| Rupali Polyester Limited |
|
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|
| Annual
Report 1997 |
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| Contents |
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| Financial
Highlights |
|
| Directors'
Report to the Shareholders |
|
| Notice
of Meeting |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
|
|
| CORPORATE
DATA |
|
|
|
| Board
of Directors |
|
|
| Jafferali
M. Feerasta |
|
| Chairman |
|
|
| Badruddin
J. Feerasta |
|
| Chief
Executive |
|
|
| Muhammad
Rashid Zahir |
|
| Amiruddin
J. Feerasta |
|
| Mohammad
Ali H. Sayani |
|
| Nooruddin
B. Feerasta (Sr.) |
|
| Abdul
Hayee |
|
|
| Secretary |
|
| Fateh
Mohammad Khera |
|
|
| Bankers |
|
| ABN
AMRO bank N.V. |
|
| Allied
Bank of Pakistan Limited |
|
| American
Express Bank Limited |
|
| ANZ
Grindlays Bank Limited |
|
| Citibank
N.A. |
|
| Credit
Agricole Indosuez |
|
| Deutsche
Ban |
|
| Emirates
Bank International Limited |
|
| Faysal
Bank Limited |
|
| Habib
Bank AG Zurich |
|
| Habib
Bank Limited |
|
| Metorpolitan
Bank Limited |
|
| Muslim
Bank of Pakistan |
|
| Societe
Generale, The French and |
|
| International
Bank |
|
| Soneri
Bank Limited |
|
| Standard
Chartered bank |
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| United
Bank Limited |
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|
| Auditors |
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| Qavi & Co. |
|
| Chartered
Accountants |
|
|
| Registered
Office |
|
| 7th
Floor, Gul Tower |
|
| I.I.
Chundrigar Road, |
|
| Karachi,
Pakistan. |
|
|
| Plant |
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| 30.2
Kilometer |
|
| Lahore-Sheikhupura
Road, |
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| Sheikhupura,
Pakistan |
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|
| PROFILE |
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|
|
| Rupali
Polyester Limited, a renowned and prestigious name in the Corporate Sector,
owns and operates |
|
| composite
facilities for manufacture of polyester fiber and filament yarn. It is the
largest producer of |
|
| polyester
filament yarn and a leader in staple fiber in Pakistan. The initial plant was
set up with a |
|
| capital
outlay of Rs. 150 million which has been now increased to Rs. 2,500 million. |
|
|
| The
products manufactured by the Company were |
|
| previously
imported mainly from Japan, Taiwan & |
|
| Korea
but the Company through its own research |
|
| and
innovative efforts has substituted them with |
|
| indigenous
products. |
|
|
| As
a step towards modernization and capacity |
|
| augmentation,
the Company has planned to expand |
|
| its
existing manufacturing facilities by installing |
|
| twisters
and winders for product diversification, for |
|
| which
the required infra-structure and ancillary |
|
| facilities
have been conceived. The plant and |
|
| machinery
required is being imported from Italy. The total project cost is expected to
be around P~:'~ 1.~: |
|
| Rupees
147.228 million. The new expanded facilities are expected to be commissioned
by April 1951 ".'. |
|
|
| The
philosophy of the Company is to grow on the strength of quality and
reliability. With this prime |
|
| objective
it is maintaining a full-fledged and well-established Research &
Development Centre for |
|
| standard
maintenance and innovative improvements in its products. Products and
services offered by |
|
| the
Company are acknowledged by the customers to be of the highest quality and
the Company is a |
|
| most
reliable one. The end products are, therefore, the results of extensively
high quality processes, so |
|
| as
to Upkeep the image of the Company developed in the minds of customers. That
is why the Rupali |
|
| products
are the first preference of customers. Rupali filament yarn is exclusively
liked by local weavers. |
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| Its
finest quality fiber is also excellently processed under local conditions.
