| ZULFEQAR INDUSTRIES LIMITED |
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997-98 |
|
|
|
| Contents |
|
|
| BOARD
OF DIRECTORS |
|
| NOTICE
OF MEETING |
|
| REPORT
OF DIRECTORS |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| FORM - 34 |
|
|
| HI-LANDER
SOAPS (PVT) LIMITED |
|
| REPORT
OF DIRECTORS |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
|
|
| Board
of Directors |
|
|
| SYED
WAJID ALl |
|
Chairman |
|
|
| S.
FERIEL RIFAAT ALl |
|
Managing Director |
|
| SYED
ASAD ALl |
|
| SYED
SHAHID ALl |
|
| BEHRAM
HASAN |
|
| RAZI-UR
RAHMAN KHAN |
|
| WUSOOQ
KHALEELI |
|
|
| COMPANY
SECRETARY |
|
| MUHAMMAD
RASHEED |
|
|
| AUDITORS |
|
| TASEER
HADI KHALID & CO. |
|
| CHARTERED
ACCOUNTANTS |
|
| KARACHI |
|
|
| REGISTERED
OFFICE |
|
| KAN
DAWALA BUILDING |
|
| M.A.
JINNAH ROAD |
|
| KARACHI-74400 |
|
|
| BANKERS |
|
| MUSLIM
COMMERCIAL BANK LTD. - KARACHI |
|
|
| LEGAL
ADVISOR |
|
| HUSSAIN
AND HAlDER - KARACHI |
|
|
| FACTORY |
|
| LINK
HALl ROAD, HYDERABAD-71900 |
|
|
|
| Notice
of Meeting |
|
|
| NOTICE
IS HEREBY GIVEN that the Thirty eighth Annual General Meeting of Zulfeqar
Industries |
|
| Limited
will be held at Beach Luxury Hotel, Moulvi Tamizuddin Khan Road, Karachi, on |
|
| Monday,
25th January 1999 at 10:30 a.m. to transact the following business. |
|
|
| 1.
To confirm the minutes of the Extraordinary General Meeting held on 29th
June, 1998. |
|
|
|
|
| 2.
To receive, consider and adopt the audited Balance Sheet and Profit and Loss |
|
| Account
of the Company for the year ended 30th June 1998, the report of Auditors |
|
| and
Directors thereon. |
|
|
| 3.
To appoint Auditors' and fix their remuneration. |
|
|
| 4.
To transact any other ordinary business with the permission of the Chair. |
|
|
| Karachi |
|
|
By order of the Board |
|
| December
16, 1998 |
|
|
|
|
|
(Muhammad Rasheed) |
|
|
|
Company Secretary |
|
|
| NOTES: |
|
|
|
| i)
The Share Transfer Books of the Company for the purpose of this Annual
General |
|
| Meeting
will remain closed from 19th January 1999 to 25th January 1999 (both days |
|
| inclusive). |
|
|
|
| ii)
A member entitled to attend and vote at the Annual General Meeting is also
entitled |
|
| to
appoint another member as proxy to attend and vote instead of him. |
|
|
| iii)
The instrument appointing proxy must be received at the Registered Office of
the |
|
| Company
not less than 48 hours before the time appointed for the meeting. |
|
|
|
| Report
of Directors to the Shareholders |
|
|
| The
Directors are pleased to present their Report and the Audited Accounts of the
Company |
|
| together
with the Auditor's Report thereon for the year ended 30th June 1998. |
|
|
| The
Company's financial results are as follows: |
|
|
|
|
|
(Rupees in '000) |
|
|
|
|
Year ended |
Year ended |
|
|
|
|
30-06-98 |
30-06-97 |
|
|
|
|
| Operational
losses for the year |
|
|
(6,616) |
(7,706) |
|
| Add:
Other Income |
|
|
|
599 |
3,606 |
|
|
|
|
|
---------- |
---------- |
|
| Loss
before Tax |
|
|
|
(6,017) |
(4,100) |
|
| Provision
for Taxation |
|
|
|
1,033 |
2,153 |
|
|
|
|
|
---------- |
---------- |
|
| Loss
after Taxation |
|
|
|
(7,050) |
(6,253) |
|
| Accumulated
Loss brought forward |
|
|
(10,722) |
(4,469) |
|
|
|
|
|
---------- |
---------- |
|
| Accumulated
Loss carried forward |
|
|
(17,772) |
(10,722) |
|
|
|
|
|
========== |
========== |
|
|
| During
the year under review, the sales of the Company recorded a decline of 22%
which |
|
| led
the Company to suffer an operational loss of Rs. 6.616 million. Sales
