Azam Textile Mills Limited - Annual Reports 2003

AZAM TEXTILE MILLS LIMITED

Annual Reports 2003

CONTENTS

COMPANY INFORMATION

BOARD OF DIRECTORS

Mr. M. Naseem Saigol

Chairman / Chief Executive

Mr. M. Azam Saigol

Mr. Shahid Sethi

Mr. Muhammad Ilyas Bajwa

Mr. Muhammad Asif Bajwa

Mr. Saeed Mian Ansari

Mr. Shahid Anwar

(NIT Nominee)

AUDITCOMMITTEE

Mr. M. Azam Saigol

Chairman/Member

Mr. Shahid Sethi

Member

Mr. Muhammad Asif Bajwa

Member

COMPANY SECRETARY

Mr. Sultan Ali

CHIEF FINANCIA1 OFFICER

Mr. Muhammad Shamil, ACA

AUDITORS

M/s Hameed Chaudhi i & Co.

Chartered Accountants

BANKERS

Allied Bank of Pakistan Limited

Askari Commercial Bank Limited

Bank Alfalah Limited

Deutsche Bank AG

Faysal Bank Limited

Habib Bank Limited

National Bank of Pakistan

Union Bank Limited

United Bank Limited

REGISTEREDOFFICE

06-Egerton Road, Lahore

Tel: 6306130-9(10 Lines)

Fax 6568699 , E-mail shares@sargois.com

MILLS

51-KM.MultanRoad,

Bhai Pheru, District Kasur

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Seventeenth Annual General Meeting of Shareholders of Azam Textile Mills Limited will

be held on Friday, January 30, 2004 at 10:30 A.M. at 06-Egerton Road, Lahore the Registered Office of the Company to

transact the following business:-

1. To confirm the minutes of Sixteenth Annual General Meeting held on 31 March 2003.

2. To receive and adopt the Annual Audited Accouts for the year ended 30 September 2003 alongwith Directors and

Auditors' Reports thereon.

3. To appoint M/s Manzoor Hussain Mir & Co. Chartered Accountants Lahore as Auditors of the Company to hold

office till the conclusion of the next Annual General Meeting and to fix their remuneration. M/s Hameed Chaudhari

& Co. Chartered Accountants Lahore the retiring Auditors of the Company are not eligible for re-appointment

under the terms of code of coperate Governance

4. Any other business with the permission of the Chair.

By Order of the Board

LAHORE: JANUARY 09,2004 (Sultan Ali)

Company Secretary

Notes:

1. Share Transfer Books of the Company will remain closed from January 30, 2004 to February 05, 2004 (both days

inclusive).

2. A member entitled to attend and vote at this meeting may appoint another Member as his/her proxy. Pro:, es in order

to he effective, must be received at 06-Egerton Road, Lahore, the Registered Office of the Company not later than

forty-eight hours before the time for holding the meeting and must be duly stamped, signed and witne- >ed

3. Members whose shares are deposited with Central Depository System are requested to bring their original National

Identity Cards or Passports along with their Account Numbers in Central Depository System for attending the

4. Members are requested to notify the Company change in their addresses, if any.

VISION

To accomplish, build up and sustain a good reputation of the

project in textile sector locally and globally by marketing high

quality of yam through team work by means of honesty,

integrity and commitment.

MISSION

To transform the Company into a modern and dynamic Yam

manufacturing Company and to provide quality products to

customers and explore new markets to promote / expand sales

of the Company through Good Governance and foster a

sound and dynamic team, so as to achieve optimum

profitability for the Company for sustainable and equitable

growth and prosperity of the Company.

DIRECTORS' REPORT

Your directors take this opportunity to present before you the Annual Report and Financial Statements of the Company

for the Year ended September 30,2003.

During the year under review Global economic and political conditions remain very fragile. First the SARS epidemic

affected very badly the economic activity in our region and lately Iraq war further deteriorated the economic and political

seence of the whole world. These factors also affected the economy of our Country which remained uncertain through

out the year. Owing to the above situation textile exports faced unprecedented difficulties which directly hit back the

price structure of domestic market, which remain depressed through out the year.

During the year under review the Company achieved sale of Rs. 735.957 million as compared to previous year sale of Rs.

540.799 million. The Company earned a Gross Profit of Rs. 5.364 million as compared to Rs. 38.688 million last year. The

Company suffered pretax loss of Rs. 51.816 million as against pretax loss of Rs. 21.684 million last year.

The losses for the year are mainly attributed to consistent increase in prices of raw cotton through out the year which

reached Rs. 2,700 per maund level during the year. These were further affected by depressed yarn prices in International

as well as local yarn market. We were further affected by the higher mark up rates charged by the Financial Institutions

as compared to the rates with others charged as a whole during the year.

