| Universal Leather & Footwear Industries Limited |
|
|
|
| Annual
Report 1998 |
|
|
|
| Contents |
|
|
| Corporate
Profile |
|
|
| Directors'
Report |
|
|
| Chairman's
Review |
|
|
| Notice
of Meeting |
|
|
| Auditors'
Report to the members |
|
| Balance
Sheet |
|
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
|
| Pattern
of Shareholdings |
|
|
|
| Corporate
Profile |
|
|
| Board
of Directors |
|
| S.M. Saleem |
|
| Chairman |
|
| Shakil
Ahmed |
|
| Chief
Executive |
|
| S.
Muhammad Naseem Muhammad Jamil |
|
| Shahid
Hussain Farrukh Hussain Sheikh |
|
| Akram
Mahmood |
|
|
| Auditors |
|
| M.
Yousuf Adil Saleem & Co. |
|
| Chartered
Accountants |
|
|
| Legal
Advisers |
|
| Mohsin
Tayebaly & Co. |
|
| Advocates
& Legal Consultants |
|
|
| Corporate
Secretary |
|
| Asif Ali |
|
|
| Bankers |
|
| Askari
Commercial Bank Ltd. |
American Express Bank
Ltd. |
|
| Bank
of America NT & SA |
Faysal Bank Ltd. |
|
| Bank
A1 Falah Ltd. |
|
Muslim Commercial Bank
Ltd. |
|
| Mashreq
Bank PSC |
|
Standard Chartered Bank
Ltd. |
|
| United
Bank Ltd. |
|
|
| Registered
& Corporate Office |
|
| Cavish
Court |
|
| A-35,
Block 7 & 8, |
|
| K.C.H.S.U. |
|
| Sharea
Faisal, |
|
| Karachi-75350. |
|
|
| Factories |
|
|
| Plot
No. 16, Sector-15, |
Hallokey Road, |
|
| Korangi
Industrial Area, |
Kana Kachha, |
|
| Karachi. |
|
|
Lahore. |
|
|
|
| Directors'
Report To The Members |
|
|
| The
Directors of your Company take pleasure in presenting 30th Annual Report |
|
| with
Audited Accounts of the Company together with Auditors' Report thereon for
the |
|
| year
ended June 30, 1998. |
|
|
| Profit
and Appropriations |
|
|
|
Rupees |
|
| Profit
before taxation |
|
|
11,525,211 |
|
| Provision
for taxation |
|
|
(6,788,074) |
|
|
|
|
---------- |
|
| Profit
after taxation |
|
|
4,737,137 |
|
| Balance
of unappropriated profit brought forward |
3,945,583 |
|
|
|
|
---------- |
|
|
|
|
8,682,720 |
|
|
|
|
|
|
| Proposed
Cash Dividend @ 10% |
|
4,000,000 |
|
| Transfer
to General Reserve |
|
- |
|
|
|
|
---------- |
|
| Unappropriated
Profit Carried Forward |
|
4,682,720 |
|
| Earning
per share (after tax on 4,000,000 shares) |
1.18 |
|
|
|
|
|
|
| CHAIRMAN'S
REVIEW |
|
| The
directors of the Company endorse the contents of the Chairman's review which
is |
|
| deemed
to be a part of the Director's report. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| A
statement of pattern of shareholdings in the Company as at June 30, 1998 is
shown on |
|
| page 27. |
|
|
| AUDITORS |
|
| The
present Auditors of the Company retire and being eligible, offer their
services for |
|
| the
year 1998-99. |
|
|
|
|
By order of the Board |
|
|
|
|
|
|
| Karachi |
|
|
S. Muhammad Naseem |
|
| Date:
08 December, 1998 |
|
Director |
|
|
|
| Chairman
Review |
|
|
| I
welcome you on behalf of the members of |
|
|
| the
Board of Directors and myself to the |
|
|
| Thirtieth
Annual General Meeting to present |
|
|
| the
Annual Report for the performance |
|
|
| ended
30th June 1998. The Director's Report |
|
|
| and
Audited Accounts for the year under |
|
|
| review
are: also placed before you. |
|
|
|
|
|
|
|
| Operating
Results |
|
|
|
| During
the year inspire of global recession in |
|
|
| the
economy, the Company has been able to |
|
|
| manage
the gross profit at 12.65% as |
|
|
| compared
to last year's profit of 13.67%. The |
|
|
| profit
from operation has decreased by |
|
|
| 18.65%.
