Welcome to PakSearch.com Pakistan's Premier Business Information
Service


For business information, annual reports, laws, ordinances, regulations and articles.




Google
 
Web Paksearch.com
NATIONAL FOODS (PVT) LIMITED
ANNUAL REPORT 1997
CONTENTS
Board of Directors
Notice of Meeting
Chairman's Review
Report of the Directors
Auditors' Report to the Members
Balance Sheet
Profit and Loss Account
Statement of Changes in Financial Position
(Cash Flow Statement
Notes to the Accounts
Pattern of Share Holdings
Board of Directors
MR. A. MAJEED      Chairman
MR. WAQAR HASAN Managing Director
Chief Executive
MR. KHAWAR M. BUTT Director
MR. ABRAR HASAN Director
MR. SIRAJUDDIN AHMAD Director (I.C.P. Nominee)
MR. ZAHID MAJEED Director
MS. JAMILA WAQAR Director
MS. M. E. MAJEED Director
MR. HABIB A. ISMAlL KHAIRANI Company Secretary
REGISTERED OFFICE 12/CL-6, Claremont Road, Civil Lines, Karachi-75530.
Phones: 515564, 515740, 515981,5662687
P.O. Box No. 15509 Fax No. 5684870
TIx: 20191 CATEL PK.
AUDITORS Riaz Ahmad, Saqib, Gohar & Company
Chartered Accountants,
5-Nasim Cooperative Housing Society Ltd,
Major Nazir Bhatti Road,
Off Shahid-e-Millat Road,
Karachi.
Phones: 4945427 - 4946112
Fax: 4932629
REGISTRAR Noble Computer Services (Pvt.) Limited
1st FIoor, AI-Manzoor Building,
Dr. Ziauddin Ahmad Road, Karachi.
Phones: 2635511-14
BANKERS Muslim Commercial Bank Limited,
Clifton Corporate Branch,
Kulsom Court, Clifton, Karachi.
Phones: 5872286 - 5831835
Fax    :5872058
Bank Al-Habib Limited
Mackvolk Building,
I. I. Chundrigar Road, Karachi.
Phones: 2412986 (10 lines)
Fax    : 2419752
Notice of Meeting
Notice is hereby given that the 26th Annual General Meeting of National Foods Limited
will be held at the Registered Office situated at 12/CL-6, Claremont Road, Civil Lines
Karachi, on Saturday the 27th December 1997, at 4.00 p.m. to transact the following FOOD
business:
1. To read and confirm the minutes of the Last Annual General Meeting held on
22nd December 1996.
2. To Receive, consider and approve the Audited Accounts for the year ended 30th
June 1997.
3. To Approve issue of bonus shares @ 12.5% to such shareholders whose names
appear on the members' book on 27th December 1997.
4. To elect Directors for a period of 3 years. The Board of Directors has fixed number
of Directors to be elected as 7 (seven) excluding any director(s) nominated
by Development Financial Institutions.. Following are the retiring directors who
are also eligible to offer themselves for re-election:
· Mr. A. Majeed
· Mr. Waqar Hasan
· Mr. Khawar M. Butt
· Mr. Abrar Hasan
· Mr. Zahid Majeed
· Ms. Jamila Waqar
· Ms. M. E. Majeed
Any person who seeks to contest the election of directors may file his (her) consent
to the company in accordance with Companies Ordinance, 1984.
5. To appoint Auditors for the year 1997-1998 and fix their remuneration. The present
auditors Messrs. Riaz Ahmad, Saqib, Gohar & Company, Chartered Accountants
retire, being eligible, have offered themselves for re-appointment as Auditors.
Special Business:
6. To approve the remuneration payable to the full time working Directors of the
Company.
7. To transact any other business with the permission of the Chairman.
NOTES:
1. The share transfer books of the Company will remain closed from 20th December
1997 to 27th December 1997. (Both days inclusive).
2. All members are entitled to attend and vote at the meeting.
3. A member entitled to attend and vote at the meeting may appoint a proxy to
attend, speak and vote for him/her. A proxy needs to be a member of Company.
