Baig Spinning Mills Limited - Annual Reports 2003

BAIG SPINNING MILLS LIMITED

Annual Reports 2003

CONTENTS

COMPANY INFORMATION

BOARD OF DIRECTORS

Dr. Mirza Ikhtiar Baig

Chairman & CEO

Mr. M. Ishtiaq Baig

Director

Mr. Mirza Mukhtar Baig

Director

Mr. Mohammad Ali Aziz

Director

Mrs. Parveen Zafar

Director

Mrs. Nasreen Tahir

Director

Mr. Muhammad Farooq

Director (Nominee I.C.P)

AUDIT COMMITTEE

Mr. Mohammad Ali Aziz

Chairman

M. Ishtiaq Baig

Member

Mrs. Parveen Zafar

Member

CHIEF FINANCIAL OFFICER

Mr. Saeed Ahmed

COMPANY SECRETARY

Mr. Nadeem Khan

AUDITORS

Hyder Bhimji & Co.

Chartered Accountants

REGISTERED OFFICE

F-225, Textile Avenue, Street No. 5

S.I.T.E., Karachi.

Tel: 256641 1 - 6

Fax: 25664 17

MILL

A-5/A, Manghopir Road, S.I.T.E.,

Karachi - Pakistan.

BANKERS

Habib Bank Limited

Allied Bank of Pakistan Limited

Mashreq Bank Pakistan Limited

Saudi Pak Commercial Bank Limied

AI-Barka Islamic Bank Limited

Bank AI-Falah Limited

MISSION STATEMENT

To become highly reliable source of supply of

yarn by effectively fulfilling the needs of

customers through an efficient use of

manufacturing facilities and maximize return

to the shareholders with due consideration

to our social responsibilities and obligation.

VISION STATEMENT

To become the premier producer of high

quality value added cotton yarn of different

qualities.

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the 31 st Annual General Meeting of Baig Spinning Mills Limited will

be held on Thursday January 29, 2004 at 4:00 p.m. at the Registered office of the Company,

Situated at F-225, Textile Avenue, Street # 5, SITE, Karachi to transact the following business.

1. To confirm the minutes of Annual General Meeting of the company held on

February 26, 2003.

2. To receive, consider and adopt the Audited Accounts of the Company for the year ended

September 30, 2003 together with Directors' and Auditors' report thereon.

3. To appoint auditors and fix their remuneration. Present auditors M/s. Hyder Bhimji & Co.

Chartered Accountants, retire and did not offer for re-appointment in view of rotation

requirements of Code of Corporate of Governance being part of listing regulations of

Karachi Stock Exchange. Audit Committee have recommended the name of M/s. Gardezi

& Co. Chartered Accountants for appointment in place of retiring auditors for consideration

in the A.G.M.

4. To transact any other business with the permission of Chair.

BY ORDER OF THE BOARD

NADEEM KHAN

(Company Secretary)

Dated: January 8, 2004

NOTES:

1. The Share Transfer books of the Company will remain closed from January 23, 2004 to

January 29, 2004 (both days inclusive).

2. A member of the company entitled to attend and vote may appoint another member on

his / her proxy to attend and vote instead of himself / herself. Proxies in order to be effective

must be received by the company not less than 48 hours before the meeting.

3. Members are requested to promptly notify the Company of any change in their address.

DIRECTORS' REPORT TO THE SHAREHOLDERS

FOR THE YEAR ENDED SEPTEMBER 30, 2003

It is my pleasure to present to you the 31st Annual Report and the audited accounts of your

Company for the year ended September 30, 2003.

During the year under review the net sales stood at Rs. 567.650 million as against net sales of

Rs. 471.208 million in the preceding year. Thus the sales have increased by 17% during year

under review. The higher sales value is due to greater sales volume and increase in the selling

prices of the yarn. There has also been even greater and substantial rise in the rates of cotton

which ultimately eroded Company's profitability. However under these difficult circumstances the

Company earned after tax profit of Rs. 3.092 million as against Rs. 7.944 million in the preceding

year.

During the year under review the Company produced 5.468 million kgs. of cotton yarn as

compared to 5.158 million kgs. produced last year recording an increase of 9.82%.

The administration and selling expenses marginally increased by Rs. 0.479 million due to

increase in sales. However in terms of percentage over sales the admin and selling expenses

decreased from 1.61% to 1.42% during the year under review.

