| Al-Abid Silk Mills Limited |
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| BOARD
OF DIRECTORS |
|
|
| Mr.
Naseem A. Sattar |
|
Chairman & Chief
Executive |
|
| Mr.
Azim Ahmed |
|
Director |
|
| Mr.
Amir Naseem |
|
Director |
|
| Mrs.
Zarina Naseem |
|
Director |
|
| Mrs.
Sadaf Nadeem |
|
Director |
|
| Mrs.
Reena Azim |
|
Director |
|
| Mrs.
Asra Amir |
|
Director |
|
| Mr.
Nasim Beg |
|
Nominee Director (N.I.T.) |
|
| Mr.
Muhammad Shafi |
|
Nominee Director (N.I.T.) |
|
| Mr.
Muhammad Ashraf |
|
Nominee Director (N.I.T.) |
|
|
| SECRETARY |
|
|
Mr. S.M. Jawed Azam |
|
|
| AUDITORS |
|
Muniff Ziauddin &
Company |
|
|
Chartered Accountants |
|
|
| REGISTRARS |
|
(a) Adam Patel & Co.
(Pvt.) Ltd. |
|
|
34/2-F, Block-5, Clifton,
Karachi. |
|
|
|
(b) Gangjees Associates
(For C.D.C. Purpose) |
|
|
516, Clifton Centre,
Khayaban-e-Roomi, |
|
|
Kehkashan, Block-5,
Clifton, Karachi. |
|
|
| BANKERS |
|
Habib Bank Limited |
|
|
Habib Bank A.G. Zurich |
|
|
Citibank, N.A. |
|
|
National Bank of Pakistan |
|
|
Deutsche Bank |
|
|
Metropolitan Bank Limited |
|
|
| REGISTERED
OFFICE |
|
A-39, S.I.T.E. |
|
|
Manghopir Road, Karachi. |
|
|
| MILLS |
|
A-39, |
|
|
|
A-51/B, |
|
|
|
A-4/A, |
|
|
D-14/C-1 |
|
|
S.I.T.E., Karachi. |
|
|
| CONTENTS |
|
|
|
| Notice
of Annual General Meeting |
|
| Report
of Directors |
|
|
| Auditor's
Report to the Members |
|
| Balance
Sheet |
|
|
| Profit
& Loss Account |
|
|
| Cash
Flow Statement |
|
|
| Notes
to the Accounts |
|
|
| Pattern
of Shareholdings |
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 30th Annual General Meeting of the shareholders of
the Company |
|
| will
be held at the Auditorium of the Institute of Chartered Accountants of
Pakistan, G-31/8, Kehkashan, |
|
| Clifton,
Karachi on Monday the 28th December, 1998 at 3.00 p.m. to transact the
following business: |
|
|
| 1.
To confirm the minutes of the 29th Annual General Meeting of the Company held
on 24th December, 1997. |
|
|
| 2.
To receive, consider and adopt the audited accounts of the Company together
with the Directors' |
|
| and
Auditors' reports thereon for the year ended on 30th June, 1998. |
|
|
| 3.
To approve Dividend at Re. 0.75 per share to the shareholders for the year
ended on 30.06.1998. |
|
|
| 4.
To appoint auditors and fix their remuneration. |
|
|
| 5.
To approve Remuneration of the Directors. |
|
|
| 6.
To consider any other business with the permission of the chair. |
|
|
| 7.
SPECIAL BUSINESS: |
|
|
| To
pass the following Resolution as Special Resolution with or without
modification. |
|
|
| RESOLVED
THAT the following amendment be made in the Article 61 (a) of the Articles of |
|
| Association
of the Company and read as under: |
|
|
| 61
(a) "The remuneration of Directors shall be determined by the Company by
an |
|
| Ordinary
Resolution. Remuneration payable to a Director for attending meetings of the |
|
| Board
shall not exceed Rs. 2,000.00" |
|
|
| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE 1984 |
|
|
| The
Company's Article of Association restricts Director's Remuneration for
attending the Board |
|
| Meeting
to Rs. 500.00 which is sought to be amended. |
|
|
|
|
BY ORDER OF THE BOARD |
|
|
|
|
|
|
|
(S. M. JAWED AZAM) |
|
| Karachi:
1st December, 1998. |
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from 22nd
December, 1998 to |
|
| 31
st December, 1998 (both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/her proxy |
|
| to
attend and vote instead of him/her. 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 meeting. |
|
|
| 3.
