| GULISTAN TEXTILES MILLS LIMITED |
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| ANNUAL REPORT 2003 |
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| Corporate Vision /
Mission Statement |
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| Vision |
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| We aim at
transforming Gulistan Textile Mills Limited (GTML) into a complete Textile |
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| unit to further
explore international market of very high value products. Our emphasis |
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| would be on product
and market diversification. Value addition and cost effectiveness, |
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| We intend to fully
equip the Company to acquire pioneering role in the economic |
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| development of the
Country. |
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| Mission |
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| The Company should
secure and provide a rewarding return on investment to its share |
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| holders and
investors, quality products to its customers, a secured and environment |
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| friendly place of
work to its employees and present itself as a reliable partner to all |
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| business
associates. |
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| COMPANY INFORMATION |
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| BOARD OF DIRECTORS |
Mr. Abdul Shakoor (Chairman) |
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Mr. Naseer Ahmed (Chief Executive) |
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Mr. Tanveer Ahmed |
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Mr. N. R. Siddiqui |
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Mr. Mohammad Abdullah |
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Mr. Riaz Ahmed |
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Mr. Mohammad Younus |
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| AUDIT COMMITEE |
Mr. Abdul Shakoor (Chairman) |
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Mr. N. R. Siddiqui |
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Mr. Riaz Ahmed |
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| CHIEF FINANCIAL
OFFICER |
Mr. Ishfaq Saeed |
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| COMPANY SECRETARY |
Mr. Zameer Q. Siddiqui |
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| AUDITORS |
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M/s. Hameed Chaudhri & Company |
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Chartered Accountants |
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Karachi |
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| LEGAL ADVISOR |
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M/s. A. K. Brohi & Company - Advocate |
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| TAX CONSULTANT |
M/s. Sharif & Company - Advocate |
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| BANKERS |
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United Bank Limited |
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Habib Bank Limited |
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National Bank of Pakistan |
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| SHARE REGISTRAR
OFFICE |
M/s. Hameed Majeed Associates (Pvt) Ltd. |
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Karachi Chamber |
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Hasrat Mohani Road |
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Karachi |
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Ph. 2424826, 2412754 |
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Fax. 2424835 |
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| REGISTERED OFFICE |
2nd Floor Finlay House |
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I. I. Chundrigar Road |
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Karachi |
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| REGIONAL OFFICE |
58 Main Gulberg |
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Lahore |
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| MILLS |
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Unit I Samasatta Distt. Bahawalpur |
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Unit II & III Tibba Sultanpur Distt. Vihari |
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Unit IV Ferozwatwan Distt.
Sheikhupura |
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| DIRECTORS' REPORT
TO THE SHAREHOLDERS |
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| Dear Sharehoders, |
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| Assalam-o-Alaikum, |
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| Your directors
present before you the annual accounts for the year ended 30 September 2003
together |
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| with auditors
report thereon & recommend the following appropriations for your
approval. |
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2003 |
2002 |
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RUPEES |
RUPEES |
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| Profit before tax |
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70,206,050 |
77,257,849 |
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| Profit after tax |
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29,520,826 |
25,360,842 |
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| Un-appropriated
profits brought forward |
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169,086,692 |
153,202,850 |
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| Total Profit
available for appropriation |
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198,607,518 |
178,563,692 |
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| Appropriations |
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| Dividend |
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12,636,000 |
9,477,000 |
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| Un-appropriated
profits carried forward |
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185,971,518 |
169,086,692 |
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| Earning per share |
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2.34 |
2.01 |
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| DIVIDEND |
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| The board proposes
payment of cash dividend of 10.00% for the year ended 30 September, 2003. |
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| OPERATIONS |
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| As brought to your
notice in the report of last quarter the results of the Company due to stable
market |
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| conditions at the
close of the year had improved. |
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| As a whole the
conditions of the market during the year under report were volatile. The
prices of yarn |
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| both in home &
foreign market remain low and therefore could not absorb the increased input
cost of |
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| cotton which was
around 10 % more than the previous year cotton prices. As brought to your
notice |
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| earlier the prices
of yarn were picked up in the month of April due to increase in cotton prices
in internainal |
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| market but SARS
epidemic in far eastern countries again depressed the demand which reduced
the |
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| prices. |
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| With the object to
achieve the target of turnover your Company had introduced new variety of
yarn. |
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| Consequently the
sales had appreciably increased from Rs. 2.436 billion of the last year to
3.056 billion. |
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| Still the gross
margin had reduced in comparison to the last year due to heavy input cost.