4. In order to be valid, an instrument of proxy and the power of Attorney or other
authority (if any) under which it is signed, or a notarially certified copy of such
power of authority, must be deposited at the Registered Office of the Company
not less than 48 hours before the time of the meeting.
5. Shareholders are requested to notify immediately, any change in their Registered
address.
6. Statement under section 160 of the Companies Ordinance1984 pertaining to the
Special Business are being sent to the shareholders with this Notice.
STATEMENT OF MATERIAL FACTS UNDER SECTION 160 OF THE COMPANIES ORDINANCE 1984.
To pass the following special resolutions with or without modification:
The Company requires the approval of the shareholders of the remuneration
payable to the Chief Executive and Directors of the Company. For this purpose,
it is intended to pass the following Resolutions:-
"RESOLVED THAT the company hereby approves and authorizes the payment
consisting of salary and allowances to the Directors, namely Messrs. Waqar Hasan.
A. Majeed, Abrar Hasan, Zahid Majeed and Mrs. Jamila Waqar, not exceeding
Rs. 2,242,800/= (Rupees twenty two lacs fourty two thousands eight hundred only)
per annum exclusive of perquisites, bonus and retirement benefits paid in
accordance with the Company's policy.
ALSO RESOLVED THAT the Chief Executive of the Company be and is hereby
authorized to increase the above remuneration in future not exceeding 20% per
annum.
FURTHER RESOLVED THAT in the event of any of the aforesaid offices falling vacant,
the approval hereby given shall equally applicable to any other person appointed
to fill such vacancy."
Chairman's Review
Moving Towards HI-TECH and Value Addition
National Foods Limited., like other Companies in Pakistan is passing through a phase of
restructuring. The year under review has many bright features such as:
(a) Quality Standards throughout have improved.
(b) The new Pickle Plant went into production and our pickles are rated in top bracket
locally as well as in export markets. Further improvements in storage and preparatory
methods are under study which will yield better profitability by reducing wastage
of materials and efficient use of space available.
(c) The new Processing Plant to produce Wet Products such as Tomato Ketchup, Pastes
Table & Cooking sauces has just gone into production and the first launch of Tomato
Ketchup is underway. This will open up new avenues to bring into the market
INNOVATIVE Products. We hope that new range of products will enhance Company's
Profitability.
(d) Human Resource department is in place and working, Each and every job is being
defined, Scales are being fixed, Training and Development Programs are underway.
Hopefully new talents will be attracted which will help the Company to move
forward into the next millennium.
On Financial side the Company is actively engaged to devise ways for efficient use of
Resources, some Results are reflected in the Balance Sheet. The prominent features are:
1. PICIC Long Terms Loan has been fully paid. The Company is availing the Leasing
Facilities for capital expenditures where needed.
2. Export Re-Finance Limit has increased from 21.4 millions to 28.5 millions which will
reduce the cost of finances.
3. There has been a net increase of 15.580 millions in the Fixed Assets through self
financing and 2,393 millions through leasing.
4. Inventory Control has improved.
Sales Tax Rates revised from 15% to 18% with effect from 1st. July 1996, in the Federal
Budget. In addition to this few more products previously exempt from Sales Tax were
included in the Tax Bracket. Although the present Government reduced the Sales Tax
Rates from 18% to 12.5% from the month April 1997, however, the adverse impact of almost
7.2 millions for the first 9 months, is reflected in the results for the year under report.
Despite our entire efforts, we have not been able to check increase in costs of
infrastructures, utilities, promotional and payroll costs etc. Unfortunately we have to
live with these Inflationary fluctuations, we can only minimize the effects by increasing
efficiency.
The Net Sale has increased by 17.2% only which is one of the lowest for many years but
fortunately we are able to maintain the Gross Profit. The young and energetic management
must be complemented for preparing the company to face future challenges and
moving fast towards new innovative products.