Despite of the unfavorable operational results management of your Company is trying its best and is able to

renegotiate rates of markup with National Bank of Pakistan on working capital limits from 12% to 8% per annum effective

from July 2003. Negotiation for further reduction in mark up is in process.

In addition to this we have totally revamped the Production pattern of our Company and started the production of Super

Fine Count ranging from 52/1 to 80/1 count yarn instead of conventional count of 20/1 and 30/1. By the Grace of

Almighty Allah we have achieved Cash break even during the first quarter of year 2003-2004 due to this change and we

hope that in coming days we will be able to earn profits.

The following note wise comments are offered on the Auditors observation as contained in their report.

2.4) The Company operates an unfunded gratuity scheme covering all its permanent employees who attained

the minimum qualifying period. Provision is being made on fair estimation based on Company's Policy.

8.1,

8. 2& 8.3) Due to acute liquidity crunch the Company was not able to service these Govt. levies on timely basis. As the

liquidity position of the Company is improved in the subsequent period, efforts are being made to clear

these dues on timely basis in order to avoid additional charges.

9.8) In accordance with Company Policies consistently applied over the years, we have not accounted for

deferred tax liability.

15.1) These balances are recoverable against pending final settlement of concerned employee's.

15.2) Efforts are being made to recover these outstanding balances and we hope that bulk of these balances will

be recovered soon, the remaining balance if any will be written off subsequently.

The Auditors M/s Hameed Chaudhri & Co. Chartered Accountants retire and are not being eligible for reappointment as

per requirements of Statutory Regulation No.XlI of Code of Corporate Governance.

The Board proposes the name of M/s Manzoor Hussain Mir & Co. Chartered Accountants for the appointment of

auditors of the Company for the year 2003-2004.

The Directors state that:-

The Financial Statements prepared by the Management present a true and fair state of affairs of the Company, the results

of its operations, cash flow and changes in equity.

Proper Books of Accounts have been maintained.

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 as applicable in Pakistan have been followed in preparation of Financial Statements

except I AS 19.

The system of Internal Control is sound in design and has been effectively implemented and monitored.

There are no significant doubts upon Company's ability to continue as a going concern.

There has been no material departure from best practices of Corporate Governance as detailed in the listing regulations.

Significant deviation from last year in operating results of the Company and reasons thereof have been explained.

The key operating and financial date for the last six years is annexed to the Director's Report.

There are no outstanding statutory payments on account of taxes, duties, levies and charges except as shown in notes

to the accounts.

There are no significant plans for corporate restructuring, business expansion and discontinuation of operations except

for improvement in the normal business activities to increase the business.

The labour management relations remained cordial. Due to adoption of strict safety measures no significant accident

was happened during the year.

We have takes all steps to ensure safe and healthy environment of our plant and are around.

Directors meetings of the Board of Directors of the Company during the year under review were four held on December

31,2003, January 31,2003, May 31,2003 and July 31,2003. Following was the attendance of the Directors:-

NAMEOFDIRECTOR

NO. OFMEETINGS ATTENDED

Mr. M. Naseem Saigol

Mr. M. Azam Saigol

Mr. Shwhid Sethi

Mr. Muhammad llyas Bajwa

Mr. Muhammad Asif Bajwa

Mr. Saeed Mian Ansari

Mr. Muhammad Ayub (Registered on July 03, 2003)

(NIT Nominee)

Mr. Shahid Anwar (Appointed on July 03, 2003)

(NIT Nominee)

During the year under review Mr. Muhammad Ayub (NIT Nominee) resigned and in his place NIT Nominee Mr. Shahid

Anwar was appointed as Director of the Company. We wish to place on record our appreciation to the outgoing Director.

During the period under review no Director, Chief Executive Officer, Chief Financial Officer, Company Secretary and their

spouses and minor children sell, buy or take any position in shares of the Company.

PATTERN OF SHAREHOLDING

A statement-showing pattern of shareholding as on September 30, 2003 is annexed.

ACKNOWLEDGMENT

We wish to thank to our banks and shareholders for their continued support and confidence on the Company. We are

pleased to record our appreciation of the services rendered by the employees of the Company and hope that the same

KEY OPERATING AND FINANCIAL DATA

Particulars

2003

2002

2001

2000

1999

1998

(,000)

Sales - Net

735,957

540,799

586,711

561,915

636,579

510,627

Gross Profit

5,364

38,688

36,356

115,772

45,098

46,124

Profit/(Loss) Before Tax

-51,816

-21,342

-38,806

35,991

-27,023

-21,742

Profit/(Loss) After Tax