| First National Modaraba |
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
| CONTENTS |
|
| Corporate
Information |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position (Cash Flow) |
|
| Notes
to the Accounts |
|
| Pattern
of Certificate Holding |
|
|
| CORPORATE
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| CHAIRMAN |
|
AIR MARSHAL (RETD.) M.
NUR KHAN |
|
|
| MANAGING
DIRECTOR |
|
| &
CHIEF EXECUTIVE |
SHAFIQ ALI SAYEED |
|
|
| DIRECTORS |
|
ABDULRAHMAN MOHAMMED |
|
|
|
BUKHATIR |
|
|
|
AZFAR HASNAIN |
|
|
|
| COMPANY
SECRETARY |
KHALID MAHMOOD |
|
|
|
| AUDITORS |
|
JALIS AHMAD & CO. |
|
|
Chartered Accountants |
|
|
| BANKERS |
|
United Bank Limited |
|
|
Habib Bank Limited |
|
|
Faysal Islamic Bank of
Bahrain E.C. |
|
|
Bank of America |
|
|
National Development |
|
|
Finance Corporation |
|
|
| LEGAL
ADVISORS |
SHAHENSHAH HUSSAIN |
|
|
Advocate |
|
|
| REGISTERED
OFFICE |
Block IV, Hockey Stadium
Complex, |
|
|
Liaquat Barracks,
Karachi-75530. |
|
|
| FACTORY |
|
Plot No. 51, Sector 7-A, |
|
|
Korangi Industrial Area, |
|
|
Karachi. |
|
|
|
| DIRECTOR'S REPORT
TO THE CERTIFICATE HOLDERS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| The
Board of Directors of National Modaraba Company (Private) Limited, managers
of First National Modaraba, |
|
| present
report of the First National Modaraba, together with audited accounts for the
year ended June 30, 1998. |
|
|
| 1.
FINANCIAL RESULTS |
|
|
1998 |
1997 |
|
|
(Rs.000) |
|
| Sales |
|
8,223 |
7,862 |
|
| Other
Income |
|
310 |
45 |
|
| Net
costs and Expenses |
|
(8,536) |
(8,339) |
|
|
---------- |
---------- |
|
| Loss
for the year |
|
(3) |
(432) |
|
|
========== |
========== |
|
| 2. BUSINESS |
|
| The
main business of the Modaraba continues to be leather tanning. |
|
|
| As
per agreement, the London Tanner's Group was disengaged from management of
our tannery during the |
|
| later
part of the year, due to their decision not to reimburse revenue losses
incurred by the Modaraba in two |
|
| quarters
ended September 30, 1997 and their continuous failure to adequately manage
our tannery. Since then, |
|
| the
tannery is being operated by the Modaraba's management, with a team of
qualified staff, mainly processing |
|
|
| During
the year, (a) processing income was higher than the prior years and (b) net
loss substantially reduced.
~ |
| to
Rs. 0.003 million, as compared to Rs.10 millions in 1996 and Rs.19 millions
in 1995. |
|
|
| Encouraged
by the market support after disengagement of London Tanner's Group, the
management hopes that |
|
| the
tannery would perform better in the years to follow. |
|
|
| 3. AUDITORS |
|
| The
present auditors Messrs. Jalis Ahmed& Company, Chartered Accountants, are
due for retirement and |
|
| being
eligible, offer themselves for re-appointment for the year ending June 30,
1999. |
|
|
| On
behalf of the Board |
|
|
| SHAFIQ
ALI SAYEED |
|
|
|
| Managing
Director & |
|
| Chief
Executive |
|
|
| Karachi
· December 26, 1998 |
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1998 |
|
|
|
|
June |
June |
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
|
| CERTIFICATE
CAPITAL |
|
| Authorised |
|
| 20,000,000
Modaraba Certificates |
|
100,000,000 |
100,000,000 |
|
| of
Rs. 5/- each |
|
=========== |
=========== |
|
| Issued,
Subscribed & Paid-up |
3 |
51,800,000 |
51,800,000 |
|
| Accumulated
Losses |
|
(39,698,648) |
(39,695,735) |
|
|
---------- |
---------- |
|
|
12,101,352 |
12,104,265 |
|
| CURRENT
