| PEL Appliances Limited |
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
| Contents |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
| BOARD
OF DIRECTORS |
|
|
| Mr.
M. Naseem Saigol |
(Chairman/Chief
Executive) |
|
| Mr.
M. Azam Saigol |
|
| Mr.
Shahid Sethi |
|
| Mr.
Irfan Zubair |
|
| Mr.
Muhammad Ilyas Bajwa |
|
| Mr.
Muhammad Asif Bajwa |
|
| Mr.
Saeed Mian Ansari |
|
|
| COMPANY
SECRETARY |
|
|
| Sheikh
Muhammad Shakeel, ACA |
|
|
| AUDITORS |
|
|
| M/s
Manzoor Hussain Mir & Co. |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
|
| ABN
Amro Bank N.V. |
|
| Deutsche
Bank AG |
|
| Faysal
Bank Limited |
|
| Mashreq
Bank PSC |
|
| National
Bank of Pakistan |
|
|
| REGISTERED
OFFICE |
|
|
| 06-Egerton
Road, |
|
| Lahore |
|
| Tel:
6306131 (5 Lines) |
|
|
| WORKS |
|
| 302-Gadoon
Amazai |
|
| Industrial
Estate, |
|
|
| District
Swabi (NWEP) |
|
|
|
|
|
|
|
| Notice
of Annual General Meeting |
|
|
| Notice
is hereby given that the Seventeenth Annual General Meeting of Shareholders
of |
|
| PEL
APPLIANCES LIMITED will be held on Thursday December 31, 1998 at 10:00 A.M.
at Associated House, |
|
| Mezzanine
Floor, 07-Egerton Road, Lahore to transact the following business:- |
|
|
| 1.
To confirm the minutes of Extraordinary General Meetinq held on November 04,
1998. |
|
|
| 2.
To receive and adopt the Annual Audited Accounts for the year ended June 30,
1998 alongwith |
|
| Directors'
and Auditors' Reports thereon. |
|
|
| 3.
To appoint Auditors to hold office till the conclusion of the next Annual
General Meetinq and fix |
|
| their
remuneration. |
|
|
| 4.
Any other business with the permission of the Chair. |
|
|
|
By order of the Board |
|
| LAHORE |
|
SHEIKH MUHAMMAD SHAKEEL |
|
| DECEMBER
09, 1998 |
|
COMPANY SECRETARY |
|
|
| NOTES: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from December
31,1998 to January 06, |
|
| 1999
(both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at this, meeting may appoint another
member as proxy. |
|
| Proxies
in order to be effective must be received at the Registered Office of the
Company not later |
|
| than
forty-eight hours before the time of duly stamped, signed and witnesses |
|
|
| 3.
Members are requested to notify the Company change in their addresses, if
any. |
|
|
|
| Director's
Report to the Members |
|
|
| GENTLEMEN |
|
|
| Your
Directors are pleased to submit their Report together with the Audited
Accounts of the Company for |
|
| the
year ended June 30, 1998. |
|
|
| FINANCIAL |
|
|
1998 |
1997 |
|
|
(Rupees in thousands) |
|
|
|
| Net sales |
|
631,813 |
385,659 |
|
| Gross profit |
|
92,637 |
36,738 |
|
|
|
|
| Operating
loss |
|
(9,068) |
(29,885) |
|
|
| Net
loss for the year |
|
'(88,113) |
'(134,151) |
|
|
| AUDITORS
AND THEIR REPORT |
|
|
| The
present Auditors Messrs Manzoor Hussain Mir & Company, Chartered
Accountants, retires and being |
|
| eligible,
offer themselves for reappointment. |
|
|
| We
offer following comments on the observation made by the Auditors in their
report. Borrowing words |
|
| from
the Judgment of the Honourable Supreme Court, based on various observations
made, being in Tax |
|
| exempted
area of Gadoon Amazai and having exemptions under clause 122 (C) of 2nd
Schedule of Income |
|
| Tax
ordinance 1979 we can be benefited if some implications of Economic Reforms
Act 1992 are considered. |
|
| A
case has been filed with High Court on above mentioned facts. Pending
decision of the Honourable High |
|
| Court
the provisions have been taken into account. |
|
|
| No
provision has been made for diminution in the value of investments in view of
their long term nature |
|
| and
the fact that prices quoted on Stock Exchanges are abnormally depressed these
days. The investee |
|
| company
is earning profits and breakup value of its shares is greater than the cost
of this investment. |
|
|
| THE
MELLINIUM BUG |
|
| The
Company has already converted most of its applications compliant with year
2000 problem and will |
|
| complete
