| Pakistan Synthetics Limited |
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
| Manufacturers
of: |
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| QUALITY
POLYESTER STAPLE FIBRE |
|
| "UNDER
BASIC TECHNOLOGY LICENCED BY TEIJIN" |
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|
|
| CONTENTS |
|
| Company
Information |
|
| Performance
of the Company at a Glance |
|
| Notice
of Meeting |
|
| Report
of the Directors |
|
| Auditors'
Report to the Members |
|
| Balance Sheet |
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|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
EBRAHIM HAJI
KARIM-CHAIRMAN |
|
|
|
UMER HAJI KARIM-CHIEF
EXECUTIVE |
|
|
|
HAROON HAJI KARIM |
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|
ANWAR HAJI KARIM |
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|
|
YAKOOB HAJI KARIM |
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|
|
AHMED EBRAHIM |
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|
NASIM BEG |
|
|
|
ALIYA DOSSA |
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|
RAUF B. KADRI-NOMINEE
DIRECTOR OF BEL |
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|
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| SECRETARY |
|
HAROON AHMED LAKHANI |
|
|
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| BANKERS |
|
HABIB BANK LIMITED |
|
|
|
HABIB BANK AG ZURICH |
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|
CITIBANK N.A. |
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|
AMERICAN EXPRESS BANK
LIMITED |
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|
METROPOLITAN BANK LIMITED |
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|
|
BANK AL-HABIB LIMITED |
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| AUDITORS |
|
HYDER BHIMJI &
COMPANY |
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|
|
CHARTERED ACCOUNTANTS |
|
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| LEGAL
ADVISORS |
MANSOOR AHMED KHAN &
COMPANY |
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|
ADVOCATES AND SOLICITORS |
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| REGISTERED
OFFICE |
3RD FLOOR, KARACHI DOCK
LABOUR BOARD |
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|
BUILDING, 58- WEST WHARF
ROAD, |
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|
KARACHI-74000 |
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| FACTORY |
|
F. 1, 2, 3, & F. 13,
14 & 15, |
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|
HUB INDUSTRIAL TRADING
ESTATE, |
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|
|
DISTRICT LASBELLA,
BALOCHISTAN |
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| PERFORMANCE
OF THE COMPANY AT A GLANCE |
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|
|
EIGHTEEN |
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|
MONTHS |
YEAR |
|
|
|
|
ENDED |
ENDED |
|
|
-- YEAR ENDED DECEMBER
31,-- |
|
JUNE 30, |
JUNE 30, |
|
|
1991 |
1992 |
1993 |
1994 |
1995 |
1997 |
1998 |
|
|
|
|
| STATISTICAL
SUMMARY |
|
|
Rupees in million |
|
|
|
| Gross sales |
|
909 |
833 |
1,143 |
1,409 |
1,699 |
2,054 |
1,170 |
|
| (Loss)/profit
before taxation |
|
15 |
35 |
154 |
257 |
274 |
36 |
(8) |
|
| Taxation |
|
4 |
4 |
5 |
6 |
7 |
9 |
5 |
|
| (Loss)/profit
after taxation |
|
11 |
31 |
149 |
251 |
267 |
27 |
(13) |
|
| Gross
assets employed |
|
|
| (including
capital work-in-progress) |
1,452 |
1,290 |
1,365 |
1,443 |
1,481 |
1,477 |
1,446 |
|
|
|
|
| Paid-up capital |
|
374 |
374 |
374 |
448 |
560 |
560 |
560 |
|
| Shareholders'
equity |
|
384 |
416 |
565 |
816 |
985 |
1,012 |
999 |
|
|
==================================================================================== |
|
|
| EARNING
AND PAY OUT |
|
Rs. per share of Rs. 10 |
|
|
| Earnings
per share after taxation |
0.29 |
0.84 |
3.98 |
5.60 |
4.77 |
0.49 |
*(0.23) |
|
| Break-up value |
|
10.29 |
11.13 |
15.11 |
18.19 |
17.57 |
18.06 |
17.83 |
|
| Bonus shares |
|
-- |
-- |
1:5 |
1:4 |
-- |
-- |
-- |
|
| Cash dividend |
|
-- |
-- |
-- |
-- |
1.75 |
-- |
-- |
|
|
==================================================================================== |
|
| *The
net earning per share for the year ended June 30,1998 was negative. |
|
|
| FINANCIAL
RATIOS |
|
Ratios |
|
|
| Current
Assets: Current Liabilities |
0.66:1 |
0.63:1 |
0.86:1 |
1.12:1 |
1.30:1 |
1.31:1 |
1.34:1 |
|
| Long-term
Debts: Equity |
|
62.38 |
55.45 |
42.58 |
25.75 |
13.87 |
7.93 |
2.98 |
|
|
==================================================================================== |
|
|
| PRODUCTION |
|
Tonnes |
|
|
|
| Polyester
Staple Fibre |
|
17,457 |
16,673 |
20,858 |
19,430 |
17,834 |
27,290 |
21,055 |
|
| Polyester Chips |
|
|
-- |
-- |
497 |
772 |
1,267 |
976 |
-- |
|
|
|
|
==================================================================================== |
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|
|
| NOTICE
OF MEETING |
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|
| Notice
is hereby given that the Thirteenth Annual General Meeting of Pakistan
Synthetics Limited |
|