achieved were |
|
| at
Rs. 391.362 million as compared to Rs. 502.324 million last year. |
|
|
| Unprecedented
availability of smuggled soaps all over the country at low prices was the |
|
| major
factor contributing to low Sales and resultant loss to the Company. The
smuggled |
|
| soaps
by avoiding payment of duties and taxes continued to enjoy unfair advantage
over |
|
| locally
produced soaps, making the latter less competitive. Concurrent to the above,
the |
|
| beleaguered
economic scenario presented a depressed market conditions causing higher |
|
| levels
of inflation. |
|
|
| Devaluation
during the year under review compelled the company to increase prices of |
|
| its
products to keep a respectable margin. |
|
|
| The
launching of new products by the company was delayed in view of uncertain |
|
| conditions. |
|
|
| Despite
difficult times the company is determined to provide excellent quality
products |
|
| and
is in the process of making concerted efforts to regain its lost market
share. Recent |
|
| curbs
on smuggling is showing improvement in checking the menace. . This will
provide |
|
| better
conditions in realising the company's efforts. An encouraging development is
that |
|
| this
year Sales are showing a slight sign of improvement than last year. |
|
|
| In
addition the company plans to introduce new products in other product
categories to |
|
| broaden
the base for business & profitability. |
|
|
| The
operations at Hi-Lander Soaps (Pvt) Limited continued suspended during the
year. |
|
| The
land and building at Mirpur, Azad Kashmir has been agreed to be disposed off
at a |
|
| price
of Rs. 2.2 million. |
|
|
| During
the period under review Messrs Razi-ur-Rahman Khan and Wusooq Khaleeli joined |
|
| the
Board of Directors in place of Messrs S. Qamar Ali Zaidi and Shabbir A.
Ferozpurwala. |
|
| The
Board congratulates Messrs Razi-ur-Rahman Khan and Wusooq Khaleeli on their |
|
| election
and wishes to place on record its appreciation of the valuable services
rendered |
|
| to
the Company by Messrs S. Qamar Ali Zaidi and Shabbir A. Ferozpurwala during
their |
|
| tenure. |
|
|
| The
company, its holding and subsidiary company have made arrangements to cope
with |
|
| any
threat of Millennium Bug by mitigating the potential disaster Year 2000. The |
|
| conversion
will be completed by the end of the current calendar year. |
|
|
| Syed
Asad Ali resigned as Chief Executive and Managing Director with effect from
16 |
|
| December
1998 and in his place Miss S. Feriel Rifaat Ali has been appointed as the
Chief |
|
| Executive
and Managing Director of the Company. |
|
|
| The
Board appreciates the efforts and dedication of all employees of the Company
which |
|
| enabled
us to run the Company efficiently. |
|
|
| The
present Auditors M/s. Taseer Hadi Khalid & Company, Chartered Accountants
retire |
|
| and
being eligible offer themselves for re-appointment as Auditors of the Company
on a |
|
| remuneration
to be fixed by you. |
|
|
| A
statement showing the pattern of Shareholding in the Company as at 30th June
1998 |
|
| is
presented on Page 25. |
|
|
|
S. Feriel Rifaat Ali |
|
|
Syed Asad Ali |
|
|
|
Chief Executive |
|
|
Director |
|
| Karachi: |
|
| 16
December 1998 |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Zulfeqar Industries Limited as at
30 June 1998 |
|
| and
the related profit and loss account and statement of changes in financial
position, 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 purpose of our audit and, after due verification thereof,
