|
31 |
41,089,691 |
30,161,709 |
|
| Financial
charges paid |
|
|
(4,850,606) |
(5,546,648) |
|
| Payment
of gratuity and leave salary |
|
(1,045,790) |
(769,884) |
|
| Taxes
paid |
|
|
(7,653,492) |
(7,937,451) |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from operating activities |
|
27,539,803 |
15,907,726 |
|
|
| Cash
flow from investing activities |
|
| Fixed
capital expenditure |
|
|
(7,346,825) |
(10,001,691) |
|
| Proceeds
from sale of fixed assets |
|
247,786 |
1,123,440 |
|
| Proceeds
from sale of livestock |
|
|
122,559 |
152,570 |
|
| Decrease/(increase)
in long term deposits |
|
189,550 |
(73,500) |
|
|
|
|
---------- |
---------- |
|
| Net
cash outflow from investing activities |
|
(6,786,930) |
(8,799,181) |
|
|
| Cash
flow from financing activities |
|
| Payment
of redeemable capital |
|
|
(1,611,314) |
(1,401,789) |
|
| Payment
of finance lease liabilities |
|