The company |
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| has earned a profit
before tax & other charges of Rs. 62.124 million as compared to Rs.
32.560 million of |
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| the last year. The
increase in profit is mainly attributed to the reduction of financial cost. |
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| BMR / EXPANSION |
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| In the year under
review your company had purchased 12 Ring Spring Frames comprising 5,760
spindles |
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| which are now in
operation. Presently the installed capacity of all your units is 95,832
spindles. |
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| Adhering to the
policy of the Company to keep the production unit fully equipped, with the
latest |
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| technology in the
field of yarn your directors are taking positive action in this direction so
that we achieve |
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| the optimum
production with acceptable quality & competable price. |
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| NOTICE OF ANNUAL
GENERAL MEETING |
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| Notice is hereby
given that the Annual General Meeting of the Shareholders of Gulistan Textile
Mills |
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| Limited will be
held on Tuesday, 29 January 2004 at 03.00 p.m. at Trading Hall, Karachi
Cotton |
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| Exchange Building,
I.I. Chundrigar Road, Karachi to transact the following business: |
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| 1. To confirm the minutes of the preceding
meeting of the shareholders. |
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| 2. To receive, consider and adopt the
audited accounts of the company for the year ended |
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| September 30, 2003
together with the Directors' and Auditors' Report thereon. |
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| 3. To approve the dividend as recommended
by the directors of the company. |
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| 4. The board of directors based on the
recommendation of the audit committee, recommend the |
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| appointment of M/s.
Mushtaq & Co. Chartered Accountants as the auditors of the |
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| Company for the
year 2003-2004 on such remuneration as fixed by the Chairman of the |
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| Company. |
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| NOTES: |
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| 1. The Register of Members of the Company
will remain closed from 28-01-2004 to 01-02-2004 |
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| (both days
inclusive). Transfer received in order at the office of Share Registrar of
the Company |
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| i.e. Hameed Majeed
Associates (Pvt) Limited, 5th Floor, Karachi Chambers, Hasrat Mohani Road, |
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| Karachi at the
close of business on 27-01-2004 will be treated in time for the purpose of
entitle |
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| ment of cash
dividend, if approved, in respect of the year ended 30th September 2003. |
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| 2. Proxies in order to be effective must
be received duly completed in all respect by the Company at |
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| the Registered
Office not less than 48 hours before the time for holding the meeting. |
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| 3. CDC Shareholders, entitled to attend
and vote at this meeting, must bring with them their |
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| National Identity
Cards / Passport in original to prove
his / her identity, and in case of Proxy |
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| must enclose an
attested copy of his / her NIC or Passport. Representative of corporate
members |
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| should bring the
usual documents required for such purpose. |
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| 4. Member are requested to notify
immediately for any change in their addresses to our Company's |
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| Share Registrar.
M/s. Hameed Majeed Associates (Pvt) Limited. |
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| (Leave of absence
on request was granted in case the directors who could not attend the Board |
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| meetings due to
other pre occupation). |
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| 4. Key operating & financial
statistics for the last six years is annexed. |
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| PROVISION FOR
DIMINUTION |
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| The Company sold
995,564 shares of Rs. 5/- each of National Development Leasing Corporation
and |
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| earned a profit of
Rs. 3.291 million on it. |
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| Following the
policy of valuing investment at lower of cost & market price we report
the gain to the extent |
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| of Rs. 15.556
million. |
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| TRADING IN
COMPANY'S SHARES |
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| During the year
under review the trading in the shares of the Company by the Directors, Chief
Executive |
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| Officer, Chief
Financial Officer, Company Secretary and their spouse and minor childern is
as follows: |
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Openning Balance As on 01-10-2002 |
Purchase |
Sale |
Closing Balance As on 30-09-2003 |
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| Mrs. Fahmeeda Begum
W/o Mr. Abdul Shakoor |
22,798 |
5,900 |
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28,698 |
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| STATEMENT ON VALUE
OF STAFF RETIREMENT BENEFIT |
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| As on September 30,
2003 deferred liability for gratuity is Rs. 32.931 million. |
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| CREDIT RATING -
ISSUE OF TFCs |
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| PACRA has awarded
instrument rating "A-" (A-Minus) for issuance of TFC of Rs. 320
million which is |
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| maintained. |
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| JCR VIS credit
rating company, has awarded "A" rating for the TFC of Rs. 400
million. |
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| AUDITORS |
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| The Audit Committee
has recommended M/s. Mushtaq & Company Chartered Accountants to acl as |
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| auditors of the
Company for the year 2003-2004 on such remuneration as fixed by the Chairman
of the |
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| Company. |
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| AKNOWLEDGEMENT |
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| The board place on
record with appreciation the efforts and devotion of the employees and entire
team of |
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| management. It
extends its gratitude to the financial institutions, leasing companies, etc.