this work before year 2K. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| A
statement showing pattern of holding of the shares held by the shareholders
of PE/APPLIANCES LIMITED |
|
| as
at June 30, 1998 is attached. |
|
|
|
For and on behalf of the
Board |
|
|
| Lahore |
|
M. Naseem Saigol |
|
| DECEMBER
09, 1998 |
|
Chairman / Chief
Executive |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of PEL APPLIANCES LIMITED as at June
30, 1998 and the related |
|
| profit
and loss account and cash flow statement, together with the notes forming
part thereof, for the year |
|
| then
ended and we state that we have obtained all the information and explanations
which to the best of |
|
| our
knowledge and belief were necessary for the purposes of our audit and, after
due verification thereof, |
|
| we
report that: |
|
|
| The
Honourable Supreme Court of Pakistan has since adjudicated that provisions of
Section 80-D of the |
|
| income-tax
Ordinance do not suffer from any Constitutional infirmity but tax liability
amounting to Rs. 16.128 |
|
| Million
indicated at Note No. 13 (ii) is not provided for the reason that Company is
protected by Economic |
|
| Reform
Act, 1992. However, Original writ filed in Honourable Peshawar High Court
stands already rejected |
|
| and
a new writ filed on the basis of observations by Honourable Supreme Court of
Pakistan is yet subjudice. |
|
|
| Subject
to above 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 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 cash flow statement, 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 al June |
|
| 30,
1998 and of the loss and cash flow statement for the year then ended except
for the provision |
|
| for
diminution in the value of long term investment (Note-6) for Rs. 52.07
Million not provided in |
|
| the
accounts and the extent to which it may effect; and |
|
|
| (d)in
our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| LAHORE |
|
Manzoor Hussain Mir &
Co. |
|
| DECEMBER
09, 1998 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet |
|
| AS
AT JUNE 30, 1998 |
|
|
|
1997 |
1998 |
|
|
Note |
(Rupees in thousands) |
|
|
| FIXED
CAPITAL EXPENDITURE |
|
|
| Land
- Freehold |
|
2,547 |
2,547 |
|
| Operating
assets |
|
4 |
175,786 |
196,472 |
|
|
|
---------- |
---------- |
|
|
|
178,333 |
199,019 |
|
|
|
|
| LONG
TERM INVESTMENT |
|
5 |
72,000 |
72,000 |
|
| LONG
TERM DEPOSITS |
|
1,226 |
2,788 |
|
|
---------- |
---------- |
|
|
251,559 |
273,807 |
|
|
| CURRENT
ASSETS |
|
| Stores,
spares and stock in trade |
6 |
164,242 |
241,514 |
|
| Trade debts |
|
7 |
74,302 |
51,435 |
|
| Advances,
deposits and prepayments |
8 |
84,928 |
147,205 |
|
| Cash
and bank balances |
|
9 |
17,012 |
20,820 |
|
|
|
---------- |
---------- |
|
|
340,484 |
460,974 |
|
|
| CURRENT
LIABILITIES |
|
| Short
term finances |
|
253,807 |
457,230 |
|
| Current
portion of lease liabilities |
|
4,815 |
5,339 |
|
| Creditors,
provisions and accrued liabilities |
120,560 |
94,009 |
|
|
379,182 |
556,578 |
|
| Net
working capital |
|
(38,698) |
(95,604) |
|
|
---------- |
---------- |
|
| Total
net assets |
|
212,861 |
178,203 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
12 |
|
|
| LONG
TERM LIABILITIES |
|
| Long
term loan |
|
128,213 |
- |
|
| liabilities against
assets subject to finance |
|
| lease |
|
2,862 |
8,304 |
|
| Net worth |
|
131,075 |
8,304 |
|
|
--------- |
--------- |
|
|
81,786 |
169,899 |
|
|
========= |
========= |
|
| REPRESENT BY |
|
|
|
| Share
capital |
|
15 |
58,500 |
58,500 |
|
| Reserves |
|
16 |
245,250 |
245,250 |
|
| Unappropriated
profit / (Loss) |
|
(221,964) |
(133,851) |
|
|
--------- |
--------- |
|
| Shareholder's
equity |
|
81,786 |
169,899 |
|
|
========= |
========= |
|
|
|
|
| Fixed
assets have been re-valued at Rs. 253,743 thousands giving rise to a surplus
on re-valuation of fixed |
|
| assets
of Rs. 132,629 thousands which has not been accounted for. For further
details refer Note 3. |
|
| The
annexed notes (1) to (25) form an integral part of these financial
statements. |
|
|
| M.