Members are requested to promptly notify the Company of any change in their
addresses. |
|
|
|
| THIRTIETH
ANNUAL REPORT OF THE DIRECTORS |
|
|
| Dear
Shareholders, |
|
|
| WELCOME:
"Welcome" is a vocative term and connotes pleasure to accord those
who are invited |
|
| at
a gathering particularly at an occasion deemed to be a happy one. |
|
|
| PREAMBLE:
The following performance record will speak for itself the progress the
Company has |
|
| made
during the year under discussion. |
|
|
| PERFORMANCE:
The accounts for the year are before you which reflect very well the entire |
|
| picture.
The sales have been increased by 22.7% totalling Rs. 1.565 Billion. Although
financial |
|
| costs
and other inputs such as cost of power and cost of gas have increased,
concurrently duty |
|
| drawback
has also been slashed, yet, we have been able to achieve a better result
through well |
|
| thought
plannings and strategies such as, instead of procuring cloth from the market,
we switched |
|
| over
substantially to procurement of yarn and getting cloth manufactured from the
procured yarn |
|
| which
helped us in timely execution of orders and in reducing our input cost of
grey cloth. To |
|
| improve
the overall picture extensive efforts were made to increase the exports for
obtaining better |
|
| results. |
|
|
| The
Company is still in pursuit of expanding export sales which you will note
from the |
|
| expansion
/ modernization program detailed below. |
|
|
| I.
A modern stitching unit is near completion which is essentially required in
today's export |
|
| culture
and it is hoped that with the new unit in operation, we will be able to
attract more |
|
| buyers
from the international market. The new stitching unit is in conformity with
the |
|
| international
environment hence such awareness and preparation will help us not only in |
|
| retaining
our existing sales, but is expected to help in enhancing our existing sales. |
|
|
| II.
L/C for a wide width Rotary Printing Machine has been established which is
expected to be |
|
| in
operation in March/April 1999. Again this has been done in pursuit of
expanding exports, |
|
| keeping
in view the demand of fabrics and made-ups, like bed linen from wide width
fabric. |
|
|
| The
above modernization / expansion plans on implementation surely will add to
the sales figures |
|
| and
will brighten the financial results. |
|
|
| DIVIDEND:
From the policy of your Company in the last years, all will realise that
prudence called |
|
| for
to retain maximum liquidity in the Company which in today's economic scenario
is even more |
|
| called
for than ever before. |
|
|
| In
view of promoting business, expansion activities and beneficial improvement
in results out of |
|
| the
activities, the dividend has been restricted to 7.5% with the same intention
as has been |
|
| expressed. |
|
|
| REMUNERATION:
The efforts of your Directors have given you a picture for yourself to
appreciate |
|
| that
they deserve an increase of 30% in their remuneration. |
|
|
| ACKNOWLEDGMENT:
If, with your Directors utmost efforts had not been complemented by the |
|
| workers,
staff and executives, our bankers and financial institutions and the
understanding of our |
|
| valued
shareholders, picture would not have been as bright as it is today. |
|
|
| Thanks
to all of you. |
|
|
|
|
|
For and on behalf of the Board of Directors |
|
|
|
|
|
|
|
|
|
|
|
NASEEM A. SATTAR |
|
| Karachi:
1st December, 1998. |
|
Chairman & Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of AL-ABID SILK MILLS LIMITED, as at
June 30, 1998 and |
|