| will
be held on Monday, the 14th December, 1998, at 4.00 p.m. at the Institute of
Chartered Accountants |
|
| of
Pakistan's Auditorium, G-31, Block-8, Clifton, Karachi-75600, Pakistan, to
transact the following |
|
| business :- |
|
|
| 1.
To confirm the minutes of the Twelfth Annual General Meeting of the Company
held on |
|
| 17th
November, 1997. |
|
|
| 2.
To receive and adopt the Audited Accounts of the Company together with
Directors' and |
|
| Auditors'
Reports for the year ended 30th June, 1998. |
|
|
| 3.
To appoint Auditors and fix their remuneration. |
|
|
| 4.
To transact such other ordinary business as may be placed before the meeting
with the |
|
| permission
of the Chair. |
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|
|
|
By order of the Board |
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|
UMER HAJI KARIM |
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| Karachi:
11th November, 1998 |
|
CHIEF EXECUTIVE |
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|
| NOTES :- |
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| 1.
Share Transfer Books of the Company will remain closed from Thursday, 10th
December, 1998 to |
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| Monday,
21st December, 1998 (both days inclusive). |
|
|
| 2.
A member of the Company entitled to attend and to vote at the meeting may
appoint any other |
|
| member
as his/her proxy to attend and to vote on his/her behalf. Proxies, in order
to be effective, must |
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| be
received at the Registered Office of the Company at 3rd Floor, Karachi Dock
Labour Board |
|
| Building,
58-West Wharf Road, Karachi, duly stamped, signed and witnessed not less than
48 hours |
|
| before
the time of holding the meeting. |
|
|
| 3.
Shareholders are requested to notify any change in their address immediately. |
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|
| REPORT
OF THE DIRECTORS FOR THE YEAR ENDED 30TH JUNE, 1998 |
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| Your
Directors have pleasure in submit- |
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|
|
| ting
their Report and Audited Accounts of |
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|
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| Pakistan
Synthetics Limited for the year |
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|
|
| ended
30th June, 1998. |
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|
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|
|
| BOARD
OF DIRECTORS |
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|
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| The
term of the office of the Directors expired |
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|
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| on
4th April, 1998 and the following Directors were |
|
|
| elected
in the Ninth Extra-Ordinary General |
|
|
|
| Meeting
of the Company held on 24th March, 1998 |
|
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| for
a period of three years effective from 5th April, |
|
|
| 1998:- |
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|
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|
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| 1)
Mr. Ebrahim Haji Karim |
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|
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| 2)
Mr. Umer Haji Karim |
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|
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| 3)
Mr. Haroon Haji Karim |
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|
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| 4)
Mr. Anwar Haji Karim |
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|
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| 5)
Mr. Yakoob Haji Karim |
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|
|
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| 6)
Mr. Ahmed Ebrahim |
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|
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| 7)
Mr. Nasim Beg |
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|
|
| 8)
Ms. Aliya Dossa |
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| In
addition to the above, Mr. Rauf Baksh Kadri |
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|
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| continues
to be a Director as a nominee of |
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|
|
| Bankers
Equity Limited. |
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|
|
|
|
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| The
Board extends a warm welcome |
|
|
|
| to
Mr. Nasim Beg and Ms. Aliya Dossa as new |
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|
|
| Directors
and hopes that the Company would |
|
|
|
| immensely
be benefitted with their active |
|
|
|
| participation
in the Board. |
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|
|
|
|
|
|
| Mr.
