| Dewan Khalid Textile Mills Limited |
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| Annual
Report 1998 |
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| CONTENTS |
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| Company
Information |
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| Notice
of the Meeting |
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| Statement
Under Section 160 |
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| Directors' Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
& Loss Account |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Share Holding |
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| Mission
Statement |
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The mission of Dewan Khalid Textile Mills Limited is to be the |
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finest Organisation, and to conduct business responsibly in a |
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straight forward way. |
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Our basic aim is to benefit the customers, employees and |
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shareholders and to fulfill our commitments to the society.
Our |
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hallmark is honesty, initiative and teamwork of our people and |
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our ability to respond effectively to change in all aspects of
life |
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including technology, culture and environment. |
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We will create a work environment, which motivates, recognises |
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and rewards achievements at all levels of the Organisation |
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because |
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IN ALLAH WE TRUST & IN PEOPLE WE BELIEVE. |
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We will always conduct ourselves with integrity and strive to
be |
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the best. |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
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DEWAN ZIA-UR-REHMAN
FAROOQUI |
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Chairman |
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DEWAN GHULAM MUSTAFA
KHALID |
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Vice Chairman |
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DEWAN ABDUL REHMAN
FAROOQUI |
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Managing Director/Chief
Executive |
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DEWAN MOHAMMAD AYUB
KHALID |
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Deputy Managing Director |
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DEWAN MOHAMMAD YOUSUF
FAROOQUI |
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DEWAN ASIM MUSHFIQ
FAROOQUI |
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MR. MOHAMMED SHAFI (NIT) |
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| AUDITORS |
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MESSRS. FARUQ ALI &
CO. |
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Chartered Accountants |
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Habib Square, |
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M. A. Jinnah Road, |
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Karachi, Pakistan. |
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| TAX ADVISORS |
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SHARIF & COMPANY |
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Advocates |
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| BANKERS |
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MUSLIM COMMERCIAL BANK
LIMITED |
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HABIB BANK LIMITED |
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ABN AMRO BANK |
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| REGISTERED
OFFICE |
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DEWAN CENTRE |
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3-A, Lalazar, |
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Beach Hotel Road, |
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Karachi - 74000, |
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Pakistan. |
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| MILLS |
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G-11, S. I. T. E., |
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Kotri (Sindh). |
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| NOTICE
OF TWENTY FIRST ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Twenty First Annual General Meeting of Dewan Khalid
Textile Mills Limited |
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| will
be held on 24th March 1999 at 4:00 p.m. at Dewan Centre, 3-A Lalazar Beach
Hotel Road, Karachi, to |
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| transact
the following business: |
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| ORDINARY
BUSINESS: |
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| 1.
Recitation from HOLY QURAN. |
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| 2.
To read the confirm the minutes of the Twentieth Annual General Meeting held
on 25th March 1998. |
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| 3.
To receive, consider and adopt the annual audited accounts for the year ended
30 September 1998, |
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| together
with the Directors' and Auditors' Report thereon. |
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| 4.
To approve the declaration of issue of bonus shares @ 10% |
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| 5.
To appoint Auditors of the Company for the year ending 30 September 1999 and
to fix their |
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| remuneration. |
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| SPECIAL
BUSINESS: |
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| 6.
To consider and approve short term loans and advances out of surplus funds
available with the |
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| Company
to Dewan Sugar Mills Limited in compliance with the provisions of Section 208
of the |
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| Companies
Ordinance, 1984. |
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| 7.
To transact any other business with the permission of the Chairman. |
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By and on behalf of Board of Directors |
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| Date:
03 March 1999 |
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(DEWAN ABDUL REHMAN FAROOQUI) |
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| Place: Karachi. |
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Managing Director/Chief Executive |
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| NOTES: |
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| 1.
The Shares Transfer Books of the Company will remain closed from 22 March
1999 to 30 March 1999 |
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| (both
days inclusive). |
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| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint a proxy to attend, speak |
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| and
vote for him/her (A proxy must be member of the company). |
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| 3.
An instrument of proxy and a power of attorney or other authority (if any)
under which it is signed or a |
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| notarially
certified copy of such power of attorney, in order to be valid must be
deposited at the |
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| registered
office of the company not less than 48 hours before the time of the meeting. |
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| 4.
