| Pioneer Cables Limited |
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|
| Annual
Report 1997 |
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| Contents |
|
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| Company Profile |
|
| Notice
of Meeting |
|
| Chairman's
Review |
|
| Directors'
Report |
|
| Pattern
of Shareholdings |
|
| 10
Years at a Glance |
|
| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
|
|
|
|
| Company
Profile |
|
|
|
|
| Board
of Directors |
|
| Mr.
Said Ahmed (Chairman) |
|
| Mr.
Zakaria A. Bawany (Chief Executive) |
|
| Mr.
Rashid Zakaria Bawany |
|
| Mrs.
Mobina A. Dada |
|
| Mr.
Zahid Zaheer |
|
| Mr.
Abdul Haiy Khan |
|
| Mr.
Tariq N. Haq |
|
| Mr.
S.Q.A. Zaidi (Nominee of N.I.T.) |
|
|
| Company
Secretary/ |
Mr. Hanif Ismail Lakhani |
|
| Chief
Accountant |
|
|
|
| Legal Adviser |
|
Mr. Muhammad Azizur
Rahman |
|
|
Advocate |
|
|
| Bankers |
|
Bank Al-Habib Ltd, |
|
|
Muslim Commercial Bank
Ltd. |
|
|
Security Investment Bank
Ltd, |
|
|
Habib Credit &
Exchange Bank Ltd. |
|
|
Albaraka Islamic
investment Bank Ltd. |
|
|
| Auditors |
|
Rahim Iqbal Rafiq &
Co. |
|
|
Chartered Accountants |
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|
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| Registered
Office |
18th Mile RCD Highway, |
|
|
27/3/1, Mouza Bairut,
Tehsil Hub, |
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|
Distt.
Lasbela-Balochistan, |
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|
Phones: 0202-32360,
0202-33679 |
|
|
Fax: 0202-32369 |
|
|
| Head/Sales
Office |
Uni Towers, 10th Floor,
Room No. 1001, |
|
|
I.I., Chundrigar Road,
P.O. Box No. 6643, |
|
|
Karachi- 74000, Pakistan. |
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|
Phones: 2416511-14,
2410553, 2413528 |
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|
Fax: (92-21) 2415815,
(92-21) 2411804 |
|
|
| Lahore Office |
|
Associated Chambers,
24/25 Patiala Ground, |
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|
Link Mcleod Road, Lahore. |
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|
Phones: (042) 7235741 -
43 |
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|
Fax: (042) 7235712 |
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|
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| Notice
of Meeting |
|
| Notice
is hereby given that the Seventeenth Annual General Meeting of the
Shareholders of |
|
| Pioneer
Cables Limited will be held on Tuesday the 16th December, 1997 at 3:00 p.m.
at the |
|
| liaison
office of the Company at Uni Towers, 10th Floor, Room No. 1001, I.I.
Chundrigar Road, |
|
| Karachi
to transact the following business; |
|
|
| Ordinary
Business |
|
|
| 1.
To confirm the minutes of 16th Annual General Meeting held on Thursday the
19th |
|
| December, 1996. |
|
|
| 2.
To receive, consider and adopt the Statement of Accounts for the year ended
June 30, |
|
| 1997
together with the Reports of the Directors and Auditors thereon. |
|
|
| 3.
To appoint Auditors for the ensuing year, and to fix their remuneration.
Messrs. Rahim |
|
| Iqbal Rafiq & Co. Chartered Accountants
retire and being eligible have offered |
|
| themselves for re-appointment. |
|
|
| 4.
To transact any other business which may legally be transacted at an Annual
General |
|
| Meeting
with the permission of the Chair. |
|
|
|
By Order of the Board |
|
|
| Karachi:
November 13, 1997. |
|
Hanif Ismail Lakhani |
|
|
Company Secretary |
|
|
| Notes: |
|
|
| 1.
The Share Transfer Books of the Company will be closed from 9th December,
1997 to 16th |
|
| December,
1997 (both days inclusive), Transfers received in order at the Shares
Department |
|
| of
the Company at Uni Towers, 10th Floor, Room No. 1001, I.I. Chundrigar Road,
Karachi |
|
| by
close of business on 8th December, 1997 will be treated in time. |
|
|
| 2.
A member entitled to attend and vote at the General Meeting is entitled to
appoint |
|
| another
member as his/her proxy to attend and vote on his/her behalf. |
|
|
| 3.
The instrument appointing a proxy, together with the power of attorney under
which it is |
|
| signed or a notarially certified copy
thereof, should be deposited at the Liaison Office / |
|
| Shares Department of the Company not less
than 48 hours before the time of holding of |
|
| the meeting. |
|
|
| 4.