The Company gives high |
|
| priority
to customer satisfaction and provides after sales services also to attend
their problems at their |
|
| door
steps. |
|
|
| AL
HAMDO LILLAH, the Company enjoys a |
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| prestige
and reputation among the industrial sector. |
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| It
is quoted on all the three Stock Exchanges of the |
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|
· |
|
|
| country
and in the present depleted stock market, |
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| the
Rupali share still holds a premium status. It also |
|
| stands
amongst major national exchequer |
|
|
|
|
|
|
| contributors
for stabilization of national economy. |
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| FINANCIAL
HIGHLIGHTS |
|
| (Rupees
million) |
|
|
1993 |
|
1994 1995 |
1996 |
1997 |
|
| Sales
(Net) |
|
1,812.64 |
1,738.50 |
2,669.622 |
2,803.930 |
2,317.735 |
|
| Profit
before Tax |
|
343.529 |
235.813 |
552.738 |
235.367 |
206.705 |
|
| Profit
after Tax |
|
212.596 |
147.715 |
354.388 |
148.187 |
135.170 |
|
| Income Tax |
|
130.933 |
88.098 |
198.350 |
87.180 |
71.535 |
|
|
Sales Tax & Excise Duty 196.228 |
243.641 |
380.143 |
412.726 |
434.618 |
|
| Gross
assets employed |
|
1718.820 |
1889.898 |
2318.420 |
2758.752 |
2459.976 |
|
| (excluding
capital work in progress) |
|
|
| Shareholders
equity |
|
1097.010 |
1066.976 |
1319.158 |
1365.139 |
1398.103 |
|
| Long
term loan |
|
63.275 |
33.745 |
4.216 |
0.000 |
0.000 |
|
|
|
|
| Debt/Equity
ratio |
|
6:94 |
3:97 |
0:100 |
0:100 |
0:100 |
|
| Earning
per share before tax (Rs.) |
11.60 |
7.96 |
16.22 |
6.91 |
6.07 |
|
| Dividend/Bonus
(percentage) |
|
60 |
15 |
30 |
30 |
30 |
|
|
(Bonus) |
|
|
| Production
volume (M. Tons) |
|
31,008 |
29,720 |
33,068 |
31,043 |
30,532 |
|
| Number
of employees |
|
1,300 |
1,347 |
1,380 |
1,375 |
1,216 |
|
|
|
| DIRECTORS
REPORT TO |
|
| THE
SHAREHOLDERS |
|
|
| The
Directors of the Company feel immense pleasure to welcome you to the
seventeenth annum general |
|
| meeting
and present the annual report and audited accounts of the Company for the
year |
|
| 30 June 1997. |
|
|
| Financial
Results |
|
|
|
Rs. in '000 |
|
|
|
|
| Net
profit before taxation |
206,705 |
|
|
|
| Provision
for taxation |
71,535 |
|
|
---------- |
|
| Profit
after taxation |
|
135,170 |
|
| Unappropriated
profit |
|
|
| brought
forward |
|
9,964 |
|
| Profit
available for |
|
---------- |
|
| appropriation |
|
145,134 |
|
| Appropriations: |
|
|
| Proposed
final cash |
|
| dividend
@ 30% |
|
102,206 |
|
|
|
| Transfer
to general reserve |
40,000 |
|
|
---------- |
|
|
|
142,206 |
|
|
---------- |
|
| Balance
carried forward |
2,928 |
|
|
========= |
|
| Earning
per share before |
|
| taxation |
|
Rs. 6,07 |
|
|
|
========= |
|
| Overview |
|
| The
polyester fiber and filament industry still remains entangled in almost the
same difficult situation |
|
| as
it was facing during the previous years. The major and the most important
factor of which is the |
|
| unfair
competition between the staple fiber and filament yarn locally produced vs
the imported polyester |
|
| staple
fiber and filament yarn which is directly 'dumped' into the Pakistan market
by the foreign |
|
| producers.
Additionally, due to much increased indigenous production capacities there is
an over- |
|
| production
which has made the demand-supply ratio imbalance. Under this situation, the
local |
|
| producers
in order to remain in the market inevitably have to make unfavourable price
adjustments, |
|
| sometime
even below the break-even point, |
|
| consequentially
putting adverse strain on revenues and |
|
| profitability. |
|
|
|
|
| The
financial results of your Company for the year ended |
|
| 30
June 1997 reflect a decline in operating as well as net |
|
| profits
as compared to last year. The pre-tax profit of |
|
| Rs.