Managing Director's Write Up
for Annual Report 1996-97
It gives me great pleasure to present the audited results of National Foods Limited for
the year 1996-97
RESULTS AND PERFORMANCE
A summary of the key financial indicators along with the profit and appropriations are
presented below:-
PROFIT AND APPROPRIATIONS
1997 1996
Profit after taxation 8,463,413 7,790,939
Un-appropriated profit 18,845,139 17,027,728
---------- ----------
27,308,552 24,818,667
Appropriations:
Proposed Cash Dividend - 2,986,764
Reserve for issue of Bonus Shares 4,106,800 2,986,764
---------- ----------
4,106,800 5,973,528
---------- ----------
23,201,752 18,845,139
========== ==========
BONUS
The company has generated a profit of Rs.8,463,413 after tax and after adding to the un-
appropriated Profit of Rs. 18,845,139 brought forward from last year, the Board of Directors
have announced 12.5% Bonus Shares to be issued in the ratios of 125 Bonus Shares for every
1000 Ordinary Shares held by the members whose names appear in the members register
on 27-12-1997.
PERFORMANCE
NFL has registered a growth of 17.17% and the profit registered has increased from last
tear at a rate of 2.97% before tax.
The reason of this somewhat
stagnant performance has
been mostly attributed to
the rampant growth in
inflation that had persisted
in the market with the then
present government. The
major increase has been
witnessed in the material
inputs like Raw Material and
Packaging material. Adjust-
ment for this haphazard
inflationary    trend    was
accounted for through price
increase, control of input
costs and wastage control
exercises. Also work on making the organization lean and efficient is underway.
However due to the above mentioned factor, the growth in profit could not be sustained.
overall the trend has 'dissipated to an extent and expenses have been controlled.
Inflationary prices were responsible for the slow growth of the company compared to
last year. The market witnessed a decrease in consumer spending due to this factor
and people switched over to the unbranded Market to maximize their spending on
household items.
Further, due to liquidity
crunch that prevailed during
the period, the shopkeeper
witnessed less buying 
strength, which forced the
distributors to keep the stocks
at minimum at their
warehouses.
On the other hand, efforts
to increase exports were
fruitful and we registered a
growth of 92.95%. Our primary
efforts were to establish a
distribution network with the
help of our present distributors
in the various parts of the
world, To an extent,
performance has greatly improved in the Middle East and North American markets.
As far as bulk exports are concerned, Red Chillies continued to be a problem. The
government, however in the latter part of the year allowed Exports of Red Chillies once
again. However, due to extremely low prices offered by the Indians in the global
market, their domination still continues and no favourable outcome can be expected
till the local market prices come down. However, we still managed to export two
containers of Red Chillies in the last quarter of the year to our bulk customers in the North
American market.
Salt and Pickles continue to be leading brands in the market today and have shown
a steady growth over a last couple of years. Recipe range is also one of the fastest
growing categories at this time and the growth rate is being sustained.
OUTLOOK FOR THE FUTURE
Due to stagnant growth in plain spices, it has become evident that a move has to be
made towards more value added products. In this regard, the new range of Ketchup
has been launched in November 1997. This launch comprises of 3 varieties in consumer
bottles, one variety in the economy bottle and also a bulk catering pack for the food
services. Expansion and step-up of plant in this regard is also complete.
By start of ketchup or wet based products, NFL will become well placed in the market
to launch other similar products.
AUDITORS
The present auditors M/s. Riaz Ahmad, Saqib, Gohar & Company, Chartered Accountants
retire, being eligible for re-appointment, have offered themselves, for re-appointment
as auditors for the year 1997-1998.
PATTERN OF SHARE HOLDING
The Pattern of Share Holding as referred by Section 236 of the Companies Ordinance
1984, is enclosed.
MANAGEMENT
Special thanks and appreciation to the marketing and operations staff of National
Foods is due. They have worked very hard to keep the company stable during the tough
economic conditions. This was possible through their coherent ability to work as a team
and generate effective and efficient results. They must be congratulated for a job well
done.
