| DEWAN MUSHTAQ TEXTILE MILLS LIMITED |
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| Annual
Report 1997 |
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| Mission
Statement |
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|
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| The
mission of Dewan Mushtaq Textile Mills Limited is to be the |
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| finest
Organisation, and to conduct business responsibly in a |
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| straight
forward way. |
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| Our
basic aim is to benefit the customers, employees and |
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| shareholders
and to fulfil our commitments to the society. Our |
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| hallmark
is honesty, initiative and teamwork of our people and |
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| our
ability to respond effectively to change in all aspects of life |
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| including
technology, culture and environment. |
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| We
will create a work environment, which motivates, recognises |
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| and
rewards achievements at all levels of the Organisation |
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| because |
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| IN
ALLAH WE TRUST & IN PEOPLE WE BELIEVE. |
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|
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| We
will always conduct ourselves with integrity and strive to be |
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| the best. |
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| CONTENTS |
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| Company
Information |
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| Notice
of the Meeting |
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| Statement
Under Section 160 |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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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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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
|
| DEWAN
M. ZIA-UR-REHMAN FAROOQUI |
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| Chairman |
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| DEWAN
GHULAM MUSTAFA KHALID |
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| Vice
Chairman |
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| DEWAN
MUHAMMAD AYUB KHALID |
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| Managing
Director/Chief Executive |
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| DEWAN
MOHAMMAD YOUSUF FAROOQUI |
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| Deputy
Managing Director |
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| DEWAN
ABDUL REHMAN FAROOQUI |
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| DEWAN
ASIM MUSHFIQ FAROOQUI |
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|
| MR.
AZHAR KHAWAJA (NIT) |
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| AUDITORS |
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| MESSRS.
FARUQ ALI & CO. |
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| Chartered
Accountants |
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| Habib
Square, |
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| M.
A. Jinnah Road, |
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| Karachi,
Pakistan. |
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|
| BANKERS |
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| HABIB
BANK LIMITED |
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|
| REGISTERED
OFFICE |
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| DEWAN
CENTRE |
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| 3-A,
Lalazar, |
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| Beach
Hotel Road, |
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| Karachi
- 74000, |
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| Pakistan. |
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|
| MILLS |
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| A-30,
S. I. T. E., |
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| Hyderabad
(Sindh). |
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| NOTICE
OF THIRTY SIXTH ANNUAL GENERAL MEETING |
|
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| Notice
is hereby given that the Thirty Sixth Annual General Meeting of Dewan Mushtaq
Textile |
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| Mills
Limited will be held on Wednesday, 28th March 1998 at 5.00 p.m. at Dewan
Centre, 3-A Lalazar |
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| Beach
Hotel Road, Karachi, to transact the following business: |
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|
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| ORDINARY
BUSINESS: |
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| 1.
Recitation from HOLY QURAN. |
|
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| 2.
To read and confirm the minutes of the Thirty Fifth Annual General Meeting
held on 28th June |
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| 1997. |
|
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| 3.
To receive, consider and adopt the annual audited accounts for the year ended
30th September |
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| 1997,
together with the Directors' and Auditors' Report thereon. |
|
|
| 4.
To approve the declaration of 15% Cash Dividend. |
|
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| 5.
To elect Seven Directors of the Company for a period of three years in
accordance with the pro- |
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| visions
of the Companies Ordinance, 1984. The retiring directors are: |
|
|
| (i)
Dewan M. Zia-ur-Rehman Farooqui |
|
|
| (ii)
Dewan Ghulam Mustafa Khalid |
|
|
| (iii)
Dewan Mohammad Ayub Khalid |
|
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| (iv)
Dewan Mohammad Yousuf Farooqui |
|
|
| (v)
Dewan Asim Mushfiq Farooqui |
|
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| (vi)
Dewan Abdul Rehman Farooqui |
|
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| (vii)
Mr. A.D. Azhar Khawaja (NIT) |
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|
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| 6.
To appoint Auditors of the Company for the year ending 30 September 1998 and
to fix their |
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| remuneration. |
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| SPECIAL
BUSINESS: |
|
|
| 7.
To consider and approve shot-term loans and advances out of surplus funds
available with the |
|
| Company
to Dewan Sugar Mills Limited in compliance with the provisions of Section 208
of the |
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| Companies
Ordinance, 1984. |
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| 8.
