| Liberty Mills Limited |
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| Annual
Report 1998 |
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| Contents |
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| Board
of Directors |
|
| Notice
of Meeting |
|
| Report
of the Directors |
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| Auditors'
Report to the Members |
|
| Balance
Sheet |
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| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
|
| Pattern
of Share Holding |
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|
|
| Board
of Directors |
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|
| BOARD
OF DIRECTORS |
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| DIRECTORS |
|
MR. SALIM N. MUKATY |
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|
MR. ARIF N. MUKATY |
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|
MR. YUSUF N. MUKATY |
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|
MR. ASHRAF SALIM MUKATY |
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|
MR. NOOR MOHAMMAD YOUSUF
MUKATY |
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|
MR. ARIF HAJI ABDUL
SATTAR MANIYA |
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|
MR. LUQMAN F. POONA WALA |
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|
MR. GHAYUR A. KHAN |
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|
MR. MADNI GUL MUHAMMAD |
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| CHIEF
EXECUTIVE |
MR. YUSUF N. MUKATY |
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| SECRETARY |
|
MR. MUHAMMAD ASHRAF GHAZI |
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| AUDITORS: |
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HYDER BHIMJI & CO. |
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|
CHARTERED ACCOUNTANTS |
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|
A. R. DIWAN & CO. |
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|
CHARTERED ACCOUNTANTS |
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| BANKERS: |
|
HABIB BANK LIMITED |
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|
HABIB BANK A. G. ZURICH |
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METROPOLITAN BANK LTD. |
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SONERI BANK LTD. |
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BANK AL HABIB LTD. |
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| REGISTERED
OFFICE: |
10TH FLOOR, ADAMJEE
HOUSE, |
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I. I. CHUNDRIGAR ROAD, |
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KARACHI- 74000. |
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TEL. NOS. 2417205-6-7-8 |
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TELE FAX: (021) 2412194 |
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CABLE: MUKATICO |
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TELEX: 20845 MKC PK |
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| MILLS: |
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A-51-A, S.I.T.E.,
KARACHI. |
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TEL. NOS. 2578103 TO
2578116 |
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TELEX: 21989 LML PK |
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TELE FAX: (021) 2564600 |
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| Notice
of Meeting |
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|
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| NOTICE
is hereby given that 32nd Annual General meeting of Shareholders of LIBERTY
MILLS |
|
| LIMITED
will be held at Beach Luxury Hotel, Moulvi Tamizuddin Khan Road, Karachi on
Monday |
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| 28th
December, 1998 at 8.00 A.M. to transact the following business: |
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|
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| 1.
To confirm the minutes of the Annual General Meeting of the Company held on
27- |
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| 12-1997. |
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|
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| 2.
To receive and adopt the Directors' and Auditors Report and Annual Audited
Accounts |
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| of
the Company for the year ended 30th June, 1998. |
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| 3.
To appoint Auditors for the year ending 30th June 1999 and to fix their
remuneration, |
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| The
retiring Auditors M/s. Hyder Bhimji & Company and M/s. A. R. Diwan &
Company |
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| Chartered
Accountants of the Company have offered themselves for re-appointment. |
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|
| 4.
To transact any other ordinary business which may be placed before the
meeting with |
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| the
permission of the chair. |
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|
By Order of the Board |
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|
(Muhammad Ashraf Ghazi) |
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|
Company Secretary |
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| KARACHI: 3rd December, 1998 |
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| NOTE: |
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| 1.
The Share Transfer Books of the Company will be closed from 21st December,
1998 |
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| to
28th December 1998 (both days inclusive). |
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| 2.
