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Ravi Ravon Limited
Annual Report 1998
CONTENTS
Board of Directors
Notice of Meeting
Chief Executive's Report
Auditors' Report
Balance Sheet
Profit & Loss Account
Statement of Changes
in Financial Position
(Cash Flow Statement)
Notes to the Accounts
Pattern of Holding of Shares
BOARD OF DIRECTORS
CHAIRMAN
DR. MUHAMMAD AMJAD
CHIEF EXECUTIVE
MR. IFTIKHAR MAHMOOD RANDHAWA
DIRECTORS
MR. NAVEED AHMAD
SYED MUKHTAR HAlDER SHAH
MR. MUHAMMAD SHAFI
MR. ZAHID AHMAD
DR. MASOOD FAIZULLAH
DR. ZAFARULLAH SHEIKH
SECRETARY
MR. LIAQAT ALl KHAN
BANKERS
UNITED BANK LIMITED
INDUSTRIAL DEVELOPMENT BANK OF PAKISTAN
AUDITORS
FORD, RHODES, ROBSON, MORROW
Chartered Accountants
REGISTERED OFFICE & WORKS
KALA SHAH KAKU
District Sheikhupura
NOTICE OF MEETING
Notice is hereby given that the 37th Annual General Meeting of the Shareholders of the Company
will be held at Faletti's Hotel, Lahore, on Tuesday, January 26, 1999 at 3.00 p.m. under the
Chairmanship of the Chief Executive to transact the following business.
1. To confirm the minutes of the last Annual General Meeting held on 30-03-1998.
2. To receive and adopt the accounts of the Company for the year ended June 30, 1998
together with the Auditors' and Directors' report thereon.
3. To appoint Auditors for the year 1998-99 and to fix their remuneration.
M/s. Ford, Rhodes, Robson, Morrow, Chartered Accountants, the retiring Auditors,
being eligible offer themselves for re-appointment.
4. To transact any other business of the Company that may be placed before the meeting
with the permission of the Chairman.
The Share Transfer Books of the Company will remain closed from 24th January to 26th January,
1999 (Both days inclusive).
by Order of the Board
LIAQAT ALl KHAN
Lahore: Secretary
Dated: 01-01-1999. Corporate Affairs
NOTES:
1. A member entitled to attend and vote at this meeting may appoint another member as
his/her proxy to attend the meeting and vote instead of him/her. Proxies in order to be
effective must be received by the Company not less than 48 hours before the meeting.
2. Shareholders are requested to promptly notify the Company of any changes in their
addresses.
CHIEF EXECUTIVE'S REVIEW FOR SHAREHOLDERS
I on behalf of the Board of Directors present the 37th Annual Report together with audited
accounts for the year ended 30th June 1998. During the year under review Company sustained a
loss of Rs. 206.865 million.
I had informed you in my last year's review for the shareholders that the operations of the
Company have been closed down following the decision of Cabinet Committee on Privatization
(CCOP). The Committee had also decided in the same meeting to pick up all liabilities of the
Company which as on 31-5-1997 stood at Rs. 840 million and relieve the employees by offering
them GHs/vss before re-offering Ravi Rayon Ltd. for privatization. As administrative measure, 98
workers who had not taken GHS were transferred to FCCCL. High Court, however, granted them
'Stay' and their case is now being heard in NIRC. Apart from these 98 workers, 40 executives
remain on roll. Funds for their release under VSS are awaited from Privatization Commission.
As a result of forementioned reasons all production activities of the Company remained suspended
and burden of fixed overheads such as salaries and wages for remaining 40 officers and 98
workers of the Company, utility bills and other expenses. were financed through borrowings from
the holding Corporation, M/s. Federal Chemical & Ceramics Corporation Limited.
Net sales out of the stocks during the year under review were Rs. 74.214 million as compared to
last year sales of Rs. 464.918 million. Inventories of Finished Goods have now almost exhausted.
The entire requirement of funds is, therefore, being met through borrowings from FCCCL.
The plant and machinery, due to long period of closure had started showing signs of rust and
damage. However, in order to preserve valuable hardware of your Company, FCCCL has very
kindly given a special grant of Rs. 2.4 million. With the help of these funds essential maintenance
from point of view of preserving the plant and machinery has been carried out and completed in
November, 1998 which will prevent any permanent damage being done to the plants for some
time.