Members are requested to notify any change in their addresses immediately. |
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| "Statement
under Section 160 of the Companies Ordinance, 1984 is attached with the
Annual Report |
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| circulated
to the members of the company". |
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| STATEMENT
UNDER SECTION 160 |
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| OF
THE COMPANIES ORDINANCE, 1984 |
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| This
statement is annexed to the Notice of Twenty First Annual General Meeting of
Dewan Khalid |
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| Textile
Mills Limited (hereinafter referred to as DKTML.) to be held on 24th March,
1999 and sets out |
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| material
facts concerning the Special Business to be transacted at the Meeting. |
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| 1.
Investments in Associated Companies |
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| The
Board of Directors considers to advance temporary short term financing to the
associated |
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| company
out of surplus funds available with the company. Details of such financing
are given |
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| below: |
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| (i) |
Name of borrower company
and asso- |
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- Dewan Sugar Mills
Limited |
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ciated undertaking
together with the |
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Rupees Fifty Million only |
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amount of loans and
advance. |
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| (ii) |
Rate of interest to be
charged on each |
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- 1% above the rate on
which the lending |
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loan and advance together
with the |
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Company has obtained its
own borrowing |
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particulars of collateral
security to be |
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- No Security is
considered necessary as all the |
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obtained from borrower. |
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companies are under
common management |
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control. |
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| (iii) |
Period for which these
loans and |
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- Twelve Months |
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advances will be made |
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| (iv) |
The terms of repayment or
any other |
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- The loans and advances
are adjustable within |
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terms of loans and
advances. |
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a period of twelve months
or as and when |
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required by the lending
Company. |
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| (v) |
Purpose of loans and
advances |
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The purpose of loans and
advances is to pro- |
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vide any immediate
requirement of working |
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capital of the borrowing
Companies. |
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| (vi) |
Benefits likely to accrue
to the |
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- The investing Company
and its shareholders |
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Company and its
shareholders from |
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will be benefited in a
manner that their invest- |
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loans and advances |
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ment will fetch a return
of one percent over |
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and above the mark-up
rate at which the |
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investing Company has
borrowed. Further, |
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the surplus funds will
not remain idle and will |
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be invested in the most
efficient manner |
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whereby the investing
Company, not only get- |
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ting good return but the
funds will also remain |
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at the disposal of the
investing Company as |
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such loans and advances
are repayable on |
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demand. |
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| None
of the Directors or their spouse has any vested or non-vested interest
whether directly, or indirectly in |
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| the
proposed business. |
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| In
this regard following resolution is proposed to be passed, with or without
modification, as a |
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| "SPECIAL
RESOLUTION". |
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| "Resolved
that the Board of Directors of the Company be and is hereby authorised to
make |
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| temporary
short term loans/advances to Dewan Sugar Mills Limited upto maximum limit of |
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| Rs.
50 Million at the mark up rate of 1% above the rate on which the Company has
obtained the |
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| borrowing. |
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| These
temporary loans/advances shall be adjusted as and when required by the
Company and |
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| shall
not exceed 12 months period". |
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| DIRECTORS'
REPORT |
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| Your
Directors take pleasure in presenting to you the 21st Annual Report of the
Company together |
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| with
the audited accounts for the year ended on September 30, 1998. |
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| Alhamdolillah,
the results for the year under review are satisfactory despite many adverse
factors |
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| such
as increase in cotton prices as compared with last year, instability in yarn
prices and immense |
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| increase
in power charges. |
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| By
the grace of Almighty Allah, your Company has earned a Net Profit of Rs.11.17
million as com- |
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| pared
with Net Profit of Rs. 13.45 million of last year. Current year's Profit
includes Cash Dividend |
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| Income
of Rs. 8.9 million from Dewan Salman Fibre Ltd. This dividend income has once
again pro- |
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| vided
a sigh of relief to your Company's cash flow. The highlights of the Accounts
