| Dewan Mushtaq 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 Mushtaq 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 MUHAMMAD AYUB
KHALID |
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Managing Director/Chief
Executive |
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DEWAN MOHAMMAD YOUSUF
FAROOQUI |
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Deputy Managing Director |
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DEWAN ABDUL REHMAN
FAROOQUI |
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DEWAN ASIM MUSHFIQ
FAROOQUI |
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MR. ZAHID ALI H. JAMAL
(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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HABIB BANK LIMITED |
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MUSLIM COMMERCIAL BANK
LIMITED |
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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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A-30, S. I. T. E., |
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Hyderabad (Sindh). |
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| NOTICE
OF THIRTY SEVENTH ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Thirty Seven Annual General Meeting of Dewan Mushtaq
Textile |
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| Mills
Limited will be held on 24th March 1999 at 5.00 p.m. at Dewan Centre, 3-A
Lalazar Beach Hotel |
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| Road,
Karachi, to 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 and confirm the minutes of the Thirty Sixth Annual General Meeting
held on 25th |
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| March 1998. |
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| 3.
To receive, consider and adopt the annual audited accounts for the year ended
30 September |
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| 1998,
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 shot-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 |
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| the
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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| Karachi:
03 March, 1999 |
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(DEWAN MOHAMMAD AYUB KHALID) |
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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 Share Transfer Books of the Company will remain closed from 22nd March,
1999 to 30th |
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| March,
1999 (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 |
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| attend,
speak 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 |
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| signed
or a notarially certified copy of such power of attorney, in order to be
valid must be |
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| deposited
at the registered office of the Company not less than 48 hours before the
time of the |
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| meeting. |
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| 4.
Members are requested to notify the Company any change in their addresses
immediately. |
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| "Statement
under Section 160 of the Companies Ordinance, 1984 attached with the Annual |
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| Report
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 the Thirty Seventh Annual General
Meeting of Dewan |
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| Mushtaq
Textile Mills Limited (hereinafter referred to as DMTML) to be held on 24th
March 1999 |
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| and
sets out 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 below: |
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| (i) |
Name of borrower Company
and |
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- Dewan Sugar Mills Limited |
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associated undertaking
together with |
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Rupees Fifty Million only |
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the amount of loan 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 Company |
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loan and advance together
with the |
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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 com- |
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obtained from borrower. |
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panies are under common
management 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 a |
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term of loans and
advances |
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period of twelve months
or as and when required |
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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 provide |
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any immediate requirement
of working capital of the |
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borrowing Companies |
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| (vi) |
Benefits likely to accrue
to the Company |
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- The investing
Company and its shareholders will be |
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and its shareholders from
loans |
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benefited in a manner
that their investment will fetch a |
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and advances |
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return of one percent
over and above the mark up rate |
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at which the investing
Company has borrowed. |
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Further, the surplus
funds will not remain idle and |
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will be invested in the
most efficient manner whereby |
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the investing Company not
only getting good return |
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but the funds will also
remain at the disposal of the |
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investing Company as such
loans and advances are |
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repayable on demand. |
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| None
of the Directors or their spouse has any vested or non-vested interest
whether directly or |
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| indirectly
in 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 the 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 up to a maximum limit
of |
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| Rs.50
million at a 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 37th Annual Report of the
Company together |
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| with
the audited accounts for the financial 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.7.34
million as com- |
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| pared
with Net Profit of Rs. 9.42 million of last year. Current year's Profit
includes Cash Dividend |
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| Income
of Rs. 5.52 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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395,906,140 |
257,811,088 |
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| Fuel,
Power and Water |
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43,348,853 |
49,583,115 |
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| Gross Profit |
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36,710,005 |
19,227,917 |
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| Cash
Dividend income from DSFL |
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5,520,015 |
7,359,998 |
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| Taxation |
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3,900,000 |
2,400,000 |
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| Net
Profit After Tax |
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7,343,066 |
9,417,080 |
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| We
humbly and gratefully bow our heads before Almighty Allah, the Most Gracious and Merciful, |
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| who
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. |
7,343,066 |
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| Un
appropriated Profit brought forward |
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Rs. |
35,290,145 |
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------------------ |
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| Profit
available for appropriation |
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Rs. |
42,633,211 |
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========== |
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| Appropriation |
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| Proposed
Bonus Shares @10% |
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Rs. |
1,762,200 |
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| Un-appropriated
profit carried forward |
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Rs. |
40,871,011 |
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------------------ |
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| Total |
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Rs. |
42,633,211 |
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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. 395 million as compared
with Rs.257 mil- |
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| lion
last year. The increase in sales is mainly attributed to devaluation of Pak
Rupee against |
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| US Dollar. |
|
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| 2.