The shareholders are requested to communicate the Company of any change in
their |
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| address. |
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|
| Report
of the Directors |
|
|
| Dear
Shareholders, |
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|
|
| On
behalf of the Board of Directors, I take pleasure in presenting the Directors
Report together |
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| with
the audited accounts of the Company for the year ended 30th June 1998. |
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| During
the year 1997-98, your Company's turnover was increased by 16.42%. However,
inspire |
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| of
the increase in turnover, it was not possible to mitigate the impact of the
difficult economic |
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| conditions
prevailed in the Country during the period under review. Operating profit at
Rs.50.98 |
|
| million
was less than that achieved in 1996-97. The reason for the decline in profits
is increased |
|
| expenses
coupled with difficult economic conditions. |
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| In
view of the difficult economic conditions foreseen for the year 1998-99, your
Directors do not |
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| recommend
payment of dividend. This is also necessary, as it will put immense burden on
the |
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| liquidity
position of the Company. |
|
|
| OPERATING
RESULTS |
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|
| The
Summaried results and appropriation of Profit are as under: |
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| Profit
before taxation |
|
12,742,016 |
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|
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| Less:
Provision for taxation |
|
2,724,467 |
|
|
|
|
|
|
---------- |
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|
|
| Profit
after taxation |
|
10,017,549 |
|
|
|
| Un-appropriated
Profit brought forward |
|
27,619 |
|
|
|
|
|
|
---------- |
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|
|
| Profit
available for appropriation |
|
10,045,168 |
|
|
|
| Transfer
to revenue reserve |
|
(10,000,000) |
|
|
|
|
|
|
---------- |
|
|
|
| Unappropriated
Profit carried forward |
|
45,168 |
|
|
|
|
========== |
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| FUTURE
OUTLOOK |
|
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| In
an increasingly competitive environment, the management will focus on further
improving the |
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| quality
of its products. As a step in this direction, your Company had applied for
ISO 9002 |
|
| certification
& the management is pleased to inform you that Alhamdolilah, your Company
is now |
|
| an
ISO 9002 Company. This will help us to boost our exports. We are also
planning to aggressively |
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| penetrate
into the foreign market for nontraditional textile goods, which will result
in increase |
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| in
sales in the year 1998-99 and onward. We are also focusing on achieving
competitive cost base |
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| &
increase in productivity. |
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|
| PATTERN
OF SHAREHOLDING |
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| A
statement showing the pattern of shareholding in the Company as at 30th June
1998 appears |
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| on page 26. |
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| AUDITORS |
|
|
| The
retiring Auditors Messrs Hyder Bhimji & Company and Messrs A.R. Diwan
& Company, being |
|
| eligible,
offer themselves for reappointment. |
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|
|
| LABOUR
MANAGEMENT RELATIONS |
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|
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| The
Labour Management relations remained cordial throughout the year. The Board
feels pleased |
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| to
express its appreciation for the loyalty, devotion and hardwork put in by
workers, staff members |
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| and
officers of the Company. |
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|
|
| YEAR
2000 COMPLIANCE OF COMPUTER SYSTEM |
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| The
Company has initiated necessary steps of switching to a P.C. base software
