| Fazal Textile Mills Limited |
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|
| Annual
Report 1998 |
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| CONTENTS |
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| Corporate
Information |
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|
| Notice
of Annual General Meeting |
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|
| Directors
Report |
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|
|
| Auditor's
Report |
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|
|
| Balance
Sheet |
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|
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| Profit
and Loss Account |
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|
| Cash
Flow Statement |
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|
|
| Notes
to the Accounts |
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|
|
| Pattern
of Shareholding |
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|
|
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| CORPORATE
INFORMATION |
|
|
| Board
of Directors |
|
| Mr.
A. Razak A. Aziz (Chairman) |
|
| Mr.
M. Yunus A. Aziz |
|
| Mr.
Sohail M. Yunus (Chief Executive) |
|
| Mr.
Muhammad Ali A. Razak |
|
| Mr.
Imran M. Yunus |
|
| Mr.
Shaikh M. Afzal |
|
| Mr.
Ilyas Ismail |
|
|
| Manager
Finance & Company Secretary |
|
| Rafique
Khanani |
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| ACA. ACIS |
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|
| Auditors |
|
| Hyder
Bhimji & Co. |
|
| Chartered
Accountants. |
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|
| Legal
Advisor |
|
| Mr.
Muhammad Aleem |
|
| (Advocate) |
|
|
| Bankers |
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| Bank
of America |
|
| Citibank
N.A. |
|
| Habib
Bank Limited |
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| Metropolitan
Bank Ltd. |
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|
| Registered
Office and Mills |
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| LA-2/B
Block # 21 |
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| Federal
'B' Area, Karachi-75950 |
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| Phones:
6321311 - 6322048 |
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| Fax:
92-21-6313372 |
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| Email:
fazalexp@cyber.net.pk. |
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|
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 36th |
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|
| Annual
General Meeting of the |
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|
| Members
of Fazal Textile Mills |
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|
| Limited
will be held at Registered Office of |
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| the
Company L-A, 2/B, Block # 21, Federal 'B' |
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| Area,
Karachi on Wednesday the 31st March, |
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|
| 1999
at 10.00 a.m. to transact the following |
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| business. |
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| 1.
To confirm the minutes of the 35th |
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| Annual
General Meeting held on 25th |
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| March,
1998. |
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|
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| 2.
To receive consider and adopt the |
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| Audited
Accounts for the year ended |
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| September
30, 1998 together with |
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| Directors
and Auditors Report thereon. |
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|
|
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| 3.
To declare the dividend as recommended |
|
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| by
the board. |
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|
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| 4.
To appoint Auditors for the year ending |
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| September
30, 1999 and to fix their |
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| remuneration. |
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| 5.
To elect seven directors as fixed by the |
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| board
in accordance with the provisions |
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| of
the Companies Ordinance 1984, for |
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| a
period of three years in place of |
|
|
| following
retiring directors. |
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|
| Mr.
A. Razak A. Aziz |
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|
|
|
| Mr.
M. Yunus A. Aziz |
|
| Mr.
Mohammad Ali A. Razak |
|
| Mr.
Sohail M. Yunus |
|
| Mr.
Ilyas Ismail |
|
| Mr.
Imran M. Yunus |
|
| Mr.
Sheikh M. Afzal |
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|
| 6.
To transact any other business with |
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| the
permission of the Chairman. |
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| NOTES: |
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| 1.
The share transfer books of the |
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| Company
will remain closed from March |
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| 29,
to April 05, 1999 (both days |
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|
| inclusive) |
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|
|
|
| 2.
Any person who seeks to contest in the |
|
| election
to the office of director should |
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| file
his/her intention to offer himself/ |
|
| herself
for election as director with the |
|
| Company
at its registered office not |
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| later
than 14 days before the date of |
|
| meeting. |
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|
|
| 3.
A member entitled to attend and vote |
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| at
the meeting may appoint a proxy to |
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| attend
and vote for him/her. Proxy |
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| forms
must be deposited at the |
|
|
| registered
office of the Company not |
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| later
than 48 hours before the time of |
|
| holding
the meeting. |
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|
|
|
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| 4.
A Corporate member of the Company |
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| may
by a resolution of its board of |
|
| directors
or governing body authorize |
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| a
person to act as its representative at |
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| the
meeting. |
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|
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| 5.
