ICC Textile Limited - Anual Reports 2003

ICC Textiles Limited

Annual Reports 2003

CONTENTS

COMPANY INFORMATION

Board of Directors

Mr. A. Rehman

Chairman

Mr. Shafiq A. Siddiqi

Chief Executive

Mr. Javaid S. Siddiqi

Mr. Usman Haq

Company Secretary

Mr. Tahir Rehman

Mrs. Shahima Rehman

Mrs. Mehmoona Luqman

Mrs. Attiya Zaheer

Audit Committee

Mr. Javaid S. Siddiqi

Chairman

Mr. Tahir Rehman

Member

Mrs. Shahima Rehman

Member

Chief Financial Officer

Mr. Javed Rashid

Auditors

M/s Anjum Asim Shahid 1

Rahman

Chartered Accountants

Bankers

Muslim Commercial Bank Ltd.

ABN Amro Bank.

Citibank N.A.

Faysal Bank Ltd.

United Bank Ltd.

Registered Office

242-A, Anand Road,

Upper Mall, Lahore.

Factory

32-K.M, Lahore-Multan Road, Sunder

Distt. Lahore.

The Year under Review

After the negative implications of 9/11 global tragedy on last yearperformance, the year under review

was affected by the following contributory factors:

There was a general slowdown in demand in the first half due to the USled Iraq war.

The worldwide scare of the SARS epidemic created a major panic, which

resulted in reduced buying by the west from the Far Eastern countries including

China. Hence, there was a negative impact on fabric sales from Pakistan

to the Far Eastern countries, which are ultimately destined for the European

and American markets.

The average Pakistan rupee exchange rate during the year against the US$ strengthened by

3.3% from 59.75 to 57.80 as compared to preceding year.

The speculation of international shortage of cotton coupled with reduced estimates of Pakistan

cotton has jeopardized all aspects of the textile trade. The erratic movement of the international

cotton price during the year resulted in extra ordinary increase in the domestic yarn

prices, thereby adversely affecting the financial viability of Pakistan fabric.

The first surge was witnessed in end February 2003, while the impact of the

second surge in October 2003 is still prevailing. The cotton and yarn prices

have abruptly escalated by 30 - 35%.

The continuing build up of the country fnrpign nurrfinr.y reserves has helped in

maintaining the downward trend in the mark up rates. Consequently, our

financial costs for the year have reduced from Rs 31.916 million to Rs 18.095

million, which as a percentage of sales has come down from 6.53% to 3.10%

DIRECTORSREPORT TO THE MEMBERS

On behalf of the board of directors, I take pleasure to present the Annual Report alongwith

the Audited Accounts of the company pertaining to the financial year ending on September

30, 2003.

Financial Highlights

The company earned a pretax profit of Rs. 6.919 million on total sales of Rs. 583.163 million

as against a pretax profit of Rs. 9.951 million on total sales of Rs. 488.555 million in the

preceding year. The total sales increased by 19%, however, the profitability was reduced

due to a higher increase in raw material cost.

Total Sales

Rs.

583,163,457

Gross Profit

Rs.

67,424,947

Operating Profit

Rs.

19,906,487

Profit before tax

Rs.

6,919,334

Net Profit after tax

Rs.

2,511,725

Unappr. Profit brought forward

Rs.

52,890,426

Total Accumulated Profit

Rs.

55,402,151

The original PICIC long term project loan was fully repaid as per schedule thus creating a

liquidity cushion of about Rs 30 million per year in subsequent periods. The equity of the

company has been gradually rising and the book value of the company share stood at Rs

15.54 on September 30, 2003.

Books of Accounts

Proper books of accounts have been maintained by the Company.

Accounting Policies

Appropriate accounting policies have been consistently applied in preparation of financial

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

International Accounting Standards (IAS)

International Accounting Standards, as applicable in Pakistan, have been followed in

preparation of financial statements.

Internal Control System

The system of internal control is sound in design and has been effectively implemented

and monitored.

Going Concern

There are no doubts upon the Companyability to continue as a going concern.

Operating and Financial Data

Key operating and financial data of last six years is annexed herewith.

Staff Retirement Benefits

Value of unfunded gratuity scheme, based on actuarial valuation, at the year end was

Rs. 12.294 million (2002: Rs. 10.667 million).

Board Meetings

During the year, seven meetings of the Board of Directors were held. Attendance by

the Directors were as follows:

Name of Directors

Attendance

I Mr. A. Rehman

2 Mr. Shafiq A. Siddiqi

3 Mr. Javaid S. Siddiqi

4 Mr. Tahir Rehman

5 Mr. Usman Haq

6 Mrs. Shahima Rehman

7 Mrs. Mehmoona Luqman

8 Mrs. Attiya Zaheer

Marketing Strategy & Future Prospects

We are maintaining our diverse marketing

strategy and are continuously making an

effort to search for new international

buyers. The distribution in terms of dollar

volume is as follows:

Europe 44%

Far East 36%

North America 20%

The international fabric market has

gradually started to absorb the increase

in cotton and yarn costs and we are

looking forward to better fabric prices.

Moreover, some dobby fabric contracts

from our regular customers at higher

prices will result in much better results

for the current quarter.

Weaving Expansion

The progress of the weaving expansion project is as follows:

The contract for purchase of brand new Sizing and Warping machines was finalized with

Benninger in July 2003, and accordingly LC was established in august 2003. The machines

have been shipped and are expected to be installed by end January 2004.

The civil works comprising new building for additional yarn storage and the new Sizing and

Warping machines have almost been completed.

Negotiations are underway for finalizing the purchase of 72 high speed airjet looms with

Toyota and Tsudakoma of Japan and Picanol of Belgium.

A medium term loan of five year period for an amount of Rs 70 million was finalized with

ABN Amro Bank at a floating mark up rate of six month T-Bill rate plus 2.15% to finance

the Sizing and Warping machines and partial civil works for the expansion.

Final proposals for the balance long term loan of Rs 205 millions from various banks are being

reviewed.

Corporate and Financial Reporting Framework

In order to follow the SECP code of corporate governance, the following statements are

given: