| Nishat Mills Limited |
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| Annual
Report 1998 |
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| CONTENTS |
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| Company
Information |
|
| Notice
of Meeting |
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| Chief
Executive's Review |
|
| Financial
Highlights |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS: |
|
Mrs. Naz Mansha |
|
Chief Executive |
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|
Mr. Yusuf H. Shirazi |
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|
Mian M. Iqbal Saigol |
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|
Mian Gulzar Ahmad |
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Mian Tanveer A. Sheikh |
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Mr. Muhammad Bashir Tariq |
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Mst. Akhter Jehan Begum |
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Mr. Muhammad Bilal Sheikh
(PICIC) |
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| ADVISOR: |
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|
Mian Muhammad Mansha |
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| COMPANY
SECRETARY: |
|
Mr. Muhammad Azam |
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| AUDITORS: |
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|
Riaz Ahmad & Company |
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Chartered Accountants |
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| LEGAL
ADVISOR: |
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Mr. M. Aurangzeb Khan,
Advocate, |
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Chamber No. 6, District
Court, |
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Faisalabad. |
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| BANKERS
TO THE COMPANY: |
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ABN AMRO Bank |
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Habib Bank Limited |
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ANZ Grindlays Bank |
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Habib Bank A.G. Zurich |
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|
|
Allied Bank of Pakistan
Limited |
Mashreq Bank P.S.C. |
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|
|
American Express Bank
Limited |
National Bank of Pakistan |
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|
|
Askari Commercial Bank
Limited |
Prudential Commercial
Bank |
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|
Bank of America |
|
Standard Chartered Bank
Ltd. |
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|
Credit Agricole Indosuez |
Societe General - The
French |
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|
Citibank N.A. |
|
and International Bank |
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|
|
Deutsche Bank |
|
The Hong Kong &
Shangai |
|
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|
Emirates Bank
International P.J.S.C |
Banking Corporation
Limited |
|
|
|
Faysal Bank Limited |
|
United Bank Limited |
|
|
| MILLS: |
|
Nishatabad, Faisalabad |
|
(Spinning, Weaving,
Processing |
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|
Stitching & Power
Plant) |
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|
12 K.M. Faisalabad Road, |
(Weaving units &
Power Plant) |
|
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|
Sheikhupura. |
|
|
| REGISTERED
OFFICE: |
|
Nishat House, |
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|
53, A, Lawrence Road,
Lahore. |
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|
Tel: 042-6367812-16 |
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Fax: 042-6367414 |
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| LIAISON
OFFICE: |
|
1st Floor, Karachi
Chambers, |
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|
Hasrat Mohani Road,
Karachi. |
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|
Tel: 021-2414721-23 |
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|
Fax: 021-2412936 |
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| BRANCH/SHARES
OFFICE: |
|
3rd and 4th Floor |
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|
E.F.U. House, |
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6-D, Main Gulberg, |
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|
Jail Road, Lahore. |
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Tel: 042-5715646-52 |
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|
Fax: 042-5715644-5 |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| NOTICE
is hereby given that the Annual General Meeting of the members of Nishat
Mills Limited |
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| will
be held at the Registered Office, Nishat House, 53-A, Lawrence Road, Lahore
on Friday, April 30, |
|
| 1999
at 11.00 a.m. to transact the following business: |
|
|
| 1.
To confirm the minutes of the last Annual General Meeting. |
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|
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| 2.
To receive and adopt the audited accounts of the Company for the year ended
September 30, |
|
| 1998
together with Directors' and Auditors Reports thereon. |
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|
|
| 3.
To approve payments of Cash Dividend. The Directors have recommended the Cash
Dividend |
|
| at
the rate of Rs. 1.75 per share (i.e. 17.5%) |
|
|
|
| 4.
To appoint Auditors for the year ending September 30, 1999 and fix their
remuneration. The |
|
| present
Auditors M/s. Riaz Ahmad & Company, Chartered Accountants, being
eligible, have |
|
| offered
themselves for reappointment. |
|
|
| 5.