system which is |
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| fully
compliant to Y 2 K requirements. It is expected that the same will be
completed well before |
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| the
close of next financial year. |
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|
For and on behalf of the Board of Directors |
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|
YUSUF N. MUKATY |
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|
Chief Executive |
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| Karachi:
the Ist December, 1998 |
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|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed Balance Sheet of Liberty Mills Limited, as at 30th
June, |
|
| 1998,
and the related Profit and Loss Account for the year then ended and the
Statement |
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| 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 conformity with the Companies Ordinance, 1984 and |
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| are
in agreement with the books of accounts and are further in accordance with |
|
| accounting
policies consistently applied. |
|
|
|
| ii)
the expenditure incurred during the year were for the purpose of the
company's |
|
| business;
and |
|
|
|
| iii)
the business conducted, investments made and the expenditure incurred during |
|
| the
year were in accordance with the objects of the Company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations |
|
| given
to us, the Balance Sheet, Profit and Loss Account and Statement of Changes |
|
| in
Financial Position (Cash Flow Statement), together with the notes forming
part |
|
| thereof,
give the information required by the Companies Ordinance, 1984 in the |
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| 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 June, 1998 and of the Profit and the Changes in Financial |
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| Position,
(Cash Flows Position) 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. |
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|
|
HYDER BHIMJI & CO. |
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|
A. R. DIWAN & CO. |
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|
Chartered Accountants |
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|
Chartered Accountants |
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|
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| Karachi:
the 1st December, 1998 |
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|
|
| BALANCE
SHEET AS AT 30TH JUNE, 1998 |
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|
1998 |
1997 |
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|
|
NOTES |
RUPEES |
RUPEES |
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|
| CAPITAL
AND RESERVES |
|
| CAPITAL |
|
| Authorised: |
|
| 20,000,
000 Ordinary Shares |
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| of
Rs. 10/- each. |
|
|
200,000,000 |
200,000,000 |
|
|
|
|
========== |
========== |
|
| ISSUED,
SUBSCRIBED AND PAID-UP |
|
3 |
148,946,900 |
148,946,900 |
|
| RESERVE
AND SURPLUS |
|
|
|
|
| Revenue
Reserve |
|
4 |
24,000,000 |
14,000,000 |
|
| Un-appropriated
Profit |
|
|
45,168 |
27,619 |
|
|
|
---------- |
---------- |
|
|
|
|
172,992,068 |
162,974,519 |
|
| REDEEMABLE
CAPITAL |
|
5 |
11,089,811 |
21,310,834 |
|
| LONG
TERM LOANS |
|
6 |
19,153,190 |
29, 717,940 |
|
| LONG
TERM LIABILITIES |
|
7 |
- |
- |
|
| DEFERRED
LIABILITIES |
|
8 |
42,053,852 |
39,941,574 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
Portion of Redeemable Capital |
|
|
10,221,023 |
9,420,298 |
|
| Current
Portion of Long Term Loans |
|
|
10,564,750 |
9,640,775 |
|
| Short
Term Running Finance utilised under |
|
|
|
| mark-up
Arrangements |
|
9 |
229,416,392 |
205,028,541 |
|
|
|
|
|
|
| Creditors,
Accrued and Other Liabilities |
10 |
149, 864, 452 |
77,202,346 |
|
| Proposed
Dividend |
|
|
- |
14,894,690 |
|
|
|
|
---------- |
---------- |
|
|
|
|
400,066,617 |
316,186,650 |
|
|
|
|
| CONTINGENCIES
& COMMITMENTS |
|
11 |
- |
- |
|
|
|
---------- |
---------- |
|
|
|
Total |
645,355,538 |
570,131,517 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| FIXED
TANGIBLE ASSETS |
|
| Operating
Assets |
|
12 |
356,263,124 |
343,321,256 |
|
| CAPITAL
WORK-IN-PROGRESS |
|
13 |
24,733,141 |
9,627,275 |
|
|
|
|
---------- |
---------- |
|
|
|
|
380,996,265 |
352,948,531 |
|
| LONG
TERM DEPOSITS |
|
|
2,646,245 |
2,405,195 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
& Spares |
|
14 |
6,220,813 |
4,725,170 |
|
| Stock-in-Trade |
