| S.G. FIBRE LIMITED |
|
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
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|
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| CONTENTS |
|
|
|
| Company
information |
|
| Notice
of annual general meeting |
|
| Directors'
report |
|
| Auditors'
report to the members |
|
| Balance
sheet |
|
| Profit
& loss account |
|
| Cash
flow statement |
|
| Notes
to the accounts |
|
| Pattern
of shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS: |
|
|
| Mr.
S. M. Ahmed |
|
Chairman / Chief
Executive |
|
| Mrs.
Zubaida Khatoon |
|
Director |
|
| Mr.
Sohail Ahmed |
|
Director |
|
| Mr.
Asim Ahmed |
|
Director |
|
| Mst.
Ghazala Ahmed |
|
Director |
|
| Mr.
Nausherwan Adil |
|
Nominee Director of
N.B.P. |
|
| Mr.
Asif A. Brohi |
|
Nominee Director of
N.B.P. |
|
|
| COMPANY
SECRETARY/DIRECTOR: |
|
|
| Mr.
Asim Ahmed |
|
|
| AUDITORS: |
|
|
| M/s.
Muniff Ziauddin & Co. |
|
| Chartered
Accountants. |
|
|
| BANKERS: |
|
|
| Allied
Bank of Pakistan Limited |
|
| Habib
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| American
Express |
|
| Citibank
N.A |
|
|
| REGISTERED
OFFICE: |
|
|
| B-40,S.I.T.E.,
Karachi. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 30th Annual General Meeting of the Shareholders of
S. G. Fibre Limited will be held |
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| on
Saturday the February 6, 1999 at 2:30 p.m. at the registered office of the
Company at B - 40, S. I. T. E., Karachi to |
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| transact
the following business: |
|
|
| 1.
To confirm the minutes of the last Annual General Meeting held on December
18, 1997. |
|
|
| 2.
To receive consider and adopt the audited 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 declare the dividend as recommended by the Directors. |
|
|
| 4.
To appoint the Auditors of the Company for the year ended June 30, 1999 and
to fix their remuneration. |
|
|
| 5.
To transact such other business with the permission of the Chair. |
|
|
| By
Order of the Board |
|
| Mr.
Asim Ahmed |
|
| Director
/ Company Secretary |
|
|
| NOTES: |
|
|
| 1.
The share transfer books of the company shall remain close from February 1,
1999 to February 7, 1999 |
|
| (both
days inclusive) |
|
|
| 2.
Transfer received at the registered office of the Company at B-40, S. I. T.
E., Karachi at the close of business |
|
| on
January 31, 1999 will be treated in time. |
|
|
| 3.
A member of the company entitled to attend and vote may appoint another
member as his/her proxy to attend |
|
| &
vote instead of him/her. Proxies in order must be received at the registered
office of the Company not less |
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| than
48 hours before the time of holding of Annual General Meeting. |
|
|
| 4.
The members are requested to communicate to the Company of any change in
their addresses. |
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|
| Karachi: |
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| January
14, 1999 |
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|
|
| DIRECTORS'
REPORT |
|
|
| Dear
Shareholders, |
|
|
| The
Board of Directors of the company takes pleasure in presenting the Annual
Report of the company for |
|
| the
year ended June 30, 1998 alongwith the audited accounts. |
|
|
| OPERATING
RESULTS |
|
|
|
1998 |
1997 |
% of increase |
|
|
(M. Tons) |
(M. Tons) |
(decrease) |
|
| Production |
|
7,337 |
6,739 |
8.87 |
|
| Sales |
|
7,473 |
6,347 |
17.74 |
|
|
(Rs. in Million) |
(Rs. in Million) |
|
|
| Turnover |
|
| (excluding
Sales Tax & Excise Duty) |
|
781.70 |
642.02 |
21.76 |
|
| Profit
after taxation |
|
46.58 |
21.06 |
121.18 |
|
| Dividend
@ 16% (1997: 20%) |
|
24.00 |
30.00 |
|
| Un-appropriated
profit |
|
94.67 |
72.09 |
|
|
|
|
| REVIEW |
|
| It
is quite clear from the operating results that the production has increased
from 6,739 M. Tons in 1996-97 to |
|
| 7,337
M. Tons in 1997-98 i.e. an increase of about 9%. Whereas our net sales has
registered an increase of |
|
| about
18% in terms of quantity from 6,347 M. Tons in 1996-97 to 7,473 M. Tons in
1997-98; while in terms |
|
| of
value it has increased by about 22% from Rs. 642,020,455 in 1996-97 to Rs.