To elect seven Directors on the Board of the Company for a period of three
years, in accordance |
|
| with
the provision of the Companies Ordinance, 1984, in the place of following
retiring Directors |
|
| namely: |
|
|
| 1.
Mrs. Naz Mansha |
|
2. Mr. Yousuf H. Shirazi |
|
| 3.
Mian M. Iqbal Saigol |
|
4. Mian Gulzar Ahmed |
|
| 5.
Mian Tanveer A. Sheikh |
6. Mr. Muhammad Bashir
Tariq |
|
| 7.
Mst. Akhtar Jahan Begum. |
|
|
| The
Board of Directors has fixed the number of elected Directors as seven. All
retiring Directors |
|
| shall
be eligible to offer themselves for re-election. |
|
|
| 6.
To consider any other business which may be placed before the Meeting with
the permission of |
|
| the Chair. |
|
|
|
|
| BOOKS
CLOSURE |
|
| The
Share Transfer Books of the company will remain closed from April, 30, 1999
to May 06, 1999 |
|
| (both
days inclusive) |
|
|
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|
BY THE ORDER OF THE BOARD |
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| Lahore:
April 5, 1999 |
|
MUHAMMAD AZAM |
|
|
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|
COMPANY SECRETARY |
|
|
| NOTES: |
|
|
| i)
The Cash Dividend will be paid to the members, whose names will appear in the
register of the |
|
| members
as at the close of business on April 29, 1999. |
|
|
|
|
|
| ii)
A member eligible to attend and vote to this meeting may appoint another
member as his/her |
|
| proxy
to attend and vote instead of him/her. Proxies in order to be effective must
be received |
|
| by
the Company at the Registered Office not later than 48 hours before the time
for holding the |
|
| meeting
in the working hours |
|
|
|
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| iii)
Nomination from the members for the Office of Directors must be received at
least 14 clear days |
|
| before
the time of the meeting at Registered Office during working hours. |
|
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| iv)
Members are requested to immediately notify the change of address, if any. |
|
|
|
| CHIEF
EXECUTIVE'S REVIEW |
|
|
| It
gives me great pleasure to welcome you all on behalf of the Board of
Directors to the Annual General |
|
| Meeting
of the Company and to appraise you of the affairs of the Company for the year
ended |
|
| 30
September, 1998. |
|
|
| NUCLEAR
BLAST |
|
| 1997-98
was a subdued year for the economy of the country. The nuclear explosion in
May 1998 on the |
|
| one
hand helped the country to attain self confidence but on the other hand shook
the confidence of |
|
| the
international business community and the country witnessed turmoil in export
markets. Various |
|
| economic
and trade sanctions were imposed by the developed countries of the world. The
freezing of |
|
| foreign
currency accounts also shattered the confidence of foreigners in the economy
of the country. |
|
|
| OPERATING
RESULTS |
|
| Inspire
of all the export market problems, the Company maintained its performance |
|
| record.
