| GHANDARA NISSAN LIMITED |
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| ANNUAL REPORT 2003 |
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| Company Profile |
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| Board Of Directors |
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| Mr. Raza Kuli Khan
Khattak
Chairman |
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| Lt. Gen. (Retd) All
Kuli Khan Khattak
Chief Executive |
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| Mr. Ahmed Kuli Khan
Khattak |
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| Mr. Jamil A. Shah |
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| Mr. Mushtaq Ahmed
Khan (FCA) |
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| Ch. Sher Mohammad |
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| Brig. (Retd)Tariq
Khalil |
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| Mr. Muhammad Zia |
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| Mr. Anis Wahab
Zubari
Nominee of NIT |
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| Mr. Tasnimul Haq
Farooqui
Nominee of Creditors |
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| Company Secretary |
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| Mr. Mohammad Saleem
Baig |
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| Registered Office |
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| Ghandhara House |
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| 109/2, Clifton
Karachi. |
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| Banker of The
Company |
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| Allied Bank of
Pakistan Limited |
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| The Hong Kong &
Shanghai Banking Corp. |
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| United Bank Limited |
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| American Express
Bank Limited |
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| The Muslim
Commercial Bank Limited |
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| The Bank of Tokyo -
Mistubishi Limited |
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| Askari Commercial
Bank |
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| Bank Al-Falah |
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| National Bank of
Pakistan |
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| Union Bank Limited |
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| Legal & Tax
Advisor |
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| Shaukat Law
Associates |
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| 217-218, Central
Hotel Annexe |
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| Abdullah Haroon
Road, Karachi |
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| Auditors |
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| M/s. Hameed
Chaudhri & Co.
M/s. Muniff Ziauddin & Co. |
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| Chartered
Accountants
Chartered Accountants |
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| 5th Floor, Karachi
Chambers
5, Victoria Chambers |
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| Hasrat Mohani
Road
Abdullah Haroon Road, |
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| Karachi
Karachi |
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| Share Registrar |
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| T.H.K. Associates
(Pvt) Ltd. |
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| Ground Floor,
Sheikh Sultan |
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| Trust Building No.
2, |
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| Beaumont Road,
Karachi. |
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| The number of Board
of Directors' Meetings held During |
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| the year and
Attendance of each Director |
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| During the year
four Board meetings were held for consideration and approval of accounts |
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| alongwith other
matters of significant importance. Attendance were as follows:- |
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| Name |
|
Attendance |
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| Mr. Raza Kuli Khan
Khattak |
|
2 |
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| Lt. Gen. (Retd) AN
Kuli Khan Khattak |
4 |
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| Mr. Ahmed Kuli Khan
Khattak |
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4 |
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| Mr. Jamil A. Shah |
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3 |
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| Brig. (Retd) Tariq
Khalil |
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3 |
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| Mr. Mushtaq Ahmed
Khan (FCA) |
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4 |
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| Ch. Sher Mohammad |
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4 |
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| Mr. Anis Wahab
Zubari |
|
3 |
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| Mr. Muhammad Zia |
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3 |
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| Mr. Tasnimul Haq
Farooqui |
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1 |
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| Holding Company |
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| Ghandhara Nissan
Limited is a subsidiary of Bibojee Services (Pvt.) Limited. |
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| Key Operating &
Financial data for the Last Six Years |
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| Past six years key
Operating and Financial Data is annexed. |
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| Pattern of
Shareholding |
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| The Pattern of
Shareholding of the Company is annexed. |
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| Auditors |
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| The present
Auditors M/s. Hameed Chaudhri & Co., Chartered Accountants and M/s.