The members are requested to advise the change in address, if any. |
|
|
| Chairman's Review |
|
|
| Dear
Shareholders |
|
| On
behalf of the Board of Directors, it gives me pleasure to present the 17th
Annual Report |
|
| alongwith
the audited accounts for the year ended 30th June, 1997 and comparative
figures |
|
| for
the last 18 months ended 30th June, 1996. |
|
|
| Business
Overview |
|
| The
year under review witnessed turmoil and uncertainty resulting in political
instability for most |
|
| part
of the year including dismissal of previous government followed by an
installation of interim |
|
| government.
The general election for the next five years were held in February, 1997 and
the |
|
| present
government came to power with a massive mandate and the remaining three
months |
|
| passed
with an inspiring note with concerted efforts to improve the sagging national
economy. |
|
| As
a whole the year passed with insurmountable difficulties with nearly 15%
devaluation of Pak |
|
| Rupee,
high budgetary deficit, high lending rate by the banks because of shortage of
funds |
|
| caused
by government borrowing. The financial position of WAPDA and KESC continues
to be |
|
| fragile
and have put an extraneous burden on our Company's operations. It is against
this |
|
| backdrop
that the results of your Company have to be measured. |
|
|
| The
sales for the year under review of the Company dropped to an unsatisfactory
level of Rs, |
|
| 330
million due to recession in the Country's economy and severe resource problem
of WAPDA |
|
| and KESC. |
|
|
| The
increase in cost of sales has been registered due to massive devaluation of
Pak Rupee |
|
| and
inflationary increases during 1996-97. The gross margin is 9.55% of the sales
as against 10% |
|
| of
corresponding period. Administrative and selling expenses have been contained
to Rs, 20,4 |
|
| million
as against Rs. 22,8 million compared to previous 18 months on annualized
basis. The |
|
| operating
profit is 3.37% of the sales as against 5.57% in the last year. Financial
charges of Rs. 22 |
|
| million
for the year are higher because of higher trade debts which strained the
financial |
|
| liquidity
of the Company and necessitated borrowings from banks. The increase in the
financial |
|
| charges
has wiped out the profitability of your Company resulting in loss before tax
at Rs. 10.6 |
|
| million.
Over and above these losses, the Company has been burdened by enactment of |
|
| minimum
tax under section 80-D of the Income Tax Ordinance, 1979 amounting to Rs. 1.6 |
|
| million
making the loss after tax to Rs. 12.3 million, Trade debts continued to
remain high |
|
| compared
to sales during the year owing to high receivables from WAPDA and KESC, both |
|
| organisations
facing financial crisis. |
|
|
| Future
Prospects: |
|
| The
prospects of the forthcoming year should be viewed in the backdrop of
Government |
|
| efforts
for the revival of industrial sector of the Country, The incidence of taxes
on the end |
|
| price
continue to remain high. Cable industry is the only capital goods industry
which is subjected |
|
| to
suffer dual consumption taxes in the form of Excise duty and Sales tax
inhibiting the growth |
|
| of
the industry on one hand and luring the unscrupulous manufacturers in
unorganised sectors |
|
| to
make substandard products on the other hand which invariably result in tax
evasion and |
|
| colossal
losses in the transmission of electricity. However, the government is making
concerted |
|
| efforts
for the revival of industrial sectors though it remains a challenge for the
cable industry. |
|
| The
reduction in corporate tax rate, the slight fall in rate of interest, efforts
towards privatisation |
|
| of
financial institutions and also restructuring of WAPDA and KESC are some of
the steps which |
|
| are
likely to pave the way for renewed activity in the sector and provide
increased business |
|
| opportunities
to the Company. |
|
|
| The
future prospects can only be described presently as uncertain until the
economic scenario |
|
| improves
due to governmental efforts to check the recessionary trend of the economy.
