| BUREWALA TEXTILE MILLS LIMITED |
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|
|
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| ANNUAL REPORT 2003 |
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| Corporate and
Financial Reporting Frame Work |
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| a) The financial statements have been
prepared by the management, present fairly its state of |
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| affairs, the result
of its operations, cash flows and changes in equity; |
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| b) Proper books of accounts have been
maintained by the Company; |
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| c) Appropriate accounting policies have
been consistently applied except for the change in policy |
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| referred in Note
2.4 to the accounts in preparation of financial statements and accounting |
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| estimates are based
on reasonable and prudent judgment; |
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| d) International Accounting Standards,
as applicable in Pakistan, have been followed in preparation |
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| of financial
statements and any departure therefrom has been adequately disclosed; |
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| e) The system of internal control is
sound in design and has been effectively implemented and |
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| monitored; |
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| f) There are no significant doubts
upon the Company's ability to continue as a going concern; |
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| g) There has been no material departure
from the best practices of corporate governance, as |
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| detailed in the
listing regulations. |
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| Pattern of
Shareholdings |
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| A statement
reflecting the pattern of shareholdings is annexed to the Annual Report. |
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| Key
Operating and Financial Data |
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| The statement
summarizing the key operating and financial data of six years including
current year is |
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| attached to the
Annual Report: |
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| Vision / Mission |
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| The statement
reflecting the vision / mission of the Company is annexed 10 the Annual
Report. |
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| Ethics and Business
Practices |
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| The statement
outlining the Ethics and Business Practices of the Company is also annexed to
the Annual |
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| Report. |
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| Board Audit
Committee |
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| The Board has
constituted an audit committee. |
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| Internal Audit |
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| The Board has also
appointed the head of Internal Audit function. |
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| Statutory Payments |
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| As on the closing
date, no government taxes, duties, levies and charges were outstanding /
overdue |
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| except the routine
payments of various levies and the amounts in dispute pending in various
appellate |
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| forums. |
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| Value of
Investments of Gratuity Funds |
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| The face value of
the investments made out of the Provident Fund of the management cadre staff
was |
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| Rs. 1 0,500,000 on
the closing date. |
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| VISION / MISSION
STATEMENT |
|
|
| The Burewala
Textile Mills Limited has been at the forefront in high quality pure cotton
yarn and fabric |
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| manufacturing for
past over 50 years. The future of pure cotton textiles in Pakistan is though
faced with |
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| tough competition,
we intend to strive for our corporate objectives. |
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| Vision Statement: |
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| Ourvisionis: |
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| To remain the
pioneers in pure cotton textile industry by producing quality products at
competitive |
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| prices to the
entire satisfaction of our customers without compromising on our principles
of |
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| ethics, integrity
and professional standards. |
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| Mission Statement: |
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| Our mission is to: |
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| 1 . Maintain the
reputation of a reliable manufacturer and supplier of high quality pure
cotton |
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| yarns and fabrics
through technology and effective resource management while |
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| maintaining high
ethical and professional standards. |
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| 2. Have sustainable growth in this era
of competition in quality of products and its prices. |
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| 3. Achieve high returns on investment
through a continuous process of improvement for |
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| the benefit of the
stakeholders. |
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| 4. Strive for excellence through
commitment, integrity, honesty and teamwork. |
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| 5. Provide excellent working atmosphere
and growth potential to talented professionals |
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| and develop long
term relationship with its employees. |
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| 6. Be a good corporate citizen. |
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| DIRECTORS' REPORT |
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| The Directors are
pleased to present their Annual Report together with the Audited Financial
Statements |
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| for the year ended
September 30, 2003 before the fiftieth Annual General Meeting of the Company. |
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|
| OPERATING RESULTS |
|
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| The gross profit
has increased to Rs. 5,513,517
during the year under review, as compared to |
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| Rs. 5,046,092 for
the previous year. The gross profit percentage has slightly improved to 1.41%
as |
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| compared to 1.29%
for the previous year. The net profit before taxation for the year is Rs.
