| RAVI RAYON LIMITED |
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
|
|
| CONTENTS |
|
| Board
of Directors |
|
|
| Notice
of Meeting |
|
|
| Chief
Executive's Report |
|
|
| Pattern
of Holding of Shares |
|
| Auditors'
Report |
|
|
| Balance Sheet |
|
|
|
| Profit
& Loss Account |
|
|
| Statement
of Changes |
|
|
| in
Financial Position |
|
| (Cash
Flow Statement) |
|
| Notes
to the Accounts |
|
|
|
|
|
| BOARD
OF DIRECTORS |
|
|
| CHAIRMAN |
|
| DR.
MUHAMMAD AMJAD |
|
|
| CHIEF
EXECUTIVE |
|
| MR.
IFTIKHAR MAHMOOD RANDHAWA |
|
|
| DIRECTORS |
|
| MR.
NAVEED AHMAD |
|
| SYED
MUKHTAR HAlDER SHAH |
|
| MR.
SHAHID GHAFFAR |
|
| MR.
ZAHID AHMAD |
|
| DR.
MASOOD FAIZULLAH |
|
| DR.
ZAFARULLAH SHEIKH |
|
|
| SECRETARY |
|
| MR.
LIAQAT ALl KHAN |
|
|
| BANKERS |
|
| UNITED
BANK LIMITED |
|
| INDUSTRIAL
DEVELOPMENT BANK OF PAKISTAN |
|
|
| AUDITORS |
|
| FORD,
RHODES, ROBSON, MORROW |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE & WORKS |
|
| KALA
SHAH KAKU |
|
| District
Sheikhupura |
|
|
|
| NOTICE
OF MEETING |
|
| Notice
is hereby given that the 36th Annual General Meeting of the Shareholders of
the Company |
|
| will
be held at Faletti's Hotel, Lahore, on Monday, March 30, 1998 at 3.00 p.m.
under the |
|
| Chairmanship
of the Chief Executive to transact the following business. |
|
|
| 1.
To confirm the minutes of the last Extra Ordinary General Meeting held on
10-03-1997. |
|
|
| 2.
To receive and adopt the accounts of the Company for the year ended June 30,
1997 |
|
| together
with the Auditors' and Directors' report thereon. |
|
|
| 3.
To appoint Auditors for the year 1997-98 and to fix their remuneration. |
|
|
| M/s.
Ford, Rhodes, Robson, Morrow, Chartered Accountants, the retiring Auditors, |
|
| being
eligible offer themselves for re-appointment. |
|
|
| 4.
To transact any other business of the Company that may be placed before the
meeting |
|
| with
the permission of the Chairman. |
|
|
| The
Share Transfer Books of the Company will remain closed from 28th March to
30th March, 1998 |
|
| (Both
days inclusive). |
|
|
| NOTES: |
|
|
| 1.
A member entitled to attend and vote at this meeting may appoint another
member as |
|
| his/her
proxy to attend the meeting and vote instead of him/her. Proxies in order to
be |
|
| effective
must be received by the Company not less than 48 hours before the meeting. |
|
|
| 2.
Shareholders are requested to promptly notify the Company of any changes in
their |
|
| addresses. |
|
|
|
| CHIEF
EXECUTIVE'S REVIEW FOR SHAREHOLDERS |
|
| I
welcome you on behalf of the Board of Directors and present the 36th Annual
Report together |
|
| with
audited accounts for the year ended 30th June, 1997. The year under review
has been very |
|
| difficult
for the Company during which it sustained a loss of Rs. 268.489 million. |
|
|
| The
main reason for the loss during the year was under capacity operations of the
plant due to |
|
| continuously
shrinking market for acetate yarn and shortage of Working Capital. Production
also |
|
| remained
suspended for over a week in August/September 1996 when flood water caused
plant |
|
| shut
down. Despite water entering some of the sensitive electrical installations
and machinery, |
|
| Management
was able to restart the entire plant smoothly in a very short period of time. |
|
|
| OPERATING
RESULTS |
|
| Net
sales of the Company during the year under review were Rs. 464.918 million as
compared to |
|
| last
year sales of Rs. 589.605 million. The Company produced 2175 M.Tons of
Acetate Yarn as |
|
| against
2712 M.Tons during the preceding year. Sales of Acetate Yarn were 2248 M.Tons
as |
|
| against
last year sales of 2922 M.Tons. There was a decline of 674 M.Tons in the
domestic market. |
|
| The
Company exported 625 M.Tons of Acetate Yarn during the year as compared to
1016 M.Tons |
|
| during
the corresponding year. The Company was able to sell 710 M.Tons of fresh
yeast during the |
|
| year
1996-97 against 838 M.Tons during the last year. Overall decline in sales was
due to lower |
|
| production.
Production activities remained low due to non-availability of Working Capital
funds. |
|
|
| FUTURE
PROSPECTS |
|
| On
account of persisting decline in domestic market of Acetate Yarn your Company
continued to |
|
| pass
through crisis. Due to general inflationary trend in the economy and
intermittent depreciation |
|
| in
the value of Pak Rupee, increase in prices of main inputs is an obvious
phenomena which has a |
|
| very
substantial adverse impact on the operational economics of Ravi Rayon Ltd.
specially due to |
|
| its
inability to proportionately increase prices of its salable products
particularly the Acetate Yarn. |
|
| As
a consequence of serious liquidity crisis and non-availability of Working
Capital funds it was no |
|
| more
viable to keep the unit running without heavy injection of capital which was
not available. |
|
|
| In
view of the prevailing circumstances and precarious financial health of the
Company your Board |
|
| of
Directors recommended to the Government of Pakistan to privatize the unit as
early as possible |
|
| as
otherwise an application for liquidation may have to be filed with the
relevant authorities. |
|
| Thereafter
Privatization Commission initiated the necessary action on priority basis and
bids for the |
|
| sale
of Ravi Rayon Limited were called on 21st August, 1997. However, the efforts
were not |
|
| successful
and no bidder came forward for purchase of the Company. Subsequently Cabinet |
|
| Committee
on Privatization (CCOP) deliberated upon the matter and decided that the
Company be |
|
| closed
down and all the employees be offered GHS/VSS. The necessary funds for this
purpose |
|
| were
released in 1st week of October 1997 and 1411 employees out of 1552 have been
relieved |
|
| under
the scheme offered by the Government. Privatization Commission now intends
tore-offer |
|
| the
unit for sale without the major burden of heavy overheads and financial
charges. Subsequent |
|
| to
disconnection of Sui Gas supplies by Sui Northern Gas Pipelines Ltd. on
account of non- |
|
| payment
of bills most of the production activities were suspended in June 1997 and
since July |
|
| 1997
the plant is totally closed down. |
|
|
| ACKNOWLEDGMENT |
|
| We
are grateful to Federal Chemical & Ceramics Corporation Ltd., Ministry of
Industries & |
|
| Production
and Privatization Commission, for providing necessary support and extending
every |
|
| help
in guiding the affairs of the Company. Their valuable guidance not only gave
us moral support |
|
| to
tackle day to day problems but also enabled us to a great extent in dealing
with various |
|
| difficulties.
The Labour Management Relations remained very cordial during the year. We
wish to |
|
| place
on record appreciations for the work done by the executives, staff and
workers. Without the |
|
| keen
sense of involvement and complete devotion to duties displayed by all
employees, struggling |
|
| against
the current crises would not have been possible. |
|
|
| AUDITORS |
|
| The
present auditors M/s. Ford, Rhodes, Robson, Morrow, retire and being eligible
offer |
|
| themselves
for re-appointment as auditors for the year 1997-98. |
|
|
| PATTERN
OF SHAREHOLDERS |
|
| The
pattern of share holding is annexed. |
|
|
| PATTERN
OF SHARE HOLDING AS ON JUNE 30, 1997 |
|
|
|
SHAREHOLDING |
|
TOTAL |
|
|
SHARE HOLDERS |
FROM |
TO |
SHARES HELD |
|
|
1,990 |
1 |
100 |
114,793 |
|
|
1,247 |
101 |
500 |
346,278 |
|
|
397 |
501 |
1,000 |
337,030 |
|
|
72 |
1,001 |
5,000 |
176,098 |
|
|
42 |
5,001 |
10,000 |
372,538 |
|
|
1 |
10,001 |
15,000 |
14,750 |
|
|
8 |
15,001 |
20,000 |
141,640 |
|
|
4 |
25,001 |
30,000 |
114,900 |
|
|
1 |
35,001 |
40,000 |
38,900 |
|
|
1 |
70,001 |
75.00 |
73,800 |
|
|