Muniff |
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| Ziauddin & Co.,
Chartered Accountants, retire and being eligible, offer themselves for |
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| reappointment. |
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| Chairman's Review |
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| 1 am pleased to
welcome you to the 21st Annual General Meeting of shareholders of the |
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| company and to
present you the Annual Report for the year ended 30th June, 2003. |
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| Economy |
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| By the grace of
Almighty ALLAH the condition of Pakistan's economy has improved and |
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| the production and
sales of the Auto Sector rose by almost 50% and 43% respectively |
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| during the
financial year ended 30th June 2003. This growth was facilitated by the
increased |
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| liquidity with
banks, attractive Car financing Schemes introduced by Financial Institutions, |
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| foreign remittances
from overseas Pakistanis and new models introduced by the Car |
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| Assemblers. |
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| Revival Plan |
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| The unusual growth
in the Automobile Industry alongwith the continuing efforts and with |
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| the Grace of
Almighty ALLAH the management of Ghandhara Nissan Limited has |
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| successfully
re-structured the Company's debts through a settlement agreement with the |
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| existing Lease
Creditors and a Bank. We are grateful to PKICL, PLHC, NDLC, ORIX, Security |
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| Leasing, First DDL
Modaraba and Hongkong Shanghai Bank who have very kindly agreed |
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| to the Management's
Debts Settlement proposal as a result of which their entire dues |
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| have been settled
at Rs. 226.372 millions. |
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| We are also in the
final stages of arranging a long term financing arrangement with a |
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| Commercial Bank at
a very competitive markup rate. |
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| (f) in our opinion, proper books of
account have been kept by the company as required |
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| by the Companies
Ordinance, 1984; |
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| (g) in our opinion |
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| (i) the balance sheet and profit and loss
account together with the notes thereon |
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| have been drawn up
in conformity with the Companies Ordinance, 1984, |
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| and are in
agreement with the books of account and are further in |
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| accordance with
accounting policies consistently applied except for a change |
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| indicated in note
no 5.01 with which we concur. |
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| (ii) the expenditure incurred during the
year was for the purpose of the |
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| company's business;
and |
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| (iii) the business conducted, investments
made and the expenditure incurred |
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| during the year
were in accordance with the objects of the company; |
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| (h) except for the financial effect of the
matters referred to in paras (a), (b), (c), (d) |
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| and (e) above, in
our opinion and to the best of our information and according to |
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| the explanations
given to us, the balance sheet, profit and loss account, cash flow |
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| statement and
statement of changes in equity together with the notes forming |
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| part thereof
conform with approved accounting standards as applicable in Pakistan, |
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| and give the
information required by the Companies Ordinance, 1984, in the manner |
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| so required and
respectively give a true and fair view of the state of the company's |
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| affairs as at 30th
June 2003 and of the profit, its cash flows and changes in equity |
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| for the year then
ended; and |
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| (i) in our opinion no Zakat was
deductible at source under the Zakat and Ushr |
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| Ordinance, 1980. |
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| Without qualifying
our report we draw attention to the fact that the accompanying financial |
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| statements have
been prepared assuming that the Company will continue as a going |
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| concern. As
discussed in note 2 to the financial statements, although the company has |
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| earned profit in
the current year but accumulated loss stood at Rs. 622.985 millions as at |
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| 30th June 2003 and
the Company's total liabilities as on that date exceeded its total assets |
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| by Rs. 364.450
millions. Management's plans in regard to these matters are also described |
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| in note 2. The
