| Bata Pakistan Limited |
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| Annual
Report 2000 |
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| CONTENTS |
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| Board
of Directors |
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| Notice
of Meeting |
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| Company's
Financial Highlights |
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| Distribution
of Revenue - 2000 |
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| Operational
Statistics |
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| Chairman's
Review |
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| Directors'
Report to the Members |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Schedule
of Net Changes in Operating Assets and Liabilities |
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| Statement
of Changes in Shareholders' Equity |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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| BOARD
OF DIRECTORS |
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| 1.
C. MORZARIA |
Chairman |
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| 2. G. STRICKER |
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Managing Director |
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| 3.
MUHAMMAD ALI MALIK |
Director |
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| 4.
KHALID M. HASSAN |
Director |
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| 5. J.P. LEE |
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Director |
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| 6.
SYED MOHAMMAD MOHSIN |
Director |
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| 7.
DR. AMJAD WAHEED |
Director |
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| 8.
ISTAQBAL MEHDI |
Director |
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| Company
Secretary |
Auditors & Tax
Advisor, |
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| Salahuddin
Niazi |
Gardezi & Co. |
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|
Chartered Accountants |
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65,
Shahrah-e-Quaid-e-Azam, Lahore. |
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| Registered
Office & Factory |
Bankers |
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| Batapur,
G. T. Road, |
Habib Bank Limited |
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| P.O.
Batapur, Lahore. |
Citibank N. A. |
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|
Standard Chartered
Grindlays Bank Limited |
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|
Emirates Bank
International |
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|
Habib Bank AG Zurich |
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National Bank of Pakistan |
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Bank Alfalah Limited |
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Muslim Commercial Bank
Limited |
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| NOTICE
OF MEETING |
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| NOTICE
IS HEREBY GIVEN that the 49th Annual General Meeting of Bata Pakistan Limited
will be |
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| held
at the Registered Office of the Company at Batapur, District Lahore on 31st
May, 2001 at 10.00 a.m. |
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| to
transact the following business. |
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| 1.
To confirm the minutes of the Extraordinary General Meeting held on 5th
October, 2000. |
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| 2.
To receive, consider, and adopt the Directors' Report, Audited Accounts of
the Company and |
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| Auditors'
Report thereon, for the year ended 31st December, 2000. |
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| 3.
To declare dividend as recommended by the Directors. |
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| 4.
To appoint Auditors and fix their remuneration for the year ending 31st
December, 2001. |
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By Order of the Board |
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| Batapur |
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|
Salahuddin Niazi |
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| LAHORE:
April 26, 2001 |
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Company Secretary |
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| NOTES: |
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| 1.
A member entitled to attend and vote at the meeting may appoint any person as
his proxy to attend |
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| the
meeting and vote instead of him. The proxy shall have the right to attend,
speak and vote in |
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| place
of the member appointing him at the meeting. A proxy need not be a member of
the Company. |
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| Proxy
form must be deposited at the Company's Registered Office not less than 48
hours before the |
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| time
for holding the meeting. |
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| 2.
The members whose shares are maintained on Central Depository System with the
Central Depository |
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| Company
of Pakistan Limited should follow the guidelines for attending the General
Meetings and |
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| appointment
of proxies as laid down by the Securities and Exchange Commission of
Pakistan. |
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| 3.
The shareholders are requested to promptly notify the Company of any change
in their addresses. |
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| 4.