LIABILITIES |
|
| Creditors,
Accrued & |
|
| Other
Liabilities |
|
4 |
9,101,594 |
8,366,807 |
|
| Due
to Management Company |
|
5,188,392 |
5,826,334 |
|
|
---------- |
---------- |
|
|
14,289,986 |
14,193,141 |
|
|
---------- |
---------- |
|
|
26,391,338 |
26,297,406 |
|
|
========== |
========== |
|
| FIXED
ASSETS - TANGIBLE |
|
5 |
5,536,300 |
5,419,508 |
|
| LONG
TERM INVESTMENTS |
|
6 |
674,970 |
674,970 |
|
| LONG
TERM DEPOSITS |
|
7 |
75,000 |
75,000 |
|
| DEFERRED
COST |
|
8 |
118,035 |
501,411 |
|
| CURRENT
ASSETS |
|
| Stores
& Spares |
|
9 |
1,808,724 |
1,783,124 |
|
| Stock-in-Trade |
|
10 |
8,953,764 |
9,652,006 |
|
| Trade Debts |
|
11 |
4,133,400 |
2,330,547 |
|
| Advances,
Deposits, Prepayments |
|
| &
Other Receivables |
|
12 |
4,885,476 |
5,477,078 |
|
| Investments |
|
13 |
546 |
546 |
|
| Cash
and Bank Balances |
|
14 |
205,123 |
383,216 |
|
|
---------- |
---------- |
|
|
19,987,033 |
19,626,517 |
|
|
---------- |
---------- |
|
|
26,391,338 |
26,297,406 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts |
|
|
| Managing
Director & |
|
Director |
|
Director |
|
| Chief
Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
June |
June |
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
| Sales
& Processing Revenue |
15 |
8,223,312 |
7,861,482 |
|
| Less:
Cost of Sales |
|
16 |
6,651,304 |
6,925,328 |
|
| GROSS
PROFIT |
|
1,572,008 |
936,154 |
|
| LESS:
OPERATING EXPENSES |
|
| Administrative |
|
17 |
1,849,388 |
1,339,216 |
|
| Selling
& Distribution |
|
18 |
35,736 |
73,519 |
|
|
---------- |
---------- |
|
|
1,885,124 |
1,412,735 |
|
|
---------- |
---------- |
|
| OPERATING
LOSS |
|
(313,116) |
(476,581) |
|
| Add:
Other Income |
|
19 |
310,203 |
44,669 |
|
|
|
---------- |
---------- |
|
| Loss
for the year |
|
(2,913) |
(431,912) |
|
| Accumulated
Losses Brought Forward |
|
(39,695,735) |
(39,263,823) |
|
|
---------- |
---------- |
|
| Accumulated
Losses Carried Forward |
|
(39,698,648) |
(39,695,735) |
|
|
========== |
========== |
|
| The
annexed notes fore an integral pan of these accounts. |
|
|
| Managing
Director & |
|
Director |
|
Director |
|
| Chief
Executive |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30 1998. |
|
|
|
June |
June |
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Loss
for the year |
|
(2,913) |
(431,912) |
|
| Adjustment
for non Cash Charges |
|
| Amortisation
of Deferred Cost |
|
383,376 |
720,692 |
|
| Deprerci
ation |
|
58,048 |
40,960 |
|
|
---------- |
---------- |
|
|
441,424 |
761,652 |
|
|
---------- |
---------- |
|
| Operating Profit before changes
in |
|
| working
capital |
|
438,511 |
329,740 |
|
| (Increase)/Decrease
in current assets |
|
| Stores
and Spares |
|
(25,600) |
(36,992) |
|
| Stock-
in -Trade |
|
698,242 |
5,598,621 |
|
| Trade Debts |
|
(1,802,853) |
1,915,533 |
|
| Advances,
Deposits, Prepayments & Others |
591,602 |
(3,987,189) |
|
|
---------- |
---------- |
|
|
(538,609) |
3,489,973 |
|
|
---------- |
---------- |
|
| lncrease/(Decrease)
in Current Liabilities |
|
| Creditors,
Accrued & Other Liabilities |
734,787 |
(610,463) |
|
| Due
to Management Company |
|
(637,942) |
(2,219,262) |
|
|
---------- |
---------- |
|
|
96,845 |
(2,829,725) |
|
|
---------- |
---------- |
|
| Net
Working Capital Changes |
|
(441,764) |
660,248 |
|
|
|
---------- |
---------- |
|
| CASH
GENERATED FROM OPERATIONS |
|
(3,253) |
989,988 |
|
|
---------- |
---------- |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Increase
in: |
|
| N.I.T.