To transact any other business with the permission of the Chairman. |
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| NOTES: |
|
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| 1.
The Share Transfer Books of the Company will remain closed from 21st March,
1998 to 31st March, |
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| 1998
(Both days inclusive). |
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| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint a proxy to attend, |
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| speak
and vote for him/her. A proxy must be member of the company. |
|
| 3.
An instrument of proxy and a power of attorney or other authority (if any)
under which it is signed |
|
| or
a notarially certified copy of such power of attorney in order to be valid
must be deposited at |
|
| the
registered office of the Company not less than 48 hours before the time of
the meeting. |
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| 4.
Members are requested to notify the Company any charge in their addresses
immediately. |
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|
| "Statement
under Section 160 of the Companies Ordinance, 1984 attached with the Annual |
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| Report
circulated to the members of the company." |
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| STATEMENT
UNDER SECTION 160 |
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| OF
THE COMPANIES ORDINANCE, 1984 |
|
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| This
statement is annexed to the Notice of the Thirty Sixth Annual General Meeting
of Dewan |
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| Mushtaq
Textile Mills Limited (hereinafter referred to as DMTML) to be held on 25th
March 1998 |
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| and
sets out material facts concerning the Special Business to be transacted at
the meeting. |
|
|
| 1.
Investments in Associated Companies |
|
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| The
Board of Directors considers to advance temporary short term financing to the
associated corn |
|
| pany
out of surplus funds available with the Company. Details of such financing
are given below: |
|
|
| (i)
Name of borrower Company and |
|
-- Dewan Sugar Mills
Limited |
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| associated undertaking
together with |
Rupees Fifty Million only |
|
| the
amount of loan and advance. |
|
|
| (ii)
Rate of interest to be charged on each |
|
-- 1% above the rate on
which the lending Company |
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| loan
and advance together with the |
|
has obtained its own
borrowing |
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| particulars
of collateral security to be |
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-- No security is
considered necessary as all the com- |
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| obtained
from borrower. |
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panies are under common
management control. |
|
|
| (iii)
Period for which these loans and |
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-- Twelve Months |
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| advances
will be made |
|
|
| (iv)
The terms of repayment or any other |
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-- The loans and
advances are adjustable within a |
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| term
of loans and advances |
|
period of twelve months
or as and when required |
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|
by the lending Company |
|
|
| (v)
Purpose of loans and advances |
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-- The purpose of loans
and advances is to provide |
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|
any immediate requirement
of working capital of the |
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|
borrowing Companies |
|
|
| (vi)
Benefits likely to accrue to the Company |
-- The investing Company
and its shareholders will be |
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| and its shareholders
from loans |
benefited in a manner
that their investment will fetch a |
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| and
advances |
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return of one percent
over and above the mark up rate |
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|
at which the investing
Company has borrowed. |
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Further, the surplus
funds will not remain idle and |
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|
will be invested in the
most efficient manner whereby |
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|
the investing Company not
getting good return but the |
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|
funds will also remain at
the disposal of the investing |
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|
Company as such loans and
advances are repayable on |
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|
demand. |
|
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| None
of the Directors or their spouse has any vested or non-vested interest