are as follows: |
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1998 |
1997 |
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|
(Rupees) |
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| Gross Sales |
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712,386,348 |
304,462,700 |
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| Fuel,
Power and Water |
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68,279,319 |
65,608,311 |
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| Gross Profit |
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65,884,151 |
40,153,263 |
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| Cash
Dividend income from DSFL. |
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8,970,015 |
11,959,998 |
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| Taxation |
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8,525,000 |
4,077,000 |
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| Net
Profit After Tax |
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11,175,616 |
13,453,099 |
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| We
humbly gratefully bow our heads before Almighty Allah, the Most Gracious and Merciful, who |
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| has
rewarded and blessed Your Company with His countless bounties in difficult
times. |
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IF YE GIVE THANKS, I WILL GIVE YOU MORE (HOLY QURAN) |
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| Your
Directors are pleased to propose appropriation of profit in the following
manner: |
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| Profit
for the year 1997-98 |
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Rs. |
11,175,616 |
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| Unappropriated
Profit brought forward |
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Rs. |
61,140,561 |
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------------------ |
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| Profit
available for appropriation |
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Rs. |
72,316,177 |
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========== |
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| Appropriation |
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| Proposed
Bonus Shares @ 10% |
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Rs. |
2,916,000 |
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| Unappropriated
profit carried forward |
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Rs. |
69,400,177 |
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| Total |
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Rs. |
72,316,177 |
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========== |
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| The
Board of Directors took decision for appropriation of the profit keeping in
view the expectations |
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| of
the shareholders from Dewan Mushtaq Group, future profitability and present
scenario of Textile |
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| Industry. |
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| The
Board also decided to apprise its valued shareholders current status and
future of local Textile |
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| Industry
and other prevalent situation in detail through this report. |
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| SALIENT
FEATURES OF THE ACCOUNTS: |
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| 1.
Total gross sales of your Company amounted to Rs. 712.38 million as compared
to Rs. 304.46 |
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| million
last year. The increased in sales is mainly attributed to increased quantity
and deval- |
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| uation
of Pak Rupee against US Dollar. |
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| 2.
Earning Per Share of your Company works out to Rs. 3.83 as compared with last
year's EPS |
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| which
was Rs. 4.61. |
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| 3.
During the year under review Textile Industry continued to remain in the
clutches of grave |
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| crisis.
Cotton crop once again failed miserably and cotton prices remained at high
level. |
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| Average
price of cotton hovered around Rs. 2,300/- per maund, excluding 12.5% sales
tax. |
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| The
sales of your company increased, primarily due to increased quantity and
devaluation |
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| impact.
The yarn prices remained under pressure whereas other costs like power
charges |
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| increased
significantly. |
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| 4.
The Board would like to apprise the shareholders that our plants are based on
old technolo- |
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| gy
and with the passage of time, they have become less efficient than the new
technology |
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| plant
and machinery. However, since the plant and machinery are almost fully
depreciated, |
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| therefore,
your Company has been able to maintain profitability and paid dividend every |
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| year regularly. |
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| 5.
Alhamdolillah, your company has
been able to meet all its financial obligations on time and |
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| from
its own resources. |
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| FUTURE
PROSPECTS |
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| The
outlook of local Textile Industry appears gloomy for the year 1999. The 1999
cotton crop is |
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| expected
to be 7.2 billion bales (13.9% lower than 1998). The crop size is lower this
time and is short |
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| of
the total requirement of the local textile industry which stood at 8.3
million bales in 1999, from 8.2 |
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| million
bales in 1998. As per the estimates, after accounting the usage by the
informal sector to the |
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| tune
of 0.2 million bales the output of 7.2 million bales puts the Textile
Industry in a position where |
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| the
industry would be importing cotton. Some import has already started and the
rates are more or |
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| less
the same as of local cotton. It appears that the cotton locally would be
costlier due to lower |
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| arrival locally. |
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| The
management has decided to implement a major Balancing, Modernizing and
Replacement |
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| (BMR)
program in order to remain competitive in its field of operation. Some of the
capital expen- |
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| diture
incurred in this relation has been reflected in the current accounts and
further investment in |
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| underway.