Pir Mohammad A. Kaliya, who was the |
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| Director
of the Company since its inception, retired |
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| and
did not offer for re-election. He played a |
|
| pivotal
role in the formation of the Company and the |
|
| establishment
of the fibre unit. The Board wishes to |
|
| place
on record its appreciation for the services |
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| rendered
by Mr. Kaliya. |
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|
|
|
|
| The
Board of Directors appointed |
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| Mr.
Ebrahim Haji Karim and Mr. Umer Haji Karim |
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| as
the Chairman and the Chief Executive of the |
|
| Company
respectively for a period of three years. |
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|
|
|
| OVERVIEW |
|
|
|
| The
Polyester Staple Fibre Industry is still |
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| passing
through its unprecedented crisis due to |
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| over
supply and the dumping by international |
|
| suppliers.
The prices of the Polyester Staple Fibre |
|
| were
and still are constantly under pressure. The |
|
| international
suppliers of Polyester Staple Fibre |
|
| have
reduced the prices of Polyester Staple Fibre |
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| to
US$ 0.85/Kg during the year under review as |
|
| against
US$ 1.05/Kg in the last year. |
|
|
|
|
| The
turnover for the year under review was |
|
| Rs.
1,170 million as against the turnover of |
|
| Rs.
1,384 million during the year ended 30th |
|
| June,
1997. The turnover has decreased by over |
|
| 15%
as compared to 1997 as the average sale |
|
| price
of Polyester Staple Fibre during the year |
|
| under
review decreased from Rs. 69.65/Kg to |
|
| Rs. 58.50/Kg. |
|
|
|
|
|
|
| The production of Polyester
Staple |
|
|
| Fibre for the year
under review was 21,055 tons |
|
|
| as
against the production of Polyester Staple Fibre |
|
|
| and Chips
of 20,800 tons in the last year ended |
|
|
| 30th June,
1997. |
|
|
|
|
|
|
|
| It may be noted that the
demand for |
|
|
|
| Polyester
Staple Fibre in the country is increasing |
|
|
| continuously
but due to over supply, not only the |
|
|
| prices of the
fibre were adversely affected but it |
|
|
| also
resulted in lesser utilization of the capacities. |
|
|
| The
Management decided to restrict the production |
|
| in order to avoid carry forward of large
stocks. |
|
|
| During
the period under review, the |
|
| Company
suffered a net loss of Rs. 7.988 million after |
|
| providing
for depreciation and financial expenses |
|
| aggregating
to Rs. 127.944 million as against a net |
|
| profit
of Rs. 90.190 million in the last year, i.e. July |
|
| 1996
to June, 1997. The net loss, after providing |
|
| for
minimum tax on turnover @ 0.5%, works out to |
|
| Rs.