for their sup- |
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| port for the
Company's prosperity. |
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| FUTURE OUTLOOK |
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| Unfortunately the
prices of raw cotton in the beginning were as high as Rs. 3,500 per mound. It
is due to |
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| damage of crop by
rains but specially due to severe pest attack. In the International Market
the prices |
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| were also increased
due to increased demand of cotton from China etc. The cotton requirements of
our |
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| Spinning Industry
are growing. Against the growing requirements of cotton the local production
of cotton |
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| is stagnant around
10 million bales (Ex Farms). The Spinning Industry locally tremendously
expanded & |
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| presently the
industry needs 12 million bales against the expected production of around 9.5
million bales |
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| (Ex-ginning). The
imbalance between the demand and the supply of cotton has necessitated its
import as |
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| we failed to
maintain equilibrium between the demand which is increasing and the supply
which is |
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| stagnant rather
decreasing. |
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| In this scenario we
foresee a difficult time for the spinning units if the prices of yarn do not
improve in the |
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| home & export
market. It is our earnest endeavor that we increase our production, improve
the quality, |
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| arrest the
production cost so that we could maintain the viability of the Company by
successfully market- |
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| ing our products. |
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| The marketing force
has been restructured by inducting qualified professionals to face the
increasing |
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| competition of our
product in the market. |
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| CORPORATE &
FINANCIAL REPORTING FRAME WORK |
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| The board is
mindfull of its responsibilities as may be obligatory by the code of
corporate governance and |
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| confirms that |
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| i) The financial statement prepared by
the management of the Company, present fairly its |
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| state of affairs,
the results of its operations, cash flows and changes in equity. |
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| ii) Proper books of accounts of the
Company have been maintained. |
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| iii) Appropriate accounting policies have
been consistently applied in preparetion of financial |
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| statements and
accounting estimates are based on reasonable and prudent judgement. |
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| iv) International Accounting Standards,
as applicable in Pakistan have been followed in preparation |
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| of financial
statements and any departure there from has been adequatley disclosed. |
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| v) The system of internal control is
sound in design and has been effectively implemented and |
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| monitored. |
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| vi) There are no significant doubts upon
the Company's ability to continue as going concern. |
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| vii) 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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| As required by the
code of corporate governance we include the following informations in this
report. |
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| 1. Statement of pattern of
shareholding is annexed. - — —»- |
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| 2. Statement of shares held by
associated undertaking & related persons are annexed. |
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| 3. Statement of 08 board meetings
held during the year and attendance by each director is as |
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| follows:- |
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| Name of Directors |
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No. of meeting attended |
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| Mr. Abdul Shakoor |
8 |
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| Mr. Naseer Ahmed |
7 |
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| Mr. Tanveerx Ahmed |
3 |
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| Mr. Mohammad
Abdullah |
8 |
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| Mr. N. R. Siddiqui |
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8 |
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| Mr. Riaz Ahmed |
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3 |
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| Mr. Mohammad Younus |
2 |
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| REVIEW REPORT TO
THE MEMBERS ON STATEMENT OF COMPLIANCE |
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| WITH BEST PRACTICES
OF CODE OF CORPORATE GOVERNANCE |
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| (a) We have reviewed the Statement of
Compliance with the Best Practices contained |
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| in the Code of
Corporate Governance aplicable to the company for the year ended |
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| 30 September, 2003
prepared by the Board of Directors of Gulistan Textile |
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| Mills Limited to comply with the Listing Regulation No.37 of the Karachi
Stock |
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| Exchange and