The board feels that it has now become inevitable to undertake BMR so as to
maintain |
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| promising
future prospects of your company. |
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| The
management is further considering other major improvements and would carry
them out to |
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| match
with the changing requirements of the industry. |
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| The
Board would like to inform the shareholders that the sales for the current
year would be affect- |
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| ed
due to implementation of BMR program. The production facilities were
temporarily shut down |
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| to
carry out renovation work for the building and ancillary facilities. This
inevitable work would |
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| result
in loss of some production for several weeks. |
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| NOTE
OF THANKS: |
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| The
Board puts on record its gratitude to its valuable shareholders, federal and
provincial govern- |
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| ment
functionaries, banks, development financial institutions and customers whose
co-operation, |
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| constant
support and patronage have enabled your Company to achieve the desired
results. |
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| The
Board also expresses its thanks for the valuable teamwork, loyalty and
laudable efforts rendered |
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| by
the executives, staff members and workers of your Company, during the year
under review, and |
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| wishes
to place on record its appreciation for the same. |
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| AUDITORS: |
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| The
Auditors of your Company, Messrs Faruq Ali & Co., Chartered Accountants,
retire and offer |
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| their
services for re-appointment for the ensuing year on the same remuneration. |
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| CONCLUSION: |
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| In
conclusion, we bow, beg and pray to Almighty Allah, Rehman-o-Rahim, in the
name of our |
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| beloved
prophet, Muhammad, peace be upon him, for continued showering of His
Blessings, |
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| Guidance,
Strength, Health and Prosperity to us, our Company, Country and Nation; and
also pray |
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| to
Almighty Allah to bestow peace, harmony, brotherhood and unity in true
Islamic spirit to whole |
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| of
Muslim Ummah, Ameen, Summa-Ameen. |
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LO-MY LORD IS INDEED HEARER OF PRAYER (HOLY QURAN) |
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For and on behalf of the Board of Directors |
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|
DEWAN ABDUL REHMAN FAROOQUI |
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| Karachi:
March 03, 1999 |
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Managing Director/Chief Executive |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed Balance Sheet of Dewan Khalid
Textile Mills Limited, as at 30th |
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| September,
1998 and the related Profit and Loss Account and Cash Flow Statement together
with the |
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| notes
forming part thereof, for the year then ended and we state that we have
obtained all the infor- |
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| mation
and explanations which to the best of our knowledge and belief were necessary
for the purpos- |
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| es
of our audit and, after due verification thereof, we report that: |
|
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| (a)
in our opinion, proper books of account have been kept by the Company as
required by the |
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| Companies
Ordinance, 1984; |
|
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| (b)
In our opinion: |
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| (i)
the Balance Sheet and Profit and Loss Account together with the notes thereon
have been |
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| drawn
up in conformity with the Companies Ordinance, 1984 and are in agreement with |
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| the
books of account and are further in accordance with accounting policies
consistently |
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| applied; |
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| (ii)
the expenditure incurred during the year was for the purpose of the Company's
busi- |
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| ness; and |
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| (iii)