|
15 |
30,084,210 |
33,827,027 |
|
| Trade Debts |
|
16 |
166,046,444 |
134,363,393 |
|
| Advances,
Deposits, Prepayments and |
|
|
|
|
| other
Receivable |
|
17 |
48,255,540 |
39,919,026 |
|
|
|
|
|
|
| Cash
& Bank Balances |
|
18 |
11,106,021 |
1,943,175 |
|
|
|
|
---------- |
---------- |
|
|
|
|
261,713,028 |
214,777,791 |
|
|
---------- |
---------- |
|
|
|
Total |
645,355,538 |
570,131,517 |
|
|
|
|
========== |
========== |
|
| NOTE:
The annexed Notes form an integral part of these accounts. |
|
|
|
YUSUF N. MUKATY |
|
|
SALIM N. MUKATY |
|
|
Chief Executive |
|
|
Director |
|
|
|
|
| Karachi:
the 1st December, 1998 |
|
|
|
| Profit
and Loss Account |
|
| For
the Year Ended 30th June, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
NOTES |
RUPEES |
RUPEES |
|
|
| Sales |
|
19 |
597,914,767 |
483,778,909 |
|
| Income
from Process Services |
|
|
|
|
| rendered
to Outside Parties |
|
|
491,917,580 |
452,303,626 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,089,832,347 |
936,082,535 |
|
| Cost
of Sales and Services |
|
20 |
978,102,613 |
833,153,634 |
|
|
|
|
---------- |
---------- |
|
| Gross Profit |
|
|
111,729, 734 |
102,928,901 |
|
|
|
|
---------- |
---------- |
|
| Administrative
Expenses |
|
21 |
23,010,104 |
16,844,588 |
|
| Selling
& Distribution Expenses |
|
22 |
37,740,816 |
24,219,414 |
|
|
---------- |
---------- |
|
|
|
|
60,750,920 |
41,064,002 |
|
|
|
|
|
---------- |
---------- |
|
|
| Operating
Profit |
|
|
50,978,814 |
61,864,899 |
|
|
|
|
|
---------- |
---------- |
|
|
| Financial
Charges |
|
23 |
38,844,460 |
50,428,959 |
|
|
| Other
Charges |
|
24 |
1,122,019 |
1,159,361 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
39,966,479 |
51,588,320 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
11,012,335 |
10,276,579 |
|
|
| Other Income |
|
25 |
1,729,681 |
1,221,479 |
|
|
|
|
|
---------- |
---------- |
|
|
| Profit
before Taxation |
|
|
12,742, O16 |
11,498,058 |
|
|
| Taxation |
|
26 |
(2,724,467) |
(10,944,470) |
|
|
|
|
|
---------- |
---------- |
|
|
| Profit
after Taxation |
|
|
10,017,549 |
553,588 |
|
|
| Un-appropriated
Profit brought forward |
|
|
27,619 |
4,068,721 |
|
|
|
---------- |
---------- |
|
| Profit
available for Appropriation |
|
|
10,045,168 |
4,622,309 |
|
|
|
|
|
|
|
| Less
Appropriation: |
|
|
|
|
| Transfer
(to)?from Revenue Reserve |
|
|
(10,000,000) |
10,300,000 |
|
| Proposed
Dividend @ Nil (1997 @ 10%) |
|
|
- |
(14,894,690) |
|
|
|
---------- |
---------- |
|
|
|
(10,000,000) |
(4,594,690) |
|
|
|
---------- |
---------- |
|
| Un-appropriated
profit carried forward |
|
45,168 |
27,619 |
|
|
========== |
========== |
|
|
| Note:
The annexed Notes form an integral part of these accounts. |
|
|
|
YUSUF N. MUKATY |
|
|
SALIM N. MUKATY |
|
|
Chief Executive |
|
|
Director |
|
|
|
|
| Karachi:
the 1st December, 1998 |
|
|
|
| Statement
of Changes in Financial Position |
|
| (Cash
Flow Statement) For the Year Ended 30th June, 1998 |
|
|
|
|
1998 |
1997 |
|
|
|
RUPEES |
RUPEES |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Net
Profit for the year before taxation |
|
12,742,016 |
11,498,058 |
|
|
|
| Adjustments
for items not involving movement of funds |
|
|
| Depreciation |
|
|
39,290,124 |
37,715,114 |
|
| Depreciation
written back |
|
|
- |
(1,451,091) |
|
| Provision
for staff Retirement benefits (Net) |
|
3,412,278 |
2,094,219 |
|
| (Profit)/Loss
on sale of fixed assets |
|
|
(208,417) |
1,566,982 |
|
| Financial
charges |
|
|
38,844,460 |
50,428,959 |
|
|
|
|
---------- |
---------- |
|
|
|
94,080,461 |
101,852,241 |
|
|
|
|
|
|
| Add:
Net decrease in working capital |
|
|
43, 741,735 |
53,200,493 |
|
|
|
|
|
|
|
| Less:
Financial charges paid |
|
|
(39,445,011) |
(52,400,868) |
|
| Income
Taxes paid |
|
|
(12,275,936) |
(11,437,748) |
|
| Long
term security deposits |
|
|
(241,050) |
- |
|
|
---------- |
---------- |
|
| Net
cash flow generated from operations |
|
85,860,199 |
91,214,118 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
Capital Expenditure |
|
|
(71,562,441) |
(41,583,408) |
|
| Proceeds
from disposal of fixed assets |
|
|
4,433,000 |
22,532,135 |
|
|
|
---------- |
---------- |
|
| Net
cash flow towards investing activities |
|
(67,129,441) |
(19,051,273) |
|
|
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
RUPEES |
RUPEES |
|
|
|
in ('000's) |
in (000's) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Repayment
of long term Loans |
|
9,420,298 |
(8,245.750) |
|
| Repayment
of Redeemable capital |
|
(9,326,750) |
(8,682,302) |
|
| Repayment
of long term liability |
|
(314,025) |
(50,000) |
|
| Dividend
paid |
|
|
(14,894,690) |
- |
|
|
|
|
---------- |
---------- |
|
| Net