This year, the Company has earned an after tax profit of Rs. 344.397 million
as |
|
| compared
to last year Rs. 324.739 million registering an increase of 6.05% in profits. |
|
| Gross
profit of the company has been increased to 21.93% with an increase of 3% |
|
| over
the last year percentage. Gross sales of the company has touched the figure
of |
|
| almost
9 billion with an increase of 4.07%. This includes export sales of Rs. 7.55
billion, |
|
| which
has increased by 4.63% as compared to last year. |
|
|
| FPCCI
EXPORT TROPHY AWARD |
|
| By
the grace of Allah Almighty, the Company maintained its export performance
and this year again |
|
| has
secured FPCCI President Export Trophy Award for the fourth time
consecutively. |
|
|
| MARKETING
STRATEGY |
|
| The
market for grey fabrics is becoming an every day changing scenario with new
suppliers coming |
|
| into
competition from Asia with better raw materials and machinery. Countries like
India, Indonesia |
|
| and
China are playing a more active part in the fabric market as compared to few
years back. |
|
|
| Keeping
in view the demand and supply situation, we have adopted different measures
in which we |
|
| have
been able to generate a better market share and margin of profit. This
includes the addition of |
|
| value
added products to our list leaving behind the traditional twill/basic items
previously prevailing |
|
| in
the market. More emphasis is now given to value-added products, or special
items, like the denims, |
|
| curtain
cloth and curtains, canvasses, 2-ply fabrics, slub fabrics, Bedford cords and
dobby items. |
|
|
| In
addition we have also put in a 10t of effort in the development of new
markets in the American and |
|
| Latin
continent as well as in Africa and Asia. In this regard a more professional
approach has been |
|
| adopted
by creating a market niche for our products by introducing special items and
additional features |
|
| like
pallet packed fabrics with extra long piece lengths and wider width fabrics. |
|
|
| We
have also improved the production standards and efficiency by |
|
| procuring
better raw materials, reducing wastage and better |
|
| training
of the workers to give better quality with lesser expenses. |
|
|
| Value
addition has become a top priority in our policy and thus an increasing |
|
| number
of fabric is now being consumed in-house by our processing department, being
finished in |
|
| form
of printed and dyed piece good and made ups. |
|
|
| Making
long term relationships with our customers has always been a major policy of
our marketing |
|
| strategy,
and we are now putting in even more efforts in this regard than before so
that the penetration |
|
| of
other competitors can be minimized into our share of the market and we have
been quite successful |
|
| in
doing so. |
|
|
| In
this regard we are putting up new and improved machinery and upgrading the
existing ones for |
|
| better
production speed and quality of fabric, thus trying to maintain our
reputation of being among |
|
| the
best quality fabric producers in the market. |
|
|
| All
the above mentioned steps reflect briefly that despite the down trend in the
international market, |
|
| we
at Nishat are prospering daily due to our professional commitment towards
excellence and our |
|
| strive
to produce the best results at all time and under all conditions. Our
marketing and production |
|
| teams
are coordinating at all times and our vision for the future is always aimed
higher and higher. |
|
|
| FUTURE
OUTLOOK |
|
| Inspite
of inflationary pressure and increasing cost of raw material, the Company has
been successful |
|
| in
procuring good quality cotton at a reasonable price. Recently announced
refinance facility on yarn |
|
| and
lowering interest rate would also help to reduce financial cost of the
company significantly. After |
|
| a
long period of textile recession which now seems to end and political
stability, we assure to have better |
|
| results
in the period coming ahead. |
|
|
| INVESTMENT