The Share Transfer Books of the Company will remain closed from 25th May to
31st May, 2001 |
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| (both
days inclusive). The transfer received in order at the Registered Office of
the Company upto 24th |
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| May
2001 will be entitled for payment of the Final Dividend. |
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| COMPANY'S
FINANCIAL HIGHLIGHTS |
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| YEAR ENDED |
|
(RUPEES IN
THOUSAND) |
% INCREASE/ |
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| DECEMBER
31, |
|
2000 |
1999 |
(DECREASE) |
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| NET SALES |
|
2,187,951 |
2,007,224 |
9 |
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| RESULT |
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| PROFIT
BEFORE TAX |
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65,112 |
47,262 |
38 |
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| PROFIT
AFTER TAX |
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46,534 |
33,954 |
37 |
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| %
OF NET RETURN ON TURNOVER |
2.13 |
1.69 |
-- |
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| CURRENT
ASSETS |
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1,174,261 |
1,038,542 |
13 |
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| CURRENT
LIABILITIES |
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1,017,223 |
843,973 |
21 |
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| CURRENT
RATIO |
|
1.15:1 |
1.23:1 |
-- |
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| ASSETS:
LIABILITIES |
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| DISTRIBUTABLE
RESERVES |
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249,098 |
223,354 |
12 |
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| SHAREHOLDERS'
EQUITY |
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325,181 |
299,437 |
9 |
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| NUMBER
OF SHARES |
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7,560 |
7,560 |
-- |
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| EARNING
PER SHARE |
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| OF
RS. 10 EACH |
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6.16 |
4.49 |
37 |
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|
Rs. '000s |
% |
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| REVENUE
PAID TO GOVERNMENT |
|
402,742 |
15.2 |
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| COST
OF SALES EXCLUDING WAGES |
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| AND
GOVERNMENT TAXES |
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|
1,301,780 |
49.1 |
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| SALARIES,
WAGES, BENEFITS AND |
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| WELFARE
EXPENSES |
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426,048 |
16.0 |
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| OVERHEADS |
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|
474,059 |
17.9 |
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| TRANSFER
TO APPROPRIATION ACCOUNT |
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25,744 |
1.0 |
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| DIVIDEND |
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20,790 |
0.8 |
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| GROSS SALES |
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2,651,163 |
100.0 |
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| CHAIRMAN'S
REVIEW |
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| On
behalf of the Board of Directors, it is a privilege |
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| and
pleasure for me to welcome you to the Company's |
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| 49th
Annual General Meeting and present the |
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| Company's
Annual Report and financial statements |
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| for
the year ended 31st December, 2000. |
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| During
the period under review, Pakistan's economy |
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| experienced
further difficulties. Inflationary |
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| pressures
continued unabated and resulted in |
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| escalations
in petroleum product prices and the |
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| prices
of other inputs, increases in the tariff on |
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| Sui-gas
and electricity, as well as depreciation of the |
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| Pak
Rupee. This further deterioration brought the |
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| economy
close to a collapse. |
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| The
new Government in the country is laying great |
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| emphasis
on documentation of the economy and is |
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| making
all out efforts to bring about a cultural |
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| change
so that people contribute to the National |
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| Exchequer
by paying taxes on their income. The |
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| Government
has also committed to make prudent use |
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| of revenues. |
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| Traders
in some parts of the country are still |
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| opposing
the Government Tax Survey |
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| documentation
and are staging demonstrations. |
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| Strikes
have occurred in many markets around the |
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| country
as a protest against the Sales Tax |
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| Scheme.
Your Company will be a beneficiary of the |
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| Government's
policy since the economy will lead to a |
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| level
playing field to all the players in the footwear |
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| business. |
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| Some
positive corrective decisions taken by the |
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| Government
during year 2000 have encouraged some |
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| hope
that professionally managed industries will |
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| produce
better results. The resolution of the dispute |
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| between
the Water and Power Development |
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| Authority
and the Hub Power Company Limited over |
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| the
tariff rate will not only open the gates for |
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| foreign
investment but certainly help the |
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| Government
in carrying out privatization of large |
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| public
sector enterprises. |
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| The
law and order situation in the country |
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| continued
to deteriorate. During the year, there were |
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| 20
robberies or thefts in Bata Stores. We lost 1,168 |
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| shop
days due to strikes, demonstrations, |
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| disturbances,
and forced closures. |
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| Through
effective controls, the management |
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| successfully
mitigated some of the adverse effects of |
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| these
pressures and your Company closed the |
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| financial
year at new heights in various areas of its |
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| activities.