Azam Saigol |
|
M. Naseem Saigol |
|
| Director |
|
Chairman/Chief Executive |
|
|
|
Manzoor Hussain Mir &
Co. |
|
|
Chartered Accountants |
|
|
|
| Profit
and Loss Account |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
1998 |
1997 |
|
|
Note |
(Rupees in thousands) |
|
|
| SALES
- GROSS (LOCAL) |
|
732,530 |
479,592 |
|
| SALES
TAX AND EXCISE DUTY |
|
100,717 |
93,933 |
|
|
|
---------- |
---------- |
|
| SALES- NET |
|
31,813 |
385,659 |
|
| COST
OF SALES |
|
17 |
539,176 |
348,921 |
|
|
|
|
---------- |
---------- |
|
| GROSS PROFIT |
|
92,637 |
30,738 |
|
| OPERATING
EXPENSES |
|
| Administrative |
|
18 |
19,798 |
17,057 |
|
| Selling |
|
19 |
81,907 |
49,566 |
|
|
101,705 |
66,623 |
|
|
---------- |
---------- |
|
| OPERATING
LOSS |
|
(9,068) |
(29,885) |
|
|
| FINANCIAL
EXPENSES |
|
20 |
(79,113) |
(104,282) |
|
| OTHER
INCOMES |
|
68 |
16 |
|
|
---------- |
---------- |
|
| NET
LOSS FOR THE YEAR |
|
(88,113) |
(134,151) |
|
| UNAPPROPRIATED
LOSS BROUGHT FORWARD |
|
(133,851) |
300 |
|
|
---------- |
---------- |
|
| ACCUMULATED
LOSS CARRIED TO BALANCE SHEET |
|
(221,964) |
(133,851) |
|
|
========== |
========== |
|
| The
annexed notes (1) to (25) form an integral part of these financial
statements. |
|
|
| M.
Azam Saigol |
|
M. Naseem Saigol |
|
| Director |
|
Chairman/Chief Executive |
|
|
|
Manzoor Hussain Mir &
Co. |
|
|
Chartered Accountants |
|
|
|
| Cash
Flow Statement |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
1998 |
1997 |
|
|
|
|
(Rupees in thousands) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Received
from customers |
|
707,041 |
603,691 |
|
| Paid
to Govt for |
|
| Excise
Duty/ Sales Tax |
|
(102,092) |
(51,959) |
|
| Turn
Over Tax |
|
(3,226) |
(4,680) |
|
| Paid
to em01oyees |
|
(28,455) |
(26,213) |
|
| Paid
to supplier |
|
(279,616) |
(359,311) |
|
| Other
payments |
|
(2,292) |
(98,156) |
|
|
--------- |
--------- |
|
| Net
cash flow from operating activities |
|
291,360 |
63,372 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Fixed
capital expenditure |
|
(676) |
(2,391) |
|
| Net
(increase) / decrease in long term deposits |
1,563 |
553 |
|
|
--------- |
--------- |
|
| Net
cash flow from investing activities |
|
887 |
(1,838) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
| Repayment
of Finance Lease liabilities |
|
(5,966) |
(7,164) |
|
| Financial
Charges |
|
(77,728) |
(10],331) |
|
|
|
|
| Net
cash flow from financing activities |
|
(83,694) |
(108,495) |
|
| Net
increase / (decrease) in cash and cash equivalent |
208,553 |
(46,961) |
|
|
|
|
| Cash
and Cash equivalent at beginning of year |
(436,410) |
(389,449) |
|
|
---------- |
---------- |
|
| Cash
and Cash equivalent at end of the year |
(227,857) |
(436,410) |
|
|
|
========== |
========== |
|
| Cash
and cash equivalent |
|
| Cash
and Bank balances |
|
17,012 |
20,820 |
|
| Short
term loan/Demand finance |
|
(244,869) |
(457,230) |
|
|
---------- |
---------- |
|
|
(227,857) |
(436,410) |
|
|
========== |
========== |
|
|
|
|
| Notes
to the Accounts |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
THE COMPANY AND ITS OPERATIONS |
|
|
| The
Company as Private Limited Company was incorporated in Pakistan under the
Companies |
|
| Ordinance,
