| Agriauto Industries Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
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|
|
|
| CONTENTS |
|
| Company
Information |
|
| Notice
of Annual General Meeting |
|
| Director's
Report |
|
| Chairman's
Review |
|
| Auditor's
Report to the Members |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholdings |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
|
| R.D.
Minwalla |
|
Chairman |
|
| Syed
Ikram Haider |
|
Chief Executive |
|
| Rais Ahmed |
|
| Mansoor
G. Habib |
|
| Tayyab
Afzal |
|
| Sohail
P. Ahmed |
|
| Asfandiyar
R. Minwalla |
|
| Owaisul
Mustafa |
|
|
| COMPANY
SECRETARY |
|
Syed Ikram Haider |
|
|
|
|
| AUDITORS |
|
|
Feroze Sharif Tariq &
Company |
|
|
|
|
Chartered Accountants |
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|
|
|
| SHARE
REGISTRAR |
|
Noble Computer Services
(Pvt) Ltd., |
|
|
|
|
2rid Floor, AI-Manzoor
Building, |
|
|
|
|
Dr. Ziauddin Ahmed Read, |
|
|
|
|
Karachi. |
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|
|
| REGISTERED
OFFICE |
|
Agriauto Industries Ltd. |
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|
11, Banglore Town Housing
Society, |
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|
|
Main Shahrah-e-Faisal, |
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|
Karachi-75350 |
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Pakistan. |
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|
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| FACTORY |
|
|
Mouza Baroot, |
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|
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|
Hub Chowki, Distt,
Lasbella, |
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|
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|
Balochistan. |
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|
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| NOTICE
OF MEETING |
|
|
| NOTICE
is hereby given that the Seventeenth Annual General Meeting of the Company
will be |
|
| held
on Tuesday, December 22, 1998 at 11:30 a.m. at the Institute of Chartered
Accountants of |
|
| Pakistan
situated at G-13, Block 8, Kehkashan, Clifton, Karachi - 75350. |
|
|
| 1.
To approve the Audited Accounts for the year ended June 30, 1998, and the
Director's |
|
| and
Auditor's Report thereon. |
|
|
|
|
| 2.
To appoint Auditors for the year ending June 30, 1999 and fix their
remuneration. M/s. |
|
| Feroze
Sharif Tariq & Co., Chartered Accountants retire and being eligible,
offer themselves |
|
| for
reappointment as the auditors of the Company for the year ending June 30,
1999. |
|
| A
shareholder of the Company has given notice under Section 253 of the
Companies |
|
| Ordinance,
1984 for the appointment of Messrs. Ford, Rhodes, Robson, Morrow, Chartered |
|
| Accountants,
to be the auditors of the Company for the year ending June 30, 1999. |
|
|
| 3.
Any other business with the permission of the Chair. |
|
|
| By
order of the Board. |
|
|
| SYED
IKRAM HAlDER |
|
| Chief
Executive & |
|
| Company
Secretary |
|
|
| Karachi:
December 01, 1998 |
|
|
| NOTES: |
|
|
|
| 1.
The share transfer books of the Company will remain closed from December 16,
1998 to |
|
| December
22, 1998. (both days inclusive) |
|
|
|
|
| 2.
A member entitle to attend and vote at this meeting may appoint another
member as |
|
| his/her
proxy to attend the meeting and vote for him/her. Proxies in order to be
effective |
|
| must
be received at the registered office of the Company duly stamped and signed
not |
|
| less
than 48 hours before the time of holding the meeting. |
|
|
| 3.
Members are requested to promptly communicate any change in their addresses
to our |
|
| Share
Registrar, Noble Computer Services (Pvt.) Ltd. |
|
|
|
| DIRECTORS
REPORT |
|
|
| 1.
The Directors of the Company take pleasure in submitting their report
alongwith the audited |
|
| accounts
of the Company, and Auditors Report thereon, for the year ended June 30, 1998 |
|
| as
follows: |
|
|
|
|
|
(Rupees in Thousand) |
|
| Profit
before Taxation |
|
4,102 |
|
|
| Provision
for Taxation |
|
1,210 |
|
|
|
|
|
---------- |
|
|
| Profit
after taxation |
|
2,892 |
|
|
| Add:
Unappropriated loss brought forward |
|
(32,368) |
|
|
|
|
|
---------- |
|
|
| Unappropriated
loss carried forward |
|
(29,476) |
|
|
|
|
|
========== |
|
|
|
| 2.