the business conducted, investments made and the expenditure incurred during
the year |
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| were
in accordance with the objects of the Company; |
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| (c)
in our opinion and to the best of our information and according to the
explanations given to |
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| us,
the Balance Sheet, Profit and Loss Account and the Cash Flow Statement,
together with the |
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| Notes
forming part thereof, give the information required by the Companies
Ordinance, 1984 |
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| in
the manner so required and respectively give a true and fair view of the
state of the |
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| Company's
affairs as at 30th September 1998 and of the profit and the Cash Flow for the
year |
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| then ended and |
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| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was |
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| deducted
by the Company and deposited in the Central Zakat Fund established under
Section |
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| 7
of that Ordinance. |
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|
| Faruq Ali & Co., |
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| Chartered
Accountants |
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| Karachi. |
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| Date:
03 March, 1999 |
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|
|
| BALANCE
SHEET AS ON 30 SEPTEMBER, 1998 |
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| CAPITAL
AND LIABILITIES |
|
Notes |
1998 |
1997 |
|
|
(Rupees) |
|
| SHAREHOLDER'S
EQUITY |
|
| Share Capital |
|
| Authorised |
|
| 15,000,000
Ordinary shares of Rs. 10/- each |
|
150,000,000 |
150,000,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed & Paid up |
|
3 |
29,160,000 |
29,160,000 |
|
| Reserves
and Surplus |
|
4 |
207,316,177 |
196,140,561 |
|
|
|
------------------ |
------------------ |
|
|
|
236,476,177 |
225,300,561 |
|
| Deferred
Liability |
|
|
|
|
|
|
| Assets
Subject to Finance Lease |
|
5 |
30,051,213 |
13,926,199 |
|
| Provision
for Gratuity |
|
|
13,219,760 |
12,849,675 |
|
|
|
|
| Current
Liabilities |
|
|
|
| Current
Portion of Lease Liabilities |
|
|
7,588,481 |
3,501,336 |
|
| Short
Term Running Finances |
|
6 |
248,829,636 |
246,889,784 |
|
| Creditors,
Accrued expenses & Other Liabilities |
|
7 |
37,562,956 |
73,053,808 |
|
| Provision
for Taxation |
|
|
14,542,696 |
6,017,696 |
|
| Dividend Payable |
|
8 |
186,282 |
7,572,869 |
|
|
|
------------------ |
------------------ |
|
|
|
308,710,051 |
337,035,493 |
|
|
|
------------------ |
------------------ |
|
|
|
588,457,201 |
589,111,928 |
|
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
|
|
| Operating
Fixed Assets (at cost |
|
|
|
| less
accumulated depreciation) |
|
9 |
96,076,595 |
77,959,943 |
|
|
|
|
|
| Long
Term Investment |
|
10 |
65,000,000 |
65,000,000 |
|
| Capital
Work in Progress |
|
|
4,554,381 |
-- |
|
| Long
Term Deposits |
|
11 |
66,775 |
66,775 |
|
|
|
|
| Current Assets |
|
|
|
| Stores
and Spares |
|
12 |
7,920,213 |
10,014,383 |
|
| Stock in Trade |
|
13 |
235,702,291 |
416,186,783 |
|
| Trade
Debts - Unsecured (Considered good) |
|
|
130,184,937 |
501,767 |
|
| Advances,
Deposits, Prepayments |
|
|
|
| and
Other Receivables |
|
14 |
43,714,122 |
14,362,294 |
|
| Cash
and Bank Balance |
|
15 |
5,237,887 |
5,019,983 |
|
|
------------------ |
------------------ |
|
|
422,759,450 |
446,085,210 |
|
|
------------------ |
------------------ |
|
|
588,457,201 |
589,111,928 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
DEWAN GHULAM MUSTAFA KHALID |
|
DEWAN ABDUL REHMAN FAROOQUI |
|
|
Director |
|
Managing Director/Chief Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER, 1998 |
|
|
|
Notes |
1998 |
1997 |
|
|
(Rupees) |
|
|
| Sales - Net |
|
16 |
706,629,158 |
301,420,105 |
|
| Less:
Excise/Export Duty |
|
|
359,540 |
73,959 |
|
|
|
------------------ |
------------------ |
|
|
|
706,269,618 |
301,346,146 |
|
| Cost of Sales |
|
17 |
640,385,467 |
261,192,883 |
|
|
|
------------------ |
------------------ |
|
| Gross Profit |
|
|
65,884,151 |
40,153,263 |
|
|
|
|
|
|
| Operating
Expenses |
|
|
|
| Administrative
& General |
|
18 |
5,329,501 |
4,933,445 |
|
| Selling
& Distribution |
|
19 |
10,205,094 |
2,820,076 |
|
|
|
------------------ |
------------------ |
|
|
|
15,534,595 |
7,753,521 |
|
|
|
------------------ |
------------------ |
|
| Operating Profit |
|
|
50,349,556 |
32,399,742 |
|
|
|
|
|
| Other Charges |
|
|
|
| Financial
Expenses |
|
20 |
38,513,300 |
26,758,281 |
|
| Donation |
|
|
445,439 |
890,397 |
|
| Workers'
Profit Participation Fund |
|
|
569,541 |
237,553 |
|
| Workers'
Welfare Fund |
|
|
426,006 |
250,388 |
|
|
|
------------------ |
------------------ |
|
|
|
39,954,286 |
28,136,619 |
|
|
|
------------------ |
------------------ |
|
|
|
10,395,270 |
4,263,123 |
|
| Other Income |
|
21 |
9,305,346 |
13,266,976 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before Taxation |
|
19,700,616 |
17,530,099 |
|
|
|
| Taxation
- Current Year |
|
8,525,000 |
4,077,000 |
|