we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the company as
required by |
|
| the
Companies Ordinance, 1984; |
|
|
|
|
| (b)
in our opinion: |
|
|
| (i)
the balance sheet and profit and loss account together with the notes thereon
have |
|
| been
drawn up in conformity with the Companies Ordinance, 1984 and are in |
|
| agreement
with the books of account and are further in accordance with accounting |
|
| policies
consistently applied; |
|
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the company's |
|
| business;
and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the |
|
| year
were in accordance with the objects of the company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given |
|
| to
us, the balance sheet, profit and loss account and the statement of changes
in |
|
| financial
position, 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 30 June 1998
and of |
|
| the
loss and the changes in financial position for the year then ended; and |
|
|
| (d)
in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
|
|
| Karachi: |
|
|
Taseer Hadi Khalid & Co. |
|
| 18
December 1998 |
|
Chartered Accounts |
|
|
|
|
| Balance
Sheet |
|
| As
at 30 June 1998 |
|
|
|
|
|
30 June |
30 June |
|
|
|
|
1998 |
1997 |
|
|
|
|
|
(Rupees in '000) |
|
|
|
|
| FIXED
CAPITAL EXPENDITURE |
|
3 |
25,711 |
23,737 |
|
| TRADE
MARK- at cost |
|
|
471 |
371 |
|
| LONG
TERM DEPOSITS |
|
4 |
870 |
699 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Stores
and spares |
|
5 |
5,531 |
5,327 |
|
| Stock-in-trade |
|
6 |
98,308 |
106,202 |
|
| Short
term investment |
|
7 |
3,000 |
3,000 |
|
| Trade
debtors-unsecured considered good |
|
8,205 |
12,335 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
8 |
26,695 |
30,998 |
|
| Cash
and bank balances |
|
9 |
3,779 |
3,782 |
|
|
|
|
---------- |
---------- |
|
|
|
|
145,518 |
161,644 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of finance lease |
|
|
315 |
- |
|
| Finance
under mark-up arrangements - secured |
10 |
64,026 |
57,579 |
|
| Short
term morabaha finance - secured |
|
- |
3,000 |
|
| Due
to holding company |
|
11 |
18,425 |
19,732 |
|
| Creditors,
accrued expenses and other liabilities |
12 |
49,802 |
60,489 |
|
| Provision
for taxation |
|
13 |
2,005 |
2,560 |
|
|
|
|
---------- |
---------- |
|
|
|
|
134,573 |
143,360 |
|
|
|
|
---------- |
---------- |
|
| NET
CURRENT ASSETS |
|
|
10,945 |
18,284 |
|
|
|
|
|
---------- |
---------- |
|
| NET ASSETS |
|
|
|
37,997 |
43,091 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| FINANCED
BY: |
|
|
|
| SHARE
CAPITAL |
|
14 |
20,000 |
20,000 |
|
| REVENUE
RESERVES |
|
|
6,000 |
6,000 |
|
| ACCUMULATED
(LOSS) |
|
|
(17,772) |
(10,722) |
|
|
|
|
|
---------- |
---------- |
|
| SHARE
HOLDERS' EQUITY |
|
|
8,228 |
15,278 |
|
| SURPLUS
ON REVALUATION OF FIXED ASSETS |
15 |
16,519 |
16,519 |
|
| DEFERRED
GRATUITY |
|
|
12,502 |
11,294 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT TO |
|
|
| FINANCE
LEASE |
|
16 |
748 |
- |
|
| CONTINGENCIES
AND COMMITMENTS |
|
17 |
- |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
37,997 |
43,091 |
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
|
|
S. Feriel Rifaat Ali |
|
|
Syed Asad Ali |
|
|
Chief Executive |
|
|
Director |
|
|
|
| Karachi: |
|
| 18
December 1998 |
|
|
|
| Profit
and Loss Account |
|
| For
the year ended 30 June 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees in '000) |
|
|
|
|
| Sales - Net |
|
18 |
391,362 |
502,324 |
|
| Cost
of goods sold |
|
19 |
348,532 |