NATIONAL FOODS LIMITED
RATIO ANALYSIS
1993 1994 1995 1996 1997
LIQUIDITY RATIOS
Current Ratio 1.21 1.24 1.07 1.02 1.01
Acid Test Ratio 0.60 0.60 0.39 0.25 0.28
Super Quick Ratio 0.18 0.15 0.11 0.11 0.10
GEARING RATIOS
Gearing Ratio 6.30% 4.84% 3.77% 5.11% 4.41%
Debt / Equity Ratio 6.72% 5.09% 3.92% 5.39% 4.61%
Interest Cover 307.60% 339.34% 332.77% 227.76% 228.07%
OPERATING RATIOS
Return On Capital Employed 18.50% 25.76% 26.41% 27.41% 24.55%
Return On Shareholder's Equity 13.96% 15.71% 18.74% 13.48% 12.77%
Gross Profit- Margin 20.85% 23.4t% 20.21% 20.15% 20.20%
Operating Profit 7.67% 9.79% 8.59% 6.27% 6.15%
Net Profit Margin 3.25% 3.57% 3.56% 2.31% 2.14%
TURNOVER RATIO
Asset Turnover 1.99 1.91 1.99 2.07 2.31
Invested Capital Turnover 4.02 4.19 5.07 5.54 5.70
Equity Turnover 4.29 4.40 5.26 5.83 5.96
Capital Intensity 5.20 5.95 5.76 5.83 6.09
Receivable Days 39.69 46.78 31.18 15.32 17.61
Days Inventory 70.89 87.46 95.07 106.08 85.05
Inventory Turnover 5.15 4.17 3.84 3.44 4.29
Working Capital Turnover 18.83 14.50 44.36 143.76 502.89
OPERATING EXPENSES (% OF SALES)
Admin. 4.51% 3.99% 3.63% 3.49% 3.49%
Selling 11.54% 13.00% 11.15% 11.54% 12.20%
Financial 1.86% 2.14% 1.85% 2.37% 2.07%
COST
Materials 83.02% 83.62% 84.87% 84.80% 84.94%
Direct Labor 3.70% 4.43% 4.65% 4.93% 4.59%
Overheads 13.28% 11.95% 10.48% 10.27% 10.47%
Admin. 21.61% 17.04% 17.95% 17.33% 17.25%
Selling 55.35% 55.55% 55.14% 57.29% 60.42%
Financial 8.92% 9.16% 9.17% 11.74% 10.27%
Earnings Per Share 2.62 3.18 3.66 2.61 2.58
Auditors' Report to the Members
We have audited the annexed balance sheet of National Foods Limited as at 30
June, 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 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 business; and
iii) the business conducted, investment 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 June 1997 and of the profit for the year then
ended; and
(d) In our opinion, Zakat deductible at source under the Zakat and Ushr Ordi-
nance, 1980, was deducted by the company and deposited in the Central
Zakat Fund established under section 7 of that ordinance.
RIAZ AHMAD, SADIQ, GOHAR & CO.
Karachi: 22nd Nov 1997 CHARTERED ACCOUNTANTS
Balance Sheet as at 30th June 1997
NOTE 1997 1996
Rupees Rupees
CAPITAL AND LIABILITIES
Capital and reserve
Authorised Capital 5,000,000
(1996: 5,000,000) Ordinary
Shares of Rs.10/- each 50,000,000 50,000,000
========== ==========
Issued, Subscribed and Paid-up Capital 2 32,854,400 29,867,640
Capital Reserve - Share Premium 6,102,100 6,102,100
Reserve for Issue of Bonus shares 4,106,800 2,986,764
Unappropriated Profit 23,201,752 18,845,139
---------- ----------
66,265,052 57,801,643
Long Term liabilities - Secured
Long term loans 3 - 3,332,681
Liabilities against assets subject finance lease 4 1,605,027 1,330,141
Deferred Tax 1,450,000 1,450,000
---------- ----------
3,055,027 3,113,409
Current Liabilities and Provision
Current portion of long term liabilities 5 2,041,893 1,558,580
Finances utilized under mark-up
arrangements - Secured 6 65,928,944 61,674,985
Creditors, accrued & other liabilities 7 33,430,005 35,412,368
Proposed dividend - 2,986,764
---------- ----------
101,400,842 101,632,697
Contingencies Commitments 8 - -