The Company achieved a sales revenue |
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| of
Rs.2.2 billion thereby registering growth of |
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| Rs.
180.7 million over the previous year. The |
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| Company
earned a pre-tax profit of Rs.65.1 million |
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| as
compared with Rs.47.3 million in the previous |
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| year,
an increase of 38%. After making provision for |
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| current
and deferred taxation of Rs.18.6 million, your |
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| Company
was able to register a 37% growth in its net |
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| profit
over the previous year from Rs.34.0 million to |
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| Rs.46.5 million. |
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| Due
to an increase in working capital requirements, |
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| it
is necessary for the Company to build up its |
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| reserves.
Your Directors have, therefore, decided to |
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| declare
a 27.50% final dividend amounting to Rs.20.8 |
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| million,
and Rs.26 million are being transferred |
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| to
General Reserve. Your Board considers this |
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| imperative
to meet the Company's future fund |
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| requirements. |
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| Due
to prudent employment of financial resources |
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| during
the year under review financial charges were |
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| 2%
lower than in the previous year, the current ratio |
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| was
1.15:1 while other financial indicators also |
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| showed
an improved trend. |
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| During
the year under review, the Company's |
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| contribution
to the National Exchequer amounted to |
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| Rs.403
million in the form of payments of Corporate |
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| Income
Tax, Sales Tax, Customs Duty and other |
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| taxes.
We are pleased to be conserving foreign |
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| exchange
reserves by limiting our dependence on |
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| imported
raw materials and through greater use of |
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| locally
fabricated machinery. |
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| Earnings
per share increased from Rs.4.49 to Rs.6.16 |
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| and
the break up value of each share rose to Rs.43.55 |
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| from
Rs.39.61 last year. Your Company continues to |
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| maintain
close contact with the Karachi and Lahore |
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| Stock
Exchanges where the Company's shares have |
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| been
listed. Your Company's shares of Rs.10 each |
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| were
quoted at Rs.19 on 31st December 2000. |
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| Our
marketing team, in its constant effort to provide |
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| excellent
service to customers has again been very |
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| active.
It is pleasing for me to report that the |
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| marketing
team generally achieved good business |
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| results. |
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| The
retail business contributed to the increased |
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| sales.
As compared with 1999 the retail business |
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| increased
by 115%. |
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| On
the domestic market, in addition to our retail |
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| operations,
we have an extensive wholesale |
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| network.
We have a dedicated and experienced group |
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| of
Distributors, and Dealers whose loyal and |
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| unstinted
co-operation merits our gratitude. In 2000, |
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| there
was an improvement of 105% in Wholesale and |
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| 103%
in Dealers' business. |
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| Throughout
the year, the amounts receivable from |
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| wholesale
Distributors and Dealers remained on the |
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| higher
side, which affected the Company's cashflow. |
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| Constant
efforts are being made to collect overdue |
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| amounts
as quickly as possible. |
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| We
are facing severe competition in export markets. |
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| We
exported 0.73 million pairs during 2000, which |
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| was
31% lower than in the previous year. Our export |
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| business
was affected mainly by low priced |
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| merchandise
from China, Taiwan and Vietnam. |
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| However,
all-out efforts are being made to meet the |
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| challenge. |
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| As
indicated in our Annual Report for 1999, your |
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| Company
received ISO 9001 certification for the |
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| export
oriented canvas shoe production unit. The |
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| benefits
associated with this quality management |
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| system
should be reflected in improved export results. |
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| While
maintaining its leading position in its |
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| traditional
market, your Company continues to seek |
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| new
avenues for expansion. To achieve this vital |
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| corporate
objective, your Managing Director, Mr. G. |
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| Stricker,
continues to pursue expansion of the |
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| Company's
retail network and the introduction of |
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| innovative
product ranges to further improve the |
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| quality
of the products and services offered to our |
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| customers. |
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| During
the year 2000, 11 new retail stores were |
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| opened
while 6 non-progressive stores were closed. |
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| Similarly
13 agencies were opened and 12 |
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| non-progressive
agencies closed. At the end of |
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| the
year, the Company had 223 retail stores, 120 |
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| agencies
and 23 wholesale depots. |
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| We
continue to make our outlets even more |
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| attractive
so that they compare favourably with |
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| international
standards. In the year under review, at |
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| a
cost of Rs.25.2 million, sales outlets throughout |
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| Pakistan
were enhanced in order to provide a better |
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| atmosphere
and improved service for our customers. |
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| Promotional
programmes were vigorously pursued in |
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| a
number of areas. Sponsorship of sports activities is |
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| one
method which the Company is utilizing very |
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| successfully
to promote its products generally. In the |
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| year
under review, the 'Power' Division, organized |
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| the
International Power Master Open Golf |
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| Tournament
in which Lt. Gen. (R) M. Tariq, Minister |
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| for
Housing, Planning & Communication, was the |
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| Guest-of-Honour
and presented prizes to the |
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| winners.