cash flow from Financing activities |
|
(33,955,763) |
(16,978,052) |
|
|
|
|
|
|
| Net
increase in Cash & Cash equivalents |
|
(15,225,005) |
55,184,793 |
|
|
|
|
|
|
| Cash
& cash equivalent at the beginning of the year |
|
(203,085,366) |
(258,270,159) |
|
|
|
|
---------- |
---------- |
|
| Cash
& cash equivalent at the end of the year |
|
(218,310,371) |
(203,085,366) |
|
|
|
|
========== |
========== |
|
|
|
YUSUF N. MUKATY |
|
|
SALIM N. MUKATY |
|
|
Chief Executive |
|
|
Director |
|
|
|
|
| Karachi:
the 1st December, 1998 |
|
|
|
| Notes
to the Accounts |
|
| For
the Year Ended 30th June, 1998 |
|
|
| 1.
COMPANY AND ITS BUSINESS |
|
|
| The
Company was incorporated in Pakistan in 1965 as Private Limited Company and
was |
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| converted
into Public Limited Company on 12th September 1969. Its share are quoted in
the |
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| Karachi
Stock Exchange. The principal activity of the Company is manufacturing and
process- |
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| ing
of all kinds of Fabrics. |
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| 2.
SIGNIFICANT ACCOUNTING POLICIES |
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| 2.01
Accounting Convention |
|
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| The
Account of the Company have been prepared under the historical cost
convention |
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| modifications
thereto if any are specifically stated. |
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| 2.02
Taxation |
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| The
charge for current taxation is based on taxable income at the current rates
of taxation |
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| after
considering admissible tax credit and rebates, if any |
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|
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| The
Company accounts for deferred taxation on all material timing differences by
using |
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| liability
method. |
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| 2.03
Gratuity |
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| The
Company operates an un-funded gratuity scheme for all its employees who are
eligible |
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| to
the benefit. |
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| 2.04
Foreign Currency Transaction |
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| Transactions
in foreign currencies are translated at the rates prevailing on the Balance |
|
| Sheet date. |
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| 2.05
Fixed Tangible Assets |
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| These
are stated at cost less accumulated depreciation except leasehold land and
capital |
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| work-in-process
which are stated at cost. |
|
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| Depreciation
in charged to income applying the reducing balance method at normal tax |
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| rates,
whereby the cost of assets is written off over its estimated useful life.
Maintenance |
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| and
normal repairs are charged to income as incurred. Major renewals and
improvement |
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| are
capitalised and assets so replaced, if any, are retired. Addition to fixed
assets are |
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| depreciated
for the whole year irrespective of date of purchase while no depreciation |
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| is
provided on Assets disposed off during the year. Profit or Loss on disposal
of fixed |
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| assets
is included in income currently. |
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| 2.06
Stores and Spares |
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| These
are valued at cost on First-in-First out method. |
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| 2.07
Stock-in-Trade |
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| These
are valued as under: |
|
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| (a)
Raw Material at cost on FIFO basis. |
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| (b)
Work-in-process at average cost of raw material. |
|
| (c)
Finished Stock at the lower of cost on FIFO basis and net realisable value. |
|
| (d)
Stock in Bonded Warehouse |