Profit for appropriation after |
|
|
| taxation
decreased from Rs. 33.94 Million to |
|
|
| Rs.
8.68 Million. As already indicated in last |
|
|
| year's
report, increase in sales was |
|
|
| extremely.
difficult due to overall recession |
|
|
| and
lack of demand for leather in western |
|
|
| world
as well the sudden economic disater |
|
|
| in
the South East Asian countries, we could |
|
|
| not
maintain the level of sales and as a result |
|
| the
overall profitability was affected. There |
|
|
| has
been substained savings in the cost of |
|
|
| raw
materials and the management was |
|
|
| trying
to reduce the inventory level but |
|
|
| unfortunately
this saving was off set as the |
|
|
| high
value stocks of previous years were |
|
|
| consumed
to make the sales for the year. |
|
|
| Due
to lower utilization of capacity part of |
|
|
| the
fixed cost remained unabsorbed leading |
|
|
| to
lower gross profit. Besides domestic |
|
|
| competition
is also extremely fierce .and sale |
|
|
| prices
in local market remained subdued. |
|
|
|
|
|
|
|
| During
current year we have provided |
|
|
| the
diminution of Rs. 6.79 Million on |
|
|
| investments
held and this has been because |
|
|
| of
extremely poor economic conditions in |
|
|
| Pakistan
resulting in down fall of prices of |
|
|
| equities
in Stock Exchange. Although the |
|
|
| investment
is medium term but the |
|
|
|
| management
decided to provide for the |
|
| diminution
resulting in reduction of profit |
|
| from
Rs. 18.31 Million to Rs. 11.52 Million. |
|
|
| Since
the Income Tax is deducted at export |
|
| stage
at flat rate i.e. 0.75% as such the |
|
| deduction
of Rs. 6.79 Million as tax was |
|
| provided
which also affected net results. |
|
|
| Ys K |
|
| The
management is well aware of the |
|
| problem
of "Millennium Bug" and in house |
|
| experts
are busy to ensure that all |
|
| application
programme are year 2000 |
|
| compliant.
This task may be completed by |
|
| February,
1999. |
|
|
| Future
Outlook |
|
| Although
during the year ahead we will |
|
| continue
to focus on our core strategy to |
|
| continue
to improve quality of products and |
|
| explore
new markets as traditional markets |
|
| are
not absorbing sufficient quantities. |
|
| However,
the economic outlook for the year |
|
| 1999
does not appear to be showing signs of |
|
| improvement
over existing levels. The |
|
| demand
in international markets is also |
|
| reduced.
Inspire of this the management will |
|
| make
efforts to maintain the level of sales |
|
| and
try to rationalize the cost of goods |
|
| produced
and achieve desired results. |
|
|
| Acknowledgment |
|
|
| On
behalf of the directors and shareholders |
|
| of
the Company, i wish to record my |
|
| appreciation
of the efforts made by |
|
| members
of staff of the Company for their |
|
| dedication
and hard work throughout the year. |
|
|
| I
am confident that the employees would |
|
| continue
to put their best efforts in |
|
| achieving
the targets set for progress and |
|
| prosperity
of the Company. |
|
|
|
S.M. Saleem |
|
|
|
Chairman |
|
|
|
| Notice
off Annual General Meeting |
|
|
| Notice
is hereby given that the 30th Annual |
|
|
| General
Meeting of the shareholders of |
|
|
| Universal
Leather & Footwear Industries |
|
|
| Limited
will be held on 30 December, 1998 at |
|
|
| 10.30
A.M. at Registered Office of the Company |
|
|
| Cavish
Court A-35, Block 7 & 8, K.C.H.S.U., |
|
|
| Sharea
Faisal Karachi - 75350 to transact the |
|
| following
business: |
|
|
| ORDINARY
BUSINESS |
|
|
| 1.
To confirm minutes of 29th Annual General |
|
| Meeting. |
|
|
|
| 2.