35,860,825 as |
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| compared to Rs.
28,164,887 for the previous year, after providing for depreciation, all
operating, |
|
| administrative,
selling & distribution and financial expenses. The summary of the
financial results is: |
|
|
|
|
2003 |
2002 |
|
|
|
Rupees |
Rupees |
|
| Sales |
|
391,622,173 |
390,124,304 |
|
| Gross profit |
|
5,513,517 |
5,046,092 |
|
| Operating (loss) |
|
-25,349,464 |
-30,200,328 |
|
| Other income |
|
65,812,356 |
60,372,036 |
|
| Profit before
taxation |
|
35,860,825 |
28,164,887 |
|
| Taxation |
|
| (Including impact
of deferred taxation) |
|
16,646,811 |
-2,500,000 |
|
| Profit after
taxation |
|
52,507,636 |
25,664,887 |
|
| Un-appropriated profit
brought forward |
|
37,
8211844 |
41,386,577 |
|
| Profit available
for appropriation |
|
90,329,480 |
67,051,464 |
|
|
| Dividend |
|
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| The Directors
recommend a payment of final cash dividend of 40% (Rs. 4.00 per share) on the
paid up |
|
| capital of the
Company. The following appropriations have been recommended: |
|
| Profit available
for appropriation |
|
90,329,480 |
67,051,464 |
|
| Appropriations: |
|
|
|
| Final cash dividend
on ordinary shares @ 40% (2002) 40%) |
29,229,620 |
29,229,620 |
|
|
|
29,229,620 |
29,229,620 |
|
| Un-appropriated
profit carried forward |
|
61,099,860 |
37,821,844 |
|
| Earnings Per Share
- Basic |
|
7.19 |
3.51 |
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|
| STATEMENT OF
COMPLIANCE WITH CODE OF CORPORATE GOVERNANCE |
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| The Company is in
the process of implementing the requirements of the Code of Corporate
Governance |
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| issued by the
Securities and Exchange Commission of Pakistan and adopted by the Stock
Exchanges. |
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| Steps are being
taken by the management of the Company for its implementation. |
|
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| The Company has
applied the principles contained in the Code in the following manner: |
|
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| 1 . The election of the Board of Directors
was held before the Code of Corporate Governance became |
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| applicable. |
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| 2. None of the members of the Board are
directors in more than ten listed companies. |
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| 3. All the directors of the Company are
registered as taxpayers and none of them has defaulted in |
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| payment of any loan
to a banking company, a DPI or an NBFI or, being a member of a Stock |
|
| Exchange, has been
declared as a defaulter by that Stock Exchange. |
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| 4. No casual vacancy occurred in the Board
during the year. |
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| 5. The Company has prepared a
"Statement of Ethics and Business Practices", which has been signed |
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| by all the
directors and employees of the Company. |
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| 6. The Board has developed a
"Vision/Mission Statement", which Ms annexed to the Annual Report. |
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| The Board is in the
process of revision and approval of significant policies of the Company. |
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| 7.
All the powers of the Board have been duly exercised and decisions on
material transactions, |
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| including
appointment and determination of remuneration and conditions of employment |
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| of the CEO and
other Executive Directors, have been taken by the Board. |
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| |
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| 8. The meetings of
the Board were presided over by tie Chairman and fie Board met at least once |
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| every quarter
Written notices of (he Board meetings, alongwith agenda and working papers,
were |
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| normally circulated
at least seven days before the rneetfhgs. The minutes of the meetings were |
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| appropriately
recorded and circulated. |
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| 9.
The Board is in the process of arranging orientation courses for its
directors to further apprise them |
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| of their duties and
responsibilities. |
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| 10. The Company Secretary and CFO were
appointed before the Code of Corporate Governance |
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| became applicable.