ACKNOWLEDGEMENT
We are grateful to Federal Chemical & Ceramics Corporation Limited, Ministry of Industries &
Production, and Privatization Commission, for providing necessary support and extending' every
help in guiding the affairs of the Company. Their valuable guidance and financial help gave us
support in dealing with various difficulties.
AUDITORS
The present Auditors M/s. Ford, Rhodes, Robson, Morrow, retire and being eligible offer
themselves for re-appointment as Auditors for the year 1998-99.
PATTERN OF SHAREHOLDERS
The pattern of shareholding is annexed.
For and on behalf of the Board of Directors
IFTIKHAR MAHMOOD RANDHAWA
Chief Executive
AUDITORS' REPORT TO THE MEMBERS
We have audited the annexed Balance Sheet of Ravi Rayon Limited as at June 30, 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 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 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) (i) The going concern basis used for the preparation of financial statements is not
appropriate because the company's manufacturing operation was shut down in
July 1997 and most of the employees were laid off as explained in Note-1 to the
financial statements. Further there is no concrete evidence available which
suggests that the company would reactivate its operation in the foreseeable
future. Consequently, adjustment may be required to the recorded assets
amounts and classification of liabilities. The financial statements do not disclose
this fact.
(ii) Except for the omission of the information included in paragraph (c) (i) above, 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 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 June 30, 1998 and of the loss and the changes in sources and
application of funds for the year then ended; and
(d) in our opinion no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
Lahore: FORD, RHODES, ROBSON, MORROW
Date: 08-12-1998 Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 1998
Notes 1998 1997
 (Rupees in thousands)
SHARE CAPITAL AND RESERVES
Share Capital
Authorised
15,000,000 ordinary shares or Rs. 10 each 150,000 150,000
========== ==========
Issued, subscribed and paid up 4 93,576 93,576
ACCUMULATED LOSS (841,838) (634,602)
---------- ----------
(748,262) (541,026)
LONG TERM LOANS 5 144,674 144,674
APPLICATION MONEY FOR PARTICIPATION
TERM CERTIFICATES 6 23,368 23,368
LIABILITIES AGAINST ASSETS SUBJECT
TO FINANCE LEASE 7 - 198
DEFERRED LIABILITIES 8 12,000 12,000
CURRENT LIABILITIES
Long Term Loans:-
Current maturity 5 13,950 13,950
---------- ----------
Overdue 5 13,950 13,950
Current maturity and overdue of liabilities against
assets subject to finance lease 7 - 304
Short term loans and running finances 9 44,732 47,519
Creditors, accruals and other liabilities 10 704,869 630,239
Provision for Sales-tax 30,504 31,494
---------- ----------
794,055 723,506
CONTINGENCIES AND COMMITMENTS 29 - -
---------- ----------
225,835 362,720
========== ==========
FIXED ASSETS - TANGIBLE
Operating assets 11 91,019 101,372
LONG TERM INVESTMENTS 12 465 465
LONG TERM LOANS AND ADVANCES 13 63,793 63,793
LONG TERM DEPOSITS 14 157 282
CURRENT ASSETS
Stores, spares and loose tools 15 35,896 36,917
Stock-in-trade 16 11,173 71,107
Trade debtors 17 4,914 27,402
Loans and advances 18 2,081 27,871
Deposits and prepayments 19 527 24,302
Income tax refundable 10,491 9,896
Cash and bank balances 20 5,319 (687)
---------- ----------
70,401 196,808
---------- ----------
225,835 362,720
========== ==========
Auditors' Report of even date is attached hereto.
Lahore: FORD, RHODES, ROBSON, MORROW
Date: 08-12-1998 Chartered Accountants
The attached notes form an integral part of these accounts.
IFTIKHAR MAHMOOD RANDHAWA DR. ZAFARULLAH SHEIKH
Chief Executive Director
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 1998
Notes 1998 1997
 (Rupees in thousands)
NET SALES 21 74,214 464,918
COST OF SALES 22 161,626 636,313
---------- ----------
GROSS LOSS (87,412) (171,395)
OPERATING EXPENSES
Administrative, selling and general 23 30,694 41,166
Financial 24 39,828 42,496
---------- ----------
70,522 83,662
---------- ----------
OPERATING LOSS (157,934) (255,057)
OTHER INCOME/CHARGES 25 (48,931) (13,432)
---------- ----------
LOSS BEFORE TAXATION (206,865) (268,489)
TAXATION 26 (371) (2,325)
---------- ----------
LOSS AFTER TAXATION (207,236) (270,814)
ACCUMULATED LOSS BROUGHT FORWARD (634,602) (363,788)
---------- ----------
ACCUMULATED LOSS CARRIED FORWARD (841,838) (634,602)
========== ==========
The attached notes form an integral part of these accounts.