CHAIRMAN'S REVIEW |
|
| The
chairman's Review on page 5 and 6 deals with the year's activities and
Directors |
|
| of
the Company endorse contents of the same |
|
|
| 3.
PATTERN OF SHAREHOLDINGS |
|
| The
Pattern of shareholdings is provided on page 26. |
|
|
| 4.
CHANGE IN THE BOARD OF DIRECTORS |
|
| Mr.
Keith S. Stack and Mr. Hassan Irshad has resigned and in their place the
nominee |
|
| of
House of Habib Mr. Tayyeb Afzal and Mr. Mansoor G. Habib has been appointed. |
|
|
| 5.
AUDITORS |
|
| M/s.
Feroze Sharif Tariq & Co. Chartered Accountants retire and being
eligible, offer |
|
| themselves
for reappointment as the auditors of the Company for the year ending |
|
| June
30, 1999. |
|
|
|
|
| A
shareholder of the Company has given notice under Section 253 of the
Companies |
|
| Ordinance,
1984 for the appointment of Messrs. Ford, Rhodes, Robson, Morrow, Chartered |
|
| Accountants,
to be the auditors of the Company for the year ending June 30, 1999. |
|
|
| By
order of the Board. |
|
|
| SYED
IKRAM HAIDER |
|
| Chief
Executive |
|
|
| Karachi:
October 23, 1998 |
|
|
|
| CHAIRMAN'S
REVIEW |
|
|
| It
is my great pleasure to welcome you to the 17th Annual General Meeting of
Agriauto Industries |
|
| Limited
and present to you the report on the performance of the Company for the year
ended |
|
| June
30, 1998 alongwith the Auditors' Report. |
|
|
| 1.
THE ECONOMY & AUTOMOTIVE ENGINEERING SECTOR |
|
|
| The
economic conditions remained very disturbed throughout the year 1997-98. The
weak |
|
| fiscal
position, cuts in social development programmes, deficit balance of trade,
rupee |
|
| devaluation,
high financial cost, free cross border trade, freezing of foreign currency |
|
| accounts,
levy of economic sanctions and deteriorating law and order situation created |
|
| an
atmosphere of uncertainty in the economy. |
|
|
| The
Engineering Industry in the country especially the automotive and tractor
component |
|
| parts
manufacturing was no exception. The automotive segment achieved a slight
growth |
|
| in
the beginning of 1998 that was offset by the increased cost of raw materials
and other |
|
| inflationary
trends. The Company's share in the replacement parts market increased |
|
| slightly.
However under-invoicing and smuggled parts continued to put the prices of our |
|
| products
under lot of pressure. |
|
|
| 2.
OPERATION FOR THE YEAR 1997-98 |
|
| We
are pleased to note that the sales achieved during the year 1997-98 were |
|
| Rs.
238 million compared to Rs. 199 million of last year reflecting a growth of
19.6%. The |
|
| Company
was also able to achieve a turnaround situation and registered a pre-tax
profit |
|
| of
Rs. 4 million. |
|
|
| The
Company availed of the advantage under the State Bank of Pakistan's Incentive |
|
| Scheme
and paid all its overdue long-term loans. |
|
|
| 3.
FUTURE OUTLOOK |
|
| On
the Government's request to all local Tractor manufacturers to reduce prices,
the |
|
| local
parts manufacturer in turn have been asked to reduce prices. With shrinking
margins |
|
| we
are hoping that the increased volumes due to enhanced demand of new tractors
and |
|
| automobiles
may help us slightly. The future of your Company, in fact our whole country, |
|
| poses
many challenges. We will continue to overcome this through hard work and
continued |
|
| focus
on quality products and service, and discontinue unprofitable activities to
enable |
|
| the
company to achieve better earnings and invest its depleted reserves
prudently. |
|
|
| 4.
CHANGE IN THE BOARD OF DIRECTORS |
|
| During
the course of the year AI-Futtaim Industries (Pvt.) Limited, Dubai has
disinvested |
|
| its
shareholding in the Company. Mr. K.S. Stack and Mr. Hasan Irshad nominee
Directors |
|
| of
AI-Futtaim resigned and in their place the House of Habib has nominated Mr.
