| WAZIR ALI INDUSTRIES LIMITED |
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
|
| BOARD
OF DIRECTORS |
|
| SYED
WAJID ALl |
|
Chairman |
|
| SYED
ASAD ALl |
|
Managing Director |
|
| SYED
YAWAR ALl |
|
| SYED
TARIQ ALl |
|
| SHAMSHAD
AHMAD |
|
| BEHRAM HASAN |
|
| MUSHTAQ
H. KHWAJA |
|
|
| SECRETARY |
|
| A.
JABBAR~GHORI |
|
|
| AUDITORS |
|
| TASEER
HADI KHALID & Co. |
|
| CHARTERED
ACCOUNTANTS |
|
| KARACHI |
|
|
| BANKERS |
|
| MUSLIM
COMMERCIAL BANK LIMITED |
|
| NATIONAL
DEVELOPMENT FINANCE CORPORATION |
|
| CITI
BANK N. A. |
|
|
| REGISTERED
OFFICE |
|
| KANDAWALA
BUILDING |
|
| M
A. JINNAH ROAD |
|
| KARACHI |
|
|
| FACTORIES |
|
| HALlROAD |
|
| HYDERABAD |
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|
|
| TABLE
OF CONTENTS |
|
|
| NOTICE
OF MEETING |
|
| DIRECTORS'
REPORT |
|
| TO
THE MEMBERS |
|
| AUDITORS'
REPORT |
|
| TO
THE MEMBERS |
|
| BALANCE
SHEET. |
|
| PROFIT
& LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES |
|
| IN
FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN OF |
|
| SHAREHOLDING |
|
|
|
|
| NOTICE
OF MEETING |
|
|
| NOTICE
IS HEREBY GIVEN that the 45th Annual General Meeting of the shareholders of
Wazir Ali |
|
| Industries
Limited will be held on Wednesday, 24th December 1997 at 08:30 A.M. at Hotel
Beach Luxury, |
|
| Karachi
to transact the following business: |
|
|
| A.
ORDINARY BUSINESS |
|
|
|
|
| 1.
To confirm the minutes of the Extra Ordinary General Meeting of the company
held on 17th June |
|
| 1997. |
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|
|
|
|
| 2.
To receive and adopt the audited Balance Sheet and Profit and Loss Account of
the company for |
|
| the
year ended 30th June, 1997 together with the directors' and auditors' report
thereon. |
|
|
| 3.
To appoint -auditors for the year ending 30th June 1998 and fix their
remuneration. |
|
|
| 4.
To transact any other business with the permission of the Chair. |
|
|
| B.
SPECIAL BUSINESS |
|
|
|
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| 5.
To approve remuneration of the director working full time for the company and
to pass with or |
|
| without
modification the following resolution as Special Resolution. |
|
|
|
|
| "RESOLVED
that consent be and is hereby given for the payment as remuneration to Syed |
|
| Yawar
Ali, the Executive Director of the sum not exceeding Rs. 720,000/- per year
and for the |
|
| provision
of housing, transport, leave fare facilities and other benefit incidental or
relating to his |
|
| office
in accordance with the company rules from time to time in force". |
|
|
| A
statement under section 160 of the Companies Ordinance, 1984 pertaining to
the Special Business is |
|
| being
sent to the members with this notice. |
|
|
|
| Notes: |
|
|
| (i)
The Share Transfer Books of the company will remain closed from 17th December
1997 to 24th |
|
| December
1997 (both days inclusive). |
|
|
|
|
| (ii)
A member entitled to attend and vote at the Annual General Meeting is
entitled to appoint anoth- |
|
| er
member as proxy to attend and vote instead of him. The instrument appointing
proxy must be |
|
| received
at the registered office of the company not less than forty eight hours
before the time of |
|
| the meeting. |
|
|
|
|
|
| (iii)
Members are requested not to bring children along with them as the children
will not be admitted |
|
| in
the Meeting Hall. |
|
|
|
|
| (iv)
Members are requested to notify the change in their address, if any,
immediately. |
|
|
| STATEMENT
IN REGARD TO SPECIAL BUSINESS |
|
|
| Remuneration
of working director |
|
|
| The
members' approval is required under the provision of Article of Association
of the company |
|
| for
the payment of remuneration and provision of certain facility to the
Executive Director in |
|
| accordance
with his terms and conditions of service with the company. |
|
|
| Syed
Yawar Ali is interested in this business to the extent of indicated
remuneration. |
|
|
|
| DIRECTORS'
REPORT TO THE MEMBERS |
|
|
| The
directors have pleasure in presenting the 45th annual report together with
the company's audited |
|
| accounts
for the year ended 30th June 1997. |
|
|
| The
year under report was the period in which your company demonstrated its
ability to operate under |
|
| difficult
economic conditions and came out with notable performance showing a before
tax profit of |
|
| Rs.
0.147 million in the year 1996-97 as compared to last year 1995-96 a loss of
Rs. 10.789 million. |
|
|
| Sales
during the year 1996-97 increased 12.10% in volume as compared to the last
corresponding year |
|
| 1995-96
and the gross profit registered 8.26% as compared to 8.19% against last
corresponding year |
|
| 1995-96.
The increase in gross profit is not significant which is due to the increase
in oil cost and other |
|
| material
costs, particularly packing material, fuel & power costs which have
increased besides the repeat- |
|
| ed
devaluation of Pak rupee and inflationary trend in the market, the expenses
of every items have |
|
| increased
whereas the selling price of the product could not be revised in
proportionate to increase in |
|
| input
cost and increase in expenses. |
|
|
| The
administration cost decreased by 5.46%. Financial cost also decreased by
33.14% and the balance |
|
| installment
of amortization deferred cost Rs. 7.832 million during 1996-97 as against Rs.
10.593 million in |
|
| 1995-96
have mainly contributed towards the improvement in the results of the
company. |
|
|
| Future
Prospect |
|
|
| In
order to introduce effectiveness and efficiency, with a view to expanding
sales of the company's prod- |
|
| ucts,
the company has beefed up its sales department by hiring seasoned sales
management personnel |
|
| expanding
coverage and reorganising the sales set up. Additionally a brand management
department |
|
| has
been set up and young M.B.A's have been hired to main positions. |
|
|
| All
this should lead to marked improvement in the quality of performance and
results of the company. |
|
|
| The
merger of sales operations with M/s Zulfeqar Industries Limited, the number
of sales force has |
|
| increased
and the distribution coverage of both outlets have also increased. It is
hoped with the current |
|
| reorganisation,
our coverage will increase which will yield more sale. |
|
|
| The
Human Resource Development |
|
|
| Emphasis
is being given to hiring qualified people and to give them on-the-job
training, especially for pro- |
|
| duction
and sales personnel. Professional training will also be arranged in future.
Executives were sent to |
|
| various
training courses and seminars to acquire further knowledge in their
respective fields. |
|
|
| Appointment
of Auditors |
|
|
| The
present auditors, M/s Taseer Hadi Khalid & Company, Chartered
Accountants, retire and offer them- |
|
| selves
for re-appointment. |
|
|
| General |
|
|
| The
directors also place on record their appreciation of the valued contribution
made by the employees. |
|
| The
relations between the workers and the staff remained cordial. |
|
|
| The
statement of Pattern of Shareholding has been given on page No. 30. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Wazir Ali Industries Limited as at
30 June 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 |
|
| drown
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, 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 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 30 June 1997 and of the loss and the changes in
financial position |
|
| for
the year then ended; and |
|
|
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
|
|
|
|
TASEER HADI KHALID &
CO |
|
| KARACHI:
Nov 17, 1997 |
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1997 |
|
|
|
|
|
Note |
(Rupees in '000) |
|
|
|
|
|
1997 |
1996 |
|
| SHARE
CAPITAL & RESERVES |
|
|
|
|
|
|
| Share
Capital |
|
|
|
| Authorised |
|
|
|
|
| 8,000,000
ordinary shares of |
|
|
| Rs. 10 each |
|
|
80,000 |
80,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