781,704,637 in |
|
| 1997-98.
The increase in profit after taxation is attributed partly to increase in
sales this year and partly to |
|
| increase
in capital gain on FC deposit. The nil provision for prior years taxation in
this financial year as compared |
|
| to
Rs. 16,460,690 provided last year has also contributed considerably to
increase in profit after taxation this |
|
| year. |
|
|
| The
average selling price of yarn excluding sales tax and excise duty increased
from Rs. 101.15 per kg in |
|
| 1996-97
to Rs. 104.60 per kg during this financial year. |
|
|
| Our
all power- requirement is being feeded by our associated undertaking S. G.
Power Limited. Our suit for |
|
| damages
against KESC is still pending in the honourable Sindh High Court. Our dispute
with KESC is also |
|
| pending
adjudication with the Secretary, Irrigation and Power and Electrical
inspector, Karachi Region, Karachi, |
|
| Government
of Sindh. |
|
|
| The
new machinery consisting of Microdraw (R) Polyester Spinning Draw Winding
Sizing Beaming Plant as |
|
| per
the feasibility report of the Phase-II of our expansion project and as stated
in our last annual report arrived |
|
| during
the year under review. Funds received through issue of share capital and
premium on their issue amounting |
|
| to
Rs. 291 Million have been fully utilised in the cost of new machinery. The
total investment in the machinery |
|
| and
building of the expansion project exceeded Rs. 600 Million. The construction
of the building to house the |
|
| new
machinery was also completed during the year. However, the installation of
machinery could be completed |
|
| in
August, 1998 and its operation commenced from September, 1998. With the new
machinery now becomes |
|
| operational,
the implementation of phase-II of our expansion project got completed. |
|
|
| FUTURE
OUTLOOK: |
|
|
| With
the complete implementation of the new project the production capacity of the
company will |
|
| increase
to about 11,000 M. Tons per annum from the previous capacity of 8,000 M. Tons
per annum. |
|
| As
the year of installation of the new machinery is 1998-99, the same is the
year of trial runs and |
|
| trial
production too. Hence the actual result from the operations of new machinery
will start coming |
|
| out
from the financial year starting July 1, 1999. As has been mentioned in the
last annual report |
|
| that
with the implementation of this new project, the company shall be the first
not only in Pakistan |
|
| but
the worldwide to introduce the Fully Drawn Micro Filament Yarn through the
Hot Channel |
|
| Stretching
system. This yarn will be sized and delivered to the weavers in the beams
ready for |
|
| immediate
weaving instead of packing in cartons as is been done at present. This is not
only the |
|
| latest
technology but it is first time introduced in Pakistan. As now-a-days many
many Water Jet |
|
| Looms
are coming. The weaver will be producing the finest quality of cloth through
our Value Added |
|
| Yarn,
which will be a good addition to the exports of the country resulting in an
increase of well |
|
| needed
Foreign Exchange. |
|
|
| AUDITORS |
|
|
| The
present auditors M/s. Muniff Ziauddin & Co., Chartered Accountants retire
and being eligible |
|
| offer
their services for the year 1998-99. |
|
|
| ACKNOWLEDGMENT |
|
| The
directors of the company wish to place on record their appreciation for
devoted and hard work |
|
| of
the company's staff, which enabled the smooth and successful operation of the
company. |
|
|
|
