| Lakson Tobacco Company Limited |
|
|
|
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| CONTENTS |
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report to the Members |
|
| Balance Sheet |
|
|
|
| Profit
& Loss Account |
|
|
| Statement
of Sources & Application of Funds (Cash Flow Statement) |
|
| Notes
to the Accounts |
|
| Pattern
of Holding of Shares |
|
|
| Subsidiary
Company's Accounts |
|
| Premier
Tobacco Company (Pvt) Limited |
|
| Financial
Highlights |
|
|
|
|
| Company
Information |
|
|
| BOARD
OF DIRECTORS |
|
| IQBALALI
LAKHANI |
|
(Chairman & Chief
Executive) |
|
| AMIN
MOHAMMED LAKHANI |
|
| CHRISTOPHER
DENNIS TOMKINSON |
|
(upto October 06, 1998) |
|
| PETER
GEORGE GREGORY |
|
(upto October 06, 1998) |
|
| ROBERT
GORDON BARRIE |
|
| ROBIN
NICHOLAS WOOD |
|
| E.A.
NOMANI |
|
| HASANALI
H. MERCHANT |
|
| TASLEEMUDDIN
AHMED BATLAY |
|
| AZIZ
EBRAHIM |
|
| A.K.M.
SAYEED |
|
| RAMZANALI
HALANI |
|
| M.K.
NAWAZ |
|
|
| ADVISOR |
|
| SULTANALl
LAKHANI |
|
|
| COMPANY
SECRETARY |
|
| RAM7ANALI
HALANI |
|
|
| AUDITORS |
|
| EBRAHIM
& CO. |
|
| Chartered
Accountants |
|
|
| A.F.
FERGUSON & CO. |
|
| Chartered
Accountants |
|
|
| REGISTERED
OFFICE |
|
| LAKSON
SQUARE, BUILDING NO. 2 |
|
| SARWAR
SHAHEED ROAD |
|
| KARACHI-74200 |
|
|
| FACTORIES |
|
|
| 1.
E/15, S.I.T.E., KOTRI |
|
| DISTT.
DADU, (SINDH) |
|
|
| 2.
PLOT NO. 20, SECTOR NO. 17 |
|
| KORANGI
INDUSTRIAL AREA, KARACHI |
|
|
| 3.
QADIRABAD |
|
| DISTT.
SAHIWAL |
|
|
| 4.
VILLAGE: MANDRA |
|
| TEH:
GUJAR KHAN |
|
| DISTT.
RAWALPINDI |
|
|
| 5. ISMAILA |
|
|
| DISTT.
SWABI |
|
|
|
|
| Notice
of Meeting |
|
|
| NOTICE
IS HEREBY GIVEN that the 29th Annual General Meeting of Lakson Tobacco
Company Limited will be |
|
| held
at Avari Renaissance Towers Hotel, Fatima Jinnah Road, Karachi on Thursday,
December 17, 1998 at 4.30 |
|
| p.m.
to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
| 1.
To receive, consider and adopt the audited Balance Sheet and Profit &
Loss Account for the year ended |
|
| June
30, 1998 together with the Directors' and Auditors' Reports thereon. |
|
|
|
|
| 2.
To declare final dividend in cash @ 19% and by way of issue of fully paid
bonus shares @ 10% as |
|
| recommended
by the Board of Directors. |
|
|
| 3.
To consider to appoint auditors and fix their remuneration. |
|
|
| SPECIAL
BUSINESS |
|
| 4.
To consider, subject to declaration of the final dividend as above, to
capitalise a sum of Rs. 19,634,580/- by |
|
| way
of issue of 1,963,458 fully paid bonus shares of Rs. 10/- each and if thought
fit to pass an ordinary |
|
| resolution
in the matter. |
|
|
| The
statement under section 160 of the Companies Ordinance, 1984 and the draft of
the ordinary resolution to be |
|
| passed
in the above matter are annexed. |
|
|
|
By order of the Board |
|
|
|
|
|
RAMZANALI HALANI |
|
| Karachi:
November 16, 1998 |
|
Director/Company
Secretary |
|
|
|
| NOTES: |
|
| 1.