IFTIKHAR MAHMOOD RANDHAWA DR. ZAFARULLAH SHEIKH
Chief Executive Director
STATEMENT OF SOURCES AND APPLICATION OF FUNDS
(CASH FLOW) FOR THE YEAR ENDED JUNE 30, 1998
1998 1997
 (Rupees in thousands)
CASH FLOW FROM OPERATING ACTIVITIES
Net (Loss) after taxation (207,236) (270,814)
Adjustment for:
Depreciation 9,941 11,164
Profit on sale of Fixed Assets (248) (99)
Provision against expired work-in-process 2,623 -
Provision against Spares in Transit 280 10,783
Provision against Raw Material in Transit 689 4,892
---------- ----------
13,285 26,740
---------- ----------
(193,951) (244,074)
(Increase)/Decrease in Current Assets
Stores Spares & Loose Tools 741 (2,370)
Stock in Trade 56,622 18,556
Trade Debtors 22,488 4,459
Loans and Advances 25,790 (6,960)
Deposits and Prepayments 2,186 515
Income Tax Refundable (595) (4,537)
---------- ----------
107,232 9,663
Increase/(Decrease) in Current Liabilities
Short Term Loans (2,787) (1,014)
Creditors, Accruals and other Liabilities 74,630 202,546
Provision for Taxes (990) 29,165
---------- ----------
70,853 230,697
---------- ----------
NET CASH FROM OPERATING ACTIVITIES (15,866) (3,714)
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Fixed Assets (18) (3,166)
Sale proceeds from disposal of Fixed Assets 678 632
Long Term Loans and Advances - -
Long Term Deposits 21,714 (1,653)
---------- ----------
NET CASH FROM INVESTING ACTIVITIES 22,374 (4,187)
CASH FLOW FROM FINANCING ACTIVITIES
Repayment of obligation under Finance Lease (502) (302)
---------- ----------
NET INCREASE/(DECREASE) IN CASH
AND BANK BALANCE 6,006 (8,203)
CASH AND BANK BALANCES
AT THE BEGINNING OF THE YEAR (687) 7,516
CASH AND BANK BALANCE ---------- ----------
AT THE END OF THE YEAR 5,319 (687)
========== ==========
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED JUNE 30, 1998
1. THE COMPANY AND ITS OPERATIONS
The Company is a public limited company quoted on the stock exchanges. The majority of its
share capital is held by the Federal Government through Federal Chemical and Ceramics
Corporation Limited (FCCCL) and certain financial institutions owned by the Government.
The Company is engage in manufacture of Acetate Rayon Yarn. Major intermediate products
are Alcohol, Acetic Acid, Acetone, Acetic Anhydride, Bleached Linters and Yeast. Due to
heavy losses the management of the company, on the instructions of Government of
Pakistan shut down its manufacturing operations in July 1997. A Golden Handshake Scheme
fully funded by Government of Pakistan, was announced to all the employees who opted and
were paid during the year except 98 workers and 40 officers of the Company.
2. COMPLIANCE WITH - I A S
These accounts comply with International Accounting Standards, wherever, applicable in all
material aspects.
3. ACCOUNTING POLICIES
(i) Revenue recognition -
Sales are recorded upon delivery of goods to the carrier.
(ii) Fixed assets -
Company owned fixed assets
Fixed assets are stated at historical cost less accumulated depreciation, except freehold
land and capital work-in-progress which are stated at cost. Depreciation is calculated at
rates mentioned in Note-11 according to the reducing balance method. Acquisitions
during the year are depreciated for a full year irrespective of the date of purchase and
no depreciation is charged on assets in the year of their disposal.
All repairs and maintenance expenditure is charged to income currently and material
betterments are capitalised.
Profits or losses on disposal of fixed assets are recognized as income or expenses
respectively in the year of occurrence.
Leased assets
Leased assets held under finance lease are stated at cost less depreciation at the rates
and basis applicable to company owned assets. The outstanding obligations under the
lease less finance charges allocated to future periods are shown as a liability. The
financial charges are calculated at the interest rates implicit in the lease and are
charged to the profit and loss account.
(iii) Investments
Investments are stated at cost. Provision for diminution in value of investments is
deducted from cost wherever applicable.
(iv) Stores, spares and stock-in-trade
These are valued at lower of cost and net realizable value. The cost is determined as
follows:
Stores, tools and engineering stores - at moving average cost.