We, |
|
| however
believe that the economic downslide has been arrested and hope for a better |
|
| economic
future. |
|
|
| Employees
and Valued Customers' |
|
| I
wish to thank all employees for their respective contribution and also our
valued customers |
|
| for
their confidence and support extended to our Company. |
|
|
|
| Directors'
Report |
|
|
| Your
Directors are pleased to submit 17th Annual Report and 14th since the Company
was listed on the Stock |
|
| Exchange
of Pakistan, alongwith audited accounts for the year ended June 30, 1997 and
the Auditors Report |
|
| thereon. |
|
|
| The
operating results of your Company are summarised below: |
|
|
|
12 months ended |
18 months ended |
|
|
June 30, 1997 |
June 30, 1996 |
|
|
Rupees |
Rupees |
|
|
| Profit
/ (loss) before taxation |
|
(10,681,531) |
23,787,150 |
|
| Taxation |
|
(1,650,831) |
(8,518,184) |
|
| Balance
of profit brought forward from last year |
661,369 |
374,278 |
|
|
---------- |
---------- |
|
| Available
for appropriation |
|
(11,670,993) |
15,643,244 |
|
|
|
|
| APPROPRIATIONS |
|
|
|
| Interim
dividend @ Nil (1996:@ 7.50%) |
|
-- |
2,660,625 |
|
| Proposed
dividend @ Nil (1996: @ 15%) |
|
-- |
5,321,250 |
|
| Transferred
to general reserve |
|
-- |
7,000,000 |
|
| Unappropriated
balance carried forward |
|
(11,670,993) |
661,369 |
|
|
|
|
| The
present Auditors M/s. Rahim Iqbal Rafiq & Co., Chartered Accountants
retire and offer themselves for re- |
|
| appointment. |
|
|
|
|
| The
pattern of shareholdings is annexed. |
|
|
|
| Pattern
of Shareholdings |
|
| As
At June 30, 1997 |
|
|
| No of |
|
Shareholding |
|
Total Shares |
|
| shareholders |
|
held |
|
|
| 207 |
1 |
to |
100 |
5,357 |
|
| 300 |
101 |
to |
500 |
54,786 |
|
| 72 |
501 |
to |
1,000 |
46,352 |
|
| 125 |
1,001 |
to |
5,000 |
232,674 |
|
| 12 |
5,001 |
to |
10,000 |
76,479 |
|
| 4 |
10,001 |
to |
15,000 |
47,085 |
|
| 3 |
15,001 |
to |
20,000 |
51,857 |
|
| 1 |
20,001 |
to |
25,000 |
23,650 |
|
| 2 |
25,001 |
to |
30,000 |
53,362 |
|
| 1 |
35,001 |
to |
40,000 |
35,561 |
|
| 2 |
55,001 |
to |
60,000 |
117,942 |
|
| 2 |
60,001 |
to |
65,000 |
125,345 |
|
| 2 |
90,001 |
to |
95,000 |
184,243 |
|
| 1 |
105,001 |
to |
110,000 |
106,048 |
|
| 1 |
110,001 |
to |
115,000 |
112,821 |
|
| 2 |
130,001 |
to |
135,000 |
264,804 |
|
| 1 |
145,001 |
to |
150,000 |
147,124 |
|
| 1 |
155,001 |
to |
160,000 |
156,197 |
|
| 1 |
235,001 |
to |
240,000 |
237,988 |
|
| 1 |
375,001 |
to |
380,000 |
379,646 |
|
| 1 |
1,085,001 |
to |
1,090,000 |
1,088,179 |
|
| ---------- |
|
---------- |
|
| 742 |
|
3,547,500 |
|
|
| CATEGORIES
OF SHAREHOLDERS |
|
|
| S. No. |
Categories |
Number |
Shares held |
Percentage |
|
|
| 1 |
Individual |
|
724 |
1,434,525 |
40.43 |
|
| 2 |
Investment Companies |
3 |
59,053 |
1.67 |
|
| 3 |
Insurance Companies |
2 |
15,750 |
0.44 |
|
| 4 |
Joint Stock Companies |
5 |
27,157 |
0.77 |
|
| 5 |
Financial Institutions |
4 |
1,128,577 |
31.81 |
|
| 6 |
Associated Companies |
3 |
752,009 |
21.20 |
|
| 7 |
Charitable institutions |
1 |
130,429 |
3.68 |
|
|
---------- |
---------- |
---------- |
|
|
742 |
3,547,500 |
100.00 |
|
|
| 10
Years at a Glance |
|
|
|
1996-97 |
*1995-96 |
1994 |
1993 |
1992 |
1991 |
1990 |
1989 |
1988 |
** 1987 |
|
|
|
|
|
|
| Sales |
|
330,166 |
772,297 |
358,729 |
300,157 |
247,878 |
312,480 |
316,850 |
292,046 |
204,818 |
