| Millat Tractors Limited |
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| Annual
Report 1998 |
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| CONTENTS |
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| Notice
of Meeting |
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| Directors'
Report to the Shareholders |
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| Chairman's
Review |
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| Pattern
of Shareholding |
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| Decade
at a Glance |
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| Auditors'
Report to the Members |
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| Balance
Sheet |
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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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| Accounts
of Subsidiary |
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| BOARD
OF DIRECTORS |
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| Sikandar
Mustafa Khan |
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| Latif
Khalid Hushmi |
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| Sohail
Bashir Rana |
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| Laeeq
Uddin Ansari |
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| Mian
Mohammad Saleem |
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| S.R.
Bokhari |
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| Rana
Mohammad Siddique |
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| Razi-ur-Rehman
Khan |
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| Wusooq
Khaleeli |
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| S.M. Tanvir |
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| ORGANIZATION
STRUCTURE |
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| Sikandar
Mustafa Khan |
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| Chairman
& Chief Executive |
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| Mian
M. Saleem |
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| Company
Secretary |
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| Sohail
Bashir Rana |
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| Director
Technical |
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| Shaukat
Ali Sh. |
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| Gen.
Manager P.C. |
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| Dr.
Syed Amer Ali |
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| Gen.
Manager Projects & Dev. |
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| Pir
Asad Iqbal |
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| Dy.
Gen. Manager Dev. |
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| Pervaiz
Aslam |
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| Sr.
Manager Procurement |
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| Ch.
Abdul Ghafoor |
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| Sr.
Manager Tractor Assy. |
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| Shafaaq
Ahmed |
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| Sr.
Manager Mfg. |
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| M.
Ashfaq Farooqi |
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| Sr.
Manager Dev. |
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| Jehangir
Qureshi |
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| Sr.
Manager Eng./MPA |
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| Rehan
A. Qureshi |
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| Sr.
Manager Maintenance |
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| M.
Akbar Sheikh |
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| Manager
Mfg. |
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| Athar
Zubair |
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| Manager
projects |
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| Zahid
H. Butt |
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| Manager
Tractor Assy. |
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| Altaf
Hussain |
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| Manager
Dev. |
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| M.
Naeem Tahir |
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| Manager
Projects |
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| Saif-ur-Rehman |
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| Manager
Eng./MPA |
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| Laeeq
Uddin Ansari |
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| Director
Finance |
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| Mian
M. Saleem |
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| Gen.
Manager Finance |
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| Javed Munir |
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| Gen.
Manager Accounts |
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| M.
Alam Qureshi |
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| Dy.
Gen. Manager Corporate Affairs |
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| Tariq
Masood |
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| Sr.
Manager Data Processing |
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| Farogh
Iqbal |
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| Sr.
Manager Data Processing |
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| Masood
A. Chaudhry |
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| Manager
accounts |
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| M.
Pervaiz Butt |
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| Manager
Budget & MIS |
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| Rustam Ali |
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| Manager
Corporate Affairs |
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| Javed
Akbar Gill |
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| Manager
Data Processing |
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| Akhtar
Hussain |
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| Manager
Finance |
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| S.M.
Abdul Qadir |
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| Manager
Finance |
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| Latif
Khalid Hashmi |
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| Director
Marketing |
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| Bashir
A. Chaudhry |
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| Gen.
Manager Marketing |
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| Ahsan Imran |
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| Dy.
Gen. Manager Multi App. |
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| Idrees
Zubair |
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| Sr.
Manager Sales |
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| Mansoor
Abbasi |
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| Sr.
Manager Service |
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| M.A.
Kakakhail |
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| Sr.
Manager Parts |
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| M. Akram |
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| Sr.
Mngr. Reg. Off. Islamabad |
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| Nasim
A. Sindhu |
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| Manager
Distribution |
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| Mubashar
Iqbal |
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| Gen.
Manager Admn./Pur. |
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| Zaair
Farid Shah |
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| Dy.
gen. Manager Admn./Pers. |
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| Mian
M. Anwar |
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| Manager
Purchase |
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| S.
Imtiaz Ali |
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| Manager
Reg. Off. Karachi |
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| Shahid
S. Toor |
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| Dy.
Gen. Manager Q.C. |
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| M.
Anwar Chaudhry |
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| Manager
Q.C. BOF. |
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| Abdul
Razzak |
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| Manager
Lab./ Guage Control |
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| M.
Ameer Khan |
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| Manager
Q.C. MFG. |
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| M.