whether directly or indirect- |
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| ly
in the proposed business. |
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| In
this regard following resolution is proposed to be passed, with or without
modification, as a |
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| 'SPECIAL
RESOLUTION' |
|
|
| "Resolved
that the Board of the Directors of the Company be and is hereby authorised to
make tern |
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| porary
short term loans / advances to Dewan Sugar Mills Limited up to a maximum
limit of Rs.50 mil |
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| lion
at a mark up rate of 1% above the rate on which the Company has obtained the
borrowing. |
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| These
temporary loans / advances shall be adjusted as and when required by the
Company and shall |
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| not
exceed 12 months period." |
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| DIRECTORS'
REPORT |
|
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| Your
Directors take pleasure in presenting to you the 36th Annual Report of the
Company together |
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| with
the audited accounts for the year ended on September 30, 1997. |
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|
| Alhamdolillah,
the results for the year under review are satisfactory despite many adverse
factors |
|
| such
as increase in cotton prices as compared with last year, instability in yarn
prices and immense |
|
| increase
in power charges. |
|
|
| By
the grace of Almighty Allah, your Company has earned a Net Profit of Rs.9.4
million as compared |
|
| with
Net Profit of Rs. 26.9 million of last year. Current year's Profit includes
Cash Dividend Income |
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| of
Rs. 7.4 million from Dewan Salman Fibre Ltd. This dividend income has once
again provided a |
|
| sign
of relief to your Company's cash flow. The highlights of the Accounts are as
follows: |
|
|
|
1997 |
1996 |
|
|
(Rupees) |
(Rupees) |
|
|
| Gross
Sales |
|
257,811,088 |
372,013,335 |
|
| Fuel,
Power and Water |
|
49,583,115 |
41,768,288 |
|
| Gross
Profit |
|
19,227,917 |
22,422,056 |
|
| Cash
Dividend income from DSFL |
|
7,359,998 |
25,600,019 |
|
| Taxation |
|
2,400,000 |
4,300,000 |
|
| Net
Profit After Tax |
|
9,417,080 |
26,934,483 |
|
|
| We
humbly gratefully bow our heads before Almighty Allah, the Most Gracious and
Merciful, who |
|
| has
rewarded and blessed Your Company with His countless bounties in difficult
times. |
|
|
| IF
YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN) |
|
|
| Your
Directors are pleased to propose appropriation of profit in the following
manner: |
|
|
| Profit
for the year 1996-97 |
|
Rs. |
9,417,080 |
|
| Un
appropriated Profit brought forward |
|
Rs. |
28,516,365 |
|
|
|
---------- |
|
| Profit
available for appropriation |
|
Rs. |
37,933,445 |
|
| Appropriation |
|
|
========== |
|
| Cash
dividend |
|
Rs. |
2,643,300 |
|
| Un-appropriated
profit carried forward |
|
Rs. |
35,290,145 |
|
|
|
---------- |
|
| Total |
|
Rs. |
37,933,445 |
|
|
========== |
|
|
|
|
|
|
|
| DIRECTORS'
REPORT |
|
| The
Board of Directors took decision for appropriation of the profit keeping in
view the expectations |
|
| of
the shareholders from Dewan Mushtaq Group, cash position of the Company,
future profitability |
|
| and
present scenario of Textile Industry. |
|
|
| The
Board also decided to apprise its valued shareholders current status and
future of local Textile |
|
| industry
and other prevalent situation in detail through this report. |
|
|
| SALIENT
FEATURES OF THE ACCOUNTS: |
|
|
| 1.
Total gross sales of your Company amounted to Rs. 257 million as compared to
Rs.372 mil- |
|
| lion
last year. |
|
|
| 2.
Earning Per Share of your Company works out to Rs. 5.34 as compared with last
year's EPS |
|
| which
was Rs. 15.28. |
|
|
| 3.
During the reviewing year, Textile Industry continued to remain under grave
crisis. Cotton |
|
| crop
once again failed miserably and cotton prices remained at high level. Average
price of |
|
| cotton
remained around Rs. 2,200/- per maund, excluding 12.5% sales tax. The yarn
prices |
|
| remained
under pressure whereas other cost like power charges increased significantly.
The |
|
| sales
of your company has been decreased considerably due to the fact that your
Company |
|
| manufactured
some seasonal products towards the year end which were scheduled to be lift- |
|
| ed
by the customers in the month of September, but the same could not be lifted
on schedule |
|
| due
to reasons beyond control of the Management. However, the majority of stocks
of yarn |
|
| reported
in the Balance Sheet have been lifted after completion of the financial year
and the |
|
| sale
proceeds have also been realised. |
|
|
| 4.
The Board would like to apprise the shareholders that our plants are based on
old technolo- |
|
| gy
and with the passage of time, they are less efficient than the new technology
plant and |
|
| machinery.
Since the plant and machinery are almost fully depreciated, therefore, your |
|
| Company
has been able to maintain profitability and paid dividend every year
regularly. |
|
|
| 5.