195,015 |
| Profit
/ (loss) after tax |
(12,332) |
15,269 |
10,709 |
6,026 |
2,737 |
11,027 |
12,089 |
10,226 |
9,844 |
12,942 |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Tangible
fixed assets |
81,917 |
65,962 |
63,891 |
65,750 |
69,861 |
73,898 |
60,058 |
61,577 |
65,221 |
67,335 |
|
|
| Long
term investment/ |
|
| deposits |
|
11,324 |
11,314 |
11,304 |
11,233 |
11,219 |
11,251 |
2,553 |
2,513 |
320 |
-- |
|
|
|
|
| Working capital |
|
17,199 |
47,132 |
42,824 |
35,886 |
35,791 |
32,606 |
50,596 |
47,818 |
45,968 |
37,588 |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Net
assets employed |
110,440 |
124,408 |
118,019 |
112,869 |
116,871 |
117,755 |
113,207 |
111,908 |
111,509 |
104,923 |
|
|
| Issued capital |
|
35,475 |
35,475 |
33,000 |
33,000 |
33,000 |
33,000 |
33,000 |
33,000 |
30,000 |
30,000 |
| Reserve
and retained |
|
| earnings |
|
64,329 |
76,661 |
71,849 |
64,440 |
64,189 |
61,452 |
53,483 |
46,832 |
44,572 |
34,603 |
|
|
| Shareholders'
equity |
99,804 |
112,136 |
104,849 |
97,440 |
97,189 |
94,452 |
86,483 |
79,832 |
74,572 |
64,603 |
|
|
| Long term loans |
|
1,768 |
3,310 |
8,174 |
10,910 |
15,102 |
18,679 |
23,576 |
29,106 |
34,054 |
38,480 |
|
|
| Deferred
liabilities |
8,868 |
8,962 |
4,996 |
4,519 |
4,580 |
4,624 |
3,148 |
2,970 |
2,883 |
1,840 |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Capital
employed |
110,440 |
124,408 |
118,019 |
112,869 |
116,871 |
117,755 |
113,207 |
111,908 |
111,509 |
104,923 |
|
|
| Financial
ratios |
|
| Current assets: |
|
| Current
liabilities |
1.07:1 |
1.19:1 |
1,37:1 |
1.37:1 |
1.49:1 |
1,43:1 |
1.66:1 |
1.78:1 |
2.08:1 |
1.72:1 |
| Turnover:
Total assets |
0,96:1 |
2.08:1 |
1.53:1 |
1.42:1 |
1.31:1 |
1.61:1 |
1.67:1 |
1,68:1 |
1.33:1 |
1,25:1 |
| Long
term loans: Equity |
0,02:1 |
0.03:1 |
0.08:1 |
0.11:1 |
0.16:1 |
0.20:1 |
0.27:1 |
0.36:1 |
0.46:1 |
0.60:1 |
| Earning/share
after tax Rs |
N.A. |
4.30 |
325 |
1.83 |
0.83 |
334 |
366 |
3.10 |
328 |
4.31 |
| Net
earning/Rupee |
|
| of
sales Rs. |
N,A, |
2 |
0.03 |
2 |
0.01 |
0.04 |
0.04 |
0.04 |
0.05 |
0.07 |
| Break
up value/share Rs. |
28.13 |
31.61 |
31.77 |
2,953 |
2,945 |
28.62 |
26.21 |
24.19 |
24.86 |
21.53 |
| Net
return on equity % |
N.A. |
13.62 |
10.21 |
6.18 |
2.82 |
11.67 |
13.98 |
12.81 |
13.20 |
20.03 |
| Net
return on capital |
|
| employed % |
N.A. |
12.27 |
9.07 |
5.34 |
2.34 |
9.36 |
10.68 |
9.14 |
8.83 |
12.33 |
| Net
return on total |
|
|
| assets % |
N.A. |
4.11 |
456 |
2.86 |
1.44 |
5.68 |
6.38 |
5.90 |
6.38 |
8.30 |
| Cash
dividend/share % |
-- |
22.50 |
10.00 |
17.50 |
-- |
17.50 |
17.50 |
15.00 |
-- |
-- |
| Bonus
issue/share % |
-- |
-- |
7.50 |
-- |
-- |
-- |
-- |
-- |
10.00 |
-- |
|
| * Figures are for eighteen months ended
June 30, 1996. |
|
| ** Figures include the results of first
eight months of tax holiday period. |
|
|
|
| Auditors'
Report To The Members |
|
| We
have audited the annexed Balance Sheet of PIONEER CABLES LIMITED as at June
30, 1997 |
|
| and
the related Profit and Loss Account and Statement of Changes in Financial
Position 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 and Profit
and Loss Account and the Statement of Changes |
|
| in Financial Position, 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 loss and the changes in Financial
Position 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. |