Members are requested to notify the |
|
| Company
of any change in their |
|
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| addresses
immediately. |
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|
By Order of the Board |
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|
RAFIQUE KHANANI |
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|
Company Secretary |
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| Karachi:
March 05, 1999 |
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|
|
| DIRECTORS
REPORT TO THE MEMBERS |
|
|
| We
are pleased to welcome the |
|
|
|
| Members
at the 36th Annual |
|
|
|
| General
meeting and have |
|
|
| pleasure
in presenting the |
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|
| Annual
Report together with the Company's |
|
|
| audited
accounts for the year ended September |
|
|
| 30, 1998. |
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|
|
|
|
|
|
| THE
YEAR UNDER REVIEW |
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| The
year under review witnessed significant |
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|
| changes
both nationally and internationally, |
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|
| which
have impacted the economy of our |
|
|
| Country
and Textile industry as well. The |
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|
| unprecedented
crisis faced by textile industry |
|
|
| since
last five years continued throughout |
|
|
| the
year. Due to the gravest financial |
|
|
| crisis
in the East Asian countries our |
|
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| country's
exports were badly effected, as |
|
|
| most
of the countries of that region are |
|
|
| important
markets for Pakistan's textile |
|
|
| exports.
Further, the crisis were worsened |
|
|
| due
to International sanctions imposed |
|
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| on
Pakistan for conducting a nuclear |
|
|
| explosion. |
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|
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| The
cotton crop failure due to attack of |
|
|
| virus
and diseases, crop estimate failure |
|
|
| and
unregulated export policy of this |
|
|
| commodity
are main factors, which are |
|
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| largely
responsible for crisis in textile |
|
|
| sector.
The traditional edge in the raw |
|
|
| cotton
prices has been lost as the cotton |
|
|
| price
policy is administered to give it a |
|
|
| global
competitive run. There is a need |
|
|
| to
redress and rectify the above situation |
|
|
| to
save the textile industry from total |
|
|
| disaster. |
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| FINANCIAL
AND OPERATIONAL |
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|
| RESULTS |
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| Inspite
of all above factors Alhamdo Lillah, |
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|
| your
Company in terms of financial results |
|
|
| has
performed reasonably well, the financial |
|
|
| results
are summarized as under: |
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|
|
|
|
|
|
|
|
Rs. '000' |
|
|
|
|
|
|
|
| Profit
before taxation |
|
|
|
58,632 |
|
|
| Provision
for taxation |
|
|
|
10,277 |
|
|
|
|
|
|
---------- |
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|
| Profit
after taxation |
|
|
|
48,355 |
|
|
|
|
|
|
| Profit
after taxation |
|
|
48,355 |
|
| Unappropriated
profit |
|
|
| brought
forward |
|
|
3,436 |
|
|
|
|
---------- |
|
| Profit
available for appropriation |
|
51,791 |
|
|
| Appropriation: |
|
| Proposed
Cash dividend |
|
| @ 10% |
|
|
6,188 |
|
| Transfer
to general reserve |
|
40,000 |
|
|
|
|
---------- |
|
|
|
|
|
46,188 |
|
| Unappropriated
profit |
|
---------- |
|
| carried
forward |
|
|
5,603 |
|
|
========== |
|
|
| The
management of the company has |
|
| continued
its efforts to export more and |
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| more
and earn valuable foreign exchange |
|
| for
the country. Export sales registered |
|
| increase
from Rs. 1.071 Billion to Rs. 1.199 |
|
| Billion
about 12% over the last year, which |
|
| is