Raw materials - at moving average cost.
Work-in-process - at annual average cost of manufacture.
Finished goods - at annual average cost of manufacture.
Stores and raw material in transit - at cost.
Other inventories - at moving average cost.
Cost of manufacture denotes factory cost of production without addition of
administrative and other overheads.
(v) Employees severance benefits -
All the employees of the Company are members of the contributory provident fund.
The Company also maintains a funded gratuity scheme approved by tax authorities for
all its employees based on length of service.
(vi) Taxation -
The charge for taxation is based on income as adjusted for tax purposes and after
taking into account all tax credits and rebates.
The Company accounts for deferred taxes arising on all major timing differences
according to the liability method.
(vii) Overall valuation policy -
The accounts are stated at historical cost without any effect for the changes in
purchasing power of money.
(viii) Associated companies -
Companies under the common control of Federal Chemical and Ceramics Corporation
Limited have been treated as associated companies..
(ix) Development expenditure-
Development expenditure on new products or processes is deferred and amortized
over the period of expected benefit.
Other accounting policies are disclosed wherever relevant in the following notes.
1998 1997
 (Rupees in thousands)
4. SHARE CAPITAL
Authorised -
15,000,000 ordinary shares of Rs. 10 each 150,000 150,000
========== ==========
Issued, subscribed and paid up -
8,408,850 ordinary shares of Rs. 10 each
issued for cash 84,089 84,089
948,710 ordinary shares of Rs. 10 each
issued for consideration other than cash 9,487 9,487
---------- ----------
93,576 93,576
========== ==========
4.1 Federal Chemical & Ceramics Corporation Ltd. FCCCL held 3,776,894 (1997: 3,776,894)
ordinary shares of Rs. 10 each as at June 30, 1998.
5. LONG TERM LOANS
United Bank Limited (Note: 5.1) 13,950 13,950
Government of Pakistan (Note: 5.2) 144,674 144,674
---------- ----------
158,624 158,624
Less: Overdue 13,950 13,950
---------- ----------
144,674 144,674
========== ==========
5.1 There is an agreement to create a second charge on the fixed assets of the Company to
secure loans from U.B.L. which carry interest at rates from 10% to 12% and are
repayable in 10 years ending in July, 1994.
5.2 The Government of Pakistan had issued bonds of Rs. (thousands) 144,674 to Industrial
Development Bank of Pakistan during the year 1995-96 in order to settle the company's
loan and the amount of interest outstanding in pursuance of the guarantee issued in
1963. This loan is free of interest.
6. APPLICATION MONEY FOR PARTICIPATION TERM CERTIFICATES
In a financial restructuring ordered by the Government of Pakistan the loan of National
Development Finance Corporation and part of the loan from United Bank Limited, would be
converted into Participation Term Certificates. The PTCs would be issued on the following
terms:-
(i) they will not share in profit until after senior loan creditors, i.e. IDBP and UBL have been
repaid in full.
(ii) their share in profits when eligible, will be a maximum of 15% after setting aside 15%
dividend to the existing stock holders.
(iii) they will share in losses and be extinguished proportionately immediately after issue.
(iv) they will be repaid in 10 to 12 annual installments after repayment of the principal
creditors.
The P.T.Cs will be issued after completion of necessary formalities. In the meanwhile following
amounts due, as decided by the Government, have been transferred to Application Money for
Participation Term Certificates Accounts.
1998 1997
 (Rupees in thousands)
National Development Finance Corporation 3,720 3,720
United Bank Limited 19,648 19,648
---------- ----------
23,368 23,368
========== ==========
7. LIABILITIES AGAINST ASSETS SUBJECT TO
FINANCE LEASE
The rate of interest used as the discounting factor (i.e. implicit in the lease) 25% per annum.
The amount of future payments and the periods during which they would fall due were:
Year ending June 30,
1998 - 366
1999 - 218
---------- ----------
- 584
Less: Financial charges - 82
---------- ----------
- 502
Less: Current and overdue portion
shown under current liabilities - 304
---------- ----------
- 198
========== ==========
7.1 During the year the Company settled its all lease obligations.
8. DEFERRED LIABILITIES
Deferred tax 12,000 12,000
========== ==========
1998 1997
 (Rupees in thousands)
9. SHORT TERM LOANS AND RUNNING FINANCES
United Bank Limited (Note: 9.1) 44,332 47,056
National Development Finance Corporation (Note: 9.2) 400 463
---------- ----------
44,732 47,519
========== ==========
9.1 The cash finance limit of Rs. (thousands) 57,500 is secured by floating charge on assets
and hypothecation of stock and stores and carries mark-up at the rate of Rs. 0.60 per
thousand per day. The mark-up and the re-purchase price are repayable within a period
of six months.