Tayyeb |
|
| Afzal
and Mr. Mansoor G. Habib. The Board wishes to thank Mr. Keith S. Stack and
Mr. |
|
| Hasan
Irshad for their valuable contribution while serving on the Board of our
Company. |
|
|
| 5.
HUMAN RESOURCE DEVELOPMENT |
|
| In-house
training programs were organized to further improve the skill levels of
workers |
|
| and
officers. These comprise training programmes related to Work Methods, Total
Quality |
|
| Management,
Kaizen, Cost Effectiveness and Product Improvement. |
|
|
| 6.
INDUSTRIAL RELATIONS |
|
| The
overall industrial relations climate remained cordial and satisfactory and
the existing |
|
| mutual
trust and understanding between the Management and Workers continues to |
|
| improve. |
|
|
| 7.
ACKNOWLEDGMENT |
|
| On
behalf of the Board of Directors, I would like to place on record
appreciation to all our |
|
| Customers,
Dealers and Suppliers for their valuable help, support and contribution to
the |
|
| affairs
of the company. I am also grateful to all our Bankers for their continued
support |
|
| during
these difficult and turbulent times. |
|
|
| We
also wish to thanks to our overseas Technical collaborators, Arvin
Engineering |
|
| Industries
of USA (for Shock Absorbers) and Kayaba Industry Company Ltd., Japan (for |
|
| Gas-charged
Shock Absorbers and Struts) for their technical help and advice. |
|
|
| Lastly,
and by no means the least, your Board of Directors wishes to acknowledge the |
|
| contribution
of Management, Executive and Workers of your company who, under the |
|
| leadership
of your Chief Executive, Syed Ikram Haider has worked hard in achieving a |
|
| creditable
performance. |
|
|
| May
Allah continue to bless our efforts. |
|
|
| R.D.
MINWALLA |
|
| Chairman |
|
| Karachi.
October 23, 1998 |
|
|
|
| REPORT
OF THE AUDITORS TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of M/s. Agriauto Industries Limited,
as at |
|
| June
30, 1998 and the related Profit & 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 purpose 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 & 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 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 object 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 & 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 20, 1998 and of
the Profit |
|
| and
the Changes in Financial position for the year then ended; and |
|
|
|
|
| d)
in our opinion, "no Zakat was deductible at sources under the Zakat and
Ushr Ordinance |
|
| 1980". |
|
|
|
| FEROZE
SHARIF TARIQ & COMPANY |
|
| CHARTERED
ACCOUNTANTS |
|
|
| Karachi:
October 23, 1998. |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
NOTE |
1998 |
1997 |
|
|
|
|
(Rupees in Thousand) |
|
|
|
|
| CAPITAL
AND LIABILITIES |
|
|
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
|
|
|
| AUTHORISED
CAPITAL |
|
|
|
| 40
Million Ordinary Shares of Rs. 5/- each |
|
200,000 |
200,000 |
|
|
|
|
========== |
========== |
|
| ISSUED,
SUBSCRIBED & PAID UP CAPITAL |
2 |
120,000 |
120,000 |
|
|
|
|
|
| CAPITAL
RESERVE |
|
3 |
12,598 |
12,598 |
|
|
|
|
|
|
| UNAPPOPRIATED
PROFIT/(LOSS) |
|
|
(29,476) |