The Board has also approved the appointment of head of internal audit. |
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| 11 . The Directors' Report for the year has
been prepared in compliance with the requirements of the |
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| Code and fully
describes the salient matters required to be disclosed. |
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| 1 2 The financial statements of the Company
were duly endorsed by the CEO and CFO before approval |
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| of the Board. |
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| 13. The directors, CEO and executives do not
hold any interest in the shares of the Company other than |
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| that disclosed in
the pattern of shareholdings. |
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| 14. The Company is in the process of fully
complying with all the corporate and financial reporting |
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| requirements of the
Code. |
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| 15. The Board has formed an Audit Committee.
It comprises of three members, majority of whom |
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| including the
Chairman of the Committee are non-executive directors. |
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| 16. The meetings of the Audit Committee were
held at least once every quarter prior to approval of |
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| interim and final
results of the Company as required by the Code. The terms of reference of the |
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| Committee have been
formed and advised to the Committee for compliance. |
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| STATEMENT OF ETHICS
AND BUSINESS PRACTICES |
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| The Burewala
Textile Mills Limited was established on very sound
principles of its development and |
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| growth on the basis
of making no compromises in any aspect of business practices. The Company
takes |
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| pride in adherence
to its principles and continues to serve its customers, stakeholders and
society on the |
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| following
guidelines: |
|
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| 1. The Company strongly believes in
free and fair business practices and open competitive |
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| markets. Developing
any association within the segment, industry or with competitors to distort |
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| the pricing and
availability is contradictory to our business code of conduct. |
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| 2. The Company's financial policies for
conducting business are transparency, integrity and |
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| following the
principles of accounting and finance as approved by regulations and
contemporary |
|
| accounting codes. |
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| 3. The Company believes in uprightness
of performance and expects it to be a fundamental |
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| responsibility of
our employees to act in Company's best interest while holding confidential |
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| information. We
expect our employees neither to solicit internal information from others nor
to |
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| disclose Company's
figures, data or any material information to any unauthorized person/body. |
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| 4. The Company believes in individuals
respect and growth. Our employment and HR policies |
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| develop individuals
without any discrimination on the basis of race, religion, gender or any
other |
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| factor. |
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| 5. The Company as a responsible
corporate citizen strongly adheres to the principles of corporate |
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| governance and
complies with regulatory obligations enforced by regulatory bodies for |
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| improving corporate
performance. |
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| 6. The Company anticipates integrity
and honesty of employees in doing business for the |
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| Company. Any unfair
or corrupt practices either to solicit business for the Company or for |
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| personal gains of
the employee is fundamentally inconsistent with business codes of the |
|
| Company. |
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| 7. The Company believes in community
development without political affiliations with any person or |
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| group of persons
working for gains. We contribute our resources for a better environment with
an |
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| unprejudiced
approach. Within our mills our policies gear towards unbiased employees |
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| betterment. |
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| We have reviewed