The share transfer books of the Company will remain closed from December 09,
1998 to December 17, |
|
| 1998
both days inclusive. Transfers received in order at the Company's registered
office situated at |
|
| Lakson
Square, Building No. 2, Sarwar Shaheed Road, Karachi, upto December 08, 1998
will be |
|
| considered
in time for entitlement of the dividend and issue of bonus shares to the
transferees. |
|
|
| 2.
A member entitled to attend and vote at the general meeting may appoint
another member as his proxy |
|
| to
attend, speak and vote instead of him. |
|
|
| 3.
Forms of proxy to be valid must be received at the Company's registered
office not later than 48 hours |
|
| before
the time of the meeting. |
|
|
| 4.
Members are requested to notify the Company promptly of any change in their
addresses. |
|
|
| 5.
A form of proxy is enclosed herewith. |
|
|
| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984. |
|
|
| The
Board of Directors has recommended to the members of the Company to declare
final cash dividend |
|
| @
19% and by way of issue of fully paid bonus shares @ 10% and thereby
capitalise a sum of Rs. |
|
| 19,634,580/-
which has been transferred to 'reserve for issue of bonus shares' out of the
profit for the |
|
| year
ended June 30, 1998. Subject to approval of the Board of Directors'
recommendation as above, |
|
| the
resolution as under will be considered to be passed by the members as an
ordinary resolution: |
|
|
| "RESOLVED
THAT: |
|
| i)
a sum of Rs. 19,634,580/- out of the 'reserve for issue of bonus shares' be
capitalised and applied |
|
| in
making payment in full of 1,963,458 ordinary shares of Rs. 10/- each and that
the said shares be |
|
| allotted
as fully paid up bonus shares to those members of the Company whose names
appear in |
|
| the
register of members on December 17, 1998 @ 10% i.e. in the proportion of ONE
share for every |
|
| TEN
existing shares and that such new shares shall rank pari passu in all
respects with the existing |
|
| ordinary
shares of the Company except that they shall not be eligible for dividend
declared for the |
|
| year
ended June 30, 1998; |
|
|
| ii)
in the event of any member holding less than ten shares or a number of shares
which is not an exact |
|
| multiple
of TEN, the fractional entitlements of shares of such members shall be
consolidated into |
|
| whole
new shares and the Directors of the Company be and are hereby authorised to
arrange sale |
|
| of
the shares constituted thereby in such manner as they may think fit and to
pay the proceeds of the |
|
| sale
to such of the members according to their entitlement; |
|
|
| iii)
for the purpose of giving effect to the above, the Directors be and hereby
authorised to take all |
|
| necessary
steps in the matter and to settle any question or difficulties that may arise
in regard to the |
|
| distribution
of the said new shares as they think fit." |
|
|
| The
Directors are interested in this business to the extent of their entitlement
of bonus shares as shareholders. |
|
|
|
|
| Directors'
Report |
|
|
| The
Directors of your Company take pleasure in presenting the twenty ninth annual
report and audited accounts |
|
| for
the year ended June 30, 1998. |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
(Rupees 000's) |
|
|
|
|
| Profit
before taxation |
|
228,566 |
129,792 |
|
| Taxation |
|
78,242 |
40,034 |
|
|
|
--------------- |
--------------- |
|
| Profit
after taxation |
|
150,324 |
89,758 |
|
| Un-appropriated
profit brought forward |
|
268 |
60,633 |
|
| Amount
transferred from capital reserve |
|
-- |
4,322 |
|
|
|
--------------- |
--------------- |
|
|
|
150,592 |
154,713 |
|
| Appropriations: |
|
|
|
| Interim
dividend @ Rs. 1.90 (1997: Rs. 1.70) |
|
|
|
| per
ordinary share of Rs. 10/- each |
|
37,306 |
27,816 |
|
|
|
|
| Proposed
cash dividend @ Rs. 1.90 |
|
|
|
| (1997:
Rs.. 2.50) per ordinary share of Rs. 10/- each |
|
37,306 |
40,905 |
|
|
|
--------------- |
--------------- |
|
|
|
74,612 |
68,721 |
|
| Transfer
to reserve for proposed issue of bonus shares |
|
|
| in
ratio of one share for every ten shares |