To receive and consider Company's |
|
| Accounts
for the year ended 30 June, 1998 |
|
| together
with the Reports of the Auditors |
|
| and
Directors, |
|
|
| 3.
To appoint Auditors for the year ending 30 |
|
| June,
1999 and fix their remuneration. |
|
|
| 4.
To approve the payment of dividend as |
|
| recommended
by the Directors. |
|
|
| 5.
To transact any other business with the |
|
| permission
of the Chair. |
|
|
|
|
By Order of the Board |
|
|
|
|
|
|
|
|
Asif Ali |
|
| Karachi |
|
|
Corporate Secretary |
|
| 08
December, 1998 |
|
|
| NOTES: |
|
| 1.
The share transfer books will be closed |
|
| from
23 December, 1998 to 30 December, |
|
| 1998
(both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at |
|
| this
meeting may appoint another member |
|
| as
his/her proxy to attend and vote on his |
|
| /her
behalf. Proxies in order to be valid |
|
| must
be received at the Registered Office of |
|
| the
Company not less than 48 hours before |
|
| the
time of meeting. |
|
|
|
|
| 3.
Shareholders are requested to promptly |
|
| notify
the Company of any change in their |
|
| address. |
|
|
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance |
|
|
| sheet
of Universal Leather and |
|
|
|
|
|
| Footwear
Industries Limited as at June |
|
|
|
|
| 30,
1998 and the related profit and loss |
|
|
|
|
| account
and statement of changes in |
|
|
|
|
| financial
position (cash flow statement) |
|
|
|
|
| together
with the notes forming part |
|
|
| thereof,
for the year then ended on that |
|
|
| date
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 |
|
|
|
|
| explanation
given to us, the balance |
|
|
|
| sheet,
profit and loss account and |
|
|
|
|
| the
statement of changes in financial |
|
|
|
| position,
(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 |
|
|
|
|
| Company's
affairs as at June 30, |
|
|
|
|
| 1998
and of the profit and the |
|
|
|
|
| changes
in financial position 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: |
|
|
|
M. Yousuf Adil Saleem & Co. |
|
|
| Date:
08 December, 1998 |
|
Chartered Accountants |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance
Sheet as at June 30, 1998 |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
Note |
Rupees |
Rupees |
|
| Share
Capital and Reserves |
|
|
|
|
|
| Authorised |
|
|
|
| 10,000,000
Ordinary shares |
|
|
| of
Rs. 10/= each |
|
|
100,000,000 |
100,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
3 |
40,000,000 |
40,000,000 |
|
| General
reserve |
|
4 |
120,000,000 |
120,000,000 |
|
| Unappropriated
profit |
|
|
4,682,720 |
3,945,583 |
|
|
|
|
---------- |
---------- |
|
|
|
|
164,682,720 |
163,945,583 |
|
|
|
|
| Deferred
liabilities |
|
|
| Staff
retirement gratuity |
|
|
9,147,025 |
7,908,980 |
|
|
|
|
| Current
liabilities |
|
|
|
|
|
|
| Short
term borrowings |
|
5 |
356,537,178 |
366,844,953 |
|
| Creditors,
accrued and other liabilities |
6 |
261,832,022 |
331,510,540 |
|
| Dividends |
|
7 |
4,040,941 |
10,037,417 |
|
| Taxation |
|
|
6,788,429 |
7,096,241 |
|
|
|
|
---------- |
---------- |
|
|
|
|
629,198,570 |
715,489,151 |
|
| Contingencies
and Commitments |
|
8 |
---------- |
---------- |
|
|
|
|
803,028,315 |
887,343,714 |
|
|
|
|
|
========== |
========== |
|
|
| Fixed
Capital Expenditure |
|
|
|
|
|
| Operating
assets |
|
9 |
92,276,710 |
94,563,277 |
|
| Capital
work in progress |
|
10 |
247,033 |
3,113,802 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
92,523,743 |
97,677,079 |
|
|
|
|
| Long
Term Investments |
|
11 |
47,694,813 |
54,490,000 |
|
|
|
|
| Long
Term Advances |
|
12 |
809,264 |
1,174,781 |
|
|
|
|