1 |
130,001 |
1,35,000 |
135,000 |
|
|
1 |
195,001 |
200,000 |
198,140 |
|
|
1 |
230,001 |
235,000 |
231,039 |
|
|
1 |
425,001 |
430,000 |
427,050 |
|
|
1 |
945,001 |
950,000 |
948,710 |
|
|
1 |
1,905,001 |
1,910,000 |
1,910,000 |
|
|
1 |
37,75,001 |
37,80,000 |
3,776,894 |
|
|
---------- |
---------- |
---------- |
---------- |
|
|
3,770 |
|
9,357,560 |
|
|
========== |
========== |
========== |
========== |
|
|
|
|
| CATEGORIES
OF SHAREHOLDERS |
|
|
| PARTICULARS |
|
NO. OF |
|
|
SHARE HOLDERS |
SHARES HELD |
PERCENTAGE |
|
|
| Individuals |
|
3,738 |
2,657,326 |
28.40% |
|
| Investment
Companies |
5 |
249,849 |
2.67% |
|
| Insurance
Companies |
8 |
213,950 |
2.29% |
|
| Financial
Institutions |
16 |
2,451,140 |
26.19% |
|
| * Corporations (FCCCL) |
1 |
3,776,894 |
40.36% |
|
| Corporate
Law Authority |
1 |
1 |
0.00% |
|
| ** Others |
|
1 |
8,400 |
0.09% |
|
| (Abandoned
Properties) |
---------- |
---------- |
---------- |
|
|
3,770 |
9,357,560 |
100.00% |
|
|
========== |
========== |
========== |
|
|
|
|
| *
Federal Chemical & Ceramics Corporation Ltd. |
|
| **
Administrator, Abandoned Properties, |
|
| Government
of Pakistan, Rawalpindi. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed Balance Sheet of Ravi Rayon 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: |
|
|
| The
financial statements have been prepared on a going concern basis. This basis
may not be |
|
| appropriate
because accumulated losses exceed the equity by Rs. (thousands) 541,026, and
the |
|
| company
has shut down its manufacturing operations as explained in Note 1 to the
financial |
|
| statements.
These factors indicate that there is uncertainty regarding the continuation
of the |
|
| company
as a going concern. |
|
|
| Except
for the effects of the matters set out in the above paragraph, 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 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 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 ad 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 sources and application of funds for the year then ended; and |
|
|
| (d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
|
|
FORD, RHODES, ROBSON,
MORROW |
|
| Lahore:
February 26, 1998 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
|
|
Notes |
1997 |
1996 |
|
|
(Rupees in thousands) |
|
| SHARE
CAPITAL AND RESERVES |
|
| Share Capital |
|
| Authorised |
|
| 15,000,000
ordinary shares or Rs. 10 each |
|
150,000 |
150,000 |
|
|
=========== |
=========== |
|
| Issued,
subscribed and paid up |
|
4 |
93,576 |
93,576 |
|
| ACCUMULATED
LOSS |
|
|
(634,602) |
(363,788) |
|
|
|
|
---------- |
---------- |
|
|
|
|
(541,026) |
(270,212) |
|
| LONG
TERM LOANS |
|
5 |
144,674 |
144,674 |
|
| APPLICATION
MONEY FOR PARTICIPATION |
|
|
|
| TERM
CERTIFICATES |
|
6 |
23,368 |
23,368 |
|
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
| TO
FINANCE LEASE |
|
7 |
198 |
495 |
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
8 |
12,000 |
12,000 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Long
Term Loans :- |
|
|
|
| Current
maturity |
|
5 |
13,950 |
13,950 |
|
| Overdue |
|
5 |
13,950 |
13,950 |
|
| Current
maturity and overdue of liabilities against |
|
|
| assets
subject to finance lease |
|
7 |
304 |
309 |
|
| Short
term loans and running finances |
|
9 |
47,519 |
48,533 |
|
| Creditors,
accruals and other liabilities |
10 |
630,239 |
427,693 |
|
| Provisions
for Sales-tax |
|
|
31,494 |
2,329 |
|
|
|
---------- |
---------- |
|
|
|
723,506 |
492,814 |
|
|
|
|
| CONTINGENCIES
AND COMMITMENTS |
|
29 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
362,720 |
403,139 |
|
|
========== |
========== |
|
| Auditors'
Report of even date is attached hereto. |
|
|