Anwar Malik |
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| Manager
Q.C. Assy. |
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| M.
Aslam Khokhar |
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| Dy.
Gen. Manager HRD |
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| Abdul
Qayyum Butt |
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| Manager HRD |
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| Mian
Habib Ahmad |
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| Dy.
Manager SA & CP |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that 35th Annual General Meeting of |
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| Millat
Tractors Limited will be held at the Company's Registered Office. |
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| 9
K.M. Sheikhupura road, Shahdara, Lahore, on Monday, December 28, |
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| 1998
at 12 Noon to transact the following business: |
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| 1.
ORDINARY BUSINESS |
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| i)
To confirm minutes of the 34th Annual General Meeting. |
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| ii)
To receive, consider and adopt the audited accounts of the |
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| Company
for the year ended June 30, 1998 together with the |
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| Directors'
and Auditors' Reports thereon. |
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| iii)
To approve payment of cash dividend at the rate of Rs. 8.50 |
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| per
share (85%) |
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| iv)
To appoint auditors and fix their remuneration for the year ending |
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| June
30, 1999. The present auditors Messrs A.F. Ferguson |
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| & Company,
Chartered Accountants, retire and are |
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| eligible
for re-appointment. |
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| 2.
SPECIAL BUSINESS |
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| i)
To approve investment of Rs. 6.28 million in Baluchistan |
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| Wheels
Limited by passing the following resolution: |
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| "RESOLVED
that an investment of Rs. 6.28 million by way of |
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| purchase
of 310,500 ordinary shares of Rs. 10/- each of |
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| Baluchistan
Wheels Limited be and is hereby approved." |
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| ii)
To amend Article No. 77 of the Memorandum and Articles of |
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| Association
of the Company by passing the following resolution |
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| with
or without modification: |
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| "RESOLVED
that amendment in Article No. 77 of the Memorandum |
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| &
Articles of Association of the Company be and is hereby |
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| approved
and adopted." |
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| 3.
ANY OTHER BUSINESS |
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| The
transact any other business with the permission of the Chair. |
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| Notes |
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| 1.
The share transfer books of the Company will remain closed from |
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| Dec.
14, 1998 to Dec. 28, 1998 (both days inclusive) and no transfer will |
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| be
accepted during this period. The members whose names appear in |
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| the
register of members as at the close of business on December 13, |
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| 1998
will qualify for the payment of cash dividend. |
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| 2.
A member entitled to attend and vote at this meeting may appoint |
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| another
member as his/her proxy to attend the meeting and vote for |
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| him/her.
Proxies in order to be effective must be received by the |
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| Company
not less than 48 hours before the meeting. |
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| 3.
Shareholders are requested to notify the change of address, if any, |
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| immediately. |
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| STATEMENT
U/S 160 OF THE COMPANIES ORDINANCE, 1984 |
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| i)
In order to broaden equity base of the Company in Balochistan |
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| Wheels
Limited the Company has purchased 310,500 shares through |
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| Karachi
Stock Exchange at an average price of Rs. 20.24 per share. |
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| ii)
In view of inflation, the Directors fee of Rs. 500/- for attending |
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| Board's
Meeting needs revision which has the concurrence of the |
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| Board
of Directors. |
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| The
proposed Article No. 77 is produced hereunder: |
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| The
remuneration of a Director, other than regular paid Managing |
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| Director
or Directors, for his services shall be such sum as |
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| may
be fixed by the Directors, but not exceeding Rs. 1,000/- for |
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| each
meeting attended by him. |
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By order of the Board |
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| Lahore: |
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Mian Muhammad Saleem |
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| Nov.
30, 1998 |
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Company Secretary |
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| DIRECTORS'
REPORT |
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| TO
THE SHAREHOLDERS |
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| The
Directors feel pleasure to place before you their 35th report and audited |
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| accounts
of the company for the year ended June 30, 1998. |
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| APPROPRIATIONS |
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| Your
directors recommend the payment of cash dividend at the rate |
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| of
Rs. 8.50 per share (85%) out of the profits available for appropriations. |
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| Accordingly,
the following appropriations have been made: |
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| ACCOUNTS |
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|
Rupees |
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|
in Thousands |
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| Profit
before taxation |
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190,206 |
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| Less:
Taxation |
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52,084 |
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---------- |
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|
138,122 |
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| Add:
Unappropriated profit brought forward |
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5 |
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---------- |
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| Profit
available for appropriations |
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138,127 |
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| Less:
Appropriations |
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| Transfer
to general reserves |
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70,000 |
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| Proposed
dividend @ 85% (1997: 75%) |
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68,080 |
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---------- |
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|
138,080 |
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---------- |
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| Unappropriated
profit carried forward |
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47 |
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========== |
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| BOARD
OF DIRECTORS |
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| Since
the last report, there have been changes in the composition of the |
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| Board.