Units |
|
- |
(448,410) |
|
| Fixed
Assets |
|
(174,840) |
(409,600) |
|
|
---------- |
---------- |
|
| CASH
USED IN INVESTING ACTIVITIES |
|
(174,840) |
(858,010) |
|
|
|
|
| NET
INCREASE/(DECREASE) IN CASH AND BANK BALANCES |
(178,093) |
131,978 |
|
| Cash
& bank balances at the beginning of the year |
383,216 |
251,238 |
|
|
---------- |
---------- |
|
| CASH
& BANK BALANCES AT THE END OF THE YEAR |
205,123 |
383,216 |
|
|
========== |
========== |
|
| Managing
Director & |
Director |
|
Director |
|
| Chief
Executive |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| First
National Modaraba is a perpetual multi-purpose modaraba floated and managed
by National |
|
| Modaraba
Company (Pvt) Limited, and is listed on Karachi and Lahore Stock Exchanges.
The principal |
|
| activity
of the Modaraba is processing/manufacturing and sell of leather and leather
products. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1)
Overall Valuation Policy |
|
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2)
Staff Retirement Benefits |
|
|
| Provision
for staff gratuity is not made in the accounts, which is accounted for on
payment and charged |
|
| to
Profit and Loss Account. |
|
|
| 2.3)
Assets taken on Rent |
|
|
| The
rental charges in the accounts are as per the agreement with the management
company to acquire the |
|
| tannery
on lease. |
|
|
| 2.4)
Stock-in-Trade |
|
|
| Stated
in Note ( 10 ). |
|
|
| 2.5)
Investments |
|
|
| These
are stated at the lower of cost and market value. |
|
|
| 2.6)
Fixed Assets and Depreciation |
|
|
| Fixed
assets purchased by the Modaraba are stated at cost less accumulated
depreciation .Depreciation is |
|
| charged
to income by applying the reducing balance method. Full year's depreciation
is charged on additions |
|
| while
no depreciation is charged on assets disposed off during the year.
Maintenance and normal repairs |
|
| are
charged to income as and when incurred. Gains and losses, if any on disposal
of fixed assets are taken |
|
| to
profit and loss account. |
|
|
| 2.7)
Deferred Costs |
|
|
| Preliminary
expenses, expenses incurred on the issue of certificates etc. are being
written off in these |
|
| accounts,
in five equal annual instalments from the year these are incurred. |
|
|
| 2.8)
Revenue Recognition |
|
|
| Sales
are recorded on despatch of goods to customers. Income on investment is
recognised on receipt basis. |
|
|
| 3.
ISSUED, SUBSCRIBED & PAID-UP CAPITAL |
|
|
June |
June |
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
|
| 6,000,000
Modaraba Certificates |
|
| of
Rs. 5/- each issued as fully |
|
| paid
up against cash. |
|
30,000,000 |
30,000,000 |
|
|
| 360,000
Certificates issued |
|
| as
fully paid Bonus Certificates |
|
1,800,000 |
1,800,000 |
|
|
| 4,000,000
Certificates issued as |
|
| fully
paid Right Certificates |
|
20,000,000 |
20,000,000 |
|
|
---------- |
---------- |
|
|
51,800,000 |
51,800,000 |
|
|
========== |
========== |
|
| 4.
CREDITORS, ACCRUED AND |
|
| OTHER
LIABILITIES |
|
|
| Creditors
for goods supplied |
|
5,989,033 |
6,270,080 |
|
| Accrued
and other Liabilities |
|
3,112,561 |
2,096,727 |
|
|
---------- |
---------- |
|
|
9,101,594 |
8,366,807 |
|
|
|
========== |
========== |
|
|
| 4.1)
The Gratuity accrued but not provided for (Note 2.2) as at June 30, 1998
amounted to Rs. 326,646/- |
|
|
| 5.
