Artistic Denim Mills Limited - Annual Reports 2003

ARTISTIC DENIM MILLS LIMITED

Annual Reports 2003

CONTENTS

COMPANY INFORMATION

Board of Directors

Muhammad Yaqoob Ahmed

Chairman & Chief Executive

Muhammad Iqbal Ahmed

Muhammad Yousuf Ahmed

Muhammad Javed Ahmed

Muhammad Faisal Ahmed

Muhammad AN Ahmed

Mrs. Hajra Ahmed

Audit Committee

Muhammad Yousuf Ahmed

Chairman

Muhammad Iqbal Ahmed

Member

Muhammad Javed Ahmed

Member

Company Secretary

S. D. Siddiqui

Chief Financial Officer

Shahzad A. Abbasi

Auditors

Ford Rhodes Sidat Hyder & Co.

Chartered Accountants

Legal Advisor

MonawwerGhani

Advocate

Bankers

Bank AL Habib Limited

Habib Bank AG Zurich

Pakistan Industrial Credit & Investment

Corporation Limited

Registered Office

39-A, Block 6, P.E.C.H.S., Karachi.

Factory

Plot No. 7,8,9 & 26, Sector 16,

Korangi Industrial Area, Karachi.

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given to the Members that the 11lh Annual General Meeting of ARTISTIC DENI

MILLS LIMITED will be held at the Registered Office of the Company at 39-A, Block-6, RE.C.H.S

Karachi, on Saturday, October 18, 2003 at 3:00 p.m. to transact the following business:

ORDINARY BUSINESS

1. To confirm the minutes of the 10m Annual General Meeting held on October 28, 2002.

2. To receive, consider and adopt the Audited Financial Statements of the Company for the ye.

ended June 30, 2003 together with Reports of the Directors' and Auditors' thereon.

3. To consider and approve payment of 40% Cash Dividend for the year ended June 30, 2003 i

recommended by the Board of Directors.

4. To appoint Auditors for the Year 2003-2004 and to fix their remuneration.

5. To transact with permission of the Chair any other business which may be transacted at an Annu

General Meeting.

By Order of the Board

Karachi: September 24, 2003 S. D.1SIDJ3IQUI

Company Secretary

NOTES:

1. The Share Transfer Books of the Company will remain closed from October 17, 2003 to October 23,

2003 (both days inclusive). Transfers received in order at the Registered Office of the Company by

close of business on October 16, 2003 will be treated in time to determine the entitlement of 40%

cash Dividend as recommended by the Board of Directors.

2. A Member entitled to attend, speak and vote at the General Meeting is entitled to appoint another

Member as his/her proxy to attend, speak and vote on his/her behalf.

3. Instrument appointing proxy and the power of attorney or other authority under which it is signed or

a notarially certified copy of the power or authority must be deposited at the Registered Office of

the Company at least 48 hours before at the time of the meeting and must be duly stamped, signed,

and witnessed. Form of Proxy is enclosed.

4. A Corporation, which is a member of the Company, may by resolution of its Board of Directors or

Governing Body authorize a person to act as its representative at the meeting.

5. CDC Account Holders will further have to follow the under mentioned guidelines as laid down in

Circular No. 1 of 2000 dated January 26, 2000 issued by the Securities and Exchange Commission

of Pakistan.

For Attending the Meeting:

i. In case of individuals, the account holder or sub-account holder and/or the person whose

securities are in group account and their registration details are uploaded as per the Regulations,

shall authenticate his/her identity by showing his/her original National Identity Card (NIC) or

original passport at the time of attending the meeting.

ii. In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen

signature of the nominee shall be produced (unless it has been provided earlier) at the time of

the meeting.

For Appointing Proxies:

i. In case of individuals, the account holder or sub-account holder and/or the person whose

securities are in group account and their registration details are uploaded as per the Regulations,

shall submit the proxy form as per the above requirement.

ii. The proxy form shall be witnessed by two persons whose names, addresses and NIC numbers

shall be mertiorted on the form.

iii. Attested copies of NIC or the passport of the beneficial owners and the proxy shall be furnished

with the proxy form.

iv. The proxy shall produce his/her original NIC or original passport at the time of the meeting.

v. In case of corporate entity, the Board of Directors' resolution/power of attorney with specimen

signature shall be submitted (Unless it has been provided earlier) along with proxy form to the

Company.