The Company's financial charges decreased by Rs. 5.563 million (i.e. by 14.51%) from Rs.

38.330 million in the preceding year to Rs. 32.767 million in the year under review. The decrease

in financial charges is mainly due to timely repayment of long term Finance, premature repayment

of high cost lease finance and efficient inventory control.

In view of tight liquidity position, low profit and accumulated losses, the Directors of your company

are not able to propose any dividend for the year under review.

CURRENT PROSPECT

The country is witnessing ever higher increase in the rate of raw cotton during the current season

due to shortage internationally as reflected by substantial rise in international market rates of raw

cotton. As a consequence the domestic raw cotton rates increased by more than 50% from the

previous season and shortage in the raw cotton crop is also expected.

The Management is fully aware of this situation and is trying hard to continue to operate plant with

three shifts and take financial measures to ensure to maintain required stock of raw cotton to

operate the plant till begining of the next season.

The Management hopes to succeed full operation of the plant under these difficult circumstances.

CORPORATE GOVERNANCE

We are pleased to report that your Company has taken necessary steps to comply with tr

provisions of the Code of Corporate Governance as incorporated in the Listing Rules of the Stoc

Exchanges. The Board of Directors hereby declares that for the year ended 30 September, 200

a) The financial statements, prepared by the management of the Company, present fair

its state of affairs, the result of its operations, cash flows and changes in equity;

b) Proper books of account of the Company have been maintained;

c) Appropriate accounting policies have been consistently applied in preparation of financi

statements and accounting estimates are based on reasonable and prudent judgmer

d) International Financial Reporting Standards, as applicable in Pakistan and requireme

of the companies ordinance 1984 alongwith directives issued by Security and Exchanc

Commission of Pakistan have been followed in preparation of financial statements ar

departure, if any, has been adequately disclosed;

e) The system of internal control is sound in design and has been effectively implemente

and monitored. The process of review will continue and any weaknesses in controls w

be removed;

f) There are no significant doubts upon the Company's ability to continue as a goir

concern;

g) There has been no material departure from the best practices of corporate governanc

as detailed in the listing regulations;

h) The key operating and financial data for the last six years, in a summarized form,

annexed;

i) During the year six board meetings were held and the attended as follows:

Name of Directors

No. of meeting attended

1. Dr. Mirza Ikhtiar Baig

2. Mr. M. Ishtiaq Baig

3. Mr. Mirza Mukhtar Baig

4. Mrs. Qudsia Baig

5. Mrs. Shireen Baig

6. Mrs. Afreen Baig

7. Miss Adeeba Baig

8. Mr. Muhammad Farooq

9. Mr. Mohammad Ali Aziz

10. Mrs. Nasreen Tahir

1 1 . Mrs. Parveen Zafar

(However leave of absence was granted to Directors who could not attend meetings).

j) The statement of pattern of share holding of the Company as at September 30, 2003, is

annexed. This statement is prepared in accordance with the Code of Corporate Governance;

and

k) During the year under review there was no trading in shares of the Company by the

Directors, CEO and their spouses.

ELECTION OF DIRECTORS

During the year four directors retired from the Board on completion of their 3 years tenure namely:

Mrs. Qudsia Baig, Mrs. Shireen Baig, Mrs. Afreen Baig & Miss. Adeeba Baig.

To replace outgoing directors four new directors were elected u/s 178 of Companies Ordinance

1984 namely: Dr. Mirza Ikhtiar Baig, Mr. Mohammad Ali Aziz, Mrs. Nasreen Tahir & Mrs. Parveen

Zafar.

Audit Committee

The Board of Directors has established an Audit Committee, to assist it in discharging its

responsibilities for corporate governance, financial reporting and corporate control. The

committee consists of the following three members including the Chairman of the

committee who are non-executive and executive Directors.

Mr. Mohammad Ali Aziz Chairman

Mr. M. Ishtiaq Baig Member

Mrs. Parveen Zafar Member

Auditors

On the recommendation of Audit Committee, the Board of Directors has proposed to

appoint M/s. Gardezi & Co., Chartered Accountants to carry out the audit of accounts for

the year ended September 30, 2004 in place of M/s. Hyder Bhimji Co. Chartered

Acountants, who have not offered their services due to application of the provisions of

Code of Corporate Governance.

COMMUNICATION

Communication with the shareholders is given a high priority. Annual, half yearly and quarterly

reports are distributed to them regularly. There is also an opportunity for individual shareholders