| 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 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 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, 1998 and of the profit 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. |
|
|
|
|
|
|
MUNIFF ZIAUDDIN & CO. |
|
| KARACHI:
1st December, 1998. |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorized
Capital |
|
|
|
| 10,000,000
Ordinary Shares of Rs. 10/- each |
|
100,000,000 |
100,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
3 |
59,400,000 |
59,400,000 |
|
|
|
|
|
| Reserves |
|
|
|
|
| Capital
reserve |
|
4 |
39,600,000 |
39,600,000 |
|
| Unappropriated
profit |
|
|
145,971,476 |
85,714,507 |
|
|
|
|
---------- |
---------- |
|
|
|
|
185,571,476 |
125,314,507 |
|
|
|
|
---------- |
---------- |
|
|
|
|
244,971,476 |
184,714,507 |
|
| LONG
TERM LOANS |
|
5 |
68,642,907 |
69,214,707 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
| TO
FINANCE LEASE |
|
6 |
18,873,444 |
32,872,771 |
|
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
7 |
12,116,387 |
9,134,281 |
|
|
|
|
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
| Short
term finances |
|
8 |
475,436,575 |
312,789,845 |
|
| Current
maturity of long-term loans and finances |
9 |
16,994,548 |
16,713,780 |
|
| Creditors,
accrued charges and other liabilities |
10 |
376,247,978 |
405,912,402 |
|
| Dividends |
|
11 |
4,707,413 |
3,204,010 |
|
|
|
|
---------- |
---------- |
|
|
|
|
873,386,514 |
738,620,037 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
12 |
---------- |
---------- |
|
|
|
|
1,217,990,728 |
1,034,556,303 |
|
|
|
|
========== |
========== |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
| Operating
fixed assets |
|
13 |
335,842,317 |
338,386,784 |
|
| Capital
work-in-progress |
|
14 |
20,296,878 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
356,139,195 |
338,386,784 |
|
|
|
|
|
|
| ADVANCE
FOR SHARES |
|
15 |
1,024,545 |
965,620 |
|
|
|
|
|
|
| LONG
TERM DEPOSITS, PREPAYMENTS |
|
|
|
| AND
DEFERRED COST |
|
16 |
1,635,455 |
1,710,530 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
17 |
48,850,682 |
50,819,889 |
|
| Stock-in-trade |
|
18 |
601,546,290 |
455,180,302 |
|
| Trade
debtors |
|
19 |
43,422,108 |
49,889,271 |
|
| Advances,
deposits and prepayments |
20 |
47,991,387 |
41,074,347 |
|
| Other
receivables |
|
21 |
103,246,314 |
62,060,720 |
|
| Cash
and bank balances |
|
22 |
14,134,752 |
34,468,840 |
|
|
|
|
---------- |
---------- |
|
|
|
859,191,533 |
693,493,369 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,217,990,728 |
1,034,556,303 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Karachi:
1st December, 1998. |
|
|
|
|
|
|
|
NASEEM A. SATTAR |
|
AZIM AHMED |
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Sales
and services |
|
23 |
1,565,553,176 |
1,275,789,970 |
|
| Cost
of sales |
|
24 |
1,319,669,734 |
1,092,886,808 |
|
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
245,883,442 |
182,903,162 |
|
|
|
|
|
---------- |
---------- |
|
| OPERATING
EXPENSES |
|
|
| Administrative |
|
25 |
53,098,523 |
46,797,509 |
|
| Selling
and distribution |
|
26 |
27,956,453 |
22,269,834 |
|
|
|
|
---------- |
---------- |
|
|
|
|
81,054,976 |
69,067,343 |
|
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
164,828,466 |
113,835,819 |
|
| Other
income |
|
27 |
2,677,946 |
2,617,098 |
|
|
|
|
---------- |
---------- |
|
|
|
|
167,506,412 |
116,452,917 |
|
|
|
|
---------- |
---------- |
|
| Financial
charges |
|
28 |
90,772,418 |
73,002,211 |
|
| Other
Charges |
|
29 |
3,850,590 |
2,172,535 |
|
|
|
|
---------- |
---------- |
|
|
|
|
94,623,008 |
75,174,746 |
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
|
72,883,404 |
41,278,171 |
|
| Taxation |
|
|
|
30 |
(8,171,435) |
(6,876,879) |
|
|
|