the Statement of Compliance with the best practices contained in the Code of |
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| Corporate
Governance for the year ended September 30, 2003 prepared by the Board of
Directors of |
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| The Burewala
Textile Mills Limited, to comply with the Listing Regulation No. 37 and
Chapter XIII of the |
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| Karachi and Lahore
Stock Exchanges respectively where the Company is listed. |
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| The responsibility
for compliance with the Code of Corporate Governance is that of the Board of
Directors |
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| of the Company. Our
responsibility is to review, to the extent where such compliance can be
objectively |
|
| verified, whether
the Statement of Compliance reflects the status of the Company's compliance
with the |
|
| provisions of the
Code of Corporate Governance and report if it does not. A review is limited
primarily to |
|
| the inquiries of
the Company personnel and review of various documents prepared by the Company
to |
|
| comply with the
Code. |
|
| As part of our
audit of financial statements we are required to obtain an understanding of
the accounting |
|
| and internal
control systems sufficient to plan the audit and develop an effective audit
approach. We have |
|
| not carried out any
special review of the internal control system to enable us to express an
opinion as to |
|
| whether the Board's
statement on internal control covers all controls and the effectiveness of
such |
|
| internal controls. |
|
| The Board is stated
to be in the process of revision and approval of significant policies and
arranging |
|
| orientation courses
for Directors. |
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| Based on our review
except for the matters noted in the previous paragraph, nothing has come to
our |
|
| attention which
causes us to believe that the Statement of Compliance does not appropriately
reflect the |
|
| Company's
compliance, in all material respects, with the best practices contained in
the Code of |
|
| Corporate
Governance, as applicable to the Company for the year ended September 30,
2003. |
|
|
| The Board has
appointed a "head of internal audit function" who is conversant
with the policies and |
|
| procedures of the
Company and is involved in the internal audit function on a full time basis. |
|
| The statutory
auditors of the Company have confirmed that they have been given a satisfactory |
|
| rating under the
Quality Control Review programme of the Institute of Chartered Accountants of |
|
| Pakistan, that they
or any of the partners of the firm, their spouses are in compliance with |
|
| International
Federation of Accountants (IFAC) guidelines on code of ethics as adopted by
Institute |
|
| of Chartered
Accountants of Pakistan. |
|
| The statutory
auditors or the persons associated with them have not been appointed to provide |
|
| other services
except in accordance with the listing regulations and the auditors have
confirmed that |
|
| they have observed
IFAC guidelines in this regard. |
|
| The Company has
fully complied with the best practices on Transfer Pricing as contained in
the |
|
| Listing Regulation
No. 38 of the Karachi Stock Exchange. |
|
| We confirm that the
efforts are being made by the Company to become fully compliant with all |
|
| material principles
contained in the Code of Corporate Governance by the end of next accounting |
|
| year. |
|
|
| BALANCE SHEET AS AT
SEPTEMBER 30, 2003 |
|
|
|
|
|
2003 |
2002 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
(Restated) |
|
| CAPITAL AND
LIABILITIES |
|
|
|
| Share Capital and
Reserves |
|
|
|
| Share Capital: |
|
|
|
|
| Authorized |
|
|
3 |
150,000,000 |
150,000,000 |
|
| Issued, subscribed
and fully paid up |
|
4 |
73,074,050 |
73,074,050 |
|
| Reserves |
|
|
5 |
244,741,688 |
244,741,688 |
|
|
|
|
317,815,738 |
317,815,738 |
|
| Un-appropriated
Profit |
|
|
61,099,860 |
37,821,844 |
|
|
|
|
378,915,598 |
355,637,582 |
|
| Fair-value reserve
on Investments |
|
6 |
1,199,285,530 |
400,529,333 |
|
|
|
|
1,578,201,128 |
756,166,915 |
|
| Obligations Under
Finance Lease |
|
|
167,583 |
|
| Deferred
Liabilities: |
|
8 |
|
|
| Deferred taxation |
|
|
1,453,189 |
23,000,000 |
|
| Provision for
gratuity |
|
|
57,358,685 |
54,415,203 |
|
|
|
|
58,811,874 |
77,415,203 |
|
| Current Liabilities: |
|
|
|
| Current portion of
obligations under finance lease |
7 |
167,584 |
333,833 |
|
| Creditors, accrued
charges and other liabilities |
9 |
24,209,190 |
26,060,357 |
|
| Provision for
taxation |
|
10 |
6,070,143 |
12,563,354 |
|
| Proposed dividend
on ordinary shares |
|
29,229,620 |
29,229,620 |
|
|
|
|
59,676,537 |
68,187,164 |
|
| Contingencies and
Commitments |
|
11 |
|
|
|
|
|
1,696,689,539 |
901,936,865 |
|
|
| NOTICE |
|
| We have audited the
annexed Balance Sheet of The Burewala Textile Mills Limited as at September |
|
| 30, 2003 and the
related Profit and Loss Account, Cash Flow Statement, and Statement of
Changes in |
|
| Equity 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. |
|
| It is the
responsibility of the company's management to establish and maintain a system
of internal |
|
| control, and
prepare and present the above said statements in conformity with the approved
accounting |
|
| standards and the
requirements of the Companies Ordinance, 1984. Our responsibility is to
express an |
|
| opinion on these
statements based on our audit. |
|
| We conducted our
audit in accordance with the auditing standards as applicable in Pakistan.