For and on behalf of the
Board of Directors |
|
| Karachi: |
|
S. M. AHMED |
|
| January
11, 1999 |
|
Chairman & Chief
Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of S. G. Fibre 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 |
|
| and
profit and loss account and the 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 profit for the year then |
|
| ended; and |
|
|
| d)
In our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was deducted by the |
|
| Company
and deposited in the Central Zakat Fund established under Section 7 of that
Ordinance. |
|
|
| Karachi: |
|
Muniff Ziauddin & Co. |
|
| January
1, 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
Capital |
|
| 15,000,000
Ordinary |
|
| shares
of Rs. 10/- each |
|
150,000,000 |
150,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed & paid-up capital |
2 |
150,000,000 |
150,000,000 |
|
| Share
premium |
|
337,400,000 |
337,400,000 |
|
| Unappropriated
profit |
|
94,675,232 |
72,092,777 |
|
|
---------- |
---------- |
|
|
582,075,232 |
559,492,777 |
|
|
| LONG
TERM LOANS AND |
|
| DEFERRED
LIABILITIES |
|
3 |
16,853,941 |
235,169,604 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Short
term Finance |
|
4 |
44,025,050 |
52,521,689 |
|
| Current
portion of long term loans |
5 |
8,901,570 |
8,901,570 |
|
| Due
to directors |
|
6 |
72,047,377 |
52,488,121 |
|
| Creditors,
accrued & other liabilities |
7 |
542,853,724 |
340,630,184 |
|
| Taxation |
|
|
4,178,509 |
1,880,476 |
|
| Dividend |
|
|
24,000,000 |
30,000,000 |
|
|
|
---------- |
---------- |
|
|
|
696,006,230 |
486,422,040 |
|
| Contingencies
& Capital Commitment |
8 |
---------- |
---------- |
|
|
1,294,935,403 |
1,281,084,421 |
|
|
========== |
========== |
|
|
| FIXED
ASSETS - TANGIBLE |
|
| Operating
fixed assets |
|
9 |
540,744,388 |
491,982,950 |
|
| Capital
work in progress |
|
10 |
9,753,070 |
20,733,411 |
|
|
|
---------- |
---------- |
|
|
|
550,497,458 |
512,716,361 |
|
|
| LONG
TERM DEPOSITS |
|
| AND
DEFERRED COST |
|
11 |
8,693,041 |
12,259,340 |
|
|
| CURRENT
ASSETS |
|
| Stores
and spares |
|
12 |
41,538,060 |
42,552,500 |
|
| Stock-in-trade |
|
13 |
202,111,982 |
323,393,022 |
|
| Trade debts |
|
14 |
608,355 |
- |
|
|
| Loans,
advances, deposits, |
|
| prepayments
and other receivables |
15 |
491,334,627 |
172,891,536 |
|
|
|
|
| Cash
& bank balances |
|
16 |
151,880 |
217,271,662 |
|
|
|
---------- |
---------- |
|
|
735,744,904 |
756,108,720 |
|
|
---------- |
---------- |
|
|
1,294,935,403 |
1,281,084,421 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of |
|
| these
accounts. |
|
|
|
|
|
|
|
|
|
| CHAIRMAN
& CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
| Sales |
|
17 |
781,704,637 |
642,020,455 |
|
| Cost
of Sales |
|
18 |
671,491,222 |
544,108,540 |
|
|
|
---------- |
---------- |
|
| GROSS
PROFIT |
|
|
110,213,415 |
97,911,915 |
|
|
|
|
| Administrative
& Selling expenses |
19 |
19,107,834 |
18,488,196 |
|
| Depreciation |
|
|
52,549,137 |
47,207,249 |
|
| Amortization |
|
|
3,553,299 |
3,553,299 |
|
|
|
---------- |
---------- |
|
|
|
75,210,270 |
69,248,744 |
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
35,003,145 |
28,101,938 |
|
| Other
Income |
|
20 |
65,065,921 |
52,957,519 |
|
|
---------- |
---------- |
|
|
100,069,066 |
81,059,457 |
|
|
|
|
|
21 |
487,369,571 |
40,332,894 |
|
| Financial
expenses |
|
22 |
841,131 |
561,233 |
|
| Other
charges |
|
---------- |
---------- |
|
|
49,578,088 |
40,332,894 |
|
| Profit
before taxation |
|
50,490,978 |
40,726,563 |
|
|
| Taxation: |
|