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
64,711,969 |
34,401,292 |
|
| Unappropriated
profit brought forward |
|
85,714,507 |
54,283,215 |
|
|
|
---------- |
---------- |
|
|
|
150,426,476 |
88,684,507 |
|
| APPROPRIATION |
|
|
|
| Proposed
dividend Re. 0.75 per share |
|
4,455,000 |
2,970,000 |
|
| (1997:
Re. 0.50 per share) |
|
|
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
145,971,476 |
85,714,507 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
NASEEM A. SATTAR |
|
|
AZIM AHMED |
|
|
Chairman & Chief Executive |
|
|
Director |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| FUNDS
PROVIDED FROM OPERATION |
|
|
|
| Profit
after taxation |
|
64,711,969 |
34,401,292 |
|
| Adjustment
of items not involving movement of funds |
|
|
| Depreciation |
|
36,410,050 |
37,621,995 |
|
| Provision
for gratuity - net |
|
2,982,106 |
1,805,468 |
|
| Profit
on disposal of fixed assets |
|
(924,695) |
(1,432,180) |
|
|
|
---------- |
---------- |
|
|
|
103,179,430 |
72,396,575 |
|
|
|
|
|
| (INCREASE)/DECREASE
IN CURRENT ASSETS |
|
|
| Stores
and spares |
|
1,969,207 |
(7,391,608) |
|
| Stock-in-trade |
|
(146,365,988) |
(115,889,944) |
|
| Trade
debtors |
|
6,467,163 |
351,295 |
|
| Advances,
deposits and prepayments |
|
(6,917,040) |
(10,748,641 |
|
| Other
receivables |
|
(41,185,594) |
6,723,669 |
|
|
|
---------- |
---------- |
|
|
|
(186,032,252) |
(126,955,229 |
|
|
|
|
| INCREASE/(DECREASE)
IN CURRENT LIABILITIES |
|
|
| Short
term finances |
|
162,646,730 |
40,814,300 |
|
| Creditors,
accrued charges and other liabilities |
|
(29,664,424) |
74,032,370 |
|
|
|
---------- |
---------- |
|
|
|
132,982,306 |
114,846,670 |
|
|
|
---------- |
---------- |
|
| NET
CASH INFLOW FROM OPERATING ACTIVITIES |
|
50,129,484 |
60,288,016 |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Advance
for shares |
|
(58,925) |
(1,200) |
|
| Capital
expenditure |
|
(55,542,767) |
(51,321,432) |
|
| Proceeds
from disposal of fixed assets |
|
2,305,000 |
3,660,500 |
|
| Long
term deposits and deferred cost |
|
75,075 |
(541,025) |
|
|
|
---------- |
---------- |
|
| NET
CASH (OUTFLOW) FROM INVESTING ACTIVITIES |
|
(53,221,617) |
(48,203,157) |
|
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
| Proceeds
from obligation under finance lease |
|
3,859,000 |
6,800,000 |
|
| Payments
of obligation under finance lease |
|
(14,422,564) |
(18,190,679 |
|
| Payments
of long term loans |
|
(3,154,994) |
(16,856,000 |
|
| Deferred
liabilities |
|
|
- |
(1,200,000 |
|
| Long
term loans acquired |
|
(571,800) |
51,489,955 |
|
| Dividends
paid |
|
(2,951,597) |
(2,862,875) |
|
|
|
---------- |
---------- |
|
| NET
CASH INFLOW/(OUTFLOW) FROM FINANCING ACTIVITIES |
(17,241,955) |
19,180,401 |
|
|
|
|
---------- |
---------- |
|
| NET
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |
(20,334,088) |
31,265,260 |
|
| CASH
AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR |
34,468,840 |
3,203,580 |
|
|
|
|
---------- |
---------- |
|
| CASH
AND CASH EQUIVALENTS AT THE END OF THE YEAR |
|
14,134,752 |
34,468,840 |
|
|
|
========== |
========== |
|
|
|
|
|
NASEEM A. SATTAR |
|
AZIM AHMED |
|
|
Chairman & Chief Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
COMPANY AND ITS BUSINESS |
|
|
| The
company was incorporated in the year 1968 as a Private Limited Company and
was converted |
|
| into
Public Limited Company on 24th December, 1987 under the Companies Ordinance,
1984. The |
|
| Company
is listed on the Karachi and Lahore Stock' Exchanges. The principal activity
of the |
|
| Company
is manufacturing and processing of various kinds of fabrics and export of
printed and dyed |
|
| cloth,
bed sets and garments made-up. |
|
|
| 2.