financial statements do not include any adjustments that might result form |
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| the outcome of this
uncertainty. |
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| Director's Report |
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| The Directors of
your Company are presenting their Report together with the Audited |
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| Accounts and
Auditors' Report thereon for the year ended 30th June 2003. |
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|
2003 |
2002 |
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|
(Rupees in '000') |
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| Profit / (Loss)
Before Taxation |
|
294,933 |
-111,748 |
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| Taxation |
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| Current year |
|
-528 |
-400 |
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| Deferred |
|
3,708 |
- |
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|
3,108 |
-400 |
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| Profit / (Loss)
After Taxation |
|
298,113 |
-112,148 |
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| Accumulated Loss |
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|
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| Brought Forward |
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-978,713 |
-866,565 |
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| Incremental
Depreciation |
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57,615 |
- |
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|
-921,098 |
-866,565 |
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| Accumulated Loss |
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| Carried Forward |
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-622,985 |
-978,713 |
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| Loss Per Share |
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19.87 |
-7.48 |
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|
Note |
2003 |
2002 |
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(Rupees in '000') |
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| NET SALES |
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28 |
101,437 |
88,456 |
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| COST OF SALES |
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29 |
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| Cost including
fixed overheads |
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|
-77,341 |
-87,796 |
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| Unabsorbed fixed
overheads |
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|
-54,141 |
-80,146 |
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|
|
-131,482 |
-167,942 |
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| GROSS LOSS |
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|
-30,045 |
-79,486 |
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| OPERATING EXPENSES |
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| Administrative and
selling expenses |
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30 |
-11,416 |
-12,742 |
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| OPERATING LOSS |
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|
-41,461 |
-92,228 |
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| SHARE OF PROFIT /
(LOSS) OF ASSOCIATED COMPANY |
31 |
62,311 |
-1,315 |
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| MISCELLANEOUS
INCOME |
|
32 |
75 |
1,039 |
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|
62,386 |
-276 |
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|
20,925 |
-92,504 |
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| OTHERS |
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| FINANCIAL EXPENSES |
|
33 |
-116,577 |
-86,799 |
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| LIABILITIES WRITTEN
BACK |
|
34 |
390,585 |
67,555 |
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|
|
274,008 |
-19,244 |
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| PROFIT / (LOSS) FOR
THE YEAR BEFORE TAXATION |
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|
294,933 |
-111,748 |
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| TAXATION |
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| Current |
|
35 |
-528 |
-400 |
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| Deferred |
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|
3,708 |
- |
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|
3,180 |
-400 |
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| PROFIT / (LOSS) FOR
THE YEAR AFTER TAXATION |
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|
298,113 |
-112,148 |
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| ACCUMULATED LOSS
BROUGHT FORWARD |
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|
-978,713 |
-866,565 |
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| ADD: INCREMENTAL
DEPRECIATION ON REVALUED |
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| FIXED ASSETS |
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|
57,615 |
- |
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|
|
|
-921,098 |
-866,565 |
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| ACCUMULATED LOSS
CARRIED FORWARD |
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|
|
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| TO BALANCE SHEET |
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|
-622,985 |
-978,713 |
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| BASIC EARNING /
(LOSS) PER SHARE |
|
36 |
19.87 |
-7.48 |
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|
Share |
Share |
Accumulated |
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|
Capital |
Premium |
Loss |
Total |
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|
Rupees in thousand |
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| YEAR ENDED 30™ JUNE
2002 |
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| Balance as at 1st
July 2001 |
|
150,000 |
40,000 |
-866,565 |
-676,565 |
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| Loss for the year |
|
- |
- |
-112,148 |
-112,148 |
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| Balance as at 30th
June 2002 |
|
150,000 |
40,000 |
-978,713 |
-788,713 |