FIXED ASSETS-TANGIBLE |
|
| ----------------------------------------------------------------------------------------------------------------------- |
|
|
|
COST |
|
|
|
DEPRECIATION |
|
WRITTEN |
|
| ----------------------------------------------------------------------------------------------------------- |
DOWN |
|
| PARTICULARS |
|
|
Rate |
|
VALUE |
|
|
AS AT |
ADDITIONS |
AS AT |
% |
AS AT |
CHARGE |
AS AT |
AS AT |
|
|
JULY 01, |
DURING |
JUNE 30, |
|
JULY 01, |
FOR |
JUNE 30, |
JUNE 30, |
|
|
1997 |
THE YEAR |
1998 |
|
1997 |
THE YEAR |
1998 |
1998 |
|
| ----------------------------------------------------------------------------------------------------------------------- |
|
|
Rs. |
Rs. |
Rs. |
|
Rs. |
Rs. |
Rs. |
Rs. |
|
| ----------------------------------------------------------------------------------------------------------------------- |
|
| Plant
& Machinery |
5,090,703 |
137,840 |
5,228,543 |
10 |
40,960 |
50,648 |
91,608 |
5,136,935 |
|
| Vehicles |
|
369,765 |
- |
369,765 |
|
- |
- |
- |
369,765 |
|
| Computers |
|
- |
37,000 |
37,000 |
20 |
- |
7,400 |
7,400 |
29,600 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| 1998 |
|
5,460,468 |
174,840 |
5,635,308 |
|
40,960 |
58,048 |
99,008 |
5,536,300 |
|
|
|
========== |
========== |
========== |
|
========== |
========== |
========== |
========== |
|
|
5,050,868 |
409,600 |
5,460,468 |
|
- |
40,960 |
40,960 |
5,419,508 |
|
| 1997 |
|
========== |
========== |
========== |
|
========== |
========== |
========== |
========== |
|
|
| The
above assets acquired by the Modaraba for enhancing the operational
efficiency of the tannery, |
|
| that
will revert to the owners of the tannery on termination of the lease at cost. |
|
|
| No
depreciation has therefore, been charged on these fixed assets for the year
under report. However |
|
|
| 6.
LONG TERM INVESTMENTS |
|
|
| The
above investment has been made in N.I.T. Units to comply with the NBFI's
Regulations prescribed |
|
| by
State Bank of Pakistan |
|
|
| 7.
LONG TERM DEPOSITS |
|
|
| It
represent deposits with State Bank of Pakistan in accordance with the NBFI's
rules as prescribed by |
|
| the
State Bank of Pakistan. |
|
|
|
June |
June |
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
| DEFERRED
COST |
|
|
| Market
Development Expenditure |
|
363,722 |
1,084,414 |
|
| Deferred
Expenditure |
|
137,689 |
137,689 |
|
|
---------- |
---------- |
|
|
501,411 |
1,222,103 |
|
| Less:
Amortised during the year. (Note 2.7) |
(383,376) |
(720,692) |
|
|
---------- |
---------- |
|
|
118,035 |
501,411 |
|
| 9. STORES AND SPARES |
|
========== |
========== |
|
|
| Chemicals
& Dyes |
|
1,074,272 |
1,074,272 |
|
| Spare Parts |
|
734,452 |
708,852 |
|
|
---------- |
---------- |
|
|
1,808,724 |
1,783,124 |
|
|
========== |
========== |
|
| 10.