3 |
25,987 |
25,987 |
|
| RESERVES |
|
|
|
|
| Revenue
reserves |
|
|
66,067 |
66,067 |
|
| Accumulated
loss |
|
|
(130,701) |
(127,272) |
|
|
|
|
---------- |
---------- |
|
|
|
|
(64,634) |
(61,205) |
|
|
|
|
---------- |
---------- |
|
|
|
|
(38,647) |
(35,218) |
|
| ADVANCE
AGAINST ISSUE |
|
|
|
| OF
RIGHT SHARES |
|
4 |
8,971 |
- |
|
| SURPLUS
ON REVALUATION |
|
|
|
| OF
FIXED ASSETS |
|
5 |
46,800 |
38,708 |
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
|
1,142 |
1,390 |
|
|
|
|
|
---------- |
---------- |
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term bank financing - Secured |
|
6 |
88,284 |
173,411 |
|
| Current
maturity of liability against |
|
|
| assets
subject to finance lease |
|
|
- |
249 |
|
| Creditors,
accrued expenses and |
|
|
|
| other
liabilities |
|
7 |
170,446 |
127,615 |
|
| Provision
for taxation |
|
8 |
5,886 |
5,234 |
|
| Unclaimed
dividend |
|
|
520 |
529 |
|
|
|
---------- |
---------- |
|
|
|
265,136 |
307,038 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
9 |
|
|
|
|
---------- |
---------- |
|
|
|
283,402 |
311,918 |
|
|
|
|
========== |
========== |
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
|
|
|
| Tangible
fixed assets - at cost/valuation |
|
| less
accumulated depreciation |
|
10 |
53,339 |
43,828 |
|
| Capital
work in progress |
|
11 |
929 |
2,027 |
|
| Intangible
trade marks |
|
|
1 |
1 |
|
|
|
|
---------- |
---------- |
|
|
|
|
54,269 |
45,856 |
|
| LONG
TERM LOANS - Secured |
|
12 |
160 |
122 |
|
| DEFERRED
COST |
|
13 |
- |
7,832 |
|
| LONG
TERM DEPOSITS |
|
|
45 |
44 |
|
|
|
---------- |
---------- |
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
14 |
5,590 |
5,651 |
|
| Stock
in trade |
|
15 |
56,671 |
93,318 |
|
| Goods
in transit |
|
|
81,161 |
97,390 |
|
| Trade
debts - Unsecured, |
|
|
| considered
good |
|
16 |
50,517 |
27,259 |
|
|
|
|
| Loans
and advances |
|
17 |
16,703 |
18,106 |
|
|
|
|
| Deposits,
prepayments and |
|
|
| other
receivables |
|
18 |
7,807 |
13,745 |
|
|
|
|
| Cash
and bank balances |
|
19 |
10,479 |
2,595 |
|
|
|
|
---------- |
---------- |
|
|
|
|
228,928 |
258,064 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
283,402 |
311,918 |
|
|
|
|
========== |
========== |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 JUNE 1997 |
|
|
|
|
|
Note |
(Rupees in '000) |
|
|
|
|
|
1997 |
1996 |
|
|
|
|
| SALES - Net |
|
20 |
1,161,894 |
1,036,465 |
|
| COST
OF GOODS SOLD |
|
21 |
1,065,818 |
951,566 |
|
|
|
|
---------- |
---------- |
|
| GROSS PROFIT |
|
|
|
96,076 |
84,899 |
|
| EXPENSES: |
|
|
|
---------- |
---------- |
|
| Administrative |
|
22 |
23,839 |
25,216 |
|
| Selling
and distribution |
|
23 |
52,343 |
50,363 |
|
| Financial |
|
|
24 |
16,391 |
24,517 |
|
| Amortisation
of deferred cost |
|
13 |
7,832 |
10,593 |
|
| Workers'
profit participation fund |
|
7 |
8 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
100,413 |
110,689 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(4,337) |
(25,790) |
|
|
|
|
| OTHER INCOME |
|
|
25 |
4,484 |
15,001 |
|
|
|
|
---------- |
---------- |
|
| PROFIT/(LOSS)
BEFORE TAXATION |
|
|
147 |
(10,789) |
|
|
|
|
---------- |
---------- |
|
| PROVISION
FOR TAXATION - Current |
|
8 |
(5,886) |
(5,234) |
|
| - Prior year |
|
|
2,310 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
(3,576) |
(5,234) |
|
|
|
|
---------- |
---------- |
|
| (LOSS)
AFTER TAXATION |
|
|
(3,429) |
(16,023) |
|
| ACCUMULATED
LOSS BROUGHT FORWARD |
|
|
(127,272) |
(111,249) |
|
|
|
|
---------- |
---------- |
|
| ACCUMULATED
LOSS CARRIED FORWARD |
|
|
(130,701) |
(127,272) |