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| YEAR ENDED 30TH
JUNE 2003 |
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| Balance as at 1st
July 2002 |
|
150,000 |
40,000 |
-978,713 |
-788,713 |
|
| Transferred from
surplus on revaluation |
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|
| of Fixed Assets on
account of incremental |
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|
| depreciation
charged in prior year |
|
- |
- |
50,730 . |
50,730 |
|
|
1 50,000 |
40,000 |
-927,983 |
-737,983 |
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| Profit for the year |
|
- |
- |
298,113 |
298,113 |
|
| Transferred from
surplus on revaluation |
|
|
| of Fixed Assets on
account of incremental |
|
|
| depreciation for
the year |
|
- |
- |
6,885 |
6,885 |
|
| Balance as at 30th
June 2003 |
|
150,000 |
40,000 |
-622,985 |
-432,985 |
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| AUDITORS' REPORT TO
MEMBERS |
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| We have audited the
annexed balance sheet of GHANDHARA NISSAN LIMITED as at |
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| 30th June 2003 and
the related profit and loss account, cash flow statement and statement |
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| of changes in
equity together with the notes forming part thereof, for the year then ended |
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| and we state that
we have obtained all the information and explanations which, to the |
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| best of our
knowledge and belief, were necessary for the purpose of our audit. |
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| It is the
responsibility of the company's management to establish and maintain a system
of |
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| internal control,
and prepare and present the above said statements in conformity with |
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| the approved
accounting standards and the requirements of the Companies Ordinance, |
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| 1984. Our
responsibility is to express an opinion on these statements based on our
audit. |
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| We conducted our
audit in accordance with auditing standards as applicable in Pakistan. |
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| These standards
require that we plan and perform the audit to obtain reasonable assurance |
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| about whether the
above said statements are free of any material misstatement. An audit |
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| includes examining,
on a test basis, evidence supporting the amounts and disclosures in |
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| the above said
statements. An audit also includes assessing the accounting policies and |
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| significant
estimates made by management, as well as, evaluating the overall presentation |
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| of the above said
statements. We believe that our audit provides a reasonable basis for |
|
| our opinion and,
after due verification, we report that: |
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| (a) as explained in note 17 to the
financial statements, the subordinated loan of |
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| Rs. 150 millions
from the contracting company remained unconfirmed at the year end; |
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| (b) as more fully explained in note
18, 19 and 34 to the financial
statement the |
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| management has
finalized a settlement agreement with lease creditors and a |
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| Commercial Bank on
17th October 2003. Under the agreement sponsors have paid |
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| Rs. 226.372
millions to the creditors in settlement of dues amounting to Rs., 616.957 |
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| millions.
Consequent upon this settlement remission of principal liability and waiver |
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| of interest
amounting to Rs. 390.585 millions has been accounted for in the accounts |
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| for the year ended
30th June 2003, although concluded in the period subsequent |
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| to the balance
sheet date. |
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| (c) as explained in note 18 and 19 to the financial statements. The
settlement |
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| agreement has been
complied with however, we have not
received direct |
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| confirmations from
leasing companies / financial institutions in respect of their |
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| outstanding
balances at the year end. However, the management has provided us |
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| with nil balance
confirmation certificates dated 1st December 2003. |
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| (d) as explained in note 23 to the
financial statements, Allied Bank of Pakistan Limited |
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| has not confirmed
their outstanding balances due from the company in respect of |
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| running finance and
mark-up accrued thereon; |
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| (e) as explained in note 45 to the
financial statement the management has not provided |
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| workers profit
participation fund and workers welfare fund on the waiver of interest |
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| and principal in
these accounts. |
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| 3. STATEMENT OF COMPLIANCE |
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| These financial
statements have been prepared in accordance with approved |
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| accounting
standards as applicable in Pakistan and the requirements of Companies |
|
| Ordinance, 1984.