|
|
|
| (1997:
one share for every five shares) |
|
19,634 |
32,724 |
|
|
|
|
| Transfer
to general reserve |
|
56,000 |
53,000 |
|
|
|
--------------- |
--------------- |
|
|
|
150,246 |
154,445 |
|
|
|
--------------- |
--------------- |
|
| Un-appropriated
profit carried forward |
|
346 |
268 |
|
|
|
========== |
========== |
|
|
| BOARD
OF DIRECTORS |
|
| On
the resignations of M/s. Peter George Gregory and Christopher Dennis
Tomkinson from the directorship of the |
|
| Company,
M/s. Robert Gordon Berrie and Robin Nicholas Wood were co-opted in their
place as nominee directors |
|
| of
Rothmans of Pall Mall (International) Limited on the Board. |
|
|
| The
Board greatly appreciates and records the services rendered by M/s. Peter
George Gregory and Christopher |
|
| Dennis
Tomkinson during their tenure and welcomes M/s. Robert Gordon Berrie and
Robin Nicholas Wood on |
|
| the Board. |
|
|
| OPERATING
RESULTS |
|
| The
Company continued to maintain growth momentum during the year under review,
both in turnover and profit. |
|
| Sales
turnover reached Rs. 12.2 billion reflecting the merger of Premier Tobacco
Industries Limited (PTI) into |
|
| Lakson
Tobacco Company Limited (LTC) with effect from January 1, 1997, an increase
of 19.9% or Rs. 2.0 billion |
|
| as
compared to combined sales revenue, including those of the first half of the
1996/97 year of PTI, of Rs. 10.2 |
|
| billion
during the prior year period. |
|
|
| Profit
after taxation was Rs. 150 million as compared to last year's combined net
profit of LTC and PTI of Rs. 132 |
|
| million,
an increase of 14%. |
|
|
| Your
Company's contribution to the national exchequer in the shape of excise
duties and sales tax rose to Rs. |
|
| 7,657
million as compared to combined figures of LTC and PTI of Rs. 6,674 million
for previous year. The |
|
| component
of excise duty and sales tax paid during the period was equivalent to 63.6%
of domestic sales |
|
| turnover
for cigarettes. |
|
|
| LEAF
TOBACCO |
|
| Due
to unfavourable weather conditions prior to harvesting the 1997 tobacco crop,
the resulting quantity of |
|
| tobacco
declined versus the prior crop and all varieties of tobacco fell short of the
industry's requirement. |
|
| However,
your Company was able to buy the required quantity, albeit at substantially
increased prices. |
|
|
| FUTURE
OUTLOOK |
|
| The
Economic Co-ordination Committee of the Cabinet decided to increase the
support price of tobacco to offer |
|
| better
prices to growers. An increasingly challenging socio-economic environment of
the business is foreseen |
|
| due
to the deteriorating foreign exchange situation since mid-1998. This will
inevitably increase the cost of |
|
| inputs.
Production and sales may suffer due to delays or refusal within the banking
system in establishing letters |
|
| of credit. |
|
|
| The
financial and economic environment of Pakistan has undergone substantial
adverse changes, including |
|
| deposit
requirements of 30% L/C margin and increased mark-up rates by almost all
banks of 1 to 2%. Your |
|
| Company
will continue its attempts to maintain profitability and performance in this
difficult business environment. |
|
|
| YEAR
2000 COMPLIANCE OF COMPUTER SYSTEMS |
|
| '(our
Company takes the Year 2000 issue very seriously and it has had a Year 2000
program since 1996. This |
|
| work
is supervised by a program steering committee comprising of our Information
Technology staff and |
|
| departmental
co-ordinators selected from each department of the Company. The committee is
chaired by the |
|
| Director
of Information Technology. |
|
|
| As
a result of this co-ordinated approach, the Year 2000 issue has already been
addressed in major areas of the |
|
| Company,
with the remaining work expected to be completed by the end of the current
Year. |
|
|
| SOCIAL
SERVICE |
|
| Your
Company's commitment to the community in the area of social services remains
a high priority. Your |
|
| Company
continues to play a leading role in social services against blindness by
holding free eye camps. This |
|
| year
free eye camps wars held with the support of leading eye specialists in