452,327 |
|
|
|
|
---------- |
---------- |
|
| Gross
profit |
|
|
42,830 |
49,997 |
|
|
|
|
| Administrative
expenses |
|
20 |
8,678 |
7,703 |
|
| Selling
and distribution expenses |
|
21 |
28,895 |
38,755 |
|
| Financial
expenses |
|
22 |
11,873 |
11,245 |
|
|
|
|
---------- |
---------- |
|
|
|
|
49,446 |
57,703 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit/(loss) |
|
|
(6,616) |
(7,706) |
|
| Other
income/(charges)- net |
|
23 |
599 |
3,606 |
|
|
|
|
---------- |
---------- |
|
| Profit/(loss)
before taxation |
|
|
(6,017) |
(4,100) |
|
|
|
|
| Provision
for taxation |
|
|
|
| Current |
|
|
2,005 |
2,560 |
|
| Prior |
|
|
(972) |
(3) |
|
| Deferred |
|
|
- |
(404) |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,033 |
2,153 |
|
|
|
|
---------- |
---------- |
|
| Profit/(loss)
after taxation |
|
|
(7,050) |
(6,253) |
|
| Accumulated
(loss) brought forward |
|
|
(10,722) |
(4,469) |
|
|
|
|
---------- |
---------- |
|
| Accumulated
(loss) carried forward |
|
|
(17,772) |
(10,722) |
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
S. Feriel Rifaat Ali |
|
Syed Asad Ali |
|
|
Chief Executive |
|
Director |
|
|
|
|
| Statement
of Changes in Financial Position |
|
| For
the year ended 30 June 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
|
|
(Rupees in '000) |
|
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| (Loss)
before taxation |
|
|
(6,017) |
(4,100) |
|
| Adjustments
for: |
|
|
|
|
| Mark-
up expense |
|
|
9,718 |
6,721 |
|
| Depreciation |
|
|
3,037 |
2,881 |
|
| Provision
for gratuity |
|
|
2,226 |
1,841 |
|
| Gain
on disposal of fixed assets |
|
|
(223) |
(310) |
|
| Dividend
income |
|
|
- |
(3,000) |
|
|
|
|
---------- |
---------- |
|
|
|
|
14,758 |
8,133 |
|
|
|
|
---------- |
---------- |
|
| Operating
profit/(loss) before working capital changes |
8,741 |
4,033 |
|
|
|
|
| (Increase)/decrease
in operating assets |
|
| Stores
and spares |
|
|
(204) |
4 |
|
| Stock
in trade |
|
|
7,894 |
(46,994) |
|
| Trade
debtors |
|
|
4,130 |
7,586 |
|
| Advances,
prepayments and other receivables |
|
5,151 |
7,705 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
16,971 |
(31,699) |
|
|
|
|
| Increase/(decrease)
in operating liabilities |
|
| Creditors,
accrued expenses and other liabilities |
(10,687) |
28,546 |
|
| Due
to holding company |
|
|
(1,307) |
2,080 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(11,994) |
30,626 |
|
|
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
|
13,718 |
2,960 |
|
|
|
|
|
|
| Income
tax paid |
|
|
(2,436) |
(139) |
|
| Gratuity
paid |
|
|
(1,018) |
(13) |
|
| Mark-up
paid |
|
|
(9,718) |
(6,936) |
|
| Dividend
paid |
|
|
- |
(3,000) |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(13,172) |
(10,088) |
|
|
|
|
|
|
---------- |
---------- |
|
| Net
cash flows from operating activities |
|
546 |
(7,128) |
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
1998 |
1997 |
|
|
|
|
|
| Fixed
capital expenditure |
|
(4,072) |
(5,174) |
|
| Sale
proceeds of fixed assets |
|
504 |
1,003 |
|
| Trade Marks |
|
|
(100) |
- |
|
| Long
term deposits |
|
(171) |
219 |
|
|
|
---------- |
---------- |
|
| Net
cash flows from investing activities |
|
(3,839) |
(3,952) |
|
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
| Morabaha
financing |
|
(3,000) |
(5,000) |
|
| Repayment
of lease liability - net |
|
(157) |
(966) |
|
|
|
---------- |
---------- |
|
| Net
cash flows from financing activities |
|
(3,157) |
(5,966) |
|
|
|
---------- |
---------- |
|
| Net
decrease in cash and cash equivalents |