1984 and converted into Public Limited Company on June 23, 1992. Its shares
are quoted |
|
| on
Stock Exchanges of Pakistan. It is a subsidiary of PAK ELEKTRON LIMITED
holding 50.17% shares. |
|
| The
Company is engaged in the manufacture and sale of domestic appliances. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention |
|
|
| These
accounts have been prepared under "historical cost" Convention. |
|
|
| 2.2
Employees Retirement Benefits |
|
|
| The
Company has maintained a provident fund scheme for all its permanent
employees |
|
| and
contributions, based on salaries and wares, are made monthly to cover the
obligations. |
|
|
| 2.3 Taxation |
|
|
| No
provision for taxation is made as the project is located in the area exempted
under |
|
| clause
122 (C) of the IInd schedule of the Income Tax Ordinance, 1979. The
exemptions |
|
| claimed
has since been accepted by the department. |
|
|
| 2.4
Tangible Fixed Assets and Depreciation |
|
|
| Operating
assets are stated at cost less depreciation, capital work in progress and
machinery |
|
| in
transit are stated at cost. |
|
|
| Depreciation
is charged to income on reducing balance method using the Normal rates |
|
| currently
applicable for tax purposes except for leasehold land which is being
amortised |
|
| proportionately
over the period of lease. A full year's depreciation is charred in the year
of |
|
| acquisition.
However depreciation on additions to plant and machinery is charred only for |
|
| working
period, NO depreciation is charred in the year of disposal. Normal repairs
and |
|
| maintenance
are charged to income as and when incurred. Major renewals and |
|
| improvements
are capitalised |
|
|
| 2.5
Trade Mark |
|
|
| The
Consideration paid for using trade mark is amortized over a period of ten
years |
|
| commencing
from March 01,1995. |
|
|
| 2.6
Assets Subject to Finance lease |
|
|
| Assets
under finance lease are stated at lower of present value of minimum lease
payments |
|
| under
the agreement or the fair value of assets. The aggregate amount of
obligations |
|
| relating
to these assets are accounted for at net present value of liabilities.
Depreciation |
|
| on
these assets is charged in line with normal depreciation policy adopted for
assets own |
|
| by
the company. |
|
|
| 2.7
Long term Investment |
|
| These
are stated at cost. |
|
|
| 2.8
Stores, Spares and Stock-in-Trade |
|
|
|
| Stores
and spares are valued at moving average cost. |
|
|
| Raw
material and components are valued at moving average cost. The cost of
work-in- |
|
| process
comprises of cost of materials, labour at actuals and factory overheads
proportionate |
|
| to
labour. Finished goods are valued at lower of cost or net realisable value.
The raw |
|
| materials
and components in bond and in transit are valued at cost. |
|
|
| 2.9 Foreign Currency conversion |
|
|
| Foreign
currency liability is converted at exchange rates prevailing at the balance
sheet |
|
| date.
Variance relating to fixed assets are adjusted against the value of
respective assets, |
|
| while
others are charged to current year's income. |
|
|
| 2.10
Revenue recognition |
|
|
| The
sale of goods is recognized on delivery of goods to customers. |
|
|
| 3.