13.148 million. |
|
|
| EARNING
PER SHARE |
|
|
|
|
| The
net earning per share for the year |
|
|
|
| ended
June 30, 1998 was negative (Re. 0.23). |
|
|
|
|
|
|
| FUTURE
OUTLOOK |
|
|
|
| The
prices of Polyester Staple Fibre are |
|
|
|
| under
immense pressure because of over supply |
|
|
|
| and
dumping by international suppliers of fibre. The |
|
|
| current
prices of polyester staple fibre have reduced |
|
|
| to Rs. 49/Kg. |
|
|
|
|
|
|
|
|
| The
Polyester Staple Fibre Manufacturers |
|
|
| Group
has filed an "Application for Anti-Dumping |
|
|
| and
Countervailing Duties" to the Ministry of Com- |
|
|
| merce
through National Tariff Commission and sought |
|
|
| an
immediate relief by taking remedial measures so |
|
|
| that
the local industry could be saved from being |
|
|
|
| collapsed
totally by the dumping of polyester staple |
|
|
| fibre
by the international suppliers. |
|
|
|
|
|
|
|
|
| The
International prices of MEG have |
|
|
|
| increased
by 10% whereas the prices of PTA are |
|
|
| depressed.
PTA is now locally available at the |
|
|
|
| international
market rates. |
|
|
|
|
|
|
| Under
the present circumstances, the |
|
|
| operating
results in the current year would not be |
|
|
| encouraging.
However, your Management is taking |
|
|
| appropriate
steps to improve the efficiencies and |
|
|
| contain
the cost to minimise the loss in the critical |
|
| situation
through which the Polyester Staple Fibre |
|
| Industry
is passing. |
|
|
|
|
|
| AUDITORS |
|
|
|
| The
present auditors, M/s. Hyder Bhimji & |
|
|
| Co.,
Chartered Accountants, retire and being eligible, |
|
| offer
themselves for re-appointment as auditors of |
|
| the Company. |
|
|
|
|
|
|
| PATTERN
OF SHAREHOLDINGS |
|
|
| A
Statement showing the pattern of |
|
|
| shareholdings
in the Company as on 30th June, |
|
|
| 1998
is attached to the accounts. |
|
|
|
|
|
| MANAGEMENT
EMPLOYEES RELATIONS |
|
| The
Management Employees relations |
|
|
| remained
cordial throughout the year. The |
|
|
| Management
wishes to express its appreciation for |
|
| the
valuable services rendered by its employees |
|
|
| and
workers during the year under review. |
|
|
|
|
|
|
|
|
For and on behalf of the |
|
|
|
|
Board of Directors |
|
|
|
|
|
| 11th
November, 1998 |
|
UMER HAJI KARIM |
|
| Karachi. |
|
CHIEF EXECUTIVE |
|
|
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of PAKISTAN SYNTHETICS 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: |
|
|
| 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 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 at June 30, |
|
| 1998
and of the loss and cash flows for the year then ended; and |
|
|
| d)
in our opinion no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
|
|
HYDER BHIMJI & CO. |
|
| Karachi:
11th November, 1998 |
|
Chartered Accountants. |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
|
|
June 30, |
June 30, |
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
(Rupees in thousand) |
|
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
Capital |
|
|
|
| 70,000,000
(1997: 70,000,000) ordinary shares of |
|
|
| Rs. 10 each |
|
700,000 |
700,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
4 |
560,400 |
560,400 |
|
| Revenue
reserves |
|
5 |
450,000 |
450,000 |
|
| (Accumulate
loss)/unappropriated profit |
|
|
(11,240) |
1,908 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
999,160 |
1,012,308 |
|
| REDEEMABLE
CAPITAL |
|
6 |
16,160 |
45,110 |
|
| LONG
- TERM LOANS |
|
7 |
-- |
24,801 |
|
| DEFERRED
LIABILITIES |
|
|
|
|
| Provision
for staff gratuity |
|
|
10,236 |
7,264 |
|
|
|
|