9.2 The working capital finance limit of Rs. (thousands) 10,000 is secured by pledge of
stocks and carries mark-up at the rate of Rs. 0.87 per thousand per day. The mark-up
and the re-purchase price are repayable within a period of one year.
1998 1997
 (Rupees in thousands)
10. CREDITORS, ACCRUALS AND
OTHER CURRENT LIABILITIES
Amount payable to employees under
Voluntary Separation Scheme (Note 10.1) 7,251 6,184
Creditors 240,091 278,054
Amount payable to FCCCL (Note 10.2) 211,763 126,840
Accrued expenses 11,644 43,230
Deposits payable on demand 133 2,273
Advance payments 519 1,408
Interest accrued on secured loans 31,850 25,317
Unclaimed dividends 652 652
Due to Gratuity Fund 11,818 74,707
Due to Provident Fund Trust (Note 10.3) 3,710 42,748
Due to Govt. of Pakistan (Note 10.4) 185,438 28,826
---------- ----------
704,869 630,239
========== ==========
10.1 Amount payable to employees under Voluntary Separation Scheme:
Balance at the beginning of the year 6,184 6,078
Add: Funds received from the Govt. of
Pakistan during the year (Note: 10.1.1) 315,858 119,002
---------- ----------
322,042 125,080
Less: Amount paid to employees during the year 313,927 115,659
Amount paid back to Govt. of Pakistan - 3,237
Bank charges 864 -
---------- ----------
Balance at the end of the year 7,251 6,184
========== ==========
10.1.1 The Golden Handshake Scheme (GHS - 1997) was offered during the year under
which 1411 employees opted. This scheme was fully funded by the Government of
Pakistan.
10.2 Amount payable to FCCCL
Current Account (Note 10.2.1) 177,430 101,520
Service & consultancy charges (Note 10.2.2) 34,333 25,320
---------- ----------
211,763 126,840
========== ==========
10.2.1 The interest @ 18% (1997: 14%) per annum is payable to Federal Chemical and
Ceramics Corporation Limited on the outstanding balance.
10.2.2 Service charges Rs. (thousands) 9,013 (1997: Rs. (thousands) 7,200 are
payable annually for providing consul/and/and experts advisory services.
10.3 This represents the amount payable for the year to the Provident Fund Trust for
those employees who have not received GHS.
10.4 This represents the amounts paid by the Government of Pakistan against the
company's liabilities for provident fund Rs. (thousand) 42,748 for gratuity
Rs. (thousands) 101,105 and for retirement/terminal benefits Rs. (thousands)
41,585 in relation for those employees who opted for Golden hand Shake
Scheme.
11. OPERATING ASSETS
(Rupees in thousands)
         COST Accumulated Net Book Annual Depreciation
Depreciation Value rate of of the year
To July Additions/ Disposals/ To, June to June at June Depreciation
01, 1997 Adjustments Adjustments 30, 1998 30, 1998 30, 1998
Freehold land (Note 11.1) 683 - - 683 - 683 - -
Roads 759 - - 759 622 137 5 7
Freehold Building
- Factory 26,398 - - 26,398 22,670 3,728 10 414
- Office 8,489 - - 8,489 5,484 3,005 5 158
Plant & machinery 308,744 - - 308,744 227,928 80,818 10 8,980
Tools and equipment 2,004 - - 2,004 1,921 83 10 9
Furniture & Fixture 3,018 18 - 3,036 2,018 1,018 10 113
Office equipment 2,709 - - 2,709 1,794 915 10 101
Vehicles (Note: 11.2) 6,218 - 987 5,231 4,599 632 20 159
-----------------------------------------------------------------------------------------------
1998 359,022 18 987 358,053 267,034 91,019 9,941
===============================================================================================
1997 357,770 3,166 1,914 359,022 257,650 101,372 11,164
===============================================================================================
11.1 It represents other than the factory land at Kala Shah Kaku. The ownership and value of
factory land has not yet been determined and booked in these accounts. The previous
management had estimated the value of such land not to exceed Rs. (thousand) 500.
11.2 These include vehicles costing Rs. (thousands) 1,013 having accumulated depreciation
of Rs. (thousands) 446 transferred from assets subject to finance lease to owned assets
during the year.
11.3 The total charge for the year for depreciation has been allocated as follows:
1998 1997
 (Rupees in thousands)
Manufacturing expenses (Note: 22) 9,727 10,895
Administrative, selling and
general expenses (Note: 23) 214 269
---------- ----------
9,941 11,164
========== ==========
12. LONG TERM INVESTMENT
Unlisted, at average cost
National Bank of Pakistan
Chief Executive Mr. Muhammad Ahmed
Mian Sumroo
46,750 shares of Rs. 10 each 465 465
========== ==========
1998 1997
 (Rupees in thousands)
13. LONG TERM LOANS AND ADVANCES
Ravi Engineering Ltd.
Advance account 48,970 48,970
Cash account 23,863 23,863
---------- ----------
Provision for doubtful loans and advances 72,833 72,833
---------- ----------
Advance account 8,604 8,604
Cash account 436 436
---------- ----------
9,040 9,040
---------- ----------
63,793 63,793
========== ==========
Outstanding for more than
three years
Others 72,833 45,489
- 27,344
---------- ----------
72,833 72,833
========== ==========
Maximum balance due at the end
of any month during the year 72,833 72,833
========== ==========
The above advances are unsecured and are expected to be repaid by the Government of
Pakistan as Ravi Engineering Limited was Privatized in January 1996.
14. LONG TERM DEPOSITS
United Bank Limited (UBL)
15 years certificates of deposit (Note: 14.1) - 3,612
Accrued interest on above certificates - 17,977
Leasing company - 125
Utility companies 157 157
---------- ----------
Less: Current maturity - UBL 157 21,871
15 years certificates of deposits
Principal - 3,612
Interest - 17,977
---------- ----------
- 21,589
---------- ----------
157 282
========== ==========
14.1 These deposits were under lien of United Bank Limited (UBL) against guarantee issued
by them to Sui Northern Gas Pipelines Limited. In November 1997 UBL encashed the
deposits amounting to Rs (thousands) 3,612 alongwith the interest accrued thereon to
Sui Northern Gas Pipelines Limited against their guarantee issued to them.
15. STORES, SPARES AND LOOSE TOOLS
Stores 4,901 4,946
Spares 30,800 31,775
---------- ----------
Spares in transit (Note: 15.1) 11,063 10,783
Less: Provision for deterioration in value (Note: 25) (11,063) (10,783)
---------- ----------
- -
Loose tools 195 196
---------- ----------
35,896 36,917
========== ==========
15.1 These represent spare parts imported but not released due to non-payment of custom dues.
1998 1997
 (Rupees in thousands)
16. STOCK IN TRADE
Raw material 5,963 9,478
Finished goods 2,924 58,943
---------- ----------
Work in process 4,909 2,663
Less: Provision against expired work-in-process (Note: 25) (2,623) -
---------- ----------
2,286 2,663
---------- ----------
Raw material in transit 5,581 4,892
Less: Provision for expired stocks (Note: 25) (5,581) (4,892)
---------- ----------
- -
Fair price shop - 23
---------- ----------
11,173 71,107
========== ==========
17. DEBTORS
Trade - unsecured
Considered good 4,914 27,402
---------- ----------
Considered doubtful 4,734 955
Less: Provision for doubtful debts (4,734) (955)
---------- ----------
- -
Others
Sale of investment in REL (Note: 17.1) 16,000 16,000
Provision (16,000) (16,000)
---------- ----------
- -
---------- ----------
4,914 27,402
========== ==========
17.1 The company is in process of obtaining the sales proceeds of its shares in REL from
Government of Pakistan. Pending confirmation of this, full provision there against has
been made thereagainst.