mainly due to increase in export of |
|
| knitted
fabrics. Keeping in view the |
|
| encouraging
response from knitting |
|
| department
sales performance, additional |
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| six
new knitting machines were installed |
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| during
the year and we are planning to |
|
| install
four more machines to increase |
|
| our
knitting capacity. The profit after-tax |
|
| remains
at Rs. 48.355 Million against Rs. |
|
| 62.840
Million in the corresponding year. |
|
| The
reduction in profit is mainly due to |
|
| increase
in input costs due to inflationary |
|
| pressure
resulting from devaluation of |
|
| rupee. |
|
|
| DIVIDEND |
|
| Inspire
of the tight liquidity position and |
|
| difficult
business conditions the directors |
|
| of
the Company has continued the payout |
|
| to
the members of its due share and have |
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| recommended
10% cash dividend. |
|
|
| YEAR
2000 COMPLIANCE OF |
|
| COMPUTER
SYSTEM |
|
| The
company with the help of our in house |
|
| experts
has taken appropriate steps to |
|
| deal
with the year 2000 problem (Y2K). |
|
| This
process is expected to be ready to |
|
| operate
in new millennium before end of |
|
| current
year. |
|
|
|
|
|
| FUTURE
PROSPECTS |
|
|
|
| The
cotton crop for the year 1998-1999 is |
|
|
| again
short of target and quality of cotton |
|
|
| is not up to the desired
standards as the |
|
|
| Staple length and
Contamination in cotton |
|
|
| are major concern in
quality of cotton. |
|
|
| The prices of cotton also
remain high |
|
|
| during
current season. We have covered |
|
|
| about 75% of our cotton
requirement and |
|
|
| are importing the
balance quantity to make |
|
| up the shortage. |
|
|
|
|
|
| We anticipate that inspite
of increase in |
|
|
| raw material prices,
increase in cost of |
|
|
| production and
competitive sales prices |
|
|
| your
Company will be able to perform |
|
|
| reasonably well during
the current year |
|
|
| and will make all
possible efforts to continue |
|
| its
tradition in exporting more and more. |
|
|
|
|
| AUDITORS |
|
|
|
| The
present auditors M/s. Hyder Bhimji |
|
|
| &
Co., Chartered Accountants retiring at |
|
|
| the annual general meeting
and being |
|
|
| eligible,
have offered themselves for re- |
|
| appointment
until conclusion of the next |
|
| annual
general meeting. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| Statement
showing pattern of holding of |
|
| shares
as at September 30, 1998 is an- |
|
| nexed
to this report. |
|
|
| THANKS
AND APPRECIATION |
|
| We
would like to place on record our deep |
|
| appreciation
for the efforts of the execu- |
|
| tives,
officers and other staff members |
|
| and
workers for their hardwork. Co-op- |
|
| eration
and sincerity to the Company in |
|
| achieving
the best possible results for the |
|
| Company
and we do hope to get the same |
|
| co-operation
in the years to come. |
|
|
|
|
On behalf of the Board |
|
|
|
|
|
|
|
SOHAIL M. YUNUS |
|
|
|
Chief Executive |
|
|
| Karachi:
March 05, 1999 |
|
|
|
| FIVE
YEARS PERFORMANCE AT A GLANCE WITH RATIOS |
|
|
|
|
(Rupees in "000") |
|
|
|
|
| Years |
|
1997-98 |
1996-97 |
1995-96 |
1994-95 |
1993-94 |
|
|
|
|
|
| Export
sales |
|
1,198,811 |
1,071,288 |
1,472,849 |
1,240,615 |
1,057,249 |
|
| Local
sales |
|
673,449 |
665,868 |
345,760 |
419,501 |
221,950 |
|
| Gross
sales |
|
1,872,260 |
1,737,156 |
1,818,609 |
1,660,116 |
1,279,199 |
|
| Net sales |
|
1,854,772 |
1,715,552 |
1,775,704 |
1,623,251 |
1,255,438 |
|
| Gross
profit |
|
230,519 |
228,241 |
225,670 |
152,469 |
245,527 |
|
| Gross
profit ratio |
|
12.43% |
13.30% |
12.71% |
9.39% |
19.56% |
|
| Profit
before taxation |
|
58,632 |
72,169 |
43,596 |
16,616 |
74,630 |
|
| Profit
before taxation ratio |
3.16% |
4.21% |
2.46% |
1.02% |
5.94% |
|
| Profit
after taxation |
|
48,355 |
62,840 |
29,299 |
4,162 |
64,135 |
|
| Profit
after taxation ratio |
2.61% |
3.66% |
1.65% |
0.26% |
5.11% |
|
| Cost
of fixed assets |
|
841,324 |
811,502 |
805,415 |
817,129 |
806,805 |
|
| Book-value
of fixed assets |
394,985 |
407,525 |
444,716 |
497,408 |
540,262 |
|
| Total
assets employed |
|
1,078,216 |