206.705 million is lower by 12% as compared to |
|
| preceding
year's profit of Rs. 235.367 million. |
|
| The
after-tax profit at Rs. 135.170 million is down by 9% |
|
| from
the previous year's net profit of Rs. 148.187 million. |
|
|
| The
deterioration in profitability is directly related to the |
|
| downward
trend in the sales prices of staple fiber and |
|
| filament
yarn which were down by 21% and 19% |
|
| respectively
from the last year due to bad market which |
|
| is
in over-supply. The sales volume of chips although |
|
| increased
by 36'Y,, over the previous year's sales, but this |
|
| increase
could not absorb the impact of reduced sales |
|
| price,
thus lowering the overall operating profit. |
|
|
| Sales
revenues for the year under review at Rs. 2,317.735 |
|
| million
remained 17.33 % lower from Rs. 2,803.930 million |
|
| in
1996. This reduction is also due to the depressed sales |
|
| prices
as explained in the above paragraph. Operating expenses for the year
increased to Rs. 168.29~, |
|
| million
from Rs. 114.943 million in 1996 owing to inflationary impact on several
items. The escalation |
|
| in
production cost could not be passed on to the customers due to massive
dumping whereby the |
|
| directly
imported fiber and filament yarn remained abundantly available in the market
at a cheaper |
|
| price,
downsizing the demand of locally produced fiber and yarn. It is expected that
the present |
|
| Government
will take cognizance of certain anomalies in definite terms and hopefully
such phenomenon |
|
| of
dumping shall also be addressed by the Government for its permanent solution
to eradicate unfair |
|
| bases
for such unjustified competition. |
|
|
| The
Company also earned other |
|
| income
of Rs. 50.373 million as |
|
| compared
to Rs. 30.098 million in |
|
| 1996,
mainly on account of mark-up |
|
| received
on long term investment in |
|
| Rupafab
Limited - an associated |
|
|
| undertaking. |
|
|
| Expansion |
|
|
| Your Directors have pleasure to |
|
| report that as per our plan for |
|
| modernization
and capacity |
|
| augmentation of existing manu- |
|
| facturing/processing
facilities at |
|
| plant
site, and taking stance of increasing market demand and in order to introduce
diversification in |
|
| our
products, twisting machines are being installed to enhance the company's yarn
making capacity to |
|
| produce
high twisted yarn. The preliminary study for this expansion has been
conducted and the |
|
| required
infra-structure as well as ancillary facilities have been conceived. Orders
for the import of |
|
| required
machinery have been placed with world's renowned suppliers in this type of
machinery in |
|
| Italy.
Total project cost is expected to be around Pak Rupees 147.228 million and
will be completed by |
|
| April
1998. The project will be financed by the ABN AMRO Bank N.V. as long term
capital financing |
|
| arrangement. |
|
|
| Board
of Directors |
|
|
| During
the year under review, the composition of the Board remained unchanged.
However, as the |
|
| term
of existing elected directors is expiring, election of directors for fresh
term of three years will be |
|
| held
in the forthcoming annual general meeting. The number of directors fixed by
the Board is |
|
| seven (7). |
|
|
| Future
Outlook |
|
|
| If
visualized and adjudged in the light of the |
|
| circumstances
currently prevailing in the staple fiber |
|
| and
filament yarn industry as well as those problems, ~ |
|
| which
in fact, once cropped up in previous years but |
|
| remained
uneradicated and are still persisting as |
|
| threat
to the industry like dumping and higher rate |
|
| of
duties/levies on raw material, the future outlook |
|
| for
the industry is not very encouraging. |
|
|
| The
excessively high increase in production capacities |
|
| in
the country is also equally alarming for the |
|
| polyester
fiber industry. Due to over-production, the |
|
| supply into the
market is far in excess of demand |
|
| creating
a broadly competitive situation which |
|
| ultimately may
make it inevitable for the producers |
|
| to
reduce sale prices and the profitability will be |
|
| further
slashed. Similarly, in an eventuality of any |
|
| upward
fluctuation in prices of imported raw |
|
| materials,
the resultant impact would not be |
|
| absorbed
in the shape of sale prices increase because |
|
| of
competition and thus the profitability trend is |
|
| likely
to further aggravate proportionately. |
|
| Notwithstanding
this fact, the recent sudden rupee |
|
| devaluation
by 8.7% will have direct impact on |
|
| import
of raw material prices which will have an |
|
| ultimate
effect on the product prices. |
|
|
| The
Company believes in diversification and expansion of its product lines based
on changed consumer |
|
| behaviour.
According to the strenuous market research undertaken by the Company's
research and |
|
| development
centre, it was revealed that the consumer behaviour has created additional
supply-demand |
|
| gap
for the value added products of polyester yarn. The Company has, therefore,
decided to expand |
|
| its
activities within the existing production facilities, initially by installing
twisting machines at a total |
|
| capital
cost of Rs. 147.228 million. The project is expected to be commissioned in
April 1998. As per |
|
| next
plan, the Company is also examining the viability |
|
| of
expanding its Air-Textured Yarn facilities. With this |
|
| diversification
in our products, for which the demand |
|
| already
exists, we hope to increase our sales revenues |
|
| at
comparatively better prices attracting favourable
. |
| impact
on our profitability. |
|
|
| Dividend |
|
|
| Your
Directors are pleased to propose a dividend @ |
|
| 30%
i.e. Rs. 3.00 per share of Rs. 10/- each for the |
|
| year
ended 30 June 1997 |
|
|
| Auditors |
|
| M/s.