The event received wide coverage on T.V. |
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| and
in the press and further enhanced the Company's |
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| reputation. |
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| During
the year under review, the Company spent |
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| Rs.43.02
million on advertising and other sales |
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| promotional
activities. These activities resulted in |
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| wider
market penetration and increased brand |
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| awareness
by the public. |
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| During
the year 2000, the Company launched a |
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| Back-to-School
campaign all over the country to |
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| stimulate
the purchase of school shoes. 2700 Prizes, |
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| including
a bumper prize of a Honda car, were |
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| offered.
Various companies provided the prizes free of |
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| cost
in joint ventures to promote their own |
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| products.
The campaign was supported by television, |
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| newspaper
and magazine advertising. For effective |
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| in-store
display, the stores were decorated with |
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| posters,
buntings, shelf talkers and show cards. The |
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| campaign
generated great publicity and awareness |
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| in
the minds of school children. |
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| In
view of the continuing uncertain economic |
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| scenario
in the country, the management decided to |
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| place
all expansion plans on hold. Investments were |
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| made
only in essential areas. During the year under |
|
| review,
the Company incurred capital expenditure of |
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| Rs.13.9
million. In addition to the replacement of |
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| existing
assets, funding was focused on programmes |
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| to
improve in quality and efficiency. |
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| The
International Tanners and Industries (Private) |
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| Limited,
a 100% subsidiary of the Company, suffered |
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| losses
from its inception. Its accumulated losses had |
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| reached
Rs.103.9 million. In order to avoid further |
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| losses,
and under the authorization given to the |
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| Managing
Director in an Extraordinary General |
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| Meeting
of Shareholders, held on 5th October 2000, |
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| the
Company's entire investment in the ordinary |
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| share
capital of ITI (Pvt) Ltd was sold. |
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| We
maintain our vigorous efforts to improve and |
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| upgrade
our shoeline. Our resourceful designers in |
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| the
Product Development Department have, during |
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| the
year under review, introduced a range of elegant, |
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| stylish
and quality products in the Leather, Sandak |
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| and
Canvas categories. Introduction of new, |
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| technically
oriented designs will enhance the |
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| uniqueness
of your Company's products and will help |
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| your
Company to stay ahead of its competitors. |
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|
| The
Company's investment in fixed assets and |
|
| intensification
of product development will, I believe, |
|
| enable
us to offer an improved range of products to |
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| our customers. |
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|
|
| The
total production of shoes during the year from |
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|
| the
factories at Batapur was 12.56 million pairs |
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| as
against 12.64 million pairs in 1999. Our Branch |