18. LOANS AND ADVANCES
Considered good -
Employees -
Executives (Note: 18.1) 216 187
Others 781 13,714
Suppliers 1,084 13,970
---------- ----------
2,081 27,871
Considered doubtful
Employees 887 -
Suppliers 3,842 -
---------- ----------
4,729 -
Less: Provision for doubtful debts (4,729) -
---------- ----------
- -
---------- ----------
2,081 27,871
========== ==========
18.1 Maximum balance due at the end of 619 2,202
any month during the year ========== ==========
1998 1997
 (Rupees in thousands)
19. DEPOSITS AND PREPAYMENTS
Current portion of deposits with UBL - 21,589
Excise duty deposits 64 75
Prepayments 463 2,638
---------- ----------
527 24,302
========== ==========
20. CASH AND BANK BALANCES 63 154
In hand
At banks
On current accounts 1,228 (867)
On PLS accounts., 28 26
On deposit accounts 4,000 -
---------- ----------
5,256 (841)
---------- ----------
5,319 (687)
========== ==========
21. NET SALES
Acetate Rayon Yarn 56,794 430,814
Intermediate Products 27,530 98,543
---------- ----------
Gross sales 84,324 529,357
---------- ----------
8,981 58,460
1,129 5,979
---------- ----------
10,110 64,439
---------- ----------
74,214 464,918
========== ==========
22. COST OF SALES
Raw material consumed 6,415 170,793
Salaries, wages and benefits 59,572 202,353
Stores and spares consumed 363 9,433
Maintenance expenses 5,057 8,269
Travelling and conveyance 6,039 11,966
Research and development 1,006 2,643
Postage, telecommunication, printing and stationery 1,666 4,231
Insurance 2,915 800
Gas, power and water 13,793 206,846
Excise duty on alcohol 76 4,495
Other manufacturing expenses 1,224 374
Depreciation 9,727 10,895
---------- ----------
107,853 633,098
Add: Opening work-in-process 2,663 20,149
---------- ----------
110,516 653,247
Less: Closing work-in-process 4,909 2,663
---------- ----------
Cost of goods manufactured 105,607 650,584
Add: Opening stock of finished goods 58,943 44,672
---------- ----------
164,550 695,256
Less: Closing stock of finished goods 2,924 58,943
---------- ----------
Cost of goods sold 161,626 636,313
========== ==========
1998 1997
 (Rupees in thousands)
23. ADMINISTRATIVE, SELLING AND GENERAL EXPENSES
Salaries, wages and benefits 4,630 15,802
Travelling and conveyance 487 807
Postage, telecommunication, printing and stationery 985 1,782
Motor running 602 1,189
Auditors remuneration (Note 23.1) 283 87
Legal and professional charges 1,651 1,144
Service & consultancy charges-holding corporation (Note 10.2.2)  9,013 7,200
Rent, rates and taxes 52 650
Publicity, research and experiments - 631
Freight and insurance 3,361 10,263
Provision for doubtful trade debtors 8,508 651
Depreciation 214 269
Others 908 691
---------- ----------
30,694 41,166
========== ==========
23.1 Auditors remuneration comprises of:
Audit fee 75 70
Special audit fee 185 -
Stock check fee 10 7
Expenses reimbursed 13 10
---------- ----------
283 87
========== ==========
24. FINANCIAL EXPENSES
Interest, mark-up and charges on-
Secured long term loans 15,623 13,603
Short term borrowing 274 103
Bank charges 142 1,084
Central excise duty on loans 38 431
Interest payable on current account
with FCCCL (Note 10.2.1) 23,751 27,275
---------- ----------
39,828 42,496
========== ==========
25. OTHER INCOME/CHARGES
Income-
Profit on bank deposits 6 2,133
Miscellaneous income 92 11
Profit on sale of fixed assets 248 99
Gain on foreign exchange 920 -
---------- ----------
1,266 2,243
Charges-
Retirement benefits (46,605) -
Provision against spares in transit (Note: 15) (280) (10,783)
Provision against raw material in transit (Note: 16) (689) (4,892)
Provision against expired work-in-process (2,623) -
---------- ----------
(48,931) (13,432)
========== ==========
26. TAXATION
For the year - Current 371 2,325
========== ==========
26.1 Current taxation represents minimum tax under section 80D of the Income Tax
Ordinance 1979.
26.2 Tax losses at year end, subject to finalization of pending assessments and appeal
effects by the tax department, are estimated at Rs. 541.852 million (1997: Rs. 276.058
million).
26.3 The tax department has levied Additional Tax of Rs. (thousands) 1,736 for the
assessment years 1991-92 to 1994-95 for which the Company has filed an appeal with
the Income Tax Appellate Tribunal. Pending the outcome of the appeal, no provision
has been made therefore.
27. PROFIT ON DISPOSAL OF FIXED ASSETS
(Rupees in thousands)
Book Sale Profit Mode of
Cost Value Price (Loss) Disposal Purchaser
Vehicle 317 203 203 - Negotiation Mr. M. Nawaz, Employee
Clifton Colony,
Opposit Wahdat Colony, Lahore.
Vehicle 317 203 203 - Negotiation Mr. Yasin Bazmi, Employee
Gulshan-e-Ravi, Lahore.