(32,368) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
103,122 |
100,230 |
|
|
|
|
|
|
| LONG
TERM LOANS |
|
4 |
20,077 |
4,937 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
Maturity of Long Term |
|
|
|
| Liabilities
and Finance Lease |
|
5 |
14,522 |
38,270 |
|
| Short
Term Finances & Borrowings |
|
6 |
35,517 |
58,437 |
|
| Creditors,
Accrued And Other Liabilities |
7 |
74,578 |
88,065 |
|
| Loan
From Others |
|
8 |
21,700 |
24,413 |
|
| Workers'
Profit Participation Fund |
9 |
286 |
71 |
|
| Workers'
Welfare Fund |
|
|
73 |
73 |
|
| Provision
For Taxation |
|
|
1,191 |
2,150 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
147,867 |
211,479 |
|
|
|
|
|
| CONTINGENCIES
& COMMITMENTS |
|
10 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
271,066 |
316,646 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| PROPERTY
AND ASSETS |
|
|
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
|
|
| OPERATING
FIXED ASSETS |
|
|
|
| (at
cost less accumulated depreciation) |
11 |
110,025 |
112,246 |
|
|
|
|
|
| CAPITAL
WORK IN PROGRESS |
|
12 |
3,642 |
29,643 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
113,667 |
141,889 |
|
|
|
|
|
| LONG
TERM DEPOSITS AND DEFERRED COST |
13 |
6,514 |
7,604 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Stock & Stores |
|
14 |
91,396 |
102,897 |
|
| Trade
Debts |
|
15 |
30,760 |
40,513 |
|
| Advances,
Deposits, Prepayments And |
|
|
| Other
Receivables |
|
16 |
8,468 |
7,273 |
|
| Advance
Income Tax |
|
17 |
20,196 |
14,172 |
|
| Cash
And Bank Balances |
|
18 |
65 |
2,298 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
150,885 |
167,153 |
|
|
|
|
---------- |
---------- |
|
|
|
|
271,066 |
316,646 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| KARACHI:
October 23, 1998. |
R.D. MINWALLA |
|
SYED IKRAM HAIDER |
|
|
|
Chairman |
|
Chief Executive |
|
|
|
|
|
|
| PROFIT
& LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
NOTE |
1998 |
1997 |
|
|
|
|
|
(Rupees in Thousand) |
|
|
|
|
| NET SALES |
|
19 |
237,756 |
198,938 |
|
| COST
OF SALES |
|
20 |
186,082 |
159,493 |
|
|
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
51,674 |
39,445 |
|
|
|
|
|
| Selling
and Distribution Expenses |
|
22 |
12,950 |
13,119 |
|
|
|
|
26,763 |
24,630 |
|
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
24,911 |
14,815 |
|
| Financial
Charges |
|
23 |
19,744 |
29,237 |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,167 |
(14,422) |
|
| Other
Income / (Loss) |
|
24 |
(1,236) |
476 |
|
|
|
|
---------- |
---------- |
|
|
|
|
3,931 |
(13,946) |
|
| Write-off
of Mobike Stock |
|
25 |
(12,318) |
- |
|
| Prior
Period Adjustment |
|
26 |
12,705 |
- |
|
|
|
|
|
| Worker's
Profit Participation Fund |
|
(216) |
- |
|
|
|
|
---------- |
---------- |
|
| PROFIT/(LOSS)
BEFORE TAXATION |
|
|
4,102 |
(13,946) |
|
| Provision
for Taxation |
|
27 |
1,210 |
996 |
|
|
|
|
|
| PROFIT/(LOSS)
AFTER TAXATION |
|
|
2,892 |
(14,942) |
|
| Unappropriated
(Loss) Brought Forward |
|
(32,368) |
(17,426) |
|
|
|
|
---------- |
---------- |
|
| Unappropriated
(Loss) Carried Forward |
|
(29,476) |
(32,368) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| R.D.