Approved accounting standards comprise of such International |
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| Accounting
Standards as notified under the provisions of the Companies Ordinance, |
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| 1984. Wherever, the
requirements of the Companies Ordinance, 1984 or directives |
|
| issued by the
Securities & Exchange Commission of Pakistan (SECP) differ with the |
|
| requirements of these standards,
the requirements of Companies Ordinance, 1984 |
|
| or the requirements
of the said directives take the precedence. |
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| 4. BASIS OF PREPARATION |
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| The financial
statements are presented in Rupees, rounded to nearest thousand. |
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| The financial
statements have been prepared on historical cost basis except for |
|
| revaluation of
certain fixed assets. The principal accounting policies adopted are |
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| set out below: |
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| 5. SIGNIFICANT ACCOUNTING POLICIES |
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| 5.01 Change in accounting policy on adoption
of IAS 12 Income Taxes (Revised 2000) |
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| During the year the
company adopted International Accounting 12- Income |
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| Taxes (revised
2000) ( IAS 12) which has become effective for all periods |
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| beginning on or
after 1 January, 2002 as notified by the Institute of Chartered |
|
| Accountants of
Pakistan. Accordingly deferred tax is now recognised on all |
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| temporary
differences at the balance sheet date between the tax bases of |
|
| assets and
liabilities and their carrying amounts for financial reporting |
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| purposes and unused
tax losses. Previously the company did not account for |
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| deferred tax assets
as a matter of prudence and deferred tax liabilities if |
|
| these were not
likely to reverse in the foreseeable future. In accordance the. |
|
| allowed alternative
treatment prescribed in IAS 8 " Net Profit and Loss for |
|
| the period,
Fundamental Errors and Changes in the Accounting Policies:, the |
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| above change in
police has been applied prospectively and the comparative |
|
| information has not
been restated. Had the accounting policy not been |
|
| changed the profit
after taxation for the year would have been lower by |
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| Rs. 3.708 millions. |
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| 5.02 Employee Benefits |
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| Defined Benefit
Plan |
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| The Company
operates an unfunded gratuity scheme for all employees who |
|
| have completed
their minimum qualifying period of service with the company. |
|
| Under the scheme
gratuity is payable on the basis of last drawn basic salary |
|
| The depreciation
method and useful lives of item of fixed assets are reviewed |
|
| periodically and
altered if circumstances or
expectation have changed |
|
| significantly. Any
change is accounted for as change in accounting estimate by |
|
| changing the
depreciation charge for the current and future periods. The |
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| estimate for
depreciation on fixed assets has been changed from the straight |
|
| line to reducing
balance method. The management feel that the reducing |
|
| balance method is
more appropriate in view of remaining useful life of fixed |
|
| assets and their
utility. Had there been no change in the accounting estimate, |
|
| the profit for the
year after taxation would have been lower by Rs. 20.405 millions. |
|
| and accumulated
loss would have been higher by Rs. 20.405 millions. |
|
| Where the carrying
amount of an asset is greater than its estimated recoverable |
|
| amount, it is
written down immediately to its recoverable amount. |
|
| Normal repairs and
maintenance are charged to expenses as and when incurred |
|
| Major renewals and
replacements are capitalized. |
|
| Leased |
|
| Assets held under
finance leases are recognized as
assets of the Company at |
|
| the lower of
present value of minimum lease payments and fair value at the |
|
| date of