chapter XIII of Lahore Stock Exchange where the Company is listed. |
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| (b) The responsibility for compliance
with the Code of Corporate Governance is that of |
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| the Board of
Directors of the Company. Our responsibility is to review, to the extent |
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| where such
compliance can be objectively verified, whether the Statement of |
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| Compliance reflects
the status of the Company's compliance with the provisions |
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| of the Code of
Corporate Governance and report if it does not. A review is limited |
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| primarily to
inquiries of the Company personnel and review of various documents |
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| prepared by the
Company to comply with the Code. |
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| (c) As part of our audit of financial
statements we are required to obtain an under |
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| standing of the
accounting and internal control systems sufficient to plan the |
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| audit and develop
an effective audit approach. We have not carried out any |
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| special review of
the internal control system to enable us to express an opinion as |
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| to whether the
Board's statement on internal control covers all control and |
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| effectiveness of
such internal controls. |
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| (d) Based on our review nothing has come
to our attention which causes us to |
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| believe that the
Statement of Compliance does not appropriately reflect the |
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| Company's
compliance, in all material respects, with the best practices con- |
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| tained in the Code
of Corporate Governance as applicable to the Company during |
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| the year under
review. |
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| STATEMENT OF
COMPLIANCE WITH BEST PRACTICES |
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| OF CORPORATE
GOVERNANCE |
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| 1. The Board comprises on seven Directors
and a Chief Executive Officer out of which Executive Directors |
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| on Board are three. |
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| 2. The directors have confirmed that none
of them is serving as a director in more than ten listed companies, |
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| including this
Company. |
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| 3. All the resident 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 DFI or an NBFI. |
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| 4. No casual vacancy occurred during the
year. |
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| 5. The Compariy has prepaerd a
"Statement of Ethics and Business Practices" which has been signed
by all |
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| the directors and
employees of the Company. |
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| 6. The Board has developed a vision/mission
statement, overall corporate strategy and significant policies of |
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| the Company. A
complete record of particulars of significant policies alongwith the dates on
which they |
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| were approved or
amended has been maintained. |
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| 7. All the powers of the Board have been
duly exercised and decisions on material transactions, including |
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| appointment and
determination of remuneration and terms and conditions of employment of the
CEO and |
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| other executive
directors, have been taken by the Board. |
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| 8. The meetings of the Board were presided
over by the Chairman and, in his absence, by a director elected |
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| by the Board for
this purpose and the Board met at least once in every quarter. Written
notices of the |
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| Board meetings,
alongwith agenda and working papers, were circulated at least seven days
before the |
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| meetings. The
minutes of the meetings were appropriately recorded and circulated. |
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| 9. The Board arranges orientation courses
for its directors during the year to apprise them of their duties and |
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| responsibilities. |
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| 10. The Board has approved appointment of CFO,
Company Secretary and Head of Internal Audit, including |
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| their remuneration
and terms and conditions of employment, as determined by the CEO. |
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| 11. The directors' report for this year has
been prepared in compliance with the requirements of the Code and |
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| fully describes the
salient matters required to be disclosed. |
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| 12. The financial statements of the Company
were duly endorsed by CEO and CFO before approval 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 that |
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| disclosed in the
pattern of shareholding. |
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| 14. The Company has complied with all the
corporate and financial reporting requirements of the Code. |
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| 15. The Board has formed an audit committee.