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED 30 JUNE 1997 |
|
|
|
|
|
(Rupees in '000) |
|
|
|
1997 |
1996 |
|
|
|
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
| Profit/(Loss)
Before Taxation |
|
|
147 |
(10,789) |
|
|
|
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
|
|
4,877 |
4,226 |
|
| Gain
0n sale of fixed assets |
|
|
(17) |
(198) |
|
| Amortisation
of deferred cost |
|
|
7,832 |
10,593 |
|
| Financial
charges |
|
|
|
16,391 |
24,517 |
|
| Provision
for doubtful debts/advance |
|
|
3,036 |
3,211 |
|
| Workers'
profit participation fund |
|
|
8 |
- |
|
| Loss
on Insurance Claim |
|
|
|
38 |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
32,312 |
31,560 |
|
|
|
|
| Changes
in operating assets/liabilities |
|
|
|
|
|
| Decrease/(Increase)
in stores and spares |
|
61 |
(53) |
|
| Decrease/(Increase)
in stock in trade |
|
36,647 |
(18,888) |
|
| Increase
in trade debts - unsecured |
|
|
(24,758) |
(8,813) |
|
| Decrease/(Increase)
in goods in transit |
|
16,229 |
(25,963) |
|
| (Increase)/Decrease
in loans & advances |
|
(1,882) |
3,924 |
|
| Decrease
in deposits, prepayments and other receivables |
5,938 |
309 |
|
|
|
|
|
|
|
| Increase
in creditors accrued expenses and other liabilities |
45,811 |
29,666 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
78,046 |
(19,818) |
|
| Financial
charges paid |
|
|
|
(19,379) |
(25,063) |
|
| Long
term deposits |
|
|
|
(248) |
|
|
| Income
Tax paid |
|
|
|
(1,175) |
(5,930) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash generated from/(used) in operating activities |
89,556 |
(19,251) |
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
(Rupees in '000) |
|
|
|
|
|
1997 |
1996 |
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
| Fixed
capital expenditure |
|
|
(5,576) |
(4,298) |
|
| (Increase)/decrease
in long term loans |
|
(38) |
99 |
|
| Proceeds
from sale of fixed assets |
|
|
17 |
600 |
|
| Insurance
claim |
|
|
|
340 |
- |
|
| Long
term deposits |
|
|
|
(1) |
- |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash (used) in investing activities |
|
(5,258) |
(3,599) |
|
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
| Payment
of finance lease liabilities |
|
|
(249) |
(317) |
|
| Payment
of dividend |
|
|
|
(9) |
(1) |
|
| (Decrease)/Increase
in short term borrowings |
|
(85,127) |
23,582 |
|
| Advance
received against issue of rights shares |
|
8,971 |
- |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash (used) in / generated from financing activities |
(76,414) |
23,264 |
|
| Net
increase in cash and bank balances |
|
7,884 |
414 |
|
| Cash
and bank balances at beginning of the year |
|
2,595 |
2,181 |
|
|
|
|
|
---------- |
---------- |
|
| Cash
and bank balances at end of the year |
|
10,479 |
2,595 |
|
|
|
========== |
========== |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED 30 JUNE 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
|
|
| 1.1
Wazir All Industries Limited was incorporated as a public limited company
under the |
|
| Companies
Act, 1913 (now the Companies Ordinance, 1984) and its shares are listed on |
|
| the
Karachi and Lahore stock exchanges. The principal activity of the company is
the |
|
| manufacture
and sale of vanaspati ghee and cooking oils. The company remained under |
|
| the
administrative control of Ghee Corporation of Pakistan (Private) Limited upto
19 |
|
| December
1992, the date of its privatisation under the policy of the Government,
through |
|
| the
Privatisation Commission (Ministry of Finance), Government of Pakistan. The
new |
|
| management
has acquired the control of Wazir Ali Industries Limited under a sale agree- |