Directors Messrs Sikandar Mustafa Khan, Latif Khalid Hashmi, |
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| Sohail
Bashir Rana, Laeeq Uddin Ansari, Mian Mohammad Saleem |
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| S.R.
Bokhari and Rana Mohammad Siddique were re-elected as directors. |
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| Nominees
of the National Investment Trust, M/s Abdul Waheed Mian and |
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| Wusooq
Khaleeli were also elected unopposed on the Board of Directors. |
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| As
such, all the candidates who had filed their nominations to be elected |
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| as
directors at the 34th AGM of the company, were elected unopposed. |
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| NIT
nominee, Mr. Abdul Waheed Mian, tendered his resignation on |
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| July
29, 1998 and in his place Mr. Razi-ur-Rehman Khan, another |
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| NIT
nominee, was coopted as a Director under Article 96(2) of the |
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| Articles
of Association of the company to fill the casual vacancy. |
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| FOREIGN
CURRENCY LOAN |
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| The
company entered into an agreement with the International |
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| Finance
Corporation in 1980 and obtained a foreign currency loan of |
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| Swiss
Francs, 7,785 million (equivalent) to about Rs. 90 million in 1980). The |
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| loan
was repayable in 16 semi annual installments commencing December, |
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| 1990.
Proceeds of this loan on roll over basis were utilized for providing |
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| financial
assistance to the company's vendors to enable them expand, |
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| balance,
modernize & replace machinery to improve the quality of |
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| their
work and also develop new products for MTL. The company has |
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| since
liquidated this loan within the stipulated period as per terms of the |
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| agreement. |
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| LONG
TERM LOANS FROM NDFC |
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| Long
Term Loans LMM I & II amounting to Rs. 17.4 & Rs. 16.3 |
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| million
were obtained from NDFC during the years 1987-88 and |
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| 1991-92,
respectively, both payable in |
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| 14
half yearly installments. |
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| LMM
Loan #1 was utilized for financing in house machining of most |
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| intricate
parts, whereas LMM loan #11 was obtained to finance |
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| automated
painting, assembly and integrated testing facilities in our new |
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| Tractor
Assembly Plant set-up to produce tractors of international quality |
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| and
standards to improve our market share. Both the loans have since been
successfully, repaid within due time |
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| with
none of the instalment becoming over due. |
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| YEAR
2000 COMPLIANCE |
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| The
year 2000 verification process for computer software, hardware and the |
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| manufacturing
machinery commenced in early 1998. For this, the non- |
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| complaint
software and equipment have already been identified, while |
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| re-development
of software is in progress and is expected to be |
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| completed
upto full compliance level by June, 1999. The non-compliant |
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| hardware
shall be replaced by March, 1999, and the existing automated |
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| system
would be modified before December, 1999, for compliance to |
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| the
year 2000 problem. |
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| AUDITORS |
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| The
shareholders of the company in |
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| the
34th AGM of the company |
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| approved
the appointment of M/s A.F. |
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| Ferguson
& Company, Chartered |
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| Accountants,
to be the auditors of the |
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| company
for the year ended |
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| June
30, 1998, in place of the retiring |
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| joint
auditors, Messrs Ilyas Saeed & |
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| Company,
Chartered Accountants, and |
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| M/s Ford, Rhodes, Robson,
Morrow, |
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| Chartered Accountants. The
present |
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| auditors
M/s A.F. Ferguson & |
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| Company,
Chartered Accountants, |
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| retire
and being eligible have offered |
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| themselves
for re-appointment. |
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| CHAIRMAN
REVIEW |
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| Contents
of the Chairman's Review |
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| dealing
with the company's affairs |
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| and
included in his Review, form part |
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| of
the Directors' Report and are |
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|
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| endorsed
by your directors. |
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| PATTERN
OF SHAREHOLDING |
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| Pattern
of Shareholding forming part |
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| of
the Directors' Report is annexed. |
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| for
and on behalf of the Board |
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|
| Sikandar
Mustafa Khan |
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| Chairman
& Chief Executive |
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| Lahore: |
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| November 18, 1998 |
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| CHAIRMAN'S
REVIEW |
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| Dear
Shareholders: |
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| I
am pleased to welcome you to the |
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| 35th
Annual General Meeting of the |
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| company
and lay before you the |
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| audited
accounts of the company |
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| alongwith
my review of the |
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| operations
for the year ended |
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| June
30, 1998. |
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| By
the Grace of Allah, your |
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|
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| company's
performance during the |
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| current
financial year demonstrates |
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| appreciable
improvements as |
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| compared
with the last year. The |
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| company
not only maintained its |
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|
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| stability
but even grew in many |
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| spheres
of activities like sales, |
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| production
and specially the |
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| profitability
which stood at Rs. 190.2 |
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| million.