These |
|
| standards require
that we plan and perform the audit to obtain reasonable assurance about
whether the |
|
| above said
statements are free of any material misstatement. An audit includes
examining, on a test |
|
| basis, evidence
supporting the amounts and disclosures in the above said statements. An audit
also |
|
| includes assessing
the accounting policies and significant estimates made by management, as well
as, |
|
| evaluating the
overall presentation of the above said statements. We believe that our audit
provides a |
|
| reasonable basis
for our opinion and, after due verification, we report that: |
|
|
| a) in our opinion, proper books of
accounts 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,
except for changes in notes 2.4 and 2. 7 with which we concur; |
|
| 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, cash flow statement and statement of changes
in equity |
|
| together
with the notes forming part thereof conform with approved accounting
standards as |
|
| applicable
in Pakistan, and, 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 September 30, 2003 and of the profit, its cash flows and changes in
equity for the year |
|
| then ended; and |
|
| d) in our opinion Zakat deductible at
source under the Zakat and Ushr Ordinance, 1980 (XVIII of |
|
| 1980),
was deducted by the company and deposited in the central zakat fund
established under |
|
| section
7 of that Ordinance. |
|
|
| FOR THE YEAR ENDED
SEPTEMBER 30, 2003 |
|
|
|
|
|
2003 |
2002 |
|
|
|
Note |
Rupees |
Rupees |
|
| Sales |
|
|
20 |
391,622,173 |
390,124,304 |
|
| Cost of |
|
21 |
-386,108,656 |
-385,078,212 |
|
| Profit |
|
|
|
5,513,517 |
5,046,092 |
|
| Operating |
|
|
|
|
| Administrative and
general |
|
22 |
24,724,513 |
29,260,625 |
|
| Selling and
distribution |
|
23 |
6,138,468 |
5,985,795 |
|
|
|
|
-30,862,981 |
-35,246,420 |
|
| Operating (Loss) |
|
|
|
-25,349,464 |
-30,200,328 |
|
| Other income |
|
|
24 |
65,812,356 |
60,372,036 |
|
| Financial and other
charges |
|
25 |
-353,796 |
-2,006,821 |
|
| Extra ordinary
charges |
|
26 |
-4,248,271 |
- |
|
| Profit Before
Taxation |
|
|
35,860,825 |
28,164,887 |
|
| Taxation |
|
|
27 |
16,646,811 |
-2,500,000 |
|
| Profit After
Taxation |
|
|
52,507,636 |
25,664,887 |
|
| Un-appropriated |
Profit Brought |
|
|
37,821,844 |
41,386,577 |
|
| Profit available for |
appropriation |
|
|
90,329,480 |
67,051,464 |
|
| Appropriations: |
|
|
|
|
| Proposed dividend
on ordinary shares @ |
|
29,229,620 |
29,229,620 |
|
| Rs. 4.00 (2002: Rs.