Vehicle 353 24 272 248 Tender Mr. Iftikhar Ahmed,
Village Rakh Chhaoni,
----------------------------------------------- Distt. Sheikhupura.
987 430 678 248
===============================================
28. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
1998 1997 1998 1997 1998 1997
Number 8 8 1 1 9 23
 (Rupees in thousands)
Meeting fee 5 7 - - - -
Salary - - 295 295 1,728 2,413
Company's contribution
to provident fund - - 23 23 144 134
Housing - - 161 161 315 278
Medical - - 28 26 185 112
Other benefits - - 172 179 205 713
------------------------------------------------------------------------
5 7 679 684 2,577 3,650
========================================================================
The Chief Executive and 3 Executives are provided with free use of company owned and
maintained cars having fuel ceiling. In addition, the above are also provided with residential
telephones.
1998 1997
 (Rupees in thousands)
29. CONTINGENCIES AND COMMITMENTS
I) Contingencies:-
a) Letters of credit outstanding 16,657 15,688
b) Counter guarantees issued to UBL
on guarantees in favour of
third parties Nil 16,303
c) In relation to employees unclaimed salaries, the
Company has a policy to write back those to income
which are unclaimed for more than three financial
years. During the year Rs. 91 thousands
(1997 Rs: 11 thousands) were written back to
income. However, as per rules, the Company is
committed to repay the amount, if claimed,
irrespective of the time limitation.
d) Litigation 220 450
e) The Company has received show-cause notices
aggregating to Rs. (thousands) 22,705 in respect of
alleged sales tax on Acetate Rayon Yarn and
Rs. (thousands) 26,386 on Intermediate products.
The Company does not accept this liability and is
contesting the show-cause notices.
f) The Company may have a liability against demurrage
penalties etc. to the custom authorities for not
clearing the stores and spare parts having the import
value of Rs. (thousands) 11,063 which have been
lying at the Karachi dockyard since 1992.
ii) Capital commitments - -
30. AGGREGATE TRANSACTIONS WITH
ASSOCIATED UNDER TAKINGS
FCCCL - Holding Corporation
-Interest charges 23,751 27,275
- Service & consultancy charges 9,013 7,200
31. PLANT CAPACITY AND ACTUAL PRODUCTION
Acetate Rayon Yarn-     (Metric Tonnes)
Capacity 3,300 3,300
Production 7 2,175
Capacity is based on 3 shifts for 330 working days in a year at the rate of 10 metric tonnes
production per day. Short fall in production is due to decline in domestic demand and shut
down of its manufacturing operations.
32. FIGURES
- in these accounts have been rounded off to the nearest thousand of rupees.
- of the previous year have been re-arranged wherever necessary for the purposes of
comparison.
IFTIKHAR MAHMOOD RANDHAWA DR. ZAFARULLAH SHEIKH
Chief Executive Director
PATTERN OF SHARE HOLDING AS ON JUNE 30, 1998
NO. OF      SHAREHOLDING TOTAL
SHARE HOLDERS FROM TO SHARES HELD
1,930 1 100 115,063
1,240 101 500 343,066
395 501 1,000 334,560
72 1,001 5,000 173,598
41 5,001 10,000 362,500
1 10,001 15,000 14,750
8 15,001 20,000 140,940
1 20,001 25,000 20,700
4 25,001 30,000 114,200
1 35,001 40,000 38,900
1 70,001 75,000 73,800
1 130,001 135,000 135,000
1 195,001 200,000 198,140
1 230,001 235,000 230,289
1 425,001 430,000 426,450
1 945,001 950,000 948,710
1 1,905,001 1,910,000 1,910,000
1 3,775,001 3,780,000 3,776,894
---------- ----------
3,761 9,357,560
========== ==========
CATEGORIES OF SHAREHOLDERS
NO. OF
PARTICULARS SHARE HOLDERS SHARES HELD PERCENTAGE
Individuals 3,729 2,659,226 28.42%
Investment Companies 5 249,049 2.66%
Insurance Companies 8 213,250 2.28%
Financial Institutions 16 2,450,740 26.19%
* Corporations (FCCCL) 1 3,776,894 40.36%
Corporate Law Authority 1 1 0.00%
** Others 1 8,400 0.09%
(Abandoned Properties)
---------- ---------- ----------
3,761 9,357,560 100.00%
========== ========== ==========
* Federal Chemical & Ceramics Corporation Ltd.
** Administrator, Abandoned Properties,
Government of Pakistan, Islamabad.
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