A substantial contribution |
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| towards
this profitability was derived |
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| from
the sale of Multi application |
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| products
like Gen Sets, Forklift |
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| Trucks
and Prime Movers which |
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| now
forms a major segment of our |
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| manufacturing
and business |
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|
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| operations. |
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| MTL's
decision to standardize its |
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| laboratories
and gauge control has |
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|
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| ended
it the successful certification |
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| of
ISO 9002, which can be seen as |
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| yet
another milestone in the |
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| company's
achievements of the |
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| current
fiscal year, as our laboratories |
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| are
the only and the first in |
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| automobile
sector that got ISO 9002 |
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| Certification.
The ISO Certification |
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|
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| in
quality management system shall |
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|
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| now
pave the way in ensuring |
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|
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| consistent
quality of our products to |
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|
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| meet
International Standards. We are |
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|
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| simultaneously
focussing our full |
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|
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| attention
to embark upon ISO |
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| Certification
of the Assembly and |
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| Manufacturing
Plants and hope to |
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|
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| achieve
the targets in near future. |
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|
| FINANCIAL
RESULTS |
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| Financial
results for the year under |
|
| review
depict commendable |
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|
| improvements
over the preceding |
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|
| year.
This positive note has been |
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|
| posted
because of the abolishing of |
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|
| the
Awami Tractor Scheme, which |
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|
| had
played havoc with the entire |
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| engineering
sector and adversely |
|
|
| affected
the agricultural industry. |
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| The
sales revenue generated during |
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| the
year was Rs. 2751.7 million, |
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|
| which
registered a growth of 34% |
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| over
the last year. The gross profit |
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| ratio
reflected rise from 12.7% of |
|
|
| previous
year to 13.9% mainly due |
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|
| to
increase in sales volume, |
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|
| material
cost controls and sale of |
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|
| Multi
application products which is |
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| now
contributing significantly to the |
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| company'
s profits. Operating |
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|
| expenses
registered an increase of |
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| 17%
because of higher volumes and |
|
|
| inflation.
Other income showed a |
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|
| steep
rise from Rs. 16 million of |
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|
| previous
year to Rs. 43 mi11ion during |
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| the
current year due to deposits kept |
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| with
banks. Due to delayed release |
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|
| of
payment by ADBP against |
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|
| delivery
of tractors made by the |
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|
| company
to ADBP loanees, the |
|
|
| company
resorted to bank borrowing |
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|
| which
increased financial charges |
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| from
Rs. 62 million of the preceding |
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| year
to Rs. 92 million for the year |
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|
| under
review. |
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|
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|
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| Your
Board of Directors keeping in |
|
|
| view
the tradition of the company, |
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| feels
pleasure to recommend a cash |
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|
| dividend
of Rs. 8.50 per share (85%) |
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| which
is in line with its policy of |
|
|
| giving
equitable returns to the |
|
|
| shareholders.
Rs. 70 million have |
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| been
transferred to General reserve, |
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| which
now stand at Rs. 452 million. |
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|
|
|
|
| TECHNICAL
OPERATIONS |
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|
| The
company produced 7854 |
|
|
| tractors
as against 5523 units of last |
|
| year,
reflecting a growth of 42%. In |
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| house
manufacturing departments |
|
|
| maintained
their timely supplies of |
|
|
| quality
major components to support |
|
|
| engine
and tractor assembly |
|
|
| operations.
However, with the launch |
|
| of
the Special Tractor Scheme under |
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|
| the
Prime Minister's National |
|
|
| Agenda,
we anticipate a substantially |
|
| higher
tractor requirement in the |
|
|
| coming
year for which concerted |
|
|
| efforts
are being made to gear up |
|
|
| the
indigenous tractor industry. |
|