| FIXED
ASSETS - TANGIBLE |
|
|
| Operating
assets |
|
11 |
101,372 |
109,903 |
|
|
|
|
| LONG TERM INVESTMENTS |
|
12 |
465 |
465 |
|
| LONG TERM LOANS AND ADVANCES |
|
13 |
63,793 |
63,793 |
|
| LONG TERM DEPOSITS |
|
14 |
282 |
10,293 |
|
| CURRENT
ASSETS |
|
|
|
|
|
|
| Stores,
spares and loose tools |
|
15 |
36,917 |
45,330 |
|
| Stock-in-trade |
|
16 |
71,107 |
94,555 |
|
| Trade debtors |
|
17 |
27,402 |
31,861 |
|
| Loans
and advances |
|
18 |
27,871 |
20,911 |
|
| Deposits
and prepayments |
|
19 |
24,302 |
13,153 |
|
| Income
tax refundable |
|
|
9,896 |
5,359 |
|
| Cash
and bank balances |
|
20 |
(687) |
7,516 |
|
|
|
---------- |
---------- |
|
|
|
196,808 |
218,685 |
|
|
---------- |
---------- |
|
|
362,720 |
403,139 |
|
|
========== |
========== |
|
| The
attached notes form an integral part of these accounts. |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
Notes |
1997 |
1996 |
|
|
(Rupees in thousands) |
|
|
|
|
| NET SALES |
|
21 |
464,918 |
589,605 |
|
| COST OF SALES |
|
22 |
636,313 |
682,599 |
|
|
|
---------- |
---------- |
|
| GROSS LOSS |
|
|
(171,395) |
(92,994) |
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative,
selling and general |
|
23 |
41,166 |
46,513 |
|
| Financial |
|
24 |
42,496 |
6,312 |
|
|
---------- |
---------- |
|
|
83,662 |
52,825 |
|
|
---------- |
---------- |
|
| OPERATING
LOSS |
|
|
(255,057) |
(145,819) |
|
| OTHER
INCOME/CHARGES |
|
25 |
(13,432) |
4,649 |
|
|
|
---------- |
---------- |
|
| LOSS
BEFORE TAXATION |
|
|
(268,489) |
(141,170) |
|
|
|
|
|
| TAXATION |
|
26 |
(2,325) |
(2,948) |
|
|
|
---------- |
---------- |
|
| LOSS
AFTER TAXATION |
|
|
(270,814) |
(144,118) |
|
| ACCUMULATED
LOSS BROUGHT FORWARD |
|
|
(363,788) |
(219,670) |
|
|
|
---------- |
---------- |
|
| ACCUMULATED
LOSS CARRIED FORWARD |
|
|
(634,602) |
(363,788) |
|
|
========== |
========== |
|
| The
attached notes form an integral part of these accounts. |
|
|
|
|
| STATEMENT
OF SOURCES AND APPLICATION OF FUNDS |
|
| (CASH
FLOW) |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
|
1997 |
1996 |
|
|
(Rupees in thousands) |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Net
(Loss) after taxation |
|
(270,814) |
(144,118) |
|
| Adjustment
for: |
|
|
|
| Depreciation |
|
11,164 |
12,204 |
|
| Profit
on sale of Fixed Assets |
|
(99) |
(713) |
|
| Book
value of Fixed Assets written off |
|
- |
311 |
|
| Provision
against Spares in Transit |
|
10,783 |
- |
|
| Provision
against Raw Material in Transit |
|
4,892 |
- |
|
|
---------- |
---------- |
|
|
26,740 |
11,802 |
|
|
---------- |
---------- |
|
|
(244,074) |
(132,316) |
|
| (Increase)/Decrease
in Current Assets |
|
|
|
| Stores,
Spares & Loose Tools |
|
(2,370) |
2,156 |
|
| Stock
in Trade |
|
18,556 |
8,312 |
|
| Trade Debtors |
|
4,459 |
12,592 |
|
| Loans
and Advances |
|
(6,960) |
(6,455) |
|
| Deposits
and Prepayments |
|
515 |
(8,830) |
|
| Income
Tax Refundable |
|
(4,537) |
(5,052) |
|
|
---------- |
---------- |
|
|
9,663 |
2,723 |
|
| Increase/(Decrease)
in Current Liabilities |
|
| Short
Term Loans |
|
(1,014) |
4,375 |
|
| Creditors,
Accruals and other Liabilities |
|
202,546 |
87,278 |
|
| Provision
for Taxes |
|
29,165 |
(3,447) |
|
|
---------- |
---------- |
|
|
230,697 |
88,206 |
|
|
---------- |
---------- |
|
| NET
CASH FROM OPERATING ACTIVITIES |
|
(3,714) |
(41,387) |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Purchase
of Fixed Assets |
|
(3,166) |
(7,162) |
|
| Sale
proceeds from disposal of Fixed Assets |
|
632 |
1,111 |
|
| Long
Term Loans and Advances |
|
- |
(15,278) |
|
| Long
Term Deposits |
|
(1,653) |
7,523 |
|
|
---------- |
---------- |
|
| NET
CASH FROM INVESTING ACTIVITIES |
|
(4,187) |
(13,806) |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Long