Qavi & Co. Chartered Accountants retire and |
|
| being
eligible offer themselves for re-appointment. |
|
|
| Pattern
of Shareholding |
|
| A
statement showing the pattern of shareholding in the Company as at 30 June
1997 as required und, ~, |
|
| Section
236 of the Companies Ordinance, 1984 appears on page 28. |
|
|
| Labor
Management Relations |
|
| Like
previous years, usual cordial relations between the management and labor were
maintained |
|
| during
this year too and we wish to place on record our appreciation of the
dedication and hard work |
|
| demonstrated
by employees of the Company of each level for progress and growth of the
Company. |
|
|
| A
Note of Gratitude |
|
| The
Directors also wish to place on record their appreciation for the cooperation
extended by the |
|
| Ministries
of Finance, Industries, Commerce and Communication. We also owe our thanks
for the |
|
| cooperation
afforded by the Departments of Customs, Central Excise and Government of the
Punjab. |
|
| We
appreciate the patronage and confidence placed in the Company by the
Development Financial |
|
| Institutions
and Commercial Banks. We are also thankful to our valued customers and expect
more |
|
| pleasant
business relationship with them. To our shareholders we are grateful for
their stake and faith |
|
| in
the Company. Rupali Polyester Limited greatly values their trust. |
|
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
|
| Notice
is hereby given that the 17th Annual General Meeting of the Company will be
held at Karachi |
|
| Sheraton
Hotel, Karachi on Saturday 29 November 1997 at 11:30 a.m. to transact the
following business: |
|
|
| Ordinary
Business: |
|
|
| 1.
To confirm the minutes of the last Annual General Meeting held on 21 December
1996. |
|
|
| 2.
To receive, consider and adopt audited accounts together with the Directors
and Auditor |
|
| Reports
thereon for the year ended 30 June 1997 |
|
|
| 3.
To elect Seven (7) Directors of the Company in accordance with the provisions
of Section 178 of |
|
| the
Companies Ordinance, 1984 for a period of three (3) years commencing from |
|
| 22
December 1997. |
|
|
| 4.
To approve payment of final dividend @ 30% i.e. Rs. 3.00 per share for the
year ended 30 June 1997 |
|
| as
recommended by the Board of Directors. |
|
|
| 5.
To appoint Auditors of the Company and to fix their remuneration. |
|
|
| 6.
To transact such other ordinary business as may be placed before the meeting
with the permission |
|
| of
the Chair. |
|
|
| Special
Business: |
|
|
| 7.
To approve the remuneration payable to the fulltime working Directors
including the Chief |
|
| Executive
of the Company. |
|
|
| Statement
under Section 160 of the Companies Ordinance, 1984 pertaining to the Special
Business |
|
| alongwith
the resolutions proposed to be passed is being sent to the shareholders with
the notice. |
|
|
| Notes: |
|
|
| 1.
In accordance with Section 178 (1) of the Companies Ordinance, 1984 the
number of Directors t~, |
|
| be
elected 1LaS been fixed as seven (7). The retiring Directors, namely Mr.
Jafferali M. Feerasta |
|
| Mr.
Badruddin J. Feerasta, Mr. Muhammad Rashid Zahir, Mr. Mohammad Ali H. Sayani, |
|
| Mr.
Amiruddin J. Feerasta, Mr. Nooruddin B. Feerasta (Sr.) & Mr. Abdul Hayee,
being eligible, |
|
| have
notified their intention to offer themselves for re-election as Directors. |
|
|
| 2.
In terms of Section 178 (3) of the Companies Ordinance, 1984 any person who
seeks to contest an |
|
| election
to the office of Director, whether he/she is a retiring Director or
otherwise, shall file with |
|
| the
Company, not later than fourteen (14) days before the date of this meeting, a
notice of |
|
| his/her
intention to offer himself/herself for election as a Director. |
|
|
| 3.
Share transfer books of the Company will remain closed from 20 November 1997
to 29 November |
|
| 1997
(both days inclusive) for determining the entitlement of Dividend. The
members whose names |
|
| appear
in the register of members as at the close of business on 19 November 1997
will qualify for |
|
| payment
of Dividend. |
|
|
| 4.
A member entitled to attend and vote at this meeting may appoint another
member as his/her |
|
| proxy
to attend and vote. Proxies in order to be effective must be received at the
registered office |
|
| of
the Company not less than 48 hours before the time of holding the meeting.
