| Ravi Ravon Limited |
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| Annual
Report 1998 |
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| CONTENTS |
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|
| 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 |
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|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 37th Annual General Meeting of the Shareholders of
the Company |
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| 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 |
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| together
with the Auditors' and Directors' report thereon. |
|
|
| 3.
To appoint Auditors for the year 1998-99 and to fix their remuneration. |
|
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| 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 |
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| with
the permission of the Chairman. |
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|
| The
Share Transfer Books of the Company will remain closed from 24th January to
26th January, |
|
| 1999
(Both days inclusive). |
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|
by Order of the Board |
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|
LIAQAT ALl KHAN |
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| Lahore: |
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|
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. |
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|
|
|
| 2.
Shareholders are requested to promptly notify the Company of any changes in
their |
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| addresses. |
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|
| 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 |