It comprises three members, of whom two are non-executive |
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| directors. |
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| 16. The meeting of the audit committee were
held at least once every quarter prior to approval of interim and |
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| final results of
the Company and as required by the Code. The terms of reference of the
committee have |
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| been formed and
advised to the committee for compliance. |
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| 17. The Board has set-up an effective internal
audit function. |
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| 18. The statutory auditors of the Company have
confirmed that they have been given a satisfactory rating |
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| under the quality
control review programme of the Institute of Chartered Accountants of
Pakistan, that |
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| they or any of the
partners of the firm, their spouses and minor children do not hold shares of
the |
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| Company and that
the firm and all its partners are in compliance with International Federation
of Account |
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| ants (IFAC)
guidelines on code of ethics as adopted by Institute of Chartered Accountants
of Pakistan. |
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| 19. The statutory auditors or the persons
associated with them have not been appointed to provide other |
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| services except in
accordance with the listing regulations and the auditors have confirmed that
they have |
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| observed IFAC
guidelines in this regard. |
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| 20. We confirm that all other material
principles contained in the Code have been complied with. |
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| GULISTAN TEXTILE
MILLS LIMITED |
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| BALANCE SHEET |
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| AS AT 30TH
SEPTEMBER, 2O03 |
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2003 |
2002 |
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|
Note |
Rupees |
Rupees |
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| ASSETS |
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| NON CURRENT ASSETS |
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| Operating fixed
assets |
|
5 |
1,289,608,490 |
1,270,641,038 |
|
| Capital
work-in-progress |
|
6 |
50,028,489 |
28,295,544 |
|
| Investment property |
|
7 |
61,214,700 |
61,024,000 |
|
| Investments |
|
8 |
214,627,404 |
215,313,987 |
|
| Deferred cost |
|
9 |
895,648 |
2,467,241 |
|
| CURRENT ASSETS |
|
|
|
| Stores, spares and
loose tools |
|
10 |
90,670,640 |
87,955,450 |
|
| Stock-in-trade |
|
11 |
585,793,838 |
571,071,526 |
|
| Trade debtors |
|
12 |
390,324,708 |
350,698,288 |
|
| Advances, deposits,
prepayments |
|
|
|
| and other
receivables |
|
13 |
203,955,453 |
241,524,944 |
|
| Short term
investments |
|
14 |
56,474,096 |
56,314,180 |
|
| Sales tax
refundable |
|
|
10,790,362 |
14,456,565 |
|
| Cash and bank
balances |
|
15 |
47,132,282 |
64,431,637 |
|
|
|
|
1,385,141,379 |
1,386,452,590 |
|
| TOTAL ASSETS |
|
|
3,001,516,110 |
2,964,194,400 |
|
| EQUITY AND
LIABILITIES |
|
|
|
| Capital and
Reserves |
|
|
|
| Issued, subscribed
& paid-up-capital |
|
16 |
126,360,000 |
126,360,000 |
|
| Reserves |
|
17 |
583,001,394 |
591,978,838 |
|
| Un-appropriated
profit |
|
|
185,971,518 |
169,086,692 |
|
| Shareholders'
equity |
|
|
895,332,912 |
887,425,530 |
|
| NON CURRENT
LIABILITIES |
|
|
|
| Redeemable capital |
|
18 |
605,466,801 |
317,111,278 |
|
| Long term loan |
|
19 |
- |
4,687,483 |
|
| Obligation under
finance lease |
|
20 |
157,520,114 |
216,468,766 |
|
| Deferred
Liabilities |
|
|
|
| Provision for
gratuity |
|
21 |
32,931,163 |
27,267,329 |
|
| Deferred taxation |
|
22 |
51,000,000 |
32,462,211 |
|
|
|
|
83,931,163 |
59,729,540 |
|
| CURRENT LIABILITIES |
|
|
|
| Short term loans |
|
23 |
888,333,042 |
1,241,234,588 |
|
| Short term loans
for imports of machinery |
|
24 |
|
- |
|
| Current maturity of
long term liabilities |
|
25 |
202,084,170 |
106,123,622 |
|
| Creditors,
provisions, accrued charges |
|
|
|
| and other
liabilities |
|
26 |
99,520,156 |
66,942,833 |
|
| Provision for
taxation |
|
27 |
56,499,714 |
53,787,075 |
|
| Dividend payable |
|
28 |
12,828,038 |
10,683,685 |
|
|
|
|
1,259,265,120 |
1,478,771,803 |
|
| CONTINGENCIES AND
COMMITMENTS |
|
29 |
|
|
|
|
|
3,001,516,110 |
2,964,194,400 |
|
|
|
|