Proxy form is |
|
| enclosed
herewith. |
|
|
| 5.
Shareholders are requested to notify any change in their addresses
immediately. |
|
|
| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE 1984 |
|
|
| This
statement sets out the material facts concerning the special business to be
transacted at the |
|
| 17th
Annual General Meeting of Rupali Polyester Limited to be held on 29 November
1997. |
|
|
| Subject
to re-election of working Directors and subsequent re-appointment of tile
Chief Executive, |
|
| approval
of the shareholders will be sought for tile remuneration payable to them in
accordance with |
|
| their
terms and conditions of service. For this purpose it is intended to propose
that the following |
|
| resolution
be passed as an Ordinary Resolution, namely: |
|
|
| "RESOLVED
THAT the Company hereby approves and authorises the holding
of offices of profit |
|
| and
payment as remuneration consisting of salary and allowances to Mr. Badruddin
J. Feerasta, Chief |
|
| Executive,
Mr. Nooruddin B. Feerasta (Sr.), Executive Director and Mr. Abdul Hayee,
Finance Director |
|
| not
exceeding Rupees 9.0 million per annum, exclusive of perquisites and other
benefits to which they |
|
| are
entitled under their terms of employment. |
|
|
| FURTHER
RESOLVED THAT in the event of any of the aforesaid offices
of profit failing vacant, the |
|
| approval
hereby given shall be equally applicable to any other person appointed to
fill such vacancy. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBER |
|
|
| We
have audited the annexed Balance Sheet of RUPAL1 POLYESTER LIMITED as at June
30, 1997 a],,~ |
|
| 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
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 the accounting policies
consistently |
|
| applied; |
|
|
| ii)
the expenditure incurred during the year was for the purposes of the
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 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 June 30,1997 and of the profit and 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. |
|
|
Qavi & Co. |
|
| Karachi:
18 October 1997 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, |
|
|
|
|
Amount in Rs. '000 |
|
|
Note |
1997 |
1996 |
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorised
Capital |
|
| 35,000,000
Ordinary Shares of Rs. 10 each |
|
350,000 |
350,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed & Paid-up Capital |
|
3 |
340,685 |
340,685 |
|
| Reserves |
|
4 |
1,054,490 |
1,014,490 |
|
| Unappropriated
Profit |
|
|
2,928 |
9,964 |
|
|
|
---------- |
---------- |
|
|
|
1,398,103 |
1,365,139 |
|
| DEFERRED
LIABILITIES |
|
|
|
| Provision
For Staff Gratuity |
|
19,791 |
14,874 |
|
|
|
| CURRENT
LIABILITIES |
|
|
| Current
Maturity of Redeemable |
|
| Capital |
|
5 |
-- |
4,216 |
|
|
| Short
Term Running Finance |
|
| Utilized
Under Mark-up |
|
| Arrangements |
|
6 |
570,080 |
407,760 |
|
|
| Advances,
Deposits, Retentions |
|
| &
Other Payables |
|
7 |
107,944 |
96,497 |
|
|
|
|
| Creditors
& Accrued Expenses |
|
8 |
207,486 |
697,279 |
|
| Provision
For Taxation |
|
94,019 |
91,336 |
|
| Proposed
Dividend |
|
102,206 |
102,206 |
|
|
---------- |
---------- |
|
|
|
1,081,735 |
1,399,294 |
|
|
| CONTINGENCIES
& COMMITMENTS |
|
9 |
-- |
-- |
|
|
|
---------- |
---------- |
|
|
|
2,499,629 |
2,779,307 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts |
|
|
|
| FIXED
CAPITAL EXPENDITURE |
|
| Operating
Fixed Assets |
|
10 |
557,985 |
600,485 |
|
| Capital Work in Progress |
|
11 |
39,653 |
20,555 |
|
|
597,638 |
621,040 |
|
|
| LONG
TERM LOANS |
|
12 |
300,763 |
2,505 |
|
| LONG
TERM DEPOSITS |
|
|
|
| PREPAYMENTS |
|
13 |
5,039 |
7,542 |
|
| CURRENT
ASSETS |
|
|
| Stores,
Spares & Loose Tools |
|
14 |
117,069 |
95,619 |
|
|
15 |
311,637 |
701,577 |
|
| Trade
Debts |
|
16 |
522,191 |
397,532 |
|
| Loans,
Advances, Deposits, Prepayments & |
|
| Other
Receivables |
|
17 |
452,545 |
837,848 |
|
| Cash
and Bank 13alances |
|
18 |
192,747 |
115,644 |