different parts of the country, |
|
| particularly
in the tobacco growing Mardan area. |
|
|
| APPRECIATION |
|
| The
Directors wish to place on record their appreciation of the sincere and
dedicated services and contribution |
|
| rendered
by all employees, at all levels, and for the constructive co-operation
extended by them in ensuring the |
|
| high
levels of performance and growth that your Company has achieved during the
year. The Board of Directors |
|
| also
thank, on behalf of the Company, the banks and financial institutions used by
the Company for their continued |
|
| support
and co-operation. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| A
pattern of shareholding in the prescribed form appears at page number 31. |
|
|
| AUDITORS |
|
| The
Auditors M/s. Ebrahim & Co., Chartered Accountants and M/s. A.F. Ferguson
& Co., Chartered Accountants, |
|
| retire
and offer themselves for re-appointment. |
|
|
On behalf of the Board of
Directors |
|
|
IQBALALI LAKHANI |
|
| Karachi:
November 06, 1998 |
|
Chairman |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed Balance Sheet of LAKSON TOBACCO COMPANY LIMITED as
at June 30, |
|
| 1998
and the related Profit and Loss Account and Statement of Sources and
Application of Funds, |
|
| 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 accounts 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 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, 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 the Statement of Sources and Application
of Funds |
|
| together
with the notes forming part thereof, give the information required by the
Companies |
|
| Ordinance,
1984 in the manner so required and respectively give a true and fair view of
the state of |
|
| the
Company's affairs as at June 30, 1998 and of the profit and the changes in
sources and application |
|
| of
funds 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. |
|
|
|
|
EBRAHIM & CO. |
A.F. FERGUSON & CO. |
|
|
|
Chartered Accountants |
Chartered Accountants |
|
| Karachi:
Dated: November 16, 1998 |
|
|
|
| Balance
Sheet as at June 30, 1998 |
|
|
|
NOTE |
1998 |
1997 |
|
|
|
|
(Rupees 000's) |
|
| TANGIBLE
FIXED ASSETS |
|
| Operating
assets |
|
|
3 |
457,777 |
355,915 |
|
|
| Capital
work-in-progress |
|
|
4 |
228,586 |
154,986 |
|
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
686,363 |
510,901 |
|
|
| LONGTERM
INVESTMENT |
|
5 |
1 |
1 |
|
|
| LONGTERM
LOANS |
|
6 |
647 |
907 |
|
|
| LONGTERM
DEPOSITS AND PREPAYMENTS |
7 |
42,138 |
29,222 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
8 |
85,094 |
73,031 |
|
|
| Stock in trade |
|
|
9 |
8,841,321 |
717,453 |
|
|
| Trade debts |
|
|
10 |
505,001 |
23,809 |
|
|
| Loans
and advances |
|
|
11 |
421,571 |
29,247 |
|
|
| Deposits,
prepayments and other receivables |
|
12 |
378,101 |
56,073 |
|
|
| Cash
and bank balances |
|
13 |
1,402,931 |
19,858 |
|
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
239,986 |
919,471 |
|
|
| Less:
CURRENT LIABILITIES |
|
|
|
| Current
portion of liabilities against assets subject |
|
|
| to
finance leases |
|
|
21 |
79,509 |
54,230 |
|
|
| Short
term redeemable capital |
|
|
14 |
300,000 |
-- |
|
| Short
term finances |
|
|
15 |
2,403,341 |
172,376 |
|
|
| Creditors,
accrued and other liabilities |
|
16 |
4,202,151 |
430,195 |
|
|
| Dividends |
|
|
17 |
773,501 |
70,459 |
|
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
1,117,408 |
727,260 |
|
|
|
|
--------------- |
--------------- |
|
|
| NET
CURRENT ASSETS |
|
|
122,578 |
192,211 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
851,727 |
733,242 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| FINANCED
BY: |
|
|
| SHARE
CAPITAL |
18 |
196,345 |
163,621 |
|
|
| RESERVES |
|
|
|
19 |
379,627 |
336,717 |
|
|
| UNAPPROPRIATED
PROFIT |
|
|
346 |
268 |
|
|
|
|
--------------- |
--------------- |
|
|
| SHAREHOLDERS
EQUITY |
|
|
576,318 |
500,606 |
|
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
20 |
51,092 |
51,092 |
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
|
| TO
FINANCE LEASES |
|
|
21 |
197,617 |