978,428 |
873,769 |
732,869 |
807,526 |
|
| Shareholders
equity |
|
316,894 |
274,727 |
217,512 |
113,756 |
109,594 |
|
| Break-up
value per share |
51.22 |
48.84 |
38.67 |
101.12 |
146.13 |
|
| Earning
per share before tax |
9.48 |
12.83 |
7.75 |
14.77 |
99.51 |
|
| Earning
per share after tax |
7.81 |
11.17 |
5.21 |
3.70 |
85.51 |
|
| Production
capacity (20/s) Lbs. |
43,164,402 |
43,876,544 |
41,927,575 |
43,917,305 |
47,484,252 |
|
| Production
(20/s) Lbs. |
|
42,608,772 |
43,593,931 |
40,341,175 |
42,714,091 |
44,231,906 |
|
| Capacity
utilization |
|
98.71% |
99.36% |
96.22% |
97.26% |
93.15% |
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed |
|
|
| balance
sheet of Fazal Textile |
|
|
| Mills
Limited as at September |
|
|
| 30,
1998 and related profit and loss account |
|
|
| and
Statement of changes in financial position |
|
| (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 |
|
|
|
| confirmity
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, invest- |
|
| ments
made and expenditure |
|
| incurred
during the year were in |
|
| accordance
with the objects of the |
|
| Company. |
|
|
| c)
in our opinion and to the best of our |
|
| information
and according to the |
|
| explanations
given to us, the balance |
|
| sheet,
profit and loss account and the |
|
| statement
of changes in financial |
|
| positions
(cash flow statement), together |
|
| with
the notes forming part thereof, |
|
| give
the information required by the |
|
| Companies
Ordinance, 1984 in the man- |
|
| ner
so required and respectively and |
|
| given
a true and fair view of the state |
|
| of
the Company's affairs as at Septem- |
|
| ber
30, 1998 and of the profit and the |
|
| cash
flows 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. |
|
|
|
|
HYDER BHIMJI & CO. |
|
|
|
Chartered Accountants |
|
| Karachi:
March 05, 1999 |
|
|
|
| BALANCE
SHEET |
|
| AS
AT SEPTEMBER 30, 1998 |
|
|
|
|
|
|
Rupees '000' |
|
|
Note |
1998 |
1997 |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised: |
|
|
|
| 15,000,000
Ordinary shares of Rs. 10/- each |
|
150,000 |
150,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paidup |
|
3 |
61,875 |
56,250 |
|
|
|
|
| RESERVES
AND SURPLUS |
|
|
|
| General
reserve |
|
4 |
249,416 |
215,041 |
|
| Unappropriated
profit |
|
|
5,603 |
3,436 |
|
|
|
|
---------- |
---------- |
|
|
|
|
255,019 |
218,477 |
|
|
|
|
---------- |
---------- |
|
| Shareholders
equity |
|
|
316,894 |
274,727 |
|
|
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
|
| Staff
retirement gratuity |
|
10,425 |
12,904 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term finances |
|
5 |
522,532 |
532,459 |
|
| Creditors,
accruals and others |
|
6 |
143,674 |
84,486 |
|
| Provision
for taxation |
|
7 |
78,503 |
68,227 |
|
| Proposed
dividend |
|
|
6,188 |
5,625 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
750,897 |
690,797 |
|
| CONTINGENCIES |
|
|
8 |
- |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
1,078,216 |
978,428 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
assets |
|
9 |
394,985 |
407,525 |
|
| Capital
work in progress |
|
10 |
12,851 |
|
|
|
|
| LONG
TERM DEPOSITS |
|
|
927 |
1,007 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
11 |
26,379 |
15,781 |
|
| Stock
in trade |
|
12 |
128,366 |
163,944 |
|
| Trade
debts |
|
13 |
379,933 |
298,935 |
|
| Loans,
advances, deposits and receivables |
14 |
128,814 |
82,062 |
|
| Cash
and bank balances |
|
15 |
5,961 |
9,174 |
|
|
|
|
|
---------- |
---------- |
|
|
|
669,453 |
569,896 |
|
|
|
---------- |
---------- |
|
|
|
1,078,216 |
978,428 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
A. Razak A. Aziz |
|
|
Sohail M. Yunus |
|
| Karachi:
March 05, 1999 |
Chairman/Director |
|
|
Chief Executive |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED SEPTEMBER 30, 1998 |
|
|
|
|
|
|
Rupees '000' |
|
|
Note |
1998 |
1997 |
|
|
|
|
| Sales |
|
16 |
1,854,772 |
1,715,552 |
|
| Cost
of sales |
|
17 |
1,624,253 |
1,487,311 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
230,519 |
228,241 |
|
|
|
|
| Administrative,
selling and |
|
|
| general
expenses |
|
18 |
74,992 |
54,780 |
|
| Financial
expenses |
|
19 |
94,602 |
98,485 |
|
|
|
|
---------- |
---------- |
|