Earning Per Share of your Company works out to Rs. 4.16 as compared with last
year's EPS, |
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| which
was Rs. 5.34. |
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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 marginally, primarily due to devaluation
impact. The |
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| yarn
prices remained under pressure whereas other costs like power charges
increased sig- |
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| nificantly. |
|
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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 |
|
| 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
PR0SPECTS |
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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 million 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 is |
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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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|
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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 Company5 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 MUHAMMAD AYUB KHALID |
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| Karachi:
03 March, 1999 |
|
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 Mushtaq
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 |
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| information
and explanations which to the best of our knowledge and belief were necessary
for the |
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| purposes
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; |
|
|
| (b)
in our opinion: |
|
|
| (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 |
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| business; 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 30 September 1998 and of the profit and the Cash Flow for the
year |
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| then ended; and |
|
|
| (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 |
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| AS
ON 30 SEPTEMBER, 1998 |
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|
|
Notes |
1998 |
1997 |
|
|
(Rupees) |
|
| CAPITAL
AND LIABILITIES |
|
|
| Share Capital |
|
|
| Authorised |
|
| 10,000,000
(1997: 10,000,000) |
|
| Ordinary
shares of Rs. 10/- Each |
|
100,000,000 |
100,000,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid-up |
|
3 |
17,622,000 |
17,622,000 |
|
| Reserves
and Surplus |
|
4 |
87,633,211 |
80,290,145 |
|
|
|
------------------ |
------------------ |
|
|
105,255,211 |
97,912,145 |
|
|
| DEFERRED
LIABILITIES FOR |
|
| Assets
Subject to Finance Lease |
|
5 |
48,821,311 |
-- |
|
| Staff Gratuity |
|
|
11,733,114 |
11,970,231 |
|
|
|
------------------ |
------------------ |
|
|
|
60,554,425 |
11,970,231 |
|
| CURRENT
LIABILITIES |
|
|
|
| Current
Portion of Lease Liability |
|
|
5,605,871 |
-- |
|
| Short-Term
Running Finances |
|
6 |
165,229,361 |
161,462,292 |
|
| Creditors,
Accrued Expenses and Other Liabilities |
|
7 |
138,697,627 |
108,766,546 |
|
| Provision
for Taxation |
|
|
19,550,641 |
15,650,641 |
|
| Dividends |
|
8 |
180,793 |
4,896,625 |
|
|
|
------------------ |
------------------ |
|
|
|
329,264,293 |
290,776,104 |
|
|
|
------------------ |
------------------ |
|
|
|
495,073,929 |
400,658,480 |
|
|
|
========== |
========== |
|
| PROPERTY
AND ASSETS |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
Fixed Assets - at cost less |
|
|
|
| accumulated
depreciation |
|
9 |
39,510,470 |
26,379,196 |
|
| CAPITAL
WORK IN PROGRESS |
|
|
45,470,841 |
-- |
|
|
|
|
|
|
| LONG
TERM INVESTMENT |
|
10 |
40,003,000 |
40,003,000 |
|
| LONG
TERM DEPOSITS |
|
11 |
55,736 |
55,736 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and Spares |
|
12 |
9,522,866 |
9,257,548 |
|
| Stock -in - Trade |
|
13 |
208,912,711 |
280,748,239 |
|
| Trade Debts |
|
14 |
77,129,936 |
19,778,126 |
|
| Advances,
Deposits, Prepayments and |
|
15 |
70,671,009 |
22,301,730 |
|
| Other
Receivables |
|
|
|
|
| Cash
and Bank Balance |
|
16 |
3,797,360 |
2,134,905 |
|
|
|
------------------ |
------------------ |
|
|
370,033,882 |
334,220,548 |
|
|
------------------ |
------------------ |
|
|
495,073,929 |
400,658,480 |
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
DEWAN ABDUL REHMAN FAROOQUI |
|
DEWAN M. AYUB KHALID |
|
|
Director |
|
Managing Director/Chief Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 SEPTEMBER, 1998 |
|
|
|
Notes |
1998 |
1997 |
|
|
(Rupees) |
|
|
| SALES - Net |
|
17 |
391,408,469 |
255,742,629 |
|
| Less:
Export Duty |
|
|
187,707 |
-- |
|
|
|
------------------ |
------------------ |
|
|
|
391,220,762 |
255,742,629 |
|
| COST
OF SALES |
|
18 |
354,510,757 |
236,514,712 |
|
|
|
|
------------------ |
------------------ |
|
| GROSS
PROFIT |
|
|
36,710,005 |
19,227,917 |
|
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
& General |
|
19 |
4,895,778 |
3,892,661 |
|
| Selling
& Distribution |
|
20 |
4,910,170 |
3,654,329 |
|
|
|
------------------ |
------------------ |
|
|
|
9,805,948 |
7,546,990 |
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
26,904,057 |
11,680,927 |
|
|
|
|
|
| OTHER
CHARGES |
|
|
|
| Financial
Expenses |
|
21 |
21,230,075 |
7,187,802 |
|
| Workers'
Profit Participation Fund |
|
|
283,699 |
224,656 |
|
| Workers'
Welfare Fund |
|
|
136,234 |
146,153 |
|
|
|
------------------ |
------------------ |
|
|
|
21,650,008 |
7,558,611 |
|
|
|
------------------ |
------------------ |
|
|
|
5,254,049 |
4,122,316 |
|
| OTHER
INCOME |
|
22 |
5,989,017 |
7,694,764 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
11,243,066 |
11,817,080 |
|
| TAXATION
- Current |
|
3,900,000 |
2, |