term loans |
|
- |
144,674 |
|
| Long
term loans - overdue |
|
- |
(85,306) |
|
| Proceeds
from obligation under Finance Lease |
|
- |
379 |
|
| Repayment
of obligation under Finance Lease |
|
(302) |
(256) |
|
|
---------- |
---------- |
|
| NET
CASH FROM FINANCING ACTIVITIES |
|
(302) |
59,491 |
|
| NET
INCREASE/(DECREASE) IN CASH |
|
---------- |
---------- |
|
| AND
BANK BALANCE |
|
(8,203) |
4,298 |
|
| CASH
AND BANK BALANCES |
|
|
|
| AT
THE BEGINNING OF THE YEAR |
|
7,516 |
3,218 |
|
|
---------- |
---------- |
|
| CASH
AND BANK BALANCE |
|
|
|
| AT
THE END OF THE YEAR |
|
(687) |
7,516 |
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
| The
Company is a public limited company quoted on the stock exchanges. The
majority of its |
|
| share
capital is held by the Federal Government through Federal Chemical and
Ceramics |
|
| Corporation
Limited (FCCCL) and certain financial institutions owned by the Government, |
|
|
| The
Company is engaged in manufacture of Acetate Rayon Yarn. 'Major by-products
are |
|
| Alcohol,
Acetic Acid, Acetone, Acetic Anhydride, Bleached Linters and Yeast. Due to
the |
|
| heavy
losses the management of the Company has shut down its manufacturing
operations |
|
| subsequent
to the year end. The management has announced a Golden Hand Shake |
|
| Scheme
after the year end for all of its employees on the instructions of the
Government of |
|
| Pakistan
who will provide the necessary funds for this purpose. |
|
|
| 2.
COMPLIANCE WITH - I A S |
|
|
| These
accounts comply with International Accounting Standards, wherever, applicable
in all |
|
| material
aspects. |
|
|
| 3.
ACCOUNTING POLICIES |
|
| (i)
Revenue recognition - |
|
| Sales
are recorded upon delivery of goods to the carrier. |
|
| (ii)
Fixed assets - |
|
| Company
owned fixed assets |
|
| Fixed
assets are stated at historical cost less accumulated depreciation, except
freehold |
|
| land
and capital work-in-progress which are stated at cost. Depreciation is
calculated at |
|
| rates
mentioned in Note-11 according to the reducing balance method. Acquisitions |
|
| during
the year are depreciated for a full year irrespective of the date of purchase
and |
|
| no
depreciation is charged on assets in the year of their disposal. |
|
| All
repairs and maintenance expenditure is charged to income currently and
material |
|
| betterments
are capitalised. |
|
| Profits
or losses on disposal of fixed assets are recognized as income or expenses |
|
| respectively
in the year of occurrence. |
|
|
| Leased assets |
|
| Leased
assets held under finance lease are stated at cost less depreciation at the
rates |
|
| and
basis applicable to Company owned assets. The outstanding obligations under
the |
|
| lease
less finance charges allocated to future periods are shown as a liability.
The |
|
| financial
charges are calculated at the interest rates implicit in the lease and are |
|
| charged
to the profit and loss account. |
|
|
| (iii)
Investments |
|
| Investments
are stated at cost. Provision for diminution in value of investments is |
|
| deducted
from cost wherever applicable. |
|
|
| iv)
Stores, spares and stock-in-trade |
|
| Stores,
tools and engineering stores |
- at moving average cost. |
|
| Raw materials |
|
- at moving average cost. |
|
| Work-in-process |
|
- at annual average cost of
manufacture. |
|
| Finished
goods |
|
- at annual average cost of
manufacture. |
|
| Stores
and raw material in transit |
- at cost. |
|
| Other
inventories |
|
- at moving average cost. |
|
|
| Cost
of manufacture denotes factory cost of production without addition of |
|
| administrative
and other overheads. |
|
|
| (v)
Employees severance benefits - |
|