|
|
| Karachi: |
|
RAHIM IQBAL RAFIQ &
CO, |
|
| Date:
November 13, 1997 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet |
|
| As
At June 30, 1997 |
|
|
|
NOTE |
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorized
Capital |
|
| 4,000,000
ordinary shares of Rs, 10/- each |
|
40,000,000 |
40,000,000 |
|
|
=========== |
=========== |
|
| Issued,
subscribed and paid up capital |
3 |
35,475,000 |
35,475,000 |
|
| General reserve |
|
4 |
76,000,000 |
76,000,000 |
|
| Unappropriated
(loss) / profit |
|
|
(11,670,993) |
661,369 |
|
|
|
----------- |
----------- |
|
|
|
99,804,007 |
112,136,369 |
|
| LONG TERM LOANS |
|
5 |
1,767,632 |
3,309,632 |
|
|
| DEFERRED
LIABILITIES |
|
|
| Taxation |
|
|
8,500,000 |
8,500,000 |
|
| Staff gratuity |
|
|
368,411 |
462,026 |
|
|
|
----------- |
----------- |
|
|
|
8,868,411 |
8,962,026 |
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of long term loans |
|
1,542,000 |
3,351,424 |
|
| Short
term finances |
|
6 |
101,468,131 |
88,835,622 |
|
| Creditors,
accrued and other liabilities |
7 |
127,698,094 |
143,247,142 |
|
| Taxation |
|
|
1,045,052 |
6, 612,582 |
|
| Proposed
dividend |
|
|
- |
5,321,250 |
|
|
|
----------- |
----------- |
|
|
|
231,753,277 |
247,368,020 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
8 |
|
|
----------- |
----------- |
|
|
342,193,327 |
371,776,047 |
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
| Operating
fixed assets |
|
9 |
60,359,074 |
65,962,316 |
|
| Capital
work-in-progress |
|
10 |
21,558,078 |
-- |
|
|
|
----------- |
----------- |
|
|
|
81,917,152 |
65,962,316 |
|
| LONG
TERM INVESTMENT |
|
11 |
10,900,000 |
10,900,000 |
|
|
| LONG
TERM SECURITY DEPOSITS |
|
424,355 |
413,855 |
|
| CURRENT ASSETS |
|
|
| Stores
and spares |
|
12 |
323,460 |
346,482 |
|
|
|
|
| Stock-in-trade |
|
13 |
73,777,627 |
52,205,807 |
|
|
|
|
| Trade debts |
|
14 |
147,902,873 |
213,867,091 |
|
|
| Loans,
advances, deposits, |
|
| prepayments
and other receivables |
15 |
19,424,047 |
12,693,021 |
|
|
|
|
|
| Cash
and bank balances |
|
16 |
7,523,813 |
15, 387,475 |
|
|
|
----------- |
----------- |
|
|
|
248,951,820 |
294,499,876 |
|
|
|
----------- |
----------- |
|
|
|
342,193,327 |
371,776,047 |
|
|
=========== |
=========== |
|
|
|
| Profit
And Loss Account |
|
| For
The Year Ended June 30, 1997 |
|
|
NOTE |
|
12 months ended |
18 months ended |
|
|
June 30, 1997 |
June 30, 1996 |
|
|
Rupees |
Rupees |
|
|
| Sales-Net |
|
17 |
330,166,214 |
772,296,624 |
|
| Cost of sales |
|
18 |
298,624,700 |
695,097, 715 |
|
|
|
----------- |
----------- |
|
| Gross profit |
|
|
31,541,514 |
77,198,909 |
|
|
|
|
|
| Administration
expenses |
|
19 |
13,399,586 |
22,986,960 |
|
| Selling
expenses |
|
20 |
7,011,690 |
11,206,373 |
|
|
|
----------- |
----------- |
|
|
|
20,411,276 |
34, 193,333 |
|
|
----------- |
----------- |
|
| Operating
profit |
|
11,130,238 |
43,005,576 |
|
| Other income |
|
21 |
238,075 |
222,768 |
|
|
----------- |
----------- |
|
|
11,368,313 |
43,228,344 |
|
|
| Financial
charges |
|
22 |
22,049,844 |
17,685,990 |
|
| Workers'
profit participation fund |
|
-- |
1,277,118 |
|
| Workers'
welfare fund |
|
|
-- |
478,086 |
|
|
----------- |
----------- |
|
|
22,049,844 |
19,441,194 |
|
|
----------- |
----------- |
|
| Profit
/ (loss) before taxation |
|
(10,681,531) |
23,787,150 |