Alhamdolillah, your company has been able to meet all its financial
obligations on time and |
|
| from
its own resources. |
|
|
| FUTURE
PROSPECTS |
|
|
| The
outlook of local Textile Industry appears encouraging for the year 1998. An
improvement in raw |
|
| material
position, supported with cheap export-refinance facility and depreciated
Rupee value, is |
|
| expected
to attain a good performance during the year. The 1998 cotton crop is
expected to be 8.8N9.0 |
|
| million
bales (3~5% lower than 1997). The crop size is little lower this time, it
still compares well |
|
| with
total requirement of the local Textile Industry which stood at 8.5 million
bales in 1997, down |
|
| from
8.9 million bales in 1996. As per the estimates, after accounting the usage
by the informal sec- |
|
| tor
to the tune of 0.5 million bales the output of 8.8 million bales puts the
Textile industry in an |
|
| accommodative
position. The fact that adequate quantity of cotton will be available for the
domes- |
|
| tic
industry during the current season is also reflected in the spot prices of
cotton at Karachi Cotton |
|
| Exchange
which are on average reduced by 5% as compared with last year. |
|
|
| The
Management has decided to implement a major Balancing, Modernising and
Replacement |
|
| (BMR)
program in order to remain competitive in its field of operation. Some of the
capital expen- |
|
| diture
incurred in this relation has been reflected in the current accounts and
further investment is |
|
| underway.
The Board feels that it has now become inevitable to undertake BMR so as to
maintain |
|
| promising
future prospects of your Company. |
|
|
| NOTE
OF THANKS: |
|
| The
Board puts on record its gratitude to its valued shareholders, federal and
provincial government |
|
| functionaries,
banks, development financial institutions and customers whose co-operation,
con- |
|
| stant
support and patronage have enabled of your Company to achieve the desired
results. |
|
|
| The
Board also expresses its thanks for the valuable teamwork, loyalty and
laudable efforts rendered |
|
| by
the executives, staff members and workers of your Company, during the year
under review, and |
|
| wish
to place on record its appreciation for the same. |
|
|
| AUDITORS: |
|
| The
Auditors of your Company, Messrs M/S Faruq All & Company, Chartered
accountants, retire |
|
| and
offer their services for re-appointment for the ensuing year on the same
remuneration. |
|
|
| CONCLUSION: |
|
| In
conclusion, we bow, beg and pray to Almighty Allah, Rehman-o-Rahim, in the
name of our |
|
| beloved
prophet, Muhammad, peace be upon him, for continued showering of His
Blessings, |
|
| Guidance,
Strength, Health and Prosperity to us, our Company, Country and Nation; and
also pray |
|
| to
Almighty Allah to bestow peace, harmony, brotherhood and unity in true
Islamic spirit to whole |
|
| of
Muslim Ummah, Ameen, Summa-Ameen. |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Dewan Mushtaq Textile Mills
Limited, as at 30 |
|
| September,
1997 and the related Profit and Loss Account and Cash Flow Statement together
with the |
|
| notes
forming part thereof, for the year then ended and we state that we have
obtained all the infor- |
|
| mation
and explanations which to the best of our knowledge and belief were necessary
for the purpos- |
|
| es
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 Ordinance, 1984 and are in agreement with |
|
| the
books of account 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
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 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 30 September 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. |
|
|
Faruq Ali & Company |
|
| Karachi:
02 March, 1998 |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET |
|
| AS
ON 30 SEPTEMBER, 1997 |
|
|
| CAPITAL
AND LIABILITIES |
|
1997 |
1996 |
|
| SHARE
HOLDERS EQUITY |
|
Notes |
(Rupees) |
|
|
| Share
Capital |
|
|
| Authorised |
|