| - Current |
|
3,908,523 |
3,210,102 |
|
| -Prior |
|
|
23.10 |
- |
16,460,680 |
|
|
|
|
---------- |
---------- |
|
|
3,908,523 |
19,670,782 |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
46,582,455 |
21,055,781 |
|
| Unappropriated
profit brought forward |
|
72,092,777 |
81,036,996 |
|
|
---------- |
---------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
118,675,232 |
102,092,777 |
|
| APPROPRIATIONS: |
|
| Proposed
dividend @ 16% (1997:20%) |
|
24,000,000 |
3,000,000 |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
94,675,232 |
72,092,777 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| CHIEF
EXECUTIVE |
|
DIRECTOR |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Funds
provided from operation |
|
|
| Profit
before taxation |
|
50,490,978 |
40,726,563 |
|
| Adjustment
of items not involving |
|
| movement
of funds; |
|
|
| Depreciation |
|
52,549,137 |
47,207,249 |
|
| Amortization
of deferred cost |
|
3,553,299 |
3,553,299 |
|
| Provision
for gratuity |
|
1,907,101 |
2,214,956 |
|
| (Gain)/Loss
on disposal of fixed assets |
|
(726,574) |
(1,863,908) |
|
|
---------- |
---------- |
|
|
57,282,963 |
51,111,596 |
|
|
---------- |
---------- |
|
| CASH
FROM OPERATING ACTIVITIES BEFORE WORKING |
|
| CAPITAL
CHANGES |
|
107,773,941 |
91,838,159 |
|
| (Increase)/Decrease
in current assets |
|
| Stores
and spares |
|
1,014,440 |
(11,975,804) |
|
| Stock-in-trade |
|
121,281,040 |
(217,125,158) |
|
| Trade debts |
|
(608,355) |
37,034,581 |
|
| Loans,
advances, deposits, prepayments and |
|
|
| Other
receivable |
|
(318,443,091) |
23,747,553 |
|
|
|
|
| Due
from associated undertakings |
|
- |
42,388,376 |
|
|
---------- |
---------- |
|
|
(196,755,966) |
(125,930,452) |
|
| Increase/(Decrease)
in current liabilities |
|
|
| Short
term finance |
|
(8,496,639) |
51,152,697I |
|
| Creditors,
accrued and other liabilities |
|
202,223,540 |
(25,236,115)~ |
|
| Due
to directors |
|
19,559,256 |
52,475,862I |
|
|
---------- |
---------- |
|
|
213,286,157 |
78,392,444 |
|
|
---------- |
---------- |
|
| CASH
GENERATED FROM OPERATIONS |
|
124,304,132 |
44,300,151 |
|
| Tax paid |
|
(1,610,490) |
(17,790,306) |
|
| Gratuity
paid |
|
(644,440) |
(639,202) |
|
|
---------- |
---------- |
|
|
(2,254,930) |
(18,429,508) |
|
|
---------- |
---------- |
|
| NET
CASH FROM OPERATING ACTIVITIES |
|
122,049,202 |
25,870,643 |
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Purchase
of fixed assets including CWIP |
|
(91,173,660) |
(149,278,211) |
|
| Sale
proceeds from disposal of fixed assets |
1,570,000 |
2,443,oo0I |
|
| Long
term deposits and deferred cost |
|
13,000 |
(26,120) |
|
|
---------- |
---------- |
|
| NET
CASH USED IN INVESTING ACTIVITIES |
|
(89,590,660) |
(146,861,331) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Payment
of long term loans |
|
(219,578,324) |
(13,352,416) |
|
| Long
term loans acquired |
|
- |
188,429,739 |
|
| Dividend
paid |
|
(30,000,000) |
(22,500,000) |
|
|
---------- |
---------- |
|
| NET
CASH USED IN FINANCING ACTIVITIES |
|
(249,578,324) |
152,577,323 |
|
|
|
---------- |
---------- |
|
| NET
INCREASE IN CASH AND CASH EQUIVALENTS |
(217,119,782) |
31,586,635 |
|
|
|
|
| CASH
AND CASH EQUIVALENTS AT THE BEGINNING |
|
| OF THE YEAR |
|
217,271,662 |
185,685,027 |
|
|
|
---------- |
---------- |
|
| CASH
AND CASH EQUIVALENTS AT THE END |
|
| OF THE YEAR |
|
151,880 |
217,271,662 |
|
|
========== |
========== |
|
| CHAIRMAN
& CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998. |
|
|
| 1.1
STATUS OF THE COMPANY |
|