|
(6,450) |
(17,046) |
|
|
|
|
| Cash
and cash equivalents at the beginning |
|
(53,797) |
(36,751) |
|
| of the year |
|
|
|
|
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
(60,247) |
(53,797) |
|
|
|
========== |
========== |
|
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
|
|
|
|
|
| Cash
and bank balances |
|
|
|
3,779 |
3,782 |
|
| Finance
under mark-up arrangements |
|
|
(64,026) |
(57,579) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
(60,247) |
(53,797) |
|
|
|
========== |
========== |
|
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
Feriel Rifaat Ali |
|
|
Syed Asad Ali |
|
|
Chief Executive |
|
|
Director |
|
|
|
| Notes
to the Accounts |
|
| For
the year ended 30 June 1998 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| The
company was incorporated in February 1960 as a private limited company and |
|
| subsequently
converted as a public limited company in November 1986 and was listed |
|
| on
Karachi Stock Exchange and Lahore Stock Exchange in December 1986 & 1987 |
|
| respectively.
The company is a subsidiary of Treet Corporation Limited which holds 52 |
|
| percent
of its shares. The principal activity of the company is to manufacture and
sale |
|
| of
toilet and washing soaps. |
|
|
| 2.
ACCOUNTING POLICIES |
|
| The
significant accounting policies are summarised as follows: |
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under the historical cost convention except |
|
| to
the extent that certain fixed assets as stated in note 3.1 are shown at
revalued |
|
| amounts. |
|
|
|
| 2.2
Staff retirement benefits |
|
|
|
| (a)
Staff gratuity |
|
|
| The
company operates an unfunded gratuity scheme and provision is |
|
| made
annually to cover the obligations under the scheme. |
|
|
| (b)
Provident fund |
|
| A
recognized provident fund scheme is in operation which covers all |
|
| permanent
employees who have completed three months service and have |
|
| been
issued confirmation letters. Equal contributions are made monthly |
|
| both
by the company and the employees in accordance with the value of |
|
| the
scheme at 10% of basic pay. |
|
|
| (c)
Retirement benefits |
|
|
| Retirement
benefits are calculated with reference to last drawn salary and |
|
| prescribed
qualifying period of service of the employee. Amounts are |
|
| charged
to profit and loss account as and when paid. |
|
|
| 2.3
Taxation |
|
|
|
|
| (a) Current |
|
|
| The
charge for current taxation is based on higher of taxable income at |
|
| the
current rates of taxation after taking into account applicable tax credits |
|
| and
tax rebates available, if any and minimum tax liability @ 0.5% of |
|
| turnover. |
|
|
|
|
| (b)
Deferred |
|
|
| Deferred
taxation is provided using the liability method on all major timing |
|
| differences.
However, deferred tax debits are not accounted for. |
|
|
| 2.4
Fixed assets |
|
|
|
| - Owned |
|
|
|
|
| (a)
Fixed assets including all additions are carried at cost or revaluation |
|
| less
accumulated depreciation. |
|
|
|
|
|
| (b)
Gain or loss on disposal of fixed assets if any, are taken to profit |
|
| and
loss account currently. |
|
|
|
|
|
| (c)
Depreciation on fixed assets other than freehold and leasehold land |
|
| is
charged on a reducing balance method at the rates specified in |
|
| note 3.1. |
|
|
|
|
| (d)
A full year's depreciation is charged on all fixed assets capitalized |
|
| during
the year while no depreciation is charged in the year fixed |
|
| assets
are disposed or scrapped. |
|
|