PLAN |
|
| By
the grace of Allah, the Company is planning for an expansion program in |
|
| processing
for which purchase of land near existing stitching plant at |
|
| Ferozepur
Road, Lahore is in process. Approval for water supply from ministry |
|
| of
irrigation has been secured so far. This would be a dying finishing unit |
|
| basically.
In addition, the Company is also planning to set up a spinning unit at |
|
| Bhikki.
This unit will provide yarn to Fabric unit. |
|
|
| YEAR
2000 COMPLIANCE OF COMPUTER SYSTEM |
|
| Following
the directions of the Corporate Law Authority to address the "Millennium
Bug", the Company |
|
| has
examined its in house developed automated systems and visualises absolutely
no problem because |
|
| of
the fact that the database and hardware in use is Y2K compliant. |
|
|
| ACKNOWLEDGEMENT |
|
| I
wish to place on record my deep appreciation for the cooperation and devoted
hard work of the officers, |
|
| staff
and workers of the company. We appreciate the patronage and confidence placed
in the Company |
|
| by
the Financial Institutions and Commercial Banks. We are also thankful to our
valued customers and |
|
| expect
more pleasant business relationship with them. To our shareholders we are
grateful for their |
|
| faith
in the Company. We greatly value their trust. |
|
|
| Lahore: |
|
|
(MRS. NAZ MANSHA) |
|
| 05
April 1999 |
|
CHIEF EXECUTIVE |
|
|
|
| FINANCIAL
HIGHLIGHTS |
|
|
|
|
1994 |
1995 |
1996 |
1997 |
1998 |
|
|
|
|
| Profit
and Loss |
|
|
|
|
|
| Net sales |
|
5,107,496 |
6,157,932 |
6,748,089 |
8,557,876 |
8,919,459 |
|
| Gross
Profit |
|
867,868 |
647,208 |
1,035,629 |
1,622,745 |
1,956,420 |
|
| Profit
before tax |
|
457,513 |
4,301 |
145,787 |
379,589 |
412,273 |
|
| Profit
after tax |
|
434,466 |
29,886 |
135,209 |
324,739 |
344,397 |
|
|
| Cash
outflows |
|
| Income
tax paid |
|
32,692 |
62,437 |
65,294 |
86,522 |
111,489 |
|
| Financial
charges paid |
|
497,465 |
531,073 |
574,997 |
820,524 |
789,018 |
|
| Fixed
capital expenditure |
632,787 |
289,864 |
92,106 |
342,969 |
644,944 |
|
|
| Balance
sheet |
|
| Current assets |
|
3,094,175 |
3,622,586 |
1,941,575 |
3,161,495 |
4,209,470 |
|
| Current
liabilities |
|
2,571,308 |
3,162,443 |
2,945,767 |
3,925,000 |
4,940,337 |
|
| Operating
fixed assets |
|
2,512,851 |
2,484,805 |
2,275,622 |
3,295,763 |
3,265,748 |
|
| Total
assets |
|
6,516,234 |
7,052,275 |
6,767,448 |
8,860,045 |
9,940,818 |
|
| Long term loans and finances |
1,120,717 |
917,020 |
700,620 |
1,097,931 |
1,018,548 |
|
| Shareholders'
Equity |
|
2,711,060 |
2,928,109 |
3,106,195 |
3,818,405 |
3,967,949 |
|
|
| Ratios |
|
| Current
ratio |
|
1.20:1 |
1.15:1 |
0.66:1 |
0.81:1 |
0.85:1 |
|
| Gearing
ratio |
|
0.29:1 |
0.24:1 |
0.18:1 |
0.22:1 |
0.20:1 |
|
| Gross
Profit % |
|
16.99 |
10.51 |
15.35 |
18.96 |
21.93 |
|
| Net
profit % (before tax) |
8.96 |
0.07 |
2.16 |
4.44 |
4.62 |
|
| Earning
per share |
|
6.62 |
0.35 |
1.56 |
2.92 |
3.09 |
|
| Proposed
dividend % |
|
- |
- |
- |
15 |
17.5 |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors of the company feel pleasure in submitting their report together
with the |
|
| audited
accounts of the company for the year ended 30 September 1998. |
|
|
|
|
|
|
|
(RUPEES IN
THOUSAND) |
|
|
|
|
|
1997 |
1998 |
|
|
|
|
| PROFIT
AND APPROPRIATIONS |
|
|
|
| Profit
before taxation |
|
|
|
412,273 |
379,589 |
|
| Provision
for taxation |
|
|
|
(67,876) |
(54,850) |
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
344,397 |
324,739 |
|
|
|
|
|
| Un-appropriated
profit brought forward |
|
821 |
203 |
|
| Transfer
on merger |
|
- |
(24,104) |
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
345,218 |
300,838 |
|
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
| Proposed
dividend |
|
194,853 |
167,017 |
|
| Transferred
to general reserve |
|
150,000 |
133,000 |
|
|
|
---------- |
---------- |
|
|
|
344,853 |
300,017 |
|
|
|
---------- |
---------- |
|
| Un-appropriated
profit |
|
365 |
821 |
|
|
|
|
|
========== |
========== |
|
|
| Auditors |
|
| The
present auditors M/s Riaz Ahmed and Company, Chartered Accountants retire,
and being eligible, |
|
| offer
themselves for reappointment. |
|
|
| Pattern
of Shareholdings |
|
| The
pattern of shareholdings as referred by section 236 of the Companies
Ordinance, 1984 is enclosed. |
|
|
| Acknowledgement |
|
| The
Directors place on record their appreciation for the efforts put in by the
executives, staff members |
|
| and
workers of the company. |
|
|
|
|
FOR AND ON BEHALF OF THE BOARD |
|
|
|
|
|
|
| Lahore: |
|
|
(MRS. NAZ MANSHA) |
|
| 05
April 1999 |
|
CHIEF EXECUTIVE |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of NISHAT MILLS LIMITED as at 30
September 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
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 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 30 September 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. |
|
|
|
|
| LAHORE: |
|
|
(RIAZ AHMAD AND COMPANY) |
|
| 06
April 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30 SEPTEMBER 1998 |
|
|
|
|
|
|
|
|
(RUPEES IN
THOUSAND) |
|
|
NOTE |
1998 |
1997 |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
share capital |
|
|
| 150,000,000
ordinary shares of Rupees 10 each |
|
1,500,000 |
1,500,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up share capital |
3 |
1,113,444 |
1,113,444 |
|
| Capital
reserves |
|
4 |
1,037,622 |
1,037,622 |
|
| Revenue
reserves |
|
5 |
1,816,518 |
1,666,518 |
|
| Unappropriated
profit |
|
|
365 |
821 |
|
|
|
|
---------- |
---------- |
|
|
|
|
3,967,949 |
3,818,405 |
|
|
|
|
| SURPLUS
ON REVALUATION OF |
|
|
| OPERATING
FIXED ASSETS |
|
|
12,118 |
12,118 |
|
|
|
|
| REDEEMABLE
CAPITAL |
|
6 |
380,640 |
250,259 |
|
|
|
|
|
|
| DEBENTURES
AND LONG TERM LOANS |
|
|
| Custom
debentures |
|
7 |
1,012 |
1,828 |
|
| Long
term loans |
|
8 |
445,128 |
623,973 |
|
|
|
|
---------- |
---------- |
|
|
|
|
446,140 |
625,801 |
|
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
| TO
FINANCE LEASE |
|
9 |
191,768 |
221,871 |
|
|
|
|
| DEFERRED
LIABILITY FOR GRATUITY |
|
|
1,866 |
6,591 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
| Current
portion of long term liabilities |
10 |
579,249 |
318,581 |
|
| Short
term finances |
|
11 |
3,414,402 |
2,481,574 |
|
| Creditors,
accrued and other liabilities |
12 |
552,391 |
766,487 |
|
| Workers'
participation fund |
|
13 |
22,309 |
21,021 |
|
| Provision
for taxation |
|
|
168,198 |
168,534 |
|
| Proposed
dividend |
|
|
194,853 |
167,017 |
|
| Dividend
payable |
|
8,935 |
1,786 |
|
|
|
---------- |
---------- |
|
|
|
4,940,337 |
3,925,000 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
14 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
9,940,818 |
8,860,045 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
(RUPEES IN
THOUSAND) |
|
|
NOTE |
1998 |
1997 |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Operating
fixed assets |
|
15 |
3,265,748 |
3,295,763 |
|
| Assets
subject to finance lease |
|
16 |
446,376 |
500,582 |
|
| Capital
work-in-progress |
|
17 |
336,550 |
23,276 |
|
|
|
|
---------- |
---------- |
|
|
|
|
4,048,674 |
3,819,621 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
18 |
1,593,099 |
1,813,420 |
|
|
|
|
|
| LONG
TERM LOANS, DEPOSITS, |
|
|
| PREPAYMENTS
AND DEFERRED COST |
|
19 |
89,575 |
65,509 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores,
spare parts and loose tools |
20 |
486,572 |
453,646 |
|
| Stock-in-trade |
|
21 |
1,007,444 |
904,951 |
|
| Short
term investments |
|
22 |
4,750 |
12,375 |
|
| Trade debts |
|
23 |
1,674,052 |
562,955 |
|
| Advances,
deposits and prepayments |
|
24 |
561,603 |
430,747 |
|
| Other
receivables |
|
25 |
354,411 |
375,882 |
|
| Cash
and bank balances |
|
26 |
120,638 |
420,939 |
|
|
|
|
---------- |
---------- |
|
|
|
|
4,209,470 |
3,161,495 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
9,940,818 |
8,860,045 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
CHIEF EXECUTIVE |
|
|
DIRECTOR |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