STOCK -IN -TRADE |
|
|
|
|
| Finished
/ Semi Finished Goods: |
|
| Cow
& Buffalo Skins |
|
7,365,674 |
14,857,176 |
|
| Sheep Skin |
|
- |
11,256 |
|
| Split
& Others |
|
783,286 |
648,095 |
|
| Processing
Work in Progress |
|
804,804 |
707,763 |
|
|
---------- |
---------- |
|
|
8,953,764 |
16,224,290 |
|
|
| Less:
Reduction in the value of stock as a result of |
|
| revaluation,
absorbed by the Management Company |
- |
(6,572,284) |
|
|
---------- |
---------- |
|
|
8,953,764 |
9,652,006 |
|
|
========== |
========== |
|
|
|
|
| These
are valued at cost, consistent with past accounting policy. As the tannery
has not been able to process leather |
|
| on
own account, the realisable value of these stocks are likely to be either
'sale on distress' or 'sale on as where is' |
|
| basis
both of which are likely to realise amounts lower than the cost. A provision
has however been made for |
|
| reduction
in value of the socks as assessed by the independent valuer of repute,
engaged for the purpose of assessing |
|
| present
value of the stocks. The loss arisen as a result of such provision has been
charged to the Management |
|
| Company. |
|
|
|
June |
June |
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
| 11.
TRADE DEBTS - Unsecured |
|
|
| Considered
good by the management |
|
4,133,400 |
2,330,547 |
|
| Considered
doubtful |
|
1,970,552 |
1,873,051 |
|
|
---------- |
---------- |
|
|
6,103,952 |
4,203,598 |
|
| Less:
Provision for doubtful debts |
|
(1,970,552) |
(1,873,051) |
|
|
---------- |
---------- |
|
|
4,133,400 |
2,330,547 |
|
|
========== |
========== |
|
| 12.
ADVANCES, DEPOSITS, PREPAYMENTS |
|
| AND
OTHER RECEIVABLES |
|
|
| Advances
(Not 12.1 ) |
|
546,144 |
310,865 |
|
| Deposits
& Prepayments |
|
45,450 |
47,325 |
|
| Income
Tax deducted at source |
|
940,719 |
865,725 |
|
| Loss
Recoverable from the Tannery Managers |
|
| considered
good by the management (Note. 20) |
3,353,163 |
4,253,163 |
|
|
---------- |
---------- |
|
|
4,885,476 |
5,477,078 |
|
|
========== |
========== |
|
| 12.1
ADVANCES |
|
|
|
| - Loan
to Employees |
|
156,049 |
81,325 |
|
| -
Advance against Expenses |
|
183,052 |
- |
|
| - Others |
|
207,043 |
229,540 |
|
|
---------- |
---------- |
|
|
546,144 |
310,865 |
|
|
========== |
========== |
|
| 13.
INVESTMENTS |
|
|
|
| Investment
in Quoted Company |
|
| First
Interfund Modaraba |
|
| 210
Ordinary Shares fully paid up. |
|
2,378 |
2,378 |
|
| Less :Provision for
diminution in the value |
|
| of
investment |
|
(1,832) |
(1,832) |
|
|
---------- |
---------- |
|
|
546 |
546 |
|
|
========== |
========== |
|
| 14.
CASH AND BANK BALANCES |
|
| In hand |
|
84,700 |
168,586 |
|
| At Banks: |
|
| Current
Accounts |
|
109,865 |
110,598 |
|
| Deposit
Account |
|
10,558 |
104,032 |
|
|
---------- |
---------- |
|
|
205,123 |
383,216 |
|
| SALES
AND PROCESSING REVENUE |
|
========== |
========== |
|
|
| Job Works |
|
8,223,312 |
7,354,888 |
|
| Local Sales |
|
- |
506,594 |
|
|
---------- |
---------- |
|
|
8,223,312 |
7,861,482 |
|
|
========== |
========== |
|
|
| 16.
COST OF SALES |
|
|
| Opening
Stock -in- Trade |
|
9,652,006 |
15,250,627 |
|
| Reduction
in the value of Stock (Note 10) |
- |
(6,572,284) |
|
|
|
|
| Cost
of goods manufactured |
|
| Raw
Material Consumed |
|
- |
561,670 |
|
| Chemical
& Dyes |
|
1,160 |
40,886 |
|
| Salaries,
Wages & Benefits |
|
2,180,287 |
1,827,518 |
|
| Fuel,
Water & Power |
|
2,065,174 |
2,152,128 |
|
| Processing
Charges |
|
536,457 |
580,479 |
|
| Stock
Valuation Expenses |
|
65,000 |
- |
|