| 10,000,000
Ordinary shares of Rs. 10/- each |
|
100,000,000 |
100,000,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid-up |
|
3 |
17,622,000 |
17,622,000 |
|
| Reserves
and surplus |
|
4 |
80,290,145 |
73,516,365 |
|
|
|
----------- |
----------- |
|
|
97,912,145 |
91,138,365 |
|
|
| DEFERRED
LIABILITY FOR STAFF GRATUITY |
|
11,970,231 |
8,530,853 |
|
|
|
| CURRENT
LIABILITIES |
|
| Short-term
running finances - Secured |
|
5 |
161,462,292 |
106,407,558 |
|
| Creditors,
accrued expenses and other liabilities |
6 |
108,766,546 |
50,164,895 |
|
| Dividends |
|
7 |
4,896,625 |
3,681,083 |
|
| Provision
for taxation |
|
|
15,650,641 |
13,250,641 |
|
|
|
----------- |
----------- |
|
|
|
290,776,104 |
173,504,177 |
|
| CONTINGENCIES |
|
8 |
----------- |
----------- |
|
|
|
400,658,480 |
273,173,395 |
|
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
fixed assets - at cost less |
|
| accumulated
depreciation |
|
9 |
26,379,196 |
22,948,265 |
|
|
|
|
| LONG
TERM INVESTMENT |
|
10 |
40,003,000 |
40,003,000 |
|
| LONG
TERM DEPOSITS |
|
11 |
55,736 |
55,736 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
12 |
9,257,548 |
11,088,437 |
|
| Stock
-in - trade |
|
13 |
280,748,239 |
133,912,182 |
|
| Trade
debts - (Unsecured, considered good) |
|
|
19,778,126 |
51,077,549 |
|
| Advances,
deposits, prepayments and other receivables |
14 |
22,301,730 |
12,848,613 |
|
| Cash
and bank balances |
|
15 |
2,134,905 |
1,239,613 |
|
|
|
----------- |
----------- |
|
|
334,220,548 |
210,166,394 |
|
|
----------- |
----------- |
|
|
400,658,480 |
273,173,395 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
Notes |
(Rupees) |
|
|
|
| SALES
- Net |
|
16 |
255,742,629 |
368,893,002 |
|
| Less:
Excise Duty & Sale Tax |
|
|
-- |
7,368,677 |
|
|
|
----------- |
----------- |
|
|
|
255,742,629 |
361,524,325 |
|
| COST
OF SALES |
|
17 |
236,514,712 |
339,102,269 |
|
|
|
|
----------- |
----------- |
|
| GROSS
PROFIT |
|
|
19,227,917 |
22,422,056 |
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
& General expenses |
|
18 |
3,892,661 |
3,959,448 |
|
| Selling
& Distribution expenses |
|
19 |
3,654,329 |
4,520,449 |
|
|
|
----------- |
----------- |
|
|
7,546,990 |
8,479,897 |
|
|
----------- |
----------- |
|
| OPERATING
PROFIT |
|
11,680,927 |
13,942,159 |
|
|
| OTHER
CHARGES |
|
| Financial
Charges |
|
20 |
7,187,802 |
7,817,457 |
|
| Workers'
Profit Participation Fund |
|
|
224,656 |
306,235 |
|
| Workers'
Welfare Fund |
|
|
146,153 |
184,003 |
|
|
|
----------- |
----------- |
|
|
|
7,558,611 |
8,307,695 |
|
|
|
----------- |
----------- |
|
|
|
4,122,316 |
5,634,464 |
|
| OTHER
INCOME |
|
21 |
7,694,764 |
25,600,019 |
|
|
|
|
----------- |
----------- |
|
| PROFIT
BEFORE TAXATION |
|
11,817,080 |
31,234,483 |
|
| TAXATION
- Current |
|
2,400,000 |
4,300,000 |
|
|
|
----------- |
----------- |
|
| PROFIT
AFTER TAXATION |
|
9,417,080 |
26,934,483 |
|
| UNAPPROPRIATED
PROFIT BROUGHT |
|
|
|
| FORWARD |
|
28,516,365 |
5,106,282 |
|
|
----------- |
----------- |
|
|
37,933,445 |
32,040,765 |
|
| Appropriation |
|
|
|
| Transferred
to General Reserve |
|
-- |
-- |
|
| Proposed
Cash Dividend: @ 15% (1996: 20%) |
|
2,643,300 |
3,524,400 |
|
|
----------- |
----------- |
|
|
2,643,300 |
3,524,400 |
|
| UNAPPROPRIATED
PROFIT CARRIED |
|
----------- |
----------- |
|
| FORWARD |
|
35,290,145 |
28,516,365 |
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these accounts |
|
|
|
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER 1997 |
|
|
|
|
1997 |
1996 |
|
|
RUPEES |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
11,817,080 |
31,234,483 |
|
| Adjustment
for non-cash and other items |
|
|
|
| Depreciation |
|
3,019,901 |
2,708,734 |
|
| Financial
charges accrued |
|
7,187,802 |
7,817,457 |
|
| Provision
for gratuity |
|
6,419,292 |
4,087,241 |
|
| (Gain)
on sale of fixed assets |
|
(334,766) |
-- |
|
|
---------- |
---------- |
|
|
28,109,309 |
45,847,915 |
|
|
| Changes
in operating assets and liabilities |
|
|