| The
Company is incorporated in Pakistan under the Companies Act 1913 (now
Companies Ordinance |
|
| 1984)
and is listed on Karachi Stock Exchange. Its principal activity is
manufacturing of polyester |
|
| filament
yarn, fibre & processing of art silk fabrics. |
|
|
| ACCOUNTING
POLICIES |
|
|
| 1.2
Accounting convention |
|
|
| These
accounts are prepared in accordance with the historical cost convention. |
|
|
| 1.3
Fixed capital expenditure & Depreciation |
|
|
| These
are stated at cost less accumulated depreciation except lease hold land and
capital work-in- |
|
| progress,
which are stated at cost. Depreciation on operating assets is charged on
reducing balance |
|
| method
without considering extra shifts worked. Acquisitions during the year are
depreciated for the |
|
| full
year irrespective of the date of purchase and no depreciation is charged on
assets in the year of |
|
| disposal.
Minor renewals, replacements, repairs and maintenance are charged to expense.
Major |
|
| renewals
and betterment are capitalised. Gains and losses on disposal of fixed assets
are included in |
|
| current
year income. |
|
|
| 1.4
Deferred cost |
|
| Deferred
cost is being amortised over a period of 5 years commencing from the year in
which these |
|
| are
incurred. |
|
|
|
| 1.5
Stores and Spares |
|
| These
are valued at cost using the average cost method. |
|
|
| 1.6
Stock-in-trade |
|
| Stock
of raw and packing materials, except for those in transit, work-in-process.
and finished goods |
|
| are
valued principally at average cost. Cost of work-in-process and manufactured
finished goods |
|
| comprises
cost of direct materials, labour and an appropriate portion of production
overheads. |
|
|
| Items
in transit are stated at cost comprising invoice values plus other charges
incurred thereon. |
|
|
| 1.7
Taxation |
|
| The
charge for current taxation is based on taxable income after taking into
account tax-credits and |
|
| rebates
available, if any, The company accounts for deferred taxation on all major
timing differences |
|
| using
the liability method. However, deferred tax is not provided if it can be
established with |
|
| reasonable
probability that the timing differences will not reverse in the foreseeable
future. |
|
|
| 1.8
Staff retirement benefits |
|
| The
company operates an un-funded gratuity scheme for its employees. Full
provision is made for |
|
| gratuity
payable to employees as per law. |
|
|
| 1.9
Revenue recognition |
|
| Sales
are recorded on despatch of goods to customers. |
|
|
| 1.10
Foreign exchange translation |
|
| Transaction
in foreign currencies are recorded at the rate prevailing on the date of
transaction. Assets |
|
| &
liabilities in foreign currencies are translated into Pak Rupees at the rate
of exchange ruling on |
|
| the
balance sheet date except foreign exchange forward contracts which are
recorded at contractual |
|
| rates. |
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
|
| 2.
ISSUED, SUBSCRIBED AND PAID-UP CAPITAL |
|
|
| 5200000 |
Ordinary shares of Rs.
10/- |
|
|
each fully paid in cash |
|
52,000,000 |
52,000,000 |
|
|
| 5415610 |
Ordinary shares of Rs.
10/- |
|
|
each issued as fully paid
bonus share. |
54,156,100 |
54,156,100 |
|
|
| 2384390 |
Ordinary shares of Rs.
10/- |
|
|
each as fully paid (in
cash) right |
23,843,900 |
23,843,900 |
|
|
shares |
|
| 2000000 |
Ordinary shares of Rs.
10/- |
|
|
each as fully paid in
cash(foreign |
20,000,000 |
20,000,000 |
|
|
placement) |
|
| ---------- |
|
---------- |
---------- |
|