| Long
Term Security Deposits |
|
118,090 |
118,090 |
|
|
|
|
| Current
Assets |
|
|
|
|
|
|
| Stores
and spares |
|
13 |
14,731,610 |
13,335,171 |
|
| Stock
in trade |
|
14 |
456,433,955 |
510,943,798 |
|
| Trade debts |
|
15 |
111,898,275 |
124,748,688 |
|
| Loans
and advances |
|
16 |
40,518,686 |
36,402,913 |
|
| Deposits
and prepayments |
|
17 |
288,397 |
313,721 |
|
| Other
receivables |
|
18 |
25,299,481 |
24,389,858 |
|
| Cash
and bank balances |
|
19 |
12,712,001 |
23,749,615 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
661,882,405 |
733,883,764 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
803,028,315 |
887,343,714 |
|
|
|
|
|
========== |
========== |
|
| The
annexed notes from 1 to 30 form an integral part of these accounts. |
|
|
|
S. Muhammad Naseem |
|
Farrukh Hussain Sheikh |
|
|
Director |
|
Director |
|
|
|
|
|
|
|
| As
Chief Executive is outside Pakistan these financial statements are signed by
directors. |
|
|
|
|
|
| Profit
& Loss Account for the |
|
| Year
Ended June 30, 1998 |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Sales |
|
|
875,521,699 |
888,016,798 |
|
| Cost
of goods sold |
|
|
764,730,967 |
766,590,664 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
110,790,732 |
121,426,134 |
|
|
|
|
| Operating
expenses |
|
|
|
| Selling |
|
22 |
35,505,709 |
35,021,458 |
|
| Administration |
|
23 |
19,070,795 |
17,297,334 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(54,576,504) |
(52,318,792) |
|
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
|
56,214,228 |
69,107,342 |
|
|
|
|
| Other
income/(Loss) |
|
24 |
(6,742,593) |
847,387 |
|
|
|
|
---------- |
---------- |
|
|
|
|
49,471,635 |
69,954,729 |
|
| Other
charges |
|
|
|
| Financial |
|
|
25 |
37,325,886 |
39,027,316 |
|
| Workers'
profit participation fund |
|
|
620,538 |
1,560,211 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(37,946,424) |
(40,587,527) |
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
11,525,211 |
29,367,202 |
|
|
|
|
| Provision
for taxation |
|
|
|
| Current |
|
(6,788,429) |
(7,096,241) |
|
| Prior
Years' |
|
355 |
1,558,598 |
|
| Deferred |
|
- |
4,104,000 |
|
|
|
---------- |
---------- |
|
|
|
(6,788,074) |
(1,433,643) |
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
4,737,137 |
27,933,559 |
|
|
|
|
| Unappropriated
profit brought forward |
|
3,945,583 |
6,012,024 |
|
|
|
|
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
|
8,682,720 |
33,945,583 |
|
|
|
|
| Appropriations |
|
|
|
| Proposed
dividend @ 10% (1997 @25%) |
|
4,000,000 |
10,000,000 |
|
| Transferred
to general reserve |
|
- |
20,000,000 |
|
|
|
---------- |
---------- |
|
|
|
|
|
4,000,000 |
30,000,000 |
|
|
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
4,682,720 |
3,945,583 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes from 1 to 30 form an integral part of these accounts. |
|
|
|
S. Muhammad Naseem |
|
Farrukh Hussain Sheikh |
|
|
Director |
|
Director |
|
|
|
| As
Chief Executive is outside Pakistan these financial statements are signed by
directors. |
|
|
|
| Statement
of Changes in Financial Position |
|
| (Cash
Flow Statement) |
|
| for
the Year Ended June 30, 1998 |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
| A.
CASH USED IN OPERATING ACTIVITIES |
|
|
|
|
|
| Profit
before taxation |
|
11,525,211 |
29,367,202 |
|
| Adjustment
for: |
|
|
|
| Depreciation |
|
10,309,689 |
10,375,067 |
|
| Financial
Charges |
|
37,325,886 |
39,027,316 |
|
| Provision
for diminution in |
|
|
|
| value
of investments |
|
6,787,865 |
(887,237) |
|
| Loss
on sale of investments |
|
2,490</ |