MINWALLA |
|
SYED IKRAM HAlDER |
|
|
| Chairman |
|
Chief Executive |
|
|
|
|
|
|
|
| KARACHI:
October 23, 1998. |
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
NOTE |
1998 |
1997 |
|
|
|
|
|
(Rupees in Thousand) |
|
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
| -
Cash generated from operations |
|
30 |
64,056 |
37,697 |
|
| -
Financial charges paid |
|
|
(29,595) |
(17,326) |
|
| - Income tax paid |
|
|
(8,194) |
(5,591) |
|
| -
Long term deposit and deferred cost |
|
1,090 |
(4,348) |
|
|
|
|
---------- |
---------- |
|
| NET
CASH FLOW FROM OPERATING ACTIVITIES |
|
27,357 |
10,432 |
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
| -
Fixed capital expenditures |
|
|
(1,475) |
(3,339) |
|
| -
Sale proceeds of fixed assets |
|
|
3,413 |
624 |
|
| -
Scrap Sales |
|
|
- |
17 |
|
|
|
|
---------- |
---------- |
|
| NET
CASH FLOW FROM INVESTING ACTIVITIES |
|
1,938 |
(2,698) |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Redeemable
capital, long term loan & lease financing |
(8,608) |
(7,081) |
|
|
|
|
---------- |
---------- |
|
| INCREASE
(DECREASE) IN CASH & CASH EQUIVALENTS |
|
20,687 |
653 |
|
|
|
|
|
|
| Cash
and cash equivalents at the beginning of the year |
(56,139) |
(56,792) |
|
|
|
|
| Cash
and cash equivalents at the end of the year |
31 |
(35,452) |
(56,139) |
|
|
|
|
========== |
========== |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| INTRODUCTION: |
|
| Agriauto
Industries Limited, a public limited company was incorporated in Pakistan on
June 25, 1981 and |
|
| was
listed on the Stock Exchanges in June 1984. The Company manufactures
Components for Automotive |
|
| Vehicles,
Motor Cycles and Agricultural Tractors. The production units manufacturing
Gaskets, Valves and |
|
| Sleeves
commenced commercial production on October 1, 1985 and production units
manufacturing Shock |
|
| Absorbers
and Camshafts commenced commercial production on dune 01, 1988. The Company
established |
|
| an
other unit for the production/assembly of Mobike, two wheeler which started
commercial activity from |
|
| March
1, 1995. |
|
|
| For
the improved utilization of plant capacities various other Auto and Tractor
Components such as Brake |
|
| Band,
Hydraulic Lift Covers, Steering Boxes & Transmission Components are also
manufactured under a |
|
| planned
diversification programme. |
|
|
| 1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 1.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 1.2
Foreign Currency Loans/Other Liabilities |
|
| The
foreign currency loans/other liabilities are converted into Pak Rupees at the
rate of exchange |
|
| prevailing
on the date of Balance Sheet. The resultant exchange difference arising
directly on the |
|
| acquisition
of assets invoiced in a foreign currency is included in the carrying amount
of the related |
|
| assets
and in respect of other liabilities the exchange difference is recognised in
income for the |
|
| period. |
|
|
|
| 1.3
Staff Retirement Benefits |
|
| The
Company follows the recognised provident fund scheme duly approved by the
Commissioner |
|
| of
Income Tax. |
|
|
|
|
| 1.4
Fixed Assets |
|
| These
are stated at cost less accumulated depreciation except Freehold Land and
Capital |
|
| Work-in-Progress
which are stated at cost. Depreciation is provided on the reducing balance
method |
|
| including
the exchange difference capitalised and the rates applied are in no case less
than the |
|
| rates
prescribed by the Central Board of Revenue. |
|
| Maintenance
and normal repairs are charged to income as and when incurred. Profit or loss
on |
|
| disposal
of fixed assets is charged/credited in the current year's income. |
|
|
| 1.6
Deferred Cost |
|
| The
expenditure on Initial licence fees has been treated as deferred revenue
expenditure, and is |
|
| amortized
over a period of five years. |
|
|
| 1.6
Stock & Stores |
|
| The
basis of valuation has been specified against each as under:- |
|
|
| (a)
Stores & Spares |
At moving average cost. |
|
| (b)
Raw Material |
At moving average cost. |
|
| (c)
Work-in-Process |
At lower of average
factory cost and net realizable value. |
|
| (d)
Finished Goods |
At lower of average
factory cost and net realizable value. |
|
| (e)
Goods-in-Transit |
At cost comprising of C
& F value and other charges thereon. |
|
|
| 1.7
Revenue Recognition |
|
| Sales
are recorded on despatch of products to the customers. |
|
|
|
|
1998 |
1997 |
|
|
|
|
(Rupees in Thousand) |
|
|
|
|
| 2.
ISSUED, SUBSCRIBED & PAID UP CAPITAL |
|
|
| 22,800,000
Ordinary Shares of Rs. 5/- each issued as |
|
| fully
paid in cash (1996-97:22,800,000 Ordinary |
|
|
| Shares
of Rs. 5/- each) |
|
114,000 |
114,000 |
|
| 1,200,000
Ordinary Shares of Rs. 5/- |
|
|
| each
issued as fully paid Bonus Shares |
|
6,000 |
6,000 |
|
|
|
---------- |
---------- |
|
|
|
|
120,000 |
120,000 |
|
|
|
========== |
========== |
|
|
|
|
|
| 3.
CAPITAL RESERVE |
|
|
|