6. Members are requested to submit declaration for Zakat on the required format and to advise change

in address, if any.

DIRECTORS' REPORT TO THE MEMBERS

The Directors of your Company have the pleasure in presenting the 11th Annual Report along with

the Audited Financial Statements for the year ended June 30, 2003.

YEAR UNDER REVIEW

Alhamodolillah, the performance of the Company, in-spite of extensive Balancing Mordernization

and Restructuring (BMR) activity during the year, remained satisfactory. Total sale of the Company

has increased to Rs.1.343 billion, which is 1.37% higher than previous year. Gross profit is 19.35%

of sales as compared to 24.55% for previous year. Profit before taxation is 13.42% of sales against

16.38% in previous year. Earnings per share is Rs.12.20 against Rs.15.06 in previous year.

Increase in cotton price, higher depreciation charge, lower rate of duty draw back, expenses on acquisition

new technical know-how and intensive marketing activity have contributed in reduction of profit margins as

compared to previous year.

PRODUCTION

Your Company has imported fifty-four (51) new looms and installation/relocation is under progress.

Production of denim fabric has decreased by 1 million meters during the year as compared to

previous year. The decreased production is attributed to the production of finer quality value

added fabric; reduced speed of old looms during the year and installation/relocation activity during

the last quarter. However, your management is confident that the decreased production would be

reversed in future by the full utilization/performance -of the new looms and equipment.

SALES AND MARKETING

Your management has been able to off-set the impact of production loss resulting from BMR

activity through value addition to the product range. However, we are confident that the capital

investment in high tech machinery and improvement of product's quality would have positive impact

in future. Diversified sales, strategic marketing and exploration of new international markets would

be the corner stone of your Company's policies in the coming period.

In the light of good operating performance of your Company, the Directors are pleased to propose

40% cash dividend for the year under review.

FUTURE OUTLOOK

Textile sector throughout the world is undergoing rapid changes due to implementation of World

Trade Organization (WTO) regime. Other cotton growing countries such as China, India and Central

Asian Republics are expected to give tough competition. Frequent fluctuation in prices of cotton,

increase in power and labour cost are exerting continuous pressure on competitiveness of our

product range. However, the management is striving for the value addition to product range by

investing in human resources, achieving cost reduction and optimzing capacity utilization.

CORPORATE COMPLIANCE

We are pleased to confirm that in compliance witri the listing regulation 37 (xix) of the Karachi

Stock Exchange (Guarantee) Limited/ Code of Corporate Governance, the Board of Directors hereby

declares that:

• The financial statements have been drawn up in conformity with the requirements of the

Companies Ordinance, 1984 and present fairly state of its affairs, operating results, cash flow

and changes equity.

• Proper books for accounts have been maintained in the manner required under Companies

Ordinance, 1984.

• Appropriate accounting policies have been consistently applied in preparation of financial

statements and accounting estimates are based on reasonable and prudent judgement.

• International Accounting Standards as applicable in Pakistan have been followed in preparation

of financial statements.

• The sound internal control system has been established and is being effectively implemented and

monitored.

• There are no-significant doubts about the Company^ ability to continue as a going concern.

• There has been no material departure from the best practices of corporate governance as

detailed by the listing regulations.

The Management is pleased to provide you with information as under:

• Key financial and operating data for the last six years in summarized form is annexed.

• Number of Board meetings held during the year ended June 30, 2003 were nine. The

attendance of the directors is as under:

Name of Directors

Meetings Attended

Mr. Muhammad Yaqoob Ahmed

Mr. Muhammad Iqbal Ahmed

Mr. Muhammad Yousuf Ahmed

Mr. Muhammad Javed Ahmed

Mr. Muhammad Faisal Ahmed

Mr. Muhammad AM Ahmed

Mrs. Hajra Ahmed

Pattern of shareholding is annexed

During the fiscal year from July 1, 2002 to June 30, 2003 the detail of trading in the shares of

the Company by the Directors, CEO, CFO, Company Secretary and their spouses and minor

children is annexed.

AUDITORS

The present auditors M/s Ford Rhodes Sidat Hyder & Co., Chartered Accountants, retire and being

eligible, offer themselves for re-appointment.

The Board Audit Committee has recommended the reappointment of M/s Ford Rhodes Sidat Hyder

& Co., Chartered Accountants, as auditors of the Company for the year 2003 - 2004.

ACKNOWLEDGEMENT