4.00) per share |
|
|
29,229,620 |
29,229,620 |
|
|
|
|
61,099,860 |
37,821,844 |
|
| Un-appropriated
Profit Carried Forward |
|
7.19 |
3.51 |
|
| Earnings Per Share |
ire - Basic |
|
28 |
|
|
| BALANCE SHEET AS AT
SEPTEMBER 30, 2003 |
|
|
|
|
|
2003 |
2002 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
(Restated) |
|
| PROPERTY AND ASSETS |
|
|
|
| Operating Fixed
Assets |
|
12 |
101,036,914 |
110,734,883 |
|
| Long Term
Investments |
|
13 |
1,263,924,792 |
465,168,595 |
|
| Long Term Deposits |
|
|
1,820,987 |
1,820,987 |
|
| Current Assets: |
|
|
|
| Stores, spare parts
and loose tools |
|
14 |
17,661,641 |
17,789,785 |
|
| Stock in trade |
|
15 |
119,765,032 |
169,922,625 |
|
| Short term
investment |
|
16 |
23,836,535 |
- |
|
| Book debts |
|
17 |
38,178,000 |
44,488,865 |
|
| Advances, deposits,
prepayments and |
|
|
| other receivables |
|
18 |
21,890,742 |
4,853,858 |
|
| Cash and bank
balances |
|
19 |
108,574,896 |
87,157,267 |
|
|
|
|
329,906,846 |
324,212,400 |
|
|
| STATEMENT OF
CHANGES IN EQUITY |
|
| FOR THE YEAR ENDED
SEPTEMBER 30, 2003 |
|
|
|
CAPITAL |
RESERVES |
REVENUE |
RESERVES |
Un- |
|
|
Share Capital |
Share Premium |
Capital Reserves |
General Reserves |
Exchange Equalization Reserve |
appropriated Profit |
Fair Value Reserves |
Total |
| Balance as on
October 01 ,2001 |
73,074,050 |
89,535,125 |
6,563 |
154,200,000 |
1,000,000 |
41,386,577 |
|
359,202,315 |
| Profit for the year
after taxation |
|
- |
|
- |
25,664,887 |
|
25,664,887 |
| Final dividend |
|
- |
|
- |
|
-29,229,620 |
|
-29,229,620 |
| Effect of adoption
of IAS -39 |
|
| (Financial
Instruments: Recognition and measurement) |
|
| Surplus on
revaluation of investment |
|
- |
|
- |
400,529,333 |
400,529,333 |
| Balance as on
September 30,2002 |
73,074,050 |
89,535,125 |
6,563 |
154,200,000 |
1,000,000 |
37,821,844 |
400,529,333 |
756,166,915 |
| Profit for the year
after taxation |
- |
- |
- |
- |
|
52,507,636 |
|
52,507,636 |
| Transfer |
|
1,000,000 |
-1,000,000 |
- |
- |
- |
| Final dividend |
|
-29,229,620 |
- |
-29,229,620 |
| Effect of adoption
of IAS - 39 |
|
| (Financial
Instruments: Recognition and measurement) |
|
| Surplus on
revaluation of investment |
• |
• |
• |
|
- |
|
798,756,197 |
798,756,197 |
| Balance as on
September 30,2003 |
73,074,050 |
89,535,125 |
6,563 |
155,200,000 |
- |
61,099,860 |
1,199,285,530 |
1,578,201,128 |
|
| FOR THE YEAR ENDED
SEPTEMBER 30, 2003 |
|
|
|
|
|
2003 |
2002 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
(Restated) |
|
|
|
|
|
| Cash generated from
operations |
|
29 |
46,678,570 |
3,314,904 |
|
| Less: Payments: |
|
|
|
|
| - Income tax |
|
|
-11,393,211 |
-16,232,876 |
|
| - Staff gratuity |
|
|
-6,319,555 |
-7,197,432 |
|
| - Extra-ordinary charges |
|
|
-4,248,271 |
- |
|
|
|
|
-21,961,037 |
-23,430,308 |
|
| Net cash inflow /
(outflow) from operating activities |
|
24,717,533 |
-20,115,404 |
|
| CASH FLOW ACTIVITIES |
|
|
|
| Fixed capital
expenditure |
|
|
-329,880 |
-2,935,442 |
|
| Purchase of short
term investments |
|
|
-69,944,100 |
- |
|
| Proceed from sale
of short term investments |
|
48,553,110 |
- |
|
| Dividend received |
|
|
47,510,008 |
73,902,723 |
|
| Sale proceeds of
fixed assets |
|
|
67,550 |
138,000 |
|
| Net cash inflow
from investing activities |
|
25,856,688 |
71,105,281 |