OPERATING ASSETS - AT DEPRECIATED REPLACEMENT VALUE |
|
|
| 3.1 Own |
|
|
| Company's
tangible fixed assets have been re-valued by M/s M. Yousaf Adil Saleem &
Co. |
|
| an
approved firm of Chartered Accountants by State Bank of Pakistan for
re-valuation of |
|
| assets.
According to their report dated June 10, 1998 present replacement value has
been |
|
| determined
as follows: |
|
|
(Rupees in thousands) |
|
|
|
Dep. replacement |
Book Value |
Re-valuation |
|
|
Value |
|
Surplus |
|
|
| LAND
(Free hold) |
3,030 |
2,547 |
483 |
|
| LAND
(Lease hold) |
5,976 |
4,328 |
1,648 |
|
| BUILDING |
|
89,945 |
37,902 |
52,043 |
|
| MACHINERY |
|
133,098 |
64,919 |
68,179 |
|
|
---------- |
---------- |
---------- |
|
| Total |
|
232,049 |
109,696 |
122,353 |
|
|
---------- |
---------- |
---------- |
|
| 3.2
Subject to Finance Lease |
|
|
|
|
Dep. replacement |
Book Value |
Re-valuation |
|
|
Value |
|
Surplus |
|
|
| MACHINERY |
|
21,694 |
11,418 |
10,276 |
|
|
|
---------- |
---------- |
---------- |
|
| Total |
|
21,694 |
11,418 |
10,276 |
|
|
|
---------- |
---------- |
---------- |
|
| Grand Total |
|
253,743 |
121,114 |
132,629 |
|
|
=========== |
=========== |
=========== |
|
|
|
|
| Recognition
of above re-valuation in the books of accounts would have given rise to a
surplus on |
|
| re-valuation
Of fixed assets amounting to Rs. 132,629 thousands as shown above and an
additional |
|
| depreciation
charged of approx. Rs. 1,360 thousands per annum. The said re-valuation has
not |
|
| been
recognized in the books of accounts. |
|
|
| 4.
OPERATING ASSETS |
|
|
|
1998 |
1997 |
|
|
(Rupees in thousands) |
|
|
| Own
(Note 4.1 ) |
|
164,368 |
174,505 |
|
| Subject
to finance lease (Note 4.2) |
|
11,418 |
21,967 |
|
|
---------- |
---------- |
|
|
175,786 |
190,472 |
|
|
========== |
========== |
|
|
|
|
| 4.1
Schedule of operating assets - Own |
|
|
|
|
|
|
|
Cost as at |
Addition / |
Cost as at |
depreciation |
Accumulated |
Written down |
|
| Description |
|
July 01, 1997 |
(Deletion) |
June 30, 1998 |
Rate% |
depreciation as |
value as at |
|
|
|
|
at June 30,1998 |
June 30,1998 |
|
|
| TANGIBLE |
|
|
| Land
- Leasehold |
4,734 |
- |
4,734 |
- |
406 |
4,328 |
|
|
|
|
| Building on |
|
|
|
| leasehold
land |
65,804 |
141 |
65,945 |
10 |
28,043 |
37,902 |
|
|
|
|
|
|
| Plant
and Machinery |
90,529 |
10,613 |
101,142 |
10 |
36,223 |
64,919 |
|
|
|
|
| Office
Equipment, |
|
|
|
| furniture
& fixture |
3,268 |
443 |
3,711 |
10 |
1,252 |
2,459 |
|
|
|
|
|
|
| Vehicles |
|
781 |
3,368 |
3,691 |
20 |
2,564 |
1,427 |
|
|
(459) |
|
(301) |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| INTANGIBLE |
|
|
| Trade mark |
|
80,000 |
- |
80,000 |
- |
26,667 |
53,333 |
|
|
|
14,565 |
|
95,155 |
|
|
|
|
|
| Total
(Rupees) 1998 |
245,116 |
(459) |
259,222 |
- |
(301) |
164,368 |
|
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
1997 |
242,725 |
2,392 |
245,116 |
- |
70,611 |
174,505 |
|
|
========== |
========== |
========== |
== |