ACCOUNTING POLICIES |
|
|
| 2.1
ACCOUNTING CONVENTION |
|
| These
accounts have been prepared on the basis of "historical cost"
convention. |
|
|
| 2.2
STAFF GRATUITY |
|
| The
Company operates an unfunded gratuity scheme covering all employees
(excluding |
|
| managerial
staff). Full provision is made in the accounts for gratuity payable to
employees as |
|
| per law. |
|
|
|
|
| 2.3
TAXATION |
|
|
|
|
| Current |
|
|
| Provision
for the year is based on taxable income at the current rates of taxation
after taking |
|
| into
account tax credit and rebates, if any. |
|
|
| Deferred |
|
|
| The
Company accounts for deferred taxation on all major timing differences using
the liability |
|
| method.
However, deferred tax is not provided if it can be established with
reasonable |
|
| probability
that the timing differences will not reverse in the foreseeable future. |
|
|
| 2.4
FIXED CAPITAL EXPENDITURE AND DEPRECIATION |
|
|
| a.
Operating fixed assets are stated at cost less accumulated depreciation
except land |
|
| and
capital work-in-progress which are stated at cost. |
|
|
| b.
Depreciation is charged to income applying the reducing balance method
without |
|
| considering
extra shifts worked. |
|
|
|
| c.
No depreciation is charged on assets disposed off during the year while
charge for the |
|
| full
year is made on additions during the year. |
|
|
| d.
Minor renewals, replacements, maintenance and repairs are charged to expense. |
|
| Major
renewals and betterments are capitalized. Gains and losses on deleted assets |
|
| are
reflected in the accounts. |
|
|
|
| 2.5
ACCOUNTING FOR LEASES |
|
| The
Company records assets acquired under finance lease and related liabilities
at lower of |
|
| present
value of minimum lease payments under the lease agreement and the fair value
of |
|
| assets.
Finance charges are allocated to accounting period in a manner so as to
produce a |
|
| constant
periodic rate of charge on the outstanding liability. Depreciation is
provided at the |
|
| rates
applicable to operating fixed assets. |
|
|
| 2.6
CAPITALIZATION OF BORROWING COST |
|
| Borrowing
cost on loans obtained for acquisition of plant and machinery for the period
till |
|
| commissioning
of production is capitalized. |
|
|
| 2.7
STORES AND SPARES |
|
| These
are valued at cost using the moving average method. |
|
|
| 2.8
STOCK-IN-TRADE |
|
| Stock
of raw materials, work-in-process and finished goods are valued at lower of
moving |
|
| average
cost and net realizable value. Cost in relation to work-in-process and
finished goods |
|
| represents
direct cost of materials, direct wages and an appropriate portion of
production |
|
| overheads. |
|
|
| Items
in transit are valued at cost comprising invoice values plus other charges
paid thereon. |
|
|
| 2.9
INVESTMENTS |
|
| These
are valued at cost. |
|
|
| 2.10
FOREIGN CURRENCY TRANSACTIONS |
|
| Transactions
in foreign currencies are converted into rupees at the rates of exchange |
|
| prevailing
on the date of transaction, Exchange gains and losses are included in income |
|
| currently. |
|
|
| 2.11
REVENUE RECOGNITION |
|
| Sale
of goods and services are recognized on despatch of goods to customers or on
the |
|
| performance
of services. |
|
|