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| Factory
at Maraka produced 1.93 million pairs in 2000. |
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| On
2nd March, 2001, after my appointment as a |
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|
| Director
of the Company, I was appointed as |
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|
| Chairman
of the Board of Directors of your Company, |
|
|
| succeeding
Mr. K. Weston who deserves our |
|
|
| gratitude
for all his guidance to the Company. |
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|
|
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|
| Your
Company continues to benefit from its |
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|
| association
with many other footwear manufacturing |
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|
| and
distributing companies of the worldwide Bata |
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|
| Shoe
Organization and in particular from the |
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| valuable
technical, commercial and other assistance |
|
|
| and
services from Bata Limited of Toronto, Canada. |
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| We
are thankful to Bata Limited for their |
|
|
| continued
support. |
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|
| The
growth of our business is dependent not only |
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| upon
the enthusiasm but also the skills imparted |
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| to
our personnel through sound training. A high |
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| level
of investment in our human resources was |
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| maintained
through training at different levels in all |
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| sectors
of our activities. 26 Employees participated |
|
| in
international courses outside Pakistan organized |
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| by
Bata Limited, Canada, covering subjects such as |
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| rubber
and plastic technology, finance, accounting |
|
| and
purchasing, and 726 employees participated in |
|
| various
in-Company and in-country courses. |
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|
| During
the year, the newly elected Collective |
|
| Bargaining
Agent (C.B.A.) served the Company with |
|
| a
Charter of Demands on behalf of certain employees |
|
| of
the Company. A two-year agreement, expiring in |
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| December,
2002 was negotiated and signed with the |
|
| elected
C.B.A., Pakistan Bata Employees Union, |
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| which
provided increased benefits and higher |
|
| incomes.
I hope that the Management and the C.B.A. |
|
| will
maintain a satisfactory relationship to achieve |
|
| better
result for the benefit of all concerned. |
|
|
| I
wish to assure you that continued growth and |
|
| reasonable
profitability remain our goals and it will |
|
| be
our constant endeavour to offer new quality |
|
| shoelines
at competitive prices in order to also reach |
|
| the
higher segments of customers in the country. |
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| The
Board of Directors and the Management of the |
|
| Company
will continue their efforts to achieve the |
|
| steady
growth of the Company and we are confident |
|
| that
in the absence of unforeseen adverse factors, the |
|
| current
year will show further improvements. |
|
|
| Finally,
I take this opportunity to express my thanks |
|
| to
all my colleagues on the Board, shareholders, |
|
| customers,
Dealers, Distributors, suppliers and |
|
| Union
representatives for their contribution and |
|
| assistance
during 2000. The Company firmly believes |
|
| that,
as partners in progress, the Company will |
|
| continue
to enjoy the full confidence, co-operation |
|
| and
support from all concerned in the development |
|
| and
progress of the Company to achieve even better |
|
| results
and to meet the challenges in the years ahead. |
|
|
|
|
C. MORZARIA |
|
|
|
CHAIRMAN |
|
|
|
|
|
|
| DIRECTORS'
REPORT TO THE MEMBERS. |
|
|
| 1.
Your Directors have pleasure in submitting their Report and Statement of
Accounts for the year |
|
| ended
December 31, 2000. |
|
|
|
|
| 2.
The Chairman's Review on page 7 to 9 deals with the year's activities and the
Directors of the |
|
| Company
endorse the contents of the Statement. |
|
|
| 3.
The financial results of the company are as under: |
|
|
|
|
Rs. '000s |
|
|
| Profit
before taxation |
|
|
65,112 |
|
|
|
|
|
|
| Less:
Provision for taxation |
|
|
|
|
| Current |
|
|
14,856 |
|
| Prior years |
|
|
(364) |
|
| Deferred |
|
|
4,086 |
|
|
|
|
------------------ |
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|
|
18,578 |
|
|
|
|
------------------ |
|
| Profit after tax |
|
|
46,534 |
|
| To
this must be added Unappropriated Profit brought forward from last year |
1,354 |
|
|
|
|
------------------ |
|
| Profit
available for appropriations |
|
47,888 |
|
|
|
|
|
|
| The
Directors have recommended the following appropriations |
|
| Transfer
to general reserve |
|
|
26,000 |
|