acquisition. The corresponding liability to the lessor is included in the |
|
| balance sheet as a
finance lease obligation. Finance costs, which represent the |
|
| difference between
the total leasing commitments and the fair value of the |
|
| assets acquired,
are charged to the income statement over the term of the |
|
| relevant lease so
as to produce a constant periodic rate of charge on the |
|
| remaining balance
of the obligations for each accounting period. |
|
| Depreciation is
charged to income applying the reducing balance method at the |
|
| rates indicated in
note 6. |
|
| 5.05 Investments |
|
| Investment in
associated companies |
|
| As per IAS 28,
Investment in Associates, associated companies are those |
|
| enterprises in
which the Company has significant influence, but not control, |
|
| over the financial
and operating policies. |
|
| Investment in
associated companies is recorded applying the equity method of |
|
| accounting in
accordance with requirements of IAS 28. |
|
| 5.06 Stores, spares and tools |
|
| Stores, spares and
tools are stated at the lower of cost and net realisable value. |
|
| The cost of
inventory is based on weighted average cost. Item in transit are |
|
| stated at cost
accumulated to balance sheet date. |
|
|
| BALANCE SHEET |
|
|
| AS AT 30™ JUNE 2003 |
|
|
|
|
Note |
2003 |
2002 |
|
|
|
|
(Rupees in '000') |
|
| ASSETS |
|
|
|
| NON CURRENT ASSETS |
|
|
|
| Operating Fixed
Assets |
|
6 |
387,491 |
435,521 |
|
| Long Term
Investment |
|
7 |
68,520 |
43,718 |
|
| Long Term Deposits |
|
8 |
594 |
2,904 |
|
| CURRENT ASSETS |
|
|
|
|
| Stores, spares and
loose tools |
|
9 |
24,574 |
24,733 |
|
| Stock-in-trade |
|
10 |
47,465 |
78,027 |
|
| Trade debtors |
|
11 |
995 |
5,877 |
|
| Advances, deposits,
prepayments and other receivables |
|
12 |
15,191 |
17,955 |
|
| Bank balances |
|
13 |
2,295 |
4,724 |
|
|
|
|
90,520 |
131,316 |
|
|
|
|
547,125 |
613,459 |
|
| EQUITY AND
LIABILITIES |
|
|
|
|
| CAPITAL AND
RESERVES |
|
|
|
|
| Share capital |
|
14 |
150,000 |
150,000 |
|
| Reserves |
|
15 |
40,000 |
40,000 |
|
| Accumulated loss |
|
|
-622,985 |
-978,713 |
|
| Shareholders'
Equity |
|
|
-432,985 |
-788,713 |
|
| SURPLUS ON
REVALUATION OF FIXED ASSETS |
|
16 |
68,535 |
200,731 |
|
| NON CURRENT
LIABILITIES |
|
|
|
|
| Subordinate Loans |
|
17 |
254,389 |
203,578 |
|
| Long Term Loan |
|
18 |
- |
73,259 |
|
| Obligation under
Finance Lease |
|
19 |
- |
220,087 |
|
| Engineering and
Technical fee payable |
|
20 |
- |
51,673 |
|
| Long Term Deposits |
|
21 |
15,611 |
20,111 |
|
| Deferred Liability |
|
22 |
44,131 |
9,255 |
|
| CURRENT LIABILITIES |
|
|
|
|
| Finance under
markup arrangements |
|
23 |
101,653 |
146,041 |
|
| Engineering and
Technical fee payable |
|
20 |
49,385 |
- |
|
| Current maturity of
long term liabilities |
|
24 |
192,257 |
79,415 |
|
| Creditors, accrued
expenses, provisions and other liabilities |
25 |
251,515 |
395,916 |
|
| Provision for
taxation |
|
26 |
2,634 |
2,106 |
|
|
|
|
597,444 |
623,478 |
|
| CONTINGENT
LIABILITIES & COMMITMENTS |
|
27 |
|
|
|
|
|
547,125 |
613,459 |
|
| The annexed notes
form an integral part of these accounts. |
|
|
| Provision |
|
| Provision are
recognized when the Company has a present legal or constructive |
|
| obligation as a
result of past events, it is probable that an outflow of resources |
|
| will be required to
settle the obligation, and a reliable estimate of the amount |
|
| can be made. |
|
| Warranty |
|
| The Company
recognises the estimated liability to repair or replace products |
|
| still under
warranty at the balance sheet date to the extent of non-reimbursable |
|
| portion from the
principal. |
|
| Financial
Instruments |
|
| Financial assets |
|
| The Company's
principal financial assets are cash & bank balances, trade debtors, |
|
| advances, deposits
and other receivables. |
|
| Trade debtors |
|
| Trade debtors are
stated at their nominal value as reduced by appropriate |
|
| allowances for
estimated irrecoverable amounts, if any. |
|
| Financial
liabilities |
|
| Financial
liabilities are classified according to the substance of the contractual |
|
| arrangements
entered into. Significant financial liabilities include subordinate |
|
| loan, long term
loans, finance lease obligations, engineering and technical fee, |
|
| short term
financing, creditors & other liabilities and proposed dividend. |
|
| Share Capital |
|
| Ordinary shares are
classified as equity. Dividend on ordinary shares are |
|
| recognised in
equity in the period to which they are related. |
|
| Cash and cash
equivalents |
|
| Cash and cash
equivalents are carried in the balance sheet at cost. For the |
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