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
| Short
- term finance utilized |
|
|
|
|
| under
mark up arrangement |
|
8 |
243,695 |
36,784 |
|
| Short
- term loan from Associated Undertaking |
|
|
10,000 |
-- |
|
| Current
portion of redeemable capital |
|
6 |
28,950 |
24,971 |
|
| Current
portion of long-term loans |
|
7 |
24,801 |
23,922 |
|
| Creditors,
accrued and other liabilities |
|
9 |
96,026 |
290,193 |
|
| Tax
on turnover |
|
|
16,606 |
11,446 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
420,078 |
387,316 |
|
| CONTINGENT
LIABILITIES AND CAPITAL |
|
|
| COMMITMENTS |
|
10 |
-- |
-- |
|
|
|
|
--------------- |
--------------- |
|
|
|
TOTAL |
1,445,634 |
1,476,799 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
|
|
|
| Operating
fixed assets |
|
11 |
878,909 |
948,590 |
|
| Capital
work - in - progress |
|
12 |
1,262 |
14,291 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
880,171 |
962,881 |
|
|
|
|
|
| LONG
- TERM LOANS AND ADVANCES |
|
13 |
1,260 |
1,653 |
|
| LONG
- TERM DEPOSITS |
|
14 |
1,998 |
4,912 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
| Stores
and spares |
|
15 |
101,644 |
111,646 |
|
| Stock-in-trade |
|
16 |
300,312 |
267,264 |
|
| Trade debts |
|
17 |
84,201 |
56,186 |
|
| Loans
and advances |
|
18 |
1,578 |
2,428 |
|
| Trade
deposits and short-term prepayments |
|
19 |
384 |
1,160 |
|
| Other
receivables |
|
20 |
63,870 |
35,232 |
|
| Cash
and bank balances |
|
21 |
10,216 |
33,437 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
562,205 |
507,353 |
|
|
|
|
--------------- |
--------------- |
|
|
TOTAL |
1,445,634 |
1,476,799 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
EBRAHIM HAJI KARIM |
|
|
UMER HAJI KARIM |
|
|
CHAIRMAN |
|
|
CHIEF EXECUTIVE |
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
Year ended |
Eighteen |
|
|
|
|
|
June 30, |
months ended |
|
|
|
|
Note |
1998 |
June 30, 1997 |
|
|
|
|
(Rupees in thousand) |
|
|
|
|
|
| Sales |
|
|
|
1,170,292 |
2,053,557 |
|
|
|
|
| Less: sales tax |
|
|
130,032 |
253,621 |
|
| brokerage
and discounts |
|
|
8,270 |
15,033 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
138,302 |
268,654 |
|
|
|
|
--------------- |
--------------- |
|
| Net sales |
|
|
1,031,990 |
1,784,903 |
|
| Cost
of goods sold |
|
22 |
985,182 |
1,639,919 |
|
|
|
|
--------------- |
--------------- |
|
| Gross profit |
|
|
46,808 |
144,984 |
|
| Administration
and selling expenses |
|
23 |
25,382 |
37,733 |
|
|
|
|
--------------- |
--------------- |
|
| Operating
profit |
|
|
21,426 |
107,251 |
|
| Other income |
|
24 |
537 |
678 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
21,963 |
107,929 |
|
| Financial
charges |
|
25 |
29,898 |
69,604 |
|
| Other charges |
|
26 |
53 |
2,025 |
|
|
|
|
--------------- |
--------------- |
|
| (Loss)/profit
before taxation |
|
|
|
(7,988) |
36,300 |
|
| Taxation
(minimum tax on turnover) |
|
|
5,160 |
8,697 |
|
|
|
|
--------------- |
--------------- |
|
| (Loss)/profit
after taxation |
|
|
(13,148) |
27,603 |
|
| Unappropriated
profit brought forward |
|
|
1,908 |
9,305 |
|
|
|
|
--------------- |
--------------- |
|
| (Loss)/profit
available for appropriations |
|
|
(11,240) |
36,908 |
|
|
|
|
|
|
|
| Appropriations: |
|
|
|
| Transfer
to general reserve |
|
|
-- |
35,000 |
|
|
|
|
--------------- |
--------------- |
|
| (Accumulated
Ioss)/unappropriated profit carried forward |
|
(11,240) |
1,908 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
EBRAHIM HAJI KARIM |
|
UMER HAJI KARIM |
|
|
CHAIRMAN |
|
CHIEF EXECUTIVE |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
Year ended |
Eighteen |