159,078 |
|
|
| DEFERRED
TAXATION |
|
|
26,700 |
22,466 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
22 |
|
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
851,727 |
733,242 |
|
|
|
|
========== |
========== |
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
| Profit
& Loss Account |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
NOTE |
(Rupees 000's) |
|
|
|
|
| Sales |
|
|
12,195,166 |
6,697,980 |
|
| Cost
of goods sold |
|
23 |
11,070,555 |
6,059,147 |
|
|
|
|
--------------- |
--------------- |
|
| Gross profit |
|
|
1,124,611 |
638,833 |
|
|
|
|
--------------- |
--------------- |
|
| Establishment
expenses |
|
24 |
145,641 |
108,113 |
|
| Selling
and distribution expenses |
|
25 |
655,381 |
361,653 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
801,022 |
469,766 |
|
|
|
|
--------------- |
--------------- |
|
| Operating
profit |
|
|
323,589 |
169,067 |
|
| Other income |
|
26 |
14,865 |
17,919 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
338,454 |
186,986 |
|
|
|
|
--------------- |
--------------- |
|
| Financial
charges |
|
27 |
92,247 |
47,463 |
|
| Other charges |
|
28 |
17,641 |
9,731 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
109,888 |
57,194 |
|
|
|
|
--------------- |
--------------- |
|
| Profit
before taxation |
|
|
228,566 |
129,792 |
|
| Taxation |
|
29 |
78,242 |
40,034 |
|
|
|
|
--------------- |
--------------- |
|
| Profit
after taxation |
|
|
150,324 |
89,758 |
|
| Unappropriated
profit brought forward |
|
|
268 |
60,633 |
|
|
|
|
--------------- |
--------------- |
|
| Profit
available for appropriation |
|
|
150,592 |
150,391 |
|
| Transfer
from capital reserve |
|
|
-- |
4,322 |
|
|
|
|
--------------- |
--------------- |
|
| Balance
available for appropriation |
|
|
150,592 |
154,713 |
|
|
|
|
|
| Appropriations: |
|
|
|
|
| Proposed
dividend |
|
|
|
|
| -Interim @19% (1997: 17%) |
|
|
37,306 |
27,816 |
|
| -Final
@19% (1997: 25%) |
|
|
37,306 |
40,905 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
74,612 |
68,721 |
|
| Reserve
for proposed issue of bonus shares @10% |
|
|
| (1997: 20%) |
|
|
19,634 |
32,724 |
|
| Transfer
to general reserve |
|
|
56,000 |
53,000 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
150,246 |
154,445 |
|
|
|
|
--------------- |
--------------- |
|
| Unappropriated
profit carried forward |
|
|
346 |
268 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| NOTE:
The annexed notes form an integral part of these accounts. |
|
|
|
| Statement
of Sources and Application of Funds (Cash Flow Statement) |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
NOTE |
1998 |
1997 |
|
|
|
|
(Rupees 000's) |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
33 |
142,066 |
409,503 |
|
| Profit
paid on term finance certificates |
|
|
-- |
(8,916) |
|
| Mark-up
paid on short term running finances |
|
|
(34,283) |
(16,364) |
|
| Mark-up
paid on export refinance |
|
|
(2,292) |
(4,314) |
|
| Interest
paid on security deposits |
|
|
(74) |
(74) |
|
| Payment
of finance charges on liabilities against |
|
|
| assets
subject to finance leases |
|
(38,665) |
(13,568) |
|
| Taxes paid |
|
|
(80,662) |
(51,147) |
|
| Long
term loans |
|
|
260 |
(802) |
|
| Long
- term deposits and prepayments (net) |
|
|
(12,916) |
(11,103) |
|
|
|
|
--------------- |
--------------- |
|
| Net
cash (outflow)/inflow from operating activities |
|
(26,566) |
303,215 |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
|
(99,283) |
(42,831) |
|
| Proceeds
against disposal of fixed assets |
|
4,682 |
5,969 |
|
| Income
received from short-term deposits and investments |
|
5,677 |
13,093 |
|
|
|
|
|
--------------- |
--------------- |
|
| Net
cash (outflow) from investing activities |
|
(88,924) |
(23,769) |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Repayment
of liabilities against assets subject to finance leases |
|
(63,012) |
(24,993) |
|
| Short
term redeemable capital |
|
|
300,000 |
-- |
|
| Repayment
of short term redeemable capital |
|
-- |
(75,000) |
|
| Dividends paid |
|
|
|
(67,721) |
(14,854) |
|
|
|
|
|
--------------- |
--------------- |