|
| ment
with "Privatisation Commission" dated 28 October 1992, |
|
|
| 1.2
These accounts have been prepared on the assumption that the company would
contin- |
|
| ue
as a going concern although its accumulated losses as of 30 June 1997,
exceeded |
|
| shareholders'
equity by Rs. 38.647 million (1996: Rs. 35.218 million) while current
liabili- |
|
| ties
exceeded current assets by Rs. 36.208 million (1996: Rs. 48.974 million). The |
|
| assumption
is based on the following facts: |
|
|
| -
Undertaking of continued support of the sponsoring directors. |
|
|
| -
Advance against equity has been received by the company from sponsoring |
|
| directors
and an associated company against future issue of right shares. The |
|
| company
subsequent to 30 June 1997 has also offered one right share for every |
|
| one
share held by the shareholders. Although the date of subscription was |
|
| 14
October 1997, the company has applied for further extension. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
| 2.1
Accounting Convention |
|
|
|
|
| The
accounts are prepared under the historical cost convention except to the
extent that |
|
| certain
fixed assets as stated in note 10, are shown at revalued amounts. |
|
|
|
|
| 2.2
Retirement Benefits |
|
| Gratuity
fund |
|
|
|
|
| The
company has instituted an approved defined contributory scheme for its
employees. |
|
| The
scheme is operated by trustees and annual contributions on the basis of the
benefits |
|
| accruing
to the employees are transferred to the trust. The company, as per the trust |
|
| deed
has the authority to reduce and regulate its annual contribution to the fund
depend- |
|
| ing
upon the income accruing to the fund. Further, the company's annual
contribution in |
|
| respect
of any member does not exceed the salary of the member for the last month of |
|
| the
financial year. |
|
|
| Provident
fund |
|
| A
recognized provident fund scheme is in operation which covers all permanent |
|
| employees
who have completed six months service and have been issued confirmation |
|
| letters,
Equal contributions are made by the company and the employees. |
|
|
| 2.3 Taxation |
|
|
| Current |
|
|
| The
charge for current taxation is based on taxable income at the current rates
of taxa- |
|
| tion
after taking into account available tax credit and tax rebates. |
|
|
| Deferred |
|
|
| The
company accounts for deferred taxation using the liability method on all
major timing |
|
| differences.
However, deferred tax debits are not accounted for in the financial state- |
|
| ments. |
|
|
|
| 2.4
Fixed Assets |
|
| Owned |
|
|
|
|
|
| (a)
Fixed assets including all additions are stated at cost or valuation less
accumu- |
|
| lated
depreciation except freehold land which is stated at revalued amount. |
|
| Depreciation
is provided on the straight line method at the rates indicated in note |
|
| 10. |
|
| (b)
A full year's depreciation is charged on fixed assets capitalized during the
year, |
|
| but
no depreciation is charged in the year of disposal. |
|
| (c)
Gain or loss on disposal of fixed assets if any, are taken to profit and loss |
|
| account
currently. |
|
| (d)
Normal repairs and maintenance are charged to expenses as and when |
|
| incurred. |
|
|
| Leased |
|
|
| (a)
Assets subject to finance lease are stated at lower of present value of
minimum |
|
| of
lease payments under the lease agreement and the fair value of the assets. |
|
| The
related obligation under the lease are accounted for as liabilities. |
|
| Depreciation
is charged on the straight line method at rates indicated in note 10